0001079973-15-000716.txt : 20151217 0001079973-15-000716.hdr.sgml : 20151217 20151217170150 ACCESSION NUMBER: 0001079973-15-000716 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20151217 DATE AS OF CHANGE: 20151217 GROUP MEMBERS: JUSTIN B BORUS GROUP MEMBERS: LAZARUS INVESTMENT PARTNERS LLLP GROUP MEMBERS: LAZARUS MACRO MICRO PARTNERS LLLP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AUTHENTIDATE HOLDING CORP CENTRAL INDEX KEY: 0000885074 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 141673067 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-54235 FILM NUMBER: 151294341 BUSINESS ADDRESS: STREET 1: CONNELL CORPORATE CENTER STREET 2: 300 CONNELL DRIVE, 5TH FLOOR CITY: BERKELEY HEIGHTS STATE: NJ ZIP: 07922 BUSINESS PHONE: 9087871700 MAIL ADDRESS: STREET 1: CONNELL CORPORATE CENTER STREET 2: 300 CONNELL DRIVE, 5TH FLOOR CITY: BERKELEY HEIGHTS STATE: NJ ZIP: 07922 FORMER COMPANY: FORMER CONFORMED NAME: BITWISE DESIGNS INC DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Lazarus Management Co LLC CENTRAL INDEX KEY: 0001531964 IRS NUMBER: 331042318 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 3200 CHERRY CREEK SOUTH DRIVE STREET 2: SUITE 670 CITY: DENVER STATE: CO ZIP: 80209 BUSINESS PHONE: 303-500-8821 MAIL ADDRESS: STREET 1: 3200 CHERRY CREEK SOUTH DRIVE STREET 2: SUITE 670 CITY: DENVER STATE: CO ZIP: 80209 SC 13D/A 1 adat_scd13da.htm SCHEDULE 13D/A adat_scd13da2-082812.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Amendment No. 23)
 
Under the Securities Exchange Act of 1934

Authentidate Holding Corp.
(Name of Issuer)
 
Common Stock, par value $0.001 per share
(Title of Class of Securities)
 
 
052666104
 
  (CUSIP Nubmer)  
 
Adam D. Averbach, Esq.
c/o Lazarus Management Company LLC
3200 Cherry Creek South Drive, Suite 670
Denver, CO  80209
(303) 500-8821
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 11, 2015
(Date of event which requires filing of this statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because § 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g) check the following box o
 
 
 

SCHEDULE 13D
 
CUSIP No. 052666104
 
1.
 NAMES OF REPORTING PERSONS.
 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
 
 Lazarus Management Company LLC  
 33-1042318
2.
 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
 (a)   o
 (b)   x
3.
 SEC USE ONLY
4.
 SOURCE OF FUNDS
 
 PF, OO
5.
 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
 
 x
6.
 CITIZENSHIP OR PLACE OF ORGANIZATION
 
 Colorado
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
7.
 SOLE VOTING POWER
 
 14,763,708
8.
 SHARED VOTING POWER
 
 0
9.
 SOLE DISPOSITIVE POWER
 
 14,763,708
10.
 SHARED DISPOSITIVE POWER
 
 0 
11.
 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
 14,763,708
12.
 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
 o
13.
 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
 29.0%
14.
 TYPE OF REPORTING PERSON
 
 IA

 
2

SCHEDULE 13D
CUSIP No. 052666104
 
1.
 NAMES OF REPORTING PERSONS.
 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
 
 Justin B. Borus 
2.
 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
 (a)   o
 (b)   x
3.
 SEC USE ONLY
4.
 SOURCE OF FUNDS
 
 PF, OO
5.
 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
 
 o
6.
 CITIZENSHIP OR PLACE OF ORGANIZATION
 
 United States
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
7.
 SOLE VOTING POWER
 
 14,763,708
8.
 SHARED VOTING POWER
 
 0
9.
 SOLE DISPOSITIVE POWER
 
 14,763,708
10.
 SHARED DISPOSITIVE POWER
 
 0 
11.
 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
 14,763,708
12.
 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
 o
13.
 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
 29.0% 
14.
 TYPE OF REPORTING PERSON
 
 IN/HC

 
 
3

SCHEDULE 13D
 
CUSIP No. 052666104

 
1.
 NAMES OF REPORTING PERSONS.
 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
 
 Lazarus Investment Partners LLLP 
 56-2347695
2.
 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
 (a)   o
 (b)   x
3.
 SEC USE ONLY
4.
 SOURCE OF FUNDS
 
 PF, OO
5.
 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
 
 o
6.
 CITIZENSHIP OR PLACE OF ORGANIZATION
 
 United States
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
7.
 SOLE VOTING POWER
 
 14,756,208
8.
 SHARED VOTING POWER
 
 0
9.
 SOLE DISPOSITIVE POWER
 
 14,756,208
10.
 SHARED DISPOSITIVE POWER
 
 0 
11.
 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
 14,756,208
12.
 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
 o
13.
 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
 29.0% 
14.
 TYPE OF REPORTING PERSON
 
 PN 

4

SCHEDULE 13D
 
CUSIP No. 052666104
 
1.
 NAMES OF REPORTING PERSONS.
 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
 
 Lazarus Macro Micro Partners LLLP
 45-5573575
2.
 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
 (a)   o
 (b)   x
3.
 SEC USE ONLY
4.
 SOURCE OF FUNDS
 
 PF, OO
5.
 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
 
 o
6.
 CITIZENSHIP OR PLACE OF ORGANIZATION
 
 Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
7.
 SOLE VOTING POWER
 
 7,500
8.
 SHARED VOTING POWER
 
 0
9.
 SOLE DISPOSITIVE POWER
 
 7,500
10.
 SHARED DISPOSITIVE POWER
 
 0 
11.
 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
 7,500
12.
 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
 o
13.
 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
 0% 
14.
 TYPE OF REPORTING PERSON
 
 PN 

 
5

 
Explanatory Note
 
 
Amendment No. 23 amends and supplements the statement on Schedule 13D originally filed by Lazarus Management Company LLC ("Lazarus Management"), Justin B. Borus and Lazarus Investment Partners LLLP ("Lazarus Partners") on August 28, 2012, as amended from time to time (the "Schedule 13D").  This Schedule 13D is also filed on behalf of Lazarus Macro Micro Partners LLLP ("Macro Micro Partners" and collectively with This Lazarus Management, Mr. Borus and Lazarus Partners, the "Reporting Persons").  All capitalized terms contained herein but not otherwise defined shall have the meanings ascribed to such terms in the Schedule 13D.  The information set forth in response to each Item below shall be deemed to be a response to all Items where such information is relevant.
 
Item 3.  Source and Amount of Funds or Other Consideration.

The responses to Items 4, 5 and 6 of the Schedule 13D are incorporated herein by reference.

Item 4.  Purpose of Transaction.

Item 4 of the Schedule 13D is hereby supplemented by adding the following:

On December 11, 2015, Lazarus Partners and the Issuer agreed to extend the maturity date of the promissory note originally issued on April 24, 2015, as amended, in the principal amount of $500,000 (the "Original Note"), that matured on December 2, 2015 to December 14, 2015.  On December 14, 2015, the parties agreed to extend the maturity date to December 15, 2015.

On December 15, 2015, Lazarus Partners and the Issuer entered into a Note Exchange Agreement pursuant to which Lazarus Partners exchanged the Original Note for a new promissory note in the principal amount of $532,811 (which amount is inclusive of the accrued but unpaid interest on the Original Note)(the "New Note") and additional common stock purchase warrants ("Additional Warrants").  The Original Note was cancelled and the New Note bears interest at 20% per annum, with principal and interest payable on the maturity date.  The note is scheduled to mature on December 15, 2016, subject to acceleration on the first to occur of (i) June 8, 2016 if the Issuer has not entered into a definitive agreement for the acquisition of all of the outstanding membership interests of Peachstate Health Management LLC, (d/d/a AEON Clinical Laboratories) ("AEON") and consummated the initial closing by such date, or (ii) 5 days after the closing of a sale of equity or debt securities of the Issuer, or a series of closings during a 90-day period, in the gross amount of at least $5,000,000 in cash proceeds.  The Additional Warrants are exercisable for 1,000,000 shares of common stock at an exercise price of $0.30 per share.  The Additional Warrants are exercisable on the first business day following the twelve-month anniversary of the issue date, provided that if the Issuer consummates the initial closing of the AEON transaction, then the initial exercise date will be the 3-year anniversary of the initial closing.  The warrants will expire on the 54-month anniversary of the initial exercise date.  In addition, as part of the Note Exchange Agreement, the terms of all of Lazarus Partners' existing warrants to purchase a total of 6,233,634 shares of common stock were amended by extending the expiration date to December 15, 2022.

Contemporaneous with entering into the Note Exchange Agreement, Lazarus Partners and the Issuer entered into a Lockup Agreement dated December 15, 2015 and a Voting Agreement dated December 15, 2015.  The Lockup Agreement will not become effective unless within thirty days following the date of the agreement, agreements in form and substance substantially similar in all material respects have been signed by certain other stockholders of the Issuer, including all officers and directors, certain affiliated entities and other current stockholders of the Issuer, and all parties that will receive Series E Preferred Stock in the AEON transaction.  The Voting Agreement will become effective upon execution of the agreement by AEON.
 
 


 
Pursuant to the terms of the Lockup Agreement, and in anticipation of the AEON transaction, Lazarus Partners has agreed to certain transfer restrictions on the securities of the Issuer that it beneficially owns, including restrictions on the exercisability of its warrants, for a period of three years from the initial closing of the AEON transaction, subject to certain events that may cause the lockup period to be reduced or eliminated for certain securities.  The transfer restrictions prohibit the transfer of any of the covered securities (i) to any person who is a 5% holder or more of the Issuer's common stock, or (ii) to any person who may become a 5% holder as a result of such transfer, and require Lazarus Partners to obtain the approval of the Issuer's chief executive officer prior to any proposed transfer.  Such transfer restrictions as they relate to the common stock will terminate upon the approval of the Issuer's stockholders of an amendment to its certificate of incorporation to restrict the ability of a person who is not an owner of more than 4.99% of the outstanding shares of the Issuer's common stock from becoming an owner of more than 4.99% of the outstanding shares during the three-year period following the initial closing of the AEON transaction, all as more fully set forth in the Issuer's Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on December 10, 2015.

Pursuant to the terms of the Voting Agreement, and in anticipation of the AEON transaction, Lazarus Partners has agreed to vote all of its voting stock of the Issuer in favor of (i) approval of the AEON transaction and all transactions contemplated thereby, (ii)  the issuance of shares or securities which issuance requires approval under the rules of the NASDAQ Stock Market, (iii) any reverse stock split which may be required in connection with the AEON transaction, (iv) any amendment to the certificate of incorporation of the Issuer to restrict a person who is not already an owner of more than 4.99% of the outstanding shares of the Issuer from becoming an owner of more than 4.99% of the outstanding shares of the Issuer, and (v) any required increase of authorized shares of common stock.  Additionally, Lazarus Partners has agreed to vote against (i) the approval or adoption of any proposal made in opposition to any proposal contrary to the above items, (ii) any other merger, consolidation or business combination unrelated to the AEON transaction, (iii) any sale, lease or transfer of all or substantially all of the assets of the Issuer or its subsidiaries, (iv) any reorganization, recapitalization, dissolution, liquidation or winding up of the Issuer, or (v) any other action that would reasonably be expected to materially impeded, interfere with, delay, postpone, discourage or adversely affect the consummation of the AEON transaction. Under the Voting Agreement, Lazarus Partners has granted the Issuer and each of its executive officers and any of them, in their capacities as officers of the Issuer, an irrevocable proxy to vote all of its voting stock or grant a consent or approval in respect of such voting stock in accordance with the provisions described above.  Further, upon the effectiveness of the Voting Agreement, Lazarus Partners has agreed that it will not to transfer any of its voting securities covered by the Voting Agreement. The voting and proxy provisions and transfer restrictions described above terminate on the first to occur of (i) the completion of all meetings of stockholders required in connection with the AEON transaction, (ii) the termination of the AEON transaction agreement, or (iii) upon notice from the Issuer.

The foregoing does not purport to be a complete description of the agreements set forth above and is qualified in its entirety by reference to the full text of such documents, which are filed as exhibits to this Schedule 13D and incorporated herein by reference.

Item 5.  Interest in Securities of the Issuer.

Item 5 of the Schedule 13D is hereby supplemented by adding the following:

Reference is made to Items 7, 9, 11 and 13 of pages 2-5 of this Schedule 13D, which items are incorporated by reference.  The securities reported on this Schedule 13D that are held by Lazarus Partners consist of 6,680,461 shares of common stock, warrants to purchase 6,233,634 shares of common stock and 200,000 shares of Series D Preferred Stock that are convertible into 1,842,113 shares of common stock.  The securities reported on this Schedule 13D that are held by Macro Micro Partners consist of 7,500 shares of common stock.  Excluded from these totals are warrants to purchase an additional 1,000,000 shares of common stock held by Lazarus Partners, as described under Item 4 above, that are not exercisable within 60 days of the date of this filing.  The calculation of percentage of beneficial ownership in Item 13 of pages 2-5 was calculated using information from Issuer's Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on December 10, 2015, in which the Issuer stated that there were 42,760,609 shares of common stock outstanding as of December 4, 2015.

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The information disclosed in Item 4 above is incorporated herein by reference.

Item 7.  Material to Be Filed as Exhibits.

Exhibit A:
   
Joint Filing Agreement, dated as of December 17, 2015, by and among Lazarus Investment Partners LLLP, Lazarus Macro Micro Partners LLLP, Lazarus Management Company LLC and Justin B. Borus.
 
Exhibit B: 
Note Exchange Agreement dated December 15, 2015.
 
Exhibit C:
   
Promissory Note.
 
Exhibit D: 
Common Stock Purchase Warrant.
 
Exhibit E: 
Lockup Agreement of Lazarus Investment Partners LLLP.
 
Exhibit F:
   
Voting Agreement of Lazarus Investment Partners LLLP.
 
