UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): January 14, 2016

 

 

AUTHENTIDATE HOLDING CORP.

(Exact name of registrant as specified in its charter)

 

 

COMMISSION FILE NUMBER:  0-20190

 

DELAWARE   14-1673067

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

Connell Corporate Center

300 Connell Drive, 1 st Floor

Berkeley Heights, New Jersey 07922

(Address and zip code of principal executive offices)

(908) 787-1700

(Registrant’s telephone number, including area code

 

 

CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING PROVISIONS:

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

Note Amendment Agreement

On January 15, 2016, Authentidate Holding Corp. (the “Company”) entered into a note amendment agreement (the “Amendment Agreement”) with MKA 79, LLC, the holder of an outstanding promissory note in the aggregate principal amount of $320,000 (the “Note”), pursuant to which the Company agreed to modify certain of the terms of such Note as described herein. The Note was originally issued on August 7, 2015 and following a prior amendment, was due and payable on January 15, 2016. The terms and conditions of such note are described in a Current Report on Form 8-K filed on August 12, 2015, which information is incorporated by reference herein.

Pursuant to the Amendment Agreement, the holder of the Note agreed to extend the maturity date to April 15, 2016 and may elect to further extend it for an additional 90 days. In consideration for such agreements, the Company agreed that the Note would be further modified so that it would be convertible into shares of common stock of the Company at an initial conversion price of $0.54 per share, which was equal to the most recent consolidated closing bid price of the Company’s common stock immediately prior to the execution of the Amendment Agreement. Based on the conversion price, the principal amount of the Note will be convertible into up to 592,593 shares of common stock. The conversion price is only subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. The holder shall not have the right to convert the Note to the extent that such conversion would result in the holder being the beneficial owner in excess of 4.99% of the Company’s common stock. The other terms and conditions of the Note were not amended. Subject to certain exceptions, the Note contains customary covenants against incurring additional indebtedness and granting additional liens and contains customary events of default. MKA 79, LLC is an entity controlled by J. David Luce, a member of the board of directors of the Company.

The foregoing does not purport to be a complete description of the Note or the amendment 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.

Voting and Lockup Agreements

Effective January 14, 2015, the Company and Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories (“AEON”) entered into voting agreements with each of the Company’s officers and directors and certain other stockholders (the “Securityholders”) pursuant to which they agreed to vote all of the shares of Company’s 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 that certain definitive agreement for the acquisition of all of the outstanding membership interests of AEON entered into between the Company, RMS Merger Sub LLC and AEON on November 18, 2015 (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 Company’s common stock from becoming an owner of more than 4.99% of the outstanding shares of the Company’s common stock. Further, as of such date, the voting agreements that the Company had previously entered into with VER 83, LLC and Lazarus Investment Partners, LLLP in December 2015, which are identical to the voting agreements entered into with the Securityholders described above, were also countersigned on behalf of AEON. The Securityholders that executed voting agreements consist of the following persons: Ian C. Bonnet, Roy E. Beauchamp, Todd A. Borus, Marc Horowitz, J. David Luce, Margaret Luce, Duke 83, LLC, MKA 79, LLC, Charles C. Lucas, William P. Henry, William A. Marshall, Lazarus Investment Partners, LLLP, Douglas B. Luce, Greener Fairways, Inc., and VER 83, LLC. Each stockholder that entered into a voting agreement also 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 Company’s 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.


As previously reported in December 2015, each of VER 83, LLC and Lazarus Investment Partners, LLLP had 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 Company’s 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 Company’s common stock from becoming an owner of more than 4.99% of the outstanding shares of the Company’s common stock. Further, the lockup agreement entered into by VER 83 and the other security holders except Lazarus Investment Partners 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. As previously reported, these 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 Company’s 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, and including the members of AEON. Effective as of January 15, 2016, the Company received the remaining required signatures and the following persons are subject to lockup agreements: Ian C. Bonnet, Roy E. Beauchamp, Todd A. Borus, Marc Horowitz, J. David Luce, Margaret Luce, MKA 79, LLC, Duke 83, LLC, Charles C. Lucas, William P. Henry, William A. Marshall, Lazarus Investment Partners, LLLP, Douglas B. Luce, VER 83, LLC, Greener Fairways, Inc., Aton Select Fund, Ltd., Hanif A. Roshan, Gulzar Roy, Sohail Ali, Holly Carpenter, Shawn Desai, Richard G. Hersperger, and Lissa H. Suda.

