AUTHENTIDATE HOLDING CORP (Form: 8-K, Received: 02/01/2016 17:30:37)

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 26, 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)

(Former name or former address, if changed since last report)

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

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

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

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

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

CURRENT REPORT ON FORM 8-K

AUTHENTIDATE HOLDING CORP.

TABLE OF CONTENTS


		Page
Item 1.01	Entry into Material Definitive Agreement	3

Item 1.02	Termination of Material Definitive Agreement	3

Item 2.01	Completion of Acquisition or Disposition of Assets	3
	Description of the Merger	3
	Description of AEON Business	6
	Description of Historical AHC Business	19
	Risk Factors	21
	Security Ownership of Certain Beneficial Owners and Management	26
	Certain Relationships and Related Transactions	29

Item 3.01	Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing	29

Item 3.02	Unregistered Sales of Equity Securities	30

Item 5.01	Changes in Control of Registrant	30

Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers	30

Item 8.01	Other Events	33

Item 9.01	Financial Statements and Exhibits	34

Item 1.01

Entry into Material Definitive Agreement.

On January 27, 2016, Peachstate Health Management LLC, d/b/a AEON Clinical Laboratories (“AEON”) was merged into a newly formed acquisition subsidiary of Authentidate Holding Corp. (the “Company”, “Authentidate” or “AHC”), pursuant to a definitive Agreement and Plan of Merger (“Merger Agreement”) dated November 18, 2015, as Amended and Restated on January 26, 2016. The merger certificate was filed with the Secretary of State of Georgia on January 27, 2016. AEON survives the merger as a wholly-owned subsidiary of Authentidate. Information concerning the terms of the Merger Agreement, the other agreements entered into pursuant thereto, and the merger is set forth in greater detail pursuant to Item 2.01 of this Current Report on Form 8-K and the information contained or incorporated by reference in Item 2.01 of this Current Report on Form 8-K is incorporated by reference in this Item 1.01.

Item 1.02

Termination of a Material Definitive Agreement.

As described in Item 5.02 of this Current Report, the Company’s employment of Mr. Ian Bonnet, its former President and Chief Executive Officer ended on January 27, 2016 and his employment agreement dated September 28, 2015 was deemed terminated as of such date. Further, effective with the closing of the merger, Mr. William Henry’s employment as our Interim Chief Strategy Officer ended as of such date, and our employment agreement with him dated August 24, 2015 terminated on such date. As described in greater detail in Item 5.02, Mr. Henry was named our Chief Operating Officer upon the closing of the merger. To the extent required by Item 1.02 of Form 8-K, the information contained or incorporated by reference in Item 5.02 of this Current Report on Form 8-K regarding Mr. Bonnet and Mr. Henry is incorporated by reference in this Item 1.02.

Item 2.01

Completion of Acquisition or Disposition of Assets.

As reported in Item 1.01 of this Current Report on Form 8-K, AEON and Authentidate completed the merger transaction contemplated by the Amended and Restated Merger Agreement on January 27, 2016, at which time, AEON was merged into a newly formed acquisition subsidiary of Authentidate. The merger certificate was filed with the Secretary of State of Georgia on January 27, 2016 and AEON survives the merger as a wholly-owned subsidiary of Authentidate.

The Merger

On November 18, 2015, Authentidate entered into the Merger Agreement with AEON and a newly formed acquisition subsidiary of Authentidate. On January 26, 2016, the parties executed an Amended and Restated Agreement and Plan of Merger primarily for the purpose of providing for the issuance by AHC of shares of its Common Stock (as defined below) in lieu of any shares of AHC Series E Preferred Stock. Also on that date, the parties executed a waiver agreement whereby they removed as closing conditions the requirements that Authentidate receive approval from Nasdaq Stock Market for the transaction and also that Authentidate receive a fairness opinion from an independent third party prior to the closing. All other terms and conditions of the original executed agreement have been included in the Amended and Restated Merger Agreement.

The parties structured the transaction so as to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. For accounting treatment purposes, the transaction will be treated as a reverse acquisition. Under the terms of the Merger Agreement, the parties have agreed that during the period during which additional shares of Common Stock of AHC may be earned, as described below, AEON will continue to operate as a stand alone entity for accounting purposes.

In accordance with the Merger Agreement, the members of AEON prior to the effective time of the Merger have become the holders of shares of Common Stock of the Company, issuable in tranches as described below.

Pursuant to the terms of the Merger Agreement:

•

AEON became a wholly-owned subsidiary of the Company by merging into the newly formed acquisition subsidiary of the Company and is henceforth to be operated as a separate entity thereafter;

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The members of AEON became the holders of shares of Common Stock of AHC, issuable in tranches as follows:

(a) At the closing, the membership interests of AEON shall be converted into the right to receive validly issued, fully paid and non-assessable shares of AHC Common stock for an aggregate of 19.9% of the issued and outstanding shares of the Common Stock, par value $0.001 per share (the “Common Stock”) of the Company (rounded to the nearest whole share) (958,030 total shares of AHC Common Stock on a post-reverse stock split basis of 1 for 9 completed on January 22, 2016) as of the close of business on the business day immediately prior to the closing date;

(b) Within three (3) days after the date that AHC obtains approval of its stockholders for the issuance of additional shares of the Common Stock in excess of 19.9%, AHC will issue to the AEON members additional shares of AHC Common Stock representing an additional 5.0% of the issued and outstanding shares of AHC’s Common Stock (rounded to the nearest whole share) as of the close of business on the business day immediately prior to the closing date;

(c) In the event AEON achieves at least $16,000,000 in EBITDA for the calendar year ending December 31, 2015, then on September 1, 2016, AHC will issue to the former AEON members shares of AHC Common Stock representing an additional 24% of the issued and outstanding shares of AHC Common Stock (rounded to the nearest whole share) as of close of business on the business day immediately prior to the closing date;

(d) In the event AEON achieves at least $65,900,000 in EBITDA, in the aggregate, for the three (3) calendar years ending December 31, 2016, 2017 and 2018, then, on October 1, 2019, subject to the completion of the audited financial statements of AEON for the calendar year ending December 31, 2018, AHC will issue to the AEON members shares of the Common Stock representing an additional 36.1% of the issued and outstanding shares of AHC’s Common Stock (rounded to the nearest whole share) as of the close of business on the business day immediately prior to the Closing Date; provided, however, AHC will issue to the AEON members such number of additional shares of Common Stock so that the total number of shares of AHC Common Stock held by the former AEON members shall equal 85% of the issued and outstanding AHC Common Stock on a post issuance basis (rounded to the nearest whole share) on a Fully Diluted Basis

Finally, the AEON members would be entitled to receive additional shares of AHC Common Stock in the event AEON achieves at least $100,000,000 in EBITDA, in the aggregate, for the four (4) calendar years ending December 31, 2019. Assuming such target EBITDA is satisfied, then within three (3) days following the completion of the audited financial statements for AEON for the calendar year ending December 31, 2019, the number of additional potential shares of Common Stock will equal an additional 5% of the issued and outstanding shares of AHC Common Stock on a post issuance basis (rounded to the nearest whole share), on a Fully Diluted Basis (resulting in the AEON members potentially owning 90% of the issued and outstanding shares of Common Stock on a post issuance basis and Fully Diluted Basis if all the additional tranches are earned). The parties have not determined, as of the date of the filing of this Form 8-K, if AEON has satisfied the EBITDA threshold for December 31, 2015.

For purposes of the transaction, “Fully Diluted Basis” means the aggregate of all outstanding shares of Common Stock, plus the shares of Common Stock issuable upon exercise or conversion of any derivative security outstanding with a conversion or exercise price of $.75 or less (on a pre-reverse split basis); in each case on the close of business on the business day immediately prior to the Closing Date. In the event that all of the EBITDA targets were satisfied, and based upon the Fully Diluted Basis of shares of AHC as of the closing, the AEON members would be entitled to receive an aggregate of 86,420,722 total shares of Common Stock on a post-reverse split basis. Further, the term “EBITDA” means earnings before interest, taxes, depreciation and amortization of AEON operating as an independent and standalone entity and based on inputs calculated in accordance with GAAP and exclude the expenses of the Merger, but shall include EBITDA of any business subsequently acquired by AEON after the closing.

Additional terms of the transaction include:

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Hanif (“Sonny”) Roshan, a founder and the Chairman of AEON prior to the transaction, has been appointed Chairman of AHC as of the closing. The Chief Executive Officer of AEON, Richard Hersperger has been appointed as Chief Executive Officer of AHC. Each of Messrs. Roshan and Hersperger have been appointed to the nine (9) member Board of Directors of AHC. The appointments of Messrs. Roshan and Hersperger as members of the AHC Board of Directors will become effective 10 days following the filing of Form 14F-1 with the SEC, as required in connection with a transaction that may result in a change of control. We expect the appointments to the AHC Board of Directors to become effective on or about February 15, 2016.

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Effective at the closing, the AEON members, have the right, to nominate and have serve as members of the Board of Directors of AHC, two persons for so long as they hold AHC Common Stock. The Board of Directors of AHC has been reconstituted, effective with the closing, to consist of nine (9) persons. As holders of Common Stock, the AEON members will vote together with the Common Stock on all matters to be presented to stockholders.

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As holders of AHC Common Stock, the AEON members will have additional rights to nominate and have appointed additional persons to the AHC Board of Directors as the number of shares of Common Stock issued to them are earned and increased and will vote on the same basis as the other holders of AHC Common Stock.

AHC and the AEON members also entered into a registration rights agreement at the closing with the AEON members whereby AHC will file with the SEC, post closing, one or more registration statements under the Securities Act of 1933, to allow for the resale by the AEON members of the shares of Common Stock held by them. The AHC Common Stock is being issued to the AEON members pursuant to an exemption from registration under the Securities Act of 1933, as amended. AEON has seven members who are exchanging their AEON membership interests for the AHC Common Stock.

The Merger Agreement contemplates that no later than May 31, 2016, AHC will seek stockholder approval for the issuance of any shares of AHC Common Stock in excess of 19.9% of the issued and outstanding shares of Common Stock as of the date of the initial closing. The shares of Common Stock of AHC were delisted from The Nasdaq Stock Market effective January 29, 2016. The Common Stock of AHC is currently listed on the OTCQB market under the symbol “ADAT”.

AHC anticipates seeking to obtain approval from the Nasdaq Stock Market for a relisting of its Common Stock. There can be no assurance that the Nasdaq Stock Market will accept its application, when and if it is submitted by AHC.

Pursuant to the Merger Agreement, in the event that AHC is unable, for any reason, to receive approval by the AHC stockholders of the issuance of the additional shares of AHC Common Stock which may be issued to the AEON members in excess of the initial 19.9% tranche under the Merger Agreement by May 31, 2016, then AHC or the AEON shall rescind the merger and all related transactions.

The Board of Directors of AHC and the members of AEON approved the execution of the Merger Agreement and completion of the transaction effective January 27, 2016.

The foregoing does not purport to be a complete description of the Merger Agreement and is qualified in its entirety by reference to the full text of the Amended and Restated Agreement and Plan of Merger dated as of January 26, 2016, has been filed as Exhibit 2.01 to this Form 8-K and the Registration Rights Agreement, which has been filed as Exhibit 10.1 to this Form 8-K.

Authentidate issued a press release on January 27, 2016 announcing the execution of the Amended and Restated Merger Agreement and issued a press release on January 28, 2016 to announce the closing of the AEON transaction, which press releases are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

Description of the AEON Businesses

The AEON Clinical Laboratories Business

AEON was founded in June, 2010 by Hanif (“Sonny”) Roshan, our Chairman. AEON is based in a 28,000 square foot campus in Gainesville, Georgia.

AEON’s primary business focus is on the “Personalized Medicine” approach to laboratory testing. This includes the testing of an individual’s blood, urine or saliva for the presence of drugs or chemicals and the patient’s DNA profile.

AEON is an innovator in the genomic testing area with three established genetic tests today (pharmacogenomics, cancer genetic testing and cancer tumor) and a pipeline of additional genetic tests in development which it plans to bring to market over the coming eighteen months. AEON is investing to expand its genetic testing capabilities to address the rapidly increasing demand for more personalized medical analysis that involves using an individual’s genetic profile to guide decisions regarding the prevention, diagnosis, and treatment of disease. AEON strives to offer unique testing specifically designed for its increased focus on personalized medicine, with superior service levels. In this effort, AEON provides advanced testing in DNA pharmacogenomics, cancer genetics and molecular microbiology. Genomic testing is more complex than conventional toxicology testing, requires unique knowledge and significantly more sophisticated equipment. As a result, genomic testing commands higher pricing while enjoying significantly less competition.

Toxicology is also a major component of AEON’s product mix and will continue to be an important element of AEON’s business strategy. AEON’s toxicology testing provides information about the medication and other substances in the patient’s system from either urine or oral fluid samples. This information helps guide a clinician’s treatment of a patient. In addition, this testing ensures the safe use of prescriptions and is designed to help doctors provide the highest level of care. AEON offers a comprehensive set of toxicology tests and conducts more than 15,000 tests per month.

AEON supports its national client base from its Gainesville, Georgia headquarters. AEON is focused on technology innovation and efficiency, utilizing state of the art testing equipment and its proprietary methodologies to provide some of the fastest and most reliable test results in the nation. AEON focuses on a service model that emphasizes the importance of the test result for both the client and the patient. By focusing on fast, accurate turnaround of test results and the ability to integrate directly with the electronic medical records of clients, AEON believes it is able to provide clients a unique service that larger clinical laboratories cannot match. Because of the emphasis on its service model AEON believes it is ideally positioned to be a preferred lab provider for personalized medicine. Currently the majority of AEON’s testing volume is in toxicology, however AEON is placing particular focus and emphasis on growing its DNA pharmacogenomics and cancer genetic testing in response to rapidly growing market demand for personalized medical testing.

AEON is a limited liability company. Included as Exhibits to this Form 8-K are (i) consolidated balance sheets as of December 31, 2014 and 2013, together with the related consolidated statements of operations, changes in members’ equity and cash flows for the years ended December 31, 2014 and 2013, together with the report of the independent registered public accounting firm and (ii) unaudited consolidated balance sheet as of September 30, 2015, together with the related unaudited consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014, unaudited consolidated statement of changes in members’ equity for the nine months ended September 30, 2015 and unaudited consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014.

For the year ended December 31, 2014, AEON generated gross revenue of approximately $24,100,000 and net income of approximately $10,824,000 and for the year ended December 31, 2013, AEON generated gross revenue of approximately $15,486,000 and net income of approximately $8,229,000. At December 31, 2014, AEON had total assets of $7,589,709 and members equity of $6,620,000. For the nine months ended September 30, 2015, AEON generated gross revenue of approximately $21,643,000 (unaudited), and net income of $6,889,000 (unaudited). At September 30, 2015, AEON had total assets of $10,268,000 (unaudited) and members’ equity of $6,970,000 (unaudited). AEON’s four primary testing services include:

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Medical Toxicology. AEON’s toxicology testing utilizes HPLC-Tandem Mass Spectrometry testing and provides information about medications and other substances in the patient’s system from either urine or oral fluid samples with rapid 48-72 hour turnaround time. This information helps guide a clinician’s treatment of a patient and helps to ensure the safe use of prescription and other medications in pain management, substance abuse, hospital, and other clinical applications and is also routinely used in employment screening and law enforcement.

Abuse of prescription and illegal drugs has increased greatly over the last decade. AEON uses the latest in mass spectrometry technology to identify individual drugs in patient specimens. AEON provides only confirmatory testing and does not provide basic screens. Screening tests are initial, qualitative drug tests conducted to identify classes of drugs present in the urine and typically are done using immunoassay. They rely on a set threshold above which a positive result is produced and therefore do not detect lower concentrations of a drug. Confirmatory tests are used for further analysis of a sample—to confirm a positive or sometimes, negative, result and typically are done using gas chromatography (GC/MS) or high performance liquid chromatography (HPLC mass spectrometry). Confirmatory testing can identify a specific drug. AEON’s drug testing technology tests over 70 drugs and metabolites in urine and oral fluid samples. This information helps physicians determine whether their patients are compliant with their prescription regimens, and whether they are abusing illegal drugs.

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Pharmacogenomics: AEON’s pharmacogenomics testing provides a “personalized” comprehensive report based on an individual patient’s DNA profile that indicates metabolic rates for defined medications. This information helps guide physician’s medication selections including dosages, leading to targeted and personalized therapy, enabling efficient selection of medications and therapies while reducing side effects and the use of ineffective medication regimens.

As part of AEON’s strategy to address the rapidly increasing demand for more personalized medical analysis, AEON’s innovative and advanced pharmacogenomics lab can analyze the set of an individual’s DNA or inherited genetic differences in drug metabolic pathways, which can affect that individual’s responses to drugs, both in terms of therapeutic effect as well as adverse effects.

AEON’s pharmacogenomics testing provides a “personalized” comprehensive report based on an individual patient’s DNA profile that will indicate metabolic rates for defined medications. This information will help guide physician’s medication selections as well as dosages, leading to targeted and personalized therapy, enabling efficient selection of medications and therapies while reducing side effects and the use of ineffective medication regimens.

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Cancer Genetic Testing. AEON provides testing for hereditary cancer markers, offering multiple BRCA testing options including comprehensive sequencing and deletion/duplication analyses of BRCA1 and BRCA2 and numerous multigene panels. The BRCA gene test is a blood test that uses DNA analysis to identify harmful mutations in either one of these two highly penetrant genes which increase the chance for cancer of the breast, ovaries and fallopian tubes.

AEON provides high quality, cost-effective genetic testing for hereditary cancer markers using cutting-edge next generation sequencing technology. Along with pharmacogenomics testing, AEON’s cancer genomic testing has expanded quickly to address the rapidly growing demand. AEON’s next generation sequence testing, branded the Cancer Detect Profile, provides information on a range of hereditary cancers that details the connection between a patient’s unique genetic makeup and their risk of developing certain prevalent cancers.

AEON believes that it is the first clinical laboratory in the Southeast United States to use an automated process, resulting in lower turnaround time, lower pricing, and the highest coverage. AEON’s diagnostic service provides reports on the patient’s unique genetic makeup, and their associated risks of developing certain types of common cancers, and include significant data showing patient’s DNA profiles. AEON’s highly qualified scientists, along with certified genetic counselors are available for consultation and interpretation of AEON’s reports. These results help healthcare professionals, patients, and their families make future medical care decisions depending on the genomic mutations and associated cancers risks.

AEON’s multiple BRCA testing options including comprehensive sequencing and election/duplication analyses of BRCA1 and BRCA2 and numerous multigene panels. The BRCA gene test is a blood test that uses DNA analysis to identify harmful mutations in either one of these two highly penetrant genes which increase the chance for cancer of the breast, ovaries and fallopian tubes.

AEON offers the analysis of thirty-eight genes covering eighteen different cancers as outlined below:


GENE(S)		ASSOCIATED CANCER(S)/TUMOR(S)
APC		Colorectal, central nervous system, thyroid, liver, duodenal, pancreatic
ATM		Breast, pancreatic
NBN		Breast, prostate, possibly ovarian
BRCA1, BRCA2		Breast, ovarian, prostate, pancreatic, male breast
BRIP1, RAD51C, RAD51D		Breast, ovarian
BMPR1A, SMAD4		Stomach, colorectal, pancreatic
CDH1		Breast, colorectal, gastric
CDK4		Melanoma
CDKN2A		Melanoma, pancreatic
CHEK2		Breast, colorectal
FH		Kidney, leiomyomas
FLCN		Kidney
MAX		Pheochromocytoma
MET		Kidney


MLH1, MSH2, MSH6, PMS2, EPCAM		Ovarian, colorectal, uterine, stomach, small bowel, hepatobiliary, brain, pancreatic, sebaceous, urinary tract

MUTYH		Breast, colorectal
NF1		Optic glioma, gastrointestinal stromal tumor, paraganglioma/pheochromocytoma, neurofibromas, breast, Central nervous system
PALB2		Breast, pancreatic
PTEN		Breast, uterine, thyroid, colorectal, kidney
RET		Thyroid (medullary), Pheochromocytoma
SDHAF2, SDHB, SDHC, SDHD		Kidney, paraganglioma/pheochromocytoma, gastrointestinal stromal tumor
TSC1, TSC2		Kidney, cardiac rhabdomyomas, central nervous system
STK11		Colorectal, small bowel, pancreatic, breast, ovarian
TMEM127		Paraganglioma/pheochromocytoma
TP53		Brain, leukemia, breast, sarcoma, adrenocortical, gastrointestinal, genitourinary
VHL		Kidney, pheochromocytoma, central nervous system

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Molecular Microbiology. Molecular microbiology identifies microorganisms including viruses, bacteria and parasites through DNA or RNA detection vs. traditional microbiology procedures which use culture to grow potential microorganisms. This technique is rapid and highly sensitive, eliminating the need for culturing. Results can be obtained for a variety of pathogens within hours instead of days, creating a powerful diagnostic tool for physicians. AEON’s gastrointestinal panel tests for 22 pathogens from a stool sample and its respiratory panel tests for 20 pathogens from a nasopharyngeal swab.

Scientific Capabilities

AEON believes that its success has been driven by its strong scientific team which has more than 200 years of experience. The more than thirty members of AEON’s scientific team are deeply involved in the operations of its laboratory and are continually working on R&D activities to expand the scope of the tests offered. Five of AEON’s scientific team members have PhDs and three have Masters degrees. All of AEON’s testing uses proprietary sample preparation methods to achieve the highest accuracy available. This methodology was developed with a team of leading scientists over several years, ensuring AEON provides the best information for patient care available.

Revenue and Sales and Marketing

AEON provides testing services to a broad range of health care providers and other customers. The primary client groups serviced by AEON include:

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Physicians

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Clinics

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Medical Centers

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Hospitals

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Rehabilitation Centers or Intensive Outpatient Care Centers

AEON’s services are paid for through a mix of reimbursement from Medicare, Medicaid and private health insurance along with direct pay clients. Currently, the top fifty payors represent over 83% of AEON’s billings with 39% of these billings representing in-network insurance charges. No single customer (payor) accounts for more than 15% of AEON’s revenue or income.

As stated elsewhere in this Report, for the fiscal year ended December 31, 2014, AEON generated gross revenue of $24,100,000 and net income of $10,824,000. For the nine months ended September 30, 2015, AEON generated gross revenue of $21,643,000 (unaudited) and net income of $6,889,000 (unaudited).

Billing for laboratory services is a complicated process involving many payors such as MCOs, Medicare, Medicaid, physicians and physician groups, hospitals, patients and employer groups, all of which have different billing requirements. In addition, billing process arrangements with third-party administrators may further complicate the billing process. For its billing systems, AEON is currently utilizing CollaborateMD as its billing software.

AEON is currently working to become an in-network provider under contract with 100% of its private health insurance payors which it believes will result in higher volumes and higher collections. AEON has a staff of seven focusing on contracting with private health insurance payors and the credentialing required to be an in-network provider. The Company’s initial focus on been on the large, national payors and AEON recently signed a national contract with United Healthcare. As the Company shifts its focus to the large, national payors, management expects the percentage of in-network billings to rapidly increase.

AEON markets its services across a wide spectrum of physician specialties, physician organizations, behavioral and mental health rehabilitation groups, third party administrators (“TPA’s”), pharmacy benefit manager (“PBM’s”), small—medium—large healthcare systems and hospitals utilizing multiple channels including direct marketing, independent agents and distributors.

AEON’s three principal marketing channels include:

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Direct Marketing – AEON employees call direct on accounts ranging from large, national payors to individual physicians.

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Independent Agents – AEON has relationships with independent agents who are directly calling on doctors and selling multiple products and services.

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Distributors – AEON has also teamed with sellers of other medical-related products who offer AEON’s testing services along with their offerings.

AEON’s early marketing strategy involved sending salespeople or independent agents into the field calling directly on individual/independent doctors to use AEON’s services, leveraging independent agents who were already calling on the doctors and selling them a variety of other products and services to produce higher testing volumes. AEON’s marketing approach was based upon an approach which emphasized personally developing the agent network and also marketing AEON’s service-oriented approach as compared to the big, national labs. An early differentiator was (and continues to be) AEON’s willingness to work with the medical provider’s EMR systems—this creates “stickier” customers with higher retention and disincentive for the customers to switch testing companies once AEON is in their EMR system.

AEON is currently refining its marketing strategy to focus on large institutional accounts including large national payors and management companies, large hospitals, hospital systems, treatment centers and other labs. AEON has made significant staff additions to its direct marketing team with emphasis on these larger institutional accounts. The key goal is to reduce the cost of acquisition per new patient and per test. As AEON focuses on direct calling to larger accounts, it will concurrently look to reduce dependence on independent agents, giving AEON better control and lower cost per test. However, the sheer volume of independent agent-driven testing will keep this channel as a significant revenue contributor for the near term.

In conjunction with marketing to larger institutional and national accounts, AEON Company is also targeting to have 100% of its revenues under contract and in-network—targeting over 60% of revenues contracted/in-network by the end of 2016 and over 70% in 2017. The key benefits to this approach are higher test volumes and a higher percentage of collections. These benefits are expected to more than offset the generally lower negotiated in-network rates, while also providing some stability from potential future reimbursement rate reduction pressure.

As AEON continues to grow, it plans to pursue additional Lab-to-Lab Reference relationships to further drive increased contracted volume with lower cost of acquisition per new patient and per test. Under this model large accounts would contract with AEON under two primary scenarios:

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Large account with its own existing lab contracts with AEON to serve as a reference lab;

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Large account without a lab contracts with AEON as a reference lab. In this case AEON will help the account build out a lab and may also provide lab management services.

In each case, AEON believes it will gain significant volumes of new contracted testing.

Industry Background; Competition

The clinical laboratory business is intensely competitive. AEON competes with laboratories owned by hospitals, many larger and smaller independent laboratories, as well as physician office laboratories. The clinical laboratory industry consists primarily of three types of providers: hospital-based laboratories, physician-office laboratories and independent clinical and anatomical pathology laboratories. AEON believes that in 2014, the U.S. clinical laboratory testing industry generated revenues of approximately $60.0 billion based on Washington G-2 reports and other industry publications. The Centers for Medicare and Medicaid Services of the Department of Health and Human Services have estimated that in 2014 there were more than 8,900 hospital-based laboratories, 121,200 physician-office laboratories and 5,900 independent clinical laboratories in the U.S.

Through 2020, the diagnostic and medical laboratory market sector is forecasted to grow at an annualized rate of 6.2%. Demand for industry services is expected to grow due to a number of factors including the movement towards preventative care, the aging population, higher illicit drug use and the increasing trend towards personalized medicine. Another factor impacting the growth of the sector is the increase in the number of insured individuals under the Affordable Care Act. Management believes that large healthcare organizations including payors, providers and administrative service providers will drive increasing testing volumes as they strive to guide the treatment of patients, ensure safe use of prescriptions and help doctors provide the highest level of care.

AEON believes that the key differentiating factors giving it advantages over its competitors include:

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Solutions - AEON provides a full suite of medical testing solutions with rapid reporting.

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Processes - AEON complements its skilled medical and analytical staff with the use of robotic testing systems for precision and speed; each step is automated to avoid human error. This approach enables AEON to provide the fastest, most-reliable turn-around times in the industry for each professional test.

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Reviews - AEON reviews every test result three times for complete confidence; the testing outcomes are reviewed by two different professionals (degreed in biology, chemistry or related sciences), then the final report undergoes a review by a senior scientist before being released. This human touch provides oversight that cannot be achieved by fully-automated reporting processes.

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Reports - Testing reports are comprehensive and easy-to-understand; in each testing protocol the outcomes are produced in formats that a physician can quickly grasp; delivered via portal, fax or EMR.

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Assistance - AEON provides professional assistance in the interpretation of results; trained scientists and/or genetic counselors are on-hand to help the physician understand the results and integrate them into a patient’s overall treatment plan.

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Retention - All samples are retained for four months; unlike most other labs, all specimens are held for long period in the event that re-testing if required. This back-up helps physicians to reduce liability concerns.

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Compliance - AEON employs full-time staff focused on compliance and regulation, is in compliance with all requirements, and all employees adhere strictly to AEON’s compliance program. Through training, education and AEON’s Medical Testing Marketing Platform (MTMP), employees are held to the highest regulatory and ethical standards while retaining a focus on customer satisfaction.

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Training - Training is provided regularly to AEON customers; helping to integrate medical testing into the protocols of a customer’s practice and ensuring proper testing are followed at all times.

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Collaboration - AEON employees are hands-on partners with their customers, providing proactive support, patient education and long-term integration of medical testing within the practice or clinic.

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Partnership - AEON seeks to build a long-term working relationship, earning the customer’s business through its superior products and service.

Diagnostic and medical laboratories are an integral part of patients’ medical evaluation and treatment providing healthcare practitioners with information concerning the onset, severity and cause of patients’ ailments and illnesses. The toxicology laboratories industry is in the growth stage of its life cycle, which is characterized by stronger growth than that of the overall economy, due to rapidly changing technologies and increasing market acceptance of the industry’s services. Over the next five years to 2020, industry revenue is forecast to increase at an annualized rate of 4.7% (as estimated by IBIS). Demand for industry services is expected to grow due to a number of factors including the movement towards preventative care, the aging population, higher illicit drug use and the increasing trend towards personalized medicine. Out-of-pocket costs for laboratory services are expected to decline, due to the healthcare insurance mandates, spurring demand for industry services.

Toxicology laboratories test an individual’s blood, urine or saliva for the presence of drugs or chemicals. Customers include hospitals, physicians and other health care providers, commercial clients and law enforcement who use the test results to assist in the detection of medication and other substances in the patient’s system. Healthcare provider’s use this information to guide the treatment of patients, ensure safe use of prescriptions and help doctors provide the highest level of care. Employers use the information to screen potential employees or for on-going testing for the use of illicit drugs. Typically, industry operators examine immunoassay, gas chromatography or gas chromatography/mass spectrometry (GC/MS) to detect for broad-based drug groups, such as opiates, benzodiazepines or barbiturates.

Higher illicit drug use is the primary driver of employers’ demand for toxicology tests. According to the latest data available from the Society for Human Resource Management, in 2011, 57.0% of businesses in the United States required employees to take drug tests. According to the Substance Abuse and Mental Health Services Administration’s (SAMHSA) 2013 National Survey on Drug Use and Health, 24.6 million Americans aged 12 and older used illicit drugs in the past month, or 9.4% of total adults aged 12 and older, up from 8.9% in 2010.

The high incidence of illicit drug and substance abuse in the United States has driven the demand for toxicology tests for employers and law enforcement, among others. Technological advances in toxicology testing have become increasingly available, accurate and cost-effective, enabling industry operators to test for more substances with higher accuracy. As a result of the Patient Protection and Affordable Care Act (the “Affordable Care Act” or “ACA”), the number of people with health insurance is increasing, encouraging visits to the physician and bolstering demand for toxicology labs to test for abnormalities or substances in blood and urine tests.

The toxicology laboratories industry is highly fragmented, due to being composed of small toxicology laboratories that primarily cater to regional demand, such as the local law enforcement sector. However, some large-scale companies have entered the market and have provided toxicology testing services to some markets (e.g. employers that have a multitude of establishments) throughout the United States. Over the past five years, market share concentration has increased as a result of stronger merger and acquisition activity. Key industry competitors include Ameritox, Aegis, Dominion and Quest Diagnostics. AEON believes that ongoing consolidation in the clinical laboratory testing business will continue. In addition, AEON believes that it and the other large independent clinical laboratory testing companies will be able to increase their share of the overall clinical laboratory testing market due to a number of factors, including cost efficiencies afforded by large-scale automated testing, reimbursement reductions and managed health care entities that require cost efficient testing services and large service networks. In addition, legal restrictions on physician referrals and their ownership of laboratories, as well as increased regulation of laboratories, are expected to contribute to the continuing consolidation of the industry.

Pharmacogenomics seeks to apply the field of genomics to improve the efficacy and safety of therapeutics. Simply put, pharmacogenomics is genetic-based testing to determine patient therapy. Pharmacogenomics testing services give doctors and healthcare provider’s insight into the genetic makeup of each of their patients and how their bodies metabolize and respond to different medications. The information in comprehensive pharmacogenomics testing reports give doctors the ability to prescribe medications and treatments based upon the individual’s genetic makeup.

Due to genetic variations, many patients experience adverse drug reactions (“ADRs”) from drugs that are relatively safe for others. ADRs are a significant cause of mortality and morbidity, which contribute to in-creased economic cost as well as human cost. In the JAMA study, “Incidence of Adverse Drug Reactions in Hospitalized Patients, of the incidence of ADRs, the authors estimated that in 1994, 2,216,000 hospitalized patients had serious ADRs and 106,000 patients had fatal ADRs. Based on those estimates, ADRs are between the fourth and sixth most common causes of death in the United States. ADRs are estimated to result in $1.56 billion to $4.0 billion dollars in direct hospital costs each year.

Regulation; Medicare and Private Reimbursement Policies

AEON’s business is impacted by extensive and frequently changing laws and regulations in the United States (at both, the federal and state levels), and the other jurisdictions in which it conducts business. These laws and regulations include regulations particular to AEON’s business, and laws and regulations relating to conducting business. AEON is also subject to inspections and audits by governmental agencies.

AEON’S testing business is subject to laws and regulations related to the protection of the environment, the health and safety of employees and the handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials. For example, the U.S. Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for healthcare employers in the U.S. This includes requirements to develop and implement multi-faceted programs to protect workers from exposure to blood-borne pathogens, including preventing or minimizing any exposure through needle stick injuries. For purposes of transportation, some biological materials and laboratory supplies are classified as hazardous materials and are subject to regulation by one or more of the

following agencies: the U.S. Department of Transportation, the U.S. Public Health Service, the U.S. Postal Service and the International Air Transport Association. AEON generally uses third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials, and contractually requires them to comply with applicable laws and regulations.

AEON is required to comply with laws and regulations in the United States (at the federal and state levels), and jurisdictions outside the United States in which AEON conducts business, including the European Union, regarding protecting the security and privacy of certain healthcare and personal information. These privacy and security laws include the federal Health Insurance Portability and Accountability Act, as amended, and the regulations thereunder (collectively, “HIPAA”). The HIPAA security regulations establish requirements for safeguarding protected health information. The HIPAA privacy regulations establish comprehensive federal standards regarding the uses and disclosures of protected health information. Together, these laws and regulations establish a complex regulatory framework, and may require a healthcare provider to notify individuals or the government if the provider discovers certain breaches of personal information or protected health information. AEON maintains policies and practices in place, designed to meet all applicable requirements.

All U.S. laboratories that perform drug testing for certain public sector employees and employees of certain federally regulated businesses are required to be certified as meeting the detailed performance and quality standards of the Substance Abuse and Mental Health Services Administration. In order to obtain access to controlled substances used to perform drugs-of-abuse testing in the United States, laboratories must be licensed by the Drug Enforcement Administration. All of AEON’s laboratories, which perform the type of testing described in this paragraph are certified and licensed as required.

The Center for Medicaid and Medicare Services regulate all laboratory testing performed on humans through the Clinical Laboratory Improvements Amendment of 1988. CLIA extends federal oversight to virtually all clinical laboratories by requiring that they be certified by the federal government or by a federally-approved accreditation agency. CLIA requires that all clinical laboratories meet quality assurance, quality control, and personnel standards. Laboratories also must undergo proficiency testing and are subject to inspections.

Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” Laboratories performing high complexity testing are required to meet more stringent requirements than moderate complexity laboratories. Laboratories performing only waived tests, which are tests determined by the Food and Drug Administration to have a low potential for error and requiring little oversight, may apply for a certificate of waiver exempting them from most of the requirements of CLIA. The sanctions for failure to comply with CLIA requirements include suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business; cancellation or suspension of the laboratory’s approval to receive Medicare and/or Medicaid reimbursement, as well as significant fines and/or criminal penalties. The loss or suspension of a CLIA certification, imposition of a fine or other penalties, or future changes in the CLIA law or regulations (or interpretation of the law or regulations) could have a material adverse effect on AEON.

AEON is also subject to state and local laboratory regulation. CLIA provides that a state may adopt laboratory regulations different from, or more stringent than those under federal law, and a number of states have implemented their own laboratory regulatory requirements. State laws may require that laboratory personnel meet certain qualifications, specify certain quality controls, or require maintenance of certain records.

Existing federal laws governing federal health care programs, including Medicare and Medicaid, as well as similar state laws, impose a variety of broadly described fraud and abuse prohibitions on health care providers, including clinical laboratories. These laws are interpreted liberally, and enforced aggressively by multiple government agencies, including the U.S. Department of Justice, HHS’ Office of Inspector General

(“OIG”), and various state agencies. Historically, the clinical laboratory industry has been the focus of major governmental enforcement initiatives. The federal government’s enforcement efforts have been increasing over the past decade, in part as a result of the enactment of HIPAA, which included several provisions related to fraud and abuse enforcement, including the establishment of a program to coordinate and fund federal, state and local law enforcement efforts. The Deficit Reduction Act of 2005 also included new requirements directed at Medicaid fraud, including increased spending on enforcement and financial incentives for states to adopt false claims act provisions similar to the federal False Claims Act. Recent amendments to the False Claims Act, as well as other enhancements to the federal fraud and abuse laws enacted as part of the ACA, are widely expected to further increase fraud and abuse enforcement efforts. For example, the ACA established an obligation to report and refund overpayments from Medicare within 60 days of identification; failure to comply with this new requirement can give rise to additional liability under the False Claims Act and Civil Monetary Penalties statute. On February 16, 2012, CMS issued a proposed rule to establish regulations addressing the reporting and returning of overpayments. Although the rule has not been finalized, cases have started to emerge with potential False Claims Act liability for retaining an overpayment beyond the 60-day deadline and the necessity to act quickly once an overpayment has been identified.

The federal health care programs’ anti-kickback law (the “Anti-Kickback Law”) prohibits knowingly providing anything of value in return for, or to induce, the referral of Medicare, Medicaid or other federal health care program business. Violations can result in imprisonment, fines, penalties, and/or exclusion from participation in federal health care programs. The OIG has published “safe harbor” regulations which specify certain arrangements that are protected from prosecution under the Anti-Kickback law if all conditions of the relevant safe harbor are met. Failure to fit within a safe harbor does not necessarily constitute a violation of the Anti-Kickback Law; rather, the arrangement would be subject to scrutiny by regulators and prosecutors and would be evaluated on a case by case basis. Many states have their own Medicaid anti-kickback laws and several states also have anti-kickback laws that apply to all payers (i.e., not just government health care programs).

From time to time, the OIG issues alerts and other guidance on certain practices in the health care industry that implicate the Anti-Kickback Law or other federal fraud and abuse laws.

Violations of other fraud and abuse laws also can result in exclusion from participation in federal health care programs, including Medicare and Medicaid. One basis for such exclusion is an individual or entity’s submission of claims to Medicare or Medicaid that are substantially in excess of that individual or entity’s usual charges for like items or services. In 2003, the OIG issued a notice of proposed rulemaking that would have defined the terms “usual charges” and “substantially in excess” in ways that might have required providers, including AEON, to either lower their charges to Medicare and Medicaid or increase charges to certain other payers to avoid the risk of exclusion. On June 18, 2007, however, the OIG withdrew the proposed rule, saying it preferred to continue evaluating billing patterns on a case-by-case basis. In its withdrawal notice, the OIG also said it “remains concerned about disparities in the amounts charged to Medicare and Medicaid when compared to private payers,” that it continues to believe its exclusion authority for excess charges “provides useful backstop protection for the public fisc from providers that routinely charge Medicare or Medicaid substantially more than their other customers” and that it will continue to use “all tools available … to address instances where Medicare or Medicaid are charged substantially more than other payers.” Thus, although the OIG did not proceed with its rulemaking, an enforcement action under this statutory exclusion basis is possible and, if pursued, could have an adverse effect on AEON. The enforcement by Medicaid officials of similar state law restrictions also could have a material adverse effect on AEON.

Under another federal statute, known as the “Stark Law” or “self-referral” prohibition, physicians who have a financial or a compensation relationship with a clinical laboratory may not, unless an exception applies, refer Medicare patients for testing to the laboratory, regardless of the intent of the parties. Similarly, laboratories may not bill Medicare for services furnished pursuant to a prohibited self-referral. There are several Stark law exceptions that are relevant to arrangements involving clinical laboratories, including: 1) fair market value

compensation for the provision of items or services; 2) payments by physicians to a laboratory for clinical laboratory services; 3) an exception for certain ancillary services (including laboratory services) provided within the referring physician’s own office, if certain criteria are satisfied; 4) physician investment in a company whose stock is traded on a public exchange and has stockholder equity exceeding $75 million; and 5) certain space and equipment rental arrangements that are set at a fair market value rate and satisfy other requirements. All of the requirements of a Stark Law exception must be met in order for the exception to apply. Many states have their own self-referral laws as well, which in some cases apply to all patient referrals, not just Medicare.

There are a variety of other types of federal and state fraud and abuse laws, including laws prohibiting submission of false or fraudulent claims. AEON takes all laws and regulations applicable to its industry very seriously, and therefore, conducts its business in compliance with all applicable federal and state fraud and abuse laws. However, AEON is unable to predict how these laws will be applied in the future, and as such, AEON gives no assurances that its arrangements will not be subject to scrutiny under such laws. Sanctions for violations of these laws may include exclusion from participation in Medicare, Medicaid and other federal or state health care programs, significant criminal and civil fines and penalties, and loss of licensure. Any exclusion from participation in a federal health care program, or any loss of licensure, arising from any action by any federal or state regulatory or enforcement authority, would likely have a material adverse effect on AEON’s business. Finally, any significant criminal or civil penalty resulting from such proceedings could also have a material adverse effect on AEON’s business.

Medicare beneficiaries’ access to laboratory testing will be integral to the industry’s growth over the next five years. In April 2014, the Protecting Access to Medicare Act of 2014 was enacted into law, which will significantly affect the Clinical Laboratory Fee Schedule (“CLFS”). Most diagnostic services are assigned a code under the Current Procedural Terminology (“CPT”) coding system created by the American Medical Association in 1966. Typically, the CPT code is a five-digit number that is assigned to an item or service, with genetic tests billed using CPT laboratory and pathology codes. In 1984, Congress authorized the creation of the Medicare Clinical Laboratory Fee Schedule for clinical laboratory services. The CLFS is, in reality, many fee schedules, as each carrier is required to establish its own schedule. Payments allowable under the CLFS were to be adjusted annually based on the Consumer Price Index, an index that grew at a rate below the rate of inflation for medical goods and services. One year later, Congress established a National Limitation Amount (NLA) to establish a cap on fees for laboratory services. Following establishment of the NLA, the maximum allowable charge for laboratory services covered by Medicare was the lesser of the provider’s charge for the service, the applicable carrier’s fee schedule amount, or the NLA. Starting in 2017, Medicare payments for clinical diagnostic laboratory tests will be determined by a market-based payment system, effectively basing Medicare payments on the weighted median of private payers’ payment rates for each test. Overall, the Congressional Budget Office (“CBO”) projects that these reforms to the CLFS will cut Medicare spending by $1.0 billion between 2014 and 2019 and an additional $2.5 billion from 2014 to 2024. Overall, this legislation will require laboratories to report variations in payment rates, such as varying payments across payers, thus likely translating to fewer discrepancies in payments. Diagnostic and medical laboratories will likely contend with increasingly competitive reimbursement rates. In addition, laboratories can be fined up to $10,000 per day for failing to report or misrepresenting laboratory payments.

The Medicaid program is a joint state-federal medical assistance program established and governed by Title XIX of the Social Security Act. The program provides assistance to more than fifty million Americans, approximately half of whom are children. The federal government has established broad guidelines for the program. States are free to administer their programs and to establish their own eligibility standards, type and scope of services, and payment rates. States must provide Medicaid benefits to certain individuals who are deemed “categorically needy;” most of these individuals are indigent women and children, and people receiving Social Security disability benefits. States may also provide benefits to individuals who are not “categorically needy” but who are deemed to be in need of assistance. In addition, children who do not qualify for benefits under Medicaid may be eligible to participate in the State Children’s Health Insurance

Program (SCHIP) under Title XIX of the Social Security Act. Medicaid programs also are substantial payors for care provided in skilled nursing facilities. Given this mix of beneficiaries, Medicaid programs are important payors for items and services that are needed by women, children and nursing home residents.