 

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated:  December 17, 2015
 


LAZARUS INVESTMENT PARTNERS LLLP
 
By: Lazarus Management Company LLC
       its General Partner
 
By: /s/ Justin B. Borus
Name: Justin B. Borus
Title:  Manager 
 
 
LAZARUS MACRO MICRO PARTNERS LLLP
 
By: Lazarus Management Company LLC
       its General Partner
 
By: /s/ Justin B. Borus
Name: Justin B. Borus
Title:  Manager 
 
LAZARUS MANAGEMENT COMPANY LLC
 
By: /s/ Justin B. Borus
Name: Justin B. Borus
Title:  Manager 
 
 
/s/ Justin B. Borus
Justin B. Borus
 
 

 
7


 
 
EX-99.A 2 ex_a.htm EXHIBIT A
 
Exhibit A

JOINT FILING AGREEMENT


This will confirm the agreement by and among the undersigned that the Schedule 13D filed with the Securities and Exchange Commission on or about the date hereof with respect to the beneficial ownership by the undersigned of the common stock, par value $0.001 per share, of Authentidate Holding Corp., a Delaware corporation, is being filed, and all amendments thereto will be filed, on behalf of each of the persons and entities named below in accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Dated:  December 17, 2015

 
 
 
 
 
 
LAZARUS INVESTMENT PARTNERS LLLP
 
By: Lazarus Management Company LLC
       its General Partner
 
By: /s/ Justin B. Borus
Name: Justin B. Borus
Title:  Manager 
 
 
LAZARUS MACRO MICRO PARTNERS LLLP
 
By: Lazarus Management Company LLC
       its General Partner
 
By: /s/ Justin B. Borus
Name: Justin B. Borus
Title:  Manager 
 
LAZARUS MANAGEMENT COMPANY LLC
 
By: /s/ Justin B. Borus
Name: Justin B. Borus
Title:  Manager 
 
 
/s/ Justin B. Borus
Justin B. Borus





 
 
1

EX-99.B 3 ex_b.htm EXHIBIT B
Exhibit B
 
 
NOTE EXCHANGE AGREEMENT
 
THIS NOTE EXCHANGE AGREEMENT (this "Agreement") is dated as of December 15, 2015, between Authentidate Holding Corp., a Delaware corporation with its address at Authentidate Holding Corp., Connell Corporate Center, 300 Connell Drive, Berkeley Heights, New Jersey 07922 (the "Company") and Lazarus Investment Partners LLLP (the "Holder"), with its address as set forth on the signature page to this Agreement.
 Recitals
 
WHEREAS, pursuant to the terms and conditions of this Agreement, the Company hereby offers to the Holder a new promissory note in the principal amount of $532,811 (which principal amount is inclusive of the accrued but unpaid interest on the Original Note) (the "New Note") and additional common stock purchase warrants (the "Additional Warrants") and the Holder, wishes to purchase and acquire the New Note and Additional Warrants in exchange for  the promissory Note held by the Holder in the original principal amount of $500,000 dated as of April 24, 2015 ("Original Note") upon the terms and conditions set forth herein; and
 
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby agreed and acknowledged, the parties hereto hereby agree as follows:
 
1.            Defined Terms.  In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the New Note or Additional Warrants (as defined herein); and (b) the following terms have the meanings set forth in this Section 1:

"Additional Warrants" means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with Section 2.2(a) hereof, which shall be in the form of Exhibit B attached hereto.

"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Business Day" means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

"Closing Date" means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to: (i) the Holders' obligations to surrender the Original Note and (ii) the Company's obligations to deliver the New Note and Additional Warrants have been satisfied or waived.

"Commission" means the United States Securities and Exchange Commission.

"Common Stock" means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

"Encumbrances" shall mean any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement interest or other right or claim of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation of law, and including any agreement (other than this Agreement) to grant or submit to any of the foregoing in the future.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
 
1

 

"New Note" means the note due, subject to the terms therein, on the one year anniversary of the date on which it is issued, as issued by the Company to the Holder hereunder, in the principal amount of $532,811 (which principal amount is inclusive of the accrued but unpaid interest on the Original Note) in the form of Exhibit A attached hereto.

"Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
 
"Required Approvals" shall have the meaning ascribed to such term in Section 4(d).

"Required Minimum" means, as of any date, 125% of the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise of all Additional Warrants ignoring any exercise limits set forth therein.

"Securities" means the New Note, the Additional Warrants and the Underlying Shares.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

"Shareholder Approval" means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 15.1% of the issued and outstanding Common Stock on the Closing Date.

"Trading Day" means a day on which the principal Trading Market is open for trading.

"Trading Market" means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the OTC Markets Inc. (or any successors to any of the foregoing).

"Transaction Documents" means this Agreement, the New Note and the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
 
"Underlying Shares" means the shares of Common Stock issuable upon exercise of the Additional Warrants.
 
"Warrant Shares" means the shares of Common Stock issuable upon exercise of the Additional Warrants.

2.             Securities Exchange.
 
2.1            Closing

(a)       Upon the following terms and subject to the conditions contained herein, Holder agrees to exchange with the Company the Original Note and Holder shall deliver and surrender to the Company at its principal offices for cancellation the Original Note held by Holder, free and clear of any liens, claims, charges, security interest or other legal or equitable Encumbrances in exchange for: (A) a New Note in the aggregate principal amount equal to the principal amount of the Original Note, plus accrued and unpaid interest thereon through the date hereof; and (B) Additional Warrants to purchase an aggregate of 1,000,000 shares of Common Stock with an exercise price of $0.30 per share. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company's counsel or such other location and on such Business Day as the parties shall mutually agree.
 
2

 
 
                   (b)        At Closing, the New Note and Additional Warrants issued in exchange for cancellation of the Original Note shall be deemed the full and final consideration for the cancellation of the Original Note, and notwithstanding anything to the contrary contained in the Original Note or otherwise, the Company and Holder hereby agree that upon the Closing: (i) the Company's obligations under the Original Note held by Holder shall be deemed cancelled and replaced with the Company's obligations under the New Note; and (ii) the Original Note shall automatically terminate and have no further force and effect (other than those specific provisions which pursuant to the terms and provisions of the Original Note expressly survive termination).

            (c)            Holder further agrees that it will write "CANCELLED" on the original of the Original Note surrendered to the Company pursuant to this Agreement and initial such phrase and return the originally executed version of the Original Note to the Company. Notwithstanding the foregoing, however, in the event the Holder does not inscribed the phrase "CANCELLED" on the Original Note, it hereby authorizes the Company's agents and officers to write such phrase on the Original Note. In the event Holder has lost his, her or its Original Note, or such Original Note was lost, stolen or destroyed, Holder shall, instead of returning the Original Note, execute and deliver to the Company an affidavit of loss and indemnification undertaking (in a form acceptable to the Company) with respect to such Original Note and in which instrument the Holder acknowledges that the Original Note is cancelled.
 
2.2            Deliveries.

            (a)            On or prior to the Closing Date (except as otherwise provided below), the Company shall deliver or cause to be delivered to Holder the following: (i) this Agreement duly executed by the Company; (ii) the New Note with a principal amount equal to the principal amount of the Holder's Original Note (plus accrued and unpaid interest thereon through the date hereof), registered in the name of Holder (such original New Note may be delivered within three Trading Days following Closing Date); (iii) the Additional Warrants with an exercise price per share equal to $0.30, subject to adjustment as provided therein (such original Additional Warrant certificate may be delivered within three Trading Days following the Closing Date) registered in the name of Holder and otherwise in the form of Exhibit B annexed hereto; and (iv) such other documents relating to the transactions contemplated by this Agreement as the Holder or its counsel may reasonably request.

                                    (b)            On or prior to the Closing Date, Holder shall deliver or cause to be delivered to the Company, as applicable, the following: (i) this Agreement duly executed by Holder; (ii) the Holder's Original Note (or an affidavit of loss and indemnity undertaking with respect thereto, in a form reasonably acceptable to the Company); (iii) the lockup and voting agreements duly executed by the Holder, as contemplated by Section 5.8, below; and (iv) such other documents relating to the transactions contemplated by this Agreement as the Company or its counsel may reasonably request.
 
2.3            Closing Conditions.

            (a)            The obligations of the Company hereunder in connection with the Closing are subject to the satisfaction, or waiver by the Company, of the following conditions: (i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Holder contained herein (unless as of a specific date therein in which case they shall be accurate as of such date); (ii) all obligations, covenants and agreements of the Holder required to be performed at or prior to the Closing Date shall have been performed; (iii) the delivery by the Holder of the items set forth in Section 2.2(b) of this Agreement; (iv) the Company shall have received from the Holder the signed lockup agreement and voting agreement as referred to in Section 5.8 below; and (v) the Company shall have received any Required Approvals necessary to conduct the Closing.
 
        (b)            The obligations of the Holder hereunder in connection with the Closing are subject to the satisfaction, or waiver by the Holder, of the following conditions: (i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein); (ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; and (iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement.
 
       2.4            Status of Original Note.  Holder hereby expressly agrees that effective as of the date of this Agreement, as first set forth above, that the maturity date of the Original Note is hereby further extended until the date that is the Closing Date and that the definition of the term "Maturity Date" as set forth in the Original Note is hereby amended to be "the Closing Date as contemplated by that certain Note Exchange Agreement dated as of December 15, 2015 between the Company and the Holder".  Accordingly, from and after the date hereof, each reference in the Original Note to the Original Note (or words of like import) shall mean and be a reference to the Original Note as amended by hereby.
 
3

 

3.          Representations, Warranties and Covenants of  Holder.  Holder hereby makes the following representations and warranties to the Company, and covenants for the benefit of the Company.
 
(a)       Due Organization and Authorization; Binding Agreement. Holder is duly organized and validly existing under the laws of the jurisdiction of its organization. Holder has full right, power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by Holder and (assuming due authorization, execution and delivery by the Company) constitutes the valid and binding obligation of Holder enforceable against Holder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and general equitable principles (whether considered in a proceeding in equity or at law), which may affect the availability of specific performance, injunctive relief and other equitable remedies, and except that indemnification and contribution provisions may be limited by applicable law.

(b)        No Conflicts.  The execution, delivery and performance of this Agreement by the Holder and the consummation by the Holder of the transactions contemplated hereby do not and will not: (i) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Holder is a party or by which the Holder's properties or assets are bound; or (ii) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Holder or by which any property or asset of the Holder are bound or affected, except, in each case, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, materially and adversely affect the Holder's ability to perform its obligations under this Agreement.

(c)        Holder Status. At the time Holder was offered the New Note and Additional Warrants, it was, and as of the date hereof it is, and on each date on which it exercises any Additional Warrants it will be either: (i) an "accredited investor" as defined in Rule 501(a) under the Securities Act; or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under the Securities Act.  Holder is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.  Holder has sufficient knowledge and experience in financial matters as to be capable of evaluating the risks and merits of the transaction contemplated hereby. Holder is able to bear the economic risk of its investment in the New Note and Additional Warrants for an indefinite period of time, is able to afford a complete loss of such investment, and acknowledges that no public market exists for the New Note and Additional Warrants and that there is no assurance that a public market will ever develop for such securities. Neither, the New Note, the Additional Warrants, nor the Underlying Shares have been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.

(d)            Information. Holder has reviewed, or has had the opportunity to review, with the assistance of professional and legal advisors of its choosing, sufficient information (including all documents filed or furnished to the Commission by the Company) and has had sufficient access to the Company necessary for Holder to decide to exchange its Original Note for the New Note and Additional Warrants in accordance with this Agreement.

(e)            Certain Disqualification Events. Neither the Holder, nor any director, executive officer, other member or officer of the Holder participating in the transactions contemplated by this Agreement, any beneficial owner of 20% of more of the Holder's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Holder in any capacity at the time of sale (each a "Holder Covered Person") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification Event covered by Rule 506(d)(2) or (3) (provided that the foregoing exception shall not be available hereunder with respect to Rule 506(d)(2)(iv) for any Disqualification Event of which the Company did not know as a result of the Holder's failure to disclose such Disqualification Event to the Company). Holder has exercised reasonable care to determine: (i) the identity of each person that is a Holder Covered Person; and (ii) whether any Holder Covered Person is subject to a Disqualification Event.
 
4

 
 
(f)        Own Account.  The Holder is and will be acquiring the Securities for the Holder's own account, for investment purposes, and not with a view to any resale or distribution in whole or in part, in violation of the Securities Act or any applicable securities laws; provided, however, that by making the representations herein, the Holder does not agree to hold such Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with federal and state securities laws applicable to such disposition.
 
(g)       Restricted Securities. The Holder understands that the securities purchased hereunder, including the Underlying Shares, are "restricted securities," as that term is defined in the Securities Act and the rules thereunder, have not been registered under the Securities Act, and that none of the Securities can be sold or transferred unless they are first registered under the Securities Act and such state and other securities laws as may be applicable or an exemption from registration under the Securities Act is available (and then the Securities may be sold or transferred only in compliance with such exemption and all applicable state and other securities laws).  Holder acknowledges that all certificates representing any of the New Note, the Additional Warrants and the Underlying Shares will bear a restrictive legend in a form as set forth below and hereby consents to the transfer agent for the Company's Common Stock making a notation on its records to implement the restrictions on transfer described herein.  Holder further understands that except as provided in the Transaction Documents: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, must be held indefinitely and may not be offered for sale, sold, assigned or transferred unless: (A) subsequently registered thereunder; (B) Holder shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; or (C) Holder provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (collectively, "Rule 144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Commission thereunder; and (iii) except as set forth in the Transaction Documents, neither the Company nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.
 
(h)            Reliance on Representations.  Holder understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Holder's compliance with, the representations, warranties, agreements, acknowledgments and understandings of Holder set forth herein in order to determine the availability of such exemptions and the eligibility of Holder to acquire the Securities. The Holder undertakes to immediately notify the Company of any change in any statement or other information relating to the Holder which takes place prior to the Closing time. No Person has made any written or oral representations to the Holder that: (i) any Person will resell or repurchase the New Notes, the Additional Warrants or the Underlying Shares; (ii) that any Person will refund all or any part of the Purchase Price; or (iii) as to the future price or value of the shares of Common Stock of the Company.

(i)             No Brokers. The Holder has not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders' structuring fees, financial advisory fees or other similar fees in connection with any of the transactions contemplated by this Agreement.
 
(j)             No General Solicitation. The Holder acknowledges that the Securities were not offered to the Holder by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio; or (ii) any seminar or meeting to which the Holder was invited by any of the foregoing means of communications.
 
5

 

(k)            Representations Regarding Original Note.  The Holder owns and holds, beneficially and of record, the entire right, title, and interest in and to the Original Note held by it, free and clear of any and all pledges, liens, security interests, mortgage, claims, charges, restrictions, options, title defects or Encumbrances other than restrictions under the Securities Act and other applicable federal and state securities laws. Holder has not, in whole or in part, (x) assigned, transferred, hypothecated, pledged or otherwise disposed of the Original Note or its rights in such Original Note, or (y) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to such Original Note which would limit the Holder's power to transfer the Original Note hereunder. Holder has the sole and unencumbered right and power to transfer and dispose of the Original Note, and such Original Note is not subject to any agreement, arrangement or restriction with respect to the voting or transfer of the Original Note, except for this Agreement. No additional consideration for any purpose shall be due to Holder at Closing, with respect to the Original Note, other than the New Note and Additional Warrants. Upon delivery of the Original Note to the Company for cancellation (as contemplated by this Agreement), the Company will receive good and marketable title to the Original Note, free and clear of all pledges, liens, security interests, mortgage, claims, charges, restrictions, options, title defects or Encumbrances. The Original Note being surrendered by it for cancellation pursuant to this Agreement represents all of the Original Note of the Company in which Holder owns any legal or beneficial interest. No Event of Default (as defined in the Original Note) has been declared by the Holder under the Original Note and no Event of Default exists or is continuing with respect to the Original Note.

 (l)             No Representations. No person or entity, other than the Company, has been authorized to give any information or to make any representation on behalf of the Company in connection with the offering of Securities, and if given or made, such information or representations have not been relied upon by the Holder as having been made or authorized by the Company.  The only representations and warranties made by the Company in connection with the offering of Securities are those contained in this Agreement, and the only information made available by the Company in connection with the offering of Securities is contained in this Agreement.
 
(m)            No Legal, Tax or Investment Advice.   Holder understands that the tax consequences of the transactions contemplated by this Agreement are complex, and accordingly Holder represents and warrants that it understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to him, her or it in connection with this Agreement and the transactions contemplated herein, constitutes legal, tax or investment advice.   Holder has consulted such legal, tax and investment advisors as he, she or it, in his, her or its sole discretion, has deemed necessary or appropriate in the circumstances.   Holder is not relying on the Company or any of its respective affiliates or agents, including its counsel and accountants, for any tax advice regarding the tax consequences of the transactions contemplated by this Agreement.