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. The form of voting agreement was filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 17, 2015 and the form of lockup agreements previously executed were filed as Exhibit C to Exhibits 10.1 and 10.2 to the Company’s Current Report on Form 8-K filed on December 17, 2015. The form of lockup agreement entered into by the members of AEON is filed as Exhibit 10.2 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 regarding the Amendment Agreement 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 regarding the terms of the Note is incorporated by reference into this Item 3.02. The offers and sales of the securities pursuant to the Amendment Agreement (and the issuance of shares of the Company’s common stock upon conversion of the Note) has 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 Company’s 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.

Item 9.01 Financial Statements and Exhibits.

 

  (d) Exhibits

 

Exhibit
No.

  

Description

10.1    Amendment Agreement dated January 15, 2016
10.2    Form of Lockup Agreement


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.

 

AUTHENTIDATE HOLDING CORP.
By:  

/s/ William A. Marshall

Name:   William A. Marshall
Title:   Chief Financial Officer and Treasurer

 

Date: January 21, 2016


EXHIBIT INDEX

 

10.1    Amendment Agreement dated January 15, 2016
10.2    Form of Lockup Agreement

Exhibit 10.1

NOTE AMENDMENT AGREEMENT

This NOTE AMENDMENT AGREEMENT (this “ Amendment ”), dated as of January 15, 2016 (the “ Effective Date ”), is entered into by and among AUTHENTIDATE HOLDING CORP., a Delaware corporation (the “ Company ” or the “ Borrower ”) and MKA 79, LLC the holder (the “ Holder ”) of the Note (as such term is defined below).

WHEREAS, the Company has issued to the Holder a promissory note in the aggregate principal amount of $320,000 (the “ Note ”) with a maturity date of December 31, 2015 (the “ Maturity Date ”);

WHEREAS, the Company seeks Holder’s consent to modify and extend the Maturity Date of the Note to the date specified hereinafter and, in consideration thereof, the Company and the Holder have agreed to the additional terms set forth herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged the Company and the Holder agree as follows:

SECTION 1. Definitions . As used herein, terms that are defined herein shall have the meanings as so defined, and terms not so defined shall have the meanings as set forth in the Note.

SECTION 2. Amendments to the Prior Note . The Note is hereby amended as follows:

(a) The Note is hereby amended to modify the definition of the term “ Maturity Date ” such that from and after the Effective Date of this Amendment, the term “ Maturity Date ” shall mean April 15, 2016. Notwithstanding the foregoing, however, the Holder may elect or agree to extend the Maturity Date by an additional 90 days (an “ Extension ”); provided that the Holder shall give written notice to the Borrower at least 30 days before such Maturity Date. The Holder agrees to cooperate in good faith with the Borrower in determining whether to extend the Maturity Date pursuant to this clause. Upon the election by the Holder to extend the Maturity Date of this Note, the Maturity Date shall automatically be amended to be the date that is 90 days following the initial Maturity Date.

(b) The Note is hereby amended to add the following new section, to be designated as Section 4, and which shall provide in full as follows:

Section 4 . Conversion .

(a) Voluntary Conversion . At any time after the Effective Date, and until this Note is no longer outstanding, the Principal Amount and interest under this Note shall be convertible, in whole or in part, into shares of common stock of the Borrower (the “ 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 Borrower 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 Borrower 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 Borrower shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Borrower 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

 

1


discrepancy, the records of the Borrower 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 $0.54 per share, subject to adjustment herein (the “ Conversion Price ”).

