UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 11, 2015
AUTHENTIDATE HOLDING CORP.
(Exact name of registrant as specified in its charter)
COMMISSION
FILE NUMBER: 0-20190
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DELAWARE |
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14-1673067 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
Connell Corporate Center
300 Connell Drive, 5th Floor
Berkeley Heights, New Jersey 07922
(Address and zip code of principal executive offices)
(908) 787-1700
(Registrants telephone number, including area code)
CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE
FOLLOWING PROVISIONS:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 |
Entry into a Material Definitive Agreement. |
Exchange Transaction with VER 83, LLC
On December 11, 2015, Authentidate Holding Corp. (the Company) entered into an exchange agreement with VER 83, LLC, the holder
of an outstanding promissory note in the aggregate principal amount of $950,000, pursuant to which the Company agreed to issue such holder, in consideration of the cancellation of the original note, a new convertible note in the aggregate principal
amount of $950,000 (the New Convertible Note) and warrants to purchase 3,800,000 shares of common stock (the Additional Warrants). The closing of the exchange transaction with VER 83, LLC is anticipated to occur on
December 17, 2015.
The New Convertible Note issued to VER 83, LLC is convertible into shares of common stock of the Company at an
initial conversion price of $0.25 per share, subject to adjustment. The New Convertible Note is convertible beginning July 1, 2016 and is due one year from the closing date. Based on the initial conversion price, the New Convertible Note will
be convertible into up to 3,800,000 shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share
that is less than the conversion price then in effect, such conversion price will be decreased to equal 85% of such lower price. The foregoing adjustments to the conversion price will not apply to certain exempt issuances, including issuances
pursuant to certain employee benefit plans. In addition, the conversion price is subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. The New Convertible Note bears interest at 9% per annum with interest
payable upon maturity or on any earlier redemption date. Following the date on which the New Convertible Note first becomes convertible, the Company will have the right to redeem all or any portion of the outstanding principal balance of the New
Convertible Note, plus all accrued but unpaid interest at a price equal to 110% of such amount. The holder of the New Convertible Note shall have the right to convert any or all of the amount to be redeemed into common stock prior to redemption.
Subject to certain exceptions, the New Convertible Note is senior to existing and future indebtedness of the Company and will be secured to the extent and as provided in the Amended Security Agreement entered into between the Company and the holder.
To provide for the collateral to secure the repayment of the New Convertible Note, MKA 79, LLC, an entity affiliated with J. David Luce, a member of the board of directors of the Company agreed to an amendment to the security agreement entered into
in August 2015 to provide that the New Convertible Note shall be secured by the collateral defined in such earlier Security Agreement. VER 83, LLC is an entity controlled by Douglas B. Luce, a sibling of J. David Luce. Subject to certain exceptions,
the New Convertible Note contains customary covenants against incurring additional indebtedness and granting additional liens and contains customary events of default. Upon the occurrence of an event of default under the New Convertible Note, the
holder may require the Company to repay all or a portion of the note in cash, at a price equal to 110% of the principal and accrued and unpaid interest.
Subject to certain limitations, the Additional Warrants are exercisable on or after the first business day following the twelve-month
anniversary of the issue date; provided, however, if the Company consummates the closing contemplated by that certain Agreement and Plan of Merger dated November 18, 2015 by and among the Company, RMS Merger Sub, LLC and Peachstate Health
Management LLC, (d/b/a AEON Clinical Laboratories) (the Definitive Agreement), then the Initial Exercise Date of the Additional Warrants shall be the date that is the three year anniversary date of such closing. The initial
exercise price of the Additional Warrants is $0.30 per share and is subject to adjustment for certain events. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into
shares of its common stock for a price per share that is less than the conversion price of the new note, the exercise price of the Additional Warrants will be decreased to a lower price based on the amount by which the conversion price of the new
note was reduced due to such transaction. The foregoing adjustments to the exercise price for future stock issues will not apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. In addition, the exercise
price of the Additional Warrants is subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. The Additional Warrants may be exercised on a cashless basis if at the time of exercise there is no current
prospectus available for the issuance of the underlying shares of common stock. The Additional Warrants will expire 54 months from their initial exercise date. In addition, the Additional Warrants provide that, after their initial exercise date, the
Company shall have the right to cause the holder to exercise the Additional Warrants provided that that the following conditions are satisfied: (i) the closing bid price of the Companys common stock is at least $0.45 for the 20
consecutive trading days prior to the date of the mandatory exercise notice and (ii) the holder is not prevented from exercising the Additional Warrants pursuant to a lockup agreement.
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The holder shall not have the right to convert the New Convertible Note or exercise the
Additional Warrants to the extent that such conversion or exercise would result in the holder being the beneficial owner in excess of 4.99% of the Companys common stock. In addition, the holder shall have no right to convert the New
Convertible Note or exercise the Additional Warrants if the issuance of the shares of common stock upon such conversion or exercise would exceed the aggregate number of shares of the Companys common stock which the Company may issue upon
conversion of the New Convertible Note and exercise of the Additional Warrants without breaching the Companys obligations under Nasdaq listing rules (the Exchange Cap). The Exchange Cap limitation does not apply if the
Companys shareholders approve issuances above the Exchange Cap. The Company agreed to grant the holder piggyback registration rights with respect to the shares of common stock issuable upon conversion of the New Convertible Note and exercise
of the Additional Warrants.
The foregoing does not purport to be a complete description of the exchange agreement, the New Convertible
Note, the Additional Warrants, and the Amended Security Agreement and is qualified in its entirety by reference to the full text of such documents, which are filed as exhibits to this Current Report on Form 8-K.
Exchange Transaction with Lazarus Investment Partners LLLP
On December 15, 2015, the Company entered into an exchange agreement with Lazarus Investment Partners LLLP, the holder of an outstanding
promissory note in the aggregate principal amount of $500,000, pursuant to which the Company agreed to issue such holder, in consideration of the cancellation of the original note, a new note in the aggregate principal amount of $532,811, which
amount includes $32,811 in accrued interest on their original note (the New Note), and warrants to purchase 1,000,000 shares of common stock (the New Warrants). The closing of the exchange transaction with Lazarus Investment
Partners occurred on December 15, 2015. Lazarus Investment Partners LLLP is the beneficial owner of approximately 29% of the Companys common stock.
The New Note bears interest at 20% per annum, payable in arrears, and is due upon the earlier of (i) twelve months from the date of
issuance, (ii) June 8, 2016 if the Company has not consummated the closing as contemplated by the Definitive Agreement by such date, or (iii) within 5 days of 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. The New Note is neither secured by any of the Companys assets nor
convertible into equity securities of the Company. The New Note contains certain events of default that are customary for similar transactions.
Subject to certain limitations, the New Warrants are exercisable on or after the first business day following the twelve-month anniversary of
the issue date; provided, however, if the Company consummates the closing contemplated by the Definitive Agreement, then the Initial Exercise Date of the New Warrant shall be the date that is the three year anniversary date of such
closing. The initial exercise price of the New Warrants is $0.30 per share and is subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. The New Warrants may be exercised on a cashless basis if at the
time of exercise there is no current prospectus available for the issuance of the underlying shares of common stock. The New Warrants will expire 54 months from their initial exercise date.
Pursuant to the exchange agreement entered into between the Company and Lazarus Investment Partners, the Company agreed that all warrants held
by Lazarus Investment Partners shall be amended to modify the definition of the term Expiration Date such that the Expiration Date of such warrants shall be extended until December 15, 2022. Further, the holder shall not
have the right to exercise the New Warrants to the extent that such exercise would result in it being the beneficial owner of in excess of 4.99% of the Companys common stock. In addition, the holder shall have no right to exercise the New
Warrants if the issuance of the shares of common stock upon such exercise would exceed the aggregate number of shares of the Companys common stock which the Company may issue upon conversion of the New Warrants without breaching the
Companys obligations under Nasdaq listing rules (the Exchange Cap). The Exchange Cap limitation does not apply if the Companys shareholders approve issuances above the Exchange Cap. The Company agreed to grant the holder
piggyback registration rights with respect to the shares of common stock issuable upon conversion of the New Warrants.