4.           Representations, Warranties and Covenants of the Company.  The Company represents and warrants to the Holder, and covenants for the benefit of the Holder, as follows:
 
            (a)       Due Organization.  The Company has been duly incorporated and is validly existing and in good standing under the laws of the state of Delaware, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole; or (iii) a material adverse effect on the Company's ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse Effect") and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(b)            Due Authorization; Binding Agreement; No Conflicts. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company's stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the Required Approvals and except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
 
 
6


(c)            Validity of New Note and Additional Warrants. The New Note issued pursuant to this Agreement and Additional Warrants, when delivered in exchange for the Original Note in accordance with this Agreement, will be the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and general equitable principles (whether considered in a proceeding in equity or at law). The Warrant Shares, when paid for and issued in accordance with the terms of the Additional Warrants, will be validly issued, fully paid and non-assessable, free and clear of all liens imposed by the Company other than restrictions on transfer provided for herein and in the Transaction Documents.
 
(d)            Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) those that have previously been obtained; (ii) the filings required pursuant to the Exchange Act; (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Warrant Shares for trading thereon in the time and manner required thereby; (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws; and (v)  in connection with obtaining Shareholder Approval (as defined in Section 5.4 below) (collectively, the "Required Approvals"). Company will use commercially reasonable efforts to promptly and timely obtain or satisfy the Required Approvals.
 
5.             Other Agreements.
 
5.1            Transfer Restrictions.

                 (a)             The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Holder, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Holder under this Agreement.
 
(b)            The Holders agree to the imprinting, so long as is required by this Section 5.1, of a legend on any of the Securities substantially in the following form:

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
7

 

                (c)            Holder agrees with the Company that Holder will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 5.1 is predicated upon the Company's reliance upon this understanding.

5.2            Reservation and Listing of Securities. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in an amount no less than the Required Minimum. If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company's certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible, including by calling a meeting of the Company's shareholders for such purpose. The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the number of shares of Common Stock issuable upon exercise of the Additional Warrants  on the date of such application; (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing or quotation on such Trading Market as soon as possible thereafter; (iii) provide to the Holder evidence of such listing or quotation; and (iv) maintain the listing or quotation of such Common Stock on any date on such Trading Market or another Trading Market.

5.3            Limitations on Exercise. Notwithstanding anything in this Agreement or any of the other agreements and instruments executed in accordance with this Agreement to the contrary, subject to receipt of the approval of the Company's stockholders, the Company shall not issue, and no Holder shall be permitted to acquire or purchase (whether upon exercise of the Additional Warrants or otherwise) any shares of Common Stock if and to the extent that the purchase and issuance of such shares of Common Stock would cause the Company to exceed the aggregate number of shares of Common Stock which the Company may issue or be deemed to have issued without breaching the Company's obligations under the applicable rules and regulations of the Nasdaq Stock Market (including, without limitation, Nasdaq Listing Rule 5635) or such other Trading Market on which the Company's shares of Common Stock are then listed or quoted for trading (the "Exchange Cap"). Accordingly, if stockholder approval would be required under the applicable listing rules of the Nasdaq Stock Market or such other Trading Market on which the Company's shares of Common Stock are then listed or quoted for trading (the "Principal Market"), then in the absence of such stockholder approval, in no event shall a Holder be permitted to acquire shares of Common Stock upon exercise of the Additional Warrants in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the principal amount of the New Note issued to Holder pursuant to this Agreement on the relevant Closing Date and the denominator of which is the aggregate principal amount of all new promissory notes issued pursuant to this Agreement and in transactions with one or more other holders of promissory notes exchanging such notes for new notes and additional warrants (the "Exchange Cap Allocation"). In the event that Holder shall sell or otherwise transfer the New Note or Additional Warrants issued hereunder, the transferee thereof shall be allocated a pro rata portion of Holder's Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee.

5.4            Shareholder Approval.  Solely in the event that the Company determines that it is required in order to permit the full exercise of the Additional Warrants issued pursuant to this Agreement into shares of Common Stock in accordance with applicable listing rules of the Principal Market (the "Shareholder Approval"), the Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) as soon as reasonably practicable and in no event later than May 31, 2016, for the purpose of obtaining Shareholder Approval, with the recommendation of the Company's Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. If the Company does not obtain Shareholder Approval at the first special meeting, the Company shall call a meeting every three (3) months thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained or the New Notes are no longer outstanding. Each Holder further agrees that it shall not be entitled to vote the shares of Common Stock of the Company issuable to it pursuant to the terms of this Agreement, including pursuant to the exercise of any Additional Warrants, at any meeting of the Company's stockholders convened to vote on a proposal to enable the Company to issue the Underlying Shares in excess of 15.1% of the issued and outstanding Common Stock of the Company.
 
8

 

5.5       Fees and Expenses.  Each party hereto shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
 
5.6       Modification of Certain Warrants. Effective on the Closing Date, the Company and Holder agree that the expiration date of the Original Warrants (as defined below), is hereby amended such that from and after such Closing Date, the term "Expiration Date" shall be December 15, 2022. The term "Original Warrants", as used herein, shall mean those certain common stock purchase warrants issued by the Company to the Holder on or about the following dates: October 13, 2010, October 13, 2011, March 14, 2012, April 11, 2012, in two issuances on September 28, 2012, June 11, 2013 and September 3, 2014.

5.7        Piggyback Registration Rights. Holder and the Company agree that the Holder shall be entitled to the registration rights with respect to the Underlying Shares as set forth in this Section 5.7.

(a)            Definition of Registrable Securities. As used in this Section 5.7, the term "Registrable Security" means, as of any date of determination, (a) all Warrant Shares then issued and issuable upon exercise of the Additional Warrants (assuming on such date the Additional Warrants are exercised in full without regard to any exercise limitations therein), (b) any additional shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the Additional Warrants (in each case, without giving effect to any limitations on exercise set forth in the Additional Warrants), and (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, registration statement hereunder with respect thereto) for so long as (i) a registration statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective registration statement, (ii) such Registrable Securities have been previously sold in accordance with Rule 144, or (iii) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Company's transfer agent and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company, and all Warrants are exercisable by "cashless exercise" as provided in each of the Warrants, as reasonably determined by the Company, upon the advice of counsel to the Company). The term "Registrable Securities" means any and all of the securities falling within the foregoing definition of "Registrable Security."

(b)            Piggyback Registration Rights. As used herein, a "Registration Statement" shall mean any registration statement filed by the Company with the Commission under the Securities Act at any time or from time to time commencing on a date within one year that any Underlying Shares may be issuable to the Holder and while any Registrable Securities remain outstanding; provided, however, that a Registration Statement for the purposes hereof shall not include: (A) any registration statement (or amendment thereto) filed by the Company which has not been declared effective on or before the date hereof; (B) any registration statement on Form S-3 (or any successor form) filed by the Company for the purpose of effecting offers and sales of securities on a continuous or delayed basis pursuant to Rule 415(a)(ix) or  (x) under the Securities Act; (C) a registration relating to employee benefit plans (whether effected on Form S-8 or its successor); or (D) a registration effected on Form S 4 (or its successor). If at any time or from time to time while any Registrable Securities remain outstanding, the Company shall determine to register or shall be required to register any of its Common Stock, whether or not for its own account, the Company shall:

(i)            provide to each Holder written notice thereof at least seven (7) days prior to the filing of the Registration Statement by the Company in connection with such registration;
 
9

 

(ii)            include in such registration, and in any underwriting involved therein, all those Registrable Securities specified in a written request by each Holder received by the Company within five (5) days after the Company mails the written notice referred to above. The Company may withdraw the registration at any time. If a registration covered by this Section 5.7 is an underwritten registration on behalf of the Company, and the underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include in such registration: (1) first, the securities the Company proposes to sell, (2) second, the Registrable Securities and other securities requested to be included in such registration, pro rata among the selling Holders and any other selling security holders on the basis of the number of Registrable Securities owned by each such Holder and other selling security holders. The Holders' right to have Registrable Securities included in the first registration statement filed by the Company may be deferred to the second registration statement filed by the Company, which deferral may be continued to the third or subsequent registration statement so long as the registration statements are pursuant to underwritten offerings and the underwriter determines in good faith that marketing factors require exclusion of some or all of the Registrable Securities held by the Holders, but such deferral shall be only to the extent of such required exclusion as determined by the underwriter; and
 
(iii)            if the registration is an underwritten registration, each Holder of Registrable Securities shall enter into an underwriting agreement in customary form with the underwriter and provide such information regarding Holder that the underwriter shall reasonably request in connection with the preparation of the prospectus describing such offering, including completion of FINRA Questionnaires.

            (c)            Covenants with Respect to Registration. In connection with the registration in which the Registrable Securities are included, the Company and Holder covenant and agree as follows:

                                        (i)          The foregoing registration rights shall be contingent on the Holders furnishing the Company with such appropriate information as the Company shall reasonably request, including (A) such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least seven days prior to the first anticipated filing date of any Registration Statement, the Company shall notify each Holder of the information the Company requires from such Holder if such Holder elects to have any of the Registrable Securities included in the Registration Statement. A Holder shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if it elects to have any of the Registrable Securities included in the Registration Statement. Each Holder agrees to furnish to the Company a completed selling security holder questionnaire (a "Questionnaire") in the form provided to it by the Company not less than two Business Days prior to the filing date of such Registration Statement. The Company shall not be required to include the Registrable Securities of a Holder in a Registration Statement and shall not be required to pay any damages to such Holder who fails to furnish to the Company a fully completed Questionnaire at least two Business Days prior to the filing date. The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by it and, if required by the Commission, the natural persons thereof that have voting and dispositive control over its shares of Common Stock.
 
 (ii)            Each Holder, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Holder has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.  Each Holder agrees that, upon receipt of any notice from the Company that it must suspend sales of Common Stock pursuant to the Registration Statement, it will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Holder is advised by the Company that such dispositions may again be made.

                          (iii)          Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.

(iv)          The Company shall indemnify each Holder of Registrable Securities to be sold pursuant to the registration statement and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or liability (including reasonable expenses reasonably incurred in investigating, preparing or defending against any claim) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from such registration statement, except to the extent arising under paragraph (v) below.
 
10

 

                          (v)            Each Holder owning Registrable Securities to be sold pursuant to a registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and any underwriter, and each person, if any, who controls the Company or such underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage or reasonable expense or liability (including expenses reasonably incurred in investigating, preparing or defending against any claim) to which they may become subject under the Securities Act, the Exchange Act or otherwise, arising (A) from information furnished by or on behalf of such Holder, or their successors or assigns, for inclusion in such registration statement, or (B) as a result of use by the Holder of a registration statement that the Holder was advised to discontinue.

5.8          Execution of Voting and Lockup Agreements. Holder agrees to execute and deliver to the Company (i) a voting agreement relating to the shares of capital stock of the Company and (ii) a lockup agreement which restricts (A) the exercise and conversion of derivative securities issued by the Company and owned by Holder and (B) the resale of shares of capital stock issued by the Company and owned by Holder, each as shall be in a form substantially similar in all material respects to the forms of lockup agreement and voting agreement attached to this Agreement as Exhibits C and D, respectively.

6.            Miscellaneous.

6.1         Governing  Law; Consent to Jurisdiction  This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without giving effect conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.  Each of the parties consents to the exclusive jurisdiction of the federal court in the Southern District of New York, New York in connection with any dispute arising under this Agreement 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.  EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY.  Each party to this Agreement irrevocably consents to the service of process in any such proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at its address set forth herein.  Nothing herein shall affect the right of any party to serve process in any other manner permitted by law.
 
 6.2         Confidentiality.  The Holder acknowledges and agrees that the existence of this Agreement and the information contained herein and in the Exhibits hereto (collectively, "Confidential Information") is of a confidential nature and shall not, without the prior written consent of the Company, be disclosed by the Holder to any person or entity, other than the Holder's personal financial and legal advisors for the sole purpose of evaluating an investment in the Company, and that it shall not, without the prior written consent of the Company, directly or indirectly, make any statements, public announcements or release to trade publications or the press with respect to the subject matter of this Agreement.  Notwithstanding the foregoing, the Holder may use or disclose Confidential Information (i) to the partners of the partnership entity that comprises the Holder, provided such persons are subject to confidentiality restrictions substantially similar to those set forth herein or (ii) in its filings as required pursuant to the Exchange Act and to the extent the Holder is required by law or legal process ("Required Disclosure") to disclose such Confidential Information, provided, however, that prior to any such Required Disclosure, Holder shall give the Company reasonable advance notice of any such disclosure and shall cooperate with the Company in protecting against any such disclosure and/or obtaining a protective order narrowing the scope of such disclosure and/or use of the Confidential Information.  The Holder further acknowledges and agrees that the information contained herein and in the other documents relating to this transaction may be regarded as material non-public information under United States federal securities laws, and that United States federal securities laws prohibit any person who has received material non-public information relating to the Company from purchasing or selling securities of the Company, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of the Company.  Accordingly, until such time as any such non-public information has been adequately disseminated to the public, the Holder shall not purchase or sell any securities of the Company, or communicate such information to any other person.
 
 
11


 
 6.3       Entire Agreement.  This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous oral or written proposals or agreements relating thereto all of which are merged herein.  This Agreement may not be amended or any provision hereof waived in whole or in part, except by a written amendment signed by all of the parties hereto.

6.4            Counterparts.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a ".pdf" format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ".pdf" signature page were an original thereof.

 6.5            Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day; (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day; (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service; or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
 
6.6         Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

 6.7            Specific Performance; Enforcement. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore, each of the parties hereto agrees that in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled at law or in equity. The parties agree that they shall be entitled to enforce specifically the terms and provisions of this Agreement in addition to any other remedy to which they may entitled at law or in equity.
 
6.8            Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by Holder in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the "Maximum Rate"), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to Holder with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at Holder's election.
 
12

 

6.9            Independent Nature of Holders' Obligations and Rights. The obligations of Holder under any Transaction Document are several and not joint with the obligations of any other Holder, and no Holder shall be responsible in any way for the performance or non-performance of the obligations of any other Holder under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. Holder has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.

 6.10            Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

6.11            Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
13


IN WITNESS WHEREOF, the Company and each Holder has caused this Agreement to be executed on its behalf as of the date first written above.

AUTHENTIDATE HOLDING CORP.
       
   
Address for Notice:
Connell Corporate Center
300 Connell Drive, 5th Floor
Berkeley Heights, NJ 07922
Attn:  President
 
/s/ Ian C. Bonnet
 
 
 Fax:
 
 
Name: Ian C. Bonnet
Title: President and Chief Executive Officer
 
         
 
 
 

 

14


 [HOLDER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Note Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Holder: Lazarus Investment Partners LLLP                                                                                                                                                                                      

Signature of Authorized Signatory of Holder: /s/ Justin B. Borus   
Name of Authorized Signatory: Justin B. Borus 

Title of Authorized Signatory: Manager of Lazarus Management Company LLC, the General Partner

Email Address of Authorized Signatory:                                                                                       

Facsimile Number of Authorized Signatory:                                                                                

Address for Notices to Holder:             _______________________________________________
     _______________________________________________
     _______________________________________________
     _______________________________________________
Address for Delivery of certificated Securities for Holder (if not same as address for notices):
_______________________________________
_______________________________________
_______________________________________

EIN Number:                                          

Principal amount of Note to be Issued at Closing: $532,811


Principal Amount of Original Notes Owned by Holder and Issue Date:
1. Prior Note issued April 24, 2015 in the Principal Amount of $500,000
 
 
15


EXHIBIT A
FORM OF NEW NOTE
 
 
 
 
16



EXHIBIT B
FORM OF ADDITIONAL WARRANT
 
 
 
17


EXHIBIT C
FORM OF LOCKUP AGREEMENT
 
 


18


EXHIBIT D
FORM OF VOTING AGREEMENT




 
 
 
 
19
EX-99.C 4 ex_c.htm EXHIBIT C
Exhibit C
 
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE FEDERAL OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS AS MAY BE APPLICABLE OR, AN OPINION OF COUNSEL THAT AN EXEMPTION FROM SUCH APPLICABLE LAWS EXIST.
 
