Exhibit 10.3


 


AMENDED AND RESTATED SECURITY AGREEMENT


 


THIS AMENDED AND RESTATED
SECURITY AGREEMENT (this “Security Agreement”) is made and entered into as of March 20, 2017 by Authentidate
Holding Corp., a Delaware corporation (the “Company”) and the parties signatory hereto (each, a “Secured
Party” and collectively, the “Secured Parties”). This Security Agreement is being executed and delivered
by the Company and the Secured Parties in connection with the Company’s issuance to the Secured Parties of those certain
Senior Secured Promissory Notes, dated as of the date first set forth above (the “Secured Notes”). Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Secured Notes.


 


WITNESSETH:


 


WHEREAS, the Company
had previously issued an aggregate principal amount of $1,270,000 of Secured Notes to certain of the Secured Parties (the “Prior
Notes”), which Prior Notes are secured by liens certain of the Company’s assets pursuant to that certain security
agreement, dated as of August 7, 2015, between the Company and the holders of the Prior Notes, and as subsequently amended on
December 11, 2015 (the “Prior Security Agreement”);


 


WHEREAS, the Company
now wishes to issue up to $2,545,199 of new Secured Notes due March 20, 2018 to certain Persons, including holders of the Prior
Notes, pursuant to a certain Exchange Agreements dated as of the date first set forth above (the “Exchange Agreement”);
and;


 


WHEREAS, it is a condition
of the transactions contemplated by the Exchange Agreement that the Company enter into a security agreement with the Secured Parties;
and


 


WHEREAS, in order
to induce the Secured Parties to extend the loans evidenced by the Secured Note, the Company has agreed to execute and deliver
to the Secured Parties this Security Agreement and to grant the security interests described herein to secure the prompt payment,
performance and discharge in full of all of the Company’s obligations under the Secured Notes, and the holders of the Prior
Notes, being the sole secured parties under the Prior Security Agreement, have all agreed to exchange such Prior Notes for Secured
Notes pursuant to the Exchange Agreement.


 


NOW, THEREFORE, in
consideration of the foregoing, the covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Secured Parties and the Company hereby agree as follows.


 


SECTION
I


DEFINITIONS


 


Section 1.1   Certain
Definitions. As used in this Security Agreement, the following terms shall have the meanings set forth in this Section 1.  Terms
used but not otherwise defined in this Security Agreement that are defined in Article 9 of the UCC (such as “account”,
“chattel paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.


 


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


 




    	 	 	 



    


    

 


(b)    “Collateral”
means the collateral in which the Secured Party are granted a security interest by this Security Agreement and which consists
of the following personal property of the Company, whether presently owned or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in connection therewith: all assets of the Company, including without limitation
all of the Company’s rights, title and interests in and to all of the following, whether now or hereafter existing or acquired
by the Company: (i) accounts; (ii) as-extracted collateral; (iii) chattel paper; (iv) deposit accounts; (v) documents; (vi) equipment;
(vii) farm products; (viii) fixtures; (ix) General Intangibles; (x) inventory; (xi) instruments; (xii) investment property; (xiii)
letter-of-credit rights; (xiv) other goods; (xv) supporting obligations; (xvi) commercial tort claims; and (xvii) all proceeds
and products of all of the foregoing, including without limitation whatever is received when any of the foregoing Collateral is
sold, exchanged, leased, licensed, collected or otherwise disposed of and includes all distributions on account thereof, rights
and claims arising therefrom. Notwithstanding the foregoing, none of the following items will be included in the Collateral: (a)
assets if the granting of a security interest in such asset would (I) be prohibited by applicable law (but proceeds and receivables
thereof, the assignment of which is expressly deemed effective under the UCC, shall not be deemed excluded from the Collateral
regardless of such prohibition), or (II) be prohibited by contract (except to the extent such prohibition is overridden by UCC
Section 9-408) (but proceeds and receivables thereof shall not be deemed excluded from the Collateral regardless of such prohibition);
(b) any property and assets, the pledge of which would require approval, license or authorization of any governmental body, unless
and until such consent, approval, license or authorization shall have been obtained or waived provided that the Company has used
commercially reasonable efforts to obtain or waive such consent, approval, license or authorization; (c) assets in circumstances
where the Secured Parties reasonably determines that the cost, burden or consequences (including adverse tax consequences) of
obtaining or perfecting a security interest in such assets is excessive in relation to the practical benefit afforded thereby;
provided, however, that to the extent permitted by applicable law, this Security Agreement shall create a valid
security interest in such asset and, to the extent permitted by applicable law, this Security Agreement shall create a valid security
interest in the proceeds of such asset.


 


(c)    “General
Intangibles” means general intangibles (as that term is defined in the UCC), and, in any event, includes payment intangibles,
contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill
(including the goodwill associated with any trademark), patents, trademarks, copyrights, URLs and domain names, industrial designs
and other Intellectual Property or rights therein or applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights
to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses, infringement
claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension
plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, interests in a partnership
or limited liability company which do not constitute a security under Article 8 of the UCC, and any other personal property
of the Company, other than those assets which are excluded from the definition of the term “General Intangibles” pursuant
to the UCC.