Under the Medicaid program states are required to cover inpatient and outpatient hospital services, physician services, childhood vaccines, and certain laboratory and imaging services. Each state has its own drug testing laws, which limits the extent to which large-scale toxicology laboratories can enter the market and cater to demand throughout the United States.

The Early and Periodic Screening, Diagnostic and Treatment (“EPSDT”) benefit provides comprehensive and preventive health care services for children under age 21 who are enrolled in Medicaid. States are required to provide comprehensive services and furnish all Medicaid coverable, appropriate, and medically necessary services needed to correct and ameliorate health conditions, based on certain federal guidelines. Laboratory testing is covered under EPSDT. In addition, States are required to provide any additional health care services that are coverable under the Federal Medicaid program and found to be medically necessary to treat, correct or reduce illnesses and conditions discovered regardless of whether the service is covered in a state’s Medicaid plan. It is the responsibility of states to determine medical necessity on a case-by-case basis Private payors are likely to consider the following in making coverage decisions regarding genetic tests: current signs and symptoms of the disease the test is intended to diagnose or rule out; personal or family history or risk factors for the disease; whether the test is considered to be investigational or experimental; the site at which the test will be performed; and whether the test will influence management or treatment of the disease.

Like Medicare, private insurers are beginning to show interest in the use of scientific or medical evidence as a basis for coverage decisions. Some private payors are using a formalized technology assessment process to evaluate new tests and treatments. For example, Blue Cross Blue Shield employs a Technology Evaluation Center, the function and goals of which closely resemble Medicare’s Technology Assessment process.

Many private payors have adopted the use of CPT codes and a laboratory fee schedule, making their processes similar to what Medicare employs. Some payors adopt the Medicare approach on an almost wholesale basis, agreeing to pay providers, for example, “95% of the Medicare Fee Schedule.”

The Toxicology Laboratories industry is subject to a heavy level of federal, state and local regulation. The Centers for Medicare and Medicaid Services (CMS) regulates all laboratory testing (except research) performed on humans in the United States through the Clinical Laboratory Improvement Amendments (CLIA). CLIA extends federal oversight to virtually all clinical laboratories by requiring that they be certified by the federal government or by a federally approved accreditation agency. Pursuant to CLIA, clinical laboratories must meet quality assurance, quality control and personnel standards. Labs must also undergo proficiency testing by the College of American Pathologists and are subject to inspections. All clinical laboratories must be properly certified to receive Medicare or Medicaid payments. Drug testing for public-sector employees, a staple of the Toxicology Laboratories industry, is regulated by the Substance Abuse and Mental Health Services Administration, which has established detailed performance and quality standards that laboratories must meet in order to be approved to perform drug testing on employees of federal government contractors and certain other entities.

Management believes that the regulatory landscape, particularly reimbursement rates set by the laboratory fee schedule, will likely become more stringent over the next five years. Starting in 2017, Medicare’s fee schedule will be determined by private payer rates, with more favorable reimbursements for single-source proprietary tests. This change will likely lower the incidence of pain physicians demanding a multitude of high-tech tests for detecting whether or not Medicare beneficiaries use specific drugs. As a result, there will likely be rising demand for proprietary toxicology tests that test for numerous drugs simultaneously.

In March 2010, President Obama signed the Patient Protection and Affordable Care Act. While the laboratory industry agreed to a five-year annual rate reduction of 1.75% to the Medicare clinical lab fee schedule under healthcare reform, the long-term positives are expected to outweigh this reduction. Healthcare coverage has been mandated since 2010, which has stimulated laboratory testing volumes. The PPACA’s inclusion of laboratory services as part of the basic coverage for those currently uninsured will increase the number of patients with access to industry services. Under the PPACA, Medicare will cover the entire cost of preventive services, such as screening tests. In addition, all private health plans must also provide coverage for preventive services.

Facilities and Equipment; Technology

AEON provides its services utilizing state of the art testing equipment and proprietary sampling preparation at its 28,000 square foot campus in Gainesville, Georgia. AEON also uses the latest in robotic sample preparation machinery for its toxicology, pharmacogenomics and hereditary cancer testing. Robotic sample preparation increases AEON’s throughput, as well as minimizes the potential for human errors.

We lease our facilities. under a lease agreement dated March 1, 2014, as amended January 20, 2016. The lease, as amended, provides for a term of 12 years expiring March 2026. The lease payments are as follows:

monthly rent of $46,500 from February 1, 2016 through March 31, 2017;

the monthly rent of $48,000 from April 1, 2017 through March 31, 2018;

the monthly rent of $49,500 from April 1, 2018 through March 31, 2019

the monthly rent of $51,000 from April 1, 2019 through March 31, 2020;

the monthly rent of $52,500 from April 1, 2020 through March 31, 2021;

the monthly rent of $54,000 from April 1, 2021 through March 31, 2022;

the monthly sum of $55,500 from April 1, 2022 through March 31, 2023;

the monthly rent of $57,000 from April 1, 2023 through March 31, 2024;

the monthly rent of $58,500 from April 1, 2024 through March 31, 2025; and

the monthly rent of $60,000 from April 1, 2025 through March 31, 2026.

In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a first priority lien and security interest in substantially all of its assets.

The landlord under the lease is Centennial Properties of Georgia, LLC, a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom are AEON members and will be receiving AHC Common Stock as a result of the transaction. Mr. Roshan is the Chairman of AEON and will be the Chairman of AHC. Mr. Desai is the Chief Technology Officer of AEON. Mr. Roy is the Chief Strategy Officer of AEON.

AEON uses state of the art equipment to evaluate urine specimens for both prescribed and recreational drugs. Specialized machines are used to evaluate DNA derived from human saliva which helps doctors determine which medications are most effective for their patients according to their DNA.

In addition to its testing equipment the Company also utilizes state of the art software applications sold by third party providers. AEON is currently using Comtron’s LABGEN™ Laboratory Information System but is updating to ComProMed’s Polytech LIS. The Polytech software will give the Company added functionality while continuing to allow AEON to interface directly with existing EHR and other systems enabling fast and secure communication of test results. AEON also utilizes Translational Software for Pharmacogenomics and PierianDx for Cancer Genomics.

The Company believes that there has been a tremendous push over the past five years to increase the level of automation in toxicology laboratories. The increased automation has been driven by a combination of factors including shortage of medical technologists, price decreases and improved modularity.

Employees

At January 15, 2015, AEON had approximately 115 full time employees, 39 independent contractors, and 72 independent sales representatives or distribution groups. AEON has no collective bargaining agreements with unions covering its employees, and believes that its overall relations with its employees are good.

DESCRIPTION OF AHC HISTORICAL BUSINESS

AHC and its subsidiaries provide secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Our web-based services are delivered as Software as a Service (SaaS) to our customers interfacing seamlessly with billing, information and document management systems. These solutions incorporate multiple features and security technologies such as business-rules based electronic forms, intelligent routing, transaction management, electronic signatures, identity credentialing, content authentication, automated audit trails and remote patient management capabilities. Both web and fax-based communications are integrated into automated, secure and trusted workflow solutions.

AHC’s telehealth solutions provide in-home patient vital signs monitoring systems and services to improve care for patients and reduce the cost of care by delivering results to their healthcare providers via the Internet.

AHC’s telehealth solutions combine our tablet or Electronic House Call™ patient vital signs monitoring appliances or our Interactive Voice Response patient vital signs monitoring solution with a web-based management and monitoring software module. Both solutions enable unattended measurements of patients’ vital signs and related health information and are designed to aid wellness and preventative care and deliver better care to specific patient segments that require regular monitoring of medical and behavioral health conditions. Healthcare providers can easily view each specific patient’s vital statistics and make adjustments to the patient’s care plans securely via the Internet. The service provides a combination of care plan schedule reminders and comprehensive disease management education as well as intelligent routing to alert on-duty caregivers whenever a patient’s vital signs are outside of the practitioner’s pre-set ranges. Healthcare providers and health insurers are also expected to benefit by having additional tools to improve patient care and reduce in-person and emergency room patient visits and hospital readmissions.

We operate our Authentidate business in the United States with technology and service offerings that address emerging growth opportunities based on the regulatory and legal requirements specific to each market. Our AHC business is engaged in the development and sale of web-based services largely based on our Inscrybe ^® platform and related capabilities and our telehealth products and services. In recent years we have focused our efforts on developing and introducing solutions for use in the healthcare information technology industry. Inscrybe ^® Healthcare is a secure web-based revenue cycle management workflow automation solution that enables healthcare industry participants to securely exchange and track a variety of documents, certificates, authorizations, and other information over different modes of communication, including electronic and fax

delivery. Inscrybe Healthcare incorporates electronic signatures, business- rules based electronic forms, content authentication using AuthentiProof, workflow intelligence for routing and transaction management, and identity credentialing and verification. Inscrybe Healthcare allows users to simplify complex clinical and administrative processes required for patient care, and facilitates order processing, online review and electronic signature of healthcare documentation, while validating the identity of the parties involved. Further, it is designed to comply with Health Insurance Portability and Accountability Act (HIPAA) guidelines. We designed the system in a modular fashion so it is easily configurable to meet customer needs and allows for the migration from current paper-based processes to an efficient paperless automated work environment. It is used to track and manage all kinds of structured and unstructured data and can be interfaced with existing in-house and external systems, including Health Information Exchange infrastructures. Inscrybe Healthcare includes the following workflow automation solutions:

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Inscrybe Referral and Order Management - provides an automated process for the exchange, update, completion and management of healthcare orders including certificates of medical necessity, plan-of-care forums, written orders, interim orders, prior authorizations, claim attachments and other supporting documentation required by healthcare payors for reimbursement of medical equipment and service claims from care providers. The physician module available with this solution provides physicians and their staff members with the ability to automate the referral order entry and tracking process and enables physicians to electronically sign order documents securely on the web. Physicians can also use this solution to refer patients to other physicians, communicate with patients using secure e-mail and track billable signatures and time spent managing patient care plans to support reimbursements. The solution’s community portal and workflow features enable home care and post-acute care providers, hospitals, health insurers and physicians to streamline important workflow processes which facilitate timely patient care, accelerate referral completion and reimbursement, maximize productivity, enhance compliance and reduce costs.

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Inscrybe Hospital Discharge - automates the hospital discharge planning process and enables hospital case managers, social workers, and discharge planners to optimize the patient discharge process. The Hospital Discharge solution uses defined workflows for patient discharge referrals, eligibility verification and acceptance, and automatic notifications to suitable care facilities or home care providers. The solution improves hospital facility utilization by optimizing patient length-of-stay and bed turnover and can incorporate input from family members into the discharge process resulting in a more efficient, cost-effective discharge planning process and enhanced compliance with patient care plans. Hospitals can also use this solution to monitor post-discharge patient care to help reduce hospital readmissions and related costs imposed by recent regulatory reforms.

We intend to continue our efforts to market AHC’s web-based services and related products in our target markets. We also intend to focus on identifying additional applications and markets where our technology can address customer needs. However, AHC has incurred significant recurring losses and our operations and product development activities have required substantial capital investment to date. These factors, among others, raise substantial doubt about our ability to continue as a going concern based on our historical business and in the event that the AEON transaction becomes subject to any rescission.

Our current AHC business revenues consist principally of transaction fees for web-based hosted software services and revenues from hardware sales, monthly monitoring services and maintenance fees from our telehealth business. For the fiscal year ended June 30, 2015 one customer accounted for approximately 45% of AHC’s consolidated revenues. Growth in our AHC business is affected by a number of factors, including general economic and business conditions, and is characterized by long sales cycles. The timing of customer contracts, implementations and ramp-up to full utilization can have a significant impact on results and we believe our results over a longer period of time provide better visibility into our performance.

RISK FACTORS

You should carefully consider all of the information set forth in this Report on Form 8-K, including the following risk factors, before deciding to invest in any of our securities. The risks below are not the only ones that we face. Additional risks not presently known to us, or that we presently deem immaterial, may also negatively impact us. Our newly acquired AEON business, consolidated financial condition, revenues, results of operations, profitability, reputation or cash flows could be materially impacted by any of these factors.

This Report on Form 8-K also includes forward-looking statements that involve risks or uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face described below related to our newly acquired AEON business and those we have previously disclosed in our reports filed with the SEC under the Securities and Exchange Act of 1934, as amended, which are incorporated herein and investors are urged to read and consider.

Cautionary Factors That May Affect Future Results

Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this document. The following important factors could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in forward-looking statements:

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Heightened competition from commercial clinical testing companies, hospitals, physicians and others.

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Increased pricing pressure from customers and payers.

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Impact of changes in payer mix, including any shift from fee-for-service to discounted or capitated fee arrangements.

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Adverse actions by government or other third-party payers, including healthcare reform that focuses on reducing healthcare costs but does not recognize the value and importance to healthcare of diagnostic testing, unilateral reduction of fee schedules payable to us, competitive bidding, and an increase in the practice of negotiating for exclusive arrangements that involve aggressively priced capitated or fee-for-service payments by health insurers or other payers.

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The impact upon our testing volume and collected revenue or general or administrative expenses resulting from our compliance with Medicare and Medicaid administrative policies and requirements of third-party payers. These include:

(1) the requirements of Medicare carriers to provide diagnosis codes for many commonly ordered tests (and the transition to a new coding set) and the possibility that third-party payers will increasingly adopt similar requirements;

(2) inability to obtain from patients a valid advance beneficiary notice form for tests that cannot be billed without prior receipt of the form;

(3) increased challenges in operating as a non-contracted provider with respect to health plans;

(4) the impact of additional or expanded limited coverage policies and limits on the allowable number of test units; and

(5) the impact of increased prior authorization programs for clinical testing.

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Adverse results from pending or future government investigations, lawsuits or private actions. These include, in particular, monetary damages, loss or suspension of licenses, and/or suspension or exclusion from the Medicare and Medicaid programs and/or criminal penalties.

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Denial, suspension or revocation of CLIA certification or other licenses for any of our clinical laboratories under the CLIA standards, revocation or suspension of the right to bill the Medicare and Medicaid programs or other adverse regulatory actions by federal, state and local agencies.

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Changes in federal, state or local laws or regulations, including changes that result in new or increased federal or state regulation of commercial clinical laboratories, tests developed by commercial clinical laboratories or other products or services that we offer or activities in which we are engaged, including regulation by the FDA and general changes in the healthcare system and healthcare delivery.

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Any adverse events which negatively impact our ability to perform testing, report test results or properly bill customers, or result in the disclosure of confidential information, including potential failures resulting from implementing common IT systems and other system conversions, telecommunications failures, malicious human acts (such as electronic break-ins or computer viruses) or natural disasters.

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Development of technologies that substantially alter the practice of clinical testing, including technology changes that lead to the development of more convenient or cost-effective testing, or testing to be performed outside of a commercial clinical laboratory.

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Inability to properly bill for our services or to obtain appropriate payments for services that we do bill.

The clinical testing business is highly competitive, and if we fail to provide an appropriately priced level of service or otherwise fail to compete effectively it could have a material adverse effect on our revenues and profitability.

The clinical testing business remains a fragmented and highly competitive industry. We compete with various types of clinical testing providers: other commercial clinical laboratories, hospital-affiliated laboratories and physician-office laboratories as well as anatomic pathology practices and large physician group practices. Hospitals may seek to leverage their relationships with community physicians and encourage the physicians to send their outreach testing to the hospital’s laboratory. In addition, hospitals that own physician practices may require the practices to refer testing to the hospital’s laboratory. In recent years, there has been a trend of hospitals acquiring physician practices, and as a result, an increased percentage of physician practices are owned by hospitals. As a result of this affiliation between hospitals and community physicians, we compete against hospital-affiliated laboratories primarily based on quality and scope of service as well as pricing. Increased hospital acquisitions of physician practices enhance physician ties to hospital-affiliated laboratories and may strengthen their competitive position.

The diagnostic information services industry also is faced with changing technology and new product introductions. Competitors may compete using advanced technology, including technology that enables more convenient or cost-effective testing. Competitors also may offer testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their offices; (2) complex testing that can be performed by hospitals in their own laboratories; and (3) home testing that can be carried out without requiring the services of outside providers.

Our operations may be adversely impacted by the effect of trends in the U.S. healthcare system, including healthcare utilization and increased patient financial responsibility for services.

Our operations may be adversely impacted by the effects of trends in the utilization of the healthcare system in the United States. Trends in the utilization of the U.S. healthcare system can be influenced by such factors as unemployment, under-employed workers, decisions to delay medical care and increased patient financial responsibility for medical care. Declining utilization of the U.S. healthcare system may result in a decline in the number of patients who seek clinical testing services.

In the current environment, patients are encouraged to take increased interest in and responsibility for, and often are bearing increased financial responsibility for, their healthcare. Our operations also may be adversely impacted by the recent trend to increased patient responsibility for payment for healthcare services, including diagnostic information services.

Government payers, such as Medicare and Medicaid, have taken steps to control the utilization and reimbursement of healthcare services, including clinical testing services.

We face efforts by government payers to reduce utilization of and reimbursement for diagnostic information services. We expect efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services will continue.

From time to time, Congress has legislated reductions in, or frozen updates to, the Medicare Clinical Laboratory Fee Schedule. In addition, CMS has adopted policies limiting or excluding coverage for clinical tests that we perform. We also provide physician services which are reimbursed by Medicare under a physician fee schedule, which is subject to adjustment on an annual basis. In recent years, reductions in the Medicare Physician Fee Schedule for anatomic pathology services adversely impacted our business relative to the business of some of our competitors whose anatomic pathology business was not as sizable as ours. Medicaid reimbursement varies by state and is subject to administrative and billing requirements and budget pressures. The 2010 federal healthcare reform legislation includes further provisions that are designed to control utilization and payment levels.

In addition, over the last several years, the federal government has continued to expand its contracts with private health insurance plans for Medicare beneficiaries, called “Medicare Advantage” programs, and has encouraged such beneficiaries to switch from the traditional programs to the private programs. There has been continued growth of health insurance plans offering Medicare Advantage programs, and of beneficiary enrollment in these programs. Also in recent years, states have mandated that Medicaid beneficiaries enroll in private managed care arrangements. Recently, state budget pressures have encouraged states to consider several courses of action that may impact our business, such as delaying payments, reducing reimbursement, restricting coverage eligibility, service coverage restrictions and imposing taxes on our services.

From time to time, the federal government has considered whether competitive bidding can be used to provide clinical testing services for Medicare beneficiaries at attractive rates while maintaining quality and access to care. Congress periodically considers cost-saving initiatives as part of its deficit reduction discussions. These initiatives have included coinsurance for clinical laboratory services, co-payments for clinical laboratory testing and further laboratory fee schedule reductions.

Third parties, including health plans, have taken steps to control the utilization and reimbursement of health services, including clinical testing services.

We face efforts by non-governmental third-party payers, including health plans, to reduce utilization of and reimbursement for clinical testing services. For example, in light of health care reform, there is increased market activity regarding alternative payment models, including bundled payment models. We expect continuing efforts by third-party payers, including in their rules, practices and policies, to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services. ACOs and IDNs also may undertake efforts to reduce utilization of, or reimbursement for, diagnostic information services.

The healthcare industry has experienced a trend of consolidation among health insurance plans, resulting in fewer but larger insurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical testing providers. These health plans, and independent physician associations, may demand that clinical testing providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services to their members through capitated payment arrangements. In addition, some health plans have been willing to limit the PPO or POS laboratory network to only a single national laboratory to obtain improved fee-for-service pricing; we may cease to be a contracted provider to a health plan. Some health plans also are reviewing test coding, evaluating coverage decisions and considering steps such as requiring preauthorization of testing. There are also an increasing number of patients enrolling in consumer driven products and high deductible plans that involve greater patient cost-sharing.

The increased consolidation among health plans also has increased pricing transparency and bargaining power and the potential adverse impact of ceasing to be a contracted provider with any such insurer. The 2010 federal healthcare reform legislation includes provisions, including ones regarding the creation of healthcare exchanges, that may encourage health insurance plans to increase exclusive contracting.

We are subject to numerous legal and regulatory requirements governing our activities, and we may face substantial fines and penalties, and our business activities may be impacted, if we fail to comply .

Our business is subject to or impacted by extensive and frequently changing laws and regulations in the United States (including at both the federal and state levels) and the other jurisdictions in which we engage in business. While we seek to conduct our business in compliance with all applicable laws, many of the laws and regulations applicable to us are vague or indefinite and have not been interpreted by the courts, including many of those relating to:

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billing and reimbursement of clinical testing;

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certification or licensure of clinical laboratories;

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the anti-self-referral and anti-kickback laws and regulations;

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the laws and regulations administered by the FDA;

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operational, personnel and quality requirements intended to ensure that clinical testing services are accurate, reliable and timely;

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safety and health of laboratory employees; and

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handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials.

These laws and regulations may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. We may not be able to maintain, renew or secure required permits, licenses or any other regulatory approvals needed to operate our business or commercialize our services. If we fail to comply with applicable laws and regulations, or if we fail to maintain, renew or obtain necessary permits, licenses and approvals, we could suffer civil and criminal penalties, fines, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third-party claims. If any of the foregoing were to occur, our reputation could be damaged and important business relationships with third parties could be adversely affected.

Our business could be adversely impacted by the FDA’s approach to regulation.

The FDA has regulatory responsibility over, among other areas, instruments, test kits, reagents and other devices used by clinical laboratories to perform diagnostic testing in the United States. The FDA has announced guidance initiatives that may impact the clinical laboratory testing business. These initiatives could have a significant impact on our business, including the application of medical device excise taxes to our business. The approach may hinder our ability to develop and market new services, cause an increase in the cost of our services, delay our ability to introduce new tests or hinder our ability to perform testing.

Failure to accurately bill for our services could have a material adverse effect on our business.

Billing for diagnostic information services is complex and subject to extensive and non-uniform rules and administrative requirements. Depending on the billing arrangement and applicable law, we bill various payers, such as patients, insurance companies, Medicare, Medicaid, physicians, hospitals and employer groups. Failure to comply with applicable laws relating to billing government healthcare programs could lead to various penalties, including: (1) exclusion from participation in Medicare/Medicaid programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4) the loss of various licenses, certificates and authorizations necessary to operate our business.

The development of new, more cost-effective solutions that can be performed by our customers or by patients, and the continued internalization of testing by hospitals or physicians, could negatively impact our testing volume and revenues.

The diagnostic information services industry is faced with changing technology and new product introductions, including technology that enables more convenient or cost-effective testing. Competitors also may offer testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their offices; (2) complex testing that can be performed by hospitals in their own laboratories; and (3) home testing that can be carried out without requiring the services of outside providers. Advances in technology also may lead to the need for less frequent testing. Further, diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed by patients in their homes; test kit manufacturers could seek to increase sales to patients of such test kits.

Failure to establish, and perform to, appropriate quality standards to assure that the highest level of quality is observed in the performance of our diagnostic information services could adversely affect the results of our operations and adversely impact our reputation.

The provision of diagnostic information services involves certain inherent risks. The services that we provide are intended to provide information for healthcare providers in providing patient care. Therefore, users of our services may have a greater sensitivity to errors than the users of services or products that are intended for other purposes.

Negligence in performing our services can lead to injury or other adverse events. We may be sued under physician liability or other liability law for acts or omissions by our pathologists, laboratory personnel and hospital employees who are under the supervision of our hospital-based pathologists. We are subject to the attendant risk of substantial damages awards and risk to our reputation.

Our operations and reputation may be impaired if we do not comply with privacy laws or information security policies.

In our business, we generate or maintain sensitive information, such as patient data and other personal information. If we do not adequately safeguard that information and it were to become available to persons or entities that should not have access to it, our business could be impaired, our reputation could suffer and we could be subject to fines, penalties and litigation.

Security Ownership and Certain Beneficial Owners

The following table sets forth, as of the January 29, 2016, certain information regarding the beneficial ownership of the shares of Common Stock by: (i) each person who, to the Company’s knowledge, beneficially owns 5% or more of the shares of Common Stock and (ii) each of the Company’s directors and “named executive officers.” As of such date, there were 5,772,256 shares of Common Stock outstanding. The number of shares beneficially owned by each entity, person, director or executive officer is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares that the individual has the right to acquire within 60 days of the relevant measurement date, through the exercise of any stock option or other right. Unless otherwise indicated, each person has sole investment and voting power, or shares such powers with his or her spouse, with respect to the shares set forth in the following table. Shares of common stock that may be acquired by an individual or group within 60 days of the relevant measurement date, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.

Effective at the close of business on January 22, 2016, the Company completed a one-for-nine reverse stock split of its Common Stock. All Common Stock, option and warrant amounts and related per share amounts in this table and footnotes have been presented to give effect to the reverse split.


	Common Stock
Name and Address of Beneficial Holder	Amount and Nature of Beneficial Ownership (++)			Percent of Class (#)
5% Stockholders
Lazarus Investment Partners LLLP 3200 Cherry Creek South Drive, Suite 670 Denver, Colorado 80209		947,785	(1)		15.9	%
Directors and Executive Officers
Charles C. Lucas III c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922		555	(2)		*


William P. Henry c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	0	(3)	*
Roy E. Beauchamp c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	0	(4)	*
Marc A. Horowitz c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	0	(5)	*
William A. Marshall c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	31,656	(6)	*
Varinder S. Rathore c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	4,261	(7)	*
Mustafa Chagani c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	2,222	(7)	*
Ronald C. Oklewicz c/o Authentidate Holding Corp. Connell Corporate Center 300 Connell Drive Berkeley Heights, NJ 07922	3,242	(7)	*
Hanif A. Roshan PeachState Health Management, d/b/a AEON Clinical Laboratories 2225 Centennial Drive Gainesville, GA 30504	335,311	(8)	5.8	%
Richard Hersperger PeachState Health Management, d/b/a AEON Clinical Laboratories 2225 Centennial Drive Gainesville, GA 30504	38,321	(8)	*
All current directors and executive officers as a group(2)(3)(4)(5)(6)(7)(8)	415,568		7.0	%

++	Unless otherwise indicated below, each director, officer and 5% stockholder has sole voting and sole investment power with respect to all shares that it beneficially owns.

#	Based on 5,772,256 outstanding shares of common stock.

*	Represents less than 1% of the issued and outstanding shares of common stock.

(1)

Based on Schedule 13D/A filed by the listed stockholder on December 17, 2015. The securities reported on this table as beneficially owned by Lazarus Management Company, LLC (“Lazarus Management”) are held by or for the benefit of Lazarus Investment Partners LLLP (“Lazarus Partners”). Includes 204,679 shares of common stock which may be issued upon conversion of 200,000 shares of Series D preferred stock. Also includes 833 shares of common stock beneficially owned by Lazarus Macro Micro Partners LLLP; Lazarus Investment Partners LLLP holds no interest in these securities and Lazarus Management Company LLC and Justin B. Borus disclaims beneficial ownership except to the extent of their pecuniary interest therein. Excludes 692,626 shares issuable upon exercise of warrants which are subject to restrictions on exercise pursuant to a lockup agreement entered into between the stockholder and the Company. Excludes 111,111 warrants issued December 15, 2015 which warrants are exercisable on the first business day following the twelve-month anniversary of the issue date, provided that if the Company consummates the initial closing of the transaction with AEON, then the initial exercise date will be the 3-year anniversary of the closing. Lazarus Management, as the investment adviser and general partner of Lazarus Partners, and Justin B. Borus, as the managing member of Lazarus Management, may be deemed to beneficially own the securities held by Lazarus Partners for the purposes of Rule 13d-3 of the Securities Exchange Act of 1934, insofar as they may be deemed to have the power to direct the voting or disposition of those securities. Neither the filing of this report nor any of its contents shall be deemed to constitute an admission that Lazarus Management or Mr. Borus is, for any other purpose, the beneficial owner of any of the securities, and each of Lazarus Management and Mr. Borus disclaims beneficial ownership as to the securities, except to the extent of his or its pecuniary interests therein.

(2)	Excludes vested options to purchase 92,557 shares of common stock which are subject to restrictions on exercise pursuant to a lockup agreement entered into between the stockholder and the Company.

(3)

Excludes options to purchase 113,062 shares of common stock which are subject to restrictions on exercise pursuant to a lockup agreement entered into between the stockholder and the Company. Of this amount options to purchase 55,555 shares of common stock are not exercisable until the company obtains the approval of its stockholders to increase the number of shares of common stock available for issuance pursuant to awards granted under the 2011 Omnibus Equity Compensation Plan.

(4)	Excludes vested options to purchase 38,721 shares of common stock which are subject to restrictions on exercise pursuant to a lockup agreement entered into between the stockholder and the Company.

(5)	Excludes vested options to purchase 40,328 shares of common stock which are subject to restrictions on exercise pursuant to a lockup agreement entered into between the stockholder and the Company.

(6)

Excludes vested options to purchase 19,444 shares of common stock and warrants to purchase 25,019 shares of common stock which are subject to restrictions on exercise pursuant to a lockup agreement entered into between the stockholder and the Company. Includes 10,234 shares of common stock issuable upon conversion of 10,000 shares of Series D preferred stock. Excludes unvested options to purchase 7,944 shares of common stock and 12,835 restricted stock units which are subject to vesting requirements.

(7)	Includes vested options to purchase 2,222 shares of common stock.

(8)	Consists of shares of common stock issued at closing and excludes any subsequent issuances of common stock which may occur in accordance with the terms and conditions of the Merger Agreement.

Certain Relationships and Related Transactions

AEON provides its services utilizing state of the art testing equipment and proprietary sampling preparation at its 28,000 square foot campus in Gainesville, Georgia. AEON leases its facilities from Centennial Properties of Georgia, LLC under a lease agreement dated March 1, 2014, as amended January 20, 2016. In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a first priority lien and security interest in substantially all of its assets.

Mr. Roshan’s spouse and other family members are also employees of AEON, including his brother, and sister-in-law. Mr. Roshan’s spouse received a distribution of $600,000 and salary of $24,000 during 2015.

As previously, reported, AHC had entered into an agreement in July, 2015 with William Henry, who was then serving as a director of AHC, whereby Mr. Henry became employed as AHC’s Interim Chief Strategy Officer. The terms of the agreement provided that Mr. Henry would receive a base salary of pay at the rate of $250,000 per year, which will be payable upon the expiration of the term of the employment letter. In addition, Mr. Henry will be entitled to a bonus of $200,000 in the event the Company completes a transaction resulting in a “change in control” during the term of the Employment Letter or within 150 days thereafter. As a result of the AEON transaction, Mr. Henry will receive his accrued salary and the bonus payment.

Roy E. Beauchamp, a member of the Authentidate Board of Directors, has a pre-existing Limited Agency Agreement with AEON. This agreement authorizes Roy E. Beauchamp (as the Agent) to represent AEON to potential customers for the products and services provided by AEON. This agreement provides for compensation of five thousand dollars ($5,000) per month and 5% of the selling price of products and services to customers introduced directly to AEON by Mr. Beauchamp. The agency agreement also provides for payment of 2.5 % of the selling price of products and services to customers introduced to AEON indirectly through an intermediary party. The agency agreement is for a term of one year, which commenced August 10, 2015, and may be extended by either party upon prior notice to the other party, unless such other party objects to such extension. The Agency Agreement also provides for Mr. Beauchamp to serve on a Board of Advisors for AEON.

AEON has a non-interest bearing, unsecured loan to the owners of AEON with no terms for repayment. The outstanding balance at September 30, 2015 was $2,319,500 and is shown as a reduction of Members’ Equity in its Unaudited Financial Statements for the nine months ended September 30, 2015.

During 2014, AEON made an advance to a related party with whom they lease their office and warehouse space in the amount $500,000. The advance was non-interest bearing and had no stated maturity date and was repaid in March 2015.

During the nine months ended September 30, 2015, AEON sold equipment to a related party with common ownership for $258,405 and no gain or loss was recorded. The amount is payable in monthly installments of $25,000 until the balance is paid and does not bear interest. The balance outstanding as of September 30, 2015 is $0.

During the nine months ended September 30, 2015, AEON sold equipment to a related party with common ownership for $147,914 and no gain or loss was recorded. The amount is due September 30, 2016 and does not bear interest. The balance outstanding as of September 30, 2015 is $132,362 and is shown as Note receivable - related party on its unaudited balance sheet at September 30, 2015.

AEON has due to shareholders in the amount of $215,097 as of September 30, 2015 representing amounts owed by AEON for expenses paid by the shareholders on behalf of AEON. There are no terms of repayment and no interest due.

Item 3.01

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On January 27, 2016, the Company received notification from The Nasdaq Stock Market LLC (“NASDAQ”) stating that the NASDAQ Listing Qualifications Hearings Panel (the “Panel”) has determined to delist the shares of the Company’s Common Stock from NASDAQ and that trading in the Company’s Common Stock will be suspended on NASDAQ effective at the open of business on Friday, January 29, 2016. The suspension is due to the Company’s continuing non-compliance with the stockholders’ equity requirement set forth in NASDAQ Listing Rule 5550(b)(1) and minimum bid price requirement in NASDAQ Listing Rule 5550(a)(2).

As previously reported, under NASDAQ Listing Rule 5110(a), a NASDAQ listed corporation must apply for initial listing in connection with a transaction whereby the NASDAQ listed corporation combines with a non-NASDAQ entity, resulting in a change of control of the NASDAQ listed corporation and potentially allowing the non-NASDAQ entity to obtain a NASDAQ listing. We previously reported that we had been advised by NASDAQ that the AEON transaction would constitute a change of control under NASDAQ Rule 5110(a).

The Panel had issued a decision in this matter on September 16, 2015 and had determined to grant the request of the Company to remain listed on The NASDAQ Stock Market, subject to the condition that, on or before January 25, 2016, the Company would announce and inform the Panel that the proposed business combination transaction has closed and that NASDAQ’s Listing Qualifications Staff (the “Staff”) has approved an initial listing application for the resulting entity. In the event that the Company was unable to meet the exception requirement, the Panel will issue a final determination to delist the Company’s Common Stock and suspend trading of the Company’s shares on The NASDAQ Capital Market. As we did not complete the AEON transaction prior to January 25, 2016, we became subject to delisting and NASDAQ issued a delisting notice to us on January 27, 2016. NASDAQ further indicated that it would complete the delisting action by filing a Form 25 Notification of Delisting with the Securities and Exchange Commission after applicable appeal periods have lapsed.

The Company’s Common Stock became eligible for quotation on the OTC Markets’ OTCQB market tier, an electronic quotation service operated by OTC Markets Group Inc. for eligible securities traded over-the-counter, effective at the open of business on January 29, 2016. The Company’s Common Stock will continue to trade under its current trading symbol “ADAT.”

Item 3.02

Unregistered Sales of Equity Securities.

Pursuant to the Merger, the Company will issue shares of its Common Stock, as described in Item 1.01 of this Current Report on Form 8-K. At the closing held on January 27, 2016, AHC issued to the AEON members an aggregate of 958,030 total shares of AHC Common Stock (on a post-reverse split basis of 1 for 9 which was completed by AHC on January 20, 2016). The number of shares to be issued, the nature of the transaction and the nature and amount of consideration received by the Company are described in Item 1.01 of this Current Report on Form 8-K, which is incorporated by reference into this Item 3.02. The securities to be issued by the Company in the Merger, including all potential future issuances, will be issued in a private placement exempt from registration under Section 4(a)(2) of the Act and Rule 506(b) of Regulation D, because the offer and sale of such securities does not involve a “public offering” as defined in Section 4(a)(2) of the Securities Act, and other applicable requirements were met.

Item 5.01

Changes in Control of Registrant.

The Merger constitutes a change in control of AHC. The Merger is described in Item 1.01 of this Form 8-K, which is incorporated by reference into this Item 5.01.

Item 5.02

Departure of Directors of Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The Merger Agreement provides that the effective time of the Merger, the executive officers of the Company will include Sonny Roshan, the current Chairman of AEON and Richard Hersperger, the current Chief Executive Officer of AEON. Additionally, effective as of the Closing, Messrs. Luce, Borus and Bonnet resigned from the Board of Directors of AHC. Mr. Bonnet also resigned as the Chief Executive Officer and President of AHC. Under his employment agreement with the Company, Mr. Bonnet is entitled to certain severance payments and benefits following his resignation, subject to his execution of a separation agreement. As of the date of this Current Report on Form 8-K, no new compensatory or severance arrangements have been entered into in connection with Mr. Bonnet’s resignation. Upon the Company’s entering into of any such arrangements in the future, the material terms of such arrangements will be disclosed in a subsequent filing.

Management; Executive Officers

Under the terms of the Merger Agreement, the AEON members are entitled to nominate and have serve two persons to the Board of Directors of AHC. Sonny Roshan, a founder and the Chairman of AEON prior to the transaction, has been appointed Chairman of AHC. The Chief Executive Officer of AEON, Richard Hersperger has been appointed as Chief Executive Officer of AHC. Each of Messrs. Roshan and Hersperger have also been appointed to the nine (9) member Board of Directors of AHC. The appointments of Messrs. Roshan and Hersperger as directors will become effective 10 days following the filing of Form 14-f with the SEC, as required in connection with a transaction that may result in a change of control. We expect the appointments to become effective on or about February 10, 2016.

Assuming the completion of the appointments of Messrs. Roshan and Hersperger, the Board of Directors and executive officers of AHC, their age and office will be as follows:


Name	Age	Office
Hanif “Sonny” Roshan	52	Chairman of the Board of Directors
Richard Hersperger	56	Chief Executive Officer and Director
Charles C. Lucas III	53	Director
William P. Henry	49	Director and Chief Operating Officer
Roy E. Beauchamp	71	Director
Marc A. Horowitz	56	Director
Ronald C. Oklewicz	68	Director
Varinder S. Rathore	44	Director
Mustafa Chagani	51	Director
William A. Marshall	63	Chief Financial Officer, Treasurer and Principal Accounting Officer

Mr. Marshall is a continuing executive officer and the terms of his employment has not changed in connection with the closing of the AEON transaction. Effective with the closing of the Merger, Mr. Marshall agreed to tender his resignation as Chief Financial Officer, Treasurer and Principal Accounting Officer of the Company, upon the written request of the Board of Directors or an authorized officer of the Company made on or after February 1, 2016; provided that the Company may request that such resignation be deferred until a date no later than March 1, 2016 and that the Company shall provide ten (10) days prior written notice of the date on which such resignation is to take effect. Any subsequent extension of Mr. Marshall’s employment would be by mutual written consent.

Mr. Henry, a member of our board of directors, has served as interim chief strategy officer of AHC since July 2015. We had entered into an employment agreement with Mr. Henry concerning his employment with us. Effective with the closing of the Merger, Mr. Henry’s employment agreement, and his employment as the Interim Chief Strategy Officer of the Company, terminated. Further, at closing, Mr. Henry was appointed as Chief Operating Officer of the Company.

In connection with the closing with AEON, AHC is not entering into any employment agreements with its new executive officers. The Board of Directors will determine in the future whether or not to enter employment agreements with Messrs. Roshan, Hersperger and Henry. Each of these persons will receive a base salary of $200,000 per year. There has been no grant of options or other equity awards to such persons in connection with the closing of the transaction or any other form of incentive compensation, other than the bonus compensation payable to Mr. Henry as described below for completion of the AEON transaction. Further, no termination, non compete or severance agreements have been entered into with these individuals.

Hanif Roshan co-founded AEON in September 2011. AEON provides toxicology and genetic laboratory testing services to physicians and medical clinics in 48 states. From January 2000 to August 2010, Mr. Roshan served as the Chief Executive Officer of Universal Medical Services, LLC. In 2008, Mr. Roshan also founded a chain of retail primary care clinics. Mr. Roshan also co-founded Palms Recovery Corporation, a provider of treatment for addiction, alcoholism, and dual diagnosis. Mr. Roshan also served as the Chief Financial Officer of Aeon Foundation from August 2013 to January 2015.

Richard Hersperger has served as Chief Executive Officer of AEON since April 2015. Prior to joining AEON, Mr. Hersperger served as Chief Executive Officer of The Business Referral Network, a technology company that he founded focused on business to business relationship marketing. Prior to that, Mr. Hersperger was Chief Executive Officer of Stream Meeting, Inc. He also founded Prism Networks and co-founded First Watch, a regulatory and compliance company providing consulting services to healthcare clients in relation to their HIPAA and HIPAA HITECH-related issues including breach determination, breach mitigation and corporate compliance. Mr. Hersperger also co-founded and was Chief Executive Officer of Identity Theft Protection Inc., and served as the managing member of Energy U.S. LLC from September 2010 to April 2012 and was the Chief Executive Officer of Diversified Coal Corporation from April 2012 until March 2015.

As previously reported, AHC had entered into an agreement in July, 2015 with William Henry, who was then serving as a director of AHC, whereby Mr. Henry became employed as AHC’s Interim Chief Strategy Officer. The terms of the agreement provided that Mr. Henry would receive a base salary of pay at the rate of $250,000 per year, which will be payable upon the expiration of the term of the employment letter. In addition, Mr. Henry will be entitled to a bonus of $200,000 in the event the Company completes a transaction resulting in a “change in control” during the term of the Employment Letter or within 150 days thereafter. As a result of the AEON transaction, Mr. Henry will receive his accrued salary and the bonus payment.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this communication regarding the proposed merger and other contemplated transactions (including statements relating to satisfaction of the conditions to and consummation of the proposed merger and the expected ownership of the combined company) constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control. Risks and uncertainties for Authentidate, AEON and of the combined company include, but are not limited to: inability to complete the proposed merger and other contemplated transactions;

liquidity and trading market for shares prior to and following the consummation of the proposed merger; costs associated with the proposed merger; failure or delay in obtaining required approvals by the SEC or any other governmental or quasi-governmental entity necessary to consummate the proposed merger, including our ability to file an effective proxy statements in connection with the proposed merger and other contemplated transactions; failure to obtain the necessary stockholder approvals or to satisfy other conditions to the closing of the proposed merger and the other contemplated transactions; a superior proposal being submitted to either party; uncertainties of cash flows and inability to meet working capital needs; and risks associated with the possible failure to realize certain benefits of the proposed merger, including future financial, tax, accounting treatment, and operating results. Many of these factors that will determine actual results are beyond Authentidate’s or AEON’s ability to control or predict.

Other risks and uncertainties are more fully described in our Annual Report on Form 10-K for the year ended June 30, 2015 filed with the SEC, and in other filings that Authentidate makes and will make with the SEC in connection with the proposed transactions, including the proxy statement described below under “Important Information and Where to Find It.” Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The statements made in this report speak only as of the date stated herein, and subsequent events and developments may cause our expectations and beliefs to change. While we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date after the date stated herein.

Additional Information and Where to Find It

The terms of the AEON transaction require that AHC will file a with the SEC a proxy statement, as well as other relevant documents related to the issuance of future tranches of Common Stock and obtain stockholder approval, on or before May 31, 2016. The issuance of the initial tranche of Common Stock did not require any action or approval of stockholders of AHC. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the proxy statement and other filings containing information about the Company and AEON may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from the Company at www.authentidate.com under the heading “Investors / SEC Filings.”

The Company and AEON and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the Merger. Additional information regarding the interests of those participants and other persons who may be deemed participants in the Merger may be obtained by reading the proxy statement regarding the Merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph. This Form 8-K shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Item 8.01

Other Events.

On January 27, 2016 and January 28, 2016, the Company issued press releases announcing the matters disclosed in this Current Report on Form 8-K. Copies of these press release are filed as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.

Item 9.

Financial Statements and Exhibits

Item 9.01

(a) Financial Statements of Businesses Acquired

(a)(1) Financial Statements

The following Financial Statements of PeachState Health Management LLC:

•

Report of Independent Registered Public Accounting Firm;

•

Consolidated Balance Sheets as of December 31, 2014 and 2013;

•

Consolidated Statements of Operations for the years ended December 31, 2014 and 2013;

•

Consolidated Statements of Changes in Members’ Equity for the years ended December 31, 2014 and 2013;

•

Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013; and

•

Notes to Consolidated Financial Statements

Unaudited Financial Statements

•

Consolidated Balance Sheet as of September 30, 2015;

•

Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014;

•

Consolidated Statements of Changes in Members’ Equity for the nine months ended September 30, 2015;

•

Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014; and

•

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules

There are no schedules required for any of the years in the two year period ended December 31, 2014 pursuant to item 15 (d)

(b) Pro Forma Financial Information

Information required under Item 9.01(b) Pro forma Financial Information will be filed by AHC on an amendment to this From 8-K to be filed within 71 days of the date hereof.