PROMISSORY NOTE
 
Principal Amount:  $532,811
Issuance Date: December 15, 2015
Maturity Date:    December 15, 2016
 
 

FOR VALUE RECEIVED, Authentidate Holding Corp., a Delaware corporation (the "Borrower"), with its principal offices located at 300 Connell Drive, Berkeley Heights, N.J. 07922, hereby promises to pay to Lazarus Investment Partners, LLLP (the "Holder") at such address as the Holder designates in writing to the Borrower, the principal sum of FIVE HUNDRED AND THIRTY TWO THOUSAND, EIGHT HUNDRED AND ELEVEN DOLLARS ($532,811) (the "Principal Amount"), on the earlier of the Maturity Date stated above, or the Accelerated Payment Date (as defined below). This Note is a direct obligation of the Borrower. This Note is being issued pursuant to that certain Note Exchange Agreement dated as of December 15, 2015 among the Borrower and the original holder of the Note (the "Exchange Agreement"). By its acceptance of this Note, each Holder agrees to be bound by the terms of the Exchange Agreement. This Note is a direct obligation of the Borrower.

1.            Interest on this Note shall be computed at the rate of 20% per annum, payable in arrears on the Maturity Date or the Accelerated Payment Date, as the case may be, at which time all accrued and unpaid interest shall be immediately due and payable. All computations of interest payable hereunder shall be on the basis of a 365-day year and actual days elapsed in the period for which such interest is payable. Accrued interest on the outstanding principal amount shall be due and payable on the Maturity Date or the Accelerated Payment Date in cash. Payments of all amounts due hereunder shall be made in lawful money of the United States.

2.            Payment of the Principal Amount of this Note, and interest thereon, shall be made upon the surrender of this Note to the Borrower, at its chief executive office (or such other office within the United States as shall be designated by the Borrower to the Holder hereof) (the "Designated Office"), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. If the Maturity Date (or the Accelerated Payment Date) shall be a Saturday or a Sunday or shall be a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday. For purposes of this note, a "month" shall mean a 30 day period.

3.             As used herein, the term "Accelerated Payment Date" shall mean the first to occur of (i) June 8, 2016 if  the Company has not entered into a definitive agreement for the acquisition of all of the outstanding membership interests of Peachstate Health Management LLC, (d/b/a AEON Clinical Laboratories) and consummated the initial closing as contemplated by such Definitive Agreement by such date or (ii) 5 days after the closing of a sale of equity or debt securities of the Company, or series of closings, as part of the same transaction, of equity or debt securities within a period of 90 days, in the gross amount of at least $5,000,000 in cash proceeds.
 
 
1


 
4.            Events of Default.

(a)            For purposes of this Note, an "Event of Default" shall consist of any of the following events:

                        (1)            The Borrower shall fail to pay any portion of the Principal Amount of this Note, or accrued but unpaid interest thereon, when the same becomes due and payable, whether at the Maturity Date or at any accelerated date of maturity or at any other date fixed for payment, and such default continues for 10 days or more.

(2)            The Borrower shall voluntarily commence any case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,  or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking other relief with respect to its debts; or a court shall enter an order for relief or any such adjudication or appointment, which case, proceeding or action or order, adjudication, or appointment, as the case may be, remains undismissed, undischarged or unbonded for a period of 60 days, then, or any time thereafter during the continuance of any of such events.

(3)            A final judgment for money damages or order for the payment of money damages in excess of One Hundred and Fifty Thousand Dollars ($150,000) (exclusive of amounts covered by insurance) shall be entered against the Borrower, which has not been vacated or stayed within 15 days of entry.
 
(4)            Any material representation or warranty of the Borrower herein or in the Purchase Agreement shall prove to have been false in any material respect upon the date when made.

(5)            The occurrence of a default (after giving effect to any grace periods or rights to cure held by the Borrower) under any material indebtedness of the Borrower resulting from other than the failure to timely pay interest or principal of such indebtedness which results in the acceleration of the maturity of such indebtedness.

(6)            The Borrower shall liquidate, dissolve, terminate or suspend its business operations.

(b)            Acceleration of Payment. If an Event of Default (other than an Event of Default specified in Section 4(a)(2) hereof with respect to the Company) occurs and is continuing, the Holder, by written notice to the Company, may declare due and payable the principal amount of this Note, plus accrued and unpaid interest thereon. Upon a declaration of acceleration, such principal and accrued but unpaid interest shall be immediately due and payable. If an Event of Default specified in Section 4(a)(2) occurs with respect to the Company, the principal of this Note shall become and be immediately due and payable, without any declaration or other act on the part of the Holder. Further, upon an Event of Default, from such date of the Event of Default, Holder shall be entitled, and this Note shall bear interest at the rate of 2.48% per month until such Event of Default is cured. Upon the payment in full of the amounts due under this Note, the Holder shall promptly surrender this Note to or as directed by the Borrower.
  
 
2

 
(c)           Collections. If an Event of Default with respect to this Note occurs and is continuing, the Holder may pursue any available remedy by proceeding at law or in equity to collect the defaulted payment or to enforce the performance of any provision of this Note. Notwithstanding any other provision in this Note, the Holder of this Note shall have the right, which is absolute and unconditional, to receive payment of the principal in respect of the Notes, and accrued but unpaid interest thereon, held by the Holder, on or after the final Maturity Date, or to bring suit for the enforcement of any such payment on or after such date, and such rights shall not be impaired or affected adversely without the consent of the Holder.

(d)           No Exclusive Right or Remedy. Except as otherwise provided herein, no right or remedy conferred in this Note upon the Holder is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.  No delay or omission of the Holder of this Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein.  Every right and remedy given by this Section 4 or by law to the Holder may be exercised from time to time, and as often as may be deemed expedient, by the Holder.

5.            Transferability; Loss and Replacement.

(a)            This Note has not been registered under the Securities Act, or the securities laws of any state or other jurisdiction.  Neither this Note nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of (a "Transfer") in the absence of registration under the Securities Act and any applicable state securities laws, or unless (i) such transaction is exempt from, or not subject to, registration under the Securities Act or the securities laws of any state or other jurisdiction and (ii) is made in compliance with applicable federal and state statutory resale restrictions, if any.  The Holder by its acceptance of this Note agrees that it shall not offer, sell, assign, transfer, pledge, encumber or otherwise dispose of this Note or any portion thereof or interest therein other than in a minimum denomination of $50,000 principal amount (or any integral multiple of $10,000 in excess thereof) and then (other than with respect to a Transfer pursuant to a registration statement that is effective at the time of such Transfer) only (a) to the Borrower, (b) to an affiliate of the Holder, (c) to a Person it reasonably believes to be an "accredited investor" within the meaning of Rule 501(a) under the Securities Act, or (d) pursuant to a transaction in compliance with Rule 144 or Rule 144A under the Securities Act, and in the case of (b), (c) and (d) above in which the transferor furnishes the Borrower with such certifications, legal opinions or other information as the Borrower may reasonably request to confirm that such transfer is being made pursuant to  an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. 
 
 
3


 
(b)            By receipt and acceptance of this Note, Holder and any permitted transferee represents and warrants to the Borrower that (i) it is an "accredited investor" as defined in Rule 501(a) under the Securities Act; (ii) either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Note, and has so evaluated the merits and risks of such investment; (iii) is able to bear the economic risk of an investment in the Note and, at the present time, is able to afford a complete loss of such investment; (iv) understands that the Note will be characterized as "restricted securities" under U.S. federal securities laws and have not been and are not being registered under the Securities Act or any state securities laws, must be held indefinitely and may not be offered for sale, sold, assigned or transferred except in accordance therewith and (vii) it has reviewed the Borrower's filings with the Securities and Exchange Commission ("SEC Reports") and has been afforded (A) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Borrower concerning the terms and conditions of this Note and the merits and risks of the prospective investment in the Note and the Borrower generally and, (B) it has access to information about the Borrower and its subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate the terms and conditions of this Note and the merits and risks of the prospective investment in the Borrower.
 
(c)            The Transfer of this Note is registrable on the books of the Borrower upon surrender of this Note for registration of Transfer at the Borrower's designated office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Borrower duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  Prior to due presentation of this Note for registration of Transfer, the Borrower and any agent of the Borrower may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note be overdue, and neither the Borrower nor any such agent shall be affected by notice to the contrary. Upon presentation of this Note for registration of Transfer at the Borrower's designated office accompanied by (i) certification by the transferor that such Transfer is in compliance with the terms hereof and (ii) by a written instrument of Transfer in a form approved by the Borrower executed by the Holder, in person or by the Holder's attorney thereunto duly authorized in writing, and including the name, address and telephone and fax numbers of the transferee and name of the contact person of the transferee, such Note shall be transferred on the Note Register, and a new Note of like tenor and bearing the same legends shall be issued in the name of the transferee and sent to the transferee at the address and c/o the contact person so indicated.  Transfers and exchanges of Notes shall be subject to such additional restrictions as are set forth in the legends on the Notes and to such additional reasonable regulations as may be prescribed by the Borrower as specified herein.  Successive registrations of Transfers as aforesaid may be made from time to time as desired, and each such registration shall be noted on the Note register. No Transfer shall be allowed except to an "accredited investor" as defined under the rules and regulations of the Securities and Exchange Commission.
 
(d)            Upon receipt by the Borrower of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and in the case of loss, theft or destruction, receipt of indemnity reasonably satisfactory to the Borrower and upon surrender and cancellation of this Note, if mutilated, the Borrower will deliver a new Note of like tenor and dated as of such cancellation, in lieu of such Note.
 
 
4


 
6.            Miscellaneous.

(a)            This Note constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Neither this Note nor any term hereof may be amended or waived orally or in writing, except that any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), and such amendment or waiver shall be applicable upon the approval of the Borrower and the Holder.

(b)            This Note and the rights and obligations of the Holder and of the undersigned shall be governed and construed in accordance with the laws of the State of New York.

(c)            Upon the occurrence and during the continuance of an Event of Default under this Note, the Borrower shall, upon demand, pay to the Holder the amount of any and all reasonable costs and expenses (including reasonable attorneys' fees) that Holder may incur in connection with the enforcement or collection of this Note.
 
(d)          No failure or delay on the part of the Holders hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies.

(e)            The Borrower hereby, to the fullest extent permitted by applicable law, waives presentment, demand, notice (including without limitation notice of default (except as otherwise specifically set forth herein), notice of protest, notice of intention to accelerate maturity, notice of acceleration of maturity and notice of nonpayment or dishonor), protest and all other demands and notices in connection with delivery, acceptance, performance, default, acceleration or enforcement of or under this Note, and the bringing of suit and diligence in taking any action to collect amounts owing hereunder or in proceeding against any of the rights and properties securing payment hereof, and is directly and primarily liable for the amount of all sums owing or to be owing hereon.  No extension of the time for the payment of this Note made by agreement with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Borrower under this Note.

(f)            To the extent that Holder receives any payment on account of any of Borrower's obligations under this Note, and any such payment(s) or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, subordinate and/or required to be repaid to a trustee, receiver or any other person or entity under any bankruptcy act, state or federal law, common law or equitable cause, then, to the extent of such payment(s) received, the Borrower's obligations or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment(s) had not been received by the Holder and applied on account of Borrower's obligations.
 
 
5


 
(g)            Section headings used herein are for convenience of reference only, are not part of this Note and shall not affect the construction of, or be taken into consideration in interpreting, this Note.
 
(h)            If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note 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 the Borrower is at any time required or obligated to pay interest hereunder at a rate that would be in excess of a statutory or legally permitted rate, then the rate of interest shall be deemed to be immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and any prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of this Note. 

(i)            All notices, offers, acceptance and any other acts under this Note (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted next business day delivery, or by facsimile or email delivery followed by overnight next business day delivery to the Borrower at the address set forth above  (or such other address as the Borrower may by notice to the Holder may designate from time to time) and to the Holder at the address set forth above (or such other address as the Holder by notice to the Borrower may designate from time to time).  Time shall be counted to, or from, as the case may be, the date of delivery.


[Signature Page Follows]
 
 
6


IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the Issuance Date.

BORROWER:

AUTHENTIDATE HOLDING CORP.

 
By:   /s/ William P. Henry  
Name:
Title:
 




 
 
7
EX-99.D 5 ex_d.htm EXHIBIT D
Exhibit D
 
 
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT (AS DEFINED BELOW), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT (II) UNLESS SOLD OR TRANSFERRED TO A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
AUTHENTIDATE HOLDING CORP.
COMMON STOCK PURCHASE WARRANT
No. 2015 B-2
December 15, 2015

THIS CERTIFIES THAT, for value received, the Holder is entitled to purchase, and AUTHENTIDATE HOLDING CORP., a Delaware corporation (the "Company"), promises and agrees to sell and issue to the Holder, at any time, or from time to time, during the Exercise Period, up to ONE MILLION (1,000,000) shares of Common Stock, par value $0.001 per share (the "Common Stock"), of the Company, at the Exercise Price, subject to the provisions and upon the terms and conditions hereinafter set forth. This Warrant is issued by the Company pursuant to that certain Note Exchange Agreement dated as of December 15, 2015 (the "Exchange Agreement") pursuant to which the Company
has agreed to issue this Warrant to the initial Holder in partial consideration of the agreement by such Holder to surrender the Original Note (as defined in the Exchange Agreement) in consideration for the issuance by the Company of a new note (a "New Note") on the terms described in the Exchange Agreement.

1.            Definitions of Certain Terms.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Exchange Agreement. In addition to the terms defined elsewhere in this Warrant, the following terms have the following meanings:
 
(a)            "Business Day" means a day on which banks are open for business in the city of New York.
 
(b)            "Closing Price" means the last reported sale price of the Company's Common Stock as reported on the principal Trading Market for the Company's Common Stock on the date in question.
 
(c)            "Commission" means the U.S. Securities and Exchange Commission.
 
(d)             "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
 
(e)            "Exercise Price" means the price at which the Holder may purchase one share of Common Stock upon exercise of this Warrant as determined from time to time pursuant to the provisions hereof. The initial Exercise Price is $0.30 per share, subject to adjustment as provided herein.
 
(f)            "Expiration Date" means the 54-month anniversary of the Initial Exercise Date.
 
 
1

 
(g)            "Holder" means a record holder of the Warrant or shares of Common Stock obtained or obtainable upon exercise of the Warrant, as applicable.  The initial Holder is Lazarus Investment Partners, LLLP.
 
(h)            "Initial Exercise Date" means the first Business Day following the twelve-month anniversary of the Issue Date; provided, however, in the event that the Company enters into a definitive agreement for the acquisition of all of the outstanding membership interests of Peachstate Health Management LLC, (d/b/a AEON Clinical Laboratories) (the "Definitive Agreement") and consummates the initial closing as contemplated by such Definitive Agreement, then the "Initial Exercise Date" of this Warrant shall be the date that is the three (3) year anniversary date of the initial closing under such Definitive Agreement.
 
(i)            "Issue Date" means December 15, 2015.
 
(j)            "Securities Act" means the Securities Act of 1933, as amended.
 
(k)            "Warrant" means this Common Stock purchase warrant and any warrant or warrants hereafter issued as a consequence of the exercise or transfer of this warrant in whole or in part.
 
2.            Exercise of Warrant.
 
(a)            Manner of Exercise.
 