The foregoing does
not purport to be a complete description of the exchange agreement, the New Note and the New Warrants, and is qualified in its entirety by reference to the full text of such documents, which are filed as exhibits to this Current Report on Form 8-K.
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Voting and Lockup Agreements
In addition, the Company entered into voting agreements with each of VER 83 and Lazarus Investment Partners pursuant to which they each agreed
to vote all of the shares of Companys common stock beneficially owned by them or acquired by them after such date and prior to the date the voting agreement terminates in favor of the business combination transaction contemplated by the
Definitive Agreement and certain other proposals, including, (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 be required, 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
Companys common stock from becoming an owner of more than 4.99% of the outstanding shares of the Companys common stock. They also each granted the Company an irrevocable proxy granting it the right to vote such shares in accordance with
the preceding sentence. The voting agreements limit the ability of the holders to sell or otherwise transfer the shares of the Companys common stock beneficially owned by them until the expiration of the voting agreement. The voting agreements
terminate upon the earliest to occur of (i) the date of the effectiveness of the transaction contemplated by the Definitive Agreement, (ii) the date of the termination of the Definitive Agreement in accordance with its terms, or
(iii) notice from the Company.
Each of the note holders also entered into a lockup agreement pursuant to which each agreed not to
(i) exercise warrants to purchase common stock owned by it for a period of up to three years and (ii) sell shares of common stock or other securities owned by them for a period of up to three years; provided, however such resale limitation
will sooner expire upon the approval by the Companys shareholders of an amendment to its Certificate of Incorporation restricting the ability of a person who is not an owner of more than 4.99% of the outstanding shares of the Companys
common stock from becoming an owner of more than 4.99% of the outstanding shares of the Companys common stock. Further, the lockup agreement entered into by VER 83 provides that all warrants held by it shall be amended to modify the definition
of the term Expiration Date such that the Expiration Date of such warrants shall be extended until the three year anniversary date of the current expiration date of each such Warrant. In each case, however, the lockup
agreements provide, by their terms, that they shall not become effective unless the Company has, either prior to, contemporaneously, or within thirty (30) days, entered into lockup agreements that are substantially similar in all material
respects to these lockup agreements, with (i) all of the Companys current executive officers and directors and (ii) persons who either beneficially own or would beneficially own but for limitations imposed by certain exercise or
conversion restrictions in their securities, 5% or more of the outstanding common stock of the Company determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.
The foregoing does not purport to be a complete description of the voting agreement or lockup agreement and is qualified in its entirety by
reference to the full text of such documents, which are filed as exhibits to this Current Report on Form 8-K.
Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included in
Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 3.02. |
Unregistered Sales of Equity Securities. |
The information disclosed in Item 1.01 of
this Current Report on Form 8-K is incorporated by reference into this Item 3.02. The offers and sales of the securities pursuant to the exchange agreements (and the issuance of shares of the Companys common stock upon exercise or
conversion thereof) have been determined to be exempt from registration under the Securities Act of 1933, in reliance on Section 4(a)(2) thereof, as transactions by an issuer not involving a public offering, in which the investors are
accredited and have acquired the securities for investment purposes and not with a view to or for sale in connection with any distribution thereof. The securities issued under the exchange agreements have not been registered under the Securities Act
and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This disclosure does not constitute an offer to sell or the solicitation of an offer to buy any of the
Companys securities, nor will there be any sales of these securities by the Company in any state or jurisdiction in which the offer, solicitation or sale would be unlawful.
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Item 9.01 |
Financial Statements and Exhibits |
(d) Exhibits
The following exhibits are filed herewith:
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Exhibit No. |
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Exhibit Title or Description |
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4.1 |
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Form of New Convertible Note issuable to VER 83, LLC |
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4.2 |
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Form of Warrant issuable to VER 83, LLC |
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4.3 |
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Form of New Note issuable to Lazarus Investment Partners, LLLP |
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4.4 |
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Form of Warrant issuable to Lazarus Investment Partners, LLLP |
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10.1 |
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Exchange Agreement between the Company and VER 83, LLC |
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10.2 |
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Exchange Agreement between the Company and Lazarus Investment Partners, LLLP |
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10.3 |
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Amended Security Agreement dated December 11, 2015 |
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10.4 |
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Form of Voting Agreement |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
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AUTHENTIDATE HOLDING CORP. |
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By: |
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/s/ William A. Marshall |
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Name: |
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William A. Marshall |
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Title: |
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Chief Financial Officer |
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Date: December 17, 2015 |
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Exhibit Index
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Exhibit No. |
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Exhibit Title or Description |
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4.1 |
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Form of New Convertible Note issuable to VER 83, LLC |
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4.2 |
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Form of Warrant issuable to VER 83, LLC |
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4.3 |
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Form of New Note issuable to Lazarus Investment Partners, LLLP |
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4.4 |
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Form of Warrant issuable to Lazarus Investment Partners, LLLP |
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10.1 |
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Exchange Agreement between the Company and VER 83, LLC |
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10.2 |
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Exchange Agreement between the Company and Lazarus Investment Partners, LLLP |
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10.3 |
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Amended Security Agreement dated December 11, 2015 |
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10.4 |
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Form of Voting Agreement |
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Exhibit 4.1
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE 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.
Original Issue
Date: December 17, 2015
Original Conversion Price (subject to adjustment herein): $0.25
Principal Amount: $950,000.00
AUTHENTIDATE HOLDING CORP.
9% SENIOR SUBORDINATED SECURED CONVERTIBLE NOTE
THIS 9% SENIOR SUBORDINATED SECURED CONVERTIBLE NOTE is a duly authorized and validly issued 9% Senior Subordinated Secured Convertible Note
of Authentidate Holding Corp., a Delaware corporation, (the Company), having its principal place of business at 300 Connell Drive, 5th Floor, Berkeley Heights, NJ 07922, due December 17, 2016 (this note, the
Note). This Note is being issued pursuant to the Exchange Agreement (as defined below) among the Company and the original holders of the Notes. By its acceptance of this Note, Holder agrees to be bound by the terms of the Exchange
Agreement. This Note is a direct obligation of the Company and payment of principal and interest of this Note shall be secured in accordance with the Security Agreement dated as of August 7, 2015 (the Security Agreement), as
amended on December 11, 2015 (the Amended Security Agreement).
FOR VALUE RECEIVED, the Company promises to pay to
VER 83, LLC or its registered assigns (the Holder), or shall have paid pursuant to the terms hereunder, the principal sum of $950,000.00 on December 17, 2016 (the Maturity Date) or such other earlier date
as this Note is required or permitted to be repaid as provided hereunder, and to pay Interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is
subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Exchange Agreement and (b) the following terms shall have the following meanings:
Bankruptcy Event means any of the following events: (a) the Company commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company, (b) there is commenced against the Company any such case or
proceeding that is not dismissed within 60 days after commencement, (c) the Company is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company suffers any
appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company makes a general assignment for the benefit of creditors,
(f) the Company calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company, by any act or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing.
1
Base Conversion Price shall have the meaning set forth in Section 5(c).
Beneficial Ownership Limitation shall have the meaning set forth in Section 4(d).
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.
Change of Control Transaction means the occurrence after the date hereof of any of (a) an acquisition after the date
hereof by an individual or legal entity or group (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or
otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities issued together with the Notes), (b) the Company merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or
the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate
voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those
individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.
Closing Bid Price and Closing Sale Price means, for any security
as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Trading Market, as reported by the Nasdaq Stock Market, or, if the Trading Market begins to operate on an extended hours basis and does
not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York time, as reported by the Nasdaq Stock Market, or, if the
Trading Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is
listed or traded as reported by the Nasdaq Stock Market, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such
security as reported by the Nasdaq Stock Market, or, if no closing bid price or last trade price, respectively, is reported for such security by the Nasdaq Stock Market, the average of the bid prices, or the ask prices, respectively, of any market
makers for such security as reported in the pink sheets by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 9(j). All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.