Item 9.01

(d) Exhibits

The following exhibits are filed herewith:


Exhibit No.		Exhibit Title or Description

2.1		Amended and Restated Agreement and Plan of Merger dated as of January 26, 2016, by and among, Authentidate Holding Corp., RMS Merger Sub, LLC, and Peachstate Health Management LLC, d/b/a AEON Clinical Laboratories (The schedules and exhibits to the agreement and plan of merger are omitted pursuant to Item 601(b)(2) of Regulation S-K. Authentidate Holding Corp. agrees to furnish supplementally to the SEC, upon request, a copy of any omitted schedule or exhibit)

10.1		Form of Registration Rights Agreement by and among Authentidate Holding Corp. and the AEON Members, dated as of January 26, 2016.

10.2		Lease Agreement dated as of March 1, 2014, as amended January 20, 2016, between Centennial Properties of Georgia, LLC and Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories.

23.1		Consent of EisnerAmper LLP, independent auditors to Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories.

99.1		Press Release filed on January 27, 2016.

99.2		Press Release filed on January 28, 2016.

99.3		Audited Financial Statements of Peachstate Health Management LLC: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2014 and 2013 Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013 Consolidated Statements of Changes in Members’ Equity for the years ended December 31, 2014 and 2013 Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013 Notes to Consolidated Financial Statements

99.4		Unaudited Financial Statements of Peachstate Health Management LLC: Consolidated Balance Sheet as of September 30, 2015 Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014 Consolidated Statements of Changes in Members’ Equity for the nine months ended September 30, 2015 Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 Notes to Consolidated Financial Statements

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

Date: February 1, 2016

Exhibit Index



Exhibit 2.1		Amended and Restated Agreement and Plan of Merger dated as of January 26, 2016, by and among, Authentidate Holding Corp., RMS Merger Sub, LLC, and Peachstate Health Management LLC, d/b/a AEON Clinical Laboratories (The schedules and exhibits to the agreement and plan of merger are omitted pursuant to Item 601(b)(2) of Regulation S-K. Authentidate Holding Corp. agrees to furnish supplementally to the SEC, upon request, a copy of any omitted schedule or exhibit)

Exhibit 10.1		Form of Registration Rights Agreement by and among Authentidate Holding Corp. and the AEON Members, dated as of January 26, 2016.

Exhibit 10.2		Lease Agreement dated as of March 1, 2014, as amended January 20, 2016, between Centennial Properties of Georgia, LLC and Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories.

Exhibit 23.1		Consent of EisnerAmper LLP, independent auditors to Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories.

Exhibit 99. 1		Press Release dated January 27, 2016

Exhibit 99.2		Press Release filed on January 28, 2016.

Exhibit 99.3		Audited Financial Statements of Peachstate Health Management LLC: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2014 and 2013 Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013 Consolidated Statements of Changes in Members’ Equity for the years ended December 31, 2014 and 2013 Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013 Notes to Consolidated Financial Statements

Exhibit 99.4		Unaudited Financial Statements of Peachstate Health Management LLC: Consolidated Balance Sheet as of September 30, 2015 Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014 Consolidated Statements of Changes in Members’ Equity for the nine months ended September 30, 2015 Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 Notes to Consolidated Financial Statements

Exhibit 2.1

EXECUTION COPY

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

BY AND AMONG

AUTHENTIDATE HOLDING CORP,

RMS MERGER SUB LLC,

AND

PEACHSTATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL LABORATORIES

Dated as of January 26, 2016

TABLE OF CONTENTS


		Page
ARTICLE 1 TRANSACTIONS AND TERMS OF TRANSACTION			3

1.1	T HE M ERGER		3
1.2	C LOSING		3
1.3	E FFECTIVE T IME		3
1.4	E FFECT OF THE M ERGER		4
1.5	A RTICLES OF O RGANIZATION AND O PERATING A GREEMENT OF S URVIVING C OMPANY		4
1.6	R ESERVED		4
1.7	C ONVERSION OF T ARGET M EMBERSHIP I NTERESTS , E TC .		4
1.8	N O F URTHER O WNERSHIP R IGHTS IN M EMBERSHIP I NTERESTS		5
1.9	T ARGET S TOCK O PTIONS AND W ARRANTS		5
1.10	M EMBERSHIP I NTERESTS OF M ERGER S UB		5
1.11	R ESERVED		5
1.12	E XCHANGE OF C ERTIFICATES		5
1.13	N O L IABILITY		5
1.14	T AKING OF N ECESSARY A CTION ; F URTHER A CTION		6
1.15	E ARN - OUT		6

ARTICLE 2 POST CLOSING MANAGEMENT AND GOVERNING DOCUMENTS			8

2.1	O FFICERS AND M ANAGERS OF S URVIVING C OMPANY		8
2.2	O FFICERS OF B UYER		9
2.3	B OARD OF D IRECTORS OF B UYER ; M ANAGERS OF M ERGER S UB		9

ARTICLE 3 RESERVED			9

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF TARGET			9

4.1	O RGANIZATION , S TANDING , AND P OWER		9
4.2	A UTHORITY OF T ARGET ; N O B REACH B Y A GREEMENT		10
4.3	C APITALIZATION OF T ARGET		11
4.4	T ARGET S UBSIDIARIES		11


4.5	F INANCIAL S TATEMENTS AND A CCOUNTING C ONTROLS	12
4.6	A BSENCE OF U NDISCLOSED L IABILITIES	12
4.7	A BSENCE OF C ERTAIN C HANGES OR E VENTS	13
4.8	T AX M ATTERS	13
4.9	A SSETS	14
4.10	I NTELLECTUAL P ROPERTY	14
4.11	E NVIRONMENTAL M ATTERS	16
4.12	C OMPLIANCE WITH L AWS	16
4.13	L ABOR R ELATIONS	17
4.14	E MPLOYEE B ENEFIT P LANS	18
4.15	M ATERIAL C ONTRACTS	20
4.16	L EGAL P ROCEEDINGS	21
4.17	S TATEMENTS P ROMISED FOR U SE BY B UYER T RUE AND C ORRECT	21
4.18	S TATE T AKEOVER L AWS	21
4.19	R EAL P ROPERTY	22
4.20	I NSURANCE	22
4.21	F OREIGN C ORRUPT P RACTICES AND I NTERNATIONAL T RADE S ANCTIONS	23
4.22	C OMMERCIAL R ELATIONSHIPS	23
4.23	B ROKERS AND F INDERS	23
4.24	N O O THER R EPRESENTATIONS OR W ARRANTIES	23

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB		23

5.1	O RGANIZATION , S TANDING , AND P OWER	24
5.2	A UTHORITY ; N O B REACH B Y A GREEMENT	24
5.3	C APITAL S TOCK	25
5.4	B UYER S UBSIDIARIES	26
5.5	SEC F ILINGS ; F INANCIAL S TATEMENTS	27
5.6	A BSENCE OF U NDISCLOSED L IABILITIES	28
5.7	A BSENCE OF C ERTAIN C HANGES OR E VENTS	29
5.8	T AX M ATTERS	29
5.9	A SSETS	30
5.10	I NTELLECTUAL P ROPERTY	31
5.11	E NVIRONMENTAL M ATTERS	32
5.12	C OMPLIANCE WITH L AWS	32
5.13	L ABOR R ELATIONS	34
5.14	E MPLOYEE B ENEFIT P LANS	34
5.15	M ATERIAL C ONTRACTS	36
5.16	L EGAL P ROCEEDINGS	37
5.17	S TATEMENTS T RUE AND C ORRECT	37

iii


5.18	R EGULATORY M ATTERS	38
5.19	B ROKERS AND F INDERS	38
5.20	I NVESTMENT C OMPANY	38
5.21	R EAL P ROPERTY	38
5.22	I NSURANCE	39
5.23	F OREIGN C ORRUPT P RACTICES AND I NTERNATIONAL T RADE S ANCTIONS	39
5.24	C OMMERCIAL R ELATIONSHIPS	40
5.25	I NTERIM O PERATIONS OF M ERGER S UB	40
5.26	N O O THER R EPRESENTATIONS OR W ARRANTIES	40

ARTICLE 6 CONDUCT OF BUSINESS PENDING the merger		40

6.1	C OVENANTS OF T ARGET	40
6.2	C OVENANTS OF B UYER	41
6.3	A DVERSE C HANGES IN C ONDITION	42
6.4	N O C ONTROL OF O THER P ARTY ’ S B USINESS ; O THER A CTIONS	43

ARTICLE 7 ADDITIONAL AGREEMENTS		43

7.1	P ROXY S TATEMENTS ; N ASDAQ S TOCKHOLDER A PPROVAL ; B UYER S TOCKHOLDER A PPROVAL	43
7.2	O THER O FFERS , E TC .	45
7.3	E XCHANGE L ISTING	47
7.4	F ILING WITH S TATE O FFICE	47
7.5	A GREEMENT AS TO E FFORTS TO C ONSUMMATE	47
7.6	I NVESTIGATION AND C ONFIDENTIALITY	48
7.7	P RESS R ELEASES	48
7.8	S TATE T AKEOVER L AWS	48
7.9	B UYER B OARD OF D IRECTORS F OLLOWING C LOSING D ATE	49
7.10	T AX M ATTERS	49
7.11	N OTIFICATION OF C ERTAIN M ATTERS	49
7.12	I NDEMNIFICATION OF P RE C LOSING D IRECTORS , O FFICERS AND M ANAGERS OF T ARGET AND B UYER	50
7.13	O PERATION OF AEON AS STAND A LONE E NTITY P OST C LOSING	51
7.14	R EASONABLE E FFORTS ; F URTHER A SSURANCES	52

ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE		53

8.1	C ONDITIONS TO O BLIGATIONS OF E ACH P ARTY	53
8.2	C ONDITIONS TO O BLIGATIONS OF B UYER	54
8.3	C ONDITIONS TO O BLIGATIONS OF T ARGET	55



ARTICLE 9 TERMINATION		57

9.1	T ERMINATION	57
9.2	E FFECT OF T ERMINATION	59

ARTICLE 10 MISCELLANEOUS		59

10.1	D EFINITIONS	59
10.2	E XPENSES	72
10.3	E NTIRE A GREEMENT	72
10.4	A MENDMENTS	72
10.5	W AIVERS	72
10.6	A SSIGNMENT	73
10.7	N OTICES	73
10.8	G OVERNING L AW	74
10.9	C OUNTERPARTS	75
10.10	C APTIONS ; A RTICLES AND S ECTIONS	75
10.11	I NTERPRETATIONS	75
10.12	E NFORCEMENT OF A GREEMENT	75
10.13	W AIVER OF J URY T RIAL	76
10.14	S EVERABILITY	76
10.15	N ONSURVIVAL OF R EPRESENTATIONS	76

EXHIBIT INDEX


Exhibit		Description

Exhibit 1		Form of Amended and Restated Operating Agreement of Target
Exhibit 2		Form of Voting Agreement
Exhibit 3		Form of Lock-Up Agreement
Exhibit 4		Form of Registration Rights Agreement
Exhibit 5		Form of Articles of Merger

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (as amended, modified or supplemented from time to time in accordance with its terms, this “ Agreement ” or this “ Amended and Restated Agreement ”), dated as of January 26, 2016 (the “ Execution Date ”), is by and among Authentidate Holding Corp., a Delaware corporation (“ Buyer ” or “ AHC ”), RMS Merger Sub LLC, a Georgia limited liability company and a wholly-owned Subsidiary of Buyer (“ Merger Sub ”), and PeachState Health Management, d/b/a AEON Clinical Laboratories, a Georgia limited liability company (“ Target ” or “ AEON ”) , and amends and restates in its entirety that certain Agreement and Plan of Merger, dated as of November 19, 2015 (the “ Original Execution Date ”), by and among Parent, Merger Sub and Target (the “ Original Merger Agreement ”),

Preamble

WHEREAS, Buyer, Merger Sub and Target desire to amend and restate the Original Merger Agreement in its entirety on the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of Buyer and the Boards of Managers of Merger Sub and Target have each declared it to be advisable and in the best interests of the corporation or limited liability company, as the case may be, and their respective stockholders or members, as the case may be, that Buyer and Target combine in order to advance their long-term business interests;

WHEREAS, the Board of Directors of Buyer and the Board of Managers of Merger Sub and Target Members have each approved this Agreement and the merger of Merger Sub with and into Target (the “ Merger ”), in accordance with the Georgia Limited Liability Company (the “ Georgia Act ”) and the terms and conditions set forth herein, which Merger will result in, among other things, the surviving company becoming a wholly-owned limited liability company subsidiary of Buyer and the Target Members (as defined below) becoming stockholders of Buyer;

WHEREAS, for federal income tax purposes, it is intended that the Merger qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and the regulations promulgated thereunder;

WHEREAS, the disinterested members of the Board of Directors of Buyer have unanimously approved this Agreement, the Merger and the transactions contemplated hereby, and determined to recommend to its stockholders the Buyer Stockholder Approval (as defined below), and the Nasdaq Stockholder Approval (as defined below), subject to the terms and conditions hereof and in accordance with the provisions of the Georgia Act. The Board of Directors of Buyer has approved the Merger prior to the Target Members (as defined below) becoming stockholders of Buyer;

WHEREAS, as an condition to the willingness of, and an inducement to Target to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, all officers and directors of Buyer and certain of the holders of the outstanding shares of Buyer Common Stock and other securities convertible or exchangeable into Buyer Common Stock listed on Section 8.3(d) of the Buyer Disclosure Memorandum have executed and delivered to Buyer voting agreements in substantially the form of Exhibit 2 (the “ Voting Agreements ”), pursuant to which they have agreed, among other things, subject to the terms of the Voting Agreements, to vote the shares of Buyer Common Stock and any other voting securities over which such Persons have voting power in favor of any proposal recommended by the Board of Directors of Buyer;

WHEREAS, as an condition to the willingness of, and an inducement to Target to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, all officers and directors of the Buyer and certain of the holders of the outstanding shares of Buyer Common Stock and other securities convertible or exchangeable into Buyer Common Stock listed on Section 8.3(d) of the Buyer Disclosure Memorandum have executed and delivered to Buyer and Target lock-up agreements in substantially the form of Exhibit 3 (the “ Lock-Up Agreements ”), pursuant to which they have agreed, among other things, for a period of up to three (3) years to the limitations as described therein on the exercise of certain derivative securities or the sale of securities owned by them; and

WHEREAS, as an condition to the willingness of, and an inducement to Target to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, the Company and the Target Members have executed and delivered a Registration Rights Agreement in substantially the form of Exhibit 4 (the “ Registration Rights Agreement ”), pursuant to which the Company has agreed to register for resale under the Securities Act the shares of Buyer Common Stock issuable pursuant to the terms hereof;

WHEREAS, certain capitalized terms used in this Agreement are defined in Section 11.1 of this Agreement.

WHEREAS, Buyer, Merger Sub and Target intend, as set forth in Section 10.11 , that, unless expressly indicated otherwise in this Agreement, (a) all references in this Agreement to “the date hereof” or “the date of this Agreement” shall refer to the Original Execution Date, (b) the date on which the representations and warranties set forth in Article IV and Article V are made shall not change as a result of the execution of this Agreement and shall be made as of such dates as they were in the Original Merger Agreement, and (c) each reference to “this Agreement” or “herein” in the representations and warranties set forth in Article IV and Article V shall refer to “the Original Merger Agreement.”

NOW, THEREFORE , in consideration of the above and the mutual warranties, representations, covenants, and agreements set forth herein, the Parties agree as follows:

ARTICLE 1

TRANSACTIONS AND TERMS OF TRANSACTION

1.1 The Merger.

At the Effective Time (as defined in Section 1.3), in accordance with the Georgia Act and the terms and conditions of this Agreement, Merger Sub shall be merged with and into Target. From and after the Effective Time, the separate corporate existence of Merger Sub shall cease and Target, as the surviving limited liability company in the Merger, shall continue its existence under the Georgia Act as a wholly-owned subsidiary of Buyer. Target as the surviving limited liability company after the Merger is hereinafter sometimes referred to as the “ Surviving Company .”

1.2 Closing.

Unless this Agreement shall have been terminated and the transactions contemplated by this Agreement abandoned pursuant to the provisions of Article 9, and subject to the satisfaction or waiver, as the case may be, of the conditions set forth in Article 7, the closing of the Merger (the “ Closing ”) shall take place at 9:00 a.m. (eastern standard time) on a date to be mutually agreed upon by the Parties (the “ Closing Date ”), but no later than the second Business Day following the satisfaction or waiver (to the extent permitted by Law) of the conditions (excluding the conditions that, by their nature, cannot be satisfied until the Closing, but subject to the satisfaction or waiver (to the extent permitted by Law) of those conditions at Closing) set forth in Article 7, unless this Agreement has been theretofore terminated pursuant to its terms or unless another time or date is agreed to in writing by the Parties. The Closing shall be held at the offices of Becker & Poliakoff, LLP, 45 Broadway, 8 ^th Floor, New York, New York, unless another place is agreed to in writing by the Parties.

1.3 Effective Time.

Subject to the provisions of this Agreement, on the Closing Date or as soon thereafter as is practicable the Parties shall cause the Merger to become effective by executing and filing in accordance with the Georgia Act, articles of merger with the Secretary of State of the State of Georgia in substantially the form of Exhibit 5 attached hereto (the “ Articles of Merger ”), the date and time of such filing, or such later date and time as may be agreed upon by the Parties and specified therein, being hereinafter referred to as the “ Effective Time .”

1.4 Effect of the Merger.

At the Effective Time, the Merger shall have the effects set forth in this Agreement and in the applicable provisions of the Georgia Act. It is the express intention of the Parties that upon completion of the Merger, AHC shall be the sole owner of all Membership Interests of the Surviving Company and there shall be no persons entitled to any ownership interests of any kind whatsoever of Target or Surviving Company. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the assets, properties, rights, privileges, immunities, powers and franchises of Target and Merger Sub shall vest in the Surviving Company, and all debts, liabilities and duties of Target and Merger Sub shall become the debts, liabilities and duties of the Surviving Company.

1.5 Articles of Organization and Operating Agreement of Surviving Company.

From and after the Effective Time and without further action on the part of the Parties, the Articles of Organization and Operating Agreement of Target shall be the Articles of Organization and Operating Agreement of the Surviving Company.

1.6 Reserved.

1.7 Conversion of Target Membership Interests, Etc.

At the Effective Time, by virtue of the Merger and without any action on the part of the Parties or the holders of the following securities:

(a) The Membership Interests of Target issued and outstanding immediately prior to the Effective Time, shall be converted into the right to receive validly issued, fully paid and non-assessable shares of Buyer Common Stock equal to 19.9% (8,622,278) (rounded to the nearest whole share of Buyer Common Stock), in the aggregate, of the issued and outstanding shares of Buyer Common Stock as of the close of business on the Business Day immediately prior to the Closing Date (the “ Merger Consideration ”).

(b) From and after the Effective Time, all Membership Interests of Target Company shall be deemed canceled and shall cease to exist, and each Target Member holding a certificate, representing Membership Interests of AEON (each, a “ Target Certificate ” and, collectively, the “ Target Certificates ”) shall cease to have any rights with respect thereto except for the right to receive the Merger Consideration in accordance with Section 1.7(a) or as otherwise set forth herein or under applicable law. The holders of Membership Interests of Target immediately prior to the Effective Time shall be entitled to receive the Merger Consideration into which Membership Interests held by each of them were converted pursuant to this Section 1.7 upon delivery of the certificates representing such Membership Interests.

1.8 No Further Ownership Rights in Membership Interests.

The Merger Consideration to be issued upon the surrender for exchange of Membership Interests in accordance with the terms of this Article 1 shall be deemed to have been issued in full satisfaction of all rights pertaining to such Membership Interests under this Article 1.

1.9 Target Stock Options and Warrants.

At the Effective Time, there shall be no outstanding options or warrants or any other derivative securities or rights of any kind to purchase or acquire Membership Interests of Target.

1.10 Membership Interests of Merger Sub.

All membership interests of Merger Sub issued and outstanding immediately prior to the Effective Time, in the aggregate, shall be converted into and become the newly issued membership interests of the Surviving Company, which shall constitute the only outstanding membership interests of the Surviving Company. Target shall become a wholly-owned subsidiary of AHC.

1.11 Reserved.

1.12 Exchange of Certificates.

Within three (3) Business Days after the Closing, each Target Member shall deliver to Buyer (a) certificates evidencing the Membership Interests in AEON and (b) written evidence whereby each Target Member (i) waives all appraisal or dissenter’s rights, (ii) confirms his or her ownership of the Membership Interests in AEON owned by such Target Member, free and clear of all liens and (iii) confirms that the Target Member understands that Buyer Common Stock to be delivered to such Target Member are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the securities as principal for his or her own account and not with a view to or for distributing or reselling such securities or any part thereof in violation of the Securities Act or any applicable state securities law, in each case, in a form reasonably satisfactory to Buyer and as a condition precedent to Buyer’s obligation to deliver the Merger Consideration to such Target Member, and (c) the Voting Agreements, in exchange for certificates of Buyer representing the Target Member’s proportionate number of shares of Buyer Common Stock as set forth on Schedule 1.12.

1.13 No Liability.

Notwithstanding any other provision of this Agreement, none of the Buyer or the Surviving Company shall be liable to a holder of Membership Interests of Target for any Merger Consideration or any amount of cash properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

1.14 Taking of Necessary Action; Further Action.

If, at any time and from time to time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest in the Surviving Company full right, title and possession of all assets, properties, rights, privileges, powers and franchises of Target and Merger Sub, the officers and managing members of the Surviving Company shall be and are fully authorized and directed, in the name of and on behalf of Target and Merger Sub, to take, or cause to be taken, all such lawful and necessary action as is not inconsistent with this Agreement.

1.15 Earn-out.

(a) In the event of Buyer Stockholder Approval, within three (3) days after such Buyer Stockholder Approval, Buyer shall issue to the Target Members additional shares of Buyer Common Stock in an amount equal to an additional 5.0% of the issued and outstanding shares of Buyer Common Stock (rounded to the nearest whole share of Buyer Common Stock) as of the close of business on the Business Day immediately prior to the Closing Date;

(b) In the event AEON achieves at least $16,000,000 in EBITDA for calendar year ending December 31, 2015, then on September 1, 2016, the Buyer shall issue to the Target Members additional shares of Buyer Common Stock in an amount equal to an additional 24% of the issued and outstanding shares of Buyer Common Stock (rounded to the nearest whole share of Buyer Common Stock) as of close of business on the Business Day immediately prior to the Closing Date;

(c) In the event AEON achieves at least $65,900,000 in EBITDA, in the aggregate, for the three (3) calendar years ending December 31, 2016, 2017 and 2018, then, on October 1, 2019, subject to the completion of the audited financial statements of AEON for the calendar year ending December 31, 2018, the Buyer shall issue to the Target Members additional shares of Buyer Common Stock in an amount equal to an additional 36.1% of the issued and outstanding shares of Buyer Common Stock (rounded to the nearest whole share of Buyer Common Stock) as of the close of business on the Business Day immediately prior to the Closing Date; provided , however , that the Buyer shall issue to the Target Members additional shares of Buyer Common Stock so that the total number of shares of Buyer Common Stock issued to the Target Members equal 85% of the issued and outstanding shares of Buyer Common Stock on a post issuance basis (rounded to the nearest whole share of Buyer Common Stock) on a Fully Diluted Basis; and

(d) In the event AEON achieves at least $100,000,000 in EBITDA , in the aggregate, for the four (4) calendar fiscal years ending December 31, 2019, then within three (3) days following the completion of the audited financial statements for Target for the calendar year ending December 31, 2019, Buyer shall issue to the Target Members additional shares of Buyer Common Stock in an amount equal to an additional 5% of the issued and outstanding shares of Buyer Common Stock on a post issuance basis (rounded to the nearest whole share of Buyer’s Common Stock), on a Fully Diluted Basis in addition to the Buyer Common Stock issued to Target Members under Section 1.15(a), (b) and (c), resulting in the Target Members potentially owning 90% of the issued and outstanding shares of Buyer Common Stock on a post issuance basis and Fully Diluted Basis if all the additional tranches are earned.

For purposes of calculating EBITDA under this Section, it is understood and agreed that the EBITDA thresholds set forth above shall be subject to adjustment, from time to time, as set forth in this paragraph. The EBITDA thresholds shall not be adjusted for up to any ten percent (10%), in the aggregate, increase or decrease, as the case may be (the “ Adjustment Threshold ”), of the Centers for Medicare and Medicaid Services (“ CMS ”) reimbursement rate levels in effect on the date hereof for services that AEON provides to its customers.

The EBITDA thresholds under this Section shall be adjusted up or down, on an annual basis, commencing on December 31, 2015, on a percentage by percentage basis, for each percentage increase or decrease, as the case may be, above the Adjustment Threshold of the CMS reimbursement rate levels in effect on the date hereof for services that AEON provides to its customers.

1.16 Target Directors.

(a) In the election of directors, the Target Holders, shall be entitled to nominate for election to the Board of Directors of Buyer, for each 10% the outstanding shares of Buyer Common Stock beneficially owned by the Target Members as of the record date for such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent, one member of the Board of Directors; provided, however, that the number of directors that the Target Members shall have the right to nominate and elect shall not be less than nor more than the number permitted under Nasdaq Rule 5640 (or any successor rule or voting rights rule applicable to the Corporation) (such individuals, the “Target Directors” ).

(b) At each meeting (or written consent in lieu of a meeting) of Buyer’s stockholders at which the election of directors is to be considered, the Board of Directors of Buyer shall, subject to Section 4.11(a) , nominate each of the Target Directors designated by the Target Members for election to the Board of Directors of Buyer. Buyer agrees to recommend that the Company’s stockholders vote, and shall solicit proxies, in favor of the election of each of the Target Directors at such meeting and otherwise support each of the Target Directors for election in a manner no less rigorous and favorable than the manner in which Buyer supports its other nominees.

(c) In the event of a vacancy on the Board of Directors of Buyer resulting from the death, disqualification, resignation, retirement or termination of term of office of a Target Director, then the board of Directors of Buyer shall fill such vacancy with a Person nominated by the Target Members to serve until the next annual or special meeting of the stockholders at which the election of directors is to be considered (and at such meeting, such Person, or another Person designated by the Target Members will be elected to the Board in the manner set forth in this Section Section 1.16(b) ).

(d) In the event that any Target Director nominated by the Target Members hereunder fails to be elected to the Board of Directors of Buyer at any meeting of Buyer’s stockholders at which the election of directors is to be considered (or written consent in lieu of any meeting), the Buyer shall permit such Target Director who so fails to be elected to act as an observer to the Board of Directors of Buyer, and such Person shall have the right to receive notice of and to act as an observer in all meetings of the Board of Directors of Buyer and receive copies of all information furnished by Buyer to members of the Board of Directors Buyer until such Person (or its successor designated by the Target Members, is (re)elected to the Board of Directors of Buyer.

1.17. Other Rights. Without the approval of two-thirds or more of the Buyer Common Stock issued pursuant to this Agreement and owned by the Target Members , the Buyer shall not:

(1) create, or authorize the creation of, any additional class or series of capital stock of Buyer (or any security convertible into or exercisable for any class or series of capital stock of Buyer) or issue or sell, or obligate itself to issue or sell, any securities of Buyer or any of its subsidiaries (or any security convertible into or exercisable for any class or series of capital stock of Buyer or any of its subsidiaries);

(2) amend, alter or repeal any provision of this Agreement;

(3) commence any voluntary liquidation, bankruptcy, dissolution, recapitalization, reorganization or assignment to their creditors, or any similar transaction; or

(4) agree or commit to do any of the foregoing.

ARTICLE 2

POST CLOSING MANAGEMENT AND GOVERNING DOCUMENTS

2.1 Officers and Managers of Surviving Company.

Effective at the Effective Time, the executive officers and/or managers of Surviving Company shall be:


Name of Person		Title

Sonny Roshan		Chairman

Richard Hersperger		Chief Executive Officer

2.2 Officers of Buyer.

Effective at the Effective Time, the executive officers of Buyer shall be:


Name of Person		Title

Sonny Roshan		Chairman

Richard Hersperger		Chief Executive Officer

and such other persons as shall be determined by the Buyer’s Board of Directors prior to the Closing Date.

2.3 Board of Directors of Buyer; Managers of the Surviving Company. Subject to Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule 14f-1 promulgated thereunder, effective at the Effective Time, the Board of Directors of the Buyer and the managers of the Surviving Company shall each include two persons who shall be nominees of the Target Members, to serve for so long as the Target Members beneficially own Buyer Common Stock (subject to Section 1.16 hereof) .

ARTICLE 3

RESERVED

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF TARGET

Target hereby represents and warrants to Buyer and Merger Sub that the statements made in this Article 4 are true and correct as of the date hereof, except as set forth in the Target Disclosure Memorandum (it being understood and agreed that any matter disclosed in any section of the Target Disclosure Memorandum will be deemed to be disclosed in any other section of the Target Disclosure Memorandum to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable to such other section of this Agreement).

4.1 Organization, Standing, and Power.

Target is a limited liability company duly formed, validly existing, and in good standing under the Laws of the State of Georgia, and has the limited liability company power and authority to carry on its business as now conducted and to own, lease and operate its Assets. Target is duly qualified or licensed to transact business as a foreign entity in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect.

4.2 Authority of Target; No Breach By Agreement.

(a) Target has the limited liability company power and authority necessary to execute, deliver, and, other than with respect to consummation of the Merger, perform this Agreement and all other agreements, documents and instruments to be executed by it in connection herewith and with respect to the consummation of the Merger, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized by all necessary limited liability company action in respect thereof on the part of Target. This Agreement represents a legal, valid, and binding obligation of Target, enforceable against Target in accordance with its terms, 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. The representations and warranties set forth in this Section 4.1(a) shall be made with respect to the Original Merger Agreement as of the Original Execution Date and with respect to this Amended and Restated Agreement as of the Execution Date.

(b) Neither the execution and delivery of this Agreement by Target, nor the consummation by Target of the transactions contemplated hereby, nor compliance by Target with any of the provisions hereof will: (i) conflict with or result in a breach of any provision of Target’s Operating Agreement or other governing documents of any; (ii) except as disclosed in Section 4.2 of the Target Disclosure Memorandum, constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of any Target Entity under, any material Contract to which a Target Entity is a party or by which a Target Entity or any their properties are bound, or Permit of any Target Entity; or (iii) subject to receipt of the requisite Consents referred to in Section 8.2(e), constitute or result in a Default under, or require any Consent pursuant to, any Law, Order, Permit or Contract applicable to any Target Entity or any of their respective material Assets, except, in the case of clauses (ii) and (iii) above, where such Default or Lien, or the failure to obtain such Consent, is not reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect. The representations and warranties set forth in this Section 4.1(b) shall be made with respect to the Original Merger Agreement as of the Original Execution Date and with respect to this Amended and Restated Agreement as of the Execution Date.

(c) Other than in connection or compliance with the provisions of the Securities Laws, applicable state corporate and securities Laws and other than Consents required from Regulatory Authorities, other than notices to or filings with the IRS or the Pension Benefit Guaranty Corporation with respect to any

employee benefit plans, and other than such notices, filings or Consents which if not obtained or made, could not reasonably be expected to (A) result in a Target Material Adverse Effect, or (B) impair in any material respect the ability of the Parties to consummate the Merger contemplated hereby on a timely basis, no notice to, filing with, or Consent of, any public body or authority is necessary for the consummation by Target of the Merger and the other transactions contemplated in this Agreement.

4.3 Capitalization of Target.

(a) The Membership Interests constitute the entire outstanding membership interests of Target. Target Members collectively hold all of the issued Membership Interests, and the Membership Interests are held of record by the respective Target Members as set forth on Section 4.3(a) of the Target Disclosure Memorandum.

(b) There are no other equity securities of Target outstanding and no outstanding Equity Rights relating to the capital or economic interests of Target other than the Membership Interests owned by the Target Members set forth on Section 4.3(b) of the Target Disclosure Memorandum. No Person has any Contract or any right or privilege (whether pre-emptive or contractual) granted by Target for the purchase, subscription or issuance of any equity securities of Target.

(c) All of the issued and outstanding Membership Interests of Target were issued in compliance with all applicable federal and state securities Laws.

4.4 Target Subsidiaries.

Section 4.4 of the Target Disclosure Memorandum sets forth each Target Subsidiary (identifying its jurisdiction of incorporation, each jurisdiction in which it is qualified and/or licensed to transact business, and the number of shares owned and percentage ownership interest represented by such share ownership). Target owns all of the issued and outstanding shares of capital stock or membership interests of each Target Subsidiary. No capital stock of any Target Subsidiary is or may become required to be issued (other than to Target) by reason of any Equity Rights, and there are no Contracts by which any Target Subsidiary is bound to issue (other than to Target) additional shares of its capital stock or Equity Rights or by which Target is or may be bound to transfer any shares of the capital stock of any Target Subsidiary. There are no Contracts relating to the rights of Target to vote or to dispose of any shares of the capital stock of any Target. All of the shares of capital stock or membership interests, as applicable of each Target Subsidiary held by Target are fully paid and nonassessable under the applicable corporation Law of the jurisdiction in which such Target Subsidiary is incorporated or organized and are owned by Target free and clear of any Lien, except as set forth in Section 4.4 of the Target Disclosure Memorandum. Except as set forth in Section 4.4 of the Target Disclosure Memorandum, each Target Subsidiary is a corporation or limited liability company duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated or formed, and has the corporate or

limited liability company power and authority necessary for it to own, lease, and operate its Assets and to carry on its business as now conducted. Each Target Subsidiary is duly qualified or licensed to transact business as a foreign entity in good standing in the States of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect. Except as set forth on Section 4.4 of the Target Disclosure Memorandum, Target has no other Target Subsidiary.

4.5 Financial Statements and Accounting Controls.

(a) Section 4.5 of the Target Disclosure Memorandum shall contain a true and correct copy of the Target Financial Statements and shall be delivered on or prior to the Closing.

(b) Each of the Target Financial Statements (including, in each case, any related notes) was or will be prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to the financial statements) and fairly presented or will fairly present in all material respects the consolidated financial position of the Target Entities at the respective dates and the consolidated results of operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount or effect.

4.6 Absence of Undisclosed Liabilities.

Except: (i) as reflected or reserved against in the consolidated balance sheet of Target as of December 31, 2014, included in the Target Financial Statements delivered to Buyer on or prior to the Closing or reflected in the notes thereto; (ii) as incurred since December 31, 2014 in the ordinary course of business consistent with past business practice; (iii) for liabilities and obligations incurred under this Agreement or in connection with the transactions contemplated by this Agreement; (iv) for liabilities and obligations disclosed in Section 4.6 of the Target Disclosure Memorandum; (v) for liabilities and obligations incurred under any Contract to which any Target Entity is a party or otherwise bound (other than liabilities or obligations thereunder due as a result of breaches of any such Contract by any Target Entity of the terms set forth therein), and (vi) except for any Liabilities not reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect, no Target Entity; (x) has incurred any Liabilities that would be required to be disclosed on a balance sheet prepared in accordance with GAAP; (y) is obligated or committed to make any payments or distributions to any Target Affiliate following the Closing.

4.7 Absence of Certain Changes or Events.

Since December 31, 2014, except as disclosed in the Target Financial Statements delivered on or prior to the Closing or as disclosed in Section 4.7 of the Target Disclosure Memorandum and delivered on or prior to the Closing: (i) there have been no events, changes, or occurrences which have had, or are reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect; and (ii) none of the Target Entities has taken any action, or failed to take any action, which action or failure, would reasonably be expected to represent or would result in a material breach or violation of any of the covenants and agreements of Target provided in Sections 7.5, 7.11, 8.2(e) and 8.2(f).

4.8 Tax Matters.

Except as disclosed in Section 4.8 of the Target Disclosure Memorandum, all Target Entities have timely filed with the appropriate Taxing authorities all material Tax Returns in all jurisdictions in which Tax Returns are required to be filed and such Tax Returns are true, correct and complete in all material respects. Except as disclosed in Section 4.8 of the Target Disclosure Memorandum, none of the Target Entities is the beneficiary of any extension of time within which to file any material Tax Return. All material Taxes of the Target Entities (whether or not shown on any Tax Return) have been fully and timely paid. There are no Liens for any material Taxes (other than a Lien for Taxes not yet due and payable) on any of the Assets of any of the Target Entities. Since June 9, 2010 (date of formation), no claim has ever been made in writing by an authority in a jurisdiction where any Target Entity does not file a Tax Return that such Target Entity may be subject to Taxes by that jurisdiction.

(a) None of the Target Entities has received any notice in writing of an assessment or proposed assessment in connection with any material Taxes, and there are no pending disputes, claims, audits or examinations regarding any material Taxes of any Target Entity or the assets of any Target Entity. None of the Target Entities has waived any statute of limitations in respect of any material Taxes or agreed to a material Tax assessment or deficiency.

(b) The unpaid Taxes of each Target Entity: (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the most recent balance sheet (rather than in any notes thereto) for such Target Entity; and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Target Entities in filing their Tax Returns.

(c) Each Target Entity has complied in all material respects with all applicable Laws, rules and regulations relating to the withholding of Taxes and the payment thereof to appropriate authorities, including Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent contractor, and Taxes required to be withheld and paid pursuant to Sections 1441 and 1442 of the Internal Revenue Code or similar provisions under foreign Law.

(d) None of the Target Entities is a party to any written Tax allocation or sharing agreement and none of the Target Entities has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Target) or has any Tax Liability of any Person under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Law (other than the other members of the consolidated group of which Target is parent), or as a transferee or successor.

(e) None of the Target Entities has made any payments, is or will be obligated to make any payments (whether as a result of the transactions contemplated by this Agreement or otherwise), or is a party to any contract that could obligate it to make any payments that could be disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue Code. None of the Target Entities will be required to include any adjustment in taxable income for any Tax period (or portion thereof) beginning after the Closing Date pursuant to Section 481 of the Internal Revenue Code or any comparable provision under state or foreign Tax Laws as a result of transactions or events occurring prior to the Closing.

(f) Each of the Target Entities is in compliance with, and its records contain all information and documents (including properly completed IRS Forms W-9) necessary to comply in all material respects with, all applicable information reporting and Tax withholding requirements under federal, state, and local Tax Laws, and such records identify with specificity all accounts subject to backup withholding under Section 3406 of the Internal Revenue Code.

(g) No Target Entity has or has had in any foreign country a permanent establishment, as defined in any applicable tax treaty or convention between the United States and such foreign country.

4.9 Assets.

Except as disclosed in Section 4.9 of the Target Disclosure Memorandum or as disclosed or reserved against in the Target Financial Statements, the Target Entities have good title, free and clear of all Liens, to all of their respective material Assets required to operate the business of the Target Entities as presently conducted.

4.10 Intellectual Property.

(a) Section 4.10(a) of the Target Disclosure Memorandum contains a complete and accurate list of the Registered Intellectual Property owned by the Target Entities and lists: (i) the record owner of such Registered Intellectual Property; and (ii) the jurisdictions in which such Registered Intellectual Property has been issued or registered, or in which an application for registration or issuance is pending. Except as disclosed in Section 4.10(a) of the Target Disclosure Memorandum, a Target Entity owns each material item of Owned Intellectual Property free and clear of any Lien.

(b) The Target Intellectual Property constitutes all Intellectual Property that is currently used or otherwise exploited by the Target Entities in their business as it is currently conducted and as it relates to the development and commercialization of any Target Product Candidate. Each material item of Registered Intellectual Property owned by the Target Entities is valid and subsisting. Except as disclosed in Section 4.10(b) of the Target Disclosure Memorandum, no material Target Intellectual Property is subject to any proceeding or outstanding decree, order, judgment, agreement or stipulation restricting in any respect the use, transfer or licensing thereof by any Target Entity.

(c) To the Knowledge of Target, no Person is infringing or misappropriating, or within the past 3 years has infringed or misappropriated, any material Target Intellectual Property.

(d) No Target Entity has received a written notice from any third party alleging, or an opinion of counsel directed to, and the current conduct of Target’s business and/or the development, manufacture, use, sale, offer for sale, importation or other commercial exploitation, of any Target Product Candidate, does not, infringe (without reference to any research or development exemption therefrom) or misappropriate any Intellectual Property of any third party or constitute unfair competition or trade practices under the Laws of any jurisdiction, except as would not reasonably likely have, individually or in the aggregate, a Target Material Adverse Effect.

(e) The Target Entities have complied in all material respects with all requirements of each applicable Regulatory Authority (including the United States Patent and Trademark Office and foreign counterparts thereof) with respect to the filing and prosecution of the Registered Intellectual Property owned by the Target Entities and material to their respective businesses. Except as disclosed in Section 4.10(e) of the Target Disclosure Memorandum, no Target Entity has received written notice from a third party or has obtained an opinion of counsel addressing any prior art or prior public uses, sales, offers for sale or disclosures which would invalidate any such Registered Intellectual Property (in whole or in part).

(f) The Target Entities have taken reasonable and customary steps to protect the rights of the Target Entities in their material Trade Secrets. All employees of and consultants to the Target Entities with permitted access to material Trade Secrets of the Target Entities are party to written Contracts under which, among other things, each such employee or consultant is obligated to maintain the confidentiality of such Trade Secrets and assign to a Target Entity all Intellectual Property created by such employee or consultant in the scope of employment or consultancy with the Target Entities. All Owned Intellectual Property developed under Contract to the Target Entities has been assigned to a Target Entity or is contractually obligated to be assigned.

4.11 Environmental Matters.

(a) To the Knowledge of Target, each Target Entity is and has been, in compliance in all material respects with all Environmental Laws, except where non-compliance would not reasonably likely have, individually or in the aggregate, a Target Material Adverse Effect.

(b) There is no Litigation pending or, to the Knowledge of Target, threatened before any court, governmental agency, or authority in which any Target Entity is or, with respect to threatened Litigation, may be named as a defendant: (i) for alleged material noncompliance (including by any predecessor) with or Liability under any Environmental Law; or (ii) relating to the release, discharge, spillage, or disposal into the environment of any Hazardous Material by any Target Entity at a site currently or formerly owned, leased, or operated by any Target Entity, except in each case as would not reasonably likely have, individually or in the aggregate, a Target Material Adverse Effect.

(c) To the Knowledge of Target, during the period of any Target Entity’s ownership or operation of any properties, there have been no, releases, discharges, spillages, or disposals of Hazardous Material by any Target Entity and all operations of the Target Entities on any properties previously or currently used, leased or otherwise being operated by any Target Entity to the Knowledge of Target materially comply with all Environmental Laws. Prior to the period of any Target Entity’s ownership or operation of any properties, to the Knowledge of Target, there were no releases, discharges, spillages, or disposals of Hazardous Material in, on, under, or affecting any such property and no Target Entity, to the Knowledge of Target, has expressly by Contract or by operation of Law or otherwise, assumed or succeeded to any Liabilities of any predecessors or any other Person related to environmental matters, except as would not reasonably likely have, individually or in the aggregate, a Target Material Adverse Effect.

4.12 Compliance with Laws.

(a) Each Target Entity has in effect all Permits necessary for it to own, lease, or operate its Assets and to carry on its business as now conducted, except where the failure to be in effect is not reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect.

(b) Except as disclosed in Section 4.12(b) of the Target Disclosure Memorandum, none of the Target Entities:

(i) is in Default under any of the provisions of its Operating Agreement or Articles of Formation, certificate of incorporation or bylaws (or other governing instruments) as the case may be;

(ii) is in Default under any Orders or Permits applicable to its business or employees conducting its business, except for Defaults which are not reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect; or

(iii) since June 9, 2010, has received any written notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (x) asserting that any Target Entity is not, or may not be, in compliance with any Laws or Orders where such noncompliance is reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect or (y) threatening to revoke any Permits, the revocation of which is reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect.

(c) All of the independent contractors, if any, of the Target Entities have and do meet the standards under all Laws (including Treasury Regulations under the Internal Revenue Code and federal and state labor and employment Laws) as independent contractors and no such Person is an employee of any Target Entity under any applicable Law, in each case, except as would not reasonably likely have, individually or in the aggregate, a Target Material Adverse Effect.