(i)            Cash Exercise.  This Warrant may be exercised, in whole or in part, at any time or from time to time, during the period commencing as of 9:30:01 a.m., New York time, on the Initial Exercise Date and ending as of 5:30 p.m., New York time, on the Expiration Date (the "Exercise Period"), for ONE MILLION (1,000,000) fully paid and non-assessable shares of Common Stock (the "Warrant Shares"), for an exercise price per share equal to the Exercise Price, by delivery to the Company at its headquarters, or at such other place as is designated in writing by the Company, of:
 
(1)            a duly executed Notice of Exercise, substantially in the form of Attachment I attached hereto and incorporated by reference herein;
 
(2)            this Warrant; and
 
(3)            subject to Section 2(a)(ii) below, payment of an amount in cash equal to the product of the Exercise Price multiplied by the number of Warrant Shares being purchased upon such exercise, with such payment being in the form of (i) a wire transfer of immediately available U.S. funds to an account designated in writing by the Company or (ii) cancellation of indebtedness of the Company held by the Holder at the time of exercise.
 
The date on which the Company receives the Notice of Exercise, this Warrant, and the Exercise Price payable with respect to the Warrant Shares being purchased shall be deemed to be the date of exercise (the "Date of Exercise").
(ii)            Cashless Exercise. Notwithstanding the provisions of Section 2(a)(i)(3) above (requiring payment by wire transfer or debt cancellation), the Company agrees that, if at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then Holder shall have the right at such time to exercise this Warrant in full or in part on a cashless basis, computed using the following formula:
 
 
2

 
X = Y (A - B)
        A
Where:

X = The number of Warrant Shares to be issued to the Holder pursuant to this cashless exercise;

Y =  The number of Warrant Shares in respect of which the net issue election is made;

A =  The Fair Market Value  (as defined below) of one Warrant Share at the time the cashless exercise election is made; and

B =  The Exercise Price then in effect at the time of such exercise.

The term "Fair Market Value" shall mean, on any given day: (A) if the class of Warrant Shares is exchange-traded, the average of the closing sales prices per share of the class of Warrant Shares for the ten (10) consecutive Trading Days ending on the day that is two (2) Trading Days prior to the applicable date of determination of Fair Market Value; or (B) if the class of Warrant Shares is not listed or admitted to trading on any securities exchange but is regularly traded in any over-the-counter market, then the average of the bid and ask prices per share of the class of Warrant Shares for the ten (10) consecutive Trading Days ending on the day that is two (2) Trading Days prior to the applicable date of determination of Fair Market Value; or (C) if the class of Warrant Shares is not traded as described in clauses (A) or (B), then the per share fair market value of the class of Warrant Shares as determined in good faith by the Company's Board of Directors.
(b)            Delivery of Certificates.  Certificates for Warrant Shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder's prime broker with the Depository Trust Company ("DTC") through its Deposit Withdrawal Agent Commission system if the Company is a participant in such system and such Warrant Shares are eligible for delivery in such a manner, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within three Business Days from the delivery to the Company of the Notice of Exercise, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (the "Delivery Period").  This Warrant shall be deemed to have been exercised on the date on which this Warrant is surrendered and payment of the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date on which all of the criteria described in the immediately preceding sentence have occurred, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. If fewer than all of the Warrant Shares purchasable under the Warrant are purchased, the Company will, upon such partial exercise, execute and deliver to the Holder a new Warrant (dated as of the Issue Date), in the same form and tenor as this Warrant, evidencing that portion of the Warrant not exercised.
 
(c)            Delivery of Electronic Shares. In lieu of delivering physical certificates representing the Warrant Shares issuable upon exercise (provided that the transfer agent is participating in the DTC Fast Automated Securities Transfer program and provided further that the Holder provides the transfer agent with information required in order to issue such Warrant Shares to the Holder electronically), upon the request of the Holder as set forth in the Notice of Exercise, but only if  the Warrant Shares may be issued without restrictive legends, the Company shall cause its transfer agent to electronically transmit, within the Delivery Period, the Warrant Shares issuable upon exercise to the Holder by crediting Holder's account with DTC through its Deposit Withdrawal Agent Commission system.  Any delivery not effected by electronic transmission shall be effected by delivery of physical certificates.
 
 
3

 
(d)            No Fractional Shares. If a fractional share of Warrant Shares would, but for the provisions of this Section 2(d), be issuable upon exercise of the rights represented by this Warrant, the Company shall (i) round a half share or greater to be delivered to Holder up to the next whole share and (ii) round a less-than-half share to be delivered to Holder down to the nearest whole share.
 
(e)            No Charge to Holder Upon Issuance.  The issuance of Warrant Shares upon exercise of this Warrant shall be made without charge to Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares (other than any transfer taxes resulting from the issuance of Warrant Shares to any person other than Holder).
 
(f)            Reservation of Shares.  During the Exercise Period, the Company shall reserve and keep available out of its authorized but unissued Common Stock such number of Warrant Shares issuable upon the full exercise of this Warrant.  All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges and not subject to the pre-emptive rights of any holder of Common Stock or any other class or series of stock of the Company.  During the Exercise Period, the Company shall not take any action which would cause the number of authorized but unissued Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of this Warrant.
 
(g)            Limitations on Exercises.
 
            (A)            Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by the Holder hereof to the extent (but only to the extent) that after giving effect to such issuance after exercise, such Holder or any of its affiliates, as a result of such exercise, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the 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 such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company, in both cases which are subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 2(g) applies, the determination of whether this Warrant is exercisable  (in relation to other securities owned by the Holder together with any Affiliates) and of which such securities shall be exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder's determination of whether this Warrant may be exercised (in relation to other securities owned by the Holder together with any Affiliates), in each case subject to the Beneficial Ownership Limitation. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Exercise that such notification has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(g), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company's most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company's transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the 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 conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The "Beneficial Ownership Limitation" shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant held by the Holder. The Holder, upon not less than 61 days' prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(g), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the Beneficial Ownership Limitation provisions of this Section 2(g) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(g) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
 
4

 
                          (B)            Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval (as defined in the Exchange Agreement), then (i) the Company may not issue upon exercise of this Warrant a number of shares of Common Stock, which, when aggregated with any shares of Common Stock issued on or after the Closing Date and prior to such exercise (1) in connection with the conversion of any New Notes issued pursuant to the Exchange Agreement or Other Exchange Agreement (defined below) and (2) in connection with the exercise of any Warrants issued pursuant to the Exchange Agreement or Other Exchange Agreement, would exceed 15.1% of the number of shares of the Company's Common Stock outstanding on the Trading Day immediately preceding the Issue Date (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the "Issuable Maximum") and (ii) the Company shall not be obligated to issue any Warrant Shares if such issuance would otherwise violate the Company's obligations under the rules or regulations of its principal Trading Market. Each Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the original principal amount of the Holder's New Note by (y) the aggregate original principal amount of all promissory notes issued pursuant to the Exchange Agreement or another substantially similar note exchange agreement (the "Other Exchange Agreement"). In addition, each Holder may allocate its pro-rata portion of the Issuable Maximum among New Notes and Warrants held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Purchaser no longer holds any New Notes or Warrants and the amount of shares issued to such Purchaser pursuant to its New Notes and Warrants was less than such Purchaser's pro-rata share of the Issuable Maximum. The Company and the Holder understand and agree that shares of Common Stock issued to and then held by the Holder as a result of exercises of Warrants shall not be entitled to cast votes on any resolution to obtain Shareholder Approval pursuant hereto.
(h)            Buy-In.  Notwithstanding anything else to the contrary contained herein, in addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the applicable Warrant Shares purchased upon the proper exercise hereof or credit the Holder's balance account with DTC, as applicable, on or before the end of the Delivery Period (other than a failure caused by any incorrect or incomplete information provided by Holder to the Company hereunder), and if after such date the Holder purchases shares of Common Stock to deliver in satisfaction of a sale by the Holder of Warrant Shares that the Holder anticipated receiving from the Company upon exercise of this Warrant (a "Buy-In"), then the Company shall, within three Business Days after the Holder's request, (1) pay cash to the Holder in the amount by which (x) the Holder's total purchase price (including commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue, by (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored, or deliver to the Holder the number of Warrant Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company.  Nothing herein shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing the Securities as required pursuant to the terms hereof.
 
5

 

3.            Adjustments in Certain Events.  The number, class, and price of Warrant Shares for which this Warrant may be exercised are subject to adjustment from time to time upon the happening of certain events as follows:

(a)            Subdivisions, Combinations and Other Issuances.  If the outstanding shares of the Company's Common Stock are divided into a greater number of shares, by forward stock split or otherwise, or a dividend in stock is paid on the Common Stock, then the number of shares of Warrant Shares for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately reduced.  Conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, by reverse stock split or otherwise, then the number of Warrant Shares for which the Warrant is then exercisable will be proportionately reduced and the Exercise Price will be proportionately increased.  The increases and reductions provided for in this Section 3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity of the Company obtainable on exercise of the Warrants nor the price payable for such percentage upon such exercise will be affected by any event described in this Section 3(a).
(b)            Merger, Consolidation, Reclassification, Reorganization, Etc.  In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of all or substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so that the Holder will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares of stock or other securities or property to which the Holder would have been entitled if, immediately prior to such event, the Holder had held the number of Warrant Shares obtainable upon the exercise of the Warrant.  In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Holder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant.  The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the Holder, if not the Company, agrees to be bound by and comply with the provisions of this Warrant.
 
6

 
(c)            If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of Common Stock, such number of securities will be distributed to the Holder or its assignee upon exercise of its rights hereunder as such Holder or assignee would have been entitled to if this Warrant had been exercised prior to the record date for such distribution.  The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities to which the Holder or its assignee is entitled under this Section 3(c).
4.            No Rights as a Stockholder.  Nothing contained in this Agreement shall be construed as conferring upon the Holder any rights whatsoever as a stockholder of the Company, either at law or in equity, including without limitation, or Holders the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors the right to receive dividends or any other matter.
5.            Restrictions on Transfer; Legends.
(a)            Registration or Exemption Required. Assuming the accuracy of the representations and warranties of the Holder contained in herein, this Warrant has been issued in a transaction exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder and exempt from state registration or qualification under applicable state laws. The Holder acknowledges that it has been advised by the Company that this Warrant and the Warrant Shares issuable upon exercise thereof have not been registered under the Securities Act. Neither this Warrant nor the Warrant Shares may be pledged, transferred, sold or assigned except pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act and applicable state laws. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act or a "qualified institutional buyer" as defined in Rule 144A(a) under the Securities Act.
 
(b)            Representations of Holder. The Holder represents and warrants that it has acquired this Warrant and will acquire the Warrant Shares for its own account for investment and not with a view to the sale or distribution thereof or the granting of any participation therein, and that the Holder has no present intention of distributing or selling to others any of such interest or granting any participation therein. The Holder acknowledges that the Warrant and Warrant Shares must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or registered or qualified under any applicable state securities or "blue-sky" laws or is exempt from registration and/or qualification. The Holder has no need for liquidity in its investment in the Company, and is able to bear the economic risk of such investment for an indefinite period and to afford a complete loss thereof. The Holder is an "accredited investor" as such term is defined in Rule 501 (the provisions of which are known to the Holder) promulgated under the Act.
 
 
7

 
(c)            Restrictive Legend. The Holder understands that until such time as the Warrant Shares have been registered under the Securities Act, or otherwise may be sold pursuant to Rule 144 under the Securities Act or an exemption from registration under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, this Warrant and the Warrant Shares, as applicable, shall bear a restrictive legend in substantially the form set forth on the cover page of this Warrant (and a stop-transfer order may be placed against transfer of the certificates for such securities).
 
(d)            Disposition of Warrant or Warrant Shares.  With respect to any offer, sale or other disposition of this Warrant or any Warrant Shares prior to registration of such Warrant Shares, the Holder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with evidence, reasonably satisfactory to the Company (which shall include such representation of the transferee regarding investment intent as the Company may request, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Securities Act as then in effect or any federal or state securities law then in effect) of this Warrant or such Warrant Shares and indicating whether or not under the Securities Act certificates for this Warrant or Warrant Shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law. Upon receiving such written notice and reasonably satisfactory evidence, the Company, as promptly as practicable but no later than seven (7) days after receipt of the written notice, shall notify the Holder that the Holder may sell or otherwise dispose of this Warrant or Warrant Shares, all in accordance with the terms of the notice delivered to the Company.  If the Company determines that the evidence is not reasonably satisfactory to the Company, the Company shall so notify the Holder promptly with details thereof after such determination has been made. Notwithstanding the foregoing, any Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144 under the Act and in compliance with the applicable statutory resale restrictions imposed by state securities laws, provided that the Company shall have been furnished with such information as the Company may reasonably request to provide a reasonable assurance that the provisions of Rule 144 and the applicable resale restrictions imposed by state securities laws have been satisfied.  Each certificate representing this Warrant or the Warrant Shares thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless pursuant to an opinion of counsel for the Holder, such legend is not required in order to ensure compliance with such laws.  The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.
 
(e)            Removal of Restrictive Legends. The certificates evidencing the Warrant Shares  shall not contain any legend restricting the transfer thereof: (A) while a registration statement  covering the sale or resale of the Warrant Shares  is effective under the Securities Act and such legend removal is permitted under applicable securities laws (including compliance with the prospectus delivery requirements of the Securities Act), or (B) following any sale of such Warrant Shares pursuant to Rule 144, or (C) if such Warrant Shares are eligible for sale under Rule 144(b)(1), or (D) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) and the Company shall have received an opinion of counsel to the Holder in form reasonably acceptable to the Company to such effect (collectively, the "Unrestricted Conditions").  The Company shall cause its counsel to issue a legal opinion to its transfer agent if required by the transfer agent to effect the issuance of the Warrant Shares, as applicable, without a restrictive legend or removal of the legend hereunder.  The Company agrees that at such time as the Unrestricted Conditions are met, it will, no later than three (3) Trading Days following the delivery by the Holder to the Company or the transfer agent of a certificate representing Warrant Shares, issued with a restrictive legend, deliver or cause to be delivered to such Holder a certificate (or electronic transfer) representing such Warrant Shares that is free from all restrictive and other legends.
 
 
8

 
(f)            Notwithstanding anything else herein, the Holder agrees that provided that the Company enters into the Definitive Agreement and consummates the initial closing as contemplated by such Definitive Agreement, then prior to the date that is the three (3) year anniversary date of the initial closing under such Definitive Agreement, the Holder shall not, to its knowledge, transfer all or any portion of this Warrant or any of the Warrant Shares to any other person or entity, which person or entity is either (i) the beneficial holder of more than 4.99% of the Common Stock of the Company or (ii) would become, by reason of such transfer, the beneficial holder of more than 4.99% of the Common Stock of the Company; provided that the provisions of this Section 5(f) will terminate and be superseded by that certain lock-up agreement contemplated by the Definitive Agreement upon the Holder's execution of such lock-up agreement.
 
6.            Registration Rights.  The Holder shall be entitled to all of the rights and subject to all of the obligations regarding registration of the shares of Common Stock issuable upon the exercise of this Warrant as described in the Exchange Agreement.
7.            Notices; Adjustments.
(i)            All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (iii) two (2) Business Days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company or to Holder, as applicable, at the respective addresses set forth on the signature page to the Purchase Agreement or at such other address(es) as they may designate, respectively, by ten (10) days advance written notice to the other party hereto.
(ii)            Upon the occurrence of any adjustments pursuant to Sections 3(a) or 3(c) hereof, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment in accordance with the terms hereof and furnish to Holder a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based.  In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date on which any such record is to be taken for the purpose of such dividend or distribution, a notice specifying such date.  In the event of any voluntary dissolution, liquidation or winding up of the Company, the Company shall mail to the Holder, at least ten (10) days prior to the date of the occurrence of any such event, a notice specifying such date.  If the approval of any stockholders of the Company shall be required in connection with any transaction contemplated by Section 3(b) above, then, the Company shall cause to be mailed to the Holder at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating the date on which such transaction is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such transaction. Notwithstanding the immediately preceding sentences, however, if the date on which the Company is obliged to provide notice hereunder to the Holders is prior to a public announcement relating to the events set forth and on such date the Company's securities are traded or quoted on any recognized national securities exchange or quotation system, then such notice shall be provided to each Holder simultaneously with the notice provided to the Company's common stockholders. Failure to give such notice, or any defect therein, shall not, however, affect the legality or validity of any such action.
 