 


(d)    “Indebtedness”
means (x) any liabilities for borrowed money or amounts (other than trade accounts payable, accrued expenses or deferred revenue
incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business; and (z) the present value of any lease payments due under leases required to be capitalized
in accordance with GAAP; provided, further, however, that in no event shall the term Indebtedness include the capital stock
surplus, retained earnings, minority interests in the common stock of subsidiaries, operating lease obligations, reserves for
deferred income taxes and investment credits, other deferred credits or reserves.


 




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(e)    “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all
letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof,
and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing
or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade
secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to
obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes
of action for infringement of the foregoing.


 


(f)    “Liens”
means any lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, other than
restrictions imposed by securities laws.


 


(g)    “Majority
in Interest” shall mean the holders of fifty-one percent (51%) or more of the then outstanding principal amount of all
then outstanding Secured Notes at the time of such determination.


 


(h)    “Material
Adverse Effect” means an event or occurrence that has a material adverse effect on (i) the legality, validity or enforceability
of the Secured Notes or this Security Agreement; (ii) the results of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) the Company’s ability to perform in any
material respect on a timely basis its obligations under the Secured Notes or this Security Agreement.


 


(i)    “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing to, of the Company to the Secured Parties, including,
without limitation, all obligations under this Security Agreement and the Secured Notes, whether now or hereafter existing, voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly
or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing,
the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Secured Notes
and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Company
from time to time under or in connection with this Security Agreement or the Secured Notes; and (iii) all amounts (including but
not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations
to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Company.


 




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(j)    “Permitted
Indebtedness” means (a) Indebtedness secured by Permitted Liens, including without limitation Indebtedness incurred
in connection with arrangements contemplated by clause (h) of the definition of the term “Permitted Liens”; (b) Indebtedness
to trade creditors or for professional services incurred in the ordinary course of business; (c) all capital lease obligations
and other obligations or liabilities created or arising under any conditional sale or other title retention agreement with respect
to property used or acquired by the subject Person, even if the rights and remedies of the lessor, seller or lender thereunder
are limited to repossession of such property and the present value of lease payments due under synthetic leases; (d) obligations
of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions
for the account of such Person in the ordinary course of the business of such Person; (e) purchase money financing and equipment
financing facilities covering existing and newly-acquired property, plant or equipment; (f) Indebtedness of any amount outstanding
immediately prior to the execution of this Security Agreement; (g) Indebtedness incurred by the Company that is made expressly
subordinate in right of payment to the Indebtedness evidenced by the Secured Note, which Indebtedness does not provide at any
time for the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if
any, thereon until after the maturity date of the Secured Note; (h) Indebtedness incurred by the Company that is unsecured; (i)
Indebtedness in an amount of up to $5,000,000 pursuant to a term loan, revolving credit facility, credit line or other extensions
of credit from a commercial banking or financial institution; and (j) extensions, refinancings and renewals of any items of Permitted
Indebtedness described above (including the issuance of new debt or convertible debt securities in exchange for the cancellation
of existing debt securities in an Alternative Transaction), provided that the principal amount is not increased or the terms modified
to impose more burdensome terms upon the Company or its Subsidiaries, as the case may be. Permitted Indebtedness shall include,
without limitation, (i) the principal amount of such Indebtedness, (ii) unpaid accrued interest thereon, and (iii) all other obligations
of the Company arising out of the Permitted Indebtedness now existing or hereafter arising, together with all costs of collecting
such obligations (including attorneys’ fees), including, without limitation, all interest accruing after the commencement
by or against the Company of any bankruptcy, reorganization or similar proceeding.


 


(k)    “Permitted
Liens” means: (a) Liens for taxes not yet due or delinquent or being contested in good faith and by appropriate proceedings,
for which adequate reserves have been established; (b) Liens in respect of property or assets imposed by law which were incurred
in the ordinary course of business, such as carriers’, warehousemen’s, materialmen’s and mechanics’ Liens
and other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings; (c) Liens incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment insurance and other types of social security,
and other Liens to secure the performance of tenders, statutory obligations, contract bids, government contracts, performance
and return of money bonds and other similar obligations, incurred in the ordinary course of business, whether pursuant to statutory
requirements, common law or consensual arrangements; (d) Liens in favor of the Secured Parties; (e) Liens in favor of customs
and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of
goods; (f) Liens which constitute rights of setoff of a customary nature or banker’s liens, whether arising by law or by
contract; (g) leases or subleases and licenses or sublicenses granted in the ordinary course of Company’s business; (h)
Liens in the ordinary course of business (A) upon or in any equipment acquired or held by the Company (or any of its Subsidiaries)
to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or
lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of such equipment; (i) Liens in existence prior
to the execution of this Security Agreement; (j) Liens that are expressly subordinated to the Liens granted pursuant to this Security
Agreement; (k) Liens securing Indebtedness contemplated by clause (i) of the definition of “Permitted Indebtedness”
set forth in Section 1.1(j) of this Security Agreement; and (l) Liens incurred in connection with the extension, renewal or refinancing
of the Permitted Indebtedness secured by Liens of the type described above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase.


