Agreement - Authentidate Holding Corp., Authentidate Inc. and Internet Venture Capital LLC
AGREEMENT
This Agreement (the "Agreement") is made and entered into this __th day of
May 2001, by and between AUTHENTIDATE HOLDING CORP. (f/k/a BITWISE DESIGNS,
INC.), a Delaware corporation ("Holding"), AUTHENTIDATE, INC., a Delaware
corporation ("Authentidate"), and INTERNET VENTURE CAPITAL, LLC, a Delaware
limited liability company ("IVC"). Holding, Authentidate and IVC may be referred
to herein individually as a "Party" or collectively as the "Parties."
RECITALS
WHEREAS, Authentidate has created a service accessible through the
Internet allowing users to verify the date, time, content and authorship of
documents, digital files and other images;
WHEREAS, Holding is the holder of a majority of the outstanding shares of
Authentidate;
WHEREAS, Authentidate and Holding wish to develop and market a service
permitting the authentication and registration of autographed sports and
entertainment memorabilia;
WHEREAS, IVC has the ability to assist in the development and
implementation of a service permitting the authentication and registration of
autographed sports and entertainment memorabilia in the United States and
international markets; and
WHEREAS, the Parties desire to enter into this Agreement as the definitive
agreement governing the manner through which the Parties will develop and market
a service permitting the authentication and registration of autographed sports
and entertainment memorabilia;
NOW, THEREFORE, the Parties agree as follows.
ARTICLE I
DEFINITIONS
1.0 For the purposes of this Agreement:
"Affiliates" of any Party means any entity that controls, is controlled by
or is under common control with such Party. For purposes of this definition,
"control" will mean the possession, directly or indirectly, of a majority of the
voting power of such entity (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Authentidate License" means the non-exclusive license or licenses to the
Authentidate Software to be granted to Newco by Authentidate to operate the
Service in the Territory.
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"Authentidate Service" means the service provided by Authentidate whereby
data may be date and time stamped through application of the Authentidate
Software.
"Authentidate Software" means the computer-readable media incorporating
the Authentidate Technology.
"Authentidate Technology" means the intellectual property designed to
verify the authenticity of digital data by employing a secure clock to stamp the
date and time on captured data and which is the subject of a certain patent
application (No. 09/259,135) filed with the United States Patent and Trademark
Office and all continuations, continuations in part, reissues, reexaminations
and divisions, and foreign counterparts thereof ("Related Patents").
"Board of Directors" means the Board of Directors of Newco as defined in
Section 6.1 off this Agreement.
"Business Day" means any day on which the New York Stock Exchange conducts
regular trading activities.
"Business Plan" means the Business Plan developed by Newco to offer the
Service in the Territory through Newco pursuant to Section 5.1(a).
"Common Stock" means the shares of Newco Common Stock, par value $.001 per
share.
"Improvements" means (i) all derivative works, discoveries and/or
inventions, whether patentable or not, made by Authentidate or a third-party,
acting alone or jointly, that constitutes a modification, enhancement, extension
or improvement of the Authentidate Technology and (ii) all Intellectual Property
developed by Authentidate or a third-party, acting alone or jointly, including
any and all applications or registrations therefor.
"Intellectual Property" means, wherever existing in the world, (i)
patents, whether in the form of utility patents or design patents, and all
pending patent applications for registration thereof, (ii) trademarks, trade
names, service marks, domain names, designs, logos, trade dress and trade
styles, whether or not registered, and all pending applications for registration
thereof, (iii) copyrights, whether or not registered, and all pending
applications for registration thereof, (iv) know-how, inventions, research
records, trade secrets, confidential information, product designs, engineering
specifications and drawings, technical information, formulas, customer lists,
supplier lists and market analyses, (v) computer software and programs, and
related flow charts, programmer notes, documentation, updates, and data, whether
in object or source code form, and (vi) all other similar intellectual property
rights, whether or not registered.
"Newco" means a C corporation to be organized by the Parties which will
serve as the vehicle through which the Parties will develop and market the
service permitting the authentication and registration of autographed sports and
entertainment memorabilia.
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"Service" means the authentication process developed, and to be developed,
by Newco to authenticate and register sports and entertainment memorabilia.
"Territory" means all countries except as limited to the extent necessary
to avoid any conflict with the rights previously granted to Authentidate
International Holdings, A.G. and its subsidiaries, if any, pursuant to the Joint
Venture Agreement, dated March 2, 2000, between Holding, Authentidate and
Windhorst New Technologies, AGi.G.
"Transaction License" means a non-exclusive license granted by
Authentidate to use the Authentidate Service in accordance with the terms
therein.
"Transfer" means the direct or indirect sale, transfer, pledge, assignment
or other disposition of or mortgage, hypothecation, or other encumbrance or
permitting or suffering of any encumbrance of all or any part of the equity
interests in Newco.
ARTICLE II
PURPOSE AND SCOPE OF AGREEMENT
2.1 Condition Precedent
Subject to the initial payment by Holding to Newco of $250,000 as set
forth in Section 3.1(b)(2) of this Agreement, the remaining obligations of
Holding under this Agreement shall not take effect until Holding completes a
financing of not less than $10,000,000 (the "Financing").
2.2 Purpose
(a) The Parties jointly undertake, within the Territory, and through
Newco to establish the Service permitting the authentication and registration of
sports, entertainment and other memorabilia. The Service is a multi-step process
whereby a unique code is dynamically generated for and attached to each item of
memorabilia and then registered and reserved on Newco's website. Newco's
customers will receive some form of a registration containing information about
the item, including an identification code. The registration record will be
administered by Newco so that only one such record will be valid at any given
time. The Service may evolve as required over time.
(b) Newco will initially establish the Service in the United States and
in such other countries located in the Territory as shall be determined by the
Board of Directors.
(c) Except as explicitly set forth in this Agreement, neither Holding,
Authentidate nor IVC, nor their respective Affiliates, shall have any obligation
to conduct business exclusively with the other Party, to offer other business
opportunities to any other Party, or refrain from competition in any manner
whatsoever regardless of whether the Parties are jointly engaged in (or may also
engage in) a related activity at any time.
