Prepared and filed by St Ives Burrups






Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This
    Securities Purchase Agreement (this “Agreement”)
  is dated as of January 28, 2004, among Authentidate Holding Corp., a Delaware
  corporation (the “Company”), and the investors identified
  on the signature pages hereto (each, an “Investor” and collectively,
  the “Investors”).
  WHEREAS, subject to the terms
        and conditions set forth in this Agreement and pursuant to Section 4(2)
        of the Securities Act (as defined below) and Rule 506 promulgated thereunder,
        the Company desires to issue and sell to each Investor, and each Investor,
        severally and not jointly, desires to purchase from the Company certain
        securities of the Company, as more fully described in this Agreement.

    NOW, THEREFORE, IN CONSIDERATION
        of the mutual covenants contained in this Agreement, and for other good
        and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Investors agree as follows:


ARTICLE I.
DEFINITIONS


  1.1   Definitions.
      In addition to the terms defined elsewhere in this Agreement, for all purposes
      of this Agreement, the following terms shall have the meanings indicated
      in this Section 1.1:



“Action” means any action,
    suit, inquiry, notice of violation, proceeding (including any partial proceeding
    such as a
  deposition) or investigation pending or threatened in writing against or affecting
  the Company, any Subsidiary or any of their respective properties before or
  by any court, arbitrator, governmental or administrative agency, regulatory
  authority (federal, state, county, local or foreign), stock market, stock exchange
  or trading facility.

  “Affiliate” means
        any Person that, directly or indirectly through one or more intermediaries,
        controls or is controlled by or is under common control with a Person,
        as such terms are used in and construed under Rule 144.

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

    “Closing” means
        the closing of the purchase and sale of the Securities pursuant to Article
        II.

    “Closing Date” means
        the second Trading Day following the date on which all conditions set
        forth in Sections 5.1 and 5.2 hereof are satisfied.

    “Commission” means
        the Securities and Exchange Commission.









 
 

“Common Stock” means
    the common stock of the Company, par value $.001 per share, and any securities
    into which such
  common stock may hereafter be reclassified.
  “Common Stock Equivalents” means
        any securities of the Company or any Subsidiary which entitle the holder
        thereof to acquire Common Stock at any time, including without limitation,
        any debt, preferred stock, rights, options, warrants or other instrument
        that is at any time convertible into or exchangeable for, or otherwise
        entitles the holder thereof to receive, Common Stock or other securities
        that entitle the holder to receive, directly or indirectly, Common Stock.

    “Company Counsel”  means
        Goldstein & Digioia, LLP.

    “Effective Date” means
        the date that the Registration Statement required by Section 2(a) of
        the Registration Rights Agreement is first declared effective by the
        Commission.

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

    “Investment Amount” means,
        with respect to each Investor, the investment amount indicated below
        such Investor’s name on the signature page of this Agreement.

    “Lien” means
        any lien, charge, encumbrance, security interest, right of first refusal
        or other restrictions of any kind.

    “Per Share Purchase Price” equals
        $13.75.

    “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.

    “Proceeding” means
        an action, claim, suit, investigation or proceeding (including, without
        limitation, an investigation or partial proceeding, such as a deposition),
        whether commenced or threatened.

    “Registration Statement” means
        a registration statement meeting the requirements set forth in the Registration
        Rights Agreement and covering the resale by the Investors of the Shares.

    “Registration Rights
          Agreement” means the Registration Rights Agreement, dated
          as of the date of this Agreement, among the Company and the Investors,
          in the form of Exhibit A hereto.

    “Rule 144” means
        Rule 144 promulgated by the Commission pursuant to the Securities Act,
        as such Rule may be amended from time to time, or any similar rule or
        regulation hereafter adopted by the Commission having substantially the
        same effect as such Rule.

    “Securities” means
        the Shares.
    
 



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“Securities Act” means
    the Securities Act of 1933, as amended.
  “Shares” means
        the shares of Common Stock issued or issuable to the Investors pursuant
        to this Agreement.

    “Subsidiary” means
        any “significant subsidiary” as defined in Rule 1-02(w) of
        the Regulation S-X promulgated by the Commission under the Exchange Act.

    “Trading Day” means
        (i) a day on which the Common Stock is traded on a Trading Market, or
        (ii) if the Common Stock is not listed on a Trading Market, a day on
        which the Common Stock is traded in the over-the-counter market, as reported
        by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
        on the OTC Bulletin Board, a day on which the Common Stock is quoted
        in the over-the-counter market as reported by the National Quotation
        Bureau Incorporated (or any similar organization or agency succeeding
        to its functions of reporting prices); provided, that in the event that
        the Common Stock is not listed or quoted as set forth in (i), (ii) and
        (iii) hereof, then Trading Day shall mean a Business Day.

    “Trading Market” means
        whichever of the New York Stock Exchange, the American Stock Exchange,
        the NASDAQ National Market, the NASDAQ SmallCap Market or OTC Bulletin
        Board on which the Common Stock is listed or quoted for trading on the
        date in question.

    “Transaction Documents” means
        this Agreement, the Registration Rights Agreement, and any other documents
        or agreements executed in connection with the transactions contemplated
        hereunder.


ARTICLE II.
PURCHASE AND SALE


  2.1   Closing. Subject
      to the terms and conditions set forth in this Agreement, at the Closing
      the Company shall issue and sell to each Investor, and each Investor shall,
      severally
      and not jointly, purchase from the Company, the Shares representing such
      Investor’s Investment Amount. The Closing shall take place at the offices
      of Bryan Cave LLP, 1290 Avenue of the Americas, New York, NY 10104 on the
      Closing Date or at such other location or time as the parties may agree.
      If the Closing has not occurred on or before February 9, 2004, the Company’s
      obligation to sell and the Investor’s obligation to purchase the
      Shares will expire.




  2.2   Closing
        Deliveries. (a)  At the Closing, the Company shall deliver
        or cause to be delivered to each Investor the following:



(i)   a certificate evidencing a
  number of Shares equal to such Investor’s Investment Amount divided by
  the Per Share Purchase Price, registered in the name of such Investor or in
  the name of the Investor’s nominee;
  (ii)   the legal
        opinion of Company Counsel, in agreed form, addressed to the Investors;
        and





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(iii)   the
    Registration Rights Agreement, duly executed by the Company.
  (b)   At the Closing,
        each Investor shall deliver or cause to be delivered to the Company the
        following:

    (i)   its Investment
        Amount, in United States dollars and in immediately available funds,
        by wire transfer to an account designated in writing by the Company for
        such purpose; and

    (ii)   the Registration
        Rights Agreement, duly executed by such Investor.


