EXHIBIT 10.38 LICENSE AND HOSTED SERVICES AGREEMENT

EXHIBIT 10.38

LICENSE AND HOSTED SERVICES AGREEMENT

This LICENSE AND HOSTED SERVICES AGREEMENT (“Agreement”) is made as of April 1, 2005 (the “Effective Date”) by and between AuthentiDate Holding Corp., a Delaware corporation, having a place of business at Two World Financial Center, 225 Liberty Street, 43rd Floor, New York, New York (“Company”) and Liberty Healthcare Group, Inc., a Delaware corporation, having a place of business at 10045 South U.S. Hwy. 1, Port St. Lucie, FL 34952 (“Customer”).

WHEREAS, during the term of this Agreement Company wishes to provide Customer with the Services and a license to the Licensed Software, and Customer wishes to receive such license and such Services from Company.

NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter provided, the Parties agree as follows:

ARTICLE 1.   DEFINITIONS

1.1 Definitions.

The following terms shall have the meanings set forth below:

“Affiliate(s)” shall mean, with respect to any given Person, any other Person directly controlling, controlled by or under common control with such Person.

“Amendment” shall have the meaning described in Section 15.6.

“Data Downloads” shall mean the data files generated by the Hosted Software and provided to Customer pursuant to this Agreement as part of the Services.

“Data Uploads” shall mean the data files received by Company from or on behalf of Customer for processing by Company as part of the Services.

“Documentation” shall mean the manuals and all other documentation and materials, in electronic form or otherwise, relating to the Licensed Software that are provided by Company to Customer.

“Equipment” shall mean the computer servers and other equipment utilized by the Company in connection with the provision of the Hosted Services pursuant to this Agreement.

“Federal Health Care Program “ shall mean any federal health care program as defined in 42 USC ss. 1320a-7b.

“Fees” shall mean, collectively, the Services Fees, Transaction Fees and License Fees.

“Force Majeure Event” shall have the meaning described in Section 15.3.

“Hosted Services” shall have the meaning described in Exhibit B.

“Hosted Services Fees” shall have the meaning described on Exhibit A.

“Hosted Company Software” shall mean and be designated as “Hosted Company Software “ for purposes of this Agreement as identified on Exhibit A to this Agreement, as such Exhibit may be amended from time to time with the consent of the Parties.

“Hosted Software” shall mean the Hosted Third Party Software and the Hosted Company Software.

“Hosted Third Party Software” shall mean all software, other than Hosted Company Software, hosted by Company for Customer pursuant to this Agreement.

“Improper Access” shall mean access to, modifications of, or contact with any portions or parts of the Hosted Software, other than by the Company or its designees.

“License” shall have the meaning described in Section 7.2(b).

“License Fees” shall be the amounts payable by the Customer to the Company for the license to the Licensed Software.

“Licensed Software” shall mean the software programs in executable object code provided to Customer and identified on Exhibit A to this Agreement as Licensed Software, as such Exhibit may be amended from time to time with the consent of the Parties, together with any related Documentation provided by Company in connection therewith, and any updates and upgrades thereto obtained by Customer from Company.

“Parties” shall mean Customer and Company, collectively.

“Party” shall mean either Customer or Company, as the case may be.

“Transaction Fees” shall have the meaning set forth on Exhibit A hereto.

“Person” shall mean any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint stock company, trust or other entity.

“Professional Services Agreement” shall mean the Professional Services Agreement of even date herewith between Company and Customer.

“Services” shall mean collectively, the Hosted Services and Support Services.

“Services Fees” shall mean, collectively, the Hosted Services Fees and the Support Services Fees.

“Support Services” shall mean the support services set forth in Exhibit C hereto with respect to the Licensed Software.

“Support Services Fees” shall mean the fees for the Support Services fees as set forth in Exhibit A hereto with respect to the Licensed Software.

“Software Upgrades” shall mean all updates, corrections, bug fixes, releases, improvements or enhancements made to the Licensed Software by Company.

“Supplemental Training” shall have the meaning described in Section 4.2.

“Taxes” shall have the meaning described in Section 10.2.

“Third Party Services” shall mean any and all services performed by any person, other than the Company and its agents and subcontractors engaged by the Company to perform services in connection with this Agreement.