 




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(l)    “Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


(m)   “Prior
Notes” means instruments described in Recitals to this Security Agreement which evidence Indebtedness issued by the
Company prior to the date of this Security Agreement, as such instruments may be amended to date, and any deferrals, renewals
or extensions thereof, and any notes or other instruments or evidences of Indebtedness issued in respect of or in exchange thereof.


 


(n)    “Subsidiary”
means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of
the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard
to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is
at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries
of such Person; or (iii) one or more Subsidiaries of such Person.


 


(o)    “UCC”
means the Uniform Commercial Code as the same is, from time to time, in effect in the State of Georgia and or any other applicable
law of any state or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Security Agreement,
from time to time.




SECTION II


COLLATERAL; OBLIGATION SECURED


 


Section 2.1    Grant
and Description. In order to secure the full and complete payment and performance of the Obligations when due, the Company
hereby grants to the Secured Parties, subject to the Permitted Liens, a first priority security interest in all of the Company’s
rights, titles, and interests in and to the Collateral (the “Security Interest”) and subject to the Permitted
Liens, pledges, collaterally transfers, and assigns the Collateral to the Secured Parties, all upon and subject to the terms and
conditions of this Security Agreement; provided, however, that each Secured Party shall subordinate from time to
time upon the Company’s request its Security Interests granted in such Collateral to any Lien(s) granted by the Company
or any of its Subsidiaries to third parties which constitutes Permitted Liens contemplated within clauses (h) through (k) of the
definition of Permitted Liens. If the grant, pledge, or collateral transfer or assignment of any specific item of the Collateral
is expressly prohibited by any contract or by law, then the Security Interest created hereby nonetheless remains effective to
the extent allowed by such contract, the UCC or other applicable laws, but is otherwise limited by that prohibition. The Security
Interest granted herein shall terminate in accordance with Section 7.1 hereof.


 


Section 2.2   Financing
Statements; Further Assurances.


 


(a)    The
Secured Parties shall be named as the sole secured parties on any and all financing statements and security agreements filed pursuant
to this Security Agreement for the ratable benefit of all of the Secured Parties, and agree that the Majority in Interest of the
Secured Parties are authorized to file any and all terminations of such financing statements at such time or times as it determines
is appropriate pursuant to the Security Agreement.


 






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(b)    As
soon as practicable following the execution and delivery of this Security Agreement and upon the authorization of the Majority
in Interest of the Secured Parties, the Company shall:


 


(i)    file
with the State of Delaware and any other offices that the Majority in Interest of the Secured Parties may reasonably request in
writing an initial financing statement that (i) indicates the Collateral in a manner consistent with the definition of the
term “Collateral” as contained in this Security Agreement, and (ii) contains any other information required by Article 9
of the UCC of the state or such jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment,
including whether the Company is an organization, the type of organization, and any organization identification number issued
to the Company;


 


(ii)    file
with the U.S. Patent and Trademark Office, such financing statements and/or patent security agreements in the form necessary to
record the Liens granted hereunder on the Company’s patents and patent applications; and


 


(iii)    upon
the reasonable request of the Majority in Interest of the Secured Parties, file such additional financing statements and other
documents, including amendments to the financing statements, in order to maintain the Liens in the Collateral.


 


(c)    Until
the Obligations are paid and performed in full, the Company covenants and agrees that it will, at its own expense and upon the
request of the Majority in Interest, but in all cases subject to the rights of the grantees of the Permitted Liens: (i) after
an Event of Default, file or cause to be filed such applications and take such other actions as the Majority in Interest may reasonably
request to obtain the consent or approval of any governmental authority to the rights of the Secured Parties hereunder, including,
without limitation, the right to sell all the Collateral upon an Event of Default without additional consent or approval from
such governmental authority; (ii) from time to time, either before or after an Event of Default, promptly execute and deliver
to the Secured Parties all such other assignments, certificates, supplemental documents, and financing statements, and do all
other acts or things as the Majority in Interest may reasonably request in order to more fully create, evidence, perfect, continue,
and preserve the priority of the Security Interest and to carry out the provisions of this Security Agreement; and (iii) either
before or after an Event of Default, pay all filing fees in connection with any financing, continuation, or termination statement
or other instrument with respect to the Security Interest.