ARTICLE III.
REPRESENTATIONS AND WARRANTIES


  3.1   Representations
        and Warranties of the Company. Except as set forth under the corresponding
        section of the disclosure schedules delivered to the Investors concurrently
        herewith (the “Disclosure Schedule”) (the parties agreeing
        that a disclosure in a particular section of the Disclosure Schedule shall
        only modify and qualify the specific representations and warranties therein
        specified in such section), the Company hereby makes the following representations
        and warranties to each Investor:



(a)   Subsidiaries. The Company
  has no direct or indirect Subsidiaries other than those listed in Schedule
  3.1(a) of the Disclosure Schedule. Except as disclosed in Schedule 3.1(a) of
  the Disclosure Schedule, the Company owns, directly or indirectly, all of the
  capital stock of each Subsidiary free and clear of any and all Liens, other
  than restrictions on transfer under applicable securities laws, and all the
  issued and outstanding shares of capital stock of each Subsidiary are validly
  issued and are fully paid, non-assessable and free of preemptive and similar
  rights.
(b)   Organization
          and Qualification. The Company and each Subsidiary is an entity
          duly incorporated or otherwise organized, validly existing and in good
          standing under the laws of the jurisdiction of its incorporation or
          organization (as applicable), with the requisite power and authority
          to own and use its properties and assets and to carry on its business
          as currently conducted. Neither the Company nor any Subsidiary is in
          violation of any of the provisions of its respective certificate or
          articles of incorporation, bylaws or other organizational or charter
          documents. The Company and each Subsidiary is duly qualified to conduct
          business and is in good standing as a foreign corporation or other
          entity in each jurisdiction in which the nature of the business conducted
          or property owned by it makes such qualification necessary, except
          where the failure to be so qualified or in good standing, as the case
          may be, could not, individually or in the aggregate, have or reasonably
          be expected to result in (i) a material and adverse effect on the legality,
          validity or enforceability of any Transaction Document, (ii) a material
          and adverse effect on the results of operations, assets, prospects,
          business or condition (financial or otherwise) of the Company and the
          Subsidiaries, taken as a whole, or (iii) an adverse impairment to the
          Company’s ability to perform on a timely basis its obligations under
          any Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”).


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(c)   Authorization; Enforcement.
  The Company has the requisite corporate power and authority to enter into and
  to consummate the transactions contemplated by each of the Transaction Documents
  and otherwise to carry out its obligations thereunder. The execution and delivery
  of each of the Transaction Documents by the Company and the consummation by
  it of the transactions contemplated thereby have been duly authorized by all
  necessary action on the part of the Company and no further action is required
  by the Company in connection therewith. Each Transaction Document has been
  (or upon delivery will have been) duly executed by the Company and, when delivered
  in accordance with the terms hereof, will constitute the valid and binding
  obligation of the Company enforceable against the Company in accordance with
  its terms, except (i) as may be limited by applicable bankruptcy, insolvency,
  reorganization, moratorium, liquidation or similar laws relating to, or affecting
  generally the enforcement of, creditors’ rights generally, (ii) insofar
  as the remedies may be unavailable and (iii) as the enforcement thereof may
  be limited by public policy. No representation or warranty is made hereby concerning
  the enforceability or valid and binding nature of Section 5 of the Registration
  Rights Agreement.

  (d)   No Conflicts. The execution,
      delivery and performance of the Transaction Documents by the Company and
      the consummation by the Company of the transactions contemplated thereby
      do not and will not (i) conflict with or violate any provision of the Company’s
      or any Subsidiary’s certificate or articles of incorporation, bylaws or
      other organizational or charter documents, or (ii) 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
      a Company or Subsidiary debt or otherwise) or other understanding to which
      the Company or any Subsidiary is a party or by which any property or asset
      of the Company or any Subsidiary is bound or affected, or (iii) result
      in a violation of any law, rule, regulation, order, judgment, injunction,
      decree or other restriction of any court or governmental authority to which
      the Company or a Subsidiary is subject (including federal and state securities
      laws and regulations), or by which any property or asset of the Company
      or a Subsidiary is bound or affected; except in the case of each of clauses
      (ii) and (iii), such as could not, individually or in the aggregate, have
      or reasonably be expected to result in a Material Adverse Effect.

  (e)   Filings, Consents and Approvals.
      The Company is not required to obtain any consent, waiver, authorization
      or order of, give any notice to, or make any filing or registration with,
      any court or other federal, state, local or other governmental authority
      or other Person in connection with the execution, delivery and performance
      by the Company of the Transaction Documents, other than (i) the filing
      with the Commission of one or more Registration Statements in accordance
      with the requirements Registration Rights Agreement, (ii) any filings required
      by state securities laws, (iii) the filing of a Notice of a Sale of Securities
      on Form D with the Commission under Regulation D of the Securities Act
      (iv) the filings required in accordance with Section 4.5, and (v) those
      that have been made or obtained prior to the date of this Agreement.


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(f)   Issuance of the Securities. The Securities
  have been duly authorized and, when issued and paid for in accordance with
  the Transaction Documents, will be duly and validly issued, fully paid and
  nonassessable, free and clear of all Liens, other than restrictions on transfer
  under applicable securities laws. The Company has reserved from its duly authorized
  capital stock all of the Shares.

  (g)   Capitalization. The
        number of shares and type of all authorized, issued and outstanding capital
        stock of the Company, and all shares of Common Stock reserved for issuance
        under the Company’s various option and incentive plans, is set
        forth in Schedule 3.1(g) of the Disclosure Schedule. Except as
        set forth in Schedule 3.1(g) of the Disclosure Schedule, no securities
        of the Company are entitled to preemptive or similar rights, and no Person
        has any right of first refusal, preemptive right, right of participation,
        or any similar right to participate in the transactions contemplated
        by the Transaction Documents. Except as a result of the purchase and
        sale of the Securities and except as disclosed in Schedule 3.1(g) of
        the Disclosure Schedule, there are no outstanding options, warrants,
        scrip rights to subscribe to, calls or commitments of any character whatsoever
        relating to, or securities, rights or obligations convertible into or
        exchangeable for, or giving any Person any right to subscribe for or
        acquire, any shares of Common Stock, or contracts, commitments, understandings
        or arrangements by which the Company or any Subsidiary is or may become
        bound to issue additional shares of Common Stock, or securities or rights
        convertible or exchangeable into shares of Common Stock. Except as set
        forth in Schedule 3.1(g)of the Disclosure Schedule, the
        issue and sale of the Securities will not, immediately or with the passage
        of time, obligate the Company to issue shares of Common Stock or other
        securities to any Person (other than the Investors) and will not result
        in a right of any holder of Company securities to adjust the exercise,
        conversion, exchange or reset price under such securities.

    (h)   SEC Reports; Financial
          Statements. The Company has filed all reports required to be filed
          by it under the Securities Act and the Exchange Act, including pursuant
          to Section 13(a) or 15(d) thereof, for the twelve months preceding
          the date hereof (or such shorter period as the Company was required
          by law to file such reports) (the foregoing materials being collectively
          referred to herein as the “SEC Reports”  and, together
          with the of the Disclosure Schedule, the “Disclosure Materials” )
          on a timely basis or has timely filed a valid extension of such time
          of filing and has filed any such SEC Reports prior to the expiration
          of any such extension. As of their respective dates, the SEC Reports
          complied in all material respects with the requirements of the Securities
          Act and the Exchange Act and the rules and regulations of the Commission
          promulgated thereunder, and none of the SEC Reports, when filed, contained
          any untrue statement of a material fact or omitted to state a material
          fact required to be stated therein or necessary in order to make the
          statements therein, in light of the circumstances under which they
          were made, not misleading. The financial statements of the Company
          included in the SEC Reports comply in all material respects with applicable
          accounting requirements and the rules and regulations of the Commission
          with respect thereto as in effect at the time of filing. Such financial
          statements have been prepared in accordance with generally accepted
          accounting principles in the United States applied on a consistent
          basis during the periods involved (“GAAP” ), except
          as may be otherwise specified in such financial statements or the notes
          thereto, and fairly present in all material respects the financial
          position of the Company and its consolidated Subsidiaries as of and
          for the dates thereof and the results of operations and cash flows
          for the periods then ended, subject, in the case of unaudited statements,
          to normal, immaterial, year-end audit adjustments. 