9

 
8.            Non-Circumvention.  The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be reasonably required to protect the rights of the Holder.
9.            Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles, and notwithstanding the fact that one or more counterparts hereof may be executed outside of the state, or one or more of the obligations of the parties hereunder are to be performed outside of the state.
10.            Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant, having terms and conditions identical to this Warrant, in lieu hereof.
11.            Modification and Waiver of Warrants. This Warrant may only be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.
12.            Successors.  This Warrant shall be binding and inure to the benefit of the parties and their respective successors and assigns hereunder; provided that this Warrant may be assigned by Holder only in compliance with the conditions specified in and in accordance with all of the terms of this Warrant.  This Warrant does not create and shall not be construed as creating any rights enforceable by any other person or corporation.
13.            Headings.  The headings used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.
14.            Saturdays, Sundays, Holidays.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
15.            Severability.  If any provision of this Warrant shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of this Warrant.
16.            Execution and Counterparts.  This Warrant may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute only one instrument.  Any one of such counterparts shall be sufficient for the purpose of proving the existence and terms of this Warrant, and no party shall be required to produce an original or all of such counterparts in making such proof.
17.            Acceptance.  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
Signature page to Common Stock Purchase Warrant follows.
 
10

IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to be executed and delivered as of the Issue Date by an officer thereunto duly authorized.
AUTHENTIDATE HOLDING CORP.
 
By:  /s/ William P. Henry
Name:
Title:
Address for Notice:
 
300 Connell Drive, 5th Floor
Berkeley Heights, NJ  07922
 
 

11

ATTACHMENT I
NOTICE OF EXERCISE

TO:            AUTHENTIDATE HOLDING CORP.
               Attention: Chief Financial Officer

The undersigned hereby elects to purchase, pursuant to the provisions of the Common Stock Warrant issued by Authentidate Holding Corp., and held by the undersigned, the original of which is attached hereto, and (check the applicable box):
Tenders herewith payment of the Exercise Price in the form of cash, via wire transfer of immediately available funds, in the amount of $____________ for _________ shares of Common Stock.
Elects the cashless exercise option pursuant to this Warrant, and accordingly requests delivery of _________ shares of Common Stock, net, pursuant to the following calculation:
X = Y (A-B)/A
(       ) =  (_____) [(_____) - (_____)]/(_____)
Where
X =            The number of shares of Common Stock to be issued to the Holder pursuant to  this cashless exercise;

Y =            The number of shares of Common Stock in respect of which the net issue election  is made;

A =            The Fair Market Value of one share of Common Stock, as calculated per the  terms of the Warrant; and

B =            The Exercise Price then in effect as of the date of exercise.
If this box is checked, as long as the Company's transfer agent participates in the DTC Fast Automated Securities Transfer program ("FAST"), and except as otherwise provided in the next following sentence, the Company shall effect delivery of the shares of Common Stock to the Holder by crediting to the account of the Holder or its nominee at DTC (as specified in this Exercise Notice) with the number of shares of Common Stock required to be delivered.  In the event that the Company's transfer agent is not a participant in FAST, or if the shares of Common Stock are not otherwise eligible for delivery through FAST, the Company shall effect delivery of the shares of Common Stock by delivering to Holder or its nominee physical certificates representing such shares.
Information for Delivery of uncertificated Shares by DWAC:

Account Number:                                                                                              
Account Name:                                                                                                            
DTC Number:             
 
12

 
                                                                                               
      If this box is checked, the Holder requests delivery of physical certificates representing the Warrant Shares and requests that such certificates be delivered to the following address:

Name:  ____________________________________________________________
(please typewrite or print in block letters)

Address: __________________________________________________________


Tax I.D. No. or Social Security No.: ____________________________________

If such number of shares shall not be all the shares purchasable upon the exercise of the Warrants evidenced by this Warrant, a new warrant certificate for the balance of such Warrants remaining unexercised shall be registered in the name of and delivered to:
Name:  ____________________________________________________________
(please typewrite or print in block letters)

Address: __________________________________________________________


Tax I.D. No. or Social Security No.: ____________________________________

HOLDER:


Name:
Title:
Date:                                                                                  







13

ATTACHMENT II

[FORM OF ASSIGNMENT]

(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)

FOR VALUE RECEIVED, the undersigned Holder of this Warrant hereby sells, assigns and transfers the foregoing Warrant and all rights evidenced thereby to
Name:
_____________________________________
 
(Please Print)
Address:
 _____________________________________
 
(Please Print)
Tax ID No.:
______________________________________

and does hereby irrevocably constitute and appoint                                         , Attorney, to transfer the within Warrant Certificate on the books of Authentidate Holding Corp., Inc., with full power of substitution.

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

Dated:
Holder: ________________________
 
______________________________
(Print Name)
 
______________________________
(Signature)
 
 

STATE OF ___________)
COUNTY OF  _________) ss:

On this __ day of ___________, before me personally came ________, to me known or who has produced the sufficient identification and who being by me duly sworn, did depose and say that he/she resides at __________________, that he/she, being duly authorized, executed the foregoing instrument on behalf of the holder of such instrument, and acknowledged before me that he/she had the authority to execute same in the name of said entity and did, in fact, execute the same in the capacity as stated herein.


_____________________________
Notary Public
 
 
 
14
EX-99.E 6 ex_e.htm EXHIBIT E
Exhibit E
 
 




December 15, 2015


Authentidate Holding Corp.
Connell Corporate Center
300 Connell Drive, 5th Floor
Berkeley Heights, NJ  07922
Attn: Ian C. Bonnet, Chief Executive Officer

Dear Mr. Bonnet:

Re:            Lockup Agreement of Lazarus Investment Partners, LLLP

The undersigned is the owner ("Securityholder") of the various securities of Authentidate Holding Corp. (the "Company") as set forth on Schedule A to this letter agreement (the "Agreement").

Securityholder understands that the Company is proposing to enter into a transaction with Peachstate Health Management LLC, (d/b/a AEON Clinical Laboratories) a limited liability company formed under the laws of the state of Georgia ("Target"), which provides for the acquisition by the Company (the "Transaction") of all of the outstanding membership interests of Target by the Company such that following the closing of the Transaction, Target will be a wholly-owned subsidiary of the Company. The Transaction is proposed to be accomplished in several steps and the Company intends to enter into a definitive transaction agreement with Target to evidence the terms and conditions of the Transaction (the "Transaction Agreement"). The undersigned Securityholder further understands that it is a condition to the closing of the Transaction that it enters into this Agreement with the Company.

The undersigned Securityholder hereby represents that the Securityholder is the sole holder (either of record or beneficially) of one or more of the following securities issued by the Company, all as described on Schedule A: shares of common stock (the "Common Stock"); shares of convertible preferred stock of the Company (the "Preferred Stock"); Restricted Stock Units (the "RSUs"); Common Stock Purchase Warrants (the "Warrants"); and certain stock options which have expiration dates subsequent to the "Measurement Date" (as defined below) (the "Options").

The shares of Common Stock, shares of Preferred Stock, shares of Common Stock which may be issued upon the conversion of the Preferred Stock, and shares of Common Stock which may be issued upon the vesting of the RSUs may be collectively referred to herein as "Capital Stock". The undersigned further agrees that the term "Capital Stock" shall also include any shares of Common Stock which may be acquired by the undersigned subsequent to the date of this Agreement, including shares of Common Stock which may be issued in payment of dividends on shares of Preferred Stock. The Warrants and Options may be referred to herein as the "Derivative Securities".  For purposes of clarity, the term "Derivative Securities" shall not include shares of Preferred Stock. In addition, shares of Common Stock which may be issued upon the conversion or exercise of any of the Derivative Securities may be referred to herein as the "Underlying Shares". The Derivative Securities, Underlying Shares and the Capital Stock may be referred to herein as the "Covered Securities". Further, as used in this Agreement, the phrase "Measurement Date" means the date that is the three (3) year anniversary of the date of the initial closing as contemplated by the Transaction Agreement; provided that if the Certificate of Amendment (as defined below) is filed with the Delaware Secretary of State, the Measurement Date will thereafter be the first to occur of such three year anniversary and the Expiration Date, as defined therein.
 
1

 

1. Restrictions on Exercise or Conversion of Derivative Securities

(a)            In connection with the Transaction, the Securityholder hereby agrees that effective as of the date of this Agreement (the "Effective Date") and through the occurrence of the Permitted Conversion/Exercise Event (as defined below), none of the Derivative Securities owned by it shall be convertible or exercisable in any manner and the Securityholder shall have no right to convert or exercise such Derivative Securities unless and until the occurrence of the Permitted Conversion/Exercise Event. Accordingly, from and after the Effective Date and until the Permitted Conversion/Exercise Event has occurred, the undersigned Securityholder agrees that any attempt to convert or exercise any of the Derivative Securities shall be null and void.  In addition, notwithstanding anything in any of the certificates or agreements evidencing any of the Derivative Securities to the contrary, during the period from the Effective Date through the occurrence of the Permitted Conversion/Exercise Event, the Company shall not be obligated to reserve any shares of Common Stock from its authorized shares of Common Stock for issuance upon the conversion or exercise of the Derivative Securities.

(b)            As used herein, the "Permitted Conversion/Exercise Event" shall mean the first to occur of (A) the termination of the Transaction Agreement in accordance with its terms or (B) at 12:01 a.m. (Eastern Time) on the Measurement Date.

(c)            Notwithstanding the foregoing, however, the Company agrees that the restrictions set forth in Section 1(a) of this Agreement may terminate prior to the occurrence of the Permitted Conversion/Exercise Event solely with respect to Derivative Securities upon the determination of the board of directors of the Company to waive such restrictions; provided, however, that the consent of a majority of the Series E Directors then serving on the board of directors of the Company (or if there are less than three (3) Series E Directors serving in such capacity at the time of the determination, then all of the Series E Directors must vote in favor of such determination) must be obtained as part of the consent of the board of directors to waive the restrictions set forth in Section 1(a) of this Agreement. As used in this Agreement, the term "Series E Directors" shall have the meaning ascribed to it in that certain Certificate of Designation of Series E Convertible Preferred Stock, as shall be adopted by the Company pursuant to the Transaction Agreement.

2. Transferability Restrictions

(a)            During the period commencing on the Effective Date and ending at 12:01 a.m. (Eastern Time) on the earliest of (A) the Measurement Date, (B) the termination of the Transaction Agreement in accordance with its terms, or (C) any earlier termination of this Agreement, unless sooner waived by the board of directors of the Company (such period referred to herein as the "Lock-Up Period"), the undersigned Securityholder will not, directly or indirectly, through an "affiliate", "associate" (as such terms are defined in the General Rules and Regulations under the Securities Act of 1933, as amended (the "Securities Act")), a family member or otherwise, offer, pledge, hypothecate, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, or transfer or grant any rights with respect thereto in any manner (collectively, a "Transfer"),  any of the Covered Securities (i) to any Person who is  the beneficial or record owner of 5.0% or more of the Company's Common Stock or (ii) to any Person who, to the best of the undersigned Securityholder's knowledge, may become a beneficial owner of 5.0% or more of the Company's Common Stock as a result of such transaction.  The undersigned agrees that prior to any proposed Transfer of a Covered Security, the undersigned Securityholder will send notice to the Company of the proposed Transfer which sets forth the number of Covered Securities to be Transferred and the identity of the transferee (if known), and the undersigned Securityholder will not Transfer any Covered Security without the prior written consent (which may be provided via e-mail) of the Chief Executive Officer of the Company (or his designee), which consent shall not be withheld unless such Transfer would be reasonably likely to result in a material adverse effect on the Company; provided; further, that the Company will use its best efforts to cause the Chief Executive Officer of the Company (or his designee) to respond to the Securityholder no later than 48 hours after the Company receives notice of the proposed Transfer. Further, the undersigned Securityholder will not, during the Lock-Up Period, enter into any swap or any other agreement or any transaction that transfers, in whole or part, directly or indirectly, the economic consequence of the ownership of the Covered Securities without the prior written consent of the Chief Executive Officer of the Company (or his designee), as determined in good faith, to be received in accordance with the provisions of the immediately preceding sentence.
 
2

 

(b)            Notwithstanding the foregoing, however, such Covered Securities may be sold or otherwise transferred in a private transaction to an affiliate of the Securityholder during the Lock-Up Period so long as the acquirer of the Covered Securities by written agreement with the Company entered into at the time of the transfer and delivered to the Company prior to the consummation of such transaction, agrees to be bound by the terms of this Agreement.

(c)            As used in this Agreement, a "Person" shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority. Further, in order to determine the beneficial ownership of a proposed buyer of Covered Securities, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.

3. Other Agreements

      (a)            Intentionally omitted.

(b)            The undersigned Securityholder hereby agrees to the imprinting of a legend on any of the certificates or agreements evidencing the Covered Securities held by it summarizing the restrictions agreed to by it pursuant to this Agreement.

(c)            Following the consummation of the initial closing of the Transaction in accordance with the Transaction Agreement, a Securityholder that was an affiliate of the Company (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) prior to such initial closing but that is no longer an affiliate of the Company following the initial closing and has not been an affiliate for at least 90 days (as determined by the board of directors of the Company) may request that the Company instruct its stock transfer agent to remove all legends on the securities issued by the Company and held by the Securityholder for at least one (1) year that were placed on such securities solely because Securityholder may have previously been an affiliate of the Company. Unless the board of directors otherwise determines, following such a request and upon the delivery by the Securityholder of all certificates, certifications and other documents requested by the Company, the Company shall instruct its stock transfer agent to remove all legends placed on the Company securities held by the Securityholder solely because of its former status as an affiliate of the Company.
 
(d)            At the meeting of the stockholders of the Company to be convened pursuant to the Transaction Agreement, the Company hereby agrees to use commercially reasonable best efforts to seek the approval of its stockholders of an amendment to its certificate of incorporation (the "Certificate of Amendment") to restrict the ability of a person who is not, as of the date hereof, an owner of more than 4.99% of the outstanding shares of the Buyer's Common Stock from becoming an owner of more than 4.99% of the outstanding shares of the Buyer's Common Stock until the occurrence of the Permitted Conversion/Exercise Event. The Company further agrees that if the stockholders of the Company approve the foregoing amendment to the Company's certificate of incorporation, then upon the filing by the Company of the appropriate Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware, the transfer restrictions set forth in Section 2(a) of this Agreement, solely with respect to shares of Common Stock now held or subsequently acquired by the undersigned, shall immediately terminate without any further action on the part of the Company or any Securityholder.
 
3

 

4. Representations of the Securityholder

(a)            The undersigned Securityholder hereby represents that it is the owner of record or beneficially, of all of the Covered Securities, free and clear of any liens, claims and encumbrances, that the Covered Securities have not been assigned, pledged or otherwise transferred, nor has the Undersigned granted or sold to any other person any interest in, option on or any other right of any type or nature, to the Covered Securities.