(d) Each of the Target Entities is in compliance, in all material respects, with all Laws applicable to the Target Entities, including the Laws and regulations enforced by the Drug Enforcement Agency, the Department of Health and Human Services and its constituent agencies, the FDA, the Centers for Medicare & Medicaid Services, and the Office of Inspector General, including the anti-kickback law (Social Security Act §1128B(b)) and analogous Laws of the various states, the drug price reporting requirements of titles XVIII and XIX of the Social Security Act, the federal False Claims Act (31 U.S.C. § 3729 et seq.), the federal Social Security Act, the federal False Statements Act, the federal Program Fraud Civil Penalties Act, the federal Health Insurance Portability and Accountability Act, and analogous federal and state Laws, the FCPA and the Laws precluding off-label marketing of drugs. None of the Target Entities, to the Knowledge of Target, is under investigation with respect to, nor have the Target Entities been threatened in writing to be charged with or been given written notice of any violation of, any applicable Law.

(e) No representation or warranty is made in this Section 4.12 with respect to compliance with employee benefit or labor laws, laws with respect to Taxes or Environmental Laws, all of which are covered in other sections of this Agreement.

4.13 Labor Relations.

(a) No Target Entity is the subject of any Litigation asserting that it or any other Target Entity has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state Law) or other violation of state or federal labor Law or seeking to compel it or any other

Target Entity to bargain with any labor organization or other employee representative as to wages or conditions of employment, nor is any Target Entity party to any collective bargaining agreement or subject to any bargaining order, injunction or other Order relating to Target’s relationship or dealings with its employees, any labor organization or any other employee representative. There is no material strike, slowdown, lockout or other job action or labor dispute involving any Target Entity pending or, to the Knowledge of Target, threatened and there has been no such actions or disputes in the past five years. To the Knowledge of Target, in the past five years, there has not been any attempt by any Target Entity employees or any labor organization or other employee representative to organize or certify a collective bargaining unit or to engage in any other union organization activity with respect to the workforce of any Target Entity.

(b) Target is in compliance in all material respects all requirements required by Law or regulation relating to the employment of foreign citizens, and to the Knowledge of Target, Target does not currently employ any person who was not permitted to work in the jurisdiction in which such person was employed.

4.14 Employee Benefit Plans.

(a) Target has disclosed in Section 4.14(a) of the Target Disclosure Memorandum, and has delivered or made available to Buyer prior to the execution of this Agreement: (i) copies of each Employee Benefit Plan currently adopted, maintained by, sponsored in whole or in part by, or contributed to by any Target Entity or ERISA Affiliate thereof for the benefit of employees, former employees, retirees, dependents, spouses, directors, independent contractors, or other beneficiaries or under which employees, retirees, former employees, dependents, spouses, directors, independent contractors, or other beneficiaries are eligible to participate; and (ii) a list of each Employee Benefit Plan that is not identified in (i) above (e.g., former Employee Benefit Plans) but for which the Target Entity or ERISA Affiliate has or reasonably would have any material obligation or Liability (collectively, the “ Target Benefit Plans ”). Any of the Target Benefit Plans which is an “employee pension benefit plan,” as that term is defined in ERISA Section 3(2), is referred to herein as a “ Target ERISA Plan .”

(b) Target has delivered to Buyer prior to the execution of this Agreement: (i) all trust agreements or other funding arrangements for all Employee Benefit Plans; (ii) all determination letters, rulings, opinion letters, information letters or advisory opinions issued by the IRS, the United States Department of Labor (“ DOL ”) or the Pension Benefit Guaranty Corporation during this calendar year or any of the preceding three calendar years; (iii) any filing or documentation (whether or not filed with the IRS) where corrective action was taken in connection with the IRS EPCRS program set forth in Revenue Procedure 2001-17 (or its predecessor or successor rulings); (iv) annual reports or returns, audited or unaudited financial statements, actuarial reports and valuations prepared for any Employee Benefit Plan for the current plan year and the three preceding plan years; (v) the most recent summary plan descriptions and any material modifications thereto; and (vi) descriptions of any unwritten Employee Benefit Plan, including a description of any material terms of such plan.

(c) Except as disclosed in Section 4.14(c) of the Target Disclosure Memorandum, each Target Benefit Plan is in compliance in all material respects with the terms of such Target Benefit Plan, in compliance with the applicable requirements of the Internal Revenue Code, applicable requirements of ERISA, and with any other applicable Laws. Each Target ERISA Plan which is intended to be qualified under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the IRS that is still in effect and applies to the Target ERISA Plan as amended and as administered or, within the time permitted under Internal Revenue Code Section 401(b), has timely applied for a favorable determination letter which when issued will apply retroactively to the Target ERISA Plan as amended and as administered. Target is not aware of any circumstances likely to result in revocation of any such favorable determination letter. Target has not received any communication (written or unwritten) from any government agency questioning or challenging the compliance of any Target Benefit Plan with applicable Laws. No Target Benefit Plan is currently being audited by a governmental agency for compliance with applicable Laws or has been audited with a determination by the governmental agency that the Employee Benefit Plan failed to comply with applicable Laws.

(d) There has been no oral or written representation or communication with respect to any aspect of the Target Benefit Plans made to employees of Target which is not in accordance with the written or otherwise preexisting terms and provisions of such Target Benefit Plans. To the Knowledge of Target, neither the Target nor any administrator or fiduciary of any Target Benefit Plan (or any agent of any of the foregoing) has engaged in any transaction, or acted or failed to act in any manner, which could subject Target or Buyer to any direct or indirect Liability (by indemnity or otherwise) for breach of any fiduciary, co-fiduciary or other duty under ERISA. There are no unresolved claims or disputes under the terms of, or in connection with, the Target Benefit Plans other than claims for benefits which are payable in the ordinary course of business and there are no pending or, to the Knowledge of Target, threatened actions, proceedings, prosecutions, inquiries, hearings or investigations against or relating to the assets of any of the trusts under such Target Benefit Plans, the Target Benefit Plan sponsor, Target Benefit Plan administrator, or any fiduciary of any Target Benefit Plan, or otherwise relating to any Target Benefit Plan.

(e) All Target Benefit Plan documents and annual reports or returns, audited or unaudited financial statements, actuarial valuations, summary annual reports, and summary plan descriptions issued with respect to the Target Benefit Plans are materially correct and complete, have been timely filed with the IRS, the DOL or distributed to participants of the Target Benefit Plans (as required by Law), and there have been no changes in the information set forth therein.

(f) To the Knowledge of Target, no “party in interest” (as defined in Section 3(14) of ERISA) or “disqualified person” (as defined in Section 4975(e)(2) of Internal Revenue Code) of any Target Benefit Plan has engaged in any nonexempt “prohibited transaction” (described in Section 4975(c) of the Internal Revenue Code or Section 406 of ERISA).

(g) Neither Target nor any ERISA Affiliate has ever sponsored, maintained, contributed to or had any obligation to contribute to a plan or arrangement that is: (i) subject to Title IV of ERISA; (ii) a multiemployer plan within the meaning of Section 3(37) of ERISA; (iii) maintained in connection with any trust described in Section 501(c)(9) of the Code; (iv) subject to the minimum funding standards of ERISA Section 302 or Internal Revenue Code Section 412; or (v) a post-termination health or welfare benefit arrangement or plan other than as required by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Internal Revenue Code (“ COBRA ”) or similar state law. No Target Benefit Plan that is a health or welfare benefit plan is self-insured.

(h) Except as disclosed in Section 4.14(h) of the Target Disclosure Memorandum, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (i) result in any material payment (including severance, unemployment compensation, golden parachute, or otherwise) becoming due to any director or any employee of any Target Entity from any Target Entity under any Target Benefit Plan or otherwise; (ii) materially increase any benefits otherwise payable under any Target Benefit Plan; or (iii) result in any acceleration of the time of payment or vesting of any such benefit.

(i) Each Target Benefit Plan may be amended, terminated, modified, or otherwise revised by Buyer, on or after the Closing, without further liability to Target or Buyer. .

4.15 Material Contracts.

(a) Section 4.15(a) of the Disclosure Schedules lists the Target Material Contracts .

(b) Each Target Material Contract is valid and binding on Target in accordance with its terms and is in full force and effect, except for such failures to be valid and binding or to be in full force and effect as would not reasonably likely have, individually or in the aggregate, a Target Material Adverse Effect. None of Target or, to Target’s Knowledge, any other party to the Target Material Contract is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Target Material Contract and no event or circumstance has occurred or, to Target’s Knowledge, will occur (including the execution of this Agreement and the consummation of the transactions contemplated herein) that, with notice or lapse of time or both, would constitute an event of default under any Target Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Target Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer.

4.16 Legal Proceedings.

Except as set forth in Section 4.16 of the Target Disclosure Memorandum, there is no Litigation instituted or pending, or, to the Knowledge of Target, threatened against any Target Entity, or against any director, officer or employee in their capacities as such, nor are there any material Orders outstanding against any Target Entity: (i) which involves, or is reasonably likely to involve, an amount in controversy in excess of $200,000 or $400,000 in the aggregate; (ii) which seeks material injunctive relief; or (iii) which is reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect.

4.17 Statements Promised for Use by Buyer True and Correct.

(a) The statements, certificates, instruments and other writings furnished or to be furnished by the Target Entities or any Affiliate thereof to Buyer pursuant to this Agreement and the other documents, agreements and instruments referred to herein do not contain and will not contain any untrue statement of material fact or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) None of the information provided by Target or the Target Members included in the First Proxy Statement and the Second Proxy Statement to be mailed to Buyer’s stockholders in connection with the First Stockholders’ Meeting and the Second Stockholders’ Meeting, as the case may be, or Nasdaq in connection with the transactions contemplated hereby that is supplied by any Target Entity or any Affiliate thereof for inclusion, will, at the respective time such documents are filed, and with respect to the First Proxy Statement and Second Proxy Statement, when each is first mailed to the stockholders of Buyer, contain an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or, in the case of the First Proxy Statement (or any amendment thereof or supplement thereto) and the Second Proxy Statement (or any amendment thereof or supplement thereto), at the time of the First Stockholders’ Meeting and the Second Stockholders’ Meeting, as the case may be, contain an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein not misleading.

4.18 State Takeover Laws.

Each Target Entity has taken all necessary action to exempt the transactions contemplated by this Agreement and the Voting Agreements from, or if necessary to challenge the validity or applicability of, any applicable “moratorium,” “fair price,” “business combination,” “control share,” or other anti-takeover Laws, including Section 14-2-1132 of the Georgia Act. Each of the Target Members has waived any rights to appraisal or dissenters’ rights under the Georgia Act and all applicable Laws.

4.19 Real Property.

Section 4.19 of the Target Disclosure Memorandum sets forth a complete list of all real property leased by the Target Entities as of the date hereof (“ Target Leased Real Property ”). A copy of the lease for each Target Leased Real Property (individually a “ Target Lease ” and collectively the “ Target Leases ”) has been provided to Buyer prior to execution of this Agreement or has been delivered or made available to Buyer. With respect to each Target Lease: (i) such Target Lease is legal, valid, and binding on the Target Entity party thereto, and, to the Knowledge of Target, each other Person party thereto, and is enforceable and in full force and effect and fully and accurately reflects all material economic terms of the parties to the Target Lease; (ii) except as set forth on Section 4.19 of the Target Disclosure Memorandum, the transactions contemplated by this Agreement do not require the consent of any other party to such Target Lease, will not result in a breach of or default under such Target Lease, or otherwise cause such Target Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing; and (iii) no Target Entity nor, to the Knowledge of Target, any other party to a Target Lease is in material Default under such Lease, and, to the Knowledge of Target, no event has occurred or failed to occur or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a material Default, or permit the termination, material modification or acceleration of rent under such Target Lease. No Target Entity (i) owns, or since June 9, 2010, has owned any real property or (ii) has guaranteed payment of any purchase price or rent for any real property or (iii) is obligated to purchase or rent any real property, other than under the Target Leases.

4.20 Insurance.

(a) Prior to execution of this Agreement, Target has provided or made available to Buyer true, correct and complete copies of its director and officer and employee and officer insurance policies, all general liability property and casualty and all other policies of insurance to which any Target Entity is a party or is a beneficiary or named insured.

(b) Excluding insurance policies that have expired and been replaced in the ordinary course of business, as of the date hereof, no threat in writing has been made to cancel (excluding cancellation upon expiration or failure to renew) any such insurance policy of the Target Entities during the period of one year prior to the date hereof. As of the date hereof, and as of the Closing, no event has occurred, including the failure by any Target Entity to give any written notice or information or by giving any inaccurate or erroneous written notice or information, which materially limits or impairs the rights of the Target Entities under any such excess Liability or protection and indemnity insurance policies.

4.21 Foreign Corrupt Practices and International Trade Sanctions.

No Target Entity, nor to the Knowledge of Target, any of their respective directors, officers or employees has, in connection with the operation of their respective businesses: (a) used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA ”), or any other similar applicable foreign, federal or state Law; (b) paid, accepted or received any unlawful contribution, payment, expenditure or gift; or (c) violated or operated in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign Laws.

4.22 Commercial Relationships.

Except as disclosed in Section 4.22 of the Target Disclosure Memorandum, none of the Target Entity’s material suppliers, collaborators, distributors, licensors or licensees has canceled or otherwise terminated its relationship related to any Target Material Contract with any Target Entity or has, during the 12 months preceding the date of this Agreement or materially adversely altered its relationship with any Target Entity. To the Knowledge of Target, Target has not received any written threat or notice from any such entity, to terminate, cancel or otherwise materially adversely modify any Target Material Contract with the Target Entities.

4.23 Brokers and Finders.

No broker, finder or investment banker or any other Person is entitled to any brokerage, finder’s or other fee or commission or other type of payment or consideration from any Target Entity in connection with this Agreement or the transactions contemplated hereby.

4.24 No Other Representations or Warranties.

Except for the representations and warranties made by Target in this Article 4 or pursuant to the certificates to be delivered pursuant to the terms set forth herein, neither Target nor any other Person makes any representation or warranty with respect to the Target Entities or any other Person or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to Buyer or representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB

Except as set forth in the Buyer Disclosure Memorandum (it being understood and agreed that any matter disclosed in any section of the Buyer Disclosure Memorandum will be deemed to be disclosed in any other section of the Buyer Disclosure Memorandum to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable to such other section), Buyer and Merger Sub hereby, jointly and severally, represent and warrant to Target as follows:

5.1 Organization, Standing, and Power.

Buyer is a corporation, duly incorporated and validly existing, and in good standing under the Laws of the State of Delaware, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Assets. Buyer is duly qualified or licensed to transact business as a foreign entity in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect. Merger Sub is a limited liability company, duly incorporated and validly existing, and in good standing under the Laws of the State of Georgia.

5.2 Authority; No Breach By Agreement.

(a) Each of Buyer and Merger Sub has the corporate or limited liability company, as applicable, power and authority necessary to execute, deliver, and, other than with respect to consummation of the Merger, perform this Agreement and all other agreements, documents and instruments to be executed by it in connection herewith and with respect to the consummation of the Merger, to perform its respective obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized by all necessary corporate or limited liability company action in respect thereof on the part of Buyer and Merger Sub, as applicable. This Agreement represents a legal, valid, and binding obligation of Buyer and Merger Sub, enforceable against Buyer and Merger Sub in accordance with its terms, 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. The representations and warranties set forth in this Section 5.1(a) shall be made with respect to the Original Merger Agreement as of the Original Execution Date and with respect to this Amended and Restated Agreement as of the Execution Date.

(b) Neither the execution and delivery of this Agreement by Buyer and Merger Sub, nor the consummation by Buyer and Merger Sub of the transactions contemplated hereby, nor compliance by Buyer and Merger Sub with any of the provisions hereof will: (i) conflict with or result in a breach of any provision of Buyer’s or Merger Sub’s certificate of incorporation or bylaws or the certificate or articles of incorporation or bylaws or other governing documents of any Buyer Subsidiary; (ii) except as disclosed in

Section 5.2 of the Buyer’s Disclosure Memorandum, constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of any Buyer Entity under, any material Contract to which a Buyer Entity is a party or by which a Buyer Entity or any their properties are bound, or Permit of any Buyer Entity; or (iii) subject to receipt of the requisite Consents referred to in Section 8.3(g), constitute or result in a Default under, or require any Consent pursuant to, any Law, Order, Permit or Contract applicable to any Buyer Entity or any of their respective material Assets, except, in the case of clauses (ii) and (iii) above, where such Default or Lien, or the failure to obtain such Consent, is not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect. The representations and warranties set forth in this Section 5.1(a) shall be made with respect to the Original Merger Agreement as of the Original Execution Date and with respect to this Amended and Restated Agreement as of the Execution Date.

(c) Other than in connection or compliance with the provisions of the Securities Laws, applicable state corporate and securities Laws, and the rules of Nasdaq, and other than Consents required from Regulatory Authorities, no notice to, filing with, or Consent of, any public body or authority is necessary for the consummation by Buyer and Merger Sub of the Merger and the other transactions contemplated in this Agreement.

(d) The Board of Directors of Buyer and the Board of Managers of Merger Sub has, at meetings duly called and held, by unanimous vote of their respective disinterested directors or managers entitled to vote, as the case may be: (i) approved and declared advisable this Agreement; (ii) determined that the Merger and other transactions contemplated by this Agreement are advisable, fair to and in the best interests of the Buyer and its stockholders; (iii) in the case of the Board of Directors of the Buyer, resolved to recommend to the Buyer stockholders (A) the Nasdaq Stockholder Approval, (B) the Buyer Stockholder Approval and the other transactions contemplated hereby, (C) the approval and adoption of this Agreement, and (D) the issuance of the Buyer Common Stock as contemplated herein; and (iv) resolved that any applicable “takeover” statute, regulation or law be rendered inapplicable to the transactions contemplated hereby, including, without limitation, the Merger.

5.3 Capital Stock.

(a) The capitalization of the Buyer is as set forth in Section 5.3(a) of the Buyers Disclosure Memorandum. Except as disclosed in Section 5.3(a) (i) of the Buyer’s Disclosure Memorandum, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as disclosed in Section 5.3(a) (ii) of the Buyers’ Disclosure Memorandum, there are no outstanding options, warrants, restricted stock units, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Buyer Common Stock or Common Stock Equivalents, or binding written contracts by which the Buyer is bound to issue additional shares of

its Common Stock or Common Stock Equivalents. The issuance of the Merger Consideration will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Target Members) pursuant to this Agreement and the Transaction Documents and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Buyer directly owns all the issued and outstanding equity interests of Merger Sub free and clear of any Liens, and there are no outstanding options, warrants, restricted stock units, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any equity interests of Merger Sub, or binding written contracts by which the Buyer or Merger Sub is bound to issue additional equity interests or securities convertible into equity interests of Merger Sub.

(b) Except as disclosed in (i) Section 5.3(a) of the Buyer Disclosure Memorandum there are no shares of capital stock or other equity securities of Buyer or Merger Sub outstanding and no outstanding Equity Rights relating to the capital stock of Buyer or equity interests of Merger Sub, in each case as of the date of this Agreement.

(c) All of the issued and outstanding shares of capital stock of Buyer and equity interests of Merger Sub were issued in compliance with all applicable federal and state securities Laws.

(d) All shares of Buyer Common Stock, will be, when issued in accordance with the terms hereof, duly authorized, validly issued, fully paid and non-assessable, and not subject to, or issued in violation of, any kind of preemptive, subscription or similar rights and were or will be issued in compliance in all material respects with all applicable federal and state securities laws.

5.4 Buyer Subsidiaries.

Buyer or one of its wholly owned Subsidiaries owns all of the issued and outstanding shares of capital stock (or other equity interests) of each Buyer Subsidiary. Merger Sub has no Subsidiaries. No capital stock (or other equity interest) of any Buyer Subsidiary is or may become required to be issued (other than to another Buyer Entity) by reason of any Equity Rights, and there are no Contracts by which any Buyer Subsidiary is bound to issue (other than to another Buyer Entity) additional shares of its capital stock (or other equity interests) or Equity Rights or by which any Buyer Entity is or may be bound to transfer any shares of the capital stock (or other equity interests) of any Buyer Subsidiary (other than to another Buyer Entity). There are no Contracts relating to the rights of any Buyer Entity to vote or to dispose of any shares of the capital stock (or other equity interests) of any Buyer Subsidiary. All of the shares of capital stock (or other equity interests) of each Buyer Subsidiary held by a Buyer Entity are fully

paid and nonassessable under the applicable Law of the jurisdiction in which such Subsidiary is incorporated or organized and are owned by the Buyer Entity free and clear of any Lien. Each Buyer Subsidiary is a corporation, limited liability company, limited partnership, or limited liability partnership, and is duly organized, validly existing, and (as to corporations) in good standing under the Laws of the jurisdiction in which it is incorporated or organized, and has the power and authority necessary for it to own, lease and operate its Assets and to carry on its business as now conducted. Each Buyer Subsidiary is duly qualified or licensed to transact business as a foreign entity in good standing in the States of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect.

5.5 SEC Filings; Financial Statements.

(a) Buyer has filed and made available to Target (including through the Electronic Data, Gathering, Analysis and Recovery database of the SEC) all SEC Reports required to be filed by Buyer since January 1, 2011. The Buyer SEC Reports: (i) at the time filed, complied in all material respects with the applicable requirements of the Securities Laws; and (ii) did not, at the time they were filed (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing or, in the case of registration statements, at the effective date thereof) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC Reports, in light of the circumstances under which they were made, not misleading.

(b) Each of the Buyer Financial Statements (including, in each case, any related notes) contained in the Buyer SEC Reports, including any Buyer SEC Reports filed after the date of this Agreement until the Closing, complied as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto, was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly presented or will fairly present in all material respects the consolidated financial position of Buyer and its Subsidiaries as at the respective dates and the consolidated results of operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount or effect.

(c) Buyer maintains a system of internal control over financial reporting (as defined in Rule 13a-15 under the Exchange Act) that has been designed to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(d) Buyer maintains a system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) necessary in order for the chief executive officer and chief financial officer of Buyer to engage in the review and evaluation process mandated by the Exchange Act and the rules promulgated thereunder. Buyer’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by Buyer in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to Buyer’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the chief executive officer and chief financial officer of Buyer required under the Exchange Act with respect to such reports.

(e) Since January 1, 2011, Buyer has not received any oral or written notification of: (i) any “reportable condition”; or (ii) any “material weakness” in Buyer’s internal control over financial reporting. The terms “reportable condition” and “material weakness” shall have the meanings assigned to them in the Statements of Auditing Standards 60, as in effect on the date hereof.

(f) Buyer has provided Target copies of all material correspondence sent to or received from the SEC by Buyer or its Subsidiaries or their respective counsel or accountants since January 1, 2011. As of the date hereof, there are no material outstanding or unresolved comments in comment letters received from the SEC staff with respect to Buyer SEC Reports.

5.6 Absence of Undisclosed Liabilities.

Except: (i) as reflected or reserved against in the consolidated balance sheet of Buyer as of June 30, 2015, included in the Buyer Financial Statements prior to the date of this Agreement or reflected in the notes thereto; (ii) as incurred since June 30, 2015 in the ordinary course of business consistent with past business practice; (iii) for liabilities and obligations incurred under this Agreement or in connection with the transactions contemplated by this Agreement; (iv) for liabilities and obligations incurred under any Contract to which any Buyer Entity is a party or otherwise bound (other than liabilities or obligations thereunder due as a result of breaches of any such Contract by any Buyer Entity of the terms set forth therein), and (v) except for any Liabilities not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect, no Buyer Entity; (x) has incurred any Liabilities that would be required to be disclosed on a balance sheet prepared in accordance with GAAP, or (y) is obligated or committed to make any payments or distributions to any Affiliate following the Closing.

5.7 Absence of Certain Changes or Events.

Since June 30, 2015, except as disclosed in the Buyer Financial Statements delivered prior to the date of this Agreement or as disclosed in Section 5.7 of the Buyer Disclosure Memorandum: (i) there have been no events, changes, or occurrences which have had, or are reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect; and (ii) none of the Buyer Entities has taken any action, or failed to take any action, which action or failure, would reasonably be expected to represent or would result in a material breach or violation of any of the covenants and agreements of Buyer provided in Sections 7.2, 7.5, 7.11, and
8.3(g).

5.8 Tax Matters.

Except as disclosed in Section 5.8 of the Buyer Disclosure Memorandum:

(a) All Buyer Entities have timely filed with the appropriate Taxing authorities all material Tax Returns in all jurisdictions in which Tax Returns are required to be filed and such Tax Returns are true, correct and complete in all material respects. None of the Buyer Entities is the beneficiary of any extension of time within which to file any material Tax Return. All material Taxes of the Buyer Entities (whether or not shown on any Tax Return) have been fully and timely paid. There are no Liens for any material Taxes (other than a Lien for Taxes not yet due and payable) on any of the Assets of any of the Buyer Entities. Since January 1, 2011, no claim has ever been made in writing by an authority in a jurisdiction where any Buyer Entity does not file a Tax Return that such Buyer Entity may be subject to Taxes by that jurisdiction.

(b) None of the Buyer Entities has received any notice in writing of an assessment or proposed assessment in connection with any material Taxes, and there are no pending disputes, claims, audits or examinations regarding any material Taxes of any Buyer Entity or the assets of any Buyer Entity. None of the Buyer Entities has waived any statute of limitations in respect of any material Taxes or agreed to a material Tax assessment or deficiency.

(c) The unpaid material Taxes of each Buyer Entity: (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the most recent balance sheet (or in any notes thereto) for such Buyer Entity; and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Buyer Entities in filing their Tax Returns.

(d) Each Buyer Entity has complied in all material respects with all applicable Laws, rules and regulations relating to the withholding of Taxes and the payment thereof to appropriate authorities, including Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent contractor, and Taxes required to be withheld and paid pursuant to Sections 1441 and 1442 of the Internal Revenue Code.

(e) None of the Buyer Entities is a party to any written Tax allocation or sharing agreement and none of the Buyer Entities has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Buyer) or has any Tax Liability of any Person under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Law (other than the other members of the consolidated group of which Buyer is parent), or as a transferee or successor.

(f) None of the Buyer Entities has made any payments, is or will be obligated to make any payments (whether as a result of the transactions contemplated by this Agreement or otherwise), or is a party to any contract that could obligate it to make any payments that could be disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue Code. None of the Buyer Entities will be required to include any adjustment in taxable income for any Tax period (or portion thereof) beginning after the Closing Date pursuant to Section 481 of the Internal Revenue Code or any comparable provision under state or foreign Tax Laws as a result of transactions or events occurring prior to the Closing. The net operating losses of the Buyer Entities are not subject to any limitation on their use under the provisions of Sections 382 or 269 of the Internal Revenue Code or any other provisions of the Internal Revenue Code or the Treasury Regulations dealing with the utilization of net operating losses other than any such limitations as may arise as a result of the consummation of the transactions contemplated by this Agreement, after giving effect to (i) the Lock-up Agreements and (ii) the implementation by Buyer of a limitation in its Certificate of Incorporation to prevent transfers of any shares of Buyers Common Stock (or derivative securities) to holders of Buyers Common stock who are, or could become upon any sale or transfer the owner of, either directly or indirectly, more than 4.99% of the Buyers Common Stock.

(g) Each of the Buyer Entities is in compliance with, and its records contain all information and documents (including properly completed IRS Forms W-9) necessary to comply in all material respects with, all applicable information reporting and Tax withholding requirements under federal, state, and local Tax Laws, and such records identify with specificity all accounts subject to backup withholding under Section 3406 of the Internal Revenue Code.

(h) No Buyer Entity has or has had in any foreign country a permanent establishment, as defined in any applicable tax treaty or convention between the United States and such foreign country.

5.9 Assets.

Except as disclosed in the Buyer Disclosure Memorandum or reserved against in the Buyer Financial Statements included in the Buyer SEC Reports, the Buyer Entities have good title, free and clear of all Liens, to all of their respective material Assets required to operate the business of the Buyer Entities as presently conducted.

5.10 Intellectual Property.

(a) Section 5.10(a) of the Buyer Disclosure Memorandum contains a complete and accurate list of the Registered Intellectual Property owned by the Buyer Entities and lists: (i) the record owner of such Registered Intellectual Property; and (ii) the jurisdictions in which such Registered Intellectual Property has been issued or registered, or in which an application for registration or issuance is pending. Except as disclosed in Section 5.10(a) of the Buyer Disclosure Memorandum, a Buyer Entity owns each material item of Owned Intellectual Property free and clear of any Lien.

(b) The Buyer Intellectual Property constitutes all Intellectual Property that is currently used or otherwise exploited by the Buyer Entities in their business as it is currently conducted and as it relates to the development and commercialization of any Buyer Product Candidate. Each material item of Registered Intellectual Property owned by the Buyer Entities is valid and subsisting. Except as disclosed in Section 5.10(b) of the Buyer Disclosure Memorandum, no material Buyer Intellectual Property is subject to any proceeding or outstanding decree, order, judgment, agreement or stipulation restricting in any respect the use, transfer or licensing thereof by any Buyer Entity.

(c) Except as disclosed in Section 5.10(c) of the Buyer Disclosure Memorandum, to the Knowledge of Buyer, no Person is infringing or misappropriating, or within the past three (3) years has infringed or misappropriated, any material Buyer Intellectual Property.

(d) Except as disclosed in Section 5.10(c) of the Buyer Disclosure Memorandum, no Buyer Entity has received a written notice from any third party alleging, or an opinion of counsel directed to, and the current conduct of Buyer’s business and/or the development, manufacture, use, sale, offer for sale, importation or other commercial exploitation, of any Buyer Product Candidate, does not, infringe (without reference to any research or development exemption therefrom) or misappropriate any Intellectual Property of any third party or constitute unfair competition or trade practices under the Laws of any jurisdiction, except as would not reasonably likely have, individually or in the aggregate, a Buyer Material Adverse Effect.

(e) The Buyer Entities have complied in all material respects with all requirements of each applicable Regulatory Authority (including the United States Patent and Trademark Office and foreign counterparts thereof) with respect to the filing and prosecution of the Registered Intellectual Property owned by the Buyer Entities and material to their respective businesses. Except as disclosed in Section 5.10(e) of the Buyer Disclosure Memorandum, no Buyer Entity has received written notice from a third party or has obtained an opinion of counsel addressing any prior art or prior public uses, sales, offers for sale or disclosures which would invalidate any such Registered Intellectual Property (in whole or in part).

(f) The Buyer Entities have taken reasonable and customary steps to protect the rights of the Buyer Entities in their material Trade Secrets. All employees of and consultants to the Buyer Entities with permitted access to material Trade Secrets of the Buyer Entities are party to written Contracts under which, among other things, each such employee or consultant is obligated to maintain the confidentiality of such Trade Secrets and assign to a Buyer Entity all Intellectual Property created by such employee or consultant in the scope of employment or consultancy with the Buyer Entities. All Owned Intellectual Property developed under Contract to the Buyer Entities has been assigned to a Buyer Entity or is contractually obligated to be assigned.

5.11 Environmental Matters.

(a) To the Knowledge of Buyer, each Buyer Entity is and has been, in compliance in all material respects with all Environmental Laws, except where non-compliance would not reasonably likely have, individually or in the aggregate, a Buyer Material Adverse Effect.

(b) There is no Litigation pending or, to the Knowledge of Buyer, threatened before any court, governmental agency, or authority in which any Buyer Entity is or, with respect to threatened Litigation, may be named as a defendant: (i) for alleged material noncompliance (including by any predecessor) with or Liability under any Environmental Law; or (ii) relating to the release, discharge, spillage, or disposal into the environment of any Hazardous Material by any Buyer Entity at a site currently or formerly owned, leased, or operated by any Buyer Entity, except in each case, as would not reasonably likely have, individually or in the aggregate, a Buyer Material Adverse Effect.

(c) To the Knowledge of Buyer, during the period of any Buyer Entity’s ownership or operation of any properties, there have been no releases, discharges, spillages, or disposals of Hazardous Material by any Buyer Entity and all operations of the Buyer Entities on any properties previously or currently used, leased or otherwise being operated by any Buyer Entity to the Knowledge of Buyer materially comply with all Environmental Laws. Prior to the period of any Buyer Entity’s ownership or operation of any properties, to the Knowledge of Buyer, there were no releases, discharges, spillages, or disposals of Hazardous Material in, on, under, or affecting any such property and no Buyer Entity, to the Knowledge of Buyer, has expressly by Contract or by operation of Law or otherwise, assumed or succeeded to any Liabilities of any predecessors or any other Person related to environmental matters, except as would not reasonably likely have, individually or in the aggregate, a Buyer Material Adverse Effect.

5.12 Compliance with Laws.

Except as disclosed in Section 5.12 of the Buyer Disclosure Memorandum, each Buyer Entity has in effect all Permits necessary for it to own, lease or operate its Assets and to carry on its business as now conducted, except where the failure to be in effect is not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect. Except as disclosed in Section 5.12 of the Buyer Disclosure Memorandum, none of the Buyer Entities:

(a) is in Default under any of the provisions of its certificate of incorporation or bylaws (or other governing instruments);

(b) is in Default under any Laws, Orders or Permits applicable to its business or employees conducting its business, except for Defaults which are not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect; or

(c) since January 11, 2011, has received any written notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (i) asserting that any Buyer Entity is not, or may not be, in compliance with any Laws or Orders, where such noncompliance is reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect or (ii) threatening to revoke any Permits, the revocation of which is reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect.

(d) All of the independent contractors, if any, of the Buyer Entities have and do meet the standards under all Laws (including Treasury Regulations under the Internal Revenue Code and federal and state labor and employment Laws) as independent contractors and no such Person is an employee of any Buyer Entity under any applicable Law, in each case, except as would not reasonably likely have, individually or in the aggregate, a Buyer Material Adverse Effect.

(e) Each of the Buyer Entities is in compliance, in all material respects, with all Laws applicable to the Buyer Entities, including the Laws and regulations enforced by the Drug Enforcement Agency, the Department of Health and Human Services and its constituent agencies, the FDA, the Centers for Medicare & Medicaid Services, and the Office of Inspector General, including the anti-kickback law (Social Security Act §1128B(b)) and analogous Laws of the various states, the drug price reporting requirements of titles XVIII and XIX of the Social Security Act, the federal False Claims Act (31 U.S.C. § 3729 et seq.), the federal Social Security Act, the federal False Statements Act, the federal Program Fraud Civil Penalties Act, the federal Health Insurance Portability and Accountability Act, and analogous federal and state Laws, the FCPA and the Laws precluding off-label marketing of drugs. None of the Buyer Entities, to the Knowledge of Buyer, is under investigation with respect to, nor have the Buyer Entities been threatened in writing to be charged with or been given written notice of any violation of, any applicable Law.

(f) No representation or warranty is made in this Section 5.12 with respect to compliance with employee benefit or labor laws, laws with respect to Taxes or Environmental Laws, all of which are covered in other sections of this Agreement.

5.13 Labor Relations.

(a) No Buyer Entity is the subject of any Litigation asserting that it or any other Buyer Entity has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state Law) or other violation of state or federal labor Law or seeking to compel it or any other Buyer Entity to bargain with any labor organization or other employee representative as to wages or conditions of employment, nor is any Buyer Entity party to any collective bargaining agreement or subject to any bargaining order, injunction or other Order relating to Buyer’s relationship or dealings with its employees, any labor organization or any other employee representative. There is no material strike, slowdown, lockout or other job action or labor dispute involving any Buyer Entity pending or, to the Knowledge of Buyer, threatened and there has been no such actions or disputes in the past five (5) years. To the Knowledge of Buyer, since January 1, 2011, there has not been any attempt by any Buyer Entity employees or any labor organization or other employee representative to organize or certify a collective bargaining unit or to engage in any other union organization activity with respect to the workforce of any Buyer Entity.

(b) Buyer is in compliance in all material respects all requirements required by Law or regulation relating to the employment of foreign citizens, and to the Knowledge of Buyer, Buyer does not currently employ any person who was not permitted to work in the jurisdiction in which such person was employed.

5.14 Employee Benefit Plans.

(a) Buyer has disclosed in Section 5.14 (a) of the Buyer Disclosure Memorandum, and has delivered or made available to Buyer prior to the execution of this Agreement: (i) copies of each Employee Benefit Plan currently adopted, maintained by, sponsored in whole or in part by, or contributed to by any Buyer Entity or ERISA Affiliate thereof for the benefit of employees, former employees, retirees, dependents, spouses, directors, independent contractors, or other beneficiaries or under which employees, retirees, former employees, dependents, spouses, directors, independent contractors, or other beneficiaries are eligible to participate; and (ii) a list of each Employee Benefit Plan that is not identified in (i) above (e.g., former Employee Benefit Plans) but for which the Buyer Entity or ERISA Affiliate has or reasonably would have any material obligation or Liability (collectively, the “Buyer Benefit Plans” ). Any of the Buyer Benefit Plans which is an “employee pension benefit plan,” as that term is defined in ERISA Section 3(2), is referred to herein as a “Buyer ERISA Plan.”

(b) Buyer has delivered to Buyer prior to the execution of this Agreement: (i) all trust agreements or other funding arrangements for all Employee Benefit Plans; (ii) all determination letters, rulings, opinion letters, information letters or advisory opinions issued by the IRS, the DOL or the Pension Benefit Guaranty Corporation during this calendar year or any of the preceding three (3) calendar years; (iii) any filing or documentation (whether or not filed with the IRS) where corrective action was taken in

connection with the IRS EPCRS program set forth in Revenue Procedure 2001-17 (or its predecessor or successor rulings); (iv) annual reports or returns, audited or unaudited financial statements, actuarial reports and valuations prepared for any Employee Benefit Plan for the current plan year and the three (3) preceding plan years; (v) the most recent summary plan descriptions and any material modifications thereto; and (vi) descriptions of any unwritten Employee Benefit Plan, including a description of any material terms of such plan.

(c) Except as disclosed in Section 5.14(c) of the Buyer Disclosure Memorandum, each Buyer Benefit Plan is in compliance in all material respects with the terms of such Buyer Benefit Plan, in compliance with the applicable requirements of the Internal Revenue Code, applicable requirements of ERISA, and with any other applicable Laws. Each Buyer ERISA Plan which is intended to be qualified under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the IRS that is still in effect and applies to the Buyer ERISA Plan as amended and as administered or, within the time permitted under Internal Revenue Code Section 401(b), has timely applied for a favorable determination letter which when issued will apply retroactively to the Buyer ERISA Plan as amended and as administered. Buyer is not aware of any circumstances likely to result in revocation of any such favorable determination letter. Buyer has not received any communication (written or unwritten) from any government agency questioning or challenging the compliance of any Buyer Benefit Plan with applicable Laws. No Buyer Benefit Plan is currently being audited by a governmental agency for compliance with applicable Laws or has been audited with a determination by the governmental agency that the Employee Benefit Plan failed to comply with applicable Laws.

(d) There has been no oral or written representation or communication with respect to any aspect of the Buyer Benefit Plans made to employees of Buyer which is not in accordance with the written or otherwise preexisting terms and provisions of such Buyer Benefit Plans. To the Knowledge of Buyer, neither the Buyer nor any administrator or fiduciary of any Buyer Benefit Plan (or any agent of any of the foregoing) has engaged in any transaction, or acted or failed to act in any manner, which could subject Buyer or Buyer to any direct or indirect Liability (by indemnity or otherwise) for breach of any fiduciary, co-fiduciary or other duty under ERISA. There are no unresolved claims or disputes under the terms of, or in connection with, the Buyer Benefit Plans other than claims for benefits which are payable in the ordinary course of business and there are no pending or, to the Knowledge of Buyer, threatened actions, proceedings, prosecutions, inquiries, hearings or investigations against or relating to the assets of any of the trusts under such Buyer Benefit Plans, the Buyer Benefit Plan sponsor, Buyer Benefit Plan administrator, or any fiduciary of any Buyer Benefit Plan, or otherwise relating to any Buyer Benefit Plan.

(e) All Buyer Benefit Plan documents and annual reports or returns, audited or unaudited financial statements, actuarial valuations, summary annual reports, and summary plan descriptions issued with respect to the Buyer Benefit Plans are materially correct and complete, have been timely filed with the IRS, the DOL or distributed to participants of the Buyer Benefit Plans (as required by Law), and there have been no changes in the information set forth therein.

(f) To the Knowledge of Buyer, no “party in interest” (as defined in Section 3(14) of ERISA) or “disqualified person” (as defined in Section 4975(e)(2) of Internal Revenue Code) of any Buyer Benefit Plan has engaged in any nonexempt “prohibited transaction” (described in Section 4975(c) of the Internal Revenue Code or Section 406 of ERISA).

(g) Neither Buyer nor any ERISA Affiliate has ever sponsored, maintained, contributed to or had any obligation to contribute to a plan or arrangement that is: (i) subject to Title IV of ERISA; (ii) a multiemployer plan within the meaning of Section 3(37) of ERISA; (iii) maintained in connection with any trust described in Section 501(c)(9) of the Code; (iv) subject to the minimum funding standards of ERISA Section 302 or Internal Revenue Code Section 412; or (v) a post-termination health or welfare benefit arrangement or plan other than as required by COBRA or similar state law. No Buyer Benefit Plan that is a health or welfare benefit plan is self-insured.

(h) Except as disclosed in Section 5.14(h) of the Buyer Disclosure Memorandum, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (i) result in any material payment (including severance, unemployment compensation, golden parachute, or otherwise) becoming due to any director or any employee of any Buyer Entity from any Buyer Entity under any Buyer Benefit Plan or otherwise; (ii) materially increase any benefits otherwise payable under any Buyer Benefit Plan; or (iii) result in any acceleration of the time of payment or vesting of any such benefit.

(i) Except as disclosed in Section 5.14 (i) of the Buyer Disclosure Memorandum, each “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) has been operated since January 1, 2011 in good faith compliance with Section 409A of the Code and IRS Notice 2005-1 and no nonqualified deferred compensation plan has been “materially modified” (within the meaning of IRS Notice 2005-1) at any time after December 31, 2014. Each Buyer Option was originally granted with an exercise price that the Board of Directors of Buyer in good faith, based on a reasonable valuation method, determined to be equal to the fair market value of a Buyer Common Stock.

5.15 Material Contracts.

Except as disclosed in Section 5.15 of the Buyer Disclosure Memorandum or otherwise reflected in the Buyer Financial Statements, none of the Buyer Entities, nor any of their respective Assets, businesses, or operations, is a party to, or is bound or affected by, or receives benefits under any Contract or amendment thereto that would be required to be filed as an exhibit to a Form 10-K filed by Buyer with the SEC as of the date of this Agreement that has not been filed as an exhibit to Buyer’s Form 10-K filed for the fiscal year ended June 30, 2015, or in a subsequent SEC Document (together with all Contracts

referred to in Section 5.15 of the Buyer Disclosure Memorandum, the “ Buyer Contracts ”). Except as disclosed in Section 5.15 of the Buyer Disclosure Memorandum, with respect to each Buyer Contract: (A) the Contract is in full force and effect; (B) no Buyer Entity is in Default thereunder, other than Defaults which are not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect; (C) no Buyer Entity has repudiated or waived any material provision of any such Contract; and (D) no other party to any such Contract is, to the Knowledge of Buyer, in Default in any respect, other than Defaults which are not reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect, or has repudiated or waived any material provision thereunder. Except as disclosed in the Buyer Disclosure Memorandum, all of the indebtedness of any Buyer Entity for money borrowed is prepayable at any time by such Buyer Entity without penalty or premium. Complete and correct copies of all Buyer Contracts have been made available to Target.

5.16 Legal Proceedings.

Except as set forth in Section 5.16 of the Buyer Disclosure Memorandum, there is no Litigation instituted or pending, or, to the Knowledge of Buyer, threatened against any Buyer Entity, or against any director, officer or employee in their capacities as such or Employee Benefit Plan of any Buyer Entity, or against any Asset, interest, or right of any of them, nor are there any material Orders outstanding against any Buyer Entity: (i) which involves, or is reasonably likely to involve, an amount in controversy in excess of $200,000 included or $400,000 in the aggregate; (ii) which seeks material injunctive relief; or (iii) which is reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect.