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Conversion Date shall have the meaning set forth in Section 4(a).
Conversion Price shall have the meaning set forth in Section 4(b).
Conversion Schedule means the Conversion Schedule in the form of Schedule 1 attached hereto.
Conversion Shares means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with
the terms hereof.
Event of Default shall have the meaning set forth in Section 8(a).
Exchange Agreement means the Note Exchange Agreement, dated as of December 11, 2015 by and among the Company and the
original Holder as amended, modified or supplemented from time to time in accordance with its terms.
Exempt Issuance
means the issuance of (a) shares of Common Stock, restricted stock units, options or other Common Stock Equivalents to employees, officers or directors of the Company or other eligible persons pursuant to any equity compensation plan presently
existing or duly adopted for such purpose by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors of the Company (for purposes of clarity, the issuance of shares of
Common Stock upon exercise of options, vesting of restricted stock units or otherwise in accordance with the terms of an award granted pursuant to such a Company plan subsequent to the date hereof shall also be an Exempt Issuance),
(b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of securities of the Company issued and outstanding on the date
of this Agreement (including shares of common stock that the Company may issue pursuant to the presently outstanding shares of Series D Preferred Stock in lieu of cash dividends thereon) provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (except that amendments or modifications to existing common stock purchase warrants to reduce
the exercise price thereof and/or alter the number or type of securities issuable upon exercise thereof shall be included within the definition of an Exempt Issuance), (c) securities in connection with a rights offering to the Companys
stockholders, including any securities which may be issued upon exercise of the rights distributed to the Companys stockholders, (d) securities issued pursuant to mergers, acquisitions or strategic transactions approved by a majority of
the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business
synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing in securities, (e) shares of Common Stock (or securities convertible into or exercisable or exchangeable for shares of Common Stock) which may be issued to consultants,
vendors, lessors, distributors or similar persons, to the Company as consideration for services or assets provided to the Company (and the shares of Common Stock which may be issued upon exercise or conversion of convertible securities issued to the
class persons specified in this clause) up to a maximum of 2,000,000 shares of Common Stock, (f) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company, and
(g) a firm commitment underwritten public offering of equity securities of the Company for at least $5,000,000 of gross proceeds.
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Fair Market Value means, on any given day: (A) if the shares of Common
Stock of the Company are exchange-traded, the average of the closing sales prices per share of Common Stock 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 shares of Common Stock of the Company are not listed or admitted to trading on any securities exchange but are regularly traded in any over-the-counter market, then the average of the bid and
ask prices per share of Common Stock 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 shares of Common Stock of
the Company are not traded as described in clauses (A) or (B), then the per share fair market value of the Common Stock as determined in good faith by the Companys Board of Directors.
Fundamental Transaction shall have the meaning set forth in Section 5(d).
Indebtedness shall have the meaning ascribed to such term in the Security Agreement.
Interest Payment Date shall have the meaning set forth in Section 2(a).
Issuable Maximum shall have the meaning set forth in Section 4(e).
Majority in Interest means, at any time of determination, fifty-one percent (51%) in interest (based on
then-outstanding principal amounts of Notes at the time of such determination) of the holders of Notes.
Notice of
Conversion shall have the meaning set forth in Section 4(a).
Optional Redemption shall have the meaning
set forth in Section 6(a).
Optional Redemption Amount means the sum of (a) 110% of the then outstanding
principal amount of the Note and (b) accrued but unpaid interest through the Optional Redemption Date.
Original Issue
Date means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.
Permitted Indebtedness shall have the meaning ascribed to such term in the Security Agreement, except that to the extent
that any provision therein refers to the original date of such agreement, then solely for the purposes hereof, such term shall be construed as referring to the Original Issue Date.
Permitted Liens shall have the meaning ascribed to such term in the Security Agreement, except that to the extent that any
provision therein refers to the original date of such agreement, then solely for the purposes hereof, such term shall be construed as referring to the Original Issue Date.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Share Delivery Date shall have the meaning set forth in Section 4(c)(ii).
Successor Entity shall have the meaning set forth in Section 5(d).
Trading Day means a day on which the principal Trading Market is open for trading.
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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).
Section 2. Interest and Prepayment.
(a) Payment of Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount
of this Note at the rate of 9% per annum, payable in arrears on (i) each Optional Redemption Date (as to that principal amount then being redeemed), (ii) each date on which any principal amount of this Note is being converted (as to
that principal amount being converted), and (iii) on the Maturity Date (each such date, an Interest Payment Date) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next
succeeding Business Day), in cash.
(b) Interest Calculations. Interest shall be calculated on the basis of a 360-day year,
consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, has been made.
(c) Prepayment. Except as otherwise set forth in this Note, the Company may not prepay any portion of the principal amount of this Note
without the prior written consent of the Holder.
Section 3. Registration of Transfers and Exchanges.
(a) Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized
denominations, as requested by the Holder surrendering the same. No service charge or other cost will be payable by the Holder for such registration of transfer or exchange. Further, provided 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 prior to the date that is the three (3) year anniversary date of the initial closing under such Definitive Agreement, the Holder agrees that it shall not, to its knowledge, transfer all or any portion of this Note or
any of the Conversion 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.
(b) Investment Representations. This Note has been issued subject to
certain investment representations of the original Holder set forth in the Exchange Agreement and may be transferred or exchanged only in compliance with the Exchange Agreement and applicable federal and state securities laws and regulations.
(c) Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the
Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the
Company nor any such agent shall be affected by notice to the contrary.
(d) 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 conversion of this Note as described in the Exchange Agreement.
5
Section 4. Conversion.
(a) Voluntary Conversion. At any time after July 1, 2016 until this Note is no longer outstanding, principal and interest under
this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) and Section 4(e) hereof). The
Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a Notice of Conversion), specifying therein the principal amount of this Note to be
converted and the date on which such conversion shall be effected (such date, the Conversion Date). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the
Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this
Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion
within two (2) Business Days of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder, and any
assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount
stated on the face hereof.
(b) Conversion Price. The conversion price in effect on any Conversion Date shall be equal to
$0.25 per share, subject to adjustment herein (the Conversion Price).
(c) Mechanics of Conversion.
(i) Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion of the
principal amount of this Note shall be equal to the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price.
(ii) Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the
Share Delivery Date), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of this Note and
(B) a bank check in the amount of accrued and unpaid interest. On or after the six month anniversary of the Original Issue Date, the Company shall use its reasonable best efforts to deliver any certificate or certificates required to be
delivered by the Company under this Section 4(c) electronically through The Depository Trust Company or another established clearing corporation performing similar functions.
(iii) Companys Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to the Holder
within three (3) Trading Days after the Companys receipt of a Conversion Notice (whether via facsimile or otherwise), a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of
Common Stock on the Companys share register or to credit the Holders or its designees balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holders conversion of any
Conversion Amount (as the case may be) (a Conversion Failure), then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such third
(3rd)
6
Trading Day that the issuance of such shares of Common Stock is not timely effected an amount equal to 0.5% of the product of (A) the sum of the number of shares of Common Stock not issued
to the Holder on a timely basis and to which the Holder is entitled multiplied by (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of
Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note
that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Companys obligations to make any payments which have accrued prior to the date of such notice pursuant to
this Section 4(c)(iii) or otherwise. The Holder agrees, however, that the maximum aggregate damages payable to a Holder hereunder for a Conversion Failure shall be 2% of the amount determined pursuant to the formula set forth in the immediately
preceding sentence. In addition to the foregoing, if within three (3) Trading Days after the Companys receipt of a Conversion Notice (whether via facsimile or otherwise), the Company shall fail to issue and deliver a certificate to the
Holder and register such shares of Common Stock on the Companys share register or credit the Holders or its designees balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the
Holders conversion hereunder (as the case may be), and if on or after such third (3rd) Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder
of shares of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the
Holders request and in the Holders discretion, either (i) pay cash to the Holder in an amount equal to the Holders total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the Buy-In Price), at which point the Companys obligation to deliver such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holders balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holders
conversion hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock multiplied by (B) the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the Conversion Date.