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2.3 No Partnership
Nothing in this Agreement shall be construed as creating between the
Parties a partnership, fiduciary or other similar relationship or a joint
venture except as expressly provided for herein. Nothing in this Agreement shall
create or imply any exclusive relationship or any obligation to inform any other
Party, offer to any other Party or to include any other Party in any opportunity
which may be available to one of the Parities in the future except as provided
in the License.
ARTICLE III
CAPITALIZATION OF A-GRAPH
3.1 Initial Capitalization
(a) Upon its formation, Newco shall have an authorized capitalization of
2,000,000 shares of Common Stock, par value $.001 per share, and 500,000 shares
of Preferred Stock, par value $.10 per share.
(b) In consideration of the issuance of shares in Newco:
(i) IVC or affiliates of IVC shall be given credit, as a capital
contribution, for $250,000 of equipment and other assets,
including development costs which IVC contributed to the
business development of AuthentiGraph.com, Inc. prior to the
date of this Agreement; the conversion of the IVC Contribution
into Newco equity shall be in full settlement of any and all
claims IVC may have against Holding, Authentidate and their
Affiliates arising out of the development of the Service;
(ii) Subject to Section 2.1 of this Agreement, Holding shall invest
an aggregate of $1 million in Newco, according to the
following schedule: $250,000 paid to Newco within 5 days from
the date this Agreement is executed; $250,000 upon the
execution of an employment agreement between Newco and the
person selected to be the Chief Executive Officer of Newco;
$250,000 after Newco's business plan has been reviewed and
approved by the CEO and Board of Directors of both Holding and
Authentidate; and assuming other conditions are satisfied,
$250,000 six months after the Initial Closing.
3.2 Shares of Common Stock of Newco (the "Newco Shares")
The initial equity interests in Newco shall be held as follows:
(a) Holding shall own 100,000 shares of the Common Stock of Newco;
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(b) IVC shall own 100,000 shares of the Common Stock of Newco; and
(c) IVC shall deliver to Nicholas Themelis such number of the
Newco Shares owned by IVC as shall equal 20% of the amount of
Newco Shares owned by IVC (the "Themelis Shares"). The
Themelis Shares shall be subject to such restrictions as
specified in Article V of this Agreement.
3.3 Representations Regarding Themelis Shares
Nicholas Themelis hereby represents and warrants that the grant to
him of the Themelis Shares is in consideration of his waiver to all compensation
due him pursuant to Article X(D) of his Employment Agreement with Holding, dated
February 28, 2000 and that neither Holding, Newco, nor any subsidiary or
affiliate of Newco has any further obligation to grant Themelis compensation
relating to the Themelis Shares. Themelis hereby, releases and discharges
Holding, Newco, their subsidiaries, affiliates, directors, officers, successors,
present employees, former employees, agents, representatives and assigns (the
"Released Persons") from any and all claims, demands or causes of action of any
kind or nature whatsoever which Themelis may have or could claim to have against
the Released Persons, from the beginning of the world up to the date of this
Agreement arising out of Article X(D) of the February 28, 2000 Employment
Agreement.
3.4 Additional Capital
(a) Holding will not be under any obligation to contribute additional
capital to Newco or be responsible for any debts or obligations of Newco and all
current intercompany obligations between Newco and Holding outstanding as of the
date of this Agreement shall be applied against Holding's capital contribution.
(b) Subsequent to the execution of this Agreement, the Parties agree to
seek additional financing to support the Parties' purpose, as described in
Article II of this Agreement, in entering into this Agreement.
ARTICLE IV
CLOSING
4.1 Formation of Newco
(a) At or prior to the Closing, the Parties shall cause to be
formed under the laws of the State of the State of Delaware a new corporation
("Newco") whose corporate name shall be as follows:
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(i) In the event that Authentidate and Holding are able to
secure the name AuthentiGraph from the owner of the trademark
"AuthentiGraph", then the name of Newco shall be
AuthentiGraph;
(ii) In the event Authentidate and Holding are unable to
secure the name AuthentiGraph, the name of Newco shall be
AuthentidateSE , Inc., or such other name upon which the
Parties mutually agree.
(b) Upon its formation, Newco shall execute an Agreement whereby
it consents to be bound to the terms of this Agreement applicable to it.
4.2 Closing
(a) The Closing shall occur at the offices of Goldstein & DiGioia,
LLP, 369 Lexington Ave., New York, NY 10017, or at such other place as shall be
agreeable to the parties, at 1:00 p.m. , Eastern Time, on May 18, 2001 or such
other date as be agreeable to the parties.
(b) At the Closing the following actions shall be taken:
(i) The certificates representing the number of Shares of
Common Stock issuable to Holding and IVC, as set forth in Section 3.1 of this
Agreement, shall be issued to Holding and IVC;
(ii) Authentidate shall deliver to Newco a non-exclusive
Transaction License Agreement governing Newco's use of the Authentidate Service;
(iii) The Themelis Shares shall be executed and delivered to
Nicholas Themelis; and
(iv) All agreements shall be executed by the parties
simultaneously at the Closing.
ARTICLE V
SHARE CERTIFICATES; TRANSFERS OF SHARES
5.1 Share certificates if issued by Newco shall be in registered form.
5.2 The following legends shall be placed on the certificate(s)
evidencing the Newco Shares:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE
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TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
Transfer of the shares represented by this certificate is restricted
by the terms of a certain Agreement dated as of May 7, 2001, a copy
of which is on file at the office of the Company. No sale,
assignment, pledge, encumbrance or other transfer shall be effective
unless and the terms and conditions of the Agreement shall have been
complied with in full.