5.17 Statements True and Correct.

(a) The statements, certificates, instruments and other writings furnished or to be furnished by the Buyer Entities or any Affiliate thereof to Target pursuant to this Agreement and the other documents, agreements and instruments referred to herein do not contain and will not contain any untrue statement of material fact or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) None of the information included in the First Proxy Statement and the Second Proxy Statement, to be mailed to Buyer’s stockholders in connection with the First Stockholders’ Meeting and the Second Stockholders’ Meeting, as the case may be, and any other documents to be filed by any Buyer Entity or any Affiliate thereof with the SEC or any other Regulatory Authority in connection with the transactions contemplated hereby that is supplied by any Buyer Entity or any Affiliate thereof, will, at the respective time such documents are filed, and with respect to the First Proxy Statement and the Second Proxy Statement, as the case may be, when each is first mailed to the stockholders of Buyer, contain an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or, in the case of the First Proxy Statement (or any amendment thereof or supplement thereto) or the Second Proxy Statement (or any

amendment thereof or supplement thereto), as the case may be, at the time of the First Stockholders’ Meeting and the Second Stockholders’ Meeting, as the case may be, will contain an untrue statement of material fact, or omit to state any material fact necessary to make the statements therein not misleading. The Proxy Statement (and any amendment or supplement thereto) will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act and, subject to Section 7.2(d) of this Agreement, the First Proxy Statement will include a recommendation by the Board of Directors of Buyer to approve the Nasdaq Stockholder Approval and as may be required by the Nasdaq Stock Market and the Second Proxy Statement will include a recommendation by the Board of Directors of Buyer to approve the Buyer Stockholder Approval.

(c) All documents that any Buyer Entity or any Affiliate thereof is responsible for filing with any Regulatory Authority in connection with the transactions contemplated hereby will comply as to form in all material respects with the provisions of applicable Law.

5.18 Regulatory Matters.

No Buyer Entity or any Affiliate thereof has taken or agreed to take any action or has any Knowledge of any fact or circumstance that is reasonably likely to materially impede or delay receipt of any Consents of Regulatory Authorities referred to in Section 8.3(f) or result in the imposition of a condition or restriction of the type referred to in the last sentence of such Section.

5.19 Brokers and Finders.

Except for payments payable to Buyer Financial Advisor for a fairness opinion and except as otherwise stated on section 5.19 of the Buyer Disclosure Memorandum, no broker, finder or investment banker or any other Person is entitled to any brokerage, finder’s or other fee or commission from any Buyer Entity in connection with this Agreement or the transactions contemplated hereby.

5.20 Investment Company.

Neither Buyer nor any of its Subsidiaries is, and neither is required to be registered as, an “investment company” under the Investment Company Act of 1940.

5.21 Real Property.

Section 5.21 of the Buyer Disclosure Memorandum sets forth a complete list of all real property leased by the Buyer Entities as of the date hereof (“ Buyer Leased Real Property ”). A copy of the lease for each Buyer Leased Real Property (individually, a “ Buyer Lease ” and collectively, the “ Buyer Leases ”) has been provided to Target prior to execution of this Agreement or has been delivered or made available to Target. With respect to each Buyer Lease: (i) such Buyer Lease is legal, valid, and binding

on the Buyer Entity party thereto, and, to the Knowledge of Buyer, each other Person party thereto, and is enforceable and in full force and effect; (ii) except as set forth on Section 5.21 of the Buyer Disclosure Memorandum, the transactions contemplated by this Agreement do not require the consent of any other party to such Buyer Lease, will not result in a breach of or default under such Buyer Lease, or otherwise cause such Buyer Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing; and (iii) no Buyer Entity nor, to the Knowledge of Buyer, any other party to a Buyer Lease is in material Default under such Buyer Lease, and, to the Knowledge of Buyer, no event has occurred or failed to occur or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a material Default, or permit the termination, material modification or acceleration of rent under such Buyer Lease. No Buyer Entity (i) owns, or since January 1, 2011, has owned, any real property, (ii) has guaranteed payment of any purchase price or rent for any real property, or (iii) is obligated to purchase or rent any real property, other than under the Buyer Leases.

5.22 Insurance.

(a) Prior to execution of this Agreement, Buyer has provided or made available to Target true, correct and complete copies of its director and officer and employee and officer insurance policies, all general liability property and casualty and all other policies of insurance to which any Buyer Entity is a party or is a beneficiary or named insured.

(b) Excluding insurance policies that have expired and been replaced in the ordinary course of business, as of the date hereof, no threat in writing has been made to cancel (excluding cancellation upon expiration or failure to renew) any such insurance policy of the Buyer Entities during the period of one year prior to the date hereof. As of the date hereof, and as of the Closing, no event has occurred, including the failure by any Buyer Entity to give any notice or information or by giving any inaccurate or erroneous notice or information, which materially limits or impairs the rights of the Buyer Entities under any such excess Liability or protection and indemnity insurance policies. The Buyer Entities currently maintain insurance similar in amounts, scope and coverage to that maintained by other peer organizations.

5.23 Foreign Corrupt Practices and International Trade Sanctions.

No Buyer Entity, nor to the Knowledge of Buyer, any of their respective directors, officers or employees has, in connection with the operation of their respective businesses: (a) used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of Section 104 of the FCPA, or any other similar applicable foreign, federal or state Law; (b) paid, accepted or received any unlawful contribution, payment, expenditure or gift; or (c) violated or operated in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign Laws.

5.24 Commercial Relationships.

Except as disclosed in Section 5.24 of the Buyer Disclosure Memorandum, none of the Buyer Entity’s material suppliers, collaborators, distributors, licensors or licensees has canceled or otherwise terminated its relationship with any Buyer Entity or has, during the twelve (12) months preceding the date of this Agreement, materially adversely altered its relationship with any Buyer Entity. To the Knowledge of Buyer, Buyer has not received any written threat or notice from any such entity, to terminate, cancel or otherwise materially adversely modify its relationship with the Buyer Entities.

5.25 Interim Operations of Merger Sub.

Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated in this Agreement.

5.26 No Other Representations or Warranties.

Except for the representations and warranties made by Buyer in this Article 5 or pursuant to the certificates to be delivered pursuant to the terms set forth herein, neither Buyer nor any other Person makes any representation or warranty with respect to the Buyer Entities or any other Person or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to Target) or representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing.

ARTICLE 6

CONDUCT OF BUSINESS PENDING THE MERGER

6.1 Covenants of Target.

From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement in accordance with Article 9 (such period being hereinafter referred to as the “Interim Period”), unless the prior written consent of Buyer shall have been obtained (which consent shall not be unreasonably withheld or delayed), and except as otherwise expressly contemplated herein, Target shall, and shall cause each of the Target Entities to: (a) operate its business only in the ordinary course; (b) use its commercially reasonable efforts to preserve intact its business organization and material Assets, intellectual property and franchises; and (c) notify Buyer promptly after receipt of any material communication between Target and any Regulatory Authority. Except as expressly permitted by this Agreement or as set forth below, none of the Target Entities, shall, during the Interim Period, directly or indirectly, do any of the following without the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed):

(a) take any action which would reasonably be likely to: (A) materially adversely affect the ability of any Party to obtain any Consents required for the transactions contemplated hereby; (B) materially adversely affect the ability of any Party to perform its covenants and agreements under this Agreement; or (C) result in a change of the business operations of Target as operated on the date of this Agreement and as reflected in Target’s Financial Statements.

(b) distribute any Asset except as described on Schedule 6.1 of Target Disclosure Memorandum;

(c) amend the operating agreement, certificate of formation, certificate or articles of incorporation, bylaws or other governing instruments of any Target Entity;

(d) terminate or allow to lapse, or modify in any material respect, any insurance policy;

(e) adopt a plan of complete or partial liquidation with respect to Target or resolutions providing for or authorizing such a liquidation;

(f) amend or modify or agree to amend or modify the terms of any Target Material Contract;

(g) enter into any oral or written agreement or understanding, or contract creating any obligations or commitment with an Affiliate of Target or Target Members; or

(h) authorize any of, or commit or agree to take any of, the foregoing actions.

6.2 Covenants of Buyer.

During the Interim Period, unless the prior written consent of Target shall have been obtained (which consent shall not be unreasonably withheld or delayed), and except as otherwise expressly contemplated herein, Buyer shall, and shall cause each Buyer Subsidiary to: (a) operate its business only in the ordinary course; (b) use its commercially reasonable efforts to preserve intact its business organization and material Assets, intellectual property and franchises; and (c) notify Target promptly after receipt of any material communication between Buyer and any Regulatory Authority). Except as expressly permitted by this Agreement or as set forth below, neither Buyer nor any Buyer Subsidiary, shall, during the Interim Period, directly or indirectly, do any of the following without the prior written consent of Target:

(a) (i) take no action which would reasonably be likely to: (A) materially adversely affect the ability of any Party to obtain any Consents required for the transactions contemplated hereby; (B) materially adversely affect the ability of any Party to perform its covenants and agreements under this Agreement; (C) result in a change of the business operations of Buyer as operated on the date of this Agreement as reflected in Buyer’s Financial Statements;

(b) distribute any Asset other than required payments or dividends under Buyer’s Series B and Series D Preferred Stock;

(c) (i) amend its organizational documents; (ii) other than make payments of dividends under its issued and outstanding Series B and Series D Preferred Stock declare, set aside or pay any dividend payable in cash, stock or property or make any other distribution with respect to Buyer Common Stock; or (iii) repurchase, redeem or otherwise acquire or exchange (other than in the ordinary course under employee benefit plans or agreements), directly or indirectly, any shares or any securities convertible into any shares, of the capital stock of Buyer;

(d) adopt a plan of complete or partial liquidation with respect to Buyer or resolutions providing for or authorizing such a liquidation or a dissolution;

(e) acquire any Assets or other businesses outside of the ordinary course of business utilizing existing balance sheet cash or cash equivalents as reflected on the Buyers Financial Statements;

(f) amend or modify or agree to amend or modify the terms of any Buyer Contract;

(g) enter into any oral or written agreement or understanding, or contract creating any obligations or commitment with an Affiliate of Buyer; or

(h) authorize any of, or commit or agree to take any of, the foregoing actions.

6.3 Adverse Changes in Condition.

Each Party agrees to promptly notify the other Party upon becoming aware of any material developments in its business and the occurrence or impending occurrence of any event or circumstance relating to it or any of its Subsidiaries that: (a) is reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect or a Buyer Material Adverse Effect, as applicable; or (b) would reasonably be likely to cause the conditions in Article 8 to fail to be satisfied, and to use its commercially reasonable efforts to prevent or promptly to remedy the same. The delivery of notice pursuant to this Section 6.3 is for informational purposes and shall not limit or otherwise affect the remedies available hereunder to any party or parties receiving such notice. Except as otherwise provided in such notice, the delivery of any such notice shall not be deemed an admission or an acknowledgement (x) that the subject matter of such notice is material or reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect or a Buyer Material Adverse Effect, as applicable, or is outside of the ordinary course of business or inconsistent with past practices or (y) that there has occurred an actual or anticipatory breach of, or failure to comply with or satisfy, any representation, warranty, covenant, condition or agreement.

6.4 No Control of Other Party’s Business; Other Actions.

Nothing contained in this Agreement is intended to give Buyer, directly or indirectly, the right to control or direct any of the Target Entities’ operations prior to the Effective Time. Prior to the Effective Time, the Target Entities shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective businesses, assets and operations.

ARTICLE 7

ADDITIONAL AGREEMENTS

7.1 Proxy Statements; Nasdaq Stockholder Approval; Buyer Stockholder Approval.

(a) Following the date hereof, as soon as reasonably practicable, but in no event to exceed 30 days after the date hereof (subject to the Target providing Buyer necessary information in a timely manner), Buyer shall prepare and file with the SEC an initial Proxy Statement and mail such initial Proxy Statement to its stockholders in connection with the First Stockholders’ Meeting (the “ First Proxy Statement ”). As soon as reasonably practicable following the First Stockholders’ Meeting, but in no event to exceed 30 days after the First Stockholders Meeting (subject to the Target providing Buyer necessary information in a timely manner), Buyer shall prepare and file with the SEC a second Proxy Statement and mail such second Proxy Statement to its stockholders in connection with the Second Stockholders’ Meeting (the “ Second Proxy Statement ”). Buyer and Target shall use their respective reasonable efforts to cause the First Proxy Statement and the Second Proxy Statement to be cleared by the SEC, as promptly as practicable. Each of Buyer and Target shall cooperate in the preparation and filing of the First Proxy Statement and the Second Proxy Statement and shall furnish to the SEC and the holders of Buyers capital stock entitled to vote all information concerning (i) the Nasdaq Stockholder Approval (as defined below) as may be necessary in connection with the First Proxy Statement, and the Buyer Stockholder Approval (as defined below) in connection with the Second Proxy Statement. Buyer and Target shall timely and properly make all necessary filings with respect to the Merger under the Securities Laws. Buyer will advise Target, promptly after Buyer receives notice thereof, and comments received by it from the SEC. As soon as reasonably practicable after the First Proxy Statement and the Second Proxy Statement shall be cleared by the SEC, the Buyer shall mail or otherwise make available in accordance with the Securities Act and the Exchange Act, the First Proxy Statement and the Second Proxy Statement to its stockholders; provided, that Target and Buyer shall consult and cooperate with each other in determining the appropriate time for mailing or otherwise making available to Buyer’s stockholders (x) the First Proxy Statement in light of the date set for the First Stockholders’ Meeting and (y) the Second Proxy Statement in light of the date set for the Second Stockholders’ Meeting.

(b) Buyer shall duly call, give notice of, convene and hold a First Stockholders’ Meeting and a Second Stockholders’ Meeting, to be held as soon as reasonably practicable after each of the First Proxy Statement and the Second Proxy Statement, as the case may be, is cleared by the SEC, on dates reasonably acceptable to Buyer, for the purpose of voting upon (i) in connection with the First Stockholders’ Meeting, (A) the approval of an amendment to Buyers’ certificate of incorporation to (x) effect a reverse stock split of the Buyer Common Stock at a split ratio that the board of directors of Buyer determines to be sufficient to regain compliance with the regain compliance with the minimum bid price requirement of the NASDAQ Stock Market and (y) a blocker restricting any person from becoming a holder of more than 4.99% of the Buyer’s Common Stock such other related matters as it deems appropriate and as may be required in order to maintain its listing on the Nasdaq Stock Market (the “ Nasdaq Stockholder Approval ”), and (B) removal of restrictions under NASDAQ rules prohibiting the conversion of the Buyer’s $900,000 principal amount of promissory notes and related warrants to purchase common stock issued on June 8, 2015; and (ii) in connection with the Second Stockholders’ Meeting, the approval and adoption of this Agreement, the Merger, the transaction contemplated hereby and the shares of Buyer Common Stock issuable pursuant to the terms hereof (“ Buyer Stockholder Approval ”). Subject to the provisions of Section 7.2(d), Buyer, through its board of directors, recommend to its stockholders the vote in favor of the Nasdaq Stockholder Approval and the Buyer Stockholder Approval and use its reasonable efforts to obtain the Nasdaq Stockholders Approval and the Buyer Stockholder Approval; provided, however, that Buyer may extend the date of each of the First Stockholders’ Meeting and the Second Stockholders’ Meeting, as the case me be, to the extent (x) necessary in order to obtain a quorum of its stockholders or an affirmative vote of its stockholders or (y) Buyer reasonably determines that such delay is required by applicable Law. The First Proxy Statement and the Second Proxy Statement shall include the recommendation of the board of directors of Buyer to vote in favor of the Nasdaq Stockholder Approval and the Buyer Stockholder Approval, as the case may be.

(c) As promptly as practicable after the date of this Agreement, the Buyer shall prepare and file any other filings required under the Exchange Act, the Securities Act or any other federal or state securities laws relating to the Merger and other transactions contemplated by this Agreement (collectively, the “ Other Filings ”). The Buyer shall also take any action required to be taken under any applicable state securities laws in connection with the issuance of shares of Buyer Common Stock to be issued pursuant to the terms hereof, and the Target shall furnish all information concerning the Target and the Target Members as may be reasonably required in connection with the foregoing. Buyer shall prepare a draft Form 8-K announcing the Closing, and such other information that may be required to be disclosed with respect to the Merger in any report or form to be filed with the SEC (“ Form 8-K ”), which shall be in a form reasonably acceptable to the Target and in a format acceptable for EDGAR filing and be filed with the SEC within the time period required by applicable securities laws. Prior to execution and delivery of this Agreement, the Buyer and the Target shall prepare (1) a press release announcing the execution and delivery of this Agreement (“ Agreement Press Release ”) and (ii) the Current Report on Form 8-K (the “ Agreement 8-K ”) announcing the execution and delivery of this Agreement and all other information

required to be disclosed by the Exchange Act. The Buyer shall, within the time period required by applicable securities laws, issue and distribute such Agreement Press Release and Agreement 8-K. Prior to Closing, the Buyer and the Target shall prepare a press release announcing the consummation of the Merger hereunder (“ Press Release ”) and publicly release such Press Release by 9:00 a.m. eastern standard time on the next Business Day following the Closing. The Target Entities and each Target Member shall provide to Buyer such information as may be necessary under the Exchange Act and the rules and regulations of the SEC so as to comply with the requirements of Form 8-K, Schedule 14A and any other applicable securities laws with respect to each filing contemplated hereunder.

7.2 Other Offers, Etc.

(a) No Buyer Entity shall, nor shall it authorize or permit any of its Affiliates or Representatives to, directly or indirectly: (i) solicit, initiate, induce or knowingly encourage the making, submission or announcement of any Acquisition Proposal; (ii) participate in any discussions or negotiations regarding, or furnish to any Person or “Group” (as such term is defined in Section 13(d) under the Exchange Act) any nonpublic information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to, any Acquisition Proposal; (iii) except as expressly permitted in Section 7.2(d), approve, endorse or recommend any Acquisition Proposal, or (iv) enter into any Acquisition Agreement contemplating or otherwise relating to any Acquisition Transaction; provided , that this Section 7.2(a) shall not prohibit a Buyer Entity from furnishing nonpublic information regarding any Buyer Entity to, or entering into a confidentiality agreement or discussions or negotiations with, any Person or Group in response to a bona fide unsolicited written Acquisition Proposal submitted by such Person or Group (and not withdrawn) if: (A) no Buyer Entity or Representative or Affiliate thereof shall have violated in any material respect any of the restrictions set forth in this Section 7.2; (B) the board of directors of Buyer determines in good faith (after consultation with its outside counsel and Buyer Financial Advisor) that such Acquisition Proposal constitutes or is reasonably likely to result in a Superior Proposal; (C) the board of directors of Buyer determines in good faith, after consultation with its outside legal counsel, that the failure to do so would violate its fiduciary duties to Buyer stockholders under applicable Law, as such duties would exist in the absence of this Section 7.2, (D) (1) at least two (2) Business Days prior to furnishing any such nonpublic information to, or entering into discussions or negotiations with, such Person or Group, Buyer gives Target written notice of the identity of such Person or Group and of Buyer’s intention to furnish nonpublic information to, or enter into discussions or negotiations with, such Person or Group, and (2) Buyer receives from such Person or Group an executed confidentiality agreement containing terms no less favorable to the disclosing Party than the terms of the Confidentiality Agreement; and (E) contemporaneously with furnishing any such nonpublic information to such Person or Group, Buyer furnishes such nonpublic information to Target (to the extent such nonpublic information has not been previously furnished by Buyer to Target). In addition to the foregoing, Buyer shall provide Target with at least two (2) Business Days prior written notice of a meeting of the board of directors of Buyer at which meeting the board of directors of Buyer is reasonably expected to resolve to recommend a Superior Proposal to its stockholders and together with such notice a copy of the most recently proposed documentation relating to such Superior Proposal; provided, further, that Buyer hereby agrees promptly to provide to Target and the Target Members any revised documentation and any Acquisition Agreement.

(b) As promptly as practicable, and in any event within one (1) Business Day after any of the executive officers of Buyer become aware thereof, Buyer shall advise Target of any request received by Buyer for nonpublic information which Buyer reasonably believes could lead to an Acquisition Proposal or of any Acquisition Proposal, the material terms and conditions of such request or Acquisition Proposal, and the identity of the Person or Group making any such request or Acquisition Proposal. Buyer shall keep Target informed promptly of material amendments or modifications to any such request or Acquisition Proposal.

(c) The Buyer Entities shall immediately cease any and all existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal and will use their respective reasonable best efforts to enforce any confidentiality or similar agreement relating to any Acquisition Proposal. Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in this Section 7.2, by any Affiliate or Representative of any Buyer Entity shall be deemed to be a breach of this Section 7.2 by Buyer.

(d) Neither the board of directors of Buyer nor any committee thereof shall: (i) except as expressly permitted by this Section 7.2, withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Target, the approval or recommendation of such board of directors or such committee of the Nasdaq Stockholder Approval or the Buyer Stockholder Approval; (ii) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal; or (iii) cause Buyer to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, an “ Acquisition Agreement ”) related to any Acquisition Proposal. Notwithstanding the foregoing, in the event that, prior to the adoption and approval of the Buyer Stockholder Approval by the holders of Buyer Common Stock, the board of directors of Buyer determines in good faith, after it has received a Superior Offer and after consultation with outside counsel, and that the failure to consider such Superior Proposal would violate its fiduciary duties to Buyer stockholders under applicable Law, then the Buyer may (subject to this and the following sentences) inform the Target that it no longer believes that the Merger is advisable and no longer recommends approval and (subject to this and the following sentences) approve or recommend a Superior Proposal and in connection therewith withdraw or modify its approval or recommendation of the Buyer Stockholder Approval (a “ Subsequent Determination ”), but only at a time that is after the fifth (5 ^th ) Business Day following Target’s receipt of written notice advising them that the board of directors of Buyer has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal (and including a copy thereof with all accompanying documentation, if in writing), identifying the person making such Superior Proposal and stating that it intends to make a Subsequent Determination. Target shall have five (5) Business Days from the date of receiving such notice to submit to Buyer any changes to the terms and conditions of this Agreement as would enable Buyer to proceed with its recommendation to its stockholders without a Subsequent Determination; provided, that any such adjustment shall be at the discretion of the Parties at the time.

(e) Nothing contained in this Agreement shall prevent Buyer or its board of directors from complying with Rule 14d-9, Rule 14e-2 or Item 1012 of Regulation M-A under the Exchange Act.

(f) Notwithstanding anything in this Section to the contrary, the “Exclusivity” provision contained in that certain Term Sheet, dated August 19, 2015 (the “ Term Sheet ”), between the Buyer and the Target, shall remain in full force and effect and shall be deemed extended until November 30, 2015. Accordingly, Buyer may not consider any Acquisition Proposal in accordance herein so long as such exclusivity provision in the Term Sheet remains in effect.

7.3 Exchange Listing.

Buyer shall use its commercially reasonable efforts to obtain the Buyer Stockholder Approval and list, prior to May 31, 2016, on the Nasdaq Stock Market the shares of Buyer Common Stock to be issued to the Target Members pursuant to the Merger, and Buyer shall give all notices and make all filings with Nasdaq Stock Market required in connection with the transactions contemplated herein.

7.4 Filing with State Office.

Upon the terms and subject to the conditions of this Agreement, on or prior to the Closing Date, Buyer shall execute and file the Articles of Merger with the Secretary of State of the State of Georgia, in connection with the Merger.

7.5 Agreement as to Efforts to Consummate.

Subject to the terms and conditions of this Agreement, each Party agrees to use, and to cause its Subsidiaries to use, its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or advisable under applicable Laws to consummate and make effective, as soon as reasonably practicable after the date of this Agreement, the transactions contemplated by this Agreement, including using its commercially reasonable efforts to lift or rescind any Order adversely affecting its ability to consummate the transactions contemplated herein and to cause to be satisfied the conditions referred to in Article 8; provided, that nothing herein shall preclude either Party from exercising its rights under this Agreement.

7.6 Investigation and Confidentiality.

(a) Each Party hereto shall permit the others reasonable access during normal business hours to its and its respective Subsidiaries’ respective business and properties, books, contracts, records and personnel having material knowledge of the transactions contemplated hereby; provided however that each Party may restrict the foregoing access to the extent that: (i) any law, treaty, rule or regulation of any governmental entity requires such Party or any of its Subsidiaries to restrict or prohibit access to any such personnel, properties or information; (ii) such investigation shall be reasonably related to the transactions contemplated hereby; (iii) such access not interfere unnecessarily with normal operations; and (iv) such access would reasonably likely to jeopardize such Party’s attorney-client privilege. No investigation by a Party shall affect the ability of such Party to rely on the representations and warranties of the other Party. The Confidentiality Agreement shall apply with respect to the information furnished thereunder and other activities contemplated thereby.

(b) In addition to the Parties’ respective obligations under the Confidentiality Agreement, which are hereby reaffirmed and adopted, and incorporated by reference herein each Party shall, and shall cause its advisers and agents to, maintain the confidentiality of all confidential information furnished to it by the other Party concerning its and its Subsidiaries’ businesses, operations, and financial positions and shall not use such information for any purpose except in furtherance of the transactions contemplated by this Agreement. If this Agreement is terminated prior to the Closing, each Party shall promptly return or certify the destruction of all documents and copies thereof, and all work papers containing confidential information received from the other Party.

7.7 Press Releases.

Prior to the Closing Date, Target and Buyer shall consult with each other as to the form and substance of any press release or other public disclosure materially related to this Agreement or any other transaction contemplated hereby; provided, that nothing in this Section 7.7 shall be deemed to prohibit any Party from making any disclosure which its counsel deems necessary or advisable in order to satisfy such Party’s disclosure obligations imposed by Law; provided, further, that each of Target and Buyer may make any public statement in response to specific questions by the press, analysts, investors or those attending industry conferences or financial analyst conference calls, so long as any such statements are not inconsistent with previous press releases, public disclosures or public statements made jointly by Target and Buyer and do not reveal material, nonpublic information regarding the other Parties.

7.8 State Takeover Laws.

Each Target Entity and Buyer Entity shall take all necessary steps to exempt the transactions contemplated by this Agreement from, or if necessary to challenge the validity or applicability of, any applicable Takeover Law.

7.9 Buyer Board of Directors Following Closing Date.

Effective on the Closing Date, the Board of Directors of the Buyer shall be reconstituted to be comprised of a total of not more than nine (9) persons, of which the Target Members shall have the right to appoint two (2) persons.

7.10 Tax Matters.

(a) Neither Target, Merger Sub nor Buyer shall take or knowingly fail to take any action that is otherwise consistent with the terms of this Agreement (without regard to this Section 7.10) and compliant with applicable law that would cause the Merger to fail to qualify as a reorganization within the meaning Section 368 of the Code. Target, Merger Sub and Buyer shall take any action that is required to cause the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code; provided, such action does not otherwise affect the economics of the transaction contemplated hereunder to any of the Parties.

(b) Subject to applicable Tax law, each of the Target, Merger Sub and Buyer shall report the Merger as a reorganization within the meaning of Section 368 of the Code.

7.11 Notification of Certain Matters.

(a) Each of Target and Buyer shall give prompt notice to the other of the occurrence or non-occurrence of: (i) any event the occurrence, or non-occurrence of which could reasonably be expected to result in any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect (or, in the case of any representation or warranty qualified by its terms by materiality, then untrue or inaccurate in any respect); and (ii) any failure of Target, Buyer, or Merger Sub, as the case may be, to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided , however , that the delivery of any notice pursuant to this Section 7.11(a) shall not limit or otherwise affect the remedies available hereunder to the Party receiving such notice.

(b) Each of the Target and Buyer shall give prompt notice to the other of: (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Merger or other transactions contemplated by this Agreement; (ii) any notice or other communication from any Regulatory Authority in connection with the Merger or other transactions contemplated by this Agreement; (iii) any litigation, relating to or involving or otherwise affecting the Target Entities or Buyer Entities that relates to the Merger or other transactions contemplated by this Agreement; (iv) the occurrence of a default or event that, with notice or lapse of time or both, will become a default under either a Target Material Contract or a Buyer Material Contract; and (v) any change that would be considered reasonably likely to result in a Target Material Adverse Effect or Buyer Material Adverse Effect, as the case may be, or is likely to impair in any material respect the ability of either Target or Buyer to consummate the transactions contemplated by this Agreement.

7.12 Indemnification of Pre Closing Directors, Officers and Managers of Target and Buyer.

(a) For a period of six (6) years after the Effective Time, Buyer shall, indemnify, defend and hold harmless the present and former directors, officers, managers, employees and agents of the Target Entities and Buyer Entities (each, an “ Indemnified Party ”) against all Liabilities arising out of actions or omissions arising out of the Indemnified Party’s service or services as directors, officers, managers employees or agents of Target or Buyers, as the case may be, occurring at or prior to the Effective Time (including the transactions contemplated by this Agreement) to the fullest extent permitted under Buyer’s certificate of incorporation and bylaws (subject to compliance with applicable Law), as in effect at the Effective Time, including provisions relating to advances of expenses incurred in the defense of any Litigation and whether or not Buyer is insured against any such matter; provided, however, that the Indemnified Party to whom such expenses are advanced shall be required to provide an undertaking to Buyer to repay such advances if it is ultimately determined that such Indemnified Person is not entitled to indemnification.

(b) Buyer shall maintain in effect for a period of six (6) years after the Effective Time, Buyer’s existing directors’ and officers’ liability insurance policy (provided that Buyer may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are substantially no less advantageous in any material respects with respect to claims arising from facts or events which occurred prior to the Effective Time and covering persons who are currently covered by such insurance; provided, that Buyer shall not be obligated to make aggregate annual premium payments for such six-year period in respect of such policy (or coverage replacing such policy) which exceed 150% of the annual premium payments on Buyer’s current policy in effect as of the date of this Agreement (the “ Maximum Amount ”). If the amount of the premiums necessary to maintain or procure such insurance coverage exceeds the Maximum Amount, Buyer shall use its commercially reasonable efforts to maintain the most advantageous policies of directors’ and officers’ liability insurance obtainable for a premium equal to the Maximum Amount.

(c) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 7.12, upon learning of any such Liability or Litigation, shall promptly notify Buyer thereof provided, however, that no delay or failure on the part of any Indemnified Party in notifying Buyer shall relieve Buyer from any obligation hereunder unless, and then solely to the extent that Buyer is prejudiced thereby. In the event of any such Litigation (whether arising before or after the Closing): (i) Buyer shall have the right to assume the defense thereof and Buyer shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Buyer elects not to assume such defense, or counsel for the Indemnified Parties advises Buyer that there are substantive issues which raise conflicts of interest

between Buyer and the Indemnified, the Indemnified Parties may retain counsel satisfactory to them, and Buyer shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, that Buyer shall be obligated pursuant to this Section 7.12(c) to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction; (ii) the Indemnified Parties will cooperate in the defense of any such Litigation; and (iii) Buyer shall not be liable for any settlement effected without its prior written consent (which shall not be unreasonably withheld or delayed); provided, further, that Buyer shall not have any obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable Law. Notwithstanding anything to the contrary contained in this Section 7.12(c) or elsewhere in this Agreement, Buyer shall not settle or compromise or consent to the entry of any judgment or otherwise seek termination with respect to any claim, action, suit, proceeding or investigation for which indemnification may be sought under this Section 7.12 (c) unless such settlement, compromise, consent or termination includes an unconditional release of all Indemnified Parties from all liability arising out of such claim, action, suit, proceeding or investigation.

(d) Following the Effective Time, to the extent permitted by applicable law, Buyer shall include and maintain in effect in its certificate of incorporation or bylaws (or similar organizational document) for a period of six (6) years after the Effective Time, the indemnification provisions in the Buyer’s certificate of incorporation and bylaws or indemnification provisions that provide for indemnification rights that are substantially similar to the indemnification rights provided for in Buyer’s certificate of incorporation and bylaws as of the Closing Date.

(e) If Buyer or any successors or assigns shall consolidate with or merge into any other Person and shall not be the continuing or surviving Person of such consolidation or Merger or shall transfer all or substantially all of its assets to any Person, then and in each case, proper provision shall be made so that the successors and assigns of Buyer shall assume the obligations set forth in this Section 7.12.

(f) The provisions of this Section 7.12 are intended to be for the benefit of and shall be enforceable by, each Indemnified Party and their respective heirs and representatives.

7.13 Operation of AEON as stand Alone Entity Post Closing.

Buyer shall operate the Surviving Company as a wholly-owned, stand-alone entity following the Effective Time, and shall maintain separate books and records, and financial statements, prepared in accordance with GAAP and except as may be required by Law, in accordance with past practice of AEON (except as may be subject to change as a result of the rules and regulations of the SEC), until the earlier of (i) as so long as any Buyer Common Stock may be earned as an earn-out pursuant to Section 1.15 hereof or (ii) October 1, 2020. Notwithstanding anything in this Agreement to the contrary, subject to approval by the Board of Directors of Buyer, AEON may acquire assets or equity interests from third parties or merge with a third party and such new assets, equity interests or merged entity shall be deemed part of AEON for purposes of calculating EBITDA for purposes of Section 1.15.

7.14 Reasonable Efforts; Further Assurances.

(a) Target and Buyer shall use their reasonable best efforts to satisfy or cause to be satisfied all of the conditions precedent set forth in Article 7, as applicable to each of them. Each of Party, at the reasonable request of the other, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of the Merger and other transactions contemplated by this Agreement.

(b) Subject to the terms and conditions hereof, Target and Buyer agree to use their respective reasonable best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and other transactions contemplated by this Agreement including, without limitation, using their respective reasonable best efforts: (i) to obtain prior to the Closing Date all licenses, certificates, permits, consents, approvals, authorizations, qualifications and orders of Regulatory Authorities and parties to contracts with the Parties or their subsidiaries as are necessary for the consummation of the transactions contemplated hereby; (ii) to effect all necessary registrations and filings required by any Regulatory Authority (in connection with which Target and Buyer shall cooperate with each other in connection with the making of all such registrations and filings, including, without limitation, providing copies of all such documents to the non-filing party and its advisors prior to the time of such filing and, if requested, will accept all reasonable additions, deletions or changes suggested in connection therewith); (iii) to furnish to each other such information and assistance as reasonably may be requested in connection with the foregoing; and (iv) to lift, rescind or mitigate the effects of any injunction, restraining order or other ruling by a Regulatory Authority adversely affecting the ability of any Party to consummate the Merger or other transactions contemplated hereby and to prevent, with respect to any threatened or such injunction, restraining order or other such ruling, the issuance or entry thereof.

7.15 Rescission of Merger . In the event that Buyer shall fail for any reason to receive the Nasdaq Stockholder Approval on or prior to January 24, 2016 or the Buyer Stockholder Approval by May 31, 2016 or the Parties shall terminate this Agreement in accordance with Article 9 of this Agreement, then the Buyer and Target shall immediately rescind the Merger and all transactions completed hereunder. In accordance therewith, all equity interests of the Surviving Company shall be transferred to the Target Members without any additional consideration in accordance with written instructions delivered by the Target Members to Buyer. Target Members shall return to Buyer for cancellation all certificates representing the Buyer Common Stock originally issued to them under this Agreement. Buyer shall obtain the written resignation of any officer or manager of Surviving Company and deliver such resignation to the Target Members as requested by Target Members. Any nominees of the Target Members then serving

as an Officer or Director of any Buyer Entity shall deliver to Buyer a written resignation from such positions. The Parties shall use their best efforts to rescind the Merger within 10 business days of the failure to obtain approval by the stockholders of Buyer of the Nasdaq Stockholder Approval or the Buyer Stockholder Approval or termination of this Agreement in accordance with Article 9 of this Agreement. The Parties shall cooperate in good faith to complete the rescission and shall execute and deliver any and all documents and certificates to effectuate the rescission as may be necessary or desirable.

7.16 Related Party Transactions . Immediately prior to the Closing Date, any and all written agreements, contracts or arrangements between Target and any Target Member or Affiliate of a Target Member shall be terminated and of no force and effect; provided , however , that the agreements, contracts, or arrangement set forth on Section 7.16 of the Target Disclosure Memorandum, the lease agreement, dated as of January 26, 2016 between Target and Centennial Properties of Georgia, LLC and any other such agreements, contracts, or arrangements with arms’ length terms shall not be terminated and shall remain in full force and effect.

ARTICLE 8

CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

8.1 Conditions to Obligations of Each Party.

The respective obligations of each Party to perform this Agreement to effect the Merger and consummate the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of the following conditions, unless waived by both Target and Buyer pursuant to Section 9.5:

(a) [reserved]

(b) No Injunctions or Restraints; Illegality . No temporary restraining order, preliminary or permanent injunction or other order (whether temporary, preliminary or permanent) issued by any court of competent jurisdiction, or other legal restraint or prohibition shall be in effect which prevents the consummation of the Merger on substantially identical terms and conferring upon Buyer and the Target Members substantially all the rights and benefits as contemplated herein, nor shall any proceeding brought by any Regulatory Authority, domestic or foreign, seeking any of the foregoing be pending, and there shall not be any action taken, or any law, regulation or order enacted, entered, enforced or deemed applicable to the Merger, which makes the consummation of the Merger on substantially identical terms and conferring upon Buyer and the Target Members substantially all the rights and benefits as contemplated herein illegal.

(c) Exchange Listing Requirements . The shares of Buyer Common Stock issuable at the Closing of the Merger in an amount equal to 19.9% of the issued and outstanding shares of Buyer Common Stock shall have been approved for listing on the Nasdaq Stock Market, subject only to official notice of issuance.

8.2 Conditions to Obligations of Buyer.

The obligations of Buyer to effect the Merger and consummate the other transactions contemplated hereby are also subject to the following conditions, unless waived by Buyer pursuant to Section 10.5:

(a) Representations and Warranties . The representations and warranties Target and Target Members contained in this Agreement are true, complete and correct in all material respects on and as of the Effective Time, with the same force and effect as if made on and as of the Effective Time, except for those (i) representations and warranties that are qualified by materiality, which representations and warranties shall be true, complete and correct in all respects, and (ii) representations and warranties which address matters only as of a particular date.

(b) Performance of Agreements and Covenants . Each and all of the agreements and covenants of Target to be performed and complied with pursuant to this Agreement and the other agreements contemplated hereby prior to the Effective Time shall have been duly performed and substantially complied with in all material respects.

(c) Certificates; Resignations . Target shall have delivered to Buyer: (i) a certificate, dated as of the Effective Time and signed on its behalf by its manager or chief executive officer and its chief financial officer (as applicable), to the effect that the conditions set forth in Section 8.1 and in Section 8.3 have been satisfied; and (ii) certified copies of resolutions duly adopted by Target’s board of managers and the Target Members evidencing the taking of all corporate action necessary to authorize the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby.

(d) Regulatory Approvals . All material actions or non-actions by, Consents of, filings and registrations with, and notifications to, all Regulatory Authorities required for consummation of the Merger by Target shall have been obtained or made and shall be in full force and effect and all waiting periods imposed by Law shall have expired or been terminated. No Consent obtained from any Regulatory Authority which is necessary for Target to consummate the Merger contemplated hereby shall be conditioned or restricted in a manner (including requirements relating to the disposition, licensing, divestiture, lease, sale, or holding separate of Assets) that would have a Target Material Adverse Effect after giving effect to the Merger.

(e) Consents and Approvals . Target shall have obtained any and all Consents required by it for consummation of the Merger or for the preventing of any Default under any Contract or Permit of Target which, if not obtained or made, is reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect. No Consent so obtained which is necessary to consummate the transactions contemplated hereby shall be conditioned or restricted in a manner that is reasonably likely to have, individually or in the aggregate, a Target Material Adverse Effect;

(f) Assets . Evidence reasonably acceptable to Buyer that Target and all Target Entities have, in the aggregate, as of the end of the calendar month ending immediately prior to the Effective Time, total net assets of at least $10,000,000, and working capital of $10,000,000, of which $3,000,000 is represented by immediately available cash assets; and

(g) Equity Plans and Convertible Securities . Evidence reasonably acceptable to Buyer that Target has terminated any and all equity option plans on or prior to Closing and that as of Closing no equity options, warrants or other instruments convertible into or exercisable for Membership Interests are issued or remain outstanding.

(h) Lock-Up Agreements by Target Members . The Target Members shall have executed and delivered the Lock-Up Agreements and such Lock-Up Agreements shall be in full force and effect.

(i) Financial Statements . Buyer shall have received the Target Financial Statements.

(j) Fairness Opinion . The Board of Directors of Buyer shall have received a fairness opinion from the Buyer Financial Advisor, stating that the Merger is fair to the stockholders of Buyer.

(k) Other Deliveries . Buyer shall have received the documents and certificates set forth in Section 1.12, and such other certificates and instruments (including without limitation certificates of good standing of Target and its Subsidiaries in their jurisdiction of organization and the various foreign jurisdictions in which they are qualified, certified charter documents, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in connection with the Merger.

8.3 Conditions to Obligations of Target.

The obligations of Target to effect the Merger and consummate the other transactions contemplated hereby are also subject to the following conditions, unless waived by Target pursuant to Section 9.5:

(a) Representations and Warranties . The representations and warranties of the Buyer and Merger Sub contained in this Agreement are true, complete and correct in all material respects on and as of the

Effective Time, with the same force and effect as if made on and as of the Effective Time, except for those (i) representations and warranties that are qualified by materiality, which representations and warranties shall be true, complete and correct in all respects, and (ii) representations and warranties which address matters only as of a particular date.

(b) Performance of Agreements and Covenants . Each and all of the agreements and covenants of Buyer to be performed and complied with pursuant to this Agreement and the other agreements contemplated hereby prior to the Effective Time shall have been duly performed and complied with.

(c) Certificates . Buyer shall have delivered to Target: (i) a certificate, dated as of the Closing and signed on its behalf by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 8.1 as relates to Buyer and in Section 8.2 have been satisfied; and (ii) certified copies of resolutions duly adopted by Buyer’s board of directors evidencing the taking of all corporate action necessary to authorize the execution, delivery and performance of this Agreement, and the consummation of the Merger contemplated hereby.

(d) Execution and Delivery of Lockup Agreements and Voting Agreements. Target shall have received executed (i) Lockup Agreements from the persons and entities as set forth on Schedule 8.3(d) of the Buyer Disclosure Schedule and such Lock-Up Agreements shall be in full force and effect; (ii) Voting Agreements from the persons and entities as set forth on Schedule 8.3(d) of the Buyer Disclosure Schedule and such Voting Agreements shall be in full force and effect.

(e) Execution and Delivery of Registration Rights Agreement. The Registration Rights Agreement shall have been executed by the Buyer and such Registration Rights Agreement shall be in full force and effect.

(f) Regulatory Approvals . All material actions or non-actions by, Consents of, filings and registrations with, and notifications to, all Regulatory Authorities required for consummation of the Merger by Buyer shall have been obtained or made and shall be in full force and effect and all waiting periods imposed by Law shall have expired or been terminated. No Consent obtained from any Regulatory Authority which is necessary for Buyer to consummate the Merger contemplated hereby shall be conditioned or restricted in a manner (including requirements relating to the disposition, licensing, divestiture, lease, sale, or holding separate of Assets) that would have a Buyer Material Adverse Effect after giving effect to the Merger.

(g) Consents and Approvals . Buyer shall have obtained any and all Consents required by it for consummation of the Merger or for the preventing of any Default under any Contract or Permit of Buyer which, if not obtained or made, is reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect. No Consent so obtained which is necessary to consummate the transactions contemplated hereby shall be conditioned or restricted in a manner that is reasonably likely to have, individually or in the aggregate, a Buyer Material Adverse Effect.

(h) Resignations . Resignation letters of certain officers and directors of Buyer identified by Buyer and Target, effective as of the Effective Time.

(i) Other Deliveries . Target shall have received such other certificates and instruments (including without limitation certificates of good standing of the Buyer and its Subsidiaries in their jurisdiction of organization and the various foreign jurisdictions in which they are qualified, certified charter documents, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in connection with the Merger.

ARTICLE 9

TERMINATION

9.1 Termination.

Notwithstanding any other provision of this Agreement, this Agreement may be terminated and the Merger and other transactions abandoned at any time prior to obtaining Nasdaq Stockholder Approval and the Buyer Stockholder Approval (and if the Merger has been effected, the rescission provision in Section 7.15 shall be triggered):

(a) By mutual written agreement of Buyer, Merger Sub and Target, duly authorized by each of the board of directors and managers (as applicable) of Buyer, Merger Sub and the Target.