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(i)   Press Releases. The press releases disseminated
  by the Company during the two (2) years preceding the date of this Agreement
  do not contain any untrue statement of a material fact or omit to state a material
  fact required to be stated therein or necessary in order to make the statements
  therein, in light of the circumstances under which they were made and when
  made, not misleading.

  (j)   Material Changes. Since
        the date of the latest audited financial statements included within the
        SEC Reports, except as specifically disclosed in the SEC Reports, (i)
        there has been no event, occurrence or development that has had or that
        could reasonably be expected to result in a Material Adverse Effect,
        (ii) the Company has not incurred any liabilities (contingent or otherwise)
        other than (A) trade payables, accrued expenses and other liabilities
        incurred in the ordinary course of business consistent with past practice
        and (B) liabilities not required to be reflected in the Company’s financial
        statements pursuant to GAAP or required to be disclosed in filings made
        with the Commission, (iii) the Company has not altered its method of
        accounting or the identity of its auditors, (iv) the Company has not
        declared or made any dividend or distribution of cash or other property
        to its stockholders or purchased, redeemed or made any agreements to
        purchase or redeem any shares of its capital stock, and (v) the Company
        has not issued any equity securities to any officer, director or Affiliate,
        except pursuant to existing Company stock option plans. The Company does
        not have pending before the Commission any request for confidential treatment
        of information.

    (k)   Litigation. There is
        no Action which (i) adversely affects or challenges the legality, validity
        or enforceability of any of the Transaction Documents or the Securities
        or (ii) except as specifically disclosed in the SEC Reports, could, if
        there were an unfavorable decision, individually or in the aggregate,
        have or reasonably be expected to result in a Material Adverse Effect.
        Neither the Company nor any Subsidiary, nor any director or officer thereof,
        is or has been the subject of any Action involving a claim of violation
        of or liability under federal or state securities laws or a claim of
        breach of fiduciary duty, except as specifically disclosed in the SEC
        Reports. There has not been, and to the knowledge of the Company, there
        is not pending or contemplated, any investigation by the Commission involving
        the Company or any current or former director or officer of the Company.
        The Commission has not issued any stop order or other order suspending
        the effectiveness of any registration statement filed by the Company
        or any Subsidiary under the Exchange Act or the Securities Act.

    (l)   Labor Relations. No
        material labor dispute exists or, to the knowledge of the Company, is
        imminent with respect to any of the employees of the Company.


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(m)   Compliance. Neither the Company nor any
  Subsidiary (i) is in default under or in violation of (and no event has occurred
  that has not been waived that, with notice or lapse of time or both, would
  result in a default by the Company or any Subsidiary under), nor has the Company
  or any Subsidiary received notice of a claim that it is in default under or
  that it is in violation of, any indenture, loan or credit agreement or any
  other agreement or instrument to which it is a party or by which it or any
  of its properties is bound (whether or not such default or violation has been
  waived), (ii) is in violation of any order of any court, arbitrator or governmental
  body, or (iii) is or has been in violation of any statute, rule or regulation
  of any governmental authority, including without limitation all foreign, federal,
  state and local laws relating to taxes, environmental protection, occupational
  health and safety, product quality and safety and employment and labor matters,
  except in each case as could not, individually or in the aggregate, have or
  reasonably be expected to result in a Material Adverse Effect. The Company
  is in compliance with the applicable requirements of the Sarbanes-Oxley Act
  of 2002, as amended, and the rules and regulations thereunder, except where
  such noncompliance could not have or reasonably be expected to result in a
  Material Adverse Effect.

  (n)   Regulatory Permits.
        The Company and the Subsidiaries possess all certificates, authorizations
        and permits issued by the appropriate federal, state, local or foreign
        regulatory authorities necessary to conduct their respective businesses
        as described in the SEC Reports, except where the failure to possess
        such permits would not, individually or in the aggregate, have or reasonably
        be expected to result in a Material Adverse Effect (“Material
        Permits” ), and neither the Company nor any Subsidiary has received
        any notice of proceedings relating to the revocation or modification
        of any Material Permit.

    (o)   Title to Assets. The
        Company and the Subsidiaries have good and marketable title in fee simple
        to all real property owned by them that is material to their respective
        businesses and good and marketable title in all personal property owned
        by them that is material to their respective businesses, in each case
        free and clear of all Liens, except for Liens as do not materially affect
        the value of such property and do not materially interfere with the use
        made and proposed to be made of such property by the Company and the
        Subsidiaries. Any real property and facilities held under lease by the
        Company and the Subsidiaries are held by them under valid, subsisting
        and enforceable leases of which the Company and the Subsidiaries are
        in compliance, except as could not, individually or in the aggregate,
        have or reasonably be expected to result in a Material Adverse Effect.



  (p)   Patents and Trademarks.




  (i)   The Company or its Subsidiaries own or have a
    valid license to use all patent, copyright, trade secret, trademark or other
    proprietary rights that are used in the business of the Company and are material
    to the Company and its Subsidiaries taken as a whole (collectively, “Intellectual
    Property”). All of such material patents, registered trademarks and
    registered copyrights have been (A) duly registered in, (B) has filed applications
    for registration in or (C) issued by the United States Patent and Trademark
    Office, the United States Register of Copyrights or the corresponding offices
    of other jurisdictions and have been maintained and renewed in accordance with
    all applicable provisions of law and administrative regulations in the United
    States and all such jurisdictions.

   



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  (ii)   All material licenses
          or other material agreements under which (A) the Company or any Subsidiary is granted rights in Intellectual
        Property and (B) the Company or any Subsidiary has granted rights
        to others in Intellectual Property owned or licensed by the Company or
        any Subsidiary,
        are in full force and effect and there is no material default by the
        Company or any Subsidiary thereto.

  (iii)   No proceedings have been
        instituted or, to the Company’s knowledge, are pending which challenge
        in a material manner the rights of the Company or any Subsidiary in respect
        to the Company or any Subsidiary’s right to the use of the Intellectual
        Property. The Company and each Subsidiary believes that it has the right
        to use, free and clear of material claims or rights of other persons,
        all of its customer lists, designs, computer software, systems, data
        compilations, and other information that are required for its products
        or its business as presently conducted.

    (iv)   The Company believes it and
        each Subsidiary has taken such reasonable steps as are required in accordance
        with sound business practice and business judgment to establish and preserve
        its ownership of all material copyright, trade secret and other proprietary
        rights with respect to its products and technology.

    (v)   To the knowledge of the Company,
        the present business, activities and products of the Company and each
        Subsidiary do not infringe any intellectual property of any other person,
        except where such infringement would not have a Material Adverse Effect.
        No material proceeding charging the Company or any Subsidiary with infringement
        of any adversely held Intellectual Property has been filed. Except as
        set forth on the Disclosure Schedule, the Company has not received or
        is otherwise aware of any infringement of or conflict with asserted rights
        of others with respect to any Intellectual Property or of any facts or
        circumstances which would render any Intellectual Property invalid or
        inadequate to protect the interests of the Company or any Subsidiary,
        and which infringement or conflict (if the subject of any unfavorable
        decision, ruling or finding) or invalidity or inadequacy, singly or in
        the aggregate, would result in a Material Adverse Effect. To the Company’s
        knowledge, there exists no third party unexpired patent or patent application
        which includes claims that would be infringed by, or otherwise have a
        Material Adverse Effect. To the knowledge of the Company, the Company
        is not making unauthorized use of any material confidential information
        or trade secrets of any third party. To the Company’s knowledge,
        the activities of the Company or any Subsidiary or any employee on behalf
        of the Company or any Subsidiary do not violate any material agreements
        or arrangements known to the Company which any such employees have with
        other persons, if any.