 


Section 2.3    Priority.
The Secured Parties hereby covenant and agree with the Company that the Company has granted and may subsequently grant, from time
to time, Permitted Liens and that the security interest granted to the Secured Parties in the Collateral hereunder is (i) subordinated
to the respective Permitted Liens in the Collateral that was granted and remains outstanding immediately prior to the date hereof
or as contemplated in Section 2.1, above (the “Senior Permitted Liens”); (ii) senior to other Liens granted
by the Company in the Collateral after the date hereof; and (iii) that as between all Secured Parties, the Security Interest granted
to each Secured Party under this Security Agreement is pari passu with the Security Interests of the other Secured Parties.
The priorities specified herein are applicable irrespective of the time, order or method of attachment or perfection of security
interests or the time or order of filing of financing statements. The Secured Parties agree not to seek to challenge, to avoid,
to subordinate or to contest or directly or indirectly to support any other Person in challenging, avoiding, subordinating or
contesting in any judicial or other proceeding, including, without limitation, any proceeding involving the Company, the priority,
validity, extent, perfection or enforceability of any Senior Permitted Liens in all or any part of the Collateral. The Secured
Parties further covenant and agree that they shall not, and they shall not instruct, authorize or otherwise permit or consent
to allowing any third party to, take any action that is in violation of, or inconsistent with, the provisions of this section.


 




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Section 2.4    Company
Remains Liable; Third Party Licensees.  (A) Anything herein to the contrary notwithstanding, (a) the Company shall
remain liable under the contracts and agreements included in the Collateral to perform all of the duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise by the Secured Parties of any of the rights
hereunder shall not release the Company from any of its duties or obligations under such contracts and agreements included in
the Collateral, and (c) the Secured Parties shall not have any obligation or liability under such contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured Parties be obligated to perform any of the obligations
or duties of the Company thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 
Until an Event of Default shall occur and be continuing, except as otherwise provided in this Security Agreement, the Secured
Notes, or other Transaction Documents, the Company shall have the right to possession and enjoyment of the Collateral for the
purpose of conducting the ordinary course of its business, subject to and upon the terms hereof and of the Secured Notes, and
the other Transaction Documents.


 


(B)    The
Secured Parties acknowledge and agree that the security interest arising hereunder in any Intellectual Property licensed by the
Company to a third party in an arms-length transaction shall be subject to the rights of such third party licensee, whether such
arms-length transaction is now existing or is entered into following the execution and delivery of this Security Agreement. Upon
the request of the Company, the Secured Parties shall promptly provide an estoppel to such third party licensee with respect to
the foregoing. The Secured Parties acknowledge and agree that no security interest or right is granted by the Company in property
to the extent that such property is not owned by the Company.


 


SECTION
III

COVENANTS


 


Section 3.1    Duties
of the Company Regarding Collateral. At all times from and after the date hereof and until the Secured Notes have been paid
in full (including if such Secured Notes shall have been converted into the Common Stock of the Company in accordance with their
terms) or this Security Agreement is sooner terminated, the Company agrees that it shall:


 


(a)          Preserve
the Collateral in good condition and order (ordinary wear and tear excepted) and not permit it to be abused or misused;


 


(b)          Not
allow any of the Collateral to be affixed to real estate, except for any property deemed to be fixtures;


 


(c)          Maintain
good and complete title to the Collateral subject only to Permitted Liens;


 


(d)          Keep
the Collateral free and clear at all times of all Liens other than Permitted Liens;


 


(e)          Take
or cause to be taken such acts and actions as shall be necessary or appropriate to assure that each Secured Party’s security
interest in the Collateral (other than the Permitted Liens) not become subordinate to or on parity with the security interests,
Liens or claims of any other Person;


 




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(f)          Except
as permitted pursuant to this Security Agreement, refrain from selling, assigning or otherwise disposing of any of the Collateral
or moving or removing any of the Collateral, without obtaining the prior written consent of the Majority in Interest of the Secured
Parties, or until all of the Obligations have been fully performed and paid in full; provided, however, that concurrently
with any disposition permitted by this Section 3.1, (x) the security interest granted hereby shall automatically be released
from the Collateral so disposed, and (y) the security interest shall continue in the Proceeds (as defined in the UCC) of such
Collateral or any property purchased with such Proceeds; and provided further, that, the Secured Parties shall execute
and deliver, at the Company’s sole cost and expense, any releases or other documents reasonably requested by the Company,
that are in form and substance reasonably acceptable to the executing party, confirming the release of the security interest in
that portion of the Collateral that is the subject of a disposition permitted by this Section 3.1;


 


(g)          Except
in the ordinary course of business, the Company may not (i) transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral (except for non-exclusive licenses granted by the Company in its ordinary course of business
and sales of inventory or obsolete capital equipment by the Company in its ordinary course of business) without the prior written
consent of the Majority in Interest or (ii) consign any of its inventory which constitutes any part of the Collateral, or sell
any of its inventory which constitutes any part of the Collateral on bill and hold, sale or return, sale on approval, or other
conditional terms of sale without the consent of the Majority in Interest of the Secured Parties which shall not be unreasonably
withheld.