(c) Mechanics of Conversion .

(i) Conversion Shares Issuable Upon Conversion . The number of shares of Common Stock issuable upon a conversion of the Principal Amount of this Note and accrued interest thereon (the “ Conversion Shares ”) shall be equal to the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted, plus the accrued and unpaid interest thereon which is to be converted, by (y) the Conversion Price.

(ii) Delivery of Certificate Upon Conversion . Not later than three (3) business days after each Conversion Date (the “ Share Delivery Date ”), the Borrower shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of this Note.

(iii) Obligation Absolute . The Borrower’s 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 third party 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 Borrower 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 Borrower 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 Borrower of any such action the Borrower may have against the Holder. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to the terms of this Note 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.

(iv) Reservation of Shares Issuable Upon Conversion . The Borrower covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common 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 be issuable (taking into account the adjustments and restrictions of Section 4(e) upon the conversion of the then outstanding principal amount of this Note. The Borrower 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.

(v) 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 Borrower shall round up such fractional share to the next whole share.

(vi) 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 Borrower 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 Borrower 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 Borrower the amount of such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

2


(d) Holder’s Conversion Limitations . The Borrower 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 Holder’s affiliates (as such term is defined in Rule 405 under the Securities Act of 1933) (an “ Affiliate ”), and any Persons acting as a group together with the Holder or any of the Holder’s 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 Borrower, 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 Securities Exchange Act of 1934, as amended, 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 Holder’s 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 Borrower each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Borrower 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 Securities Exchange Act of 1934, as amended (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 Borrower’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Borrower, or (iii) a more recent written notice by the Borrower or the Borrower’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Borrower shall within two business 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 Borrower, 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 Borrower, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial

 

3


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 61 st day after such notice is delivered to the Borrower. 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) Certain Adjustments .

(i) Stock Dividends and Stock Splits . If the Borrower, 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, (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 Borrower, 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 Borrower) 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.

(ii) Pro Rata Distributions . During such time as this Note is outstanding, if the Borrower 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 Holder’s 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).

(iii) Fundamental Transaction . If, at any time while this Note is outstanding, (i) the Borrower, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Borrower with or into another Person, (ii) the Borrower, 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 Borrower 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

 

4


and has been accepted by the holders of more than 50% of the outstanding Common Stock, (iv) the Borrower, 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 Borrower are effectively converted into or exchanged for other securities, cash or property, or (v) the Borrower, 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) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Borrower, 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) 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 Borrower shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the 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 Borrower shall cause any successor entity in a Fundamental Transaction in which the Borrower is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Borrower under this Note and the other Transaction Documents in accordance with the provisions of this Section 4(e)(iii). 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 “Borrower” shall refer instead to the Successor Entity), and may exercise every right and power of the Borrower and shall assume all of the obligations of the Borrower under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Borrower herein.

(iv) Calculations . All calculations under this Section 4(e) 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 4(e), 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 Borrower) issued and outstanding.

(f) Notice to the Holder .

(i) Adjustment to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of Section 4(e), the Borrower 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 Borrower shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the approval of any stockholders of the Borrower shall be required in connection with any reclassification of the

 

5


Common Stock, any consolidation or merger to which the Borrower is a party, any sale or transfer of all or substantially all of the assets of the Borrower, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (D) the Borrower shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Borrower, then, in each case, the Borrower 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 Borrower’s records, 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 Borrower, the Borrower 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.