  (q)   Insurance.
      The Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries
      are engaged. The Company has no reason to believe that it will not be able
      to renew its existing insurance coverage as and when such coverage expires
      or to obtain similar coverage from similar insurers as may be necessary to
      continue its business without a significant increase in cost.


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  (r)   Transactions With Affiliates and Employees.
      Except as set forth in the SEC Reports and on the Disclosure Schedule, none
      of the officers or directors of the Company and, to the knowledge of the Company,
      none of the employees of the Company is presently a party to any transaction
      with the Company or any Subsidiary (other than for services as employees, officers
      and directors), including any contract, agreement or other arrangement providing
      for the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or is an officer, director, trustee or partner.

  (s)   Internal
        Accounting Controls.
        The Company and the Subsidiaries maintain a system of internal accounting
        controls sufficient to provide reasonable assurance that (i) transactions
        are executed in accordance with management’s general or specific authorizations,
        (ii) transactions are recorded as necessary to permit preparation of
        financial statements in conformity with generally accepted accounting
        principles and to maintain asset accountability, (iii) access to assets
        is permitted only in accordance with management’s general or specific
        authorization, and (iv) the recorded accountability for assets is compared
        with the existing assets at reasonable intervals and appropriate action
        is taken with respect to any differences. The Company has established
        disclosure controls and procedures (as defined in Exchange Act rules
        13a-14 and 15d-14) for the Company and designed such disclosure controls
        and procedures to ensure that material information relating to the Company,
        including its Subsidiaries, is made known to the certifying officers
        by others within those entities, particularly during the period in which
        the Company’s Form 10-K or 10-Q, as the case may be, is being prepared.
        The Company’s certifying officers have evaluated the effectiveness of
        the Company’s controls and procedures as of a date within 90 days
        prior to the filing date of the Form 10-Q for the Company’s most
        recently ended fiscal quarter (such date, the “Evaluation Date”).
        The Company presented in its most recently filed Form 10-K or Form 10-Q
        the conclusions of the certifying officers about the effectiveness of
        the disclosure controls and procedures based on their evaluations as
        of the Evaluation Date. Since the Evaluation Date, there have been no
        significant changes in the Company’s internal controls (as such
        term is defined in Item 307(b) of Regulation S-K under the Exchange Act)
        or, to the Company’s knowledge, in other factors that could significantly
        affect the Company’s internal controls.

    (t)   Solvency. Based on
        the financial condition of the Company as of the Closing Date (and assuming
        that the Closing shall have occurred), (i) the Company’s fair saleable
        value of its assets exceeds the amount that will be required to be paid
        on or in respect of the Company’s existing debts and other liabilities
        (including known contingent liabilities) as they mature; (ii) the Company’s
        assets do not constitute unreasonably small capital to carry on its business
        for the current fiscal year as now conducted and as proposed to be conducted
        including its capital needs taking into account the particular capital
        requirements of the business conducted by the Company, and projected
        capital requirements and capital availability thereof; and (iii) the
        current cash flow of the Company, together with the proceeds the Company
        would receive, were it to liquidate all of its assets, after taking into
        account all anticipated uses of the cash, would be sufficient to pay
        all amounts on or in respect of its debt when such amounts are required
        to be paid. The Company does not intend to incur debts beyond its ability
        to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).


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(u)   Certain Fees. Except as described in Schedule
    3.1(u) of the Disclosure Schedule, no brokerage or finder’s fees or commissions
    are or will be payable by the Company to any broker, financial advisor or
    consultant, finder, placement agent, investment banker, bank or other Person
    with respect to the transactions contemplated by this Agreement. The Investors
    shall have no obligation with respect to any fees or with respect to any
    claims (other than such fees or commissions owed by an Investor pursuant
    to written agreements executed by such Investor which fees or commissions
    shall be the sole responsibility of such Investor) made by or on behalf of
    other Persons for fees of a type contemplated in this Section that may be
    due in connection with the transactions contemplated by this Agreement.

  (v)   Certain Registration Matters.
        Assuming the accuracy of the Investors’ representations and warranties
        set forth in Section 3.2(b)-(f), no registration under the Securities
        Act is required for the offer and sale of the Securities by the Company
        to the Investors under the Transaction Documents. Except as described
        in Schedule 3.1(v) of the Disclosure Schedule, the Company has
        not granted or agreed to grant to any Person any rights (including “piggy-back” registration
        rights) to have any securities of the Company registered with the Commission
        or any other governmental authority that have not been satisfied.

    (w)   Listing and Maintenance
          Requirements. Except as specified in the SEC Reports, the Company
          has not, in the two years preceding the date hereof, received notice
          from any Trading Market to the effect that the Company is not in compliance
          with the listing or maintenance requirements thereof. The Company is,
          and has no reason to believe that it will not in the foreseeable future
          continue to be, in compliance with the listing and maintenance requirements
          for continued listing of the Common Stock on the Trading Market. The
          issuance and sale of the Securities under the Transaction Documents
          does not contravene the rules and regulations of the Trading Market
          on which the Common Stock is currently listed or quoted (including
          Rule 4350 of the Nasdaq Stock Market if the Trading Market is the Nasdaq
          National or Nasdaq SmallCap Market), and no approval of the shareholders
          of the Company thereunder is required for the Company to issue and
          deliver to the Investors the maximum number of Securities contemplated
          by Transaction Documents, including such as may be required pursuant
          to Nasdaq Rule 4350.

    (x)   Investment Company.
        The Company is not, and is not an Affiliate of, an “investment
        company” within the meaning of the Investment Company Act of 1940,
        as amended.

    (y)   Application of Takeover
          Protections. The Company has taken all necessary action, if any,
          in order to render inapplicable any control share acquisition, business
          combination, poison pill (including any distribution under a rights
          agreement) or other similar anti-takeover provision under the Company’s
          Certificate of Incorporation (or similar charter documents) or the
          laws of its state of incorporation that is or could become applicable
          to the Investors as a result of the Investors and the Company fulfilling
          their obligations or exercising their rights under the Transaction
          Documents, including without limitation the Company’s issuance of the
Securities and the Investors’ ownership of the Securities.


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  (z)   No Additional Agreements. The Company
      does not have any agreement or understanding with any Investor with respect
      to the transactions contemplated by the Transaction Documents other than as
      specified in the Transaction Documents.

  (aa)   Disclosure. The Company
        confirms that neither it nor any Person acting on its behalf has provided
        any of the Investors or their agents or counsel with any information
        that the Company believes constitutes material, non-public information.
        The Company understands and confirms that the Investors will rely on
        the foregoing representations and covenants in effecting transactions
        in securities of the Company. All disclosure provided to the Investors
        regarding the Company, its business and the transactions contemplated
        hereby, furnished by or on behalf of the Company (including the Company’s
        representations and warranties set forth in this Agreement) are true
        and correct and do not contain any untrue statement of a material fact
        or omit to state any material fact necessary in order to make the statements
        made therein, in light of the circumstances under which they were made,
not misleading. 