 


(h)          Promptly
provide to the Secured Parties such financial statements, reports, lists and schedules related to the Collateral and any other
information relating to the Collateral as the Majority in Interest of the Secured Parties may reasonably request from time to
time;


 





(i)          Maintain,
at the place where the Company is entitled to receive notices under the Secured Notes, a current record of where all material
Collateral is located, permit representatives of the Secured Parties (acting upon the authorization of the Majority in Interest)
at any time, upon reasonable prior written notice during normal business hours to inspect and make abstracts from such records
(provided, that so long as no Event of Default exists, the Secured Parties shall conduct such inspections no more frequently
than semi-annually);


 


(j)          Within
three (3) Business Days notify each Secured Party if any Event of Default (as hereinafter defined) occurs; and


 


(k)          In
accordance with prudent business practices, endeavor to collect or cause to be collected from each account debtor under its accounts,
as and when due, any and all amounts owing under such accounts.


 


For purposes of
clarity, nothing in this Security Agreement, including without limitation the restrictions set forth in Section 3.1(f) of this
Security Agreement, shall be construed as restricting the Company and its Subsidiaries from (I) granting licenses or sublicenses
to any of the Collateral which constitutes Intellectual Property; (II) from licensing, selling, leasing or renting, directly or
indirectly, any inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms;
(III) from engaging in joint ventures, strategic alliances or other similar arrangements for bona fide business purposes consistent
with industry practices; (IV) from utilizing the cash generated from the Company’s business operations in accordance with
the business judgment of management or the board of directors; or (V) from entering into transactions contemplated by the definition
of Permitted Liens.


 




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Section 3.2    Duties
with Respect to Intellectual Property. At all times from and after the date hereof and until the Secured Notes have been paid
in full (including if such Secured Notes shall have been converted into the Common Stock of the Company in accordance with their
terms) or this Security Agreement is sooner terminated, the Company agrees that it shall:


 


(a)       Except
to the extent that failure to act cannot reasonably be expected to have a Material Adverse Effect, take all commercially reasonable
steps necessary to (x) maintain the validity and enforceability of any Collateral that constitutes Intellectual Property
in full force and effect and (y) pursue the application, obtain the relevant registration and maintain the registration of
each of its patents, trademarks and copyrights that is part of the Collateral, including, without limitation, by the payment of
required fees and taxes, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright
Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits, the filing
of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance
fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings.


 


(b)        Except
to the extent that failure to act cannot reasonably be expected to have a Material Adverse Effect, not do or permit any act or
knowingly omit to do any act whereby any of its Intellectual Property that is part of the Collateral may lapse, be terminated,
or become invalid or unenforceable or placed in the public domain (or in case of a trade secret, lose its competitive value).


 


(c)        Except
to the extent that failure to act cannot reasonably be expected to have a Material Adverse Effect, take all commercially reasonable
steps to preserve and protect each item of its Intellectual Property that is part of the Collateral, including, without limitation,
maintaining the quality of any and all products or services used or provided in connection with any of the trademarks, consistent
with the quality of the products and services as of the date hereof, and taking all commercially reasonable steps necessary to
ensure that all licensed users of any of the Trademarks abide by the applicable license’s terms with respect to the standards
of quality.


 


Notwithstanding the
foregoing provisions of this Section 3.2 or anything to the contrary elsewhere in this Security Agreement, nothing in this
Security Agreement shall prevent the Company or its Subsidiaries from discontinuing the use or maintenance of any of its Intellectual
Property, the enforcement of its license agreements or the pursuit of actions against infringers, if they determine in its reasonable
business judgment that such discontinuance is desirable in the conduct of its business.


 


Section 3.3 Other
Encumbrances. At all times after the date hereof and until such time as there are no Obligations due to the Secured Parties
or this Security Agreement is sooner terminated, the Company shall, subject to the rights of the holders of the Permitted Liens:
(i) defend its title to, and each Secured Party’s interest in, the Collateral against all claims, (ii) take any action necessary
to remove any encumbrances on the Collateral other than Permitted Liens, and (iii) defend the right, title and interest of each
Secured Party in and to any of the Company’s rights in the Collateral.


 


Section 3.4 Change
Name or Location. At all times after the date hereof and until such time as there are no Obligations due to the Secured Parties
or this Security Agreement is sooner terminated, the Company shall not, except upon 10 days’ prior written notice to the
Secured Parties, change its company name or conduct its business under any name other than that set forth herein or change its
jurisdiction of organization or incorporation, chief executive office, place of business from the current location.


 




    	 	9	 



    


    

 


SECTION
IV

REPRESENTATIONS AND WARRANTIES


 


The Company represents
and warrants to each Secured Party as follows:


 


Section 4.1    Title
to Collateral. The Company is the owner of and has good and marketable title to, or has a valid and subsisting leasehold interest
in, all of the Collateral.


 


Section 4.2    No
Other Encumbrances. Other than the Permitted Liens, the Company has not granted, nor will it grant, a security interest in
the Collateral to any other individual or entity, and to the actual knowledge of the Company, such Collateral is free and clear
of any mortgage, pledge, lease, trust, bailment, lien, security interest, encumbrance, charge or other arrangement, other than
the Permitted Liens.