“Third Party Software” shall mean any and all software, other than the Hosted Company Software and the Licensed Software. Third Party Software shall include the Hosted Third Party Software.

1.2 References.

(a) the Exhibits to this Agreement shall be incorporated into and deemed part of this Agreement, and all references to this Agreement shall include the Exhibits to this Agreement; and

(b) references to the word “including” or the phrase “e.g.” shall mean “including, without limitation” or “including, but not limited to”.

1.3 Headings.

The Article and Section headings are for reference and convenience purposes only and shall not be considered in the interpretation of this Agreement.

1.4 Interpretation of Documents.

In the event of a conflict between the terms of this Agreement and the terms (but not technical specifications, schematics or functional or performance criteria, or acceptance test criteria) of any Exhibit, if any, the terms of this Agreement shall prevail, unless indicated otherwise in such Exhibit.

ARTICLE 2.   RESPONSIBILITIES

2.1 Responsibilities.

Subject to the terms of and during the Term of this Agreement,

(1) Company will provide Customer with the Hosted Services as provided in Section 7 and in accordance with the terms of Exhibit B;

(2) Company will provide Customer with the Support Services for the Licensed Software, if any, and any Software Upgrades pursuant to the terms of Exhibit C;

(3) In order to ensure the proper implementation and operation of the Hosted Software and any Licensed Software (including any Software Upgrades), a high level of Customer interaction and availability will be needed. Company will provide assistance and support to the Customer as prescribed in this Agreement, but the following important responsibilities belong to the Customer:

(a) Assign a coordinator to be available to the Company when Company installs on the Equipment and/or troubleshoots the Hosted Software, and to observe and review on-going operability of the Hosted Software. The coordinator must have the authority to make decisions regarding the implementation, use and repair of the Hosted Software;

(b) Promptly report problems to Company;

(c) Test all functionality of the Data Downloads to verify the Data Downloads delivered to Customer from time to time are functioning properly;

(d) Provide all Data Uploads in proper format; and

(e) Provide Company with prompt access to Customer’s systems to troubleshoot any compatibility problems and assist Company with respect to the Hosted Software when reasonably requested by Company support personnel;

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(4) Company agrees to be primarily responsible for troubleshooting problems relating to the Hosted Software.

ARTICLE 3.   DOCUMENTATION

Company will provide Customer with such documentation relating to (i) the Hosted Software as shall be necessary to enable Customer to provide Company with Data Uploads compatible with the Hosted Software and to properly utilize and access all Data Downloads, and (ii) utilize the Licensed Software as contemplated hereunder.

ARTICLE 4.   TRAINING

4.1 Training.

Company agrees to provide Customer with training of Customer’s employees on the use and operation of the Hosted Software to the extent necessary to properly interface the Hosted Software with Customer’s systems relating to the provision to Company of Data Uploads and the receipt by Customer of Data Downloads. Company also agrees to provide Customer with training of Customer’s employees on the use and operation of any Licensed Software and Software Upgrades. Company shall provide sufficient experienced and qualified personnel to conduct such training.

4.2 Supplemental Training.

Upon the request of Customer, Company shall furnish additional education and training at a rate mutually agreed to in writing by both Parties from time to time (“Supplemental Training”).

4.3 Confidentiality of Training Materials.

All training materials provided to Customer are confidential information of the Company and shall be maintained in confidence by the Customer. The Customer agrees that it shall maintain the confidentiality of the training materials to the same extent that it maintains the confidentiality of its own confidential material, but in no event shall Customer use less than reasonable care.

ARTICLE 5.   TERM

Subject to Article 13, this Agreement shall remain in force for an initial period of [ * * * * ] (the “Initial Term”) from the Effective Date. This Agreement will [ * * * * ] (each, a “Renewal Term” and together with the Initial Term, the “Term”) unless one Party provides written notice to the other Party of its intent not to renew not less than [ * * * * ] days before the expiration of the then-current Initial Term or Renewal Term. Either Party may terminate this Agreement upon written notice delivered to the other Party pursuant to Article 13.