5.3 Right of First Refusal.
(a) Subject to Section 5.4, whenever and as often as any Party
desires to sell any Newco Shares (referred to in Sections 5.3 and 5.4 as
"Restricted Stock"), such proposed sale must be for an aggregate consideration
of at least $100,000 and pursuant to a bona fide written offer to purchase such
shares. In such event, the Party desiring to sell Restricted Stock (the "Selling
Shareholder") shall give written notice to each other Party (for purposes of
Sections 5.3 and 5.4 each, an "Offeree" and collectively, the "Offerees") and
also to Newco to such effect, enclosing a copy of such offer and specifying the
number of shares of Restricted Stock that the Selling Shareholder desires to
sell, the name of the person or persons to whom the Selling Shareholder desires
to make such sale and the consideration per share of Common Stock that has been
offered in connection with such offer. In the event that such consideration
includes non-cash consideration, the dollar value of such non-cash consideration
shall be its fair market value, as reasonably determined by the Board of
Directors ("Fair Market Value").
(b) Upon receipt of the Notice, the Offerees shall initially have
the first right and option to purchase the shares proposed to be sold for the
same consideration, at the same purchase price and on the same terms as
specified in the Notice, pro rata on the basis of the number of shares of Common
Stock then held by them, exercisable for 20 Business Days after service of the
Notice. Failure of any Offeree to respond to the Notice within such 20-Business
Day period shall be deemed to constitute a notification to the Selling
Shareholder of such Offeree's decision not to exercise the first right and
option to purchase shares of Restricted Stock under this Section 5.3. If any
Offeree fails to exercise his, her or its first right and option, the Selling
Shareholder shall give written notice to each of the other Offerees who has
elected to purchase his, her or its pro rata share of the shares of Restricted
Stock proposed to be transferred, and each such Offeree shall have the right,
exercisable for a period of three days from the date of receipt of such notice,
to purchase the remaining shares of Restricted Stock, pro rata on the basis of
the number of shares of Common Stock then held by all such electing Offerees
exercising such
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right to purchase such remaining shares or in such other proportions as they may
agree. An Offeree may exercise his, her or its right and option to purchase such
Restricted Stock by giving written notice of exercise to the Selling Shareholder
and to the Company within the period or periods specified above, specifying the
date (not later than three days from the date of expiration of all applicable
first rights and options to purchase shares under this paragraph) upon which
payment of the purchase price for the shares purchased pursuant to this
paragraph shall be made. The Selling Shareholder shall deliver to the Offeree(s)
at Newco's principal office, at least one day prior to the payment date, wire
transfer instructions (if funds are to be wired) and, prior to the close of
business on the payment date specified in such notice, the certificate or
certificates representing the shares being purchased by the Offeree(s), properly
endorsed for transfer, free and clear of any restrictions, Liens or claims,
against payment of the purchase price therefor by the Offeree(s) in immediately
available funds.
(c) In the event that all of the shares of Restricted Stock
proposed to be transferred are not purchased by the Offerees, Newco shall have
the right and option to purchase the balance of the shares proposed to be
transferred for the same consideration, at the purchase price per share
specified in the Notice and on the same terms as specified in the Notice,
exercisable for 15 Business Days after expiration of the option period set forth
in Section 5.3 (b). Failure of Newco to respond to such Notice within such 15
day period shall be deemed to constitute a notification to the Selling
Shareholder of Newco's decision not to exercise the right and option to purchase
shares of Restricted Stock under this Section 5.3. Newco may exercise its right
and option to purchase such Restricted Stock by giving written notice of
exercise to the Selling Shareholder within such 15-Business Day period,
specifying the date (not later than three days from the date of such notice)
upon which payment of the purchase price for the shares shall be made. The
Selling Shareholder shall deliver to Newco's principal office, at least one day
prior to the payment date, wire transfer instructions (if funds are to be wired)
and, prior to the close of business on the payment date specified in such
notice, the certificate or certificates representing the shares being purchased
by Newco, properly endorsed for transfer, free and clear of any restrictions,
Liens or claims, against payment of the purchase price therefor by Newco in
immediately available funds.
(d) If all the shares of Restricted Stock proposed to be
transferred are not purchased by the Offerees and Newco in accordance with this
Section 5.3, the Selling Shareholder shall not be required to sell any of the
shares of Restricted Stock proposed to be transferred to the Offerees or to
Newco, and, during the 60-day period commencing on the expiration of the rights
and options provided for in this paragraph, may sell all (but not less than all)
of such shares to the transferee named in the Notice for a consideration equal
to or greater than the consideration specified in the Notice, free of the
restrictions contained in Section 5.3 (but subject to the other terms and
conditions hereof).
(e) Notwithstanding the foregoing, any Party shall have the right
to transfer and sell up to 10% of the shares of Common Stock beneficially owned
on the date hereof.
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(f) For the purposes of this Section 5.3, the term "Common Stock"
shall be deemed to include the Themelis Shares.
5.4 Co-Sale Rights.
(a) Whenever and as often as any Party shall receive a bona fide
offer to purchase any shares of Restricted Stock from a prospective purchaser
that the Selling Shareholder wishes to accept, each Offeree shall have the
right, at his, her or its option, either to exercise his, her or its rights
under Section 5.3 or to participate in the sale to the prospective purchaser
pursuant to this Section 5.4. The Selling Shareholder shall use his, her or its
best efforts to arrange for the sale to the prospective purchaser of, in the
aggregate, such shares of Common Stock held by the Offerees as shall equal the
number of shares proposed to be sold by the Selling Shareholder. For purposes of
this Section 5.4, an Offeree may elect to sell Common Stock at the purchase
price per share specified for the Common Stock in the Notice. If the prospective
purchaser will not purchase all of the shares of Restricted Stock and Common
Stock that the Selling Shareholder and the electing Offerees wish to sell
pursuant to this Section 5.4, the number of Restricted Shares and shares of
Common Stock the Selling Shareholder and Offerees shall be entitled to sell
shall be reduced on a pro rata basis to an amount equal to the aggregate number
of Restricted Shares and shares of Common Stock the prospective purchaser is
willing to purchase. The number of shares each Offeree shall be entitled to sell
to such prospective purchaser shall be determined pro rata based on the relative
number of shares of Common Stock owned by each Offeree. An Offeree may exercise
his, her or its right under this paragraph by written notice given within seven
days after receipt of the Notice specifying the number of shares of Common Stock
that such Offeree wishes to sell.