(b)            The undersigned Securityholder acknowledges and understands that unless and until the Permitted Conversion/Exercise Event occurs, the Securityholder will be unable to convert or exercise the Derivative Securities, except as expressly provided for in this Agreement. It is further agreed and acknowledged that upon the occurrence of the Permitted Conversion/Exercise Event, the restrictions set forth in Section 1 of this Agreement shall automatically expire without any further action on the part of either the Company or the Securityholder.

(c)            The undersigned Securityholder (i) is an investor familiar with the business of the Company, (ii) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of this investment decision and make an informed decision, (iii) has the ability to bear the economic risks of this decision, (iv) has had an opportunity to ask such questions and make such inquiries concerning the Company and has received such information regarding the Company, its business, its financial condition and its prospects as the Securityholder has determined to be necessary, and (v) is an "accredited investor" as that term is defined under Rule 501(a) under Regulation D under the Securities Act (the provisions of which are known to the Securityholder).

(d)            The undersigned Securityholder further represents that it has the full right, power, legal capacity and authority to enter into this agreement and to complete the transactions herein contemplated and that this agreement constitutes a valid and binding obligation of the Securityholder, and is enforceable against the undersigned Securityholder in accordance with its terms.

5. Confidentiality

THIS AGREEMENT MAY BE DEEMED TO CONSTITUTE MATERIAL NON-PUBLIC INFORMATION OF THE COMPANY.  SECURITIES LAWS RESTRICT ANY PERSON WHO HAS MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY (INCLUDING THE MATTERS WHICH ARE THE SUBJECT OF THIS AGREEMENT) FROM PURCHASING OR SELLING SECURITIES OF THE COMPANY OR FROM COMMUNICATING SUCH INFORMATION TO ANY OTHER PERSON.  THE SECURITYHOLDER (BY ACCEPTANCE OF THIS AGREEMENT) AGREES THAT IT SHALL NOT PURCHASE OR SELL SECURITIES OF THE COMPANY WITH THE KNOWLEDGE OF THE MATTERS DESCRIBED IN THIS AGREEMENT UNTIL SUCH TIME AS THE MATTERS DESCRIBED IN THIS AGREEMENT ARE PUBLICLY DISCLOSED BY THE COMPANY OR ARE OF NO FORCE OR EFFECT.
 
4

 

THE SECURITYHOLDER (BY RECEIPT OF THIS AGREEMENT) AGREES TO KEEP THE COMPANY'S CONFIDENTIAL INFORMATION (INCLUDING THE INFORMATION CONTAINED HEREIN) STRICTLY CONFIDENTIAL AND NOT TO DISCLOSE SUCH CONFIDENTIAL INFORMATION (INCLUDING THE EXISTENCE OR CONTENTS OF THIS AGREEMENT) TO ANYONE OTHER THAN ITS ADVISORS, INCLUDING COUNSEL AND ACCOUNTANTS, FOR THE SOLE PURPOSE OF EVALUATING THE MATTERS DESCRIBED HEREIN; PROVIDED THAT THE SECURITYHOLDER MAY DISCLOSE SUCH CONFIDENTIAL INFORMATION TO ITS PARTNERS (PROVIDED, SUCH RECIPIENT IS SUBJECT TO APPROPRIATE CONFIDENTIALITY RESTRICTIONS SUBSTANTIALLY SIMILAR IN ALL MATERIAL RESPECTS TO THE CONFIDENTIALTY REQUIREMENTS SET FORTH HEREIN), IN FILINGS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED OR AS OTHERWISE REQUIRED BY APPLICABLE SECURITIES LAWS. THE SECURITYHOLDER AGREES TO USE THE INFORMATION CONTAINED HEREIN ONLY FOR THE PURPOSE OF EVALUATION THE MATTERS DESCRIBED IN THIS AGREEMENT AND FOR NO OTHER PURPOSE. ACCORDINGLY, THE SECURITYHOLDER AGREES NOT TO PURCHASE, SELL, HYPOTHECATE, PLEDGE OR HEDGE ANY SECURITIES OF THE COMPANY UNTIL SUCH TIME AS THE MATTERS DESCRIBED IN THIS AGREEMENT ARE PUBLICLY DISCLOSED BY THE COMPANY (WHICH THE COMPANY AGREES TO DO BEFORE OR PROMPTLY AFTER THE INITIAL CLOSING) OR OF NO FORCE OR EFFECT.

6. General Matters

(a)            The undersigned Securityholder hereby agrees that the arrangements and restrictions set forth herein shall not give rise to any breach by the Company of the Company's obligations under any of the Covered Securities held by it.

(b)            This Agreement may be signed in counterparts and shall become effective as if executed in a single, complete document upon its execution by the parties.  Facsimile signatures of the undersigned parties will have the same force and effect as original signatures. This Agreement contains the entire agreement and understanding of the parties with respect to its subject matter and supersedes all prior arrangements and understandings between the parties, either written or oral, with respect to its subject matter. The provisions of this Agreement shall not be waived, modified, amended, altered or supplemented, in whole or in part, except by a writing signed by all the parties hereto. The failure or neglect of the Company to insist, in any one or more instances, upon the strict performance of any of the terms or conditions of this Agreement, or its waiver of strict performance of any of the terms or conditions of this Agreement, shall not be construed as a waiver or relinquishment in the future of such term or condition, but the same shall continue in full force and effect.

(c)            Notwithstanding any other provision of this Agreement, this Agreement will not become effective unless prior to, contemporaneously herewith, or within thirty (30) days following the date hereof, agreements that are in form and substance substantially similar in all material respects to this Agreement ("Substantially Identical Agreements" and together with this Agreement "Lockup Agreements") have been signed by all Persons set forth on Schedule C to this Agreement which such Persons constitute: (i) all the executive officers and directors of the Company as of the date hereof, (ii) each holder of 5% or more of the outstanding Common Stock of the Company determined in the same manner as is used for determining whether a holder is subject to Section 13(d) under the Securities Exchange Act of 1934, as amended ("5% Holder"), and (iii) each Person, to the actual knowledge of the Company, which would currently be a 5% Holder if all Derivative Securities held by it were currently exercisable or convertible ("Other 5% Holder") without regard to any beneficial ownership limitations or other restrictions on exercise or conversion set forth in the certificates representing such Derivative Securities held by it. Schedule C lists all Persons described in clauses (i) through (iii) above that are requested to execute the Lockup Agreements pursuant to this Section.  The term "Signing Holders" will mean all persons and entities who have signed Lockup Agreements, including the Securityholder under this Agreement, and the term "Diluted Holdings" shall mean all shares of Common Stock held by a holder, together with all shares of Common Stock issuable upon exercise or conversion of all Preferred Stock, Derivative Securities and other securities held by such holder which are convertible into or exercisable for shares of Common Stock of the Company.
 
5

 

(d)            Notwithstanding any other provision of this Agreement, (i) prior to the date that the Company files with the Secretary of State of the State of Delaware the Certificate of Amendment, the Company will not terminate, release, waive or otherwise modify the restrictions of Section 2(a) of this Agreement on any shares of Capital Stock for any Signing Holder unless the same is offered to all Signing Holders, determined on a pro rata basis, in proportion to the Diluted Holdings of the requesting Signing Holder which the Company agrees to release to all the Diluted Holdings of the requesting Signing Holder immediately prior to such release; in each case subject to a Lockup Agreement; (ii) the Company will not terminate, release, waive or otherwise modify the provisions of paragraph 1(a) with respect to Derivative Securities held by any Signing Holder, unless the same is offered to all Signing Holders with respect to the Derivative Securities held by the Signing Holders on a pro rata basis, in proportion to  the Derivative Securities of the requesting Signing Holder which the Company agrees to release to all the Derivative Securities of the requesting Signing Holder immediately prior to such release; in each case subject to a Lockup Agreement; and (iii) the Company will not give its consent to any Transfer requested by a Signing Holder under paragraph 2(a) above if the Transfer could adversely affect any other Signing Holder's ability to obtain the Company's consent of a similar Transfer of the Selling Percentage (as defined below) of its Diluted Holdings unless all Signing Holders are notified and permitted to sell their pro rata percentage of their Diluted Holdings (as determined in accordance with clause (i) of this Section 6(d)).  The term "Selling Percentage" means the percentage that the number of shares of Covered Securities that a Signing Holder may Transfer as determined in accordance with clause (i) of this Section 6(d).

The Company agrees that in order to best ensure the fair and reasonable exercise of rights pursuant to this Section 6(d) by the Signing Holders, the Company shall, upon its receipt by a requesting Signing Holder of any request to Transfer Covered Securities or to take any action otherwise contemplated in this Section 6(d), the Company shall promptly notify the other Signing Holders of the request submitted to the Company and shall advise such other Signing Holders of their rights hereunder. In the event that following such notice, the Company determines that to permit Signing Holders to exercise their rights hereunder would adversely affect the Company or the other Signing Holders, then the Company shall have the authority to (i) deny any requested Transfers of Capital Stock or conversions or exercises of Derivative Securities or (ii) proportionally reduce, as determined in the first paragraph of this Section 6(d), the number of Covered Securities that the Signing Holders may Transfer or the number of Derivative Securities that the Signing Holders may convert or exercise, as the case may be. For the purpose of clarity, to the extent a Signing Holder wishes to Transfer Covered Securities or convert or exercise Derivative Securities, such action must be taken within 30 days of the date that the Company notifies the Signing Holders of the extent to which such action may be taken pursuant to this Section 6(d), following which, the right of a Signing Holder to Transfer such Covered Securities or convert or exercise such Derivative Securities shall expire unless it subsequently requests another opportunity to take such action.

(e)            This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. The undersigned parties hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waive, and agree 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.
 
 
6


 
(f)            The undersigned Securityholder is not entitled to cancel, terminate or revoke this Agreement and it shall survive the death or disability of the Securityholder and shall be binding upon his/her/its heirs, executors, administrators, successors, legal representatives, and permitted assigns.

(g)            The Securityholder acknowledges and agrees that the Company's remedy at law for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by the Securityholder of any of the provisions of this Agreement it is agreed that, in addition to its remedy at law, the Company shall be entitled, without posting any bond, to equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.  Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach.
 
(h)            The Securityholder has been advised and had the opportunity to consult with an attorney or other advisor prior to executing this agreement. The Securityholder understands, confirms and agrees that neither counsel to the Company (Becker & Poliakoff LLP) nor counsel to Target (Troutman & Sanders LLP) has acted or is acting as counsel to the Securityholder and that the Securityholder has not relied upon any legal advice except as provided by its own counsel. The Securityholder represents and warrants that it has duly authorized its representative to execute this agreement on its behalf.


Remainder of page intentionally left blank; signature page follows.
 
 
 
7

IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed as of the date first set forth above.

SECURITYHOLDER:


Lazarus Investment Partners LLLP
By:  Lazarus Management Company LLC, its General Partner

/s/ Justin B. Borus        
Signature

Print Name: Justin B. Borus
Title:  Manager


Agreed to and accepted:

Authentidate Holding Corp.



/s/ Ian C. Bonnet      
By: Ian C. Bonnet
Title: Chief Executive Officer

 
 
8
EX-99.F 7 ex_f.htm EXHIBIT F
Exhibit F
 
STOCKHOLDER VOTING AGREEMENT

THIS STOCKHOLDER VOTING AGREEMENT (this "Agreement") is made and entered into as of December 15, 2015, by and among Peachstate Health Management LLC, a limited liability company formed under the laws of the state of Georgia ("Target"), Authentidate Holding Corp., a Delaware corporation ("Buyer"), and the undersigned stockholders (each, a "Stockholder" and, collectively, the "Stockholders") of Buyer.

Preamble

Concurrently with the execution and delivery hereof, Buyer, Target and certain owners of membership interests of Target (the "Target Owners") are entering into an acquisition agreement of even date herewith (as it may be amended or supplemented from time to time pursuant to the terms thereof, the "Transaction Agreement"), which provides for the acquisition by Buyer (the "Transaction") of all of the outstanding ownership interests of Target by Buyer such that following the closing of the Transaction, Target will be a wholly-owned subsidiary of Buyer.

Each Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of such number of shares of each class of capital stock of Buyer as is indicated on the signature page of this Agreement.

In consideration of the execution and delivery of the Transaction Agreement by Buyer, Target and the Target Owners, Stockholders desire to agree to vote the Shares (as defined herein) over which Stockholder has voting power so as to facilitate the consummation of the Transaction, as further provided herein.

NOW, THEREFORE, intending to be legally bound, the parties hereto hereby agree as follows:

1.            Certain Definitions.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Transaction Agreement. For all purposes of and under this Agreement, the following terms shall have the following respective meanings:

"Constructive Sale" means with respect to any security a short sale with respect to such security, entering into or acquiring an offsetting derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits and risks of ownership.

"Shares" means, with respect to any Stockholder, (i) all shares of capital stock of the Company owned, beneficially or of record, by each Stockholder as of the date hereof which are entitled to vote at any meeting of stockholders generally or upon written consent in lieu of a meeting or to vote as a separate class upon the Transaction, and (ii) all additional shares of capital stock which are entitled to vote at any meeting of stockholders generally or upon written consent in lieu of a meeting or to vote as a separate class upon the Transaction of the Company acquired by Stockholder, beneficially or of record, during the period commencing with the execution and delivery of this Agreement and expiring on the Expiration Date (as such term is defined in Section 12 below).
 
1

 

"Transfer" means, with respect to any security, the direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation or suffrage of a lien, security interest or encumbrance in or upon, or the gift, placement in trust, or the Constructive Sale or other disposition of such security (including transfers by testamentary or intestate succession or otherwise by operation of law) or any right, title or interest therein (including, but not limited to, any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise), or the record or beneficial ownership thereof, the offer to make such a sale, transfer, Constructive Sale or other disposition, and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing.

2.            Transfer and Voting Restrictions.

            (a)            At all times during the period commencing with the execution and delivery of this Agreement and expiring on the Expiration Date, each Stockholder shall not, except in connection with the Transaction or as the result of the death of such Stockholder, Transfer any of the Shares owned by such Stockholder, or  make an offer or enter into an agreement, commitment or other arrangement with respect thereto.

            (b)            Each Stockholder understands and agrees that if such Stockholder attempts to Transfer, vote or provide any other person with the authority to vote any of the Shares owned by such Stockholder other than in compliance with this Agreement, Buyer shall not, and each Stockholder hereby unconditionally and irrevocably instructs Buyer not to, (i) permit any such Transfer on its books and records, (ii) issue a new certificate representing any of the Shares owned by such Stockholder or (iii) record such vote unless and until such Stockholder shall have complied with the terms of this Agreement.

            (c)            From and after the date hereof, except as otherwise permitted by this Agreement or by order of a court of competent jurisdiction, each Stockholder will not commit any act that would restrict his legal power, authority and right to vote all of the Shares then owned of record or beneficially by him or otherwise prevent or disable such Stockholder from performing any of his obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement and as otherwise permitted by this Agreement, from and after the date hereof, each Stockholder will not enter into any voting agreement with any person or entity with respect to any of the Shares owned by such Stockholder, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of such Shares, deposit any of such Shares in a voting trust or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting such Stockholder's legal power, authority or right to vote such Shares in favor of the approval of the Transaction.

      (d)            Notwithstanding anything in this Agreement to the contrary, any Stockholder may Transfer any Shares owned by such Stockholder to any member of such Stockholder's immediate family, to a trust for the benefit of such Stockholder or any immediately family member of such Stockholder; provided, however, that such a Transfer shall be permitted only if, as a condition precedent to such Transfer, the transferee in such Transfer agrees in a writing that is reasonably satisfactory in form and substance to Buyer to be bound by all terms of this Agreement as though such transferee were a Stockholder hereunder.
 