(b) By either Buyer or Target (provided that the terminating Party is not then in breach of any representation, warranty, covenant, or other agreement contained in this Agreement such that the conditions to closing the Merger set forth in Article 8 would not be satisfied as of the time of such breach) in the event of a breach by the other Party of any representation, warranty, covenant, or agreement contained in this Agreement which cannot be or has not been cured within fifteen (15) days after the giving of written notice to the breaching Party of such breach and which breach would permit the terminating Party to refuse to consummate the transactions contemplated by this Agreement.

(c) By Target, if (i) the Board of Directors of Buyer, or any authorized committee thereof, shall have effected a Subsequent Determination; (ii) the Board of Directors of Buyer, or any authorized committee thereof shall have failed to present and recommend the approval and adoption of the Nasdaq Stockholder Approval or the Buyer Stockholder Approval, or withdrawn or modified in a manner adverse to Target, its recommendation for approval of the Nasdaq Stockholder Approval or the Buyer Stockholder Approval; (iii) Buyer shall have entered, or caused its Subsidiaries to enter, into any letter of intent, agreement in principle, term sheet, merger agreement, acquisition agreement or other similar agreement related to any Acquisition Proposal; (iv) Buyer shall have breached Section 7.2; (v) Buyer shall have failed to include its recommendation of the approval of this Agreement in the Second Proxy Statement; or (vi) the Board of Directors of Buyer, or any authorized committee thereof shall have resolved to do any of the foregoing.

(d) By either Buyer or Target if the Merger has not been consummated or Buyer Stockholder Approval has not been obtained on or before January 24, 2016 (the “ End Date ”); provided , however , that the right to terminate this Agreement pursuant to this Section 9.1(d) shall not be available to any party whose breach of any representation, warranty, covenant or agreement set forth in this Agreement has been the principal cause of, or resulted in, the failure of the Merger to be consummated on or before the End Date.

(e) By Target or Buyer if the First Stockholders’ Meeting or the Second Stockholders’ Meeting, as the case may be, shall have been held and completed (including any adjournments or postponements thereof), the Buyer’s stockholders shall have taken a final vote on the proposals to approve the Nasdaq Stockholder Approval or the Buyer Stockholder Approval, as the case may be, and such proposals to approve the Nasdaq Stockholder Approval or the Buyer Stockholder Approval, as the case may be, shall not have been obtained; provided , however , that a Party shall not be permitted to terminate this Agreement pursuant to this Section 9.1(e) if the failure to obtain the Nasdaq Stockholder Approval or the Buyer Stockholder Approval, as the case may be, is attributable to a failure on the part of such party seeking to terminate this Agreement to perform any material obligation required to be performed by such party pursuant to this Agreement.

(f) By either Target or Buyer, if there shall have been any law enacted by a Regulatory Authority prohibiting the consummation of the Merger or obtaining the Nasdaq Stockholder Approval, the Buyer Stockholder Approval, or any Regulatory Authority having competent jurisdiction shall have issued an order or taken any other action, in each case, which restrains, enjoins or otherwise prohibits the Merger, the Nasdaq Stockholder Approval or the Buyer Stockholder Approval.

(g) By Target, if it is not then in material breach of its obligations, representations and warranties under this Agreement, and if (i) either Buyer or Merger Sub breaches its representations and warranties herein such that Section 8.2(a) would not be satisfied; or (ii) there has been a breach on the part of Buyer or Merger Sub of any of their respective covenants or agreements contained in this Agreement such that Section 8.2(b) would not be satisfied, and, in both case (i) and case (ii), such breach cannot be cured or has not been cured within fifteen (15) days after notice thereof to Buyer.

(h) By Buyer, if neither Buyer nor Merger Sub is then in material breach of its obligations or representations and warranties under this Agreement, and if (i) Target breaches its representations and warranties herein such that Section 8.3(a) would not be satisfied or (ii) there has been a breach on the part of Target of any of its covenants or agreements contained in this Agreement such that Section 8.3(b) would not be satisfied, and, in both case (i) and case (ii), such breach cannot be cured or has not been cured within fifteen (15) days after notice thereof to Target.

9.2 Effect of Termination.

In the event of the termination and abandonment of this Agreement pursuant to Section 9.1, this Agreement shall become void and have no effect, except that (a) the provisions of this Section 9.2 shall survive any such termination and abandonment, (b) no such termination shall relieve the breaching Party from Liability resulting from any breach by that Party of this Agreement, and (c) the Parties shall rescind the Merger as provided under Section 7.15 hereof.

ARTICLE 10

MISCELLANEOUS

10.1 Definitions.

(a) Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:

“Acquisition Proposal” means any bona fide proposal (whether communicated to Buyer or publicly announced to Buyer’s stockholders) by any Person (other than contemplated hereunder) for an Acquisition Transaction involving Buyer or any of its present or future consolidated Subsidiaries, or any combination of such Subsidiaries.

“Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (i) any acquisition or purchase from Buyer by any Person or Group (other than the Target Members) of 20% or more in interest of the total outstanding voting securities of any Buyer, or any tender offer or exchange offer that if consummated would result in any Person or Group (other than Buyer or any of its Affiliates) beneficially owning 20% or more in interest of the total outstanding voting securities of any Buyer, or any merger, consolidation, business combination or similar transaction involving Buyer pursuant to which the stockholders of Buyer immediately preceding such transaction hold less than 80% of the equity interests in the surviving or resulting entity (which includes the parent corporation of any constituent corporation to any such transaction) of such transaction; (ii) any sale or lease (other than in the ordinary course of business), or exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of 20% or more of the assets of Buyer or any of its present or future consolidated Subsidiaries, or any combination of such Subsidiaries, on a consolidated basis; or (iii) any liquidation or dissolution of Buyer.

“Affiliate” of a Person means: (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; (ii) any officer, director, partner, employer, or direct or indirect beneficial owner of any 10% or greater equity or voting interest of such Person; or (iii) any other Person for which a Person described in clause (ii) acts in any such capacity.

“Assets” of a Person means all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description (excluding real property), whether tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.

“ Business Day ” shall be any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York, New York are permitted or required by law, executive order or governmental decree to remain closed.

“Buyer Common Stock” means the common stock, par value $0.001 per share, of Buyer.

“Buyer Disclosure Memorandum” means the written information set forth in the disclosure letter delivered prior to the date of this Agreement to Target.

“Buyer Entities” means, collectively, Buyer and all Buyer Subsidiaries.

“Buyer Financial Advisor” means Alvarez & Marsal.

“Buyer Financial Statements” means the: (i) audited consolidated balance sheets (including related notes and schedules, if any) of Buyer as of June 30, 2014 and as of June 30, 2015, and the related statements of operations, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) for each of the three (3) fiscal years ended June 30, 2015, as filed by Buyer in SEC Documents, and (ii) unaudited condensed consolidated balance sheets of Buyer (including related notes and schedules, if any) and related statements of operations, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) included in SEC Documents filed with respect to the three (3) month period ended September 30, 2015.

“Buyer Material Adverse Effect” means an event, change or occurrence which, individually or together with any other event, change or occurrence, has a material adverse impact on (i) the financial position, business, or results of operations of Buyer and its Subsidiaries, taken as a whole, or (ii) the ability of Buyer to perform its obligations under this Agreement or to consummate the Merger or the other transactions contemplated by this Agreement; provided, that “Buyer Material Adverse Effect” shall not be deemed to include the impact of: (A) changes in Laws of general applicability or interpretations

thereof by courts or governmental authorities; (B) changes in GAAP; (C) actions and omissions of Buyer (or any of its Subsidiaries) taken with the prior written Consent of Target in contemplation of the transactions contemplated hereby; (D) the effects of compliance with and performance under this Agreement on the operating performance of Buyer, including expenses incurred by Buyer in consummating the transactions contemplated by this Agreement; (E) the execution and public announcement of this Agreement or any of the transactions contemplated by this Agreement; (F) changes in the market price or trading volume of Buyer Common Stock; (G) general national or international economic, financial, political or business conditions including the engagement by the United States in hostilities, whether or not pursuant to a declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possession or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States; or (I) any failure by Buyer to meet internal projections or forecasts or third party revenue or earnings predictions for any period (it being understood that any cause of any such failure may be taken into consideration when determining whether a Buyer Material Adverse Effect has occurred or is reasonably expected to occur).

“Buyer Subsidiaries” means the Subsidiaries of Buyer, which shall include the Buyer Subsidiaries described in Section 5.4 and any corporation, limited liability company, limited partnership, limited liability partnership or other organization acquired as a Subsidiary of Buyer in the future and held as a Subsidiary by Buyer at the Closing.

“ Common Stock Equivalents ” means any securities of Buyer which entitle the holder thereof to acquire at any time Common Stock of Buyer, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock of Buyer.

“Confidentiality Agreement” means that certain Confidentiality Agreement between Target and Buyer.

“Consent” means any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit.

“Contract” means any written agreement, arrangement, authorization, commitment, contract, indenture, instrument, license, obligation, plan, practice, restriction, understanding, or undertaking of any kind or character, or other document to which any Person is a party or that is binding on any Person or its capital stock, Assets or business (excluding leases and subleases).

“Default” means: (i) any breach or violation of, default under, contravention of, or conflict with, any Contract, Law, Order, or Permit; (ii) any occurrence of any event that with the passage of time or the giving of notice or both would constitute a breach or violation of, default under, contravention of, or conflict with, any Contract, Law, Order, or Permit; or (iii) any occurrence of any event that with or without the passage of time or the giving of notice would give rise to a right of any Person to exercise any remedy or obtain any relief under, terminate or revoke, suspend, cancel, or modify or change the current terms of, or renegotiate, or to accelerate the maturity or performance of, or to increase or impose any Liability under, any Contract, Law, Order, or Permit.

“EBITDA” means earnings before interest, taxes, depreciation and amortization of AEON operating as an independent and standalone entity. EBITDA shall be based on inputs calculated in accordance with GAAP. The Parties agree that EBITDA will exclude the expenses of the Merger including the fees and expenses of counsel, profits and losses attributable to the existing Buyer businesses, and good will attributable to the Merger, but shall include EBITDA of any subsequently acquired business as provided under Section 7.13 hereof.

“Employee Benefit Plan” means each pension, retirement, profit-sharing, deferred compensation, stock option, employee stock ownership, share purchase, severance pay, vacation, bonus, retention, employment agreement (or consulting agreement), change in control or other incentive plan, medical, vision, dental or other health plan, any life insurance plan, flexible spending account, cafeteria plan, vacation, holiday, disability or any other employee benefit plan or fringe benefit plan, including any “employee benefit plan,” as that term is defined in Section 3(3) of ERISA and any other plan, fund, policy, program, practice, custom understanding or arrangement providing compensation or other benefits, whether or not such Employee Benefit Plan is or is intended to be: (i) covered or qualified under the Internal Revenue Code, ERISA or any other applicable Law; (ii) written or oral; (iii) funded or unfunded; (iv) actual or contingent; (v) arrived at through collective bargaining or otherwise; or (vi) current or terminated.

“Environmental Laws” means all Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) including the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq. (“CERCLA”), the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq. (“RCRA”), and other Laws relating to emissions, discharges, releases, or threatened releases of any Hazardous Material, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of any Hazardous Material.

“Equity Rights” means all arrangements, calls, commitments, Contracts, options, rights to subscribe to, scrip, understandings, warrants, or other obligations of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock or equity interest of a Person or by which a Person is or may be bound to issue additional shares of its capital stock, equity interest or other Equity Rights.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means any Target Entity, and any predecessor of a Target Entity or any of its Subsidiaries and any other Person who constitutes or has constituted all or part of a controlled group or has been or is under common control with, or whose employees were or are treated as employed by, any of the Target Entities, any subsidiary and/or any predecessor or any of them, under Section 414 of the Internal Revenue Code, and the regulations thereunder.

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

“Exhibit” means the Exhibits so marked, copies of which are attached to this Agreement. Such Exhibits are hereby incorporated by reference herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being attached hereto or thereto.

“First Stockholders’ Meeting” means the first meeting of the stockholders of Buyer to be held pursuant to Section 8.1(a), including any adjournment or adjournments thereof, to approve the Nasdaq Stockholder Approval.

“ Fully Diluted Basis” means mean the aggregate of all outstanding shares of Buyer Common Stock, plus the shares of Common Stock issuable upon exercise or conversion of any derivative security outstanding with a conversion or exercise price of $.75 or less (on a pre-reverse split basis); in each case on the close of business on the Business Day immediately prior to the Closing Date.

“GAAP” means United States generally accepted accounting principles, consistently applied during the periods involved.

“Hazardous Material” means: (i) any hazardous substance, hazardous material, hazardous waste, regulated substance, or toxic substance (as those terms are defined by any applicable Environmental Laws); and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or oil, asbestos-containing materials and any polychlorinated biphenyls.

“Intellectual Property” means the following and all rights (whether common law, statutory or otherwise): (a) United States and foreign patents, inventor’s certificates and utility models (including any substitutions, extensions, confirmations, reissues, divisions, re-examinations, renewals and extensions thereof) and any and all applications (including any utility, continuation, divisional, substitution, continuations-in-part, provisional, reissue, or reexamination application) and registrations therefor, and

equivalent or similar rights anywhere in the world in inventions and discoveries (“ Patents ”); (b) copyrights and any and all applications and registrations therefor; (c) domain names, uniform resource locators and other names and locators associated with the Internet, and any and all applications or registrations therefor (“ Domain Names ”); (d) trade names, logos, business symbols, trade dress, assumed names, fictitious names, corporate names, certification marks, collective marks, d/b/a’s, trademarks and service marks, (in each case together with any and all related goodwill) and any and all applications and registrations therefor (“ Trademarks ”); (e) all rights in databases and data collections; (f) all inventions (whether or not patentable) and (g) all trade secrets, and other confidential information including technology, know how, data, processes, schematics, business methods, formulae, drawings, prototypes, models, designs, compositions of matter, techniques, improvements, methods (including manufacturing methods), clinical and regulatory strategies, formulations, manufacturing data and processes specifications, manuals, research and development/clinical proposals and proprietary customer and supplier lists, and all documentation relating to any of the foregoing (“ Trade Secrets ”), in each case to the extent recognized as intellectual property under applicable law.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“IRS” means the United States Internal Revenue Service.

“Knowledge” as used with respect to a Person means the actual knowledge after reasonable inquiry of the chief executive officer and chief financial officer, or Persons of similar function within a Party.

Law” means any code, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its Assets, Liabilities, or business.

“Liability” means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.

“Licensed Intellectual Property” means all Intellectual Property to which the Target Entities have rights granted by a third party.

“Lien” means any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, lien, mortgage, pledge, reservation, restriction, security interest, title retention or other security arrangement, or any charge of any nature whatsoever of, on, or with respect to any property or property interest, other than: (i) liens reflected (or with respect to liabilities reflected) in

the most recent audited financial statements of any Target Entity or Buyer or its Subsidiaries, as applicable; (ii) mechanics’, materialmen’s, workmen’s or similar liens; (iii) easements, rights of way or similar encumbrances that do not materially interfere with the operations of the business of the Target Entities or the Buyer Entities, as applicable, as presently conducted; (iv) Liens for Taxes and all water, sewer, utility, trash and other similar charges, in each case that are not yet due and payable or are being contested in good faith; (v) liens and other encumbrances that would not reasonably be expected to have a Target Material Adverse Effect or a Buyer Material Adverse Effect, as applicable, and (vi) with respect to Article 5 hereof, all matters created or caused by or on behalf of, or with the written consent of, Buyer.

“Litigation” means any action, arbitration, lawsuit, claim, complaint, criminal prosecution, governmental or other examination or investigation

“Material” or “material” for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question; provided that any specific monetary amount stated in this Agreement shall determine materiality in that instance.

“ Membership Interest ” means the entire interest of a Target Member.

“Nasdaq Stock Market” means The Nasdaq Stock Market.

“Order” means any administrative award, settlement, decree, injunction, judgment, quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency, or Regulatory Authority.

“Owned Intellectual Property” shall mean all Intellectual Property that is owned by the Target Entities (whether solely or jointly with any third party).

“Party” means any of Target, Merger Sub or Buyer, and “Parties” means Target, Merger Sub and Buyer.

“Permit” means any federal, state, local, and foreign governmental approval, authorization, certificate, easement, filing, franchise, license, notice, permit, or right to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, Assets, or business.

“Person” means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a representative capacity.

“Registered Intellectual Property” means Intellectual Property that is duly registered with or issued by an appropriate Regulatory Authority of which the rights conveyed by the registration or issuance are in effect as of the date hereof, and any application filed with an appropriate Regulatory Authority for registration or issuance.

“Regulatory Authorities” means, collectively, the SEC, the Nasdaq Stock Market, the FTC, FDA, and all other federal, state, county, local or other governmental or regulatory agencies, authorities (including taxing and self-regulatory authorities), instrumentalities (whether domestic or foreign) having jurisdiction over the Parties and their respective Subsidiaries.

“Representative” means any investment banker, financial advisor, attorney, accountant, consultant, or other representative or agent engaged by a Person.

“SEC” means the United States Securities and Exchange Commission.

“SEC Documents” means all forms, proxy statements, registration statements, reports, schedules, and other documents filed, or required to be filed, by a Party or any of its Subsidiaries with any Regulatory Authority pursuant to the Securities Laws.

“SEC Reports” means all reports, schedules, forms, statements and other documents filed by the Buyer under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since January 1, 2011.

“Second Stockholders’ Meeting” means the second meeting of the stockholders of Buyer to be held pursuant to Section 8.1(a), including any adjournment or adjournments thereof, to approve the Buyer Stockholder Approval.

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

“Securities Laws” means the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and regulations of any Regulatory Authority promulgated thereunder.

“Subsidiaries” means all those corporations, associations, or other business entities of which the entity in question either: (i) owns or controls 50% or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which 50% or more of the outstanding equity securities is owned directly or indirectly by its parent (provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity); (ii) in the case of partnerships, serves as a general partner; (iii) in the case of a limited liability company, serves as a managing member; or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof.

“Superior Proposal” means any Acquisition Proposal (on its most recently amended or modified terms, if amended or modified): (i) involving the acquisition of a majority equity interest in, or all or a majority of all of the assets and liabilities of, the Buyer Entities; and (ii) with respect to which the board of directors of Buyer: (A) determines (after consultation with its Buyer Financial Advisor and outside legal counsel) in good faith that such Acquisition Proposal, if accepted, is reasonably likely to be consummated on a timely basis, taking into account all legal, financial, regulatory and other aspects of the Acquisition Proposal and the Person or Group making the Acquisition Proposal; and (B) determines in its good faith judgment (based on, among other things, the advice of Buyer Financial Advisor and outside legal counsel) to be more favorable to Buyer’s stockholders than the Merger taking into account all relevant factors (including whether, in the good faith judgment of the board of directors of Buyer, after obtaining the advice of Buyer Financial Advisor and outside legal counsel, the Person or Group making such Acquisition Proposal is reasonably able to finance the transaction, and any proposed changes to this Agreement that may be proposed by Buyer in response to such Acquisition Proposal). Notwithstanding anything to the contrary contained in this Agreement, for purposes of the definition of “Superior Proposal,” the references to “20%” in the definition of “Acquisition Proposal” and “Acquisition Transaction” shall be deemed to be references to “more than 50%.”

“Target Disclosure Memorandum” means the written information set forth in a disclosure letter delivered prior to the date of this Agreement to Buyer describing in reasonable detail the matters contained therein and, with respect to each disclosure made therein, specifically referencing each Section of this Agreement under which such disclosure is being made. Information disclosed with respect to one Section shall not be deemed to be disclosed for purposes of any other Section not specifically referenced with respect thereto.

“Target Entities” means, collectively, Target and the Target Subsidiaries.

“Target Financial Statements” means the: (i) audited consolidated balance sheets (including related notes and schedules, if any) of Target as of December 31, 2013 and as of December 31, 2014, and the related statements of operations, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) for the three (3) years ended December 31, 2014, and (ii) unaudited condensed consolidated balance sheets of Target (including related notes and schedules, if any) and related statements of operations, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) for the three (3) and nine (9) month periods ended September 30, 2015.

“Target Intellectual Property” means all Owned Intellectual Property and all Licensed Intellectual Property.

“Target Material Adverse Effect” means an event, change or occurrence which, individually or together with any other event, change or occurrence, has a material adverse impact on: (i) the financial position, business or results of operations of the Target Entities, taken as a whole; or (ii) the ability of Target to perform its obligations under this Agreement or to consummate the Merger or the other transactions contemplated by this Agreement; provided, that with respect to clause (i), “Target Material Adverse Effect” shall be deemed to exclude the impact of: (A) changes in Laws of general applicability or interpretations thereof by courts or governmental or Regulatory Authorities: (B) changes in GAAP; (C) actions and omissions of any Target Entity taken with the prior written consent of Buyer in contemplation of the transactions contemplated hereby; (D) the effects of compliance with this Agreement on the operating performance of Target, including expenses incurred by Target in consummating the transactions contemplated by this Agreement; (E) the execution and public announcement of this Agreement or any of the transactions contemplated by this Agreement; (F) general national or international economic, financial, political or business conditions including the engagement by the United States in hostilities, whether or not pursuant to a declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possession or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States; or (G) any failure by Target to meet internal projections or forecasts or third party revenue or earnings predictions for any period (it being understood that any cause of any such failure may be taken into consideration when determining whether a Target Material Adverse Effect has occurred or is reasonably expected to occur).

“ Target Material Contracts ” means any of the following written agreements, contracts or arrangements, legally binding, or which may be claimed by a third party which is or may be, a party to such agreement, contract or arrangement, to be legally binding upon any Target Entity, whether or not in the ordinary course of business, as follows (i) written agreements, contracts or arrangements, with any Target Member or Affiliate of a Target Member and (ii) any written agreements, contracts or arrangements, for the payment of money or any obligation or rights enforceable against any Target Entity which may equal or exceed the sum of $60,000 and (iii) Target Leases.

“Target Members” means the members of Target as of the date hereof.

“Target Subsidiaries” means the Subsidiaries of Target, which shall include each Target Subsidiary described in Section 4.4 and any corporation, limited liability company, limited partnership, limited liability partnership or other organization acquired as a Subsidiary of Target in the future and held as a Subsidiary by Target at the Closing.

“Tax” or “Taxes” means any federal, state, county, local, or foreign taxes, charges, fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise, employment, sales, use, transfer, recording license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duties, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, disability, real property,

personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by the United States or any state, county, local or foreign government or subdivision or agency thereof, including any interest, penalties, and additions imposed thereon or with respect thereto.

“Tax Return” means any report, return, information return, or other information required to be supplied to a Regulatory Authority in connection with Taxes, including any return of an affiliated or combined or unitary group that includes a Party or its Subsidiaries.

“ Transaction Documents ” means, this Agreement, the Registration Rights Agreement, the Voting Agreements, and the Lock-Up Agreements.

“Voting Agreements” means the agreements between the Buyer and all of its officers and directors and certain holders of its Common Stock and Equity Rights whereby, among other things, such persons agree to vote all voting Securities beneficially owned by them: (i) in favor of the Merger and the issuance of the Buyer Common Stock pursuant to the terms hereof; and (ii) nominees of Target as set forth in the Voting Agreement, at all annual and special meetings of Stockholders of Buyer and by written consent of Stockholders during the period commencing on the Closing Date until a date which is the later of (A) three (3) years following the Closing Date or (B) the issuance of all of the Buyer Common Stock to be issued pursuant to the terms hereof, and otherwise in the form of Exhibit 4 annexed hereto.

(b) The terms set forth below shall have the meanings ascribed thereto on the referenced pages:


Term	Page
Acquisition Agreement		41
Adjustment Threshold		9
AEON		1
Agreement		1
Agreement 8-K		39
Agreement Press Release		39
AHC		1
Amended and Restated Agreement		1
Articles of Merger		6


Buyer			1
Buyer Benefits Plans			31
Buyer Contracts			33
Buyer ERISA Plan			31
Buyer Leased Real Property			34
Buyer Lease(s)			34
Buyer Stockholder Approval			39
Closing			2
Closing Date			2
CMS			9
COBRA			19
Code			1
DOL			17
Domain Names			56
Effective Time			6
End Date			51
FCPA			21
First Proxy Statement			38
Form 8-K			39
Georgia Act			1
Indemnified Party			44
Interim Period			36
Lock-Up Agreements			2
Maximum Amount			44
Merger			1
Merger Consolidation			6


Merger Sub			1
Nasdaq Stockholder Approval			39
Original Execution Date			1
Original Merger Agreement			1
Original Voting Agreement			1
Other Filings			39
Patents			56
Press Release			40
Registration Rights Agreement			2
Second Proxy Statement			38
Subsequent Determination			41
Surviving Company			2
Target			1
Target Benefit Plans			17
Target Certificate/s			6
Target ERISA Plan			17
Target Leased Real Property			20
Target Leases			20
Term Sheet			41
Trademarks			56
Trade Secrets			56
Voting Agreements			1

(c) Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed followed by the words “but not limited to.” The word “or” is not exclusive. References to “written” or “in writing” include in visual electronic form. Words of one gender shall be construed to apply to each gender.

10.2 Expenses.

(a) Each of the Parties shall bear and pay all direct costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including filing, registration and application fees, printing fees, and fees and expenses of its own financial or other consultants, investment bankers, accountants, and counsel.

(b) Nothing contained in this Section 10.2 shall constitute or shall be deemed to constitute liquidated damages for the willful breach by Target of the terms of this Agreement or otherwise limit the rights of Buyer.

10.3 Entire Agreement.

This Agreement and the documents, instruments and exhibits referred to herein constitute the entire agreement between the Parties with respect to the transactions contemplated hereunder and supersede all prior arrangements or understandings with respect thereto, written or oral (except, as to the agreement regarding confidentiality as provided under the Confidentiality Agreement). Nothing in this Agreement expressed or implied, is intended to confer upon any Person, other than the Parties or their respective successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

10.4 Amendments.

To the extent permitted by Law, this Agreement may be amended by a subsequent writing signed by each of the Parties upon the approval of each of the Parties, whether before or after stockholder approval of this Agreement has been obtained.

10.5 Waivers.

(a) Prior to or at the Closing, Buyer, acting through its board of directors, chief executive officer or other authorized officer, shall have the right to waive any Default in the performance of any term of this Agreement by Target, to waive or extend the time for the compliance or fulfillment by Target of any and all of its obligations under this Agreement, and to waive any or all of the conditions precedent to the obligations of Buyer under this Agreement, except any condition which, if not satisfied, would result in the violation of any Law. No such waiver shall be effective unless in writing signed by a duly authorized officer of Buyer.

(b) Prior to or at the Closing, Target, acting through its board of Managers or authorized officer, shall have the right to waive any Default in the performance of any term of this Agreement by Buyer, to waive or extend the time for the compliance or fulfillment by Buyer of any and all of its obligations under this Agreement, and to waive any or all of the conditions precedent to the obligations of Target under this Agreement, except any condition which, if not satisfied, would result in the violation of any Law. No such waiver shall be effective unless in writing signed by a duly authorized officer of Target.

(c) The failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the right of such Party at a later time to enforce the same or any other provision of this Agreement. No waiver of any condition or of the breach of any term contained in this Agreement in one or more instances shall be deemed to be or construed as a further or continuing waiver of such condition or breach or a waiver of any other condition or of the breach of any other term of this Agreement.

10.6 Assignment.

Except as expressly contemplated hereby, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party hereto (whether by operation of Law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

10.7 Notices.

All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder):

Target:

PeachState Health Management, d/b/a AEON Clinical Laboratories

2225 Centennial Dr

Gainesville, GA 30504

Attn: Richard Hersperger

Fax:

With copies to (which shall not constitute notice):

Troutman Sanders LLP

875 Third Avenue

New York, NY 10022

Attn: Joseph Walsh, Esq.

Fax: 212-704-5919

Buyer:

Authentidate Holding Corp.

300 Connell Drive, Suite 1000

Berkeley Heights, NJ 07922

Attn: Chief Executive Officer

Fax:

With a copy to (which shall not constitute notice):

Becker & Poliakoff LLP

45 Broadway, 8 ^th Floor

New York, NY 10006

Attn: Victor DiGioia, Esq.

Fax: 212-557-0295

or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. All such notices or communications shall be deemed to be received (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of nationally-recognized overnight courier, on the next Business Day after the date when sent; (iii) in the case of facsimile transmission or telecopier or electronic mail, upon confirmed receipt; and (iv) in the case of mailing, on the third Business Day following the date on which the piece of mail containing such communication was posted.

10.8 Governing Law.

Regardless of any conflict of law or choice of law principles that might otherwise apply, the Parties agree that this Agreement shall be governed by and construed in all respects in accordance with the laws of the State of Delaware except to the extent required under the Georgia Act. The Parties all expressly agree and acknowledge that the State of Delaware has a reasonable relationship to the Parties and/or this Agreement. As to any dispute, claim, or Litigation arising out of or relating in any way to this Agreement or the transaction at issue in this Agreement, the Parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of any Delaware state court, or federal court of the United States of

America sitting in Delaware, and any appellate court from any thereof. Each Party hereto hereby irrevocably waives, to the fullest extent permitted by Law: (a) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such court; (b) any claim that any suit, action or proceeding brought in such court has been brought in an inconvenient forum; and (c) any defense that it may now or hereafter have based on lack of personal jurisdiction in such forum.

10.9 Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

10.10 Captions; Articles and Sections.

The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to particular Articles or Sections shall mean and refer to the referenced Articles and Sections of this Agreement.

10.11 Interpretations.

Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any Party, whether under any rule of construction or otherwise. No Party to this Agreement shall be considered the drafter. The Parties acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all Parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the purposes and intentions of all Parties hereto. Unless expressly indicated otherwise in this Agreement, (a) all references in this Agreement to “the date hereof” or “the date of this Agreement” shall refer to the Original Execution Date, (b) except as otherwise specified in Article IV or Article V of this Agreement, the date on which the representations and warranties set forth in Article IV and Article V are made shall not change from the Original Merger Agreement as a result of the execution of this Agreement and shall be made in this Agreement as of such dates as they were made in the Original Merger Agreement, and (c) each reference to “this Agreement” or “herein” in the representations and warranties set forth in Article IV and Article V shall refer to “the Original Merger Agreement.”

10.12 Enforcement of Agreement.

The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

10.13 Waiver of Jury Trial.

Each Party acknowledges and agrees that any controversy that may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each Party hereby irrevocably and unconditionally waives any such right such Party may have to a trial by jury in respect of any Litigation, directly or indirectly, arising out of, or relating to, this Agreement, or the transactions contemplated by this Agreement. Each Party certifies that (a) no representative, agent or attorney of the other Party has represented expressly or otherwise, that such other Party would not, in the event of Litigation, seek to enforce the foregoing waiver, (b) each Party understands and has considered the implications of this waiver, (c) each Party makes this waiver voluntarily, and (d) each Party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11.13.

10.14 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. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

10.15 Nonsurvival of Representations.

None of the representations and warranties in this Agreement shall survive the Closing Date and no Party shall have any liability to any other Party with respect thereto. This Section 10.15 shall not limit or affect any covenant or agreement of the Parties which by its terms provides for performance after the Closing Date.

IN WITNESS WHEREOF , each of the Parties has caused this Agreement to be executed on its behalf by its duly authorized officers as of the day and year first above written.


AUTHENTIDATE HOLDING CORP.

By:		/s/ Charles C. Lucas
		Name: Charles C. Lucas
		Title: Chairman

RMS MERGER SUB LLC

By:		/s/ Charles C. Lucas
		Name: Charles C. Lucas
		Title: Chairman

PEACHSTATE HEALTH MANAGEMENT, LLC d/b/a/ AEON CLINICAL LABORATORIES

By:		/s/ Hanif A. Roshan
Name:		Hanif A. Roshan
Title:		Chairman

Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of January [ ], 2016, by and among Authentidate Holding Corp., a Delaware corporation (the “ Company ”), and the persons whose names appear on the signature page annexed hereto (collectively the “ Investors ”) constituting the former members of Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories (“ AEON ”)

WHEREAS:

A. In connection with that certain Agreement and Plan of Merger, dated as of November 19, 2015 (the “ Merger Agreement ”), among the Company, RMS Merger Sub LLC, a wholly owned subsidiary of the Company (“ Merger Sub ”) and AEON, AEON merged (the “ Merger ”) with and into Merger Sub, the separate corporate existence of AEON ceased and the Merger Sub, as the surviving limited liability company in the merger, continued its existence as a wholly-owned subsidiary of the Company.

B. At the effective time of the Merger, the membership interests of AEON held by the Investors immediately prior to the effective time of the Merger were converted into the right to receive shares of the Company’s common stock, is $0.001 par value per share (the “ Common Stock ”).

C. To induce the Investors to execute and deliver the Merger Agreement, the Company has agreed to provide certain registration rights with respect to the resale by the Investors of the shares of Common Stock under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “ 1933 Act ”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Investors hereby agree as follows:

1. Definitions .

As used in this Agreement, the following terms shall have the following meanings:

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

b. “ Effective Date ” means the date the Registration Statement (as defined below) is declared effective by the SEC.

c. “ Effectiveness Deadline ” means, with respect to any registration statement required to be filed to cover the resale by the Investors of the Registrable Securities pursuant to Section 2, 120 days after the Filing Date, or if there is a review of the Registration Statement by the SEC, 150 days after the Filing Date.

d. “ Filing Date ” means with respect to any registration statement required to be filed to cover the resale by the Investors of the Registrable Securities pursuant to Section 2.

e. “ Filing Deadline ” means with respect to any registration statement required to be filed to cover the resale by the Investors of the Registrable Securities pursuant to Section 2, 90 days following the Demand Registration Request (as defined below), unless the Demand Registration Request is made after June 30 but before the audited financial statements for the last completed fiscal year are available, in which case the Filing Deadline means the later of (i) ten Business Days following the availability of the audited financial statements for the last completed fiscal year and (ii) 90 days following the Demand Registration Request.

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

g. “ register ,” “ registered ,” and “ registration ” refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

h. “ Registrable Securities ” means (i) the Common Stock issued pursuant to the Merger Agreement and (ii) any share capital of the Company issued pursuant to the Merger Agreement with respect to the issued and outstanding Common Stock as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise.

i. “ Registration Statement ” means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities.

j. “ Required Holders ” means the holders of at least a 20% of the outstanding Registrable Securities.

k. “ Rule 415 ” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.

l. “ SEC ” means the United States Securities and Exchange Commission.

2. Registration .

a. Demand Registration . Subject to the terms and conditions of this Agreement, if at any time following the date hereof the Company receives a written request from the Required Holders that the Company register under the 1933 Act any of the Registrable Securities held by the Required Holders (such a written request being hereinafter referred to as a

“ Demand Registration Request ”), the Company shall file, as promptly as reasonably practicable but no later than the Filing Deadline, a registration statement under the 1933 Act covering all of the Registrable Securities which may be registered at such time in accordance with SEC rules. The registration statement shall be on Form S-1 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-1, in which case such registration shall be on another appropriate form for such purpose). The Registration Statement shall contain the “ Selling Shareholders ” and “ Plan of Distribution ” sections in substantially the form attached hereto as Exhibit A . The Company shall use its reasonable efforts to cause the registration statement to be declared effective or otherwise to become effective under the 1933 Act as soon as reasonably practicable but, in any event, no later than the Effectiveness Deadline. By 9:30 am on the trading date following the Effective Date, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Registration Statement. The Company shall not be obligated to effect more than four (4) Demand Registrations under this Section 2(a) in respect of Registrable Securities.

b. Eligibility for Form S-3 . If at any time the Company becomes eligible to register the resale of the Registrable Securities on Form S-3, it shall (i) be allowed to utilize Form S-3 for the initial Demand Registration and (ii) promptly convert any then effective Registration Statement(s) to Form S-3 and (iii) shall file any future Registration Statements on Form S-3 so long as so eligible.

3. Related Obligations . At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a) or 2(b), the Company will use its reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

a. The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities and use its reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective as soon as reasonably practicable after such filing (but in no event later than the Effectiveness Deadline). The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Investors may sell all of the Registrable Securities covered by such Registration Statement without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the 1933 Act or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “ Registration Period ”). The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading. The term “reasonable efforts” shall mean, among other things, that the Company shall submit to the SEC, within two (2) Business Days after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff has no further comments on a particular Registration Statement, as the case may be, and (ii) the approval of

Investors whose Registrable Securities are included in such Registration Statement (which approval is immediately sought), a request for acceleration of effectiveness of such Registration Statement to a time and date, subject to acceptance by the SEC, not later than two (2) Business Days after the submission of such request.

b. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K, or any analogous report under the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC as soon as reasonably practicable after the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.

c. The Company shall permit the Investors whose Registrable Securities are included in any Registration Statement to review (i) a Registration Statement at least three (3) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q or any similar or successor reports) within a reasonable number of days prior to their filing with the SEC. The Company shall furnish to the Investors whose Registrable Securities are included in a Registration Statement, without charge, (i) copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an such Investor, and all exhibits and (iii) upon the effectiveness of any Registration Statement, such number of copies of the prospectus included in such Registration Statement and all amendments and supplements thereto as such Investor may reasonably request.

d. The Company shall use its reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by the Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify

the Registrable Securities for sale in such jurisdictions; provided, however , that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its certificate of incorporation or bylaws, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor of the Registrable Securities covered by a Registration Statement of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of notice of the initiation or threatening of any proceeding for such purpose.

e. The Company shall notify each Investor of the Registrable Securities covered by a Registration Statement in writing of the happening of any event, as promptly as reasonably practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(p), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to such Investor as such Investor may reasonably request. The Company shall also promptly notify each Investor of the Registrable Securities covered by a Registration Statement in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each such Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

f. The Company shall use its reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of notice of the initiation or threat of any proceeding for such purpose.

g. If any Investors of the Registrable Securities covered by a Registration Statement is required under applicable securities laws to be described in the Registration Statement as an underwriter, at the reasonable request of such Investor, the Company shall furnish to such Investor, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as an Investor may request (i) a letter, dated as of such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to such Investor, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to such Investor.

h. Upon the written request of any Investor of the Registrable Securities covered by a Registration Statement in connection with such Investor’s due diligence requirements, if any, the Company shall make available for inspection by such Investor or agents retained by such Investor (collectively, the “ Inspectors ”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “ Records ”), as shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein shall be deemed to limit the Investors’ ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

i. The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor of the Registrable Securities covered by a Registration Statement is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

j. The Company shall use its reasonable efforts either to (i) cause all of the Registrable Securities covered by a Registration Statement to be listed or quoted on each securities exchange, bulletin board or quotation system on which securities of the same class or series issued by the Company are then listed or quoted.

k. The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request.

l. If requested by an Investor of the Registrable Securities covered by a Registration Statement, the Company shall (i) as soon as reasonably practicable incorporate in a prospectus supplement or post-effective amendment such information as such Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as reasonably practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as reasonably practicable, supplement or make amendments to any Registration Statement if reasonably requested by such Investor holding any Registrable Securities.

m. The Company shall use its reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

n. The Company shall make generally available (which may include the filing of any periodic reports under the Exchange Act with the SEC on its EDGAR system) to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of a Registration Statement.

o. The Company shall otherwise use its reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

p. Notwithstanding anything to the contrary herein, at any time after the Effective Date, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company otherwise required (a “ Grace Period ”); provided that no Grace Period shall exceed 45 consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of 90 (90 days and the first day of any Grace Period must be at least five (5) trading days after the last day of any prior Grace Period (each, an “ Allowable Grace Period ”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the

notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3(e) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(e) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.

4. Obligations of the Investors .

a. At least five (5) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor whose Registrable Securities are to be included in a Registration Statement in writing of the information the Company requires from each such Investor. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company 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 effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

b. Each Investor whose Registrable Securities are to be included in a Registration Statement agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder.

c. Each Investor whose Registrable Securities are to be included in a Registration Statement agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of 3(e) or receipt of notice that no supplement or amendment is required.

d. Each Investor whose Registrable Securities are to be included in a Registration Statement covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.

5. Expenses of Registration .

All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company.

6. Indemnification .

In the event any Registrable Securities are included in a Registration Statement under this Agreement:

a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor whose Registrable Securities are included in a Registration Statement, the directors, officers, members, partners, employees, agents, representatives of, and each Person, if any, who controls any Investor whose Registrable Securities are included in a Registration Statement within the meaning of the 1933 Act or the 1934 Act (each, an “ Indemnified Person ”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively, “ Claims ”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“ Indemnified Damages ”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“ Blue Sky Filing ”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “ Violations ”). Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

b. In connection with any Registration Statement in which a Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “ Indemnified Party ”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c), such Investor will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however , that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented.

c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for any and all Indemnified Persons or Indemnified Parties to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. In the

case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

d. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

e. The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

7. Contribution .

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

8. Reports Under the 1934 Act .

With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“ Rule 144 ”), the Company agrees to:

a. make and keep public information available, as those terms are understood and defined in Rule 144; and

b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144.

9. Assignment of Registration Rights .

The rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of such Investor’s Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Merger Agreement.

10. Amendment of Registration Rights .

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

11. Miscellaneous .

a. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the such record owner of such Registrable Securities.

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

If to the Company:

Authentidate Holding Corp.

Connell Corporate Center

300 Connell Drive, Suite 1000

Berkeley Heights, New Jersey 07922

Telephone: ([ ]) [ ]-[ ]

Facsimile: ([ ]) [ ]-[ ]

Attention: Chief Financial Officer

If to a Investor, to its address set forth on the Schedule of Investors attached hereto, with copies to such Investor’s representatives as set forth on the Schedule of Investors attached hereto, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

d. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the

jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

e. This Agreement constitutes the entire agreement and the instruments referenced herein among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the instruments referenced herein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

f. Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

g. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

h. This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

i. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

j. All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.

k. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

l. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

m. The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor. Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

[Signature Page Follows]

IN WITNESS WHEREOF , each Investor and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.


COMPANY:

AUTHENTIDATE HOLDING CORP.

By:		__________________________________
		Name:
		Title:

IN WITNESS WHEREOF , each Investor and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.


[INVESTORS]:

By:		__________________________________
		Name:
		Title:

SCHEDULE OF INVESTORS


Investors		Investor’s Address and Facsimile Number		Investor’s Representative’s Address and Facsimile Number

EXHIBIT B

SELLING STOCKHOLDERS

We are registering the shares of common stock in order to permit the selling shareholders to offer the shares for resale from time to time.

The table below lists the selling shareholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling shareholders. The second column lists the number of shares of common stock beneficially owned by each selling shareholder based on its ownership of the shares of commons stock, as of , 201[ ].

The third column lists the shares of common stock being offered by this prospectus by the selling shareholders.

The fourth column assumes the sale of all of the shares offered by the selling shareholders pursuant to this prospectus.

PLAN OF DISTRIBUTION

We are registering the shares of common stock to permit the resale of these shares by the selling shareholders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

The selling shareholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,

•

on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

•

in the over-the-counter market;

•

in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

•

through the writing of options, whether such options are listed on an options exchange or otherwise;

•

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

•

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

•

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

•

an exchange distribution in accordance with the rules of the applicable exchange;

•

privately negotiated transactions;

•

short sales;

•

sales pursuant to Rule 144;

•

broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;

•

a combination of any such methods of sale; and

•

any other method permitted pursuant to applicable law.

If the selling shareholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling shareholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.

The selling shareholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling shareholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any selling shareholder will sell any or all of the shares of common stock registered pursuant to the shelf registration statement, of which this prospectus forms a part.

The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.

We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling shareholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreements, or the selling shareholders will be entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling shareholder specifically for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to contribution.

Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

Exhibit 10.2

STATE OF GEORGIA

COUNTY OF HALL

FIRST LEASE AMENDMENT

THIS FIRST LEASE AMENDMENT (the “Amendment”) is made and entered into as of the 20 ^th day of January, 2016, by and between CENTENNIAL PROPERTIES OF GEORGIA, LLC, a Georgia limited liability company (“Landlord”), and PEACHSTATE HEALTH MANAGEMENT, LLC, a Georgia limited liability company (“Tenant”).