(c) The Note is hereby amended to delete the last sentence of paragraph 2 of the Note and to replace such deleted text with the following provision:

At any time after the Effective Date, and from time to time, the Borrower may deliver a notice to the Holder (an “ Redemption Notice ” and the date such notice is deemed delivered hereunder, the “ 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 Principal Amount noticed for redemption, and all accrued but unpaid interest thereon, (such amount being the “ Redemption Amount ”) on the 10 th business day following the Redemption Notice Date (such date, the “ Redemption Date, ” such 10 business day period, the “ Redemption Period ” and such redemption, the “ Redemption ”). The Redemption Amount is payable in full on the Redemption Date. The Borrower covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Redemption Notice through 5:00 p.m. (New York time) on the business day immediately preceding the Redemption Date. Unless a Holder elects to convert its Note prior to the time and date specified above, each Holder shall, prior to 5:00 p.m. (New York time) on the Redemption Date, return any and all original Notes to be redeemed to the Borrower (or such other place at set forth in the Redemption Notice) and such certificates shall be duly endorsed or assigned either to the Borrower or in blank.

(d) The Note is hereby amended to provide that Section 4, Section 5 and Section 6 shall be renumbered amended as Section 5, Section 6 and Section 7 and all references in the Note to Section 4, Section 5 or Section 6 shall be amended to be references to Section 5, Section 6 or Section 7, as the case may be.

(e) The Holder hereby acknowledges that the shares of Common Stock which may be issued upon conversion of the Note are subject to the terms and conditions of a lockup agreement previously executed by the Holder and shall be restricted from transfer in accordance with the terms and conditions of such lockup agreement.

 

6


SECTION 3. No Defaults . The Borrower and Holder, by execution of this Amendment, each hereby represent and warrant to the other, that as of the date hereof, no Event of Default has occurred under the Note and no Event of Default exists or is continuing with respect to the Note.

SECTION 4. Effect of Amendment . Upon the Effective Date of this Amendment, (i) the applicable portions of this Amendment shall be a part of the Note and the Note shall incorporate the provisions of Section 2 hereof, and (ii) each reference in the Note to “this Note”, “this Agreement”, “hereof”, “hereunder”, or words of like import, and each reference in any other document or agreement to the Note shall mean and be a reference to the Note as amended hereby. Except as expressly amended hereby, the Note (as it may have previously been amended) shall remain in full force and effect in accordance with its terms, and is hereby ratified and confirmed by the parties hereto. This Amendment shall be affixed to the original of the Note and become a part thereof.

SECTION 5. Consent . Each of the Holder and the Borrower hereby consents to the terms of the amendments to the Note contained in this Amendment. This Amendment is not intended to serve as, and shall not be construed by operation of law or otherwise, as a novation of the Note.

SECTION 6. Representations and Warranties . Each of the parties hereto represents and warrants that it is duly incorporated or otherwise organized, validly existing and (to the extent applicable) in good standing under the laws of the jurisdiction of its formation, that it has all requisite power and authority to enter into this Amendment and that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation. The Holder further represents and warrants that (i) it is the beneficial or record owner of the Note originally issued to it, free and clear of any and all pledges, liens, security interests, mortgage, claims, charges, restrictions, options, title defects or encumbrances and (ii) such Holder has not assigned, pledged or otherwise transferred the Note or any interest in the Note.

SECTION 7. Governing Law; Miscellaneous .

(a) This Amendment shall be governed by and construed in accordance with the laws of the State of New York without reference to principles of conflicts of law. Headings used herein are for convenience of reference only and shall not affect the meaning of this Amendment. This Amendment may be executed in any number of counterparts, and by the parties hereto on separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same agreement. Executed counterparts may be delivered via facsimile or other means of electronic transmission. The Holder agrees that this Amendment shall be affixed by each Holder to its Note and become a part thereof.

(b) This Amendment 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. No provision of this Amendment may be waived, modified, supplemented or amended except in a written instrument signed by the Borrower and the Holder. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the rights at a later time to enforce the same. No waivers of or exceptions to any term, condition, or provision of this Amendment, 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. This Amendment shall be binding upon and shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

(c) The Holder has been advised and had the opportunity to consult with an attorney or other advisor prior to executing this Amendment. The undersigned Holder understands, confirms and agrees that counsel to the Borrower is not acting as counsel to the Holder and the undersigned Holder has not relied upon any legal advice except as provided by its own counsel.