(iv) Obligation Absolute. The Companys
obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. Nothing herein shall limit a Holders
right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Companys failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.
(v) Reservation of Shares Issuable Upon Conversion. The Company covenants that it
will at all times reserve and keep available out of its authorized and unissued shares of Common
7
Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other
holders of the Notes), not less than 125% of such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Exchange Agreement) be issuable (taking into account the adjustments and restrictions of
Section 5) upon the conversion of the then outstanding principal amount of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and
non-assessable and, if the Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Registration Statement (subject to such Holders compliance with its obligations under
the Registration Rights Agreement).
(vi) Fractional Shares. No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall round up such fractional share to the next whole share.
(vii) Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be
made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer
Agent fees required for same-day processing of any Notice of Conversion.
(d) Holders Conversion Limitations. The Company
shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together
with the Holders Affiliates, and any Persons acting as a group together with the Holder or any of the Holders Affiliates) 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 conversion of this Note with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note 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 Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), 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 4(d) applies, the determination of whether this Note is convertible (in
relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to
be the Holders determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set
forth
8
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 4(d), 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 Companys 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 Companys 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 Note, 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 conversion of this Note 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 4(d), 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 conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) 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 4(d) 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 Note.
(e) Issuance Limitations. Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval, then
the Company may not issue, upon conversion of either the principal amount of, or Interest thereon, this Note, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and
prior to such Conversion Date (i) in connection with the conversion of any Notes issued pursuant to the Exchange Agreement, and (ii) in connection with the exercise of any Warrants issued pursuant to the Exchange Agreement, would exceed
15.1% of the number of shares of Common Stock outstanding on the Trading Day immediately preceding the Original Issue Date (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the
Issuable Maximum). 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 Holders 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. In addition, each Holder may allocate its pro-rata portion of the Issuable Maximum among Notes and Warrants
held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Holder no longer holds any Notes or Warrants and the amount of shares issued to the Holder pursuant to the Holders Notes and Warrants was less than
the Holders 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 conversions of this Note shall not be entitled to cast votes
on any resolution to obtain Shareholder Approval pursuant hereto.
9
Section 5. Certain Adjustments.
(a) Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
conversion of the Notes or upon the exercise of any options or warrants), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or re-classification.
(b) Pro Rata Distributions. During such
time as this Note is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a
Distribution), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the
extent that the Holders right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance.
(c) Subsequent Equity Sales. If, at any time while this Note is outstanding, the Company sells or grants any option to purchase or
reduces the conversion or exercise price of any outstanding securities, grants any right to reduce, or otherwise disposes of or issues, any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at a price
per share that is lower than the then Conversion Price, other than in connection with any Common Stock Equivalents outstanding on the Original Issue Date (such lower price, the Base Conversion Price and such issuances,
collectively, a Dilutive Issuance) then the Conversion Price shall be reduced to equal the product of (i) 0.85 and (ii) the Base Conversion Price; provided, however, that such adjustment to the Conversion Price shall be
made only to the extent that after taking into account such adjustment to the Conversion Price the number of authorized but unissued shares of Common Stock available for issuance under the Companys Certificate of Incorporation is sufficient
for the issuance of the maximum number of Conversion Shares issuable upon conversion of the Note at such adjusted Conversion Price. In the event that the Company at such time does not have a sufficient number of authorized but unissued
shares
10
of Common Stock available for issuance at an adjusted Conversion Price, the Company shall immediately use all commercially reasonable efforts to convene a meeting of its stockholders for the
purpose of further amending its Certificate of Incorporation for the purpose of increasing the authorized number of shares of Common Stock in such an amount as is necessary to permit conversion of the Notes into the additional Conversion Shares
issuable on account of such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. For purposes of clarity, if the holder of Common Stock or Common Stock Equivalents so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled
to receive shares of Common Stock at a price per share that is lower than the Conversion Price, such issuance shall be deemed to be a Dilutive Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(c), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the
Dilutive Issuance Notice). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(c), upon the occurrence of any Dilutive Issuance, the Holder is entitled to
receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion. Notwithstanding
the foregoing, no adjustment will be made under this Section 5(c) in respect of an Exempt Issuance.
(d) Fundamental
Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by
the holders of more than 50% of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory
share exchange pursuant to which the shares of Common Stock of the Company are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement
or other business combination) (each a Fundamental Transaction), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section 4(e) on the conversion of this Note), the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the Alternate Consideration) receivable as a result of such Fundamental Transaction by a holder of the number of shares
of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section 4(e) on the conversion of this Note). For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the
11
Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the Successor Entity) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(d). Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the
Company shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Company herein.
(e) Calculations. All calculations under this Section 5
shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number
of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
(f) Notice to the Holder.
(i) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the
Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(ii) Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the approval of any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property or (D) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least ten (10) calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the
holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange 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
reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be
specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company, the Company shall not be required to provide such notice until such time as it makes public
disclosure of such event, at which point it shall simultaneously with its public disclosure, provide notice to the Holder. The Holder shall remain entitled to convert this Note during the period commencing on the date of such notice through the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 6. Redemption.
(a) Optional Redemption at Election of Company. Subject to the provisions of this Section 6(a), at any time after July 1, 2016
and from time to time thereafter, the Company may deliver a notice to the Holder (an Optional Redemption Notice and the date such notice is deemed delivered hereunder, the Optional Redemption Notice Date) of its
irrevocable election to redeem some or all of the then outstanding principal amount of this Note for cash in an amount equal to the Optional Redemption Amount on the 60th calendar day following
the Optional Redemption Notice Date (such date, the Optional Redemption Date, such 60 day period, the Optional Redemption Period and such redemption, the Optional Redemption). The Optional
Redemption Amount is payable in full on the Optional Redemption Date. The Company covenants and agrees that it will honor all permitted Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through 5:00 p.m. (New
York time) on the business day immediately preceding the Optional Redemption Date. The Companys determination to pay an Optional Redemption in cash shall be applied ratably to all of the holders of the then outstanding Notes based on their (or
their predecessors) initial purchases of Notes pursuant to the Exchange Agreement. Unless a Holder elects to convert its Notes prior to the time and date specified above in compliance with the terms and conditions of this Note, each Holder
shall, prior to 5:00 p.m. (New York time) on the Optional Redemption Date, return any and all original Notes to be redeemed to the Company (or such other place at set forth in the Optional Redemption Notice) and such certificates shall be duly
endorsed or assigned either to the Company or in blank.
(b) Redemption Procedure. The payment of cash pursuant to an Optional
Redemption shall be payable on the Optional Redemption Date. If any portion of the payment pursuant to an Optional Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of an Optional Redemption Amount in connection with an Optional
Redemption remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Optional Redemption, ab initio, and, with respect to the Companys failure to
honor the Optional Redemption, the Company shall have no further right to exercise such Optional Redemption.
Section 7.
Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of a Majority in Interest shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries
to, directly or indirectly:
(a) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any
indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
(b) other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
(c) repay, repurchase or
offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to (i) the Conversion Shares or Warrant Shares as permitted or required under
the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents pursuant to employee, director or consultant repurchase plans or similar agreements; or
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(d) prepay any Indebtedness, other than the Notes if on a pro-rata basis and other than pursuant
to payments of Permitted Indebtedness.