WHEREAS the parties entered into a Lease Agreement (See Exhibit “A” attached hereto; the “Lease”) on March 1, 2014, with respect to that certain parcel of real property located at 2225 Centennial Drive, Gainesville, Hall County, Georgia 30504; and,

WHEREAS the parties wish to amend selected portions of said Lease to better reflect the terms of same as such have evolved since its Commencement Date; and,

NOW, THEREFORE, in consideration of the payment of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

1. Representations and warranties. In connection with the Lease, the parties represent and warrant to one another that:

(a) Tenant is the present lessee, and Landlord is the present lessor, under the Lease and each has the full right and power and lawful right to enter into this Amendment;

(b) Landlord has not heretofore transferred, sold, conveyed, assigned, bargained, set over or otherwise disposed of its interest in and to the Lease to any other party;

(c) There are no uncured defaults on the part of Tenant as Lessee under the Lease, nor any acts which, but for the passage of time or the giving of notice, or both, would constitute such a default; and,

(d) The Lease is in full force and effect, and there have been no amendment,, modification or other agreement relating to the Lease except as otherwise provided for above or in Section Two (2) below.

2. Amendments. The Lease is hereby agreed by all parties hereto to be amended as follows:

(a) Section 1.13 is amended to reflect a Term of twelve (12) years;

(b) Section 1.14 is amended to include the monthly rent of $46,500 from February 1, 2016 through March 31, 2017; the monthly rent of $48,000 from April 1, 2017 through March 31, 2018; the monthly sum of $49,500 from April 1, 2018 through March 31, 2019, and the monthly rent of $51,000 from April 1, 2019 through March 31, 2020; the monthly rent of $52,500 from April 1, 2020 through March 31, 2021; the monthly rent of $54,000 from April 1, 2021 through March 31, 2022; the monthly sum of $55,500 from April 1, 2022 through March 31, 2023, the monthly rent of $57,000 from April 1, 2023 through March 31, 2024; the monthly rent of $58,500 from April 1, 2024 through March 31, 2025; and, the monthly rent of $60,000 from April 1, 2025 through March 31, 2026.


First Lease Amendment for 2225 Centennial Drive, Gainesville, Georgia 30504		PAGE 1

(c) Section 3.01 is amended as follows: Tenant covenants and agrees to pay Landlord the Minimum Rent specified in Section 1.14 in advance on the first (1 ^st ) day of each month of the Term;

(d) Section 10.03 is amended in its entirety and replaced with the following: All trade fixtures, personal property, equipment and merchandise belonging to Tenant which are, or may be, put or placed into the Premises during the Term, whether exempt or not from sale under execution and attachment under the laws of the state where the Premises are located, shall at all times be subject to a first lien and security interest in favor of Landlord for the purpose of securing all rent, additional rent, other sums or other duties and obligations which may become due and owing to Landlord from Tenant under this Lease. Accordingly, Landlord may file a UCC-1 financing statement with the appropriate authorities to reflect such security interest and, upon default or breach of any covenant(s) of this Lease of whatever nature, Landlord is to immediately become the titled owner of any and all such personal property of Tenant located upon the Premises, and may likewise afford itself of any and all other remedies available to it under the Uniform Commercial Code;

(e) The first sentence of Section 10.04 is excised in its entirety; and,

(f) Section 15.01(a) is amended in its entirety and replaced with the following: (a) If Tenant at any time during the Term shall (i) fail to make any payment of rent, additional rent or other sum herein required to be paid by Tenant (for example, those monies contemplated in Section 13.01 above), or (ii) fails to immediately cure any hazardous condition which Tenant has created or suffered in violation of law or this Lease, or (iii) fails to observe or perform any of the covenants in respect to assignment, subletting and encumbrance set forth in Article 15; or (iv) fails to observe or perform any other provision hereof, then Tenant shall be in default of the Lease and will not be afforded any opportunity to cure same.

It is understood and acknowledged by all parties that, except as may otherwise be stated herein, the parties’ Lease remains as written, and where conflicts exist between the original Lease and this Amendment, the terms herein shall control.

3. Parties and Terms. This document shall be binding on and run to the benefit of the heirs, successors, legal representatives and assigns of the parties.

4. Future Amendments. This Agreement can only be modified in writing signed by all parties or their duly authorized agents. All of the parties hereby acknowledge that by executing this Agreement they have the authority and capacity to represent and bind the respective parties hereto.

5. Authorized Signatory. All parties executing this Assignment are authorized to execute same on behalf of Landlord and Tenant.

6. Counterparts. This Amendment may be executed in several counterparts, each of which shall be fully effective as an original and all of which together shall constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this document to physically form one document.

7. Entire Agreement. The parties execute this Agreement freely and voluntarily and each acknowledges that in executing such they have not relied upon any promises, inducements, or representations, whether express or implied, made by any party or their representatives. This writing is intended by the parties as a complete and exclusive statement of the terms of this Agreement, and shall supersede all prior negotiations and all communications or understandings of any nature whatsoever between the parties. Consequently, no evidence in any form whatsoever shall be relevant or admissible to supplement, explain, vary, or alter the terms of this Agreement.


First Lease Amendment for 2225 Centennial Drive, Gainesville, Georgia 30504		PAGE 2

8. Construction. Except as otherwise expressly provided in this Agreement or related agreements, in all respects, including all matters of construction, validity and performance, this Agreement and the obligations set forth hereunder shall be governed by, and construed and enforced in accordance with, the laws of the state of Georgia.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this First Lease Amendment under seal as of the day and year first above written, each acknowledging receipt of an executed counterpart hereof.


LANDLORD:	CENTENNIAL PROPERTIES OF GEORGIA, LLC a Georgia limited liability company

	/s/ Pyarali Roy		(SEAL)
	By:	Pyarali Roy
	Its:	Member

TENANT:	PEACHSTATE HEALTH MANAGEMENT, LLC a Georgia limited liability company

	/s/ Hanif A. Roshan		(SEAL)
	By:	Hanif A. Roshan
	Its:	Member


First Lease Amendment for 2225 Centennial Drive, Gainesville, Georgia 30504		PAGE 3

EXHIBIT “A”

LEASE

Between

CENTENNIAL PROPERTIES OF GEORGIA, LLC.

a Georgia limited company

(Landlord)

and

PEACHSTATE HEALTH MANAGEMENT, LLC.

d/b/a AEON CLINICAL LABORATORIES

a Georgia limited company

(Tenant)

Dated:

MARCH 1, 2014

2225 Centennial Drive

Gainesville, Georgia 30504

STATE OF GEORGIA

COUNTY OF HALL

THIS LEASE is made and entered into by and between Landlord and Tenant (as said terms are hereafter defined in Article 1) as of the date stated on the title page.

ARTICLE 1

When used in this Agreement the following terms shall have the respective meanings set forth opposite each such term. Other definitions are given elsewhere in this Agreement.


1.01	Lease or Agreement:	This Agreement, including the following exhibits, riders and addenda which are incorporated herein and made a part of hereof by this reference.

1.02	Landlord:	CENTENNIAL PROPERTIES OF GEORGIA, LLC

1.03	Landlord’s Address:	2225 Centennial Drive Gainesville, Georgia 30504

1.04	Rental Payment Place:	2225 Centennial Drive Gainesville, Georgia 30504

1.05	Managing Agent:	N/A

1.06	Managing Agent’s Address:	N/A

1.07	Tenant:	PEACHSTATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL LABORATORIES

1.08	Tenant’s Trade Name	AEON

1.09	Tenant’s Address:	2225 Centennial Drive Gainesville, Georgia 30504

1.10	Premises:	That building and adjoining parking lots located at, and commonly known as, 2225 Centennial Drive, Gainesville, Georgia, 30504, as better described in that certain aerial photograph attached hereto as Exhibit “A”.

1.11	Leasable Space:	When used with respect to the Premises means Landlord’s best estimate of the number of square feet for use by the Tenant is 28,000 square feet. Tenant acknowledges such is not a warranty by Landlord and that Tenant has examined the Premises and accepts such is their “AS IS” condition and configuration.

1.12	Commencement Date:	March 1, 2014.

1.13	Term:	A period of ten (10) years.

1.14	Minimum Rent:	The fixed rent payable by Tenant during the Term in monthly installments as follows: The monthly sum of $23,750 beginning on April 1, 2014, rough March 31, 2015; the monthly sum of $24,250 from April 1, 2015, through March 31, 2016; the monthly sum of 24,750 from April 1, 2016, through March 31, 2017; the monthly sum of $25,250 from April 1, 2017, through March 31, 2018; the monthly sum of $25,750 from April 1, 2018, through March 31, 2019; the monthly sum of $26,250 from April 1, 2019, through March 31, 2020; the monthly sum of $26,750 from April 1, 2020, through March 31, 2021; the


		monthly sum of $27,250 from April 1, 2021, through March 31, 2021; the monthly sum of $27,750 from April 1, 2022, through March 31, 2022; the monthly sum of $28,250 from April 1, 2022, through March 31, 2023; and, finally, the monthly sum of $28,750 from April 1, 2023, through March 31, 2024. Such rent shall become due and payable to Landlord by the 6 ^th day of each and every month hereunder.

1.15	Security Deposit:	N/A

1.16	Permitted Uses:	A clinical reference laboratory and no other.

1.17	Guarantor(s):	N/A

1.18	Broker’s Name and Address:	N/A

ARTICLE 2 - Grant and Term

2.01 Grant . In consideration of the rents agreed to be paid, and the agreements made by the respective parties hereto, Landlord demises and leases to Tenant and Tenant hereby leases from Landlord the Premises upon the terms and conditions herein provided.

2.02 Term . Subject to the terms, covenants and agreements contained herein, Tenant shall have and hold the Premises for the entire Term as defined above.

ARTICLE 3 - RENT

3.01 Minimum Rent . Tenant covenants and agrees to pay Landlord the Minimum Rent specified in Section 1.14 in advance on the sixth (6 ^th ) day of each month of the Term.

3.02 Utility Charge . Tenant shall be solely responsible for and pay when due all charges for heat, water, gas, electricity or any other utility services used or consumed in the Premises. In the event such charges shall not be paid when due, Landlord shall have the right to pay same, which amount so paid is hereby declared to be additional rent due on demand with interest as provided in Section 3.05.

3.03 Taxes . Tenant shall pay as additional rent all real estate and ad valorem related taxes for the Premises. Tenant shall further pay and discharge when due any federal, state, county or municipal tax levied or assessed against the leasehold estate created hereby, and any taxes levied or assessed against any trade fixtures, furnishings, equipment, leasehold improvements, alterations or additions made by Tenant, merchandise and personal property of any kind owned, installed or used by Tenant in or upon the Premises during the Term. Upon Landlord receiving the actual real property tax bill from the county in which the Premises are located, then such bill will be presented to Tenant at which time Tenant shall remit the balance due to Landlord within thirty (30) days.

3.04 Insurance . Tenant shall, during the Term, keep in full force and effect public liability, property damage, fire, extended coverage, casualty, rent loss and flood (if required) insurance covering the Premises and shall name Landlord as an additional loss payee.

3.05 Additional Rent . Tenant covenants to pay and discharge when the same shall become due, as additional rent, all amounts, liabilities and obligations which Tenant has assumed or agreed to pay or discharge pursuant to this Lease including those enumerated in this Article 3 and elsewhere in this Lease, together with every fine, penalty, interest and cost which may be added for non-payment thereof.

3.06 Method of Payment, Past Due Rents . The term “rent” as used in this Lease shall mean and include all Minimum Rent and additional amounts payable hereunder. All rent shall be paid to Landlord at the Rental Payment Place or at such other place or to such other person as Landlord may from time to time direct in writing, or as otherwise provided herein, in lawful money of the United States of America. In the event the Tenant fails to make any such payment within ten (10) days after the same becomes due, then in addition to all rights, powers and remedies provided herein, by law or otherwise in the case of non-payment of rent, Landlord shall be entitled to

recover from Tenant two percent (2%) of the amount due as liquidated damages if payment is made therefore during said ten (10) day period, and the sum of five percent (5%) of the amount due as liquidated damages should payment be tendered after said ten (10) day period. Tenant will also pay to Landlord on demand, interest at the rate of twelve percent (12%) per annum, commencing after said ten (10) day period, on all overdue installments of rent and on overdue amounts of additional rent relating to obligations which Landlord shall have paid on behalf of Tenant, in each case from the due date thereof until paid in full.

3.07 Net Lease . This is a net lease and the rent, additional rent and all other sums payable hereunder by Tenant shall be paid without notice, demand, set-off, counterclaim, deduction, or defense and, except as otherwise expressly provided herein without abatement or suspension. Except as otherwise expressly provided in this Lease, this Lease shall not terminate, nor shall Tenant have any right to terminate this Lease nor shall Tenant be entitled to any abatement or reduction of rent hereunder, nor shall the obligations of Tenant under this Lease be affected, by reason of (i) any damage to or the destruction of all or any part of the Premises from whatever cause, (ii) the taking of the Premises or any portion thereof by condemnation, requisition or otherwise for any reason, (iii) the prohibition, limitation or restriction of Tenant’s use of all or any part of the Premises, or any interference with such use, by law or ordinance or other governmental regulation by injunction, (iv) any default on the part of Landlord under this Lease, or under any other agreement to which Landlord and Tenant may be parties, (v) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceeding affecting Landlord or any assignee of Landlord, or (vi) any other cause whether similar or dissimilar to the foregoing.

ARTICLE 4 - Construction of Improvements

4.01 Condition of Premises . Tenant acknowledges that it has inspected the Premises and hereby accepts the Premises “AS IS” with no representation or warranty by Landlord as to the condition of the Premises or their suitability for Tenant’s proposed improvements thereto or use thereof, and with no promise by Landlord or its agents to improve or repair the Premises.

4.02 Tenant’s Work . All improvements to the Premises necessary for the Tenant’s use and occupancy thereof shall be completed by Tenant, at Tenant’s expense, and shall hereinafter be referred to as “Tenant Improvements”. Any work contemplated by Tenant must comply with the directions outlined in Section 10.04 below. Tenant agrees that all work will be completed, and Tenant shall open for business, within six (6) months of this Lease’s execution.

4.03 Excuse of Performance . Anything in this Lease to the contrary notwithstanding, neither Tenant nor Landlord shall be deemed in default with respect to the performance of any and all terms, covenants and conditions of this Lease if such failure of performance shall be due to any strike, lock-out, boycott, labor dispute, civil commotion, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulation or control, inability to obtain any material or service, Act of God, adverse weather conditions, energy shortage or any other cause whether similar or dissimilar beyond reasonable control of the Tenant or Landlord, as the case may be; provided, however, such cause is not due to the willful act of the Tenant or Landlord, as the case may be; and further provided that the party claiming any such excuse for its performance hereunder has given the other party notice of the cause and anticipated duration of such failure of performance.

ARTICLE 5 - Use of Premises

5.01 Use . (a) The Premises shall be occupied and used only for the Permitted Uses and for no other purpose whatever unless Landlord in its sole right and discretion and/or with the approval and consent of any other interested party who has a right consents to a change in such uses. Tenant acknowledges and agrees that the Permitted Uses of the Premises set forth herein are a critical element of the bargain of the parties hereto and that actual and substantial detriment will result to Landlord in the event that a change or deviation in such uses shall occur or be permitted without the express written consents herein required. Said use will comply with all applicable laws, codes and government restrictions.

(b) Tenant agrees to keep the Premises open and diligently operate the business conducted therein under the trade name specified in Section 1.08. Tenant agrees to conduct Tenant’s business at all times in a proper business manner consistent with the then re-imaged condition of said business. Tenant agrees that storage and office space in the Premises shall only exist to the extent required for Permitted Uses conducted on the Premises. No auction, fire, liquidation or bankruptcy sales may be conducted in the Premises without the prior written consent of Landlord having been first obtained.

ARTICLE 6 - Quiet Enjoyment and Landlord’s Right of Entry

6.01 Quiet Enjoyment . If and so long as Tenant shall pay rent specified herein and observe and perform all covenants, agreements and obligations required by it to be observed and performed hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease and the mortgages and other matters to which this Lease is subordinate.

6.02 Right of Entry . Tenant agrees that Landlord, Managing Agent, their agents, employees or servants or any person authorized by Landlord may enter the Premises for the purpose of inspecting the condition of the same and to make such repairs, additions, improvements, changes or alterations to the Premises or the building of which they are a part as Landlord may elect to make, and to exhibit the same to prospective purchasers, mortgagees and tenants of other areas of the building and to prospective tenants and to place in and upon the Premises during the last six months of the Term at such places as may be determined by Landlord “For Rent” signs or notices, and Tenant undertakes and agrees that neither Tenant nor any person with Tenant’s control will interfere with such signs or notices.

ARTICLE 7 - Nuisance, Waste, Rules and Regulations

7.01 Nuisance . Tenant shall not perform any acts or carry on any practices which may injure the building of which the Premises are a part, violate any certificate of occupancy affecting same, constitute a public or private nuisance or a menace to other tenants, produce undue noise, create obnoxious fumes or odors or otherwise cause unreasonable interference with other tenants.

7.02 Waste, Etc . Tenant agrees not to: (a) permit any unlawful or immoral practice to be carried on or committed on the Premise; (b) make any use of or allow the Premises to be used for any purpose that might invalidate or increase the rate of insurance thereof; (c) keep or use or permit to be kept or used on the Premises any inflammable fluids or explosives without the written permission of the Landlord first hand and obtained; (d) use the Premises for any purpose whatsoever which might create a nuisance or injure the reputation of the Premises; (e) deface or injure the Premises; (f) sell or consume or allow the sale or consumption of alcoholic beverages on the Premises, unless the same is included in the Permitted Uses and appropriate licenses and insurances coverage has been secured; or (g) commit or suffer any waste in or about the Premises.

7.03 Rules and Regulations . Tenant covenants and agrees with Landlord that:

(a) All loading and unloading of goods shall be done only through the rear entrances designated for such purposes by Landlord.

(b) All garbage and refuse shall be placed outside of the Premises prepared for collection in the maimer and at the times and places specified by Landlord. Tenant shall pay the cost of removal of all of Tenant’s refuse or rubbish.

(c) No aerial or any other device or structure including, but not limited to T.V. disc, etc., shall be erected on the roof or affixed to exterior walls of the Premises without such roof and wall(s) then being properly sealed so as to secure the interior of the building from the weather and inclement elements.

(d) Tenant shall keep the Premises at a sufficient temperature to prevent freezing of water in pipes and fixtures.

(e) The Premises shall be kept clean and free from dirt and rubbish by Tenant to the satisfaction of Landlord.

(f) The plumbing facilities shall not be used for any other purpose than that for which they are constructed, and no foreign substance of any kind shall be thrown therein.

(g) Tenant shall keep the signs, exterior lights and display window lights on the Premises lighted each and every day of the Term during the hours Tenant remains open for business.

In the event any violation of any of the above rules and regulations continues after five (5) days following notice to the Tenant of such violation, beginning on such fifth day Tenant shall, in addition to any and all other remedies of Landlord provided in this Lease for default by Tenant, pay liquidated damages of Fifty Dollars ($50.00) per day for each violation for each day such violation continues. Landlord reserves the right to adopt additional rules and regulations in respect to the conduct of Tenant’s activities in the Premises, which upon adoption shall be deemed incorporated herein, provided that Tenant is given notice hereof.

ARTICLE 8 - Compliance with Law, Liens, Indemnity

8.01 Compliance with Law and Contracts . Tenant shall, at its expense, comply with and shall cause the Premises and Tenant’s employees to comply with all governmental statutes, laws, rules, orders, regulations and ordinances at any time during the Term. Tenant shall, at its expense, comply with the requirements of all policies of insurance which at any time may be in force with respect of the Premises, and with provisions of all contracts, agreements and restrictions affecting the Premises or any part thereof or the occupancy or use thereof.

8.02 Title and Covenant Against Liens . The Landlord’s title is and always shall be paramount to the title of the Tenant and nothing in this Lease contained shall empower the Tenant to do any act which can, shall or may encumber the title of the Landlord. Tenant covenants and agrees not to suffer or permit any lien of mechanics or materialman to be placed upon or against the Premises or against the Tenant’s leasehold interest in the Premises and in, case of any such lien attaching, to immediately pay and remove same or contest same, in which event Tenant will post a bond adequate to protect the interest of Landlord during the pendency of such proceedings. Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Premises, and any and all liens and encumbrances created by Tenant shall attach only to Tenant’s interest in the Premises. If any such liens so attach and Tenant fails to pay and remove same within thirty (30) days, Landlord, at its election, may pay and satisfy the same and in such event the sums so paid by Landlord, with interest from the date of payment at the rate set forth in Section 3.06 hereof for amounts owed Landlord by Tenant, shall be deemed to be additional rent due and payable by Tenant at once without notice or demand.

8.03 Indemnification . Tenant agrees to pay, and to protect, indemnify and save harmless Landlord and all beneficiaries, agents and employees of Landlord from and against any and all liabilities, losses, damages, costs, expenses (including all attorney’s fees and expenses of Landlord), causes of action, suits, claims, demands or judgments of any nature whatsoever (except those arising from the gross negligent acts of Landlord, its agents or employees) arising from (a) any injury to, or the death of, any person or any damage to property on the Premises or upon adjoining sidewalks, streets or ways, (b) violation of any agreement or condition of this Lease, and (c) violation by Tenant of any contract or agreement to which Tenant is a party or any restriction, statute, law, ordinance or regulation, in each case affecting the Premises or any part thereof or the occupancy or use thereof.

ARTICLE 9 - Maintenance and Repair of Premises

9.01 Maintenance by Tenant . Tenant shall at all times maintain the entire Premises (including maintenance of exterior entrances and all glass and show window moldings) and all foundations, floors, roofs, ceiling, exterior and interior walls, partitions, doors, fixtures, equipment and appurtenances thereof (including lighting, plumbing fixtures, heating, air conditioning, ventilating, electrical and fire detection and protection systems installed by Landlord or Tenant exclusively serving the Premises and including leaks around ducts, pipes, vents or other parts of the heating, air conditioning, ventilating and plumbing systems which protrude through the roof of the Premises) in good order, appearance, condition and repair, including all necessary replacements of any said facilities. It is expressly acknowledged by Tenant, therefore, that Landlord has no duty to repair anything associated with the Premises, such duty being exclusively that of Tenant.

9.02 Maintenance by Landlord . Landlord has no duty to maintain or repair the Premises, such duty being exclusively that of Tenant. If Landlord is required to make repairs to the Premises by reasons of Tenant’s acts, omissions or negligence or if Tenant refuses or neglects to repair as required hereunder to the reasonable satisfaction of Landlord, Landlord may make such repairs without liability to Tenant for any loss or damage that may accrue to Tenant’s merchandise, fixtures or other property or to Tenant’s business by reason thereof. Upon completion thereof, Tenant shall reimburse Landlord’s costs for making such repairs plus twenty percent (20%) of such costs for overhead and supervision, upon presentation of a bill thereof, as additional rent.

ARTICLE 10 - Fixtures, Signs and Alterations

10.01 Fixtures . All readily moveable furnishings, store fixtures and equipment owned and used by Tenant in the Premises shall at all times during the Term be and remain the property of the Tenant without regard to the means by which they are installed in or attached to the Premises. Upon expiration or termination of this Lease, Tenant shall remove all such furnishings, fixtures and equipment and restore the Premises as provided in Section 17.01, provided that Tenant shall not remove any equipment, conduits and fixtures providing water, plumbing electrical, heating,

ventilation, air conditioning, lighting and sewer service to the Premises, all of which, together with any other furnishings, fixtures and equipment not removed by Tenant as provided above, shall become the property of Landlord upon expiration of the Term or termination of Tenant’s right to possession of the Premises pursuant to Article 15 and shall be conclusively presumed to have been conveyed by Tenant to Landlord under this Lease as a bill of sale without any payment or credit by Landlord to Tenant.

10.02 Signs . Tenant shall have the right to place signs and advertisements on the exterior and interior of the Premises provided that size, style and appearance of all exterior signs and all interior signs visible from the exterior of the Premises shall be subject to the approval of Landlord or Managing Agent and shall be in compliance with applicable law.

10.03 Landlord’s Lien . All trade fixtures, personal property, equipment and merchandise belonging to Tenant which are, or may be, put into the Premises during the Term, whether exempt or not from sale under execution and attachment under the laws of the state where the Premises are located, shall at all times be subject to a first lien and security interest in favor of Landlord, for the purpose of securing all rent, additional rent or other sums which may become due to Landlord from Tenant under this Lease. Upon default or breach of any covenants of this Lease, Landlord shall have all remedies available under the Uniform Commercial Code enacted in the state where the Premises are located including, but not limited to, the right to take possession of the above mentioned property and dispose of it by sale in a commercially reasonable manner.

10.04 Alterations . Tenant shall not make any alterations, additions, improvements or changes in the Premises relating to the drive-thru window located thereon, other than the installation of “bullet proof” glass. Tenant specifically understands and acknowledges that the sealing or removal of said drive-thru window will result in its loss by either Tenant, future tenant(s), and Landlord. Tenant shall likewise not make any alterations, additions, improvements or changes in the Premises having a cost of $5,000.00 or more without in each instance first obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld; provided , however , that Tenant may make first-class manner such interior additions, improvements and changes in the Premises so long as such alterations, additions, improvements and changes are non-structural and do not interfere with or otherwise affect any plumbing, fire protection and protection or utility systems except those installed by Tenant or exclusively serving the Premises. All such permitted alterations, additions, improvements and changes in the Premises shall be at Tenant’s sole and exclusive expense and comply with all insurance requirements and with applicable governmental laws, statutes, ordinances, rules and regulations. All such alterations, additions, improvements or changes shall become upon completion the property of the Landlord, unless otherwise agreed to in writing by Landlord.

10.05 Loss and Damage to Tenant’s Property . Landlord shall not be liable for any damage to property of Tenant or of others located on the Premises, nor the loss of or damage to any property of Tenant or of others by theft or otherwise. All property of Tenant kept or stored on the Premises shall be so kept or stored at the risk of Tenant only, and Tenant shall hold Landlord harmless from any claims arising out of damage to same, including subrogation claims by Tenant’s insurance carrier, unless such damage shall be caused by the willful act or gross negligence of the Landlord.

10.06 Tenant’s Improvements . It is contemplated that Tenant will make significant improvements to the subject Premises prior to its opening for business. It is agreed by Tenant that it will provide Landlord, on a monthly basis during the time of Tenant’s improvements to the Premises, with copies of all invoices, and proof of payment therefore, associated with Tenant’s work. It is further agreed by Tenant that the cost of improvements shall amount to $350,000.00 or more, and Tenant agrees to expend, at a minimum, said $350,000.00 in improving the subject premises prior to opening for business.

ARTICLE 11 - Condemnation

11.01 All of Premises Taken . If the whole of the Premises shall be taken or condemned either permanently or temporarily for any public or quasi-public use or purpose by any competent authority in appropriation proceedings or by any right of eminent domain or by agreement or conveyance in lieu thereof (each of the foregoing being hereinafter referred to as “Condemnation”), this Lease shall terminate as of the date possession shall be taken by such authority, and Tenant shall pay rent and perform all of its other obligations under this Lease up to such date.

11.02 Less Than All of Premises Taken . If less than all but more than twenty-five percent (25%) of the Leasable Space in the Premises is taken by Condemnation, or if (regardless of the percentage of Leasable Space in the Premises which is taken) the remainder of the Premises cannot be used for Tenant’s continued use or occupancy for Tenant’s business, in the reasonable judgment of Landlord, then in either such event Landlord or Tenant shall each have the right to terminate this Lease upon notice the other party within sixty (60) days after possession is taken by such Condemnation.

ARTICLE 12 - Insurance

12.01 Insurance to be Provided by Tenant . Tenant shall maintain throughout the Term, at its expense, insurance of the following character: (a) casualty insurance against loss or damage by fire and other risks from time to time included under “extended coverage” policies, in the amount of the full replacement cost of all Tenant Improvements and all subsequent alterations, additions and improvements to the Premises and all furniture, trade fixtures, equipment, merchandise and all other items of Tenant’s property on the Premises; (b) comprehensive general public liability insurance (including contractual liability) against claims for bodily injury, death or property damage occurring on, in or about the Premises and the adjoining streets, sidewalks and passageways, such insurance to afford protection of not less than $1,000,000 combined single limit per occurrence; (c) workmen’s compensation insurance in amounts required by applicable law or statute covering all personnel employed by Tenant (i.e., employees and not independent contractors) in connection with any work done on or about the Premises; (d) insurance against loss or damage to plate glass in or on the Premises; and (e) such other insurance on the Premises in such amounts and against such other insurable hazards which at the time are commonly obtained in the case of property similar to the Premises.

12.02 General Insurance Requirements . Each policy of insurance referred to in Section 12.01 shall name as the insured parties thereunder Landlord (including its agents and other parties designated by Landlord) and Tenant, as their interest may appear, and shall be written as a primary policy which does not contribute to and is not in excess of coverage which Landlord may carry. Every policy which Tenant is obligated to carry under the terms of Section 12.01 shall contain an agreement by the insurer that it will not cancel or fail to renew or amend such policy or reduce the coverage thereunder except after thirty (30) days prior written notice to the Landlord. Tenant shall deliver to Landlord certificates of the insures, evidencing all of the insurance which is required to be maintained by Tenant hereunder together with evidence of the payments therefore within ten (10) days of this Lease’s execution, and Tenant shall, within thirty (30) days prior to the expiration of any such insurance, deliver other certificates of the insurers evidencing the renewal or replacement of such insurance together with evidence of the payment of all premiums therefore.

12.03 Waiver of Claims . Landlord and Landlord’s agents and employees shall not be liable for and Tenant waives all claims for damage to person or property sustained by Tenant or any party claiming through Tenant resulting from any accident of occurrence in or upon the Premises or the building of which they shall be a part.

ARTICLE 13 - Damage or Destruction

13.01 Destruction of Premises . In the event that the Premises are totally or partially damaged or destroyed by fire or other casualty or occurrence covered by insurance, the damage shall be repaired by Landlord within one hundred eighty (180) days of the casualty and the Premises restored to the same condition as they were in immediately before such damage or destruction, by Landlord at Landlord’s expense to the extent of insurance recovery. During said repair period, rent will not abate.

ARTICLE 14 - Assignment, Subletting and Encumbrance

14.01 Assignment and Subletting . Tenant shall not assign this Lease or any interest therein or sublet the Premises or any portion thereof, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. The consent of Landlord to any one assignment or sublease pursuant hereto shall not be deemed to be a waiver of the provisions of this Section with respect to any subsequent assignment or sublease. Each such permitted sublease shall expressly be made subject to the provisions of this Lease. If Tenant assigns any of its rights and interests under this Lease, the assignee under such assignment shall expressly assume all of the obligations of Landlord or otherwise affect any of the rights of Landlord under this Lease nor shall it affect or reduce any obligations of a principal and not as obligations of a guarantor or surety to the same extent as though no assignment or subletting had been made. In the event Tenant shall assign this Lease or sublease the Premises for rent or other consideration in excess of the rent payable hereunder, Landlord shall receive all such excess rent or other consideration as additional rent hereunder.

14.02 Criteria for Assignment and Subletting . In evaluating and determining whether or not to consent to a requested assignment or sublease of the Premises by Tenant, Landlord must be satisfied in its sole reasonable determination that the criteria elements set forth above must continue to be satisfied and the Landlord must receive adequate assurance of the financial condition and stability of the proposed assignee, sublessee or subtenant (“assignee”).

14.03 Encumbrance . Neither this Lease nor the Term shall be mortgaged, pledged or encumbered by Tenant, nor shall Tenant mortgage, pledge or encumber the interest of Tenant in and to any sublease of the Premises or the rental payable thereunder, without the prior written consent of Landlord, which consent may be granted or withheld in sole discretion of Landlord, and Tenant shall not allow or permit any transfer of this Lease or any interest hereunder by operation of Law. Any such mortgage, pledge, encumbrance, sublease or assignment made in violation of this Section shall be void.

ARTICLE 15 - Default

15.01 Events of Default . Any of the following occurrences or acts shall constitute an event of default under this Lease.

(a) If Tenant, at any time during the Term, shall (i) fail to make any payment of rent, additional rent or other sum herein required to be paid by Tenant for a period of ten (10) days after delivery by Landlord or written notice to Tenant that any such payment has become due, or (ii) fail to pay rent, additional rent or other sums herein required to be paid by Tenant when due on three (3) or more occasions during any twelve (12) month period, or (iii) fail to cure, immediately after notice from Landlord, any hazardous condition which Tenant has created or suffered in violation of law or this Lease, or (iv) fail to observe or perform any of the covenants in respect to assignment, subletting and encumbrance set forth in Article 15; or (v) fail to observe or perform any other provision hereof for thirty (30) days after Landlord shall have delivered to Tenant written notice of such failure provided that in the case of any default referred to in this clause (vi) which cannot be cured by the payment of money and cannot with diligence be cured within such thirty (30) day period, if Tenant shall commence to cure the same within such thirty (30) day period and thereafter shall prosecute the curing of same with diligence and continuity, then the time within which such failure may be cured shall be extended for such period not to exceed sixty (60) days as may be necessary to complete the curing of the same with diligence and continuity; or

(b) To the full extent permissible under the Bankruptcy Reform Act of 1978 as amended, or any successor thereto, (i) if Tenant or any Guarantor shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future federal or state bankruptcy law or under any similar federal or state law, or shall be adjudicated a bankrupt or insolvent or shall make assignment for the benefit of its creditors or shall admit in writing the inability to pay its debts generally as they become due, or if a petition or answer proposing the adjudication of Tenant or any Guarantor as a bankrupt or its reorganization under any present or future federal or state bankruptcy law or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within thirty (30) days after the filing thereof, (ii) if a receiver, trustee or liquidator of Tenant or any Guarantor of all or substantially all of the assets of Tenant or any Guarantor of the Premises or any portion thereof shall be appointed in any preceding brought by or against Tenant or any Guarantor and shall not be discharged within thirty (30) days after such appointment, or if Tenant or any Guarantor shall consent to or acquiesce in such appointment; or (iii) if the applicable provisions of the Bankruptcy Reform Act of 1978 as amended, specifically Sections 363 and 365 thereof, are not satisfied to the fullest possible extent; or

(c) If the Premises shall have been abandoned, provided that the Premises shall be deemed to have been abandoned if Tenant transfers a substantial part of Tenant’s operations, business and personnel from the Premises to another location or fails to carry on its business at the Premises for a period of five (5) consecutive business days; or

(d) If Tenant fails to take possession of the Premises when possession is tendered by Landlord, or fails to submit plans or other information regarding the Tenant Improvements for Landlord’s approval or to commence and complete construction of the Tenant Improvements to be constructed by Tenant when as required by the provisions of this Lease and open its business therein promptly upon such completion.

15.02 Right to Terminate . If an event of default shall have occurred, Landlord shall have the right at its election, then or at any time thereafter, to give Tenant written notice of Landlord’s election to terminate this Lease on a date specified in such notice. Upon giving of such notice, this Lease and the estate hereby granted shall expire and terminate on such date as fully and completely and with the same effect as if such date were the date hereinbefore fixed for the expiration of the Term, and all rights of Tenant hereunder shall expire and terminate, but Tenant shall remain liable as hereinafter provided.

15.03 Right of Re-Entry . If any default shall have occurred, Landlord shall have the immediate right, whether or not this Lease shall have been terminated pursuant to Section 15.02, to re-enter and repossess the Premises or any part thereof by force, summary proceedings, ejectment or otherwise with the right to remove all persons and property therefrom. Landlord shall be under no liability for or by any reason of any such entry, repossession or removal. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such election be given to Tenant pursuant to Section 15.02 or unless the termination of this Lease be decreed by a court of competent jurisdiction.

15.04 Right to Re-Let . At any time or from time to time after the repossession of the Premises or any part thereof pursuant to Section 15.03, whether or not this Lease shall have been terminated pursuant to Section 15.02, Landlord may (but shall be under no obligation) re-let the Premises or any other part thereof for the account of Tenant, in the name of Tenant or Landlord or otherwise, without notice to Tenant, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions (which may include concession or free rent) and for such uses as Landlord, in its absolute discretion, may determine, and Landlord may collect and receive any rents payable by reason of such re-letting. Landlord shall not be responsible or liable for any failure to collect any rent due upon such re-letting.

15.05 Tenant to Remain Liable . No expiration or termination of this Lease pursuant to Section 15.02, by operation of law or otherwise, and no repossession of the premises or any part thereof pursuant to Section 15.03 or otherwise, and no re-letting of the Premises or any part thereof pursuant to Section 15.04, shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, repossession or re-letting.

15.06 Current Damages . In the event of any expiration or termination of this Lease or repossession of the Premises or any part thereof by reason of the occurrence of default, Tenant will pay to Landlord the rent, additional rent and other sums required to be paid by the Tenant for the period to and including the date of such expiration, termination or repossession; and thereafter until the end of what would have been the Term in the absence of such expiration, termination or repossession, and whether or not Premises or any part thereof shall have been re-let, Tenant shall be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages the rent, additional rent and other sums which would be payable under this Lease by Tenant in the absence of such expiration, termination or repossession, less the net proceeds, if any of re-letting affected for the account of Tenant pursuant to Section 15.04, after deducting from such proceeds all of Landlord’s expenses reasonably incurred in connection with such re-letting (including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorney’s fees, employee expenses, alterations costs and expenses of preparation for such re-letting). Tenant will pay such current damages on the days on which rent would have been payable under this Lease in the absence of such expiration, termination or repossession, and Landlord shall be entitled to recover the same from Tenant on each such day.

15.07 Rights Cumulative, Non-Waiver . No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. The failure of Landlord to insist at any time upon the strict performance of any covenant or agreement or to exercise any option, right, power or remedy contained in the Lease shall not be construed as a waiver or relinquishment thereof for the future. The receipt by Landlord of any rent, additional rent or any other sum payable hereunder with knowledge of the breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Landlord. In addition to the other remedies provided in this Lease, Landlord shall be entitled, to the extent permitted by applicable law, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, conditions or provisions of this Lease, or to a decree compelling performance of this Lease, or to any other remedy allowed to Landlord at law or in equity.

15.08 Legal Expenses . In the event either Landlord or Tenant shall be in default in the performance of any of its obligations under this Lease, and an action shall be brought for the enforcement thereof in which it shall be finally and no further appeal determined that Landlord or Tenant was in default, the party in default shall pay to the other

party all attorney’s fees and litigation expense incurred or paid by it in connection therewith. In the event Landlord shall, without fault on its part, be made a party to any litigation commenced against Tenant, if Tenant, at its expense, shall fail to provide Landlord with counsel approved by Landlord, Tenant shall pay as additional rent all costs and attorney’s fees incurred or paid by Landlord in connection with such litigation. In the event Tenant shall, without fault on its part, be made a party to any litigation commenced against Landlord, if Landlord, at its expense, shall fail to provide Tenant with counsel approved by Tenant, Landlord shall reimburse Tenant for all costs and attorney’s fees incurred or paid by Tenant in connection with such litigation.

15.09 Landlord’s Right to Cure . Landlord may, but shall not be obligated to, cure any default by Tenant after complying with the notice provisions herein set forth, and whenever Landlord so elects, all costs and expenses paid or incurred by Landlord in curing such default, including without limitation reasonable attorney’s fees, shall be so much additional rent due on demand with interest as provided in Sections 3.06 and 3.07.

15.10 Default by Landlord . Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have therefore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided however, that if the nature of Landlord’s obligation is such that more than thirty (30) day period and thereafter diligently prosecute the same to completion. In no event shall Tenant have the right to terminate this Lease as a result of Landlord’s default and Tenant’s remedies shall be limited to damages and/or an injunction.

ARTICLE 16 - Estoppel Certificates, Subordination, Mortgage Protection

16.01 Estoppel Certificates . Within ten (10) days after request therefore by Landlord, Tenant agrees to execute and deliver a certificate in the form presented by Landlord to any proposed mortgagee or purchaser of the Premises, or to Landlord, certifying (if such be the case) to matters requested by Landlord. Failure of Tenant to execute and deliver the requested certificate shall constitute an event of default.

16.02 Subordination/Superiority . The rights and interest of Tenant under this Lease shall be subject and subordinate to any mortgage, trust deed or deed or trust that is or may hereafter be placed upon the Premises and to any and all advances to be made thereunder and to the interest thereon and all renewals, amendments, modifications, replacements and extensions thereof, if the mortgagee or trustee or secured party named in such mortgage or trust deed and shall agree by instrument in writing to recognize this Lease in the event of foreclosure, if and so long as Tenant is not in default hereunder.

ARTICLE 17 - Surrender and Holdover

17.01 Surrender . Upon the expiration or earlier termination of this Lease, Tenant shall peaceably leave and surrender the Premises to Landlord broom-clean and otherwise in the condition in which Premises are required to be maintained by the terms of this Lease. Tenant shall surrender all keys for the Premises to Landlord at the place then fixed for the payment and shall inform Landlord of all combinations on locks, safes, vaults, if any, in the Premises. Tenant shall, at its expense, remove from the Premises on or prior to such expiration or earlier termination all furnishings, fixtures and equipment situated thereon (including all exterior and interior signs) which are not the property of Landlord as provided in Section 10.01, and Tenant shall, at its expense, on or prior to such expiration or earlier termination, repair any damage caused by such removal. Any property not so removed shall become the property of Landlord, and Landlord may thereafter cause such property to be removed from the Premises and disposed of, but the cost of any such removal and disposition and the cost of repairing any damage caused by such removal shall be borne by Tenant.

17.02 Holdover . Should be Tenant or any party claiming under Tenant hold over in possession at the expiration of the Term, such holding over shall not be deemed to extend the Term or renew this Lease, and such holding over shall be an unlawful detainer and such parties shall be subject to immediate eviction and removal. Tenant shall pay upon demand to Landlord during any period while Tenant shall hold the Premises after expiration of the term, as liquidated damages, a sum equal to 150% the monthly rate of Minimum Rent in effect for the last month of the Term, and Tenant shall also pay all damages, consequential as well as direct, sustained by Landlord by reason of such holding over.

ARTICLE 18 - Security Deposit

[ Intentionally omitted ]

ARTICLE 19 - Advertising

19 Advertising . Tenant shall not change its Trade Name/Trade Style without written notification to Landlord.

ARTICLE 20 - General Provisions

20.01 Successors . All of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

20.02 Notices . All notices, demands, requests, consents, approvals and other instruments required or permitted to be given pursuant to the terms of this Lease shall be in writing and shall be deemed to have been properly given if sent by overnight courier (e.g. FedEx) addressed to Tenant at Tenant’s address or Landlord at Landlord’s address, as the case may be, and such notice so mailed shall be deemed to have been delivered on the second business day following deposits in the mails. Landlord and Tenant shall each have the right from time to time to specify as its address for purposes of this Lease any other addresses in the United States of America upon three (3) days’ notice thereof, similarly given, to the other party.

20.03 No Option . The submission of this Lease for examination does not constitute an offer to enter into a Lease, and this Lease shall become effective only upon execution and delivery hereof by Landlord and Tenant.

20.04 No Joint Venture . The relationship of the parties is that of Landlord and Tenant only, and nothing in this Lease shall be construed as creating a partnership, joint venture, principal-agent or any other relationship. Except as expressly otherwise provided herein, neither party shall have any right or power to create any expense or liability chargeable to the other party.

20.05 Broker . The parties hereto represent to one another that neither has used the services of a broker with respect to this Lease.

20.06 Headings and Captions . The headings and captions contained in this Lease are inserted for convenience of reference only, and are not to be deemed part of or to be used in construing this Lease.

20.07 Partial Individuality . If any term or prevision of this Lease which obligates the Landlord or the Tenant to pay an amount or perform an obligation before the commencement of the Term or after the expiration of the Term shall be binding and unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law.

20.08 Survival . Any provision of this Lease which obligates the Landlord or the Tenant to pay an amount or perform an obligation before the commencement of the Term or after the expiration of the Term shall be binding and enforceable notwithstanding that payment or performance is not within the Term, and the same shall survive.

20.09 Definition of Landlord, Exculpation . The term Landlord as used in this Lease, so far as the covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the Premises, and in the event of any transfer or transfers of title thereto, Landlord named herein (and in case of any subsequent transfer or conveyance, the then grantor) shall be automatically relieved from and after the date of such transfer or conveyance of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed. It is expressly understood and agreed by and between parties hereto, anything herein to the contrary notwithstanding, that all of the representations, warranties, covenants, undertakings and agreements by Landlord for the purpose or with the intention of binding Landlord personally, but are made and intended for the purpose only of subjecting Landlord’s interest in the Premises to the terms of this Lease and for no other purpose whatsoever, and that in the case of default hereunder by Landlord, the Tenant shall look solely to the interest of Landlord in the Premises for satisfaction of any obligation of Landlord to Tenant.