(b) If none of the Offerees demand the purchase of any of their
shares of Common Stock as provided by subsection 5.4, then the Selling
Shareholder shall be free to transfer, in accordance and in full compliance with
the terms and provisions of this Agreement, and sell his shares of Restricted
Stock not purchased by any Offeree, but only to the transferee designated in the
Notice and upon the same terms and conditions stated in the Notice within 60
days of the service of the Notice. Thereafter, any remaining shares of
Restricted Stock proposed to be transferred by any Party shall again be
restricted by, and may not be transferred without full compliance with, this
Agreement.
(c) Notwithstanding the foregoing, any Party shall have the right
to transfer and sell up to 10% of the shares of Common Stock beneficially owned
on the date hereof.
(d) For the purposes of this Section 5.4, the term "Common Stock"
shall be deemed to include the Themelis Shares.
5.5 At the request of the underwriter in the initial public offering of
the Common Stock of Newco, holders of shares of Common Stock of Newco, including
the shares issuable upon exercise of the Themelis Options, agree to enter into a
Lock-up Agreement with the
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Underwriter for a period of time not to exceed twelve months, or such other
shorter period of time requested by the underwriter, from the date of the
initial public offering.
5.6 Family Gifts and Transfers to Affiliates. Notwithstanding the rights
granted to the Parties pursuant to sections 5.3 and 5.4 of this Agreement, any
Party at any time, may transfer any shares of Common Stock which he may now or
hereafter own to (a) any immediate family member or any trust or custodial
account for the sole benefit of himself or members of his immediate family and
(b) in accordance with applicable laws of descent and distribution, provided, in
each case, that the transferee of any such Shareholder agrees to the terms of
this Agreement. In addition, any Party may Transfer its interest in Newco to an
Affiliate of such Party, provided that such any such Affiliate agrees to the
terms of this Agreement.
5.7 Any Transfer by a Party of an interest in Newco shall be effective
only upon the execution and delivery by the transferor of an appropriate
irrevocable and unconditional guarantee to continue to be bound by the
provisions of this Agreement and the By-laws and Charter of Newco together with
instruments of assumption under which the Affiliate agrees to be bound by this
Agreement and the By-laws and Charter of Newco. An assignment or Transfer shall
not release the transferor of any of its obligations hereunder or under the
By-laws and Charter of Newco.
5.8 Any Party may Transfer this Agreement and all of its rights and
obligations hereunder to any Party acquiring all or substantially all of the
business of such Party whether by merger, sale of assets or otherwise.
ARTICLE VI
BUSINESS PLAN OF A-GRAPH
6.1 Business Plan
(a) The individual appointed to be the Chief Executive Officer of
Newco will develop promptly the Business Plan for each of three fiscal years of
Newco. The Business Plan shall include, but not be limited to, a description of
the business, marketing, technology and operations of Newco.
(b) Newco shall initially draft the first Business Plan which
shall include a strategy for developing the Service in the United States during
the year 2001.
(c) No Party shall have the right to represent any other Party in
any negotiations with third parties nor enter into any agreement with a third
party for the account of the other Parties or their joint account, without the
prior written approval of the unrepresented Party. The Party engaging in such
unauthorized conduct and/or causing liability therefrom shall be in breach of
this Agreement and shall hold the other Parties harmless for any claims raised
by a third party.
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ARTICLE VII
MANAGEMENT OF NEWCO
7.1 Board of Directors
(a) The business and affairs of Newco will be managed initially
under the direction of a seven person Board of Directors, consisting of the
following persons: two individuals to be nominated by IVC; two individuals to be
nominated by Holding; the individual elected to serve as the Chief Executive
Officer of Newco and two individuals selected by the five other individuals. The
Parties agree to vote their shares for such persons.
(b) The Board of Directors shall oversee strategic planning and
the implementation of the Business Plans.
(c) The consent of the IVC and Holding designees to the Board of
Directors shall be required to approve any transaction which will result in a
Change of Control of Newco. For the purposes of this section, a "Change of
Control" of Newco shall be deemed to have occurred if there shall be consummated
(i) any consolidation or merger of the Newco in which Newco is not the
continuing or surviving corporation or pursuant to which shares of Newco's
Common Stock would be converted into cash, securities or other property, other
than a merger of Newco in which the holders of Newco's Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of Newco, or (iii) the
stockholders of Newco approve any plan or proposal for the liquidation or
dissolution of Newco, or (iv) any person (as such term is used in Sections 13(d)
and 13(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 20% or more of Newco's outstanding Common Stock,
except in connection with a transaction approved by the Board of Directors; or
(v) during any period of two consecutive years, individuals who at the beginning
of such period constituted the entire Board of Directors shall cease for any
reason to constitute a majority thereof unless the election, or the nomination
for election by Newco's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(d) With respect to the persons nominated by Holding and IVC to
serve on the Board of Directors, in the event that the position of a Director
held by such person becomes vacant, for any reason, the Parties agree to cause
their shares to be voted to elect as a replacement for such Director a person
nominated by either the party who nominated the Director whose position is
vacant.
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7.2 Meetings of the Board of Directors
(a) Notwithstanding mandatory Delaware law, the following
provisions shall be applicable to the meetings of the Board of Directors, unless
otherwise determined by the Board of Directors of Newco:
(i) The Board of Directors shall hold at least one meeting
per quarter either in person or by conference call.
(ii) Any two members of the Board of Directors may at any
time call for a special meeting of the Board of Directors upon five (5) Business
Days prior notice to the Members of the Board of Directors, specifying the date
and agenda of the meeting. If the member required to specify the time and place
of the meeting fails to do so within twenty-four hours of receipt of a request
therefor, the member calling for the special meeting shall specify the time and
place within 24 hours thereafter. Such notice may be waived in writing before or
after such meeting or by attendance at such meeting. A member may propose an
agenda item for discussion at such meeting by written notice to the other
members, unless waived. In addition, any item which the members agree to discuss
at a Board of Directors meeting shall be considered to be an agenda item at such
meeting.