  3.2   Representations
        and Warranties of the Investors. Each Investor hereby, for itself and
        for no other Investor, represents and warrants to the Company as follows:



(a)   Organization; Authority.
    Such Investor is an entity duly organized, validly existing and in good standing
    under the
  laws of the jurisdiction of its organization with the requisite corporate or
  partnership power and authority to enter into and to consummate the transactions
  contemplated by the applicable Transaction Documents and otherwise to carry
  out its obligations thereunder. The execution, delivery and performance by
  such Investor of the transactions contemplated by this Agreement has been duly
  authorized by all necessary corporate or, if such Investor is not a corporation,
  such partnership, limited liability company or other applicable like action,
  on the part of such Investor. Each of this Agreement and the Registration Rights
  Agreement has been duly executed by such Investor, and when delivered by such
  Investor in accordance with terms hereof, will constitute the valid and legally
  binding obligation of such Investor, enforceable against it in accordance with
  its terms, except as such enforceability may be limited by applicable bankruptcy,
  insolvency, reorganization, moratorium, liquidation or similar laws relating
  to, or affecting generally the enforcement of, creditors’ rights and
  remedies or by other equitable principles of general application. No representation
  or warranty is made hereby concerning the enforceability or valid and binding
  nature of Section 5 of the Registration Rights Agreement.

  (b)   Investment Intent. Such
      Investor is acquiring the Securities as principal for its own account for
      investment purposes only and not with a view to or for distributing or
      reselling such Securities or any part thereof, without prejudice, however,
      to such Investor’s right at all times to sell or otherwise dispose of all
      or any part of such Securities in compliance with applicable federal and
      state securities laws. Subject to the immediately preceding sentence, nothing
      contained herein shall be deemed a representation or warranty by such Investor
      to hold the Securities for any period of time.


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(c)   Investor Status; Experience.
    At the time such Investor was offered the Securities, it was, and at the
    date hereof it
  is an “accredited investor” as defined in Rule 501(a) under the Securities
  Act. Such Investor is not a registered broker-dealer under Section 15 of the
  Exchange Act. Such Investor is acquiring the Securities hereunder in the ordinary
  course of its business. Such Investor does not have any agreement or understanding,
  directly or indirectly, with any Person to distribute any of the Securities.
  Such Investor either alone or together with its representatives, has such knowledge,
  sophistication and experience in business and financial matters so as to be
  capable of evaluating the merits and risks of the prospective investment in
  the Shares, and has so evaluated the merits and risks of such investment. Such
  Investor is able to bear the economic risk of an investment in the Shares and,
  at the present time, is able to afford a complete loss of such investment.

  (d)   General Solicitation.
        Such Investor is not purchasing the Securities as a result of any advertisement,
        article, notice or other communication regarding the Securities published
        in any newspaper, magazine or similar media or broadcast over television
        or radio or presented at any seminar or any other general solicitation
        or general advertisement.

    (e)   Access to Information.
        Such Investor acknowledges that it has reviewed the Disclosure Materials
        and has been afforded (i) the opportunity to ask such questions as it
        has deemed necessary of, and to receive answers from, representatives
        of the Company concerning the terms and conditions of the offering of
        the Shares and the merits and risks of investing in the Securities; (ii)
        access to information about the Company and the Subsidiaries and their
        respective financial condition, results of operations, business, properties,
        management and prospects sufficient to enable it to evaluate its investment;
        and (iii) the opportunity to obtain such additional information that
        the Company possesses or can acquire without unreasonable effort or expense
        that is necessary to make an informed investment decision with respect
        to the investment. Neither such inquiries nor any other investigation
        conducted by or on behalf of such Investor or its representatives or
        counsel shall modify, amend or affect such Investor’s right to rely on
        the truth, accuracy and completeness of the Disclosure Materials and
        the Company’s representations and warranties contained in the Transaction
        Documents.

    (f)   Limited Ownership.The
        purchase by such Investor of the Securities issuable to it at the Closing
        will not result in such Investor (individually or together with other
        Person with whom such Investor has identified, or will have identified,
        itself as part of a “group” in a public filing made with
        the Commission involving the Company’s securities) acquiring, or
        obtaining the right to acquire, in excess of 19.999% of the Common Stock
        or the voting power of the Company on a post transaction basis that assumes
        that the Closing shall have occurred. Such Investor does not presently
        intend to, alone or together with others, make a public filing with the
        Commission to disclose that it has (or that it together with such other
        Persons have) acquired, or obtained the right to acquire, as a result
        of the Closing (when added to any other securities of the Company that
        it or they then own or have the right to acquire), in excess of 19.999%
        of the Common Stock or the voting power of the Company on a post transaction
        basis that assumes that the Closing shall have occurred.


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(g)   Independent Investment Decision.
    Such Investor has independently evaluated the merits of its decision to purchase
  Securities pursuant to this Agreement, such decision has been independently
  made by such Investor and such Investor confirms that it has only relied on
  the advice of its own business and/or legal counsel and not on the advice of
  any other Investor’s business and/or legal counsel, or the Company’s
  legal counsel, in making such decision. Such Investor has not relied on the
  truth, accuracy or completeness of the statements contained in any research
  report concerning the Company that was prepared by an investment banking firm.

  (h)   Reliance. Such Investor
        understands and acknowledges that: (i) the Shares are being offered and
        sold to it without registration under the Securities Act in a private
        placement that is exempt from the registration provisions of the Securities
        Act and (ii) the availability of such exemption depends in part on, and
        the Company will rely upon the accuracy and truthfulness of, the foregoing
        representations and such Investor hereby consents to such reliance.

    The Company acknowledges and
        agrees that each Investor does not make or has not made any representations
        or warranties with respect to the transactions contemplated hereby other
        than those specifically set forth in this Section 3.2.


ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES


  4.1   (a)   Securities may
      only be disposed of in compliance with state and federal securities laws.
      In connection with any transfer of the Securities other than pursuant to
      an effective registration statement, to the Company, to an Affiliate of an
      Investor or in connection with a pledge as contemplated in Section 4.1(b),
      the Company may require the transferor thereof to provide to the Company
      an opinion of counsel selected by the transferor, the form and substance
      of which opinion shall be reasonably satisfactory to the Company, to the
      effect that such transfer does not require registration of such transferred
      Securities under the Securities Act. 




  (b)   Certificates evidencing
      the Securities will contain the following legend, until such time as they
      are not required under Section 4.1(c):




  [NEITHER THESE SECURITIES
      NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
      REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES
      AND EXCHANGE
      COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
      OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES
      ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
      SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
      ACCORDANCE
      WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
      COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
      BE REASONABLY ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES
      ISSUABLE UPON EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED
      IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

   



  14





 
 

The Company
    acknowledges and agrees that an Investor may from time to time pledge, and/or
    grant a security interest in some or all
  of the Securities pursuant to a bona fide margin agreement in connection with
  a bona fide margin account and, if required under the terms of such agreement
  or account, such Investor may transfer pledged or secured Securities to the
  pledgees or secured parties. Such a pledge or transfer would not be subject
  to approval or consent of the Company and no legal opinion of legal counsel
  to the pledgee, secured party or pledgor shall be required in connection with
  the pledge, but such legal opinion may be required in connection with a subsequent
  transfer following default by the Investor transferee of the pledge. No notice
  shall be required of such pledge. At the appropriate Investor’s expense,
  the Company will execute and deliver such reasonable documentation as a pledgee
  or secured party of Securities may reasonably request in connection with a
  pledge or transfer of the Securities including the preparation and filing of
  any required prospectus supplement under Rule 424(b)(3) of the Securities Act
  or other applicable provision of the Securities Act to appropriately amend
  the list of Selling Stockholders thereunder.