2

 

3.            Agreement to Vote Shares.

            (a)            Prior to the Expiration Date, at every meeting of the stockholders of Buyer called, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of Buyer, each Stockholder (solely in Stockholder's capacity as such) shall appear at the meeting or otherwise cause the Shares owned by such Stockholder to be present thereat for purposes of establishing a quorum and, to the extent not voted by the persons appointed as proxies pursuant to this Agreement, vote (A) in favor of approval of the Transaction, the Transaction Agreement and the other transactions contemplated thereby, including, without limitation, (i) the issuance of shares or securities which issuance requires approval under the rules of the NASDAQ Stock Market, (ii) any required increase of authorized shares of Common Stock, (iii) any reverse stock split which may required in connection with the Transaction Agreement, and (iv) any amendment to the certificate of incorporation of the Company to restrict a person who is not already an owner of more than 4.99% of the outstanding shares of the Company's common stock from becoming an owner of more than 4.99% of the outstanding shares of the Company's common stock (collectively, the "Proxy Proposals"), and (B) against (i) the approval or adoption of any proposal made in opposition to, or in competition with, the Proxy Proposals and (ii) against any of the following (to the extent unrelated to the Proxy Proposals): (1) any merger, consolidation or business combination involving Buyer or any of its subsidiaries other than the Proxy Proposals; (2) any sale, lease or transfer of all or substantially all of the assets of Buyer or any of its subsidiaries; (3) any reorganization, recapitalization, dissolution, liquidation or winding up of Buyer or any of its subsidiaries; or (4) any other action that is intended, or would reasonably be expected to materially impede, interfere with, delay, postpone, discourage or adversely affect the consummation of the Transaction (each of (B)(i) and (ii), a "Competing Transaction").
 
        (b)            If Stockholder is the beneficial owner, but not the record holder, of the Shares, such Stockholder agrees to take all actions necessary to cause the record holder and any nominees to vote all of the Shares in accordance with this Section 3.

4.            Grant of Irrevocable Proxy.

      (a)            Each Stockholder hereby irrevocably (to the fullest extent permitted by law) grants to, and appoints, Buyer and each of its executive officers and any of them, in their capacities as officers of Buyer (the "Grantees"), each Stockholder's proxy and attorney-in-fact (with full power of substitution and re-substitution), for and in the name, place and stead of such Stockholder, to vote the Shares, to instruct nominees or record holders to vote such Shares owned by such Stockholder, or grant a consent or approval in respect of such Shares in accordance with Section 3 hereof and, in the discretion of the Grantees with respect to any proposed adjournments or postponements of any meeting of stockholders at which any of the matters described in Section 3 hereof is to be considered.
 
 
3

 
    (b)            Each Stockholder represents that any proxies heretofore given in respect of Stockholder's shares that may still be in effect are not irrevocable, and such proxies are hereby revoked.

      (c)            Each Stockholder hereby affirms that the irrevocable proxy set forth in this Section 4 is given in connection with the execution of the Transaction Agreement, and that such irrevocable proxy is given to secure the performance of the duties of such Stockholder under this Agreement. Each Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked, except as otherwise provided in this Agreement. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212 of the Delaware General Corporation Law until termination of this Agreement.

      (d)            The Grantees may not exercise this irrevocable proxy on any other matter except as provided above. Each Stockholder may vote the Shares on all other matters.

      (e)            Buyer may terminate this proxy with respect to any Stockholder at any time at its sole election by written notice provided to Stockholder.

5.            No Solicitation. Prior to the termination of this Agreement, each Stockholder, solely in his capacity as a stockholder, shall not directly or indirectly, (i) solicit, initiate or knowingly encourage, induce or facilitate the making, submission or announcement of any Competing Transaction or take any action that would reasonably be expected to lead to a proposal for a Competing Transaction, (ii) except as Buyer may be permitted pursuant to the Transaction Agreement, conduct or engage in discussions or negotiations with any Person with respect to any Competing Transaction, or disclose any non-public information relating to Buyer or any of its Subsidiaries to any Person in connection with or in response to an Competing Transaction or an inquiry or indication of interest that could reasonably be expected to lead to a proposal for a Competing Transaction, (iii) approve, endorse or recommend any Competing Transaction or (iv) enter into any letter of intent or similar document or any contract or agreement contemplating or otherwise relating to any Competing Transaction.

6.            Action in Stockholder Capacity Only. Each Stockholder makes no agreement or understanding herein as a director, employee, officer or agent of Buyer. Each Stockholder signs solely in his capacity as a record holder and beneficial owner, as applicable, of Shares, and nothing herein shall limit or affect any actions taken in any other capacity, including without limitation, as an officer, director, employee, or agent of Buyer.

7.            Representations and Warranties of Stockholder. Each Stockholder, severally but not jointly, hereby represents and warrants to Buyer and Target as follows:

      (a)            (i) Such Stockholder is the beneficial or record owner of the shares of capital stock of Buyer indicated on the signature page of this Agreement free and clear of any and all pledges, liens, security interests, mortgage, claims, charges, restrictions, options, title defects or encumbrances; (ii) such Stockholder does not beneficially own any securities of Buyer other than the shares of capital stock and rights to purchase shares of capital stock of Buyer set forth on the signature page of this Agreement; (iii) such Stockholder has full power and authority to make, enter into and carry out the terms of this Agreement and to grant the irrevocable proxy as set forth in Section 4; and (iv) this Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder enforceable against him in accordance with its terms. Prior to the termination of this Agreement, such Stockholder agrees to promptly notify Buyer and Target of any additional shares of capital stock of Buyer that such Stockholder becomes the beneficial owner of after the date hereof.
 
 
4


 
      (b)            As of the date hereof and for so long as this Agreement remains in effect (including as of the date of the Stockholders' Meeting, which, for purposes of this Agreement, includes any adjournment or postponement thereof), except for this Agreement or as otherwise permitted by this Agreement, such Stockholder has full legal power, authority and right to vote all of the Shares then owned of record or beneficially by him, in favor of the approval and authorization of the Proxy Proposals without the consent or approval of, or any other action on the part of, any other person or entity (including, without limitation, any governmental entity). Without limiting the generality of the foregoing, such Stockholder has not entered into any voting agreement (other than this Agreement) with any person or entity with respect to any of the Shares, granted any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Shares, deposited any of the Shares in a voting trust or entered into any arrangement or agreement with any person or entity limiting or affecting his legal power, authority or right to vote the Shares on any matter.

      (c)            The execution and delivery of this Agreement and the performance by such Stockholder of his agreements and obligations hereunder will not result in any breach or violation of or be in conflict with or constitute a default under any term of any agreement, judgment, injunction, order, decree, law, regulation or arrangement to which such Stockholder is a party or by which such Stockholder (or any of his assets) is bound, except for any such breach, violation, conflict or default which, individually or in the aggregate, would not impair or adversely in any material respect affect such Stockholder's ability to perform his obligations under this Agreement or render materially inaccurate any of the representations made by him herein.

      (d)            Except as disclosed pursuant to the Transaction Agreement, no investment banker, broker, finder or other intermediary is entitled to a fee or commission from Buyer or Target in respect of this Agreement based upon any arrangement or agreement made by or on behalf of such Stockholder.
 
      (e)            Each Stockholder understands and acknowledges that Buyer and Target are entering into the Transaction Agreement in reliance upon such Stockholder's execution and delivery of this Agreement and the representations and warranties contained herein.

8.            Representations and Warranties of Buyer.

      (a)            Buyer hereby represents and warrants to Target and the undersigned Stockholder as follows:
 
 
5


 
                    (i)     Buyer has full power and authority to make, enter into and carry out the terms of this Agreement

                    (ii)     this Agreement has been duly and validly authorized by all necessary action on the part of Buyer and has been duly and validly executed and delivered by Buyer and constitutes a valid and binding agreement of Buyer enforceable against it in accordance with its terms.

                    (iii)     The execution and delivery of this Agreement and the performance by Buyer of its agreements and obligations hereunder will not result in any breach or violation of or be in conflict with or constitute a default under any term of any agreement, judgment, injunction, order, decree, law, regulation or arrangement to which Buyer is a party or by which Buyer (or any of its assets) is bound, except for any such breach, violation, conflict or default which, individually or in the aggregate, would not impair or adversely affect Buyer's ability to perform its obligations under this Agreement or render materially inaccurate any of the representations made by it herein.

9.            Waiver of Rights of Appraisal. Each Stockholder hereby waives, and agrees to prevent the exercise of, any rights of appraisal with respect to the Transaction, or rights to dissent from the Transaction, that such Stockholder may have by virtue of his beneficial ownership of the Shares.

10.            Regulatory Approvals. Each of the provisions of this Agreement is subject to compliance with applicable regulatory conditions and receipt of any required consents.

11.            Confidentiality. Each Stockholder recognizes that successful consummation of the transactions contemplated by the Transaction Agreement may be dependent upon confidentiality with respect to the matters referred to herein. In this connection, pending public disclosure thereof, and so that Buyer may rely on the safe harbor provisions of Rule 100(b)(2)(ii) of Regulation FD, Stockholder, solely in his or its capacity as a stockholder, hereby agrees not to disclose or discuss such matters with anyone not a party to this Agreement (other than his or its counsel and advisors, if any) without the prior written consent of Buyer and Target, except for disclosures such Stockholder's counsel advises are necessary in order to comply with any Law, in which event Stockholder shall give notice of such disclosure to Buyer and Target as promptly as practicable so as to enable Buyer and Target to seek a protective order from a court of competent jurisdiction with respect thereto, and except for any filings required to be made by the Stockholder under the Exchange Act.

12.            Termination. This Agreement shall automatically terminate and be of no further force or effect whatsoever on the first to occur of (i) the completion of all meetings of stockholders of the Buyer required under the Transaction Agreement, (ii) the termination of the Transaction Agreement pursuant to the terms thereof, or (iii) as to any Stockholder, upon notice from Buyer in accordance with Section 4(e) hereof (the date of termination being the "Expiration Date").
 
 
6

 
13.            Miscellaneous Provisions.

      (a)            Amendments, Modifications and Waivers. No amendment, modification or waiver in respect of this Agreement shall be effective against any party unless it shall be in writing and signed by Buyer, Target and each Stockholder.

      (b)            Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among or between any of the parties with respect to the subject matter hereof and thereof.

      (c)            Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.

      (d)            Consent to Jurisdiction; Venue. In any action or proceeding between any of the parties arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, each of the parties: (i) irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state courts of the State of New York and to the jurisdiction of the United States District Court for the Southern District of New York, and (ii) agrees that all claims in respect of such action or proceeding may be heard and determined exclusively in the Southern District of New York in Manhattan, New York.

      (e)            WAIVER OF JURY TRIAL. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

      (f)            Attorneys' Fees. In any action at law or suit in equity to enforce this Agreement or the rights of any of the parties hereunder, the prevailing party in such action or suit shall be entitled to receive a reasonable sum for its attorneys' fees and all other reasonable costs and expenses incurred in such action or suit.

      (g)            Assignment and Successors. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, including, without limitation, such Stockholder's estate and heirs upon the death of such Stockholder, provided that except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by any of the parties hereto without the prior written consent of the other parties hereto, except that Buyer, without obtaining the consent of any other party hereto, shall be entitled to assign this Agreement or all or any of its rights or obligations hereunder to any one or more Affiliates of Buyer. No assignment by Buyer under this Section 13(g) shall relieve Buyer of its obligations under this Agreement. Any assignment in violation of the foregoing shall be void and of no effect.
 
 
7


 
      (h)            No Third Party Rights. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

      (i)            Cooperation. Each Stockholder agrees to reasonably cooperate with Buyer and to execute and deliver such further documents, certificates, agreements and instruments and to take such other actions as may be reasonably requested by Buyer to evidence or reflect the transactions contemplated by this Agreement and to carry out the intent and purpose of this Agreement. Each Stockholder hereby agrees that Buyer and Target may publish and disclose in the Proxy Statement and any other report filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (including all documents and schedules filed with the SEC), such Stockholder's identity and ownership of Shares and the nature of such Stockholder's commitments, arrangements and understandings under this Agreement and may further file this Agreement as an Exhibit to any filing made by Buyer or Target with the SEC relating to the Transaction.

      (j)            Severability. If any term or other provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect so long as the economic or legal substance of this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the terms of this Agreement remain as originally contemplated to the fullest extent possible.

      (k)            Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

      (l)            Specific Performance; Injunctive Relief. The parties hereto acknowledge that Buyer and Target shall be irreparably harmed and that there shall be no adequate remedy at law for a violation of any of the covenants or agreements of such Stockholder set forth in this Agreement. Therefore, each Stockholder hereby agrees that, in addition to any other remedies that may be available to Buyer or Target, as applicable upon any such violation, such party shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means to which they are entitled at law or in equity, without requiring the posting of any bond or other undertaking.

      (m)            Notices. All notices, consents, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if (a) delivered to the appropriate address by hand or overnight courier (providing proof of delivery), or (b) sent by facsimile with confirmation of transmission by the transmitting equipment confirmed with a copy delivered as provided in clause (a), in each case to the parties at the following address or facsimile (or at such other address or facsimile for a party as shall be specified by like notice): (i) if to Buyer or Target, to the address or facsimile provided in the Transaction Agreement, including to the persons designated therein to receive copies; and (ii) if to any Stockholder, to such Stockholder's address or facsimile shown below such Stockholder's signature on the signature page hereof.
 
 
 
8


 
      (n)            Counterparts. This Agreement may be executed in several counterparts, including by facsimile, each of which shall be deemed an original and all of which shall constitute one and the same instrument, and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties; it being understood that all parties need not sign the same counterpart.

      (o)            Headings. The headings contained in this Agreement are for the convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

      (p)            Legal Representation. This Agreement was negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to any construction or interpretation thereof.
 
      (q)            Several Obligations. Notwithstanding anything in this Agreement to the contrary, the obligations of the Stockholders hereunder shall be several but not joint and no Stockholder shall be responsible for any act or inaction by any other Stockholder. Each Stockholder agrees that such Stockholder's obligations under this Agreement is a several obligation of such Stockholder, and that the failure by any other Stockholder to perform such other Stockholder's obligations under this Agreement or the breach by any other Stockholder of any representation or warranty hereunder shall not constitute a bar, limitation, prohibition or defense to the enforcement of this Agreement against any Stockholder.
 
Signature pages follow.  Remainder of page intentionally left blank.
 
 
9

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the date first above written.
 
     
Authentidate Holding Corp.
   
   
/s/ Ian C. Bonnet
By:
 
Ian C. Bonnet
Its:
 
President and Chief Executive Officer
 
Peachstate Health Management LLC
   
     
By:
 
Richard Hersperger
Its:
 
Chief Executive Officer
 
 

 
10

STOCKHOLDER SIGNATURE PAGE

Stockholder:
 
Lazarus Investment Partners LLLP
By:  Lazarus Management Company LLC
 
 
/s/ Justin B. Borus
 
Signature
Name:  Justin B. Borus
Title:  Manager 
     
Address:
 
 
 
   
Telephone:
 
 
Facsimile:
 
 
Shares Beneficially Owned by Stockholder:

Shares of Buyer Common Stock:
   
     
Options to acquire Buyer Common Stock:
   
     
Restricted Stock Units issued by Buyer:
   
     
Warrants to acquire Buyer Common Stock:
   
     
Shares of Common Stock issuable upon conversion of Buyer Preferred Stock
   
     
Shares of Common Stock issuable upon conversion of Convertible Debt Instruments:
   


 
11