 


Section 4.3    Authority;
Enforceability. The execution, delivery and performance of this Security Agreement by the Company does not: (i) violate
any of the provisions of the Certificate of Incorporation or By-laws of the Company or any judgment, decree, order or award of
any court, governmental body or arbitrator or any applicable law, rule or regulation applicable to the Company; or (ii) subject
to each Secured Party’s performance of its respective obligations under any subordination agreements with respect to Permitted
Liens or Permitted Indebtedness, conflict with, or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing the Company’s debt
or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound
or affected. The Company has the authority and capacity to perform its obligations hereunder, and this Security Agreement is the
valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights
or general equitable principles, whether applied in law or equity.


 


Section 4.4    Company
Name; Place of Business; Location of Collateral. The Company’s true and correct company name, all trade name(s) under
which it conducts its business, its jurisdiction of organization or incorporation and each of its chief executive offices, its
place(s) of business and the locations of the Collateral or records relating to the Collateral are set forth in Schedule I
hereto. The Company’s place of business and chief executive office is where the Company is entitled to receive notices
hereunder; the present and foreseeable location of the Company’s books and records concerning any of the Collateral that
is accounts is as set forth on Schedule I hereto, and the location of all other Collateral, including, without limitation,
the Company’s inventory and equipment is as set forth on Schedule I hereto.


 


Section 4.5    Perfection;
Security Interest. This Security Agreement creates in favor of the Secured Parties, a valid security interest in the Collateral,
subject only to Permitted Liens securing the payment and performance of the Obligations. For Collateral in which the Security
Interest may be perfected by the filing of financing statements, once those financing statements have been properly filed in the
appropriate jurisdictions, the Security Interest in such Collateral will be fully perfected, subject only to Permitted Liens.
Other than the financing statements and with respect to this Security Agreement, to the actual knowledge of the Company, there
are no other financing statements or control agreements covering any Collateral, other than those evidencing Permitted Liens.


 




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SECTION
V

EVENTS OF DEFAULT


 


Section 5.1     Events
of Default Defined. The occurrence of any of the following events prior to the termination or expiration of this Security
Agreement shall constitute an event of default under this Security Agreement (each, an “Event of Default”):


 


(a)          The
failure of the Company to perform or comply in a material respect with any act, duty or obligation required to be performed under
this Security Agreement if such failure is not remedied within twenty (20) calendar days after the Company receives written notice
of such failure from the Majority in Interest or thirty (30) calendar days after the occurrence thereof;


 


(b)          If
any of the representations or warranties of the Company set forth in this Security Agreement shall prove to have been incorrect
in any material respect when made, or becomes incorrect in any material respect and, if subject to cure, is not cured within twenty
(20) calendar days after the Company receives written notice thereof from the
Majority in Interest of the Secured Parties or within thirty (30) calendar days after the Company becomes aware, and immediately
notifies the Secured Parties, of any such incorrectness;


 


(c)          If
any material portion of the Collateral shall be damaged, destroyed or otherwise lost and such damage, destruction or loss is not
covered by insurance; or


 


(d)          If
an “Event of Default” as defined in the Secured Notes shall have occurred and is continuing.


 


Section 5.2   Rights
and Remedies Upon Default. If an Event of Default exists and is continuing, the Majority in Interest of the Secured Parties
shall, at its election (but subject to Section 7 below and to the terms and conditions of the Transaction Documents),
exercise any and all rights available to a secured party under the UCC, in addition to any and all other rights afforded by the
Transaction Documents, at law, in equity, or otherwise, including, without limitation, (a) requiring the Company to assemble
all or part of the Collateral and make it available to the Secured Parties at a place to be designated by the Majority in Interest
of the Secured Parties which is reasonably convenient to the Secured Parties and the Company, (b) surrendering any policies
of insurance on all or part of the Collateral and receiving and applying the unearned premiums as a credit on the Obligation,
(c) applying by appropriate judicial proceedings for appointment of a receiver for all or part of the Collateral (and the
Company hereby consents to any such appointment), (d) applying to the Obligation any cash held by Secured Parties under this
Security Agreement, and (e) as legally permissible, selling, reselling, assigning and delivering or granting a license to use
or otherwise dispose of the Collateral or any part thereof, in one or more parcels at public or private sale, at any of the Secured
Parties’ offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Majority in
Interest of the Secured Parties may deem commercially reasonable.


 


Section 5.3     Notice.
Reasonable notification of the time and place of any public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be made, shall be sent to the Company, the holders
of Permitted Liens, and to any other person or entity entitled to notice under the UCC. It is agreed that notice sent or given
not less than ten calendar days prior to the taking of the action to which the notice relates is reasonable notification and notice
for the purposes of this subparagraph.


 


Section 5.4     Application
of Proceeds. The Secured Parties shall apply the proceeds of any sale or other disposition of the Collateral hereunder in
the following order: first, to the payment of all expenses incurred in retaking, holding, and preparing any of the Collateral
for sale(s) or other disposition, in arranging for such sale(s) or other disposition, and in actually selling or disposing of
the same (all of which are part of the Obligation); second, toward repayment of amounts expended by the Secured Parties
in so acting hereunder; and third, toward payment of the balance of the Obligations in the order and manner as the Majority
in Interest of the Secured Parties determines in its sole discretion. Any surplus remaining shall be delivered to the Company
or as a court of competent jurisdiction may direct. If the proceeds are insufficient to pay the Obligations in full, then the
Company shall remain liable for any deficiency.