(iii) Regular meetings of the Board of Directors shall be held
at the principal offices of Newco, unless the members establish any other place
for meetings by mutual agreement. Special meetings shall be held in the location
and at the time specified (in accordance with this subsection) by the member
which did not call the meeting.
(iv) Members of the Board of Directors may participate in
such meetings by means of a conference telephone or similar means of
communication if all persons participating in the meeting are able to hear one
another, and any such Director shall be deemed to be present at such meeting.
Any action that may be taken at a meeting may also be taken by unanimous written
consent.
(v) Meetings of the Board of Directors may be attended by
guests invited by the members of the Board of Directors pursuant to the
unanimous approval of the Board of Directors.
7.3 Chief Executive Officer
(a) Until such time as a Chief Executive Officer of Newco is
employed by Newco pursuant to Section 7.3(b) of this Agreement, Mr. John T.
Botti shall act as the interim President and Chief Executive Officer of Newco
(b) As soon as possible after the execution and delivery of this
Agreement, the Board of Directors shall appoint the Chief Executive Officer of
Newco (the "Newco CEO") who shall have the following duties and
responsibilities:
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(i) to prepare reports and recommendations for presentation
to the Board of Directors, including, without limitation, in respect of
decisions which require the approval of the shareholders of Newco;
(ii) to prepare necessary Business Plans for Newco for
approval by the Board of Directors as well as such overall strategic, marketing,
advertising and other general plans which require approval by the Board of
Directors;
(iii) to prepare proposals for investment by the Board of
Directors;
(iv) to implement the resolutions of the Board of Directors;
(v) to advise, supervise and coordinate the Newco business,
operations and management; and
(vi) to oversee all day to day operating aspects of the
business of Newco.
(b) The Newco CEO shall report to the Board of Directors.
7.4 Accounting
(a) Newco shall keep all books of accounts and make all financial
reports in accordance with the standards prescribed by United States laws and
regulations and conform to Generally Accepted Accounting Principles in the
United States. Newco shall prepare (1) preliminary financial statements, within
thirty days after the end of each of the first three quarters of it's fiscal
year, followed by unaudited finalized versions thereof within five days
thereafter; (2) unaudited finalized financial statements, including without
limitation a balance sheet and income statement, within thirty days after the
end of the fourth quarter and its entire fiscal year; (3) audited financial
statements within sixty days of the end of its entire fiscal year; and (4) such
further reports as shall be required by the Board of Directors. Copies of all
such reports shall immediately be forwarded to IVC, Holding and Authentidate.
Newco shall provide any financial statement required by Holding to meet its
reporting requirements as a public company, including audited financial
statements within 60 days of Newco's the fiscal year end. Newco shall
additionally retain or employ a qualified accountant to prepare the quarterly
financial statements and maintain its accounting records on a weekly basis.
(b) Certified Public Accountants
Newco shall, at its expense, appoint a firm of certified public
accountants of good repute, and acceptable to the firm of accountants of
Holding, to audit its books of account for each accounting period. Said
certified public accountants shall issue an audit report before the regular
meeting of Shareholders, copies of which shall be forwarded to each Party. Each
audit report shall be in reasonable detail and shall be in conformance with
generally accepted accounting principles. Said accountants shall prepare all
Federal, state and local income tax returns
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according to the timetables established by the tax authorities. Sales tax
returns, if applicable, will be prepared by Newco.
(c) Right of Inspection
At all times after Newco's incorporation, each Party shall have the
right by its duly authorized representative or accountant to inspect and have
full access to all properties, books of account, records and the like of Newco
and Newco shall furnish to the requesting Party all information concerning the
same which the requesting Party may reasonably require in connection with a
complete examination thereof, and the requesting Party shall have the right to
inspect and make copies from the books and records of Newco at all reasonable
times, upon reasonable notice.
(d) Fiscal Year
Newco shall initially adopt June 30 as the end of its fiscal year.
ARTICLE VIII
ADDITIONAL OBLIGATIONS
8.1 Upon execution of this Agreement and in further consideration for
the issuance of the Newco Shares, IVC shall use its best efforts to obtain a
general release in favor of Holding, Authentidate, Newco and such other persons,
if any, as determined by the Board of Directors concerning the Parties' prior
business relationships with third parties..
(b) IVC hereby releases Holding, Authentidate, Newco, William
McLean, Siupeli Malamala and their affiliates, agents and employees, from any
and all liabilities owing to it and its affiliates arising out of any act or
omission prior to the date of this Agreement relating to any business or
proposed business activity of Newco, William Fleming, TracerCode, Total Sports
Concepts, Inc. and/or affiliated parties.
8.2 As soon as practicable after the Closing, Newco shall obtain general
liability insurance of not less than $1,000,000 and naming Holding and IVC as
additional insureds.
8.3 Upon or as soon as practicable after the Closing, Newco shall enter
into employment agreements with Siupeli Malamala and William McLean, in the form
annexed as Exhibits 8.3 (a) and (b) to this Agreement.
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ARTICLE IX
OTHER RIGHTS
9.1 Newco Name; Trademarks and Other Rights
(a) Authentidate and Holding hereby covenant, at its cost, to be
no more than $25,000, to take all actions reasonably necessary to secure
protection for Newco of the name, Trademark and domain name "AuthentiGraph,"
including to undertake prosecution or defense of litigation to establish or
protect Newco's interest in the name AuthentiGraph. Newco will be responsible
for the cost above this limit. Newco recognizes that the domain name
"AuthentiGraph" is currently held by an unrelated third party and is not
currently available.