 

7


IN WITNESS WHEREOF , the parties have caused this Amendment to be executed by their respective duly authorized representatives, as of the date first set forth above

 

AUTHENTIDATE HOLDING CORP.
By:  

/s/ Ian C. Bonnet

Name:   Ian C. Bonnet
Title:   Chief Executive Officer

 

ACCEPTED AND AGREED:
HOLDER: MKA 79, LLC
By:  

/s/ J. David Luce

Name:   J. David Luce
Title:  
Principal Amount of Note: $ 320,000.00

 

8


ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the Convertible Note due October 15, 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:

 

Date to Effect Conversion:
Principal Amount of Note to be Converted:
Number of shares of Common Stock to be issued:
Signature:  

 

Name:  

 

Address for Delivery of Common Stock Certificates:

 

 

Or  
DWAC Instructions:
Broker No:  

 

Account No:  

 

 

9

Exhibit 10.2

January      2016

Authentidate Holding Corp.

Connell Corporate Center

300 Connell Drive, 5 th Floor

Berkeley Heights, NJ 07922

Attn: Ian C. Bonnet, Chief Executive Officer

Dear Mr. Bonnet:

 

  Re: Lockup Agreement of [AEON MEMBER]

The undersigned is a current member of Peachstate Health Management LLC, (d/b/a AEON Clinical Laboratories), a limited liability company formed under the laws of the state of Georgia (“Target”).

The undersigned understands that Authentidate Holding Corp. (the “Company”) is proposing to enter into a transaction with 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 entered into a definitive transaction agreement with Target to evidence the terms and conditions of the Transaction (the “Transaction Agreement”). The undersigned further understands that it is a condition to the closing of the Transaction that it enters into this Agreement with the Company.

Following the effective date of the Transaction, the undersigned will receive one or more of the following securities issued by the Company: shares of common stock (the “Common Stock”); shares of convertible preferred stock of the Company (the “Preferred Stock”); Restricted Stock Units (the “RSUs”); Common Stock Purchase Warrants (the “Warrants”); and certain stock options which have expiration dates subsequent to the “Measurement Date” (as defined below) (the “Options”).

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

 

1


1. Restrictions on Exercise or Conversion of Derivative Securities

(a) In connection with the Transaction, the undersigned 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 whether now or hereinafter owned by him, her or it shall be convertible or exercisable in any manner and the undersigned 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 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.

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 will not, directly or indirectly, through an “affiliate”, “associate” (as such terms are defined in the General Rules and Regulations under the Securities Act of 1933, as amended (the “Securities Act”)), a family member or otherwise, offer, pledge, hypothecate, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, or transfer or grant any rights with respect thereto in any manner (collectively, a “Transfer”), any of the Covered Securities (i) to any Person who is the beneficial or record owner of 5.0% or more of the Company’s Common Stock or (ii) to any Person who, to the best of the undersigned’s knowledge, may become a beneficial owner of 5.0% or more of the Company’s Common Stock as a result of such transaction. The undersigned agrees that prior to any proposed Transfer of a Covered Security, the undersigned will send notice to the Company of the proposed Transfer which sets forth the number of Covered Securities to be Transferred and the identity of the transferee (if known), and the undersigned 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 undersigned no later than forty-eight (48) hours after the Company receives notice of the proposed Transfer. Further, the undersigned will not, during the Lock-Up Period, enter into any swap or any other

 

2


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 undersigned during the Lock-Up Period so long as the acquirer of the Covered Securities by written agreement with the Company entered into at the time of the transfer and delivered to the Company prior to the consummation of such transaction, agrees to be bound by the terms of this Agreement.

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

3. Other Agreements

(a) In consideration of the agreement by the undersigned 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 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.