 




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Section 5.5    Compliance
with Other Laws. The Secured Parties shall comply with any applicable state or federal laws in connection with a disposition
of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.


 


SECTION
VI

ADDITIONAL REMEDIES


 


Section 6.1    Additional
Remedies. If an Event of Default exists and is continuing, the Company shall:


 


(a)          Endorse
any and all documents evidencing any Collateral (other than any Collateral if and to the extent subject to the Permitted Liens)
in accordance with the instructions provided by the Majority in Interest of the Secured Parties, and notify any payor that said
documents have been so endorsed and that all sums due and owing pursuant to them should be paid directly to such Secured Parties,
or as otherwise instructed by the Majority in Interest of the Secured Parties;


 


(b)          Turn
over to the Secured Parties, or as otherwise instructed by the Majority in Interest of the Secured Parties, copies of all documents
evidencing any right to collection of any sums due to the Company arising from or in connection with any of the Collateral;


 


(c)          Take
any action reasonably required by a Secured Party with reference to the Federal Assignment of Claims Act; and


 


(d)          Keep
all of its books, records, documents and instruments relating to the Collateral in such manner as the Secured Parties may require.


 


SECTION
VII

MISCELLANEOUS


 


Section 7.1    Termination
and Release. This Security Agreement, and the Liens created by this Security Agreement shall automatically terminate in all
respects upon the full and final payment by the Company of the Secured Notes or the conversion of the Secured Notes into shares
of capital stock of the Company, in accordance with the terms of the Secured Notes. Further, the Liens created by this Security
Agreement on any of the Collateral shall be automatically released if the Company disposes of such Collateral pursuant to a transaction
permitted by the Secured Notes or otherwise consented to by the Majority in Interest. In connection with any termination or release
pursuant to this Section 8.1, the Majority in Interest shall promptly execute and deliver to the Company all documents that the
Company shall reasonably request to evidence such termination or release.


 


Section 7.2    Severability.
In the event that any provision of this Security Agreement becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Security Agreement shall continue in full force and effect without said provision; provided,
that in such case the parties shall negotiate in good faith to replace such provision with a new provision which is not illegal,
unenforceable or void, as long as such new provision does not materially change the economic benefits of this Security Agreement
to the parties.


 




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Section 7.3    Continuing
Security Interest; Successors. This Security Agreement creates a continuing security interest in the Collateral and shall
(i) remain in full force and effect until the Obligations are paid and performed in full or this Security Agreement is sooner
terminated in accordance with Section 7.1; and (ii) inure to the benefit of and be enforceable by Secured Parties and their
successors, transferees, and assigns. Each Secured Party may assign its rights hereunder in connection with any private sale or
transfer of its Secured Note in accordance with the terms of the Exchange Agreement and applicable law, in which case the term
“Secured Party” shall be deemed to refer to such transferee as though such transferee was an original signatory
hereto.


 


Section 7.4    Governing
Law. This Security Agreement shall be governed by and construed under the laws of the State of Delaware applicable to contracts
made and to be performed entirely within the State of Delaware.


 


Section 7.5    Headings.
The headings used in this Security Agreement are used for convenience only and are not to be considered in construing or interpreting
this Security Agreement.


 


Section 7.6    Notices.  Any
notice to the Company or to a Secured Party shall be given in the manner set forth in the Exchange Agreement; provided
that a Secured Party, if not a party to such Exchange Agreement, shall provide the Company with its proper delivery instructions
for notices. Either party may, by notice given in accordance with the Exchange Agreement, change the address to which notices,
demands and requests shall be sent to such party. Any notice to be given by the Company to the Secured Parties shall be given
in the manner provided for in the Exchange Agreement, and delivered to such addresses as the Company is instructed by the Secured
Parties.


 


Section 7.7    Entire
Agreement; Amendments; Waivers. This Security Agreement constitutes the entire agreement between the parties with regard to
the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or
among the parties. Except as expressly provided herein, neither this Security Agreement nor any term hereof may be amended except
pursuant to a written instrument executed by Company and the Majority in Interest, and no provision hereof may be waived other
than by a written instrument signed by the party against whom enforcement of any such waiver is sought. The Secured Parties shall
not, by any act, any failure to act or any delay in acting be deemed to have (i) waived any right or remedy under this Security
Agreement, or (ii) acquiesced in any Event of Default or in any breach of any of the terms and conditions of this Security Agreement.
No failure to exercise, nor any delay in exercising, any right, power or privilege of the Secured Parties under this Security
Agreement shall operate as a waiver of any such right, power or privilege. No single or partial exercise of any right, power or
privilege under this Security Agreement shall preclude any other or further exercise of any other right, power or privilege. A
waiver by a Secured Party of any right or remedy under this Security Agreement on any one occasion shall not be construed as a
bar to any right or remedy that such Secured Party would otherwise have on any future occasion.