Section 8. Events of Default
(a) Event of Default means, wherever used herein, any of the following events (whatever the reason for such event and
whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
(i) the Companys or any Subsidiarys failure to pay to the Holder any amount of Principal, Interest, late charges or other amounts
when and as due under this Note (including, without limitation, the Companys or any Subsidiarys failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Exchange Agreement) or any
other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest, late charges or other amounts when and as due, in which case
only if such failure remains uncured for a period of at least fifteen (15) days;
(ii) the occurrence of any default under,
redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries, other than in any amount not in excess of an aggregate of $150,000;
(iii) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by
or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within sixty (60) days of their initiation
(iv) the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the filing by it of a petition seeking reorganization or relief under any applicable federal, state or
foreign law, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any Subsidiary in furtherance of any such action;
(v) the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a
voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any
Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or
foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a
period of sixty (60) consecutive days;
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(vi) a final judgment or judgments for the payment of money aggregating in excess of $150,000
are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within forty-five (45) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) days
after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $150,000 amount set forth above so long as the Company provides the
Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary
(as the case may be) will receive the proceeds of such insurance or indemnity within forty-five (45) days of the issuance of such judgment;
(vii) the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable
grace period, any payment with respect to any Indebtedness in excess of $150,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good
faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of
$150,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or
the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations
(including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;
(viii) other than as specifically set forth in another clause of this Section 8(a), the Company or any Subsidiary breaches, in any
material respect, any representation, warranty, covenant or other term or condition of any Transaction Document (including, without limitation, the Amended Security Agreement, except, in the case of a breach of a covenant or other term or condition
that is curable, only if such breach remains uncured for a period of ten (10) consecutive Trading Days after notice of breach from Holder or fifteen (15) consecutive Trading Days from when the Company became aware of such breach (in each
case, subject to any grace or cure period provided therein);
(ix) any material provision of any Transaction Document (including, without
limitation, the Amended Security Agreement) shall at any time for any reason (other than pursuant to the express terms thereof or such provision has been performed in full or waived by the relevant party) cease to be valid and binding on or
enforceable against the parties thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the
Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document (including, without limitation, the Amended Security Agreement);
(x) the Amended Security Agreement shall for any reason fail or cease to create a separate valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on the Collateral (as defined in the Security Agreement) in favor of the Holder; or
(xi) any material damage to, or loss, theft or destruction of, any material portion of the Collateral, whether or not insured, which causes,
for more than thirty (30) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could have a Material Adverse Effect.
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(b) Remedies upon Event of Default.
(i) If an Event of Default occurs and is continuing with respect to any of the Notes, the Holder may declare all of the then outstanding
Principal of this Note and all other Notes held by the Holder, including any Interest, to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (iii), (iv) and/or (v) of
Section 8(a), this Note shall become due and payable automatically without further action or notice. In the event of such acceleration, the amount due and owing to the Holder shall be 110% of the outstanding Principal of the Notes held by the
Holder (plus all accrued and unpaid Interest and late charges, if any). The Holders remedies under this Note shall be cumulative.
Section 9. Miscellaneous.
(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number
or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 9(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile
number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Exchange Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) 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 prior to 5:30 p.m. (New York City time) on any date, (ii) 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, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be
given.
(b) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is
a direct debt obligation of the Company.
(c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed,
the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated,
lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the New York Courts). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York
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Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.
(e) Waiver. Any waiver by the
Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other
occasion. Any waiver by the Company or the Holder must be in writing.
(f) Severability. 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 it shall be found that
any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable
law.
(g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day.
(h) Headings. The headings contained herein are for convenience
only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
(i) Secured
Obligation. The obligations of the Company under this Note are secured by certain assets of the Company pursuant to the Amended Security Agreement, dated as of the date of the Exchange Agreement, between the Company and the Secured Parties (as
defined therein).
(j) Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price, the Closing
Bid Price, the Closing Sale Price or fair market value (as the case may be) or the arithmetic calculation of the Conversion Rate or the applicable Optional Redemption Amount, the Company or the Holder (as the case may be) shall submit the disputed
determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or
(ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute (including, without limitation, as to whether any issuance or sale or deemed issuance or sale was an issuance or
sale or deemed issuance or sale of Excluded Securities). If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination or arithmetic calculation (as the case
may be) being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days,
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submit via facsimile (a) the disputed determination of the Conversion Price, the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) to an independent,
reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate or the applicable Optional Redemption Amount or to an independent, outside accountant as the Company
and Holder mutually agree upon. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and notify the Company and the Holder of the results
no later than ten (10) Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment banks or accountants determination or calculation (as the case may be) shall be
binding upon all parties absent demonstrable error.
*********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized
officer as of the date first above indicated.
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AUTHENTIDATE HOLDING CORP. |
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By: |
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Ian C. Bonnet |
Title: |
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Chief Executive Officer |
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Facsimile No. for delivery of Notices: |
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ANNEX A
NOTICE OF CONVERSION
The
undersigned hereby elects to convert principal under the 9% Senior Subordinated Secured Convertible Note due December 17, 2016 of Authentidate Holding Corp., a Delaware corporation (the Company), into shares of common stock
(the Common Stock), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer
taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of
the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any
transfer of the aforesaid shares of Common Stock.
Conversion calculations:
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Date to Effect Conversion: |
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Principal Amount of Note to be Converted: |
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Number of shares of Common Stock to be issued: |
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Address for Delivery of Common Stock Certificates: |
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Or |
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DWAC Instructions: |
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Schedule 1
CONVERSION SCHEDULE
The 9% Senior
Subordinated Secured Convertible Note due on December 17, 2016 in the original principal amount of $950,000.00 is issued by Authentidate Holding Corp. This Conversion Schedule reflects conversions made under Section 4 of the above
referenced Note.
Dated:
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Amount of
Conversion |
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Aggregate
Principal Amount
Remaining Subsequent to
Conversion (or original
Principal Amount) |
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Exhibit 4.2
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
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No. 2015 B-1 |
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December 17, 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 THREE MILLION, EIGHT HUNDRED THOUSAND
(3,800,000) 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 limitations 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 11, 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 certain Original Notes (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 Companys Common Stock as reported on the principal
Trading Market for the Companys 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) Exempt Issuance shall have the meaning ascribed to such term as set forth in
the New Note issued to the original Holder of this Warrant pursuant to the Exchange Agreement.
(f) 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.
(g) Expiration Date means the 54-month anniversary of the Initial Exercise
Date.
(h) 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 VER 83, LLC.
(i) 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.
(j) Issue Date means
December 17, 2015.
(k) Securities Act means the Securities Act of 1933, as amended.
(l) 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 THREE MILLION, EIGHT HUNDRED THOUSAND (3,800,000) 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 a wire transfer of immediately available U.S. funds to an account designated in writing by the Company.
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), 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 unless otherwise prohibited by applicable law, the
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Holder shall have the right to exercise this Warrant in full or in part on a cashless basis, computed using the following formula:
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 Companys Board of Directors.
(b) Company Warrant Call. Commencing on a date which is at least one Trading Day after the Initial Exercise Date, the Company shall
have the right, subject to satisfaction of the conditions in this Section 2(b), to cause the exercise of this Warrant (Mandatory Exercise). If the Company elects to require the Mandatory Exercise of this Warrant, the Company
shall deliver prior written notice to the Holder at least ten (10) business days (Mandatory Exercise Notice) prior to the effective date (Mandatory Exercise Effective Date) of such Mandatory Exercise. In
order to effectuate a Mandatory Exercise, the following conditions shall be satisfied as of the Mandatory Exercise Effective Date: (i) the Closing Bid Price for the twenty (20) consecutive Trading Days prior to the date of the Mandatory
Exercise Notice shall be equal to or in excess of $0.45 (as adjusted for stock splits, stock combinations and the like occurring from and after the Issuance Date) and (ii) all of the Warrants issued pursuant to the Exchange Agreement are called
by the Company for a Mandatory Exercise. If the Company elects to require the Mandatory Exercise of this Warrant, then the Holder must exercise all, but not less than all, of this Warrant for all of the then-remaining Warrant Shares for cash as
further set forth herein. Notwithstanding anything contained in this Section 2(b) to the contrary (but subject to the last sentence of this Section 2(b)), the Company may not exercise its right under this Section 2(b) to the extent
that (i) the Holder would be prevented from exercising the Warrant in compliance with any lockup agreement it may enter into with the Company or (ii) the Holder delivers a written notice to the Company stating that such exercise would
result in a violation of Section 2(i)(A) (a Blocker Notice) or if such exercise would violate Section 2(i)(B), then in respect of such mandatory exercise the Company shall have the right to require the Holder to exercise
this Warrant for such number of Warrant Shares that may be exercised hereunder without violating either subsection (A) or (B) of Section 2(i). Thereafter and from time to time, the Holder shall further exercise this Warrant (so long
as on any proposed date for a subsequent mandatory exercise all of the conditions described in this Section 2(b) are satisfied) in such amounts and from time to time until this Warrant is fully exercised, subject to ongoing compliance with this
Section 2(b) and Section 2(i).