  (c)   Certificates evidencing the
      Shares shall not contain any legend (including the legend set forth in
      Section 4.1(b)): (i) following a sale of such Securities pursuant to an
      effective registration statement (including the Registration Statement),
      or (ii) following a sale of such Securities pursuant to Rule 144 (assuming
      the transferor is not an Affiliate of the Company), or (iii) while such
      Securities are eligible for sale under Rule 144(k) following receipt of
      such certifications as to such Investor’s eligibility to rely on
      such Rule as the Company may reasonably request), or (iv) if such legend
      is not required under applicable requirements of the Securities Act (including
      judicial interpretations and pronouncements issued by the Staff of the
      Commission). Following such time as restrictive legends are not required
      to be placed on certificates representing Securities, the Company will,
      no later than three Trading Days following the delivery by an Investor
      to the Company or the Company’s transfer agent of a certificate representing
      such Securities containing a restrictive legend, deliver or cause to be
      delivered to such Investor a certificate representing such Securities that
      is free from all restrictive and other legends. The Company may not make
      any notation on its records or give instructions to any transfer agent
      of the Company that enlarge the restrictions on transfer set forth in this
      Section.


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4.2   Furnishing of Information. As long as
  any Investor owns the Securities, the Company covenants to timely file (or
  obtain extensions in respect thereof and file within the applicable grace period)
  all reports required to be filed by the Company after the date hereof pursuant
  to the Exchange Act. As long as any Investor owns Securities, if the Company
  is not required to file reports pursuant to such laws, it will prepare and
  furnish to the Investors and make publicly available in accordance with Rule
  144(c) such information as is required for the Investors to sell such Securities
  under Rule 144. The Company further covenants that it will take such further
  action as any holder of Securities may reasonably request, all to the extent
  required from time to time to enable such Person to sell such Securities without
  registration under the Securities Act within the limitation of the exemptions
  provided by Rule 144.

  4.3   Integration. The Company
        shall not, and shall use its best efforts to ensure that no Affiliate
        of the Company shall, sell, offer for sale or solicit offers to buy or
        otherwise negotiate in respect of any security (as defined in Section
        2 of the Securities Act) that would be integrated with the offer or sale
        of the Securities in a manner that would require the registration under
        the Securities Act of the sale of the Securities to the Investors, or
        that would be integrated with the offer or sale of the Securities for
        purposes of the rules and regulations of any Trading Market.

    4.4   Subsequent Registrations.
        Other than pursuant to the Registration Statement, prior to the Effective
        Date, the Company may not file any registration statement (other than
        on Form S-8) with the Commission with respect to any securities of the
        Company. Notwithstanding the foregoing, the Company may during such period
        of time file such prospectus supplements or amendments to presently effective
        registration statements as it may consider to be necessary or in its
        best interests in order to keep current and accurate the information
        contained therein.

    4.5   Securities Laws Disclosure;
          Publicity. By 8:30 a.m. (New York City time) on the Trading Day
          immediately following the date of this Agreement, the Company will
          issue a press release disclosing the execution of this Agreement. On
          the Trading Day immediately following the date of this Agreement, the
          Company will file a Current Report on Form 8-K disclosing the material
          terms of the transactions contemplated hereby. By 2:00 p.m. (New York
          City time) on the Closing Date, the Company will issue a press release
          and file a Current Report on Form 8-K disclosing the closing of the
          transactions contemplated hereby. In addition, the Company will make
          such other filings and notices in the manner and time required by the
          Commission and the Trading Market on which the Common Stock is listed.
          Notwithstanding the foregoing, the Company shall not publicly disclose
          the name of any Investor, or include the name of any Investor in any
          filing with the Commission (other than the Registration Statement and
          any exhibits to filings made in respect of this transaction in accordance
          with periodic filing requirements under the Exchange Act) or any regulatory
          agency or Trading Market, without the prior written consent of such
          Investor, except to the extent such disclosure is required by law or
          Trading Market regulations, in which case the Company shall provide
          the Investors with prior notice of such disclosure.


16





 


4.6   Limitation on Issuance of Future Priced Securities.
  During the six months following the Closing Date, the Company shall not issue
  any “Future Priced Securities” as such term is described by NASD
  IM-4350-1.

  4.7   Indemnification of Investors.
        In addition to the indemnity provided in the Registration Rights Agreement,
        the Company will indemnify and hold the Investors and their directors,
        officers, shareholders, partners, employees and agents (each, an “Investor
        Party” ) harmless from any and all losses, liabilities, obligations,
        claims, contingencies, damages, costs and expenses, including all judgments,
        amounts paid in settlements, court costs and reasonable attorneys’ fees
        and costs of investigation (collectively, “Losses” )
        that any such Investor Party may suffer or incur as a result of or relating
        to any misrepresentation, breach or inaccuracy of any representation,
        warranty, covenant or agreement made by the Company in any Transaction
        Document. In addition to the indemnity contained herein, the Company
        will reimburse each Investor Party for its reasonable legal and other
        expenses (including the cost of any investigation, preparation and travel
        in connection therewith) incurred in connection therewith, as such expenses
        are incurred. The applicable procedural requirements of Section 5(c)
        of the Registration Rights Agreement shall apply to the procedures of
        any indemnification claims under this Section.

    4.8   Non-Public Information.
        The Company covenants and agrees that neither it nor any other Person
        acting on its behalf will provide any Investor or its agents or counsel
        with any information that the Company believes constitutes material non-public
        information, unless prior thereto such Investor shall have executed a
        written agreement regarding the confidentiality and use of such information.
        The Company understands and confirms that each Investor shall be relying
        on the foregoing representations in effecting transactions in securities
        of the Company.

    4.9   Use of Proceeds. The
        Company shall use the proceeds from the sale of the Securities hereunder,
        net of offering expenses, for working capital purposes and not for the
        satisfaction of any portion of the Company’s debt (other than payment
        of trade payables and accrued expenses in the ordinary course of the
        Company’s business and prior practices), to redeem any Common Stock
        or Common Stock Equivalents or to settle any outstanding Action.


ARTICLE V.


  5.1   Conditions Precedent
        to the Obligations of the Investors to Purchase Securities. The obligation
        of each Investor to acquire Securities at the Closing is subject to the
        satisfaction or waiver by such Investor, at or before the Closing, of each
        of the following conditions:




  (a)   Representations and Warranties. The representations
    and warranties of the Company contained herein shall be true and correct in
    all material respects as of the date when made and as of the Closing Date as
    though made on and as of such date;
      

      (b)   Performance. The Company
            shall have performed, satisfied and complied in all material respects
            with all covenants, agreements and conditions required by the Transaction
            Documents to be performed, satisfied or complied with by it at or prior
            to the Closing;



17





 


(c)   No Injunction. No statute, rule, regulation,
  executive order, decree, ruling or injunction shall have been enacted, entered,
  promulgated or endorsed by any court or governmental authority of competent
  jurisdiction that prohibits the consummation of any of the transactions contemplated
  by the Transaction Documents;

  (d)   Adverse Changes. Since
        the date of execution of this Agreement, no event or series of events
        shall have occurred that reasonably would be expected to have or result
        in a (i) an adverse effect on the legality, validity or enforceability
        of any Transaction Document, or (ii) a material and adverse effect on
        the results of operations, assets, business or condition (financial or
        otherwise) of the Company and the Subsidiaries, taken as a whole; 

    (e)   No Suspensions of Trading
          in Common Stock; Listing. Trading in the Common Stock shall not
          have been suspended by the Commission or any Trading Market (except
          for any suspensions of trading of not more than one Trading Day solely
          to permit dissemination of material information regarding the Company)
          at any time since the date of execution of this Agreement, and the
          Common Stock shall have been at all times since such date listed for
          trading on a Trading Market; 

    (f)   Nasdaq Listing. The
        Nasdaq Stock Market shall have waived application of the 15 day prior
        notice contained in NASD Marketplace Rule 4310(c)(17)(D) or such timeframe
        shall have expired without objection; 

    (g)   Lock-Up. The Company
        shall have obtained such agreements and documents as are reasonably required
        to lock-up the options held by John Botti, CEO of the Company, such that
        they may not be exercised prior to the amendment to the Company’s
        certificate of incorporation to increase the number of authorized and
        unissued shares in accordance with the proxy statement filed with the
        SEC on December 31, 2003.