 


Section 7.8    Multiple
Counterparts. This Security Agreement has been executed in a number of identical counterparts, each of which shall be deemed
an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this Security Agreement,
it shall not be necessary to produce or account for more than one such counterpart.


 




    	 	13	 



    


    

 


Section 7.9    Cumulative
Remedies. The rights and remedies provided in this Security Agreement are cumulative, may be exercised singly or concurrently,
and are not exclusive of any other rights or remedies provided by law.


 


Section 7.10 Waivers.
The Company acknowledges that the Obligations arose out of a commercial transaction and hereby knowingly waives any right to require
the Secured Parties to (i) proceed against any person or entity, (ii) proceed
against any other collateral under any other agreement, (iii) pursue any other remedy available to the Secured Parties, or (iv)
make presentment, demand, dishonor, notice of dishonor, acceleration and/or notice of non-payment.


 


Section 7.11 Release.
No transfer or renewal, extension, assignment or termination of this Security Agreement or of any instrument or document executed
and delivered by the Company to the Secured Parties, nor additional advances made by the Secured Parties to the Company, nor the
taking of further security, nor the retaking or re-delivery of the Collateral by the Secured Parties nor any other act of the
Secured Parties shall release the Company from any Obligation, except a release or discharge executed in writing by the Majority
in Interest with respect to such Obligation or upon full payment and satisfaction of all Obligations and termination of the Secured
Notes. At such time the Obligations have been satisfied in full, the Majority in Interest shall execute and deliver to the Company
all assignments and other instruments as may be reasonably necessary or proper to terminate the Secured Parties’ security
interest in the Collateral, subject to any disposition of the Collateral that may have been made by or on behalf of the Secured
Parties pursuant to this Security Agreement. For the purpose of this Security Agreement, the Obligations shall be deemed to continue
if the Company enters into any bankruptcy or similar proceeding at a time when any amount paid to the Secured Parties could be
ordered to be repaid as a preference or pursuant to a similar theory, and shall continue until it is finally determined that no
such repayment can be ordered.


 


Section 7.12  
Independent Representation. Each Secured Party expressly represents and warrants to the Company that (a) before executing
this Agreement, such Secured Party has fully informed himself or itself of the terms, contents, conditions and effects of this
Agreement; (b) such Secured Party has relied solely and completely upon his or its own judgment in executing this Agreement;
(c) such Secured Party has had the opportunity to seek the advice of his or its own counsel and advisors before executing
this Agreement; (d) such Secured Party has acted voluntarily and of his or its own free will in executing this Agreement;
(e) such Secured Party is not acting under duress, whether economic or physical, in executing this Agreement; (f) this
Agreement is the result of arm’s length negotiations conducted by and among the parties; and (g) such Secured Party
acknowledges that the law firm of Becker & Poliakoff, LLP has been retained by the Company to prepare this Agreement as legal
counsel for the Company, that Becker & Poliakoff, LLP does not represent any Secured Party in connection with the preparation
or execution of this Agreement, that such firm has not given any legal, investment or tax advice to any Secured Party regarding
this Agreement and that such Secured Party has not relied upon any legal advice except as provided by its own attorneys. Becker
& Poliakoff, LLP is expressly intended as a beneficiary of the representations and warranties of the Holders contained in
this Section 7.12.


 


 


[Signature Pages to Follow]




    	 	14	 



    


    

  


IN WITNESS WHEREOF,
the Company and the Secured Party have duly executed this Security Agreement as of the date first written above.


 


	 	AUTHENTIDATE HOLDING CORP.
	 	 	 
	 	By:	 
	 	 	Name: Hanif A. Roshan
	 	 	Title:  Chief Executive Officer


 


Signature
Page to Security Agreement


 




     


     


    

 


 


Signature
Page to Security Agreement


 


	 	SECURED PARTY:
	 	 
	 	[	]
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 


 




     


     


    

 


Schedule I


 


List of Collateral Locations, Executive
Offices and 


Jurisdiction of Organization or Incorporation
of Obligors


 


	Company Name:	Authentidate Holding Corp.
	 	 
	Executive Officers:  	Hanif A. Roshan – Chief Executive Officer and interim Principal Accounting Officer
	 	 
	Jurisdiction of Incorporation:  	Delaware
	 	 
	Subsidiaries of Company:	Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories
	 	2225 Centennial Drive
	 	Gainesville, GA  30504
	 	 
	 	Authentidate, Inc.
	 	300 Connell Drive, 5th Floor
	 	Berkeley Heights, NJ  07922
	 	 
	 	Express MD Solutions, LLC
	 	300 Connell Drive, 5th Floor
	 	Berkeley Heights, NJ  07922
	 	 
	 	Trac Medical Solutions, Inc.
	 	300 Connell Drive, 5th Floor
	 	Berkeley Heights, NJ  07922
	 	 
	Location of Collateral 	 
	and/or related records:	Authentidate Holding Corp. 
	 	2225 Centennial Drive
	 	Gainesville, GA  30504