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(c) 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 Holders 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.
(d) Intentionally Omitted.
(e) No Fractional Shares. If a fractional share of Warrant Shares would, but for the provisions of this Section 2(e), be
issuable upon exercise of the rights represented by this Warrant, the Company shall round a fractional share to be delivered to Holder up to the next whole share.
(f) 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 exercise hereof or credit the Holders balance account with DTC, as applicable (a
Delivery Failure), 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 Holders request, (1) pay cash to the Holder in the amount by which (x) the Holders 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 Holders 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 Companys failure to timely deliver certificates representing the
Securities as required pursuant to the terms hereof.
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(g) 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).
(h) Reservation of Shares. During the Exercise Period, the
Company shall reserve and keep available out of its authorized but unissued Common Stock equal to 125% of the 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 non-assessable 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.
(i) 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 New Notes or the 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(i)(A), 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(i)(A) 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 Holders 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(i)(A), 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
Companys 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 Companys transfer
agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the
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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(i)(A), 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(i)(A) 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(i)(A) 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.
(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 (as 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 Companys 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 Companys 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 Holders 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 Purchasers 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.
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 Companys 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
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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) Subsequent Equity Sales. If, at any time while this Warrant is outstanding, the
Company sells or grants any option to purchase, or grants any right to reprice, or otherwise dispose of or issues, any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at a price per share that is lower
than the initial Conversion Price of the New Note (as defined in and determined in accordance with the New Note), other than in connection with any Common Stock Equivalents outstanding on the Closing Date (such issuances collectively, a
Dilutive Issuance) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at a price per share that is lower than such Conversion Price, such issuance shall be
deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to the price equal to the product of (A) the then current Exercise Price of this Warrant, multiplied by
(B) the quotient obtained by dividing (i) the Conversion Price of the New Note after giving effect to the adjustment required by Section 5(c) of the New Note by (ii) the then current Conversion Price of the New Note (such lower
price, the Adjusted Exercise Price). For purposes of clarity only, no adjustment in the number of Warrant Shares issuable upon exercise of this Warrant shall occur upon the adjustment to the Exercise Price pursuant to this
Section 3(b). Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company
shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the Dilutive Issuance Notice). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this
Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Adjusted Exercise Price on or after the date of such Dilutive Issuance, regardless of whether the Holder
accurately refers to the Adjusted Exercise Price in the Notice of Exercise.
(c) 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 he would have been entitled if, immediately prior to such event, he 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.
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(d) 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.
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 he 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 he has acquired this Warrant and will acquire the Warrant Shares for his own account for investment and not with a view to the sale or distribution thereof or the granting of any participation
therein, and that he 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 Securities Act.
(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
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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 in accordance with the applicable provisions of the Exchange Agreement).
(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
three (3) 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.
(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
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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.
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 Section 5.7 of 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 Exchange 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) through 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(c) 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 Companys 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 Companys common stockholders. Failure to give such notice, or any defect therein, shall not, however, affect the legality or
validity of any such action.
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.
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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.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and delivered as of the
Issue Date by an officer thereunto duly authorized.
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AUTHENTIDATE HOLDING CORP. |
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By: |
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Name: |
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Ian C. Bonnet |
Title: |
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Chief Executive Officer |
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Address for Notice: |
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300 Connell Drive, 5th Floor |
Berkeley Heights, NJ 07922 |
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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. as of
, 2015, 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. |
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Elects the cashless exercise option pursuant to Section 1.4 of the Warrant, and accordingly requests delivery of
shares of Common Stock, net, pursuant to the following calculation: |
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X = Y (A-B)/A |
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( ) = ( )[( ) -
( )]/( ) |
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 Companys 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 Companys 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:
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Account Number: |
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Account Name: |
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DTC Number: |
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¨ 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:
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Name: |
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(please typewrite or print in block letters) |
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Tax I.D. No. or Social Security No.: |
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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:
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Name: |
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(please typewrite or print in block letters) |
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Tax I.D. No. or Social Security No.: |
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HOLDER: |
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Name: |
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Title: |
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Date: |
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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
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Name: |
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and does hereby irrevocably constitute and appoint
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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.
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On this day of
, before me personally came
, to me known, who being by me duly sworn, did depose and say that he resides at
, that he is the holder of the
foregoing instrument and that he executed such instrument and duly acknowledged to me that he executed the same.
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Exhibit 4.3
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
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Principal Amount: $532,811 |
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Issuance Date: December 15, 2015 |
Maturity Date: December 15, 2016 |
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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.
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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
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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.
(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.
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(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
Borrowers 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
Borrowers 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 Holders 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 Borrowers 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 Holders 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
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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.
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 Borrowers 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 Borrowers 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 Borrowers obligations.
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(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]
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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the Issuance Date.
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BORROWER: |
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AUTHENTIDATE HOLDING CORP. |
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Title: |
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Exhibit 4.4
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
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No. 2015 B-2 |
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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 Companys Common Stock as reported on the principal Trading Market for the Companys 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.
(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).
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(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:
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 Companys 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 Holders 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 Holders 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.
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(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 Holders 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
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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
Companys 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 Companys 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.
(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 Companys 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 Companys 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 Holders 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 Purchasers 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.
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(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
Holders 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 Holders request, (1) pay cash to the Holder in the amount by which (x) the Holders 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 Holders 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 Companys failure to timely deliver certificates representing the Securities as required pursuant to the terms hereof.
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 Companys 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
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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.
(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.
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(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.
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(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 Holders 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 Companys 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 Companys common stockholders. Failure to give such notice, or any defect therein, shall not, however, affect the legality or
validity of any such action.
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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.
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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.
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AUTHENTIDATE HOLDING CORP. |
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Address for Notice: |
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300 Connell Drive, 5th Floor
Berkeley Heights, NJ 07922 |
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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):
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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. |
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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.
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If this box is checked, as long as the Companys 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 Companys 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:
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Account Number: |
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Account Name: |
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DTC Number: |
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¨ 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:
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Tax I.D. No. or Social Security No.: |
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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:
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Tax I.D. No. or Social Security No.: |
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HOLDER: |
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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
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(Please Print) |
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Address: |
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(Please Print) |
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Tax ID No.: |
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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.
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(Print Name) |
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(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.
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Exhibit 10.1
NOTE EXCHANGE AGREEMENT
THIS NOTE EXCHANGE AGREEMENT (this Agreement) is dated as of December 11, 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 VER 83, LLC (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 secured promissory 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 $950,000 dated as of February 17, 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.
Amended Security Agreement means that certain amendment to the Security Agreement, dated as of August 7, 2015, dated
as of the date first set forth above, among the Company, the Holder and the secured party, as named therein.
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 Companys 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.
Conversion Price shall have the meaning ascribed to
such term in the New Note.
Conversion Shares means the shares of Common Stock issuable upon the conversion of the New
Note.
1
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.
New Note means the Secured Subordinated Convertible Note due, subject to the terms therein, due 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 $950,000 in the form of Exhibit A attached hereto.
Original Warrants means the Common Stock Warrants issued by the Company and dated as of April 3, 2015 to purchase an
aggregate of 3,166,667 shares of Common Stock of the Company.
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 or conversion in full of all Additional Warrants and the New Note, ignoring any conversion or 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, the Warrants, the Amended Security Agreement,
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 issued and issuable upon conversion of the New Note and upon exercise of
the Additional Warrants.
Warrant Shares means the shares of Common Stock issuable upon exercise of the Additional
Warrants.
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2. Securities Exchange.
2.1 Closing
(a) Upon
the following terms and subject to the conditions contained herein, Holder agrees to exchange from 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 bearing
interest at the rate of 9% per annum; and (B) Additional Warrants to purchase an aggregate of 3,800,000 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 Companys counsel or such other location and on such Business Day as the parties shall mutually agree.