    (h)   Waivers. The Company
        shall have received the waivers of all participation rights referenced
        in Schedule 3.1(g)(1) of the Disclosure Schedule; and

    (i)   Timing. The Closing
        shall have occurred no later than February 9, 2004.



  5.2   Conditions Precedent
        to the Obligations of the Company to sell Securities. The obligation
        of the Company to sell Securities at the Closing is subject to the satisfaction
        or waiver by the Company, at or before the Closing, of each of the following
        conditions:



(a)   Representations and Warranties. The representations
  and warranties of each Investor contained herein shall be true and correct
  in all material respects as of the date when made and as of the Closing Date
  as though made on and as of such date;
  (b)   Performance. Each Investor
        shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by the Transaction
        Documents to be performed, satisfied or complied with by such Investor
        at or prior to the Closing;


  18





 
 

(c)   No Injunction. No statute, rule, regulation,
  executive order, decree, ruling or injunction shall have been enacted, entered,
  promulgated or endorsed by any court or governmental authority of competent
  jurisdiction that prohibits the consummation of any of the transactions contemplated
  by the Transaction Documents;

  (d)   Nasdaq Listing. The
        Nasdaq Stock Market shall have waived application of the 15 day prior
        notice contained in NASD Marketplace Rule 4310(c)(17)(D) or such timeframe
        shall have expired without objection; 

    (e)   Lock-Up. The Company
        shall have obtained such agreements and documents as are reasonably required
        to lock-up the options held by John Botti, CEO of the Company, such that
        they may not be exercised prior to the amendment to the Company’s
        certificate of incorporation to increase the number of authorized and
        unissued shares in accordance with the proxy statement filed with the
        SEC on December 31, 2003.

    (f)   Waivers. The Company
        shall have received the waivers of all participation rights referenced
        in Schedule 3.1(g)(1) of the Disclosure Schedule; and

    (g)   Timing. The Closing
        shall have occurred no later than February 9, 2004.


ARTICLE VI.
MISCELLANEOUS

6.1   Fees and Expenses. Each Investor and the
  Company shall pay the fees and expenses of its advisers, counsel, accountants
  and other experts, if any, and all other expenses incurred by such party incident
  to the negotiation, preparation, execution, delivery and performance of the
  Transaction Documents. The Company has agreed to pay $25,000 of the legal fees
  and expenses incurred by Roth Capital Partners LLC at the Closing. The Company
  shall pay all stamp and other taxes and duties levied in connection with the
  sale of the Securities.

  6.2   Entire
        Agreement. The
        Transaction Documents, together with the Exhibits and the Disclosure
        Schedule and other schedules thereto, contain the entire understanding
        of the parties with respect to the subject matter hereof and supersede
        all prior agreements and understandings, oral or written, with respect
        to such matters, which the parties acknowledge have been merged into
        such documents, exhibits and schedules. The Company hereby incorporates
        by reference into the Agreement the following information on file with
        the Commission: (a) Annual Report on Form 10-K/A for the fiscal
        year ended June 30, 2003 and (b) Quarterly Report on Form 10-Q
        for the fiscal quarter ended September 30, 2003. Such incorporation
        shall not impair the Investor’s reliance on the Company’s representations
        and warranties set forth herein.

    6.3   Notices. Any and all
        notices or other communications or deliveries required or permitted to
        be provided hereunder shall be in writing and shall be deemed given and
        effective on the earliest of (a) the date of transmission, if such notice
        or communication is delivered via facsimile at the facsimile number specified
        in this Section prior to 6:30 p.m. (New York City time) on a Trading
        Day, (b) the next Trading Day after the date of transmission, if such
        notice or communication is delivered via facsimile at the facsimile number
        specified in this Section on a day that is not a Trading Day or later
        than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading
        Day following the date of mailing, if sent by U.S. nationally recognized
        overnight courier service, or (d) upon actual receipt by the party to
        whom such notice is required to be given. The address for such notices
        and communications shall be as follows:


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	If to the Company:	
 Authentidate Holding Corp
2165 Technology Drive,
Schenectady, NY  12308
Facsimile No.: (518) 346-3644
Attn: Chief Financial Officer 
	 	 
	With a copy to: 	Goldstein & Digioia,
      LLP

    45 Broadway, 11th Floor

    New York, NY 10006

    Facsimile No.: (212) 557-0295

    Attn: Victor DiGioia, Esq.
	 	 
	If to an Investor:	      To the address set forth under such Investor’s name

    on the signature pages hereof;
	 	 


or such other address as may be designated in writing hereafter, in the same manner, by such Person.

6.4   Amendments; Waivers. No provision of this
  Agreement may be waived or amended except in a written instrument signed, in
  the case of an amendment, by the Company and the Investors holding a majority
  of the Shares or, in the case of a waiver, by the party against whom enforcement
  of any such waiver is sought. No waiver of any default with respect to any
  provision, condition or requirement of this Agreement shall be deemed to be
  a continuing waiver in the future or a waiver of any subsequent default or
  a waiver of any other provision, condition or requirement hereof, nor shall
  any delay or omission of either party to exercise any right hereunder in any
  manner impair the exercise of any such right.

  6.5   Construction. The headings
        herein are for convenience only, do not constitute a part of this Agreement
        and shall not be deemed to limit or affect any of the provisions hereof.
        The language used in this Agreement will be deemed to be the language
        chosen by the parties to express their mutual intent, and no rules of
        strict construction will be applied against any party. 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 provisions of this Agreement or any of the Transaction
        Documents.

    6.6   Successors and Assigns.
        This Agreement shall be binding upon and inure to the benefit of the
        parties and their successors and permitted assigns. The Company may not
        assign this Agreement or any rights or obligations hereunder without
        the prior written consent of the Investors. Any Investor may assign any
        or all of its rights under this Agreement to any Person to whom such
        Investor assigns or transfers any Securities, provided such transferee
        agrees in writing to be bound, with respect to the transferred Securities,
        by the provisions hereof that apply to the “Investors.” 

    6.7   No Third-Party Beneficiaries.
        This Agreement is intended for the benefit of the parties hereto and
        their respective successors and permitted assigns and is not for the
        benefit of, nor may any provision hereof be enforced by, any other Person,
        except as otherwise set forth in Section 4.8 (as to each Investor Party).