(b) Authentidate acknowledges that the title to the research
performed by Cap Gemini of America, Inc. regarding the Service shall be
transferred to Newco.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 Mutual Representations and Warranties
(a) Representations and Warranties. Each Party represents and
warrants to each other Party that such Party has the full corporate right, power
and authority to enter into this Agreement and to perform the acts required of
it hereunder; and the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate or contravene any applicable law or regulation or any agreement
to which such Party is a party or by which it is otherwise bound, and when
executed and delivered by such Party, this Agreement will constitute the legal,
valid and binding obligation of such Party, enforceable against such Party in
accordance with its terms.
10.2 Representations and Warranties of Holding and Authentidate
(a) Holding and Authentidate represent and warrant that:
(i) to their knowledge, Authentidate is the sole and
exclusive owner of the Authentidate Sofware, free and
clear of any claims, liens, charges or encumbrances;
(ii) Authentidate has filed a patent application with respect
to Authentidate Technology with the United States Patent
and Trademark Office and Authentidate is aware of no
impediments to registration pending oppositions thereto;
(iii) Holding has transferred to Authentidate such of its
interest in the Authentidate Technology as necessary to
protect Newco's interest as established by this
Agreement and covenants that it will transfer to
Authentidate any such future rights that it may obtain
in the Authentidate Technology;
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(iv) Subject to the license granted to Authentidate
International Holdings, A.G., Authentidate and Holding
have neither licensed the Authentidate Software to any
other person or entity in a manner which may interfere
with the use thereof by Newco; and
(v) to the best knowledge of Holding and Authentidate, there
are no restrictions, whether by contract, operation of
law, or otherwise, on their ability to grant to Newco
the Authentidate License, subject to the License granted
to Authentidate International Holdings, A.G.
10.3 Representations and Warranties of IVC
IVC hereby represents and warrants that:
(a) It is an "Accredited Investor" as that term is defined in
Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
(b) IVC has conducted its own due diligence review of Holding,
Authentidate and Newco to the extent it deems necessary and has not relied on
the statements, advice or recommendations or any other person or entity in
connection with the transactions contemplated hereby.
(c) It has such knowledge and experience in finance, securities,
investments and other business matters so as to be able to protect its interests
in connection with this transaction.
(d) It understands the various risks of an investment in Newco as
proposed herein and can afford to bear such risks, including, but not limited
to, the risks of losing its entire investment.
(e) It acknowledges that no market for the shares of common stock
of Newco presently exists and none may develop in the future and that it may
find it impossible to liquidate its investment at a time when it may be
desirable to do so, or at any other time.
(f) It has been advised that the Newco Shares have not been
registered under the Securities Act, and that all the foregoing securities will
be issued on the basis of the statutory exemption provided by Section 4(2) of
the Securities Act and/or Regulation D promulgated thereunder relating to
transactions by an issuer not involving any public offering and under similar
exemptions under certain state securities laws; that this transaction has not
been reviewed by, passed on or submitted to any Federal or state agency or
self-regulatory organization where an exemption is being relied upon, and that
Newco's reliance thereon is based in part upon the representations made by IVC
in this Agreement. IVC acknowledges that it has been informed by Holding,
Authentidate and Newco, or is otherwise familiar with, the nature of the
limitations imposed by the Securities Act and the rules and regulations
thereunder on the transfer of securities. In particular, IVC agrees that no
sale, assignment or transfer of the Newco Shares
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shall be valid or effective, and Newco shall not be required to give any effect
to any such sale, assignment or transfer, unless (i) the sale, assignment or
transfer of the foregoing securities are registered under the Securities Act,
(ii) the foregoing securities are sold, assigned or transferred in accordance
with all the requirements and limitations of Rule 144 under the Securities Act,
it being understood that Rule 144 is not available at the present time for the
sale of the foregoing securities, or (iii) such sale, assignment, or transfer is
otherwise exempt from registration under the Securities Act. IVC acknowledges
that the Newco Shares shall be subject to a stop transfer order and the
certificate or certificates evidencing any underlying shares shall bear the
legend set forth in Section 5.2.
(g) IVC will acquire the Newco Shares for its own account for
investment and not with a view to the sale or distribution thereof or the
granting of any participation therein, and that it has no present intention of
distribution or selling to others any of such interest or granting any
participation therein.
10.4 Limitation of Liability. EXCEPT AS PROVIDED IN THIS ARTICLE X, AND
EXCEPT FOR A LIABILITY ARISING AS A RESULT OF A CLAIM FOR BREACH OF, OR A
DEFAULT IN, THIS AGREEMENT OR THE LICENSE, UNDER NO CIRCUMSTANCES WILL ANY PARTY
BE LIABLE TO ANY OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT OR THE LICENSE, SUCH
AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.
10.5 EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE X, AND EXCEPT FOR A
LIABILITY ARISING AS A RESULT OF A CLAIM FOR BREACH OF, OR A DEFAULT IN, THIS
AGREEMENT OR THE LICENSE, NO PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY
DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
PRODUCTS AND SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE
OF PERFORMANCE.
10.6 EXCLUSIVE REMEDIES. THE RIGHTS AND REMEDIES SET FORTH IN THIS
ARTICLE X AND THE LICENSE AGREEMENT CONSTITUTE THE ENTIRE OBLIGATIONS AND THE
EXCLUSIVE REMEDIES OF THE PARTIES CONCERNING INFRINGEMENT OF THE INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES OR THIRD PARTY CLAIMS.
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ARTICLE XI
TERM AND TERMINATION
11.1 Term. The term of this Agreement shall commence on the date of
execution and delivery of this Agreement (the "Effective Date"). This Agreement
shall expire when terminated:
(a) After a material breach by any Party in accordance with the
provisions of Section 11.2; or
(b) Upon the mutual written agreement of the Parties.
11.2 Termination
Any Party which is not in material breach of this Agreement shall
have the right to terminate this Agreement upon the occurrence of the events set
forth below:
(a) The other Party is in material breach of any material term,
condition or covenant of this Agreement and the breaching Party fails to cure
such breach within thirty (30) calendar days after the receipt of written notice
of such breach (unless such other Party commences the cure of such breach within
such 30 day period, which cure can be reasonably expected to be completed after
the expiration of such 30 day period but within a reasonable time, and is
actually cured within a reasonable time); or
(b) An event of bankruptcy occurs with respect to the other Party.