(b) The undersigned 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, if the undersigned 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 ninety (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 undersigned for at least one (1) year that were placed on such securities solely because the undersigned 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 undersigned 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 undersigned 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 Company’s Common Stock from becoming an owner of more than 4.99% of the outstanding shares of the Company’s Common Stock until the occurrence of the Permitted

 

3


Conversion/Exercise Event. The Company further agrees that if the stockholders of the Company approve the foregoing amendment to the Company’s certificate of incorporation, then upon the filing by the Company of the appropriate Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware, the transfer restrictions set forth in Section 2(a) of this Agreement, solely with respect to shares of Common Stock now held or subsequently acquired by the undersigned, shall immediately terminate without any further action on the part of the Company or the undersigned.

 

  4. Representations of the Undersigned

(a) The undersigned acknowledges and understands that unless and until the Permitted Conversion/Exercise Event occurs, the undersigned 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 undersigned.

(b) The undersigned (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 undersigned 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 undersigned).

(c) The undersigned 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 undersigned, and is enforceable against the undersigned in accordance with its terms.

5. Confidentiality

THIS AGREEMENT MAY BE DEEMED TO CONSTITUTE MATERIAL NON-PUBLIC INFORMATION OF THE COMPANY. SECURITIES LAWS RESTRICT ANY PERSON WHO HAS MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY (INCLUDING THE MATTERS WHICH ARE THE SUBJECT OF THIS AGREEMENT) FROM PURCHASING OR SELLING SECURITIES OF THE COMPANY OR FROM COMMUNICATING SUCH INFORMATION TO ANY OTHER PERSON. THE UNDERSIGNED (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 UNDERSIGNED (BY RECEIPT OF THIS AGREEMENT) AGREES TO KEEP THE COMPANY’S CONFIDENTIAL INFORMATION (INCLUDING THE INFORMATION CONTAINED HEREIN) STRICTLY CONFIDENTIAL AND NOT TO DISCLOSE SUCH CONFIDENTIAL INFORMATION (INCLUDING THE EXISTENCE OR CONTENTS OF THIS AGREEMENT) TO ANYONE OTHER THAN ITS ADVISORS, INCLUDING COUNSEL AND ACCOUNTANTS, FOR THE SOLE PURPOSE OF EVALUATING THE MATTERS DESCRIBED HEREIN; PROVIDED THAT THE UNDERSIGNED MAY DISCLOSE SUCH CONFIDENTIAL INFORMATION IN

 

4


FILINGS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR AS OTHERWISE REQUIRED BY APPLICABLE SECURITIES LAWS. THE UNDERSIGNED 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 UNDERSIGNED AGREES NOT TO PURCHASE, SELL, HYPOTHECATE, PLEDGE OR HEDGE ANY SECURITIES OF THE COMPANY UNTIL SUCH TIME AS THE MATTERS DESCRIBED IN THIS AGREEMENT ARE PUBLICLY DISCLOSED BY THE COMPANY (WHICH THE COMPANY AGREES TO DO BEFORE OR PROMPTLY AFTER THE INITIAL CLOSING) OR OF NO FORCE OR EFFECT.

6. General Matters

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

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

(c) Notwithstanding any other provision of this Agreement, this Agreement will not become effective unless prior to, contemporaneously herewith, or within thirty (30) days following the date hereof, agreements that are in form and substance substantially similar in all material respects to this Agreement (“Substantially Identical Agreements” and together with this Agreement “Lockup Agreements”) have been signed by all Persons set forth on Schedule A 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 A 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 undersigned 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

 

5


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

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

(e) This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. The undersigned parties hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waive, and agree not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

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

 

6


(g) The undersigned acknowledges and agrees that the Company’s remedy at law for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by the undersigned 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 undersigned has been advised and had the opportunity to consult with an attorney or other advisor prior to executing this agreement. The undersigned 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 undersigned and that the undersigned has not relied upon any legal advice except as provided by its own counsel. The undersigned represents and warrants that it has duly authorized its representative to execute this agreement on its behalf.

Remainder of page intentionally left blank; signature page follows.

 

7


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

 

 

[AEON MEMBER]

 

Agreed to and accepted:
Authentidate Holding Corp.

 

By:   Ian C. Bonnet
Title:   Chief Executive Officer

 

8