20.10 Time of Essence . Time is of essence of this Lease, and all provisions herein relating thereto shall be strictly construed.

20.11 Accord and Satisfaction . No payment by Tenant or receipt by Landlord of a lesser amount than the rent or other amounts herein stipulated rent and amounts due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment thereof be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such amounts or pursue any other remedy provided in this Lease.

20.12 Entire Agreement . This Lease and any attachments hereto and forming a part hereof, set forth all the covenants, promises, agreements, conditions or understandings, either oral or written, between Landlord and Tenant except those herein set forth. Except as otherwise provided herein, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by them.

20.13 Recordation . Tenant shall not record this Lease without the written consent of Landlord.

20.14 Governing Law . This Lease shall be construed and enforced in accordance with the laws of the State of Georgia.

20.15 Corporate Tenants . In the event the Tenant hereunder is a corporation, the persons executing this Lease on behalf of the Tenant hereby covenant and warrant that all corporate taxes and all future forms, reports, fees and other documents necessary for Tenant to comply with applicable laws will be filed by Tenant when due.

20.16 Governmental Regulations . Tenant shall comply with all laws, rules, orders, ordinances and regulations including, without limitation, environmental regulations (the “Regulations”) of the Municipality, County, State or Federal Government and of any department or bureau of any of them, and of any other governmental authority having jurisdiction over the Premises, Tenant’s occupancy of the Premises or Tenant’s business conducted thereon.

20.17 Authority . The officers of Tenant executing this Lease on Tenant’s behalf hereby make the following representations, in their personal and corporate capacities, upon which Landlord is relying in consenting hereto:

(a) that Tenant has been duly organized, is validly existing and is in good standing in the State of Georgia and is, as of the date hereof, in good standing to transact business in the State of Georgia; and,

(b) that the officers executing this Lease on Tenant’s behalf have been duly authorized by all necessary corporate action to executed the same, and that upon the execution hereof, this Lease shall be the valid and binding obligation of Tenant.

IN WITNESS WHEREOF , the parties have executed and delivered this Lease as of the day and year first written above.


LANDLORD:		TENANT:

CENTENNIAL PROPERTIES OF GEORGIA, LLC		PEACHSTATE HEALTH MANAGEMENT, LLC

/s/ Pyarali Roy		/s/ Sonny Roshan
By: Pyarali Roy, its Member		By: Sonny Roshan, its CEO

WITNESS:		WITNESS:

/s/ Paul S Suda		/s/ Paul S Suda

Exhibit “A”

Entire Lease Premises

LOGO

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements of Authentidate Holding Corp. on Form S-3 (Nos. 333-05445, 333-49160, 333-70880, 333-100546, 333-101354, 333-106174, 333-109626, 333-113153, 333-170760 and 333-179577) and on Form S-8 (Nos. 333-197346, 333-179269, 333-23933, 333-65894, 333-91337, 333-97965, 333-118338 and 333-174347) of our report dated December 18, 2015, on our audits of the consolidated financial statements of Peach State Health Management LLC, d/b/a Aeon Clinical Laboratories, as of December 31, 2014 and 2013 and for each of the years then ended, which report is included in this Current Report on Form 8-K to be filed on or about February 1, 2016.

/s/ EISNERAMPER LLP

Iselin, NJ

February 1, 2016

Exhibit 99.1

LOGO

FOR RELEASE: Wednesday, January 27, 2016

Berkeley Heights, NJ

Gainesville, GA

Authentidate and AEON Clinical Laboratories Execute

Amendment to Merger Agreement and Schedule Closing

Authentidate Holding Corp. (NASDAQ: ADAT) and Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories, today announced that they have entered into an amendment to their agreement and plan of merger whereby privately-held AEON will merge with a wholly-owned subsidiary of Authentidate and become a wholly owned subsidiary of Authentidate.

The transaction was modified to remove the issuance of any preferred stock of Authentidate and provide that the consideration will instead be comprised of shares of Common Stock of Authentidate. The transaction will proceed upon substantially the same terms as previously announced; including the requirements for EBITDA based benchmarks of the AEON business. The AEON members will be entitled to receive additional shares of Common Stock tied to the earnings of AEON during the four calendar years commencing with the completed financial results for December 2015 through December 2019. The AEON members will receive at closing an aggregate of 19.9% (8,622,278 pre reverse stock split shares of Common Stock) of Common Stock of Authentidate and can earn additional shares equaling up to 90% of the outstanding stock of Authentidate based upon earnings of $100,000,000.

The parties anticipate closing the transaction within the next 24 hours.

As provided for in the transaction, following the closing, Sonny Roshan, founder of AEON, will become Chairman of Authentidate and Richard Hersperger, the CEO of AEON, will become CEO of the combined companies. Both men will also serve on the Board of Directors of Authentidate.

The parties further amended the previously announced terms of the transaction to remove the closing condition that Authentidate receive approval from Nasdaq Stock Market for the transaction. Authentidate expects to receive notice from The Nasdaq Stock Market of its delisting. Authentidate expects that its Common Stock will trade on the OTC QB market following its delisting from The Nasdaq Stock Market. The trading symbol will remain unchanged. Authentidate expects to submit a listing application to The Nasdaq Stock Market in the near future to regain its listing.

Additional Information

Additional information regarding the merger will be provided in the company’s Form 8-K and Schedule 14F-1 filings over the next few days. Following the closing, Authentidate management will also schedule a conference call regarding the transaction, and details for the call will be provided in a subsequent press release.

About AEON Clinical Laboratories

AEON Clinical Laboratories is a growing comprehensive and efficient clinical laboratory using state of the art testing equipment. Housed in a 28,000 square foot campus, in Gainesville, Georgia, AEON emphasizes Technology Innovation. AEON has developed proprietary methodologies that provide some of the fastest and most reliable urine and oral fluid (saliva) test results in the nation. AEON provides health care professionals with four primary tests: Medical Toxicology, Pharmacogenomics, Cancer Genetic Testing, and Molecular Biology.

About Authentidate Holding Corp.

Authentidate Holding Corp. is a provider of secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to coordinate care for patients and enhance related administrative and clinical workflows. Authentidate’s products and services enable healthcare organizations to increase revenues, reduce costs and enhance patient care by eliminating paper and manual work steps from clinical and administrative processes. Authentidate’s telehealth solutions combine patient vital signs monitoring with a web application that streamlines patient care management. Delivered as Software as a Service (SaaS), customers only require an Internet connection and web browser to access our web-based applications thereby utilizing previous investments in systems and technology. The company’s healthcare customers and users include leading homecare companies, health systems, physician groups and governmental entities. These organizations utilize the company’s products and services to coordinate care for patients outside of acute-care.

Authentidate, Inscrybe and InscrybeMD are registered trademarks of Authentidate Holding Corp. All other trade names are the property of their respective owners.

For more information, visit the company’s website at www.authentidate.com

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this communication regarding the merger and other contemplated transactions (including statements relating to satisfaction of the conditions to and consummation of the merger and the expected ownership of the combined company) constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control. Risks and uncertainties for Authentidate, AEON and of the combined company include, but are not limited to:; liquidity and trading market for shares following the consummation of the merger; costs associated with the merger; failure or delay in obtaining required approvals by the SEC or any other governmental or quasi-governmental entity necessary to our ability to file an effective proxy statement in connection with the merger and other contemplated transactions; failure to obtain the necessary stockholder approval of the merger and the other contemplated transactions; uncertainties of cash flows and inability to meet working capital needs; and risks associated with the possible failure to realize certain benefits of the merger, including future financial, tax, accounting treatment, and operating results. Many of these factors that will determine actual results are beyond Authentidate’s or AEON’s ability to control or predict.

Other risks and uncertainties are more fully described in our Annual Report on Form 10-K for the year ended June 30, 2015 filed with the SEC, and in other filings that Authentidate makes and will make with the SEC in connection with the transactions, including the proxy statement described below under “Important Information and Where to Find It.” Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The statements made in this press release speak only as of the date stated herein, and subsequent events and developments may cause our expectations and beliefs to change. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements contained in this news release to reflect subsequent information, events, results or circumstances or otherwise. While we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date after the date stated herein.

Additional Information and Where to Find It

The issuance of the initial tranche of common stock at the closing of the merger does not require any action of stockholders of Authentidate.

BEFORE MAKING ANY INVESTMENT DECISION, INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE COMPANY’S FORM 8-K TO BE FILED FOLLOWING CLOSING WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the Form 8-k and other filings containing information about the Company and AEON may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from the Company at www.authentidate.com under the heading “Investors / SEC Filings” or by writing to the Secretary, Authentidate Holding Corp., at 300 Connell Drive, Berkeley Heights, NJ 07922.

This press release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Authentidate Contacts:

James Carbonara, Hayden IR,

james@haydenir.com or (646) 755-7412

Brett Maas, Hayden IR,

Brett@haydenir.com or (646) 536-7331

Exhibit 99.2

LOGO

FOR RELEASE: Thursday, January 28, 2016

Berkeley Heights, NJ

Gainesville, GA

Authentidate and AEON Clinical Laboratories Complete Merger to

Form Innovative Healthcare Technology Company

Authentidate Common Stock to Commence Trading on the OTCQB Market

Under the Ticker Symbol “ADAT” on January 29, 2016

Sonny Roshan to serve as Chairman of the Board;

Richard Hersperger appointed CEO of the combined Company

Authentidate Holding Corp. (NASDAQ: ADAT) and Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories, today announced that they have completed their merger transaction whereby privately-held AEON has merged with a wholly-owned subsidiary of Authentidate. The merger creates a company focused on delivering innovative solutions that achieve technology best practices in medicine and raise the standard of healthcare.

The transaction was structured as a tax-free exchange, with the former AEON members receiving shares of Common Stock of Authentidate at the closing, and potential further issuances tied to the earnings of AEON during the five calendar years ending December 2019. The AEON members received an aggregate of 19.9% (approximately 958,030 shares of Common Stock on a post-reverse stock split basis) of Common Stock of Authentidate in the initial tranche effective at closing and can earn additional shares equaling up to 90% of the outstanding stock of Authentidate based upon meeting the benchmark targets, including delivering $16,000,000 in EBITDA for the calendar year ended 2015 and $100,000,000 in aggregate EBITDA for the calendar years 2016 through 2019. In connection with the completion of the merger, Sonny Roshan, founder of AEON, will become Chairman of Authentidate and Richard Hersperger, the CEO of AEON, will become CEO of the combined companies. Both men will also serve on the Board of Directors of Authentidate.

In addition, Authentidate also announced today that on January 27, 2016, it received notification from The Nasdaq Stock Market LLC (“NASDAQ”) that trading in the Company’s Common Stock will be suspended on NASDAQ effective with the open of business on Friday, January 29, 2016, as the Company was unable to complete its business combination with AEON Clinical Laboratories and otherwise satisfy the terms of the decision by the NASDAQ Listing Qualifications Hearing Panel on or before January 25, 2016. The Company understands that its Common Stock will be formally delisted from NASDAQ via NASDAQ’s filing of a Form 25 “Notification of Delisting” with the Securities and Exchange Commission after all applicable appeal periods have lapsed.

Authentidate’s Common Stock is expected to be available for trading on the OTCQB Market beginning January 29, 2016 under the ticker symbol “ADAT.” This transition to the OTCQB Market does not affect the Company’s business operations. The Company will continue to file periodic and certain other reports with the Securities and Exchange Commission under applicable federal securities laws. Investors will be able to view real-time best bid and ask quotes for “ADAT” at http://www.otcmarkets.com . The Company further announced that it intends to seek relisting of its Common Stock on The NASDAQ Stock Market as soon as practicable. No assurances, however, can be given that the Company’s application for relisting will be accepted.

Charles Lucas, the former Chairman of the Board of Authentidate and a continuing board member, stated, “We are very excited to announce the completion of our business combination with AEON Clinical Laboratories and, as previously reported, we believe this transaction provides the opportunity for substantial returns for Authentidate shareholders. We believe the AEON combination will enable us to reach a broader base of customers with a more robust product offering that can make a marked impact on the delivery of healthcare services and provide our customers with an expanded product set to support their patients’ healthcare management needs. This combination will also enable the self-funding of future growth for the combined company. We are glad to have brought this transaction to a close and we are excited about the future prospects for the combined company.”

Richard Hersperger, Chief Executive Officer of AEON, stated, “We are thrilled to finalize our transaction with Authentidate and look forward to combining our capabilities to create the opportunity to make personalized medicine a reality. Our solutions enable physicians to personalize medication management therapy and deliver excellence in the standard of care. We believe that this combination will benefit our customers, our shareholders, our vendors and patients.”

Additional Information and Conference Call

Additional information regarding the merger, including certain financial statements of AEON is expected to be provided in the Company’s Form 8-K and Schedule 14F-1 filings over the next few days.

Management will also schedule a conference call regarding the transaction and details for the call will be provided in a subsequent press release.

About AEON Clinical Laboratories

About Authentidate Holding Corp.

Authentidate Holding Corp. is a provider of secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to coordinate care for patients and enhance related administrative and clinical workflows. Authentidate’s products and services enable healthcare organizations to increase revenues, reduce costs and enhance patient care by eliminating paper and manual work steps from clinical and administrative processes. Authentidate’s telehealth solutions combine patient vital signs monitoring with a web application that streamlines patient care management. Delivered as Software as a Service (SaaS), customers only require an Internet connection and web browser to access our web-based applications thereby utilizing previous investments in systems and technology. The Company’s healthcare customers and users include leading homecare companies, health systems, physician groups and governmental entities. These organizations utilize the Company’s products and services to coordinate care for patients outside of acute-care.

Authentidate, Inscrybe and InscrybeMD are registered trademarks of Authentidate Holding Corp. All other trade names are the property of their respective owners.

For more information, visit the Company’s website at www.authentidate.com

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this communication regarding the merger and other contemplated transactions (including statements relating to satisfaction of the conditions to and consummation of the merger and the expected ownership of the combined company) constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control. Risks and uncertainties for Authentidate, AEON and of the combined company include, but are not limited to: liquidity and trading market for shares following the consummation of the merger; costs associated with the merger; failure or delay in obtaining required approvals by the SEC or any other governmental or quasi-governmental entity necessary to our ability to file an effective proxy statement in connection with the merger and other contemplated transactions; failure to obtain the necessary stockholder approval of the merger and the other contemplated transactions; uncertainties of cash flows and inability to meet working capital needs; and risks associated with the possible failure to realize certain benefits of the merger, including future financial, tax, accounting treatment, and operating results. Many of these factors that will determine actual results are beyond Authentidate’s or AEON’s ability to control or predict.

Other risks and uncertainties are more fully described in our Annual Report on Form 10-K for the year ended June 30, 2015 filed with the SEC, and in other filings that Authentidate makes and will make with the SEC in connection with the transactions, including the proxy statement described below under “Important Information and Where to Find It.” Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The statements made in this press release speak only as of the date stated herein, and subsequent events and developments may cause our expectations and beliefs to change. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements contained in this news release to reflect subsequent information, events, results or circumstances or otherwise. While we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date after the date stated herein.

Additional Information and Where to Find It

The issuance of the initial tranche of Common Stock at the closing of the merger does not require any action of stockholders of Authentidate. Thereafter, under the terms of the merger agreement, Authentidate shall file a proxy statement and related material to obtain stockholder approval of the issuance of all of the Common Stock potentially issuable to the AEON members.

BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTOR AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the proxy statement and other filings containing information about the Company and AEON may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from the Company at www.authentidate.com under the heading “Investors / SEC Filings” or by writing to the Secretary, Authentidate Holding Corp., at 300 Connell Drive, Berkeley Heights, NJ 07922.

Authentidate and AEON and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the Merger. Additional information regarding the interests of those participants and other persons who may be deemed participants in the Merger may be obtained by reading the proxy statement regarding the Merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph. Additional information regarding Authentidate’s directors’ and executive officers’ respective interests in Authentidate by security holdings or otherwise is set forth in Authentidate’s proxy statement relating to the 2015 annual meeting of stockholders filed with the SEC on April 17, 2015 and Authentidate’s proxy statement related to the January 20, 2016 special meeting of stockholders filed with the SEC on December 10, 2015. This press release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Authentidate Contacts:

James Carbonara, Hayden IR,

james@haydenir.com or (646) 755-7412

Brett Maas, Hayden IR,

Brett@haydenir.com or (646) 536-7331

Exhibit 99.3

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY

d/b/a AEON CLINICAL LABORATORIES

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 and 2013

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY

d/b/a AEON CLINICAL LABORATORIES

TABLE OF CONTENTS



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			1

CONSOLIDATED BALANCE SHEETS			2

CONSOLIDATED STATEMENTS OF OPERATIONS			3

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY			4

CONSOLIDATED STATEMENTS OF CASH FLOWS			5

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS			6 - 12

EisnerAmper LLP

111 Wood Avenue South

Iselin, NJ 08830-2700

T 732.243.7000

F 732.951.7400

www.eisneramper.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Peach State Health Management, LLC

We have audited the accompanying consolidated balance sheets of Peach State Health Management, LLC and Subsidiary, d/b/a Aeon Clinical Laboratories (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in members’ equity, and cash flows for each of the years in the two-year period ended December 31, 2014. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Peach State Health Management, LLC and Subsidiary, d/b/a Aeon Clinical Laboratories as of December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

LOGO

Iselin, New Jersey

December 18, 2015

New York | New Jersey | Pennsylvania | California | Cayman Islands

EisnerAmper is an independent member of PKF International Limited

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Consolidated Balance Sheets


	December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	4,154,775		$	2,955,711
Notes receivable		258,405			92,000
Inventory, net		104,459			—
Prepaid expenses and other current assets		188,132			57,620

Total current assets		4,705,771			3,105,331

Property and equipment, net		2,383,485			2,614,090

Other assets:
Due from related parties		500,000			—
Investment in Alpha Tissue, Inc.		453			41,019

Total other assets		500,453			41,019

Total assets	$	7,589,709		$	5,760,440

LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	551,300		$	48,164
Accrued expenses and other liabilities		308,111			375,187
Income tax payable		7,300			24,000
Due to shareholders		82,684			191,768

Total current liabilities		949,395			639,119
Deferred rental expense		20,250			—

Total liabilities		969,645			639,119

Commitments and contingencies
Members’ equity		7,485,564			5,450,966
Less: loans to shareholders		(865,500	)		(329,645	)

		6,620,064			5,121,321

Total liabilities and members’ equity	$	7,589,709		$	5,760,440

See notes to consolidated financial statements

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Consolidated Statements of Operations


	Year Ended December 31,
	2014			2013
Net revenues	$	24,100,076		$	15,485,604
Operating expenses:
Cost of revenues		3,973,563			2,106,173
Selling, general and administrative expenses		8,088,543			5,100,523

Total operating expenses		12,062,106			7,206,696

Income from operations		12,037,970			8,278,908

Other income (expense):
Charitable contribution - Aeon Foundation		(1,015,750	)		—
Interest income		3,160			1,579
Interest expense		(6,515	)		(4,697	)
Loss on equity method investment		(131,566	)		(58,981	)
Loss on write-off of note receivable		(92,000	)		—
Gain on sale of equipment		52,381			36,446
Miscellaneous income		18			—

Total other income (expense)		(1,190,272	)		(25,653	)

Income before provision for income taxes		10,847,698			8,253,255
Provision for state income taxes		23,250			24,000

Net income	$	10,824,448		$	8,229,255

See notes to consolidated financial statements

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Consolidated Statements of Changes in Members’ Equity


Balance, January 1, 2013	$	1,325,330
Net income		8,229,255
Distributions		(4,103,619	)

Balance, December 31, 2013		5,450,966
Net income		10,824,448
Distributions		(8,789,850	)

Balance, December 31, 2014	$	7,485,564

See notes to consolidated financial statements

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Consolidated Statements of Cash Flows


	Year Ended December 31,
	2014			2013
Cash flows from operating activities:
Net income	$	10,824,448		$	8,229,255

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		730,464			538,869
Loss on equity method investment		131,566			58,981
Loss on write-off of note receivable		92,000			—
Gain on sale of equipment		(52,381	)		(36,446	)
Deferred rent		20,250			—
(Increase) decrease in:
Inventory		(104,459	)		—
Prepaid expenses and other current assets		(130,512	)		73,380
Increase (decrease) in:
Accounts payable		503,136			(71,911	)
Accrued expenses and other liabilities		(67,076	)		(10,586	)
Income tax payable		(16,700	)		24,000

Total adjustments		1,106,288			576.287

Net cash provided by operating activities		11,930,736			8,805,542

Cash flows from investing activities:
Due from related parties		(500,000	)		—
Payments for purchases of property and equipment		(705,883	)		(1,874,410	)
Repayment of note receivables		—			103,000
Investment in Alpha Tissue, Inc.		(91,000	)		(100,000	)
Increase in loans to shareholders		(535,855	)		(329,645	)
Increase in due to shareholders		—			59,890
Repayment of due to shareholders		(109,084	)		—

Net cash used in investing activities		(1,941,822	)		(2,141,165	)

Cash flows from financing activities:
Members’ distributions		(8,789,850	)		(4,103,619	)

Net cash used in financing activities		(8,789,850	)		(4,103,619	)

Net change in cash and cash equivalents		1,199,064			2,560,758
Cash and cash equivalents - beginning of year		2,955,711			394,953

Cash and cash equivalents - end of year	$	4,154,775		$	2,955,711

Supplemental disclosures of cash paid:
Interest	$	2,786		$	—

Taxes	$	39,922		$	—

Non-cash investing activities:
Note receivable for sale of equipment	$	258,405		$	195,000

See notes to consolidated financial statements

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

NOTE A – ORGANIZATION AND BUSINESS

Peach State Health Management, LLC which conducts business under the name Aeon Clinical Laboratories (collectively the “Company”, “Aeon”) began operations in 2012 and is located in Gainesville, Georgia and is incorporated in Georgia. Aeon contracts with health care professionals to provide urine and oral fluid testing to their patients. The 4 primary tests provided are Medical Toxicology, Pharmacogenomics, Cancer Genetic Testing and Molecular Biology. Universal Billing Systems, LLC is a wholly owned subsidiary of the Company and is engaged in out sourced billing services for health care providers.

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

[2] Use of estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

[3] Revenue recognition:

The Company provides laboratory testing services. Billings for these services are reimbursed by third-party payers net of allowances for differences between amounts billed and the cash receipts from such payers. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’’) ASC-605 “Revenue Recognition ”, the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured.

The Company has limited experience and history to develop a reliable estimate of the provision for contractual adjustments (that is, the difference between established rates and expected third-party payer payments) and discounts (that is, the difference between established rates and the amount billable). Accordingly the Company recognizes revenue for these services upon cash receipt because the criteria to recognize revenues under ASC-605 have not been met at the time test results are delivered since the fee is not fixed and determinable until such time the third party payer remits payment. When the Company generates sufficient history as to allowances and discounts, revenues will be recognized upon the delivery of the test results.

[4] Cash and cash equivalents:

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less.

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

[5] Inventory:

Inventory consists of laboratory testing supplies and materials and is stated at lower of cost or market, on a first-in, first-out basis.

[6] Property and Equipment:

Property and equipment are stated at cost, less accumulated depreciation. Minor additions and renewals are recorded as expenses in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:


	Estimated Useful Life
Machinery and equipment		5-7 years
Furniture and fixtures		5-7 years
Leasehold improvements		15 years
Software		3-7 years

Long-lived assets held and used by the Company are reviewed for impairment, in accordance with FASB ASC Topic 360, “Property, Plant, and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed. At December 31, 2014 and 2013, the Company did not record any impairment charges.

[7] Income taxes:

The Company has elected to be taxed as an S Corporation for federal and certain state income tax purposes. Under this election, substantially all of the profits, losses, credits and deductions of the Company are passed through to the individual stockholders. Therefore, no provision or liability for income taxes has been included in these consolidated financial statements except for state and localities where the S Corporation status has not been recognized. The provision for income taxes consisting of current franchise and excise taxes for state and localities were $23,250 and $24,000 for the years ended December 31, 2014 and 2013, respectively.

The Company follows the accounting guidance concerning provisions for uncertain income tax positions. This clarified the accounting for income taxes by prescribing a minimum probability threshold that an uncertain tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company’s consolidated financial statements for the years ended December 31, 2014 and 2013.

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

[8] Deferred Rent:

Rent expenses for operating leases which included scheduled rent increases is determined by expensing the total amount of rent due over the life of the operating lease on a straight-line basis. The difference between the rent paid under the terms of the lease and the rent expensed on a straight-line basis is recorded as a liability. The deferred rent at December 31, 2014 and 2013 was $20,250 and $0 at December 31, 2014 and 2013, respectively.

[9] Advertising:

The Company expenses advertising costs as incurred. Such expenses were $203,742 and $114,422 for the years ended December 31, 2014 and 2013, respectively.

[10] Equity method investments:

Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors including, among others, representation on the Investee company’s Board of Directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee company’s individual accounts are not reflected within the Company’s consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the Investee company is reflected in the caption “Loss on equity method investment” in the consolidated statements of operations. The Company’s carrying value in an equity method Investee company is reflected in the caption “Investment in Alpha Tissue, Inc.” in the Company’s consolidated balance sheets. See Note F for further information.

When the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

[11] Recent Accounting Pronouncements:

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASU 2014-09”), which affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU must be applied for annual periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact on the consolidated financial statements of adopting the alternative guidance in ASU 2014-09 and has not determined the impact of adoption at this time.

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. ASU 2015-11 requires inventory measured using any method other than last-in, first-out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. Early application is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

NOTE C – CONCENTRATION OF CREDIT RISK

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At December 31, 2014 and 2013, the Company had approximately $3,904,775 and $2,705,711, respectively, in excess of FDIC-insured limits. The Company has not experienced any losses in such accounts.

NOTE D – NOTE RECEIVABLE

During December 2014, the Company entered into an agreement with an unrelated third party for the sale of certain equipment for $258,405. The note is non-interest bearing payable in monthly installments of $25,000 until the balance is paid and is due December 2015.

As of December 31, 2013, the Company had a non-interest bearing note receivable in the amount of $92,000. The original amount of the note was $195,000 for the sale of certain equipment and payments in the amount of $103,000 were received during 2013. During 2014, the Company determined the remaining balance to be uncollectable and the note was written-off.

NOTE E – PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2014 and 2013 consists of the following:


	December 31,			December 31,
	2014			2013
Machinery and equipment	$	3,412,679		$	3,050,481
Furniture and fixtures		105,043			113,187
Leasehold improvements		64,193			43,347
Software		106,560			57,000

		3,688,475			3,264,015
Less: accumulated depreciation		(1,304,990	)		(649,925	)

	$	2,383,485		$	2,614,090

The total depreciation expense was $730,464 and $538,869 for the years ended December 31, 2014 and 2013, respectively. Depreciation expense included in cost of revenues was $712,581 and $538,869, respectively, for the years ended December 31, 2014 and 2013.

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

NOTE F – INVESTMENT IN ALPHA TISSUE, INC.

During 2013, the Company invested in Alpha Tissue Inc. The investment is accounted for using the equity method and represents a 30% ownership in the corporation. A summary of the Company’s contributions to and investment in the corporation is as follows:


	2014			2013
Prior year investment balance	$	41,019		$	—
Contributions		91,000			100,000
Net loss		(131,566	)		(58,981	)

	$	453		$	41,019

NOTE G – LINE OF CREDIT

On June 30, 2014 the Company entered into a line of credit with an overall limitation of $1,000,000. Borrowings under the line of credit bear interest at the LIBOR Daily Floating Rate plus 2.5%, and are due on demand and expired on June 30, 2015. The line-of-credit agreement is collateralized by property and equipment, inventory, and receivables. The credit agreement requires compliance with certain financial covenants. There were no amounts outstanding on the line as of December 31, 2014.

The LIBOR Daily Floating Rate at December 31, 2014 was 0.085%.

NOTE H – LEASE COMMITMENTS

The Company leases office and warehouse space from a related party (see Note I) in 2014. In 2013, the Company leased office space on a month-to-month basis from a third-party. Rental expenses incurred under operating leases from third parties or related parties for the years ended December 31, 2014 and December 31, 2013 were $234,000 and $120,000, respectively.

The future minimum lease payments under non-cancelable operating leases are as follows for the years ending December 31:


	Total
2015	$	289,500
2016		295,500
2017		301,500
2018		307,500
2019		313,500
Thereafter		1,398,750

Total	$	2,906,250

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

NOTE I – RELATED PARTY TRANSACTIONS

The Company has a non-interest bearing, unsecured loan to the owners of the Company with no term of repayment. The outstanding balance at December 31, 2014 was $865,500 and is shown as a reduction of Members’ Equity.

The Company has made an advance in 2014 to a related party with whom they lease their office and warehouse space in the amount $500,000. The advance is non-interest bearing and has no stated maturity date and was repaid in March 2015.

During the year ended December 31, 2014, the Company made consulting payments amounting to $400,000 to a related party with common ownership and is included in selling, general and administrative expenses.

During the year ended December 31, 2014, the Company made a charitable contribution in the amount of $1,010,000 to Aeon Foundation, Inc. a tax exempt organization under section 501 (c) (3) of the Internal Revenue code. The Trustees of the foundation are also the shareholders of the Company.

NOTE J – COMMITMENTS AND CONTINGENCIES

During 2014 a sales contractor filed suit against the Company alleging that it had not been paid the full amount of commissions due under its agreement. The Company believes that the contractor was overpaid and is counter-suing for reimbursement of overpayments and for payment of a loan made to the sales contractor. Counsel for the Company intends to vigorously defend the claim and pursue the counterclaim and has not made any assertions as to the eventual outcome. The Company believes the resolution of this matter will not have a material effect on its financial position, result of operations or liquidity.

NOTE K – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through December 18, 2015, which represents the date these consolidated financial statements were available to be issued.

On November 19, 2015, the Company entered into a merger agreement with Authentidate Holdings Corp. (“Authentidate”) under which the Company will merge with a wholly owned subsidiary of Authentidate and be operated as a separate entity. Pursuant to the terms of the merger agreement the existing shareholders of Aeon will become holders of shares of Series E Preferred Stock of Authentidate issuable in tranches. At closing, Aeon shareholders will be issued Series E Preferred Stock convertible into 19.9% of the outstanding shares of the Authentidate’s common stock on the date of the closing of the merger transaction, and an additional number of Series E Preferred Stock convertible into 5% of the outstanding shares of the Authentidate’s common stock upon approval of the merger transaction by the shareholders of Authentidate. If Aeon achieves certain financial results during the next four years, the Aeon shareholders will be issued additional tranches of Series E Shares which, including the previously issued Series E Shares, will be convertible into 85% of the outstanding shares of Authentidate’s common stock (on a partially diluted basis as defined). The merger agreement also provides for the issuance of Series E Shares as bonus shares for the achievement of certain incremental financial results for the four fiscal years ending December 31, 2019, convertible into 5% of the outstanding shares of Authentidate’s common stock (on a partially diluted basis as defined). The holders of the Series E Shares will have certain preferential rights, including the right to vote separately as a class to nominate and elect one director for each 10% of the outstanding shares of the Authentidate’s common stock into which the outstanding Series E Shares shall be convertible. The merger will become effective upon completion of certain customary closing conditions.

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY d/b/a AEON CLINICAL LABORATORIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

In October 2015, the Company issued a promissory note in the aggregate principal amount of $450,000 to Authentidate. The note is unsecured and is not convertible into equity securities of Authentidate. The note bears interest at 20% per annum, payable in arrears, and is due upon the earlier of (i) October 28, 2016, or (ii) within 30 days of the closing of a sale of equity or debt securities of Authentidate, 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.

Exhibit 99.4

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY

d/b/a AEON CLINICAL LABORATORIES

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

PEACH STATE HEALTH MANAGEMENT, LLC AND SUBSIDIARY

d/b/a AEON CLINICAL LABORATORIES

TABLE OF CONTENTS



CONSOLIDATED BALANCE SHEET			1

CONSOLIDATED STATEMENTS OF OPERATIONS			2

CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS’ EQUITY			3

CONSOLIDATED STATEMENTS OF CASH FLOWS			4

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS			5 - 11

Peach State Health Management, LLC and Subsidiary d/b/a Aeon Clinical Laboratories

Consolidated Balance Sheet

September 30, 2015 (unaudited)


ASSETS
Current assets:
Cash and cash equivalents	$	6,980,394
Note receivable - related party		132,362
Inventory, net		71,066
Prepaid expenses and other current assets		103,641

Total current assets		7,287,463

Property and equipment, net		2,980,615

Total assets	$	10,268,078

LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	1,606,117
Accrued commissions		1,326,798
Other current liabilities		83,563
Income tax payable		28,961
Due to shareholders		215,097

Total current liabilities		3,260,536
Deferred rental expense		37,500

Total liabilities		3,298,036

Commitments and contingencies
Members’ equity		9,289,542
Less: loans to shareholders		(2,319,500	)

		6,970,042

Total liabilities and members’ equity	$	10,268,078

See accompanying notes to the financial statements .

Peach State Health Management, LLC and Subsidiary d/b/a Aeon Clinical Laboratories

Consolidated Statements of Operations


	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015			2014
	(unaudited)					(unaudited)
Net revenues	$	9,391,324	$	7,754,698		$	21,642,568		$	18,829,907
Operating expenses:
Cost of revenues		1,542,151		1,098,350			4,094,552			2,827,965
Selling, general and administrative expenses		5,036,612		1,699,316			10,627,764			5,596,344

Total operating expenses		6,578,763		2,797,666			14,722,316			8,424,309

Income from operations		2,812,561		4,957,032			6,920,252			10,405,598

Other income (expense):
Interest income		—		177			—			722
Interest expense		—		—			(12,987	)		—
Loss on equity method investment		—		(44,281	)		(453	)		(104,345	)
Loss on write-off of note receivable		—		(92,000	)		—			(92,000	)

Total other income (expense)		—		(136,104	)		(13,440	)		(195,623	)

Income before provision for income taxes		2,812,561		4,820,928			6,906,812			10,209,975
Provision for state income taxes		6,000		5,800			18,000			17,400

Net income	$	2,806,561	$	4,815,128		$	6,888,812		$	10,192,575

See accompanying notes to the financial statements .

Peach State Health Management, LLC and Subsidiary d/b/a Aeon Clinical Laboratories

Consolidated Statement of Changes in Members’ Equity

(unaudited)


Balance, January 1, 2015	$	7,485,564
Net income		6,888,812
Distributions		(5,084,834	)

Balance, September 30, 2015	$	9,289,542

See accompanying notes to the financial statements .

Peach State Health Management, LLC and Subsidiary d/b/a Aeon Clinical Laboratories

Consolidated Statements of Cash Flows


	Nine Months Ended
	September 30,
	2015			2014
	(unaudited)
Cash flows from operating activities:
Net income	$	6,888,812		$	10,192,575

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		731,675			547,848
Loss on equity method investment		453			104,345
Loss on write-off of note receivable		—			92,000
Deferred rent		17,250			13,500
(Increase) decrease in:
Inventory		33,393			(30,314	)
Prepaid expenses and other current assets		84,491			(29,111	)
Increase (decrease) in:
Accounts payable		1,054,807			470,518
Accrued commissions		1,058,476			—
Other current liabilities		43,774			(203,568	)
Income tax payable		21,661			(6,600	)

Total adjustments		3,045,980			958,618

Net cash provided by operating activities		9,934,792			11,151,193

Cash flows from investing activities:
Repayment of notes receivable		258,405			—
Repayment of notes receivable - related party		273,957			—
Repayment of due from related parties		500,000			—
Payments for purchases of property and equipment		(1,735,114	)		(668,138	)
Investment in Alpha Tissue, Inc.		—			(69,000	)
Increase in loans to shareholders		(1,454,000	)		(536,155	)
Increase (decrease) in due to shareholders		132,413			(102,303	)

Net cash used in investing activities		(2,024,339	)		(1,375,596	)

Cash flows from financing activities:
Members’ distributions		(5,084,834	)		(6,878,120	)

Net cash used in financing activities		(5,084,834	)		(6,878,120	)

Net change in cash and cash equivalents		2,825,619			2,897,477
Cash and cash equivalents - beginning of period		4,154,775			2,955,711

Cash and cash equivalents - end of period:	$	6,980,394		$	5,853,188

Supplemental disclosure of cash paid:
Interest	$	12,987		$	—

Taxes	$	18,000		$	—

Non-cash investing activities:
Note receivable for sale of equipment	$	406,319		$	—

See accompanying notes to the financial statements .

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

NOTE A – ORGANIZATION AND BUSINESS

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] Interim Financial Information:

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. The consolidated financial statements include all adjustments, consisting only of normal recurring adjustments that management of the Company believes are necessary for a fair presentation of the periods presented. These interim consolidated financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

[2] Principles of consolidation:

[3] Use of estimates:

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

[4] Revenue recognition:

The Company provides laboratory testing services. Billings for these services are reimbursed by third-party payers net of allowances for differences between amounts billed and the cash receipts from such payers. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC-605 “Revenue Recognition”, the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured.

[5] Cash and cash equivalents:

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less.

[6] Inventory:

Inventory consists of laboratory testing supplies and materials and is stated at lower of cost or market, on a first-in, first-out basis.

[7] Property and Equipment:


	Estimated Useful Life
Machinery and equipment		5-7 years
Furniture and fixtures		5-7 years
Leasehold improvements		10 years
Software		3-7 years

Long-lived assets held and used by the Company are reviewed for impairment, in accordance with FASB ASC Topic 360, “Property, Plant, and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed. At September 30, 2015, the Company did not record any impairment charges.

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

[8] Income taxes:

The Company has elected to be taxed as an S Corporation for federal and certain state income tax purposes. Under this election, substantially all of the profits, losses, credits and deductions of the Company are passed through to the individual stockholders. Therefore, no provision or liability for income taxes has been included in these consolidated financial statements except for state and localities where the S Corporation status has not been recognized. The provision for income taxes consisting of current franchise and excise taxes for state and localities were $6,000 and $5,800 for the three months ended September 30, 2015 and 2014, respectively. The provision for income taxes consisting of current franchise and excise taxes for state and localities were $18,000 and $17,400 for the nine months ended September 30, 2015 and 2014, respectively.

[9] Deferred Rent

[10] Advertising:

The Company expenses advertising costs as incurred. Such expenses were $24,320 and $61,500 for the three and nine months ended September 30, 2015 and $50,361 and $194,632 for the three and nine months ended September 30, 2014, respectively.

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

[11] Equity method investments:

[12] Recent Accounting Pronouncements:

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers ” (Topic 606) (“ASU 2014-09”), which affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU must be applied for annual periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact on the consolidated financial statements of adopting the alternative guidance in ASU 2014-09 and has not determined the impact of adoption at this time.

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. ASU 2015-11 requires inventory measured using any method other than last-in, first out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. Early application is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

NOTE C - CONCENTRATION OF CREDIT RISK

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At September 30, 2015, the Company had approximately $6,505,444 in excess of FDIC-insured limits. The Company has not experienced any losses in such accounts.

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

NOTE D – NOTE RECEIVABLE

N OTE E - P ROPERTY AND E QUIPMENT

Property and equipment at September 30, 2015 consists of the following:


Machinery and equipment	$	4,544,698
Furniture and fixtures		105,043
Leasehold improvements		64,143
Software		303,386

		5,017,270
Less: accumulated depreciation		(2,036,655	)

	$	2,980,615

The total depreciation expense was $243,892 and $731,675 for the three and nine months ended September 30, 2015 and $150,000 and $547,848 for the three and nine months ended September 30, 2014, respectively. Depreciation expense included in cost of revenues was $236,572 and $709,725 for the three and nine months ended September 30, 2015 and $145,000 and $450,000 for the three and nine months ended September 30, 2014, respectively.

NOTE G – LINE OF CREDIT

On June 30, 2014 the Company entered into a line of credit with an overall limitation of $1,000,000. Borrowings under the line of credit bear interest at the LIBOR Daily Floating Rate plus 2.5%, and are due on demand and expired on June 30, 2015. The line-of-credit agreement was collateralized by property and equipment, inventory, and receivables. The credit agreement required compliance with certain financial covenants.

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

NOTE H – LEASE COMMITMENTS

The Company leases office and warehouse space from a related party (see Note I) commencing in April 2014. In the first quarter of 2014, the Company leased office space on a month-to-month basis from a third party. Rental expenses incurred under operating leases from third parties or related parties for the three and nine months ended September 30, 2015 and 2014 were $78,000 and $234,000 and $78,000 and $186,000, respectively.

The future minimum lease payments under non-cancelable operating leases are as follows for the remaining three months ending December 31, 2015 and following years ending December 31:


	Total
2015	$	72,750
2016		295,500
2017		301,500
2018		307,500
2019		313,500
Thereafter		1,398,750

Total	$	2,689,500

NOTE I - RELATED PARTY TRANSACTIONS

The Company leases their office building and warehouse from a related party with common ownership. The lease commenced in April 2014 with a term of ten years. Rent expense amounted to $78,000 and $234,000 for the three and nine months ended September 30, 2015 and $78,000 and $156,000 for the three and nine months ended September 30, 2014.

The Company has a non-interest bearing, unsecured loan to the owners of the Company with no terms for repayment. The outstanding balance at September 30, 2015 was $2,319,500 and is shown as a reduction of Members’ Equity.

During 2014, the Company made an advance to a related party with whom they lease their office and warehouse space in the amount $500,000. The advance was non-interest bearing and had no stated maturity date and was repaid in March 2015.

During the nine months ended September 30, 2015, the Company sold equipment to a related party with common ownership for $258,405 and no gain or loss was recorded. The amount is payable in monthly installments of $25,000 until the balance is paid and does not bear interest. The balance outstanding as of September 30, 2015 is $0.

During the nine months ended September 30, 2015, the Company sold equipment to a related party with common ownership for $147,914 and no gain or loss was recorded. The amount is due September 30, 2016 and does not bear interest. The balance outstanding as of September 30, 2015 is $132,362 and is shown as Note receivable - related party.

PEACH STATE HEALTH MANAGEMENT, LLC d/b/a AEON CLINICAL

LABORATORIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)

NOTE I - RELATED PARTY TRANSACTIONS (Continued)

The Company has due to shareholders in the amount of $215,097 as of September 30, 2015 representing amounts owed by the Company for expenses paid by the shareholders on behalf of the Company. There are no terms of repayment and no interest due.

NOTE J – COMMITMENTS AND CONTINGENCIES

NOTE K – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through December 22, 2015, which represents the date these consolidated financial statements were available to be issued.

On November 19, 2015, the Company entered into a merger agreement with Authentidate Holdings Corp (“Authentidate”) under which the Company will merge with a wholly owned subsidiary of Authentidate and be operated as a separate entity. Pursuant to the terms of the merger agreement the existing shareholders of Aeon will become holders of shares of Series E Preferred Stock of Authentidate issuable in tranches. At closing, Aeon shareholders will be issued Series E Preferred Stock convertible into 19.9% of the outstanding shares of the Authentidate’s common stock on the date of the closing of the merger transaction, and an additional number of Series E Preferred Stock convertible into 5% of the outstanding shares of the Authentidate’s common stock upon approval of the merger transaction by the shareholders of Authentidate. If Aeon achieves certain financial results during the next four years, the Aeon shareholders will be issued additional tranches of Series E Shares which, including the previously issued Series E Shares, will be convertible into 85% of the outstanding shares of Authentidate’s common stock (on a partially diluted basis as defined). The merger agreement also provides for the issuance of Series E Shares as bonus shares for the achievement of certain incremental financial results for the four fiscal years ending December 31, 2019, convertible into 5% of the outstanding shares of Authentidate’s common stock (on a partially diluted basis as defined). The holders of the Series E Shares will have certain preferential rights, including the right to vote separately as a class to nominate and elect one director for each 10% of the outstanding shares of the Authentidate’s common stock into which the outstanding Series E Shares shall be convertible. The merger will become effective upon completion of certain customary closing conditions.

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