(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 Companys
obligations under the Original Note held by Holder shall be deemed fully paid and satisfied; 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 PAID IN
FULL 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 PAID IN FULL on the Original Note, it hereby authorizes the Companys 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 and paid in full.
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 Amended Security Agreement, duly
executed by the Company; (iii) a New Note with a principal amount equal to the principal amount of the Holders Original Note, registered in the name of Holder (such original New Note may be delivered within three Trading Days following
Closing Date); (iv) 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 (v) 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 Amended Security Agreement, duly executed by the Holder; (iii) the Holders Original Note (or an affidavit of loss and indemnity undertaking with respect thereto, in a form
reasonably acceptable to the Company); (iv) the lockup and voting agreements duly executed by the Holder, as contemplated by Section 5.8, below; and (v) 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.
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(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 11, 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. 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).
(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 Holders 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 Holders 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 or converts the New Note 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.
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(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 Holders 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 Holders
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.
(f) Own Account. The Holder is and will be acquiring the Securities for the Holders 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 Companys 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 Holders 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
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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.
(k) Representations Regarding Original Notes and Original Warrants. The Holder owns and holds, beneficially and of record, the entire
right, title, and interest in and to the Original Note and Original Warrants 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 Holders 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 occurred 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.
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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 Companys 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 Companys 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.
(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 Conversion Shares, when paid for and issued in accordance with the terms of the New Note, and 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 Conversion Shares and 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).
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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] [CONVERTIBLE]] 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.
(c) Each Holder, severally and not jointly with the other Holders, 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 Companys reliance upon this
understanding.
5.2 Reservation and Listing of Securities. Subject to obtaining the Required Approvals, 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 Companys 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 Companys 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 conversion of the New Notes
and 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 Conversion and 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 Companys stockholders, the Company shall not issue, and no Holder shall be permitted to acquire or purchase (whether upon conversion of the
New Note or 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 Companys 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 Companys 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
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Nasdaq Stock Market or such other Trading Market on which the Companys 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 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 Holders 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 conversion of the New Note (including in connection with the payment of interest thereon) or 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 Companys 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 conversion of the New Note or exercise
of any Additional Warrants, at any meeting of the Companys 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.
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 Waiver of Interest. The Holder hereby irrevocably waives any and all claims, demands, suits, actions, causes of
action and rights whatsoever at law or in equity, now existing or arising relating to any accrued and unpaid interest on the Original Note or any other agreement between the parties. The Holder hereby acknowledges and agrees that it shall not
commence or prosecute in any way, or cause to be commenced or prosecuted, any action in any court relating to such accrued and unpaid interest.
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 of the shares of Common Stock then issued and issuable upon conversion in full of the New Notes (assuming on such date the New Note is
converted in full without regard to any conversion limitations therein), (b) 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), (c) any additional shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the New Notes or the Additional Warrants (in each case, without giving effect to any
limitations on conversion set forth in the New Notes or limitations on exercise set forth in the Additional Warrants), and (d) 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
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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 Companys 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;
(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
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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.
(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 lock up 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
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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 Holders 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
to the extent the Holder is required by law 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.
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.
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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 Holders election.
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.
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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.
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AUTHENTIDATE HOLDING CORP. |
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Address for Notice: Connell Corporate
Center 300 Connell Drive, 5th Floor Berkeley Heights, NJ
07922 Attn: President |
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Fax: |
Name: Ian C. Bonnet Title: President and Chief
Executive Officer |
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[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.
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Name of Holder: |
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VER 83, LLC |
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Signature of Authorized Signatory of Holder: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Email Address of Authorized Signatory: |
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Facsimile Number of Authorized Signatory: |
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Address for Notices to Holder: |
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Address for Delivery of certificated Securities for Holder (if not same as address for notices): |
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EIN Number:
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Principal amount of Secured Note to be Issued at Closing: $950,000
Principal Amount of Original Notes Owned by Holder and Issue Date:
1. Prior Note issued February 17, 2015 in the Principal Amount of $950,000
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EXHIBIT A
FORM OF NEW NOTE
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EXHIBIT B
FORM OF ADDITIONAL WARRANT
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EXHIBIT C
FORM OF LOCKUP AGREEMENT
December , 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:
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Re: |
Lockup Agreement of [
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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
1
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.
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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.
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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 Companys Common Stock or (ii) to any Person who, to the best of the undersigned
Securityholders knowledge, may become a beneficial owner of 5.0% or more of the Companys 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
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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.
(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.
(a) In consideration of the agreement by the Securityholder to the
restrictions against exercisability, conversion and transfer as set forth herein, the Company hereby agrees that the relevant section of each of the Warrants held by the undersigned Securityholder is hereby amended to modify the definition of the
term Expiration Date such that from and after the effective date of this Agreement, the term Expiration Date shall be such date that is the three (3) year anniversary date of the current expiration date of
each such Warrant; provided that the provisions of this Section will not apply to any Warrant that has an Expiration Date after January 1, 2022 immediately prior to the Effective Date. The specific Expiration Date of each Warrant that is
subject to this Agreement shall be set forth on Schedule B to this Agreement.
(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,
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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 Buyers Common Stock from becoming an owner of more than 4.99% of the outstanding shares of the Buyers 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 Companys 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.
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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.
THIS AGREEMENT MAY BE DEEMED TO CONSTITUTE MATERIAL NON-PUBLIC
INFORMATION OF THE COMPANY. SECURITIES LAWS RESTRICT ANY PERSON WHO HAS
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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.
THE SECURITYHOLDER (BY RECEIPT OF
THIS AGREEMENT) AGREES TO KEEP THE COMPANYS 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.
(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 Companys 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
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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.
(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 Holders ability to obtain the Companys 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.
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(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.
(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 Companys 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.
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IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed as of the date
first set forth above.
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SECURITYHOLDER: |
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Signature |
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Print Name: |
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Agreed to and accepted: |
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Authentidate Holding Corp. |
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By: Ian C. Bonnet |
Title: Chief Executive Officer |
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EXHIBIT D
FORM OF VOTING AGREEMENT
Exhibit 10.2
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 Companys 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.
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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 Companys counsel or such other location and on such Business Day as the parties shall mutually agree.
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(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 Companys obligations under the Original Note held by Holder shall be deemed cancelled and replaced with the Companys 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 Companys 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 Holders 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 Holders 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.
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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. 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 Holders
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 Holders 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
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beneficial owner of 20% of more of the Holders 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 Holders 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.
(f) Own Account. The Holder is and will be acquiring the Securities for the Holders 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 Companys 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 Holders 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.
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(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.
(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 Holders 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
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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 Companys 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 Companys 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.
(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.
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(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.
(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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Holders 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.
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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 Companys 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 Companys 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.
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 Companys 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.
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(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;
(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.
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(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.
(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
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any person or entity, other than the Holders 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.
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.
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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 Holders election.
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]
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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.
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AUTHENTIDATE HOLDING CORP. |
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Address for Notice: Connell Corporate
Center 300 Connell Drive, 5th Floor Berkeley Heights, NJ
07922 Attn: President |
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Fax: |
Name: Ian C. Bonnet Title: President and Chief
Executive Officer |
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[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.
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Signature of Authorized Signatory of Holder: |
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Name of Authorized Signatory: |
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Email Address of Authorized Signatory: |
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Facsimile Number of Authorized Signatory: |
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Address for Notices to Holder: |
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Address for Delivery of certificated Securities for Holder (if not same as address for notices): |
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Principal amount of Note to be Issued at Closing:
$
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
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EXHIBIT A
FORM OF NEW NOTE
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EXHIBIT B
FORM OF ADDITIONAL WARRANT
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EXHIBIT C
FORM OF LOCKUP AGREEMENT
December , 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:
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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
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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.
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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.
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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 Companys Common Stock or (ii) to any Person who, to the best of the undersigned
Securityholders knowledge, may become a beneficial owner of 5.0% or more of the Companys 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
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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.
(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.
(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
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4.99% of the outstanding shares of the Buyers Common Stock from becoming an owner of more than 4.99% of the outstanding shares of the Buyers 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 Companys 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.
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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.
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.