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6.8   Governing Law. All questions
    concerning the construction, validity, enforcement and interpretation of
    this Agreement
  shall be governed by and construed and enforced in accordance with the internal
  laws of the State of New York, without regard to the principles of conflicts
  of law thereof. Each party agrees that all Proceedings concerning the interpretations,
  enforcement and defense of the transactions contemplated by this Agreement
  and any other Transaction Documents (whether brought against a party hereto
  or its respective Affiliates, employees or agents) shall be commenced exclusively
  in the state and federal courts sitting in the City of New York, Borough of
  Manhattan (the “New York Courts”). Each party hereto hereby
  irrevocably submits to the exclusive jurisdiction of the New York Courts for
  the adjudication of any dispute hereunder or in connection herewith or with
  any transaction contemplated hereby or discussed herein (including with respect
  to the enforcement of the any of the Transaction Documents), and hereby irrevocably
  waives, and agrees not to assert in any Proceeding, any claim that it is not
  personally subject to the jurisdiction of any such New York Court, or that
  such Proceeding has been commenced in an improper or inconvenient forum. Each
  party hereto hereby irrevocably waives personal service of process and consents
  to process being served in any such Proceeding by mailing a copy thereof via
  registered or certified mail or overnight delivery (with evidence of delivery)
  to such party at the address in effect for notices to it under this Agreement
  and agrees that such service shall constitute good and sufficient service of
  process and notice thereof. Nothing contained herein shall be deemed to limit
  in any way any right to serve process in any manner permitted by law. Each
  party hereto hereby irrevocably waives, to the fullest extent permitted by
  applicable law, any and all right to trial by jury in any legal proceeding
  arising out of or relating to this Agreement or the transactions contemplated
  hereby. If either party shall commence a Proceeding to enforce any provisions
  of a Transaction Document, then the prevailing party in such Proceeding shall
  be reimbursed by the other party for its attorney’s fees and other costs
  and expenses incurred with the investigation, preparation and prosecution of
  such Proceeding.

  6.9   Survival. The representations
      and warranties contained in this Agreement shall survive until the third
      anniversary of the Closing. The agreements and covenants contained herein
      shall survive the Closing and the delivery of the Securities in accordance
      with their respective terms.

  6.10   Execution. This Agreement
      may be executed in two or more counterparts, all of which when taken together
      shall be considered one and the same agreement and shall become effective
      when counterparts have been signed by each party and delivered to the other
      party, it being understood that both parties need not sign the same counterpart.
      In the event that any signature is delivered by facsimile transmission,
      such signature shall create a valid and binding obligation of the party
      executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original thereof.

  6.11   Severability. If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby
      and the parties will attempt to agree upon a valid and enforceable provision
      that is a reasonable substitute therefor, and upon so agreeing, shall incorporate
      such substitute provision in this Agreement.


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6.12   Rescission and Withdrawal Right. Notwithstanding
  anything to the contrary contained in (and without limiting any similar provisions
  of) the Transaction Documents, whenever any Investor exercises a right, election,
  demand or option under a Transaction Document and the Company does not timely
  perform its related obligations within the periods therein provided, then such
  Investor may rescind or withdraw, in its sole discretion from time to time
  upon written notice to the Company, any relevant notice, demand or election
  in whole or in part without prejudice to its future actions and rights.

  6.13   Replacement of Securities.
        If any certificate or instrument evidencing any Securities is mutilated,
        lost, stolen or destroyed, the Company shall issue or cause to be issued
        in exchange and substitution for and upon cancellation thereof, or in
        lieu of and substitution therefor, a new certificate or instrument, but
        only upon receipt of evidence reasonably satisfactory to the Company
        of such loss, theft or destruction and customary and reasonable indemnity
        and customary surety bond, if requested. The applicants for a new certificate
        or instrument under such circumstances shall also pay any reasonable
        third-party costs associated with the issuance of such replacement Securities.
        If a replacement certificate or instrument evidencing any Securities
        is requested due to a mutilation thereof, the Company may require delivery
        of such mutilated certificate or instrument as a condition precedent
        to any issuance of a replacement.

    6.14   Remedies. In addition
        to being entitled to exercise all rights provided herein or granted by
        law, including recovery of damages, each of the Investors and the Company
        will be entitled to specific performance under the Transaction Documents.
        The parties agree that monetary damages may not be adequate compensation
        for any loss incurred by reason of any breach of obligations described
        in the foregoing sentence and hereby agrees to waive in any action for
        specific performance of any such obligation the defense that a remedy
        at law would be adequate.

    6.15   Payment Set Aside.
        To the extent that the Company makes a payment or payments to any Investor
        pursuant to any Transaction Document or an Investor enforces or exercises
        its rights thereunder, and such payment or payments or the proceeds of
        such enforcement or exercise or any part thereof are subsequently invalidated,
        declared to be fraudulent or preferential, set aside, recovered from,
        disgorged by or are required to be refunded, repaid or otherwise restored
        to the Company, a trustee, receiver or any other person under any law
        (including, without limitation, any bankruptcy law, state or federal
        law, common law or equitable cause of action), then to the extent of
        any such restoration the obligation or part thereof originally intended
        to be satisfied shall be revived and continued in full force and effect
        as if such payment had not been made or such enforcement or setoff had
        not occurred.

    6.16   Independent Nature of
          Investors’ Obligations and Rights. The obligations of each Investor
          under any Transaction Document are several and not joint with the obligations
          of any other Investor, and no Investor shall be responsible in any
          way for the performance of the obligations of any other Investor under
          any Transaction Document. The decision of each Investor to purchase
          Securities pursuant to the Transaction Documents has been made by such
          Investor independently of any other Investor. Nothing contained herein
          or in any Transaction Document, and no action taken by any Investor
          pursuant thereto, shall be deemed to constitute the Investors as a
          partnership, an association, a joint venture or any other kind of entity,
          or create a presumption that the Investors are in any way acting in
          concert or as a group with respect to such obligations or the transactions
          contemplated by the Transaction Document. Each Investor acknowledges
          that no other Investor has acted as agent for such Investor in connection
          with making its investment hereunder and that no Investor will be acting
          as agent of such Investor in connection with monitoring its investment
          in the Securities or enforcing its rights under the Transaction Documents.
          Each Investor shall be entitled to independently protect and enforce
          its rights, including without limitation the rights arising out of
          this Agreement or out of the other Transaction Documents, and it shall
          not be necessary for any other Investor to be joined as an additional
          party in any proceeding for such purpose.


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6.17   Limitation of
      Liability. Notwithstanding anything herein to the contrary, the Company
      acknowledges and agrees that the liability of an Investor arising directly
      or indirectly, under any Transaction Document of any and every nature whatsoever
      shall be satisfied solely out of the assets of such Investor, and that
      no trustee, officer, other investment vehicle or any other Affiliate of
      such Investor or any investor, shareholder or holder of shares of beneficial
      interest of such a Investor shall be personally liable for any liabilities
      of such Investor.

 

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SIGNATURE PAGES FOLLOW]

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  IN WITNESS WHEREOF,
      the parties hereto have caused this Securities Purchase Agreement to be duly
      executed by their respective authorized signatories as of the date first
      indicated above.




  AUTHENTIDATE HOLDING CORP.
      

   

  

  

  Name:

Title: 



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SIGNATURE PAGES FOR INVESTORS FOLLOW]

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  IN WITNESS WHEREOF,
      the parties have executed this Securities Purchase Agreement as of the date
      first written above.



[INVESTOR]

  

     

    By:  _____________________________

           Name:

         Title:

    Investment Amount:        $

     

    Address for Notice (including
        facsimile number):





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