For purposes of the foregoing, an event of bankruptcy with respect to a Party
means any of the following circumstances:
(i) the commencement by the Party of a voluntary case under
the United States Bankruptcy Code,
(ii) the commencement against the Party of an involuntary
case under the United States Bankruptcy Code if the case is not vacated within
ninety calendar days after commencement,
(iii) the entry of a final order by a court of competent
jurisdiction finding the Party to be bankrupt or insolvent, ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its general creditors or assuming custody of or appointing a
receiver or other custodian for all or a substantial part of its property and
such order shall not be vacated or stayed upon appeal or otherwise stayed within
ninety calendar days of issuance; or
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(iv) the Party makes an assignment for the benefit of, or
enters into a composition with its creditors, or appoints or consents to the
appointment of a receiver or other custodian for all or a substantial part of
its property.
(c) Termination under subsection (a) shall be effective upon
delivery of notice of the expiration of the cure period or the expiration of a
stated time period, as the case may be and termination under subsection (b) will
become effective immediately upon written notice of termination at any time
after the occurrence of the event.
(d) This Agreement may be terminated at any time by the mutual
written consent of all the Parties hereto.
(e) This Agreement shall be terminated in the event that an event
of bankruptcy occurs with respect to Newco and the Parties cannot agree on a
plan of recapitalization.
(f) Upon termination, all Licenses granted by Authentidate shall
terminate and all of the Authentidate Software shall be the sole property of
Authentidate.
ARTICLE XII
CONFIDENTIALITY
12.1 Confidentiality, Non-Disclosure
(a) Each of IVC, Holding, Authentidate and Newco covenants and
agrees, on behalf of themselves, their Affiliates, parents, subsidiaries,
directors, officers, employees, agents, successors and assigns, that they shall
not, at any time during or after the termination of this Agreement, except when
acting on behalf of and with the written authorization of the other Parties,
make use of or disclose to any person, corporation, or other entity, for any
purpose whatsoever, any trade secret or other Confidential Information of
another Party and not to use any such Confidential Information of another Party
for any purpose other than the purpose for which it was originally disclosed to
the receiving party. No Party will disclose the others' Confidential Information
to its employees and agents except on a "need-to-know" basis.
(b) Confidential Information means any information of a Party
disclosed to the other party in the course of this Agreement, which is
identified as, or should be reasonably understood to be, confidential to the
disclosing Party, including, but not limited to, trade secrets and confidential
information disclosed to the Parties or known by them as a consequence of their
transactions with IVC, Holding, Authentidate and/or Newco, whether or not
pursuant to this Agreement, and not generally known in the industry, concerning
the business, finances, methods, operations, know-how, trade secrets, data,
technical processes and formulas, source code, product designs, sales, cost and
other unpublished financial information, product and Business Plans,
projections, marketing data, information, research and development, customers,
pricing and information relating to proposed expansion and this Agreement and
all exhibits hereto. Confidential Information will not include information
which: (a) is known or becomes known to
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the recipient directly or indirectly from a third-party source who obtained the
information lawfully other than one having an obligation of confidentiality to
the providing party; (b) is or becomes publicly available or otherwise ceases to
be secret or confidential, except through a breach of this Agreement by the
recipient; or (c) is or was independently developed by the recipient without use
of or reference to the providing party's Confidential Information, as shown by
evidence in the recipient's possession.
(c) The Parties acknowledge and agree that each may disclose
Confidential Information: (a) as required by law or the rules of the National
Association of Securities Dealers, Inc. or any applicable securities exchange or
any governmental authority required by law; (b) to their respective directors,
officers, employees, attorneys, accountants and other advisors, who are under an
obligation of confidentiality, on a "need-to-know" basis; (c) to investors or
joint venture partners, who are under an obligation of confidentiality, on a
"need-to-know" basis; or (d) in connection with disputes or litigation between
the parties involving such Confidential Information and each Party will endeavor
to limit disclosure to that purpose and to ensure maximum application of all
appropriate judicial safeguards (such as placing documents under seal). In the
event a Party is required to disclose Confidential Information as required by
law, such party will, to the extent practicable, in advance of such disclosure,
provide the disclosing party with prompt notice of such requirement. Such Party
also agrees, to the extent legally permissible, to provide the disclosing party,
in advance of any such disclosure, with copies of any information or documents
such party intends to disclose (and, if applicable, the text of the disclosure
language itself) and to cooperate with the disclosing party to the extent the
disclosing Party may seek to limit such disclosure.
12.2 General
(a) This Article XII shall survive the termination of this
Agreement.
(b) The Parties acknowledge that damages alone may not be an
adequate remedy for any breach by any Party of this Article XII, and
accordingly, each expressly agrees that, in addition to any other remedies which
each may have, each shall be entitled to request injunctive relief in a court of
competent jurisdiction.
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ARTICLE XIII
RESTRICTIVE COVENANT
13.1 Restrictive Covenant
(a) During the term of this Agreement and for a period of one year
after any termination of this Agreement, except for a termination based on a
default in or breach of this Agreement by any Party, the other Parties agree
that they will not, directly or indirectly enter into or become associated with
or engage in any other business (whether as a partner, officer, director,
shareholder, employee, consultant, or otherwise), which business is primarily
involved in the manufacture, development, distribution, marketing and/or sales
of technology to authenticate and register autographed sports and entertainment
memorabilia by means similar to those described in this Agreement in the
Territory or geographical areas of operation of Newco.
(b) During the term of this Agreement, Holding and Authentidate
agree that they will not, directly or indirectly enter into or become associated
with or engage in any other business in the Territory (whether as a partner,
officer, director, shareholder, employee, consultant, or otherwise), which
business is primarily involved in the manufacture, development, distribution,
marketing and/or sales of the Service.