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THE SECURITYHOLDER (BY RECEIPT OF THIS AGREEMENT) AGREES TO KEEP THE COMPANYS 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.
(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 Companys 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
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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.
(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 Holders ability to obtain the Companys 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
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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.
(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 Companys 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.
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IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed as of the date
first set forth above.
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SECURITYHOLDER: |
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Signature |
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Print Name: |
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Agreed to and accepted: |
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Authentidate Holding Corp. |
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By: Ian C. Bonnet |
Title: Chief Executive Officer |
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EXHIBIT D
FORM OF VOTING AGREEMENT
Exhibit 10.3
AMENDMENT NO. 1 TO SECURITY AGREEMENT
THIS SECURITY AGREEMENT AMENDMENT NO 1. (this Agreement) is made and entered into as of December 11, 2015 by
Authentidate Holding Corp., a Delaware corporation (the Company) and MKA 79, LLC (MKA) and VER 83, LLC (VER and together the Secured Parties).
W I T N E S S E T H:
WHEREAS, MKA and the Company are parties to a Security Agreement dated as of August 7, 2015 (Original Security Agreement),
which had been entered into by MKA and the Company in connection with the agreement, pursuant to the terms of a Senior Secured Promissory Note dated as of August 7, 2015 (the MKA Note) in the principal amount of $320,000, of MKA to
provide funds to the Company.
WHEREAS, VER has previously provided funds to the Company pursuant to the terms of a Promissory Note dated
as of February 17, 2015, as amended, in the original principal amount of $950,000 (the Original VER Note), which funds were provided without the benefit of any security interest in assets of the Company;
WHEREAS, the Company has requested that VER surrender its Original VER Note in exchange for a new promissory note reflecting all outstanding
principal and accrued interest under the Original VER Note and to provide for a new maturity date;
WHEREAS, VER has agreed to accept the
terms of the proposed exchange and enter into a Note Exchange Agreement of even date herewith provided that payment of principal and interest under the new note is secured on the same terms of the MKA Note, and MKA has agreed to enter into this
Agreement to allow for VER to become a secured party under the Original Security Agreement, as amended by this Agreement.
NOW, THEREFORE,
in consideration of the foregoing, the covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Secured Parties and the Company hereby agree as follows.
1. Certain Definitions. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Original Security
Agreement.
(a) Majority in Interest shall mean the holders of fifty-one percent (51%) or more of the then
outstanding principal amount of both the New VER Note and the MKA Note at the time of such determination.
(b)
Obligations means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the
Company to the Secured Parties, including, without limitation, all obligations under this Agreement and the Secured Notes, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent
all or any part of such payment is avoided or recovered directly or indirectly from any of the Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from
time to time. Without limiting the generality of the foregoing, the term Obligations shall include, without limitation: (i) principal of, and interest on the Secured Notes
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and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Company from time to time under or in connection with this
Agreement or the Secured Notes; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company.
(c) Secured Notes
means the MKA Note and the New VER Note, as may be amended from time to time.
2. Grant and Description. In order to secure the full and complete
payment and performance of the Obligations when due, the Company hereby grants to the Secured Parties, subject to the Permitted Liens, a first priority security interest in all of the Companys rights, titles, and interests in and to the
Collateral (the Security Interest) and subject to the Permitted Liens, pledges, collaterally transfers, and assigns the Collateral to the Secured Parties, all upon and subject to the terms and conditions of this Security
Agreement. If the grant, pledge, or collateral transfer or assignment of any specific item of the Collateral is expressly prohibited by any contract or by law, then the Security Interest created hereby nonetheless remains effective to the extent
allowed by such contract, the UCC or other applicable laws, but is otherwise limited by that prohibition. The Security Interest granted herein shall terminate in accordance with Section 7.1 of the Original Security Agreement.
3. Financing Statements; Further Assurances.
(a) The Secured Parties shall be named as the secured parties on any and all financing statements and security agreements filed pursuant to
this Security Agreement and is authorized to file any and all terminations of such financing statements at such time or times as it determines is appropriate pursuant to the Security Agreement.
(b) As soon as practicable following the execution and delivery of this Agreement and upon the authorization of the Secured Parties, the
Company shall:
(i) file with the State of Delaware and any other offices that the Secured Parties may reasonably request in writing an
amended financing statement that (i) indicates the Collateral in a manner consistent with the definition of the term Collateral as contained in this Agreement, and (ii) contains any other information required by Article 9
of the UCC of the state or such jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment, including whether the Company is an organization, the type of organization, and any organization identification
number issued to the Company and (iii) reflects VER as an additional secured party;
(ii) if necessary to perfect the Security
Interest granted in the Collateral hereunder, file with the U.S. Patent and Trademark Office, such amended financing statements and/or patent security agreements in the form necessary to record the Liens granted hereunder to the Secured Parties on
the Companys patents and patent applications.
4. Inclusion of VER as Secured Party.
Each of MKA and the Company hereby acknowledge, consent and agree that for purposes of the Original Security Agreement, as amended by this
Agreement, (i) VER shall be deemed a Secured Party; (ii) the term Obligations includes all obligations under the New VER Note and the MKA Note and (iii) VER shall be entitled to all rights as a Secured Party under the Original
Security Agreement, as amended by this Agreement, as if VER were an original party to the Original Security Agreement.
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5. Entire Agreement; Continuing Validity of Original Security Agreement. Except as amended under this
Agreement, the Original Security agreement shall remain in full force and effect.
6. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.
7.
Headings. The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
8. Multiple Counterparts. This Agreement has been executed in a number of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement; but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
9. Separate Counsel. Each of VER and MKA and the Company has engaged and consulted with its own attorney, or has declined to do so despite
recommendations from the other Parties to obtain and utilize separate counsel, prior to the execution of this Agreement. Each of the Secured Parties understands, confirms and agrees that the law fir of Becker & Poliakoff LLP, as counsel to
the Company is not acting as counsel to any Secured Party and the undersigned Secured Party has not received any legal advice from Becker & Poliakoff LLP.
Remainder of page intentionally left blank. Signature pages follow.
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[signature page]
AMENDMENT NO.1 SECURITY AGREEMENT
December 11,
2015
IN WITNESS WHEREOF, the Company and the Secured Party have duly executed this Agreement as of the date first written above.
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Ian C. Bonnet |
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Connell Corporate Center 300
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VER 83 LLC |
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MKA 79 LLC |
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Exhibit 10.4
STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT (this Agreement) is made and entered into as of December ,
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 Stockholders 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 Stockholders immediate family, to a trust for the benefit of such Stockholder or any
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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.
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 Stockholders 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 Companys common stock from becoming an owner of more than 4.99% of the outstanding shares of the Companys 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 Stockholders 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.
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(b) Each Stockholder represents that any proxies heretofore given in respect of
Stockholders 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
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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.
(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 Stockholders 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 Stockholders 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:
(i) Buyer has full power and authority to make, enter into and carry out the terms of this Agreement
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(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 Buyers 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 Stockholders 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).
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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 Stockholders 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.
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(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 Stockholders identity and ownership of Shares and the nature of such Stockholders 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
Stockholders address or facsimile shown below such Stockholders signature on the signature page hereof.
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(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 Stockholders obligations under this Agreement is a several obligation of such
Stockholder, and that the failure by any other Stockholder to perform such other Stockholders 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.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the date
first above written.
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Authentidate Holding Corp. |
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By: |
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Ian C. Bonnet |
Its: |
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President and Chief Executive Officer |
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Peachstate Health Management LLC |
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By: |
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Richard Hersperger |
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Chief Executive Officer |
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STOCKHOLDER SIGNATURE PAGE
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Shares Beneficially Owned by Stockholder:
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Shares of Buyer Common Stock: |
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Options to acquire Buyer Common Stock: |
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Restricted Stock Units issued by Buyer: |
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Warrants to acquire Buyer Common Stock: |
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Shares of Common Stock issuable upon conversion of Buyer Preferred Stock |
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Shares of Common Stock issuable upon conversion of Convertible Debt Instruments: |
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Aeon Global Health (CE) (USOTC:AGHC)
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