(c) Nothing in this Article XIII shall be construed to prevent
Holding and Authentidate from developing, distributing, marketing or selling its
own products and services to other third parties in the Territory served by
Newco pursuant to this Agreement.
13.2 General
(a) The Parties acknowledge and agree that the covenants contained
in this Article XIII are fair and reasonable and of a special unique character
which gives them peculiar value and exist in order to protect the Parties and
that the Parties would not have entered into this Agreement without such
covenants being made to it.
(b) If any court shall hold that the duration or geographic scope
of the non- competition clause, or any other restriction contained in this
Article XIII is unenforceable, it is our intention that same shall not thereby
be terminated but shall be deemed amended to delete therefrom such provision or
portion adjudicated to be invalid or unenforceable or in the alternative such
judicially substituted term may be substituted therefor.
(c) The Parties further acknowledge that damages alone will not be
an adequate remedy for any breach by any Party of the covenants contained in
this Article XIII, and accordingly, each expressly agrees that, in addition to
any other remedies which each may have, each shall be entitled to injunctive
relief in a court of competent jurisdiction.
(d) The Parties acknowledge that the covenants contained in this
Article XIII are separate and distinct from, and shall not be merged with, any
similar covenants made by IVC, Holding and Authentidate in any other agreement,
document or understanding.
(e) The provisions of this Article XIII shall survive the
termination of this Agreement.
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ARTICLE XIV
INDEMNIFICATION
Each Party represents and warrants to the other Party that such Party has
the full corporate right, power and authority to enter into this Agreement and
to perform the acts required of it hereunder; and the execution of this
Agreement by such Party, and the performance by such Party of its obligations
and duties hereunder, do not and will not violate or contravene any applicable
law or regulation or any agreement to which such Party is a party or by which it
is otherwise bound, and when executed and delivered by such Party, this
Agreement will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms. Each Party agrees
to indemnify and hold harmless each other Party to this agreement for a breach
of the foregoing representations and warranties on such terms as set forth in
this Agreement.
ARTICLE XV
GENERAL
(a) Press Releases and Public Announcements. Except as provided by
Section 9.2, no Party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior
written approval of the other Parties; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its reasonable best
efforts to advise the other Party prior to making the disclosure).
(b) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(c) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. Except as otherwise provided herein, all notices, requests,
demands, claims, and or other communications to be given hereunder will be in
writing and will be (as
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elected by the party giving such notice): (a) personally delivered; (b)
transmitted by postage prepaid registered or certified airmail, return receipt
requested; (c) transmitted by electronic mail via the Internet with receipt
being acknowledged by the recipient by return electronic mail (with a copy of
such transmission concurrently transmitted by postage prepaid registered or
certified airmail, return receipt requested); (d) transmitted by facsimile (with
a copy of such transmission by postage prepaid registered or certified airmail,
return receipt requested); or (e) deposited prepaid with a nationally recognized
overnight courier service. Unless otherwise provided herein, all notices will be
deemed to have been duly given on: (x) the date of receipt (or if delivery is
refused, the date of such refusal) if delivered personally, by electronic mail,
facsimile or by courier; or (y) three (3) days after the date of posting if
transmitted by certified mail. Notice hereunder will be directed to a party at
the address for such party as set forth below. Either party may change its
address for notice purposes hereof on written notice to the other party pursuant
to this Section 14 (f).
If to Holding: Copy to:
John T. Botti Victor J. DiGioia, Esq.
Authentidate Holding Corp. Goldstein & DiGioia, LLP
2165 Technology Drive 369 Lexington Avenue, 18th Floor
Schenectady, New York 12308 New York, New York 10017
If to Authentidate: Copy to:
Robert Van Naarden Victor J. DiGioia, Esq.
Authentidate, Inc. Goldstein & DiGioia, LLP
2 World Financial Center, 43rd Floor 369 Lexington Avenue, 18th Floor
New York, New York 10281 New York, New York 10017
If to IVC:
Frank J. Skelly, III
218 Royal Palm Way
Palm Beach, Florida 33480
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail). Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(g) Governing Law. This Agreement has been executed in the State of New
York, and except as otherwise provided herein, its validity, interpretation,
performance, and
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enforcement will be governed by the laws and courts of such state, without
application of the conflict of law principles thereof.
(h) Jurisdiction and Venue. Any judicial proceedings brought by or
against any party on any dispute arising out of this Agreement or any matter
related thereto shall be brought in the state or federal courts of New York
City, New York and, by execution and delivery of this Agreement, each of the
parties accepts for itself the exclusive jurisdiction and venue of the aforesaid
courts as trial courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement after exhaustion of all
appeals taken (or by the appropriate appellate court if such appellate court
renders judgment).
(i) Arbitration. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, except as otherwise provided
herein to the contrary. The undersigned agree that any and all disputes or
disagreements relating to this agreement shall be submitted to arbitration
before the American Arbitration Association in accordance with the rules and
procedures governing such proceedings and that the venue for any such proceeding
shall be within the State of New York. The parties further agree to accept and
acknowledge service of any and all process which may be served in any suit,
action or proceeding, and agree that service of process upon each other mailed
by certified mail to each other's address shall be deemed in every respect
effective service of process in any such suit, action or proceeding. The parties
further agree each party shall bear their own costs of the arbitration as well
as the costs of its own attorneys' fees.
(i) Amendments. This Agreement may be amended by the parties hereto at
any time; provided, however, that any amendment must be by an instrument or
instruments in writing signed and delivered on behalf of each of the parties
hereto.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
[Remained of page intentionally left blank. Signature page is next page.]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
AUTHENTIDATE HOLDING CORP.
--------------------------------
By John T. Botti, President
AUTHENTIDATE, INC.
--------------------------------
By John T. Botti, Chairman
INTERNET VENTURE CAPITAL, LLC
--------------------------------
An Authorized Representative
NICHOLAS THEMELIS (Solely with respect to
Sections 3.2 and 3.3 and Article V hereof)
---------------------------------
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