ARTICLE 6.   LIMITED WARRANTIES

6.1 Hosted Services.

Company warrants that the Hosted Services will be performed consistently according to generally accepted industry standards. This warranty with respect to the Data Downloads shall be valid for thirty (30) days from the delivery of the applicable Data Download. In the event of a material breach of the foregoing warranty, the Customer will notify the Company in writing within ten (10) days of learning of such breach. Upon receipt of such notice, the Company agrees to use commercially reasonable efforts to re-perform the non-conforming Hosted Services or, if such re-performance is not commercially reasonable, obtain a refund of any fees paid to Company for nonconforming services. THE REMEDIES SET FORTH IN THIS SECTION SHALL BE CUSTOMER’s SOLE AND EXCLUSIVE REMEDY IN THE EVENT OF A BREACH OF THE WARRANTY SET FORTH IN THIS SECTION.

6.2 Licensed Software.

During the Term, the Licensed Software will function substantially in accordance with the capabilities as indicated in the Documentation. The Company represents and warrants that (a) it has all right and authority to grant the licenses granted herein and (b) to the Company’s knowledge the Licensed Software does not infringe any patent, copyright, trade secret or other intellectual property interest of any third party. Other than the representations in this Section 6.2, the Licensed Software is provided “AS IS” and “WITH ALL FAULTS. The Company will use commercially reasonable efforts to resolve any problems identified by Customer with respect to the operability of the Licensed Software during the Term; provided, however, that Customer must promptly provide the Company with notice of any problems with the Licensed Software and all information reasonably requested by the Company.

6.3 Hosted Company Software.

The Company represents and warrants that to the Company’s knowledge the Hosted Company Software does not infringe any patent, copyright, trade secret or other intellectual property interest of any third party.

6.4 Exclusions.

EXCEPT FOR THE LIMITED WARRANTIES SET FORTH HEREIN, COMPANY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES, THE DATA DOWNLOADS, THE LICENSED SOFTWARE OR THE HOSTED COMPANY SOFTWARE.

[ * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.]

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6.5 Limitations.

This warranty only covers damages that occur pursuant to normal use of the Data Downloads and the Licensed Software during the Term. This warranty does not cover damages that occur due to any Data Uploads not conforming to required specifications or any Third Party Software or Third Party Services. This warranty also does not cover any failures or damages that result from accidents, misuse, abuse, neglect, misapplication, alteration, secondary installation, set-up, improper maintenance, or modifications to the Data Downloads or Licensed Software by any Person other than Company, or damage attributable to acts of nature, terrorism, vandalism or war.

ARTICLE 7.   SERVICES AND LICENSES

7.1 Generally.

During the Term, the Company shall provide Customer with the Hosted Services and Support Services, if any (collectively “Services”).

7.2 Data.

The Customer shall provide to the Company Data Uploads. The Company shall provide Customer with a Data Download corresponding to each Data Upload provided to the Company, which is to be derived from such Data Upload.

7.3 License Grant.

(a) The Company hereby grants to Customer a worldwide, perpetual license to use for its internal purposes the Data Downloads (“DD License”).

(b) The Company hereby grants to Customer a worldwide, non-exclusive, non-transferable, non-sublicensable, license (the “License”) to use during the Term the Licensed Software and the Documentation.

7.4 USPS EPM License.

The Parties acknowledge and agree that the provision of the Services pursuant to this Agreement requires Customer to execute a license agreement and other documentation with the United States Postal Service (“USPS”) relating to the USPS Electronic Postmark(R) Service and that, in addition to the fees and other amounts payable hereunder to the Company, Customer will be required to pay certain license and other fees directly to the USPS in accordance with such license agreement and other documentation. In addition, Customer acknowledges that the Company will be entitled to certain payments from the USPS based on the amounts paid by Customer to the USPS.

7.5 Third Party Licenses.

Customer shall ensure that the Company is named as a third party beneficiary to all Hosted Third Party Software licenses to which Customer is a party, including all applicable indemnification provisions contained therein to the extent permitted by the owners of such Hosted Third Party Software. To the extent the Company is not named as a third party beneficiary under any Hosted Third Party Software licenses to which Customer is a party (any such license an “Excluded License”), Customer agrees to and shall indemnify the Company in accordance with Section 8.2.3 with respect to any claims or liability based on, relating to or resulting from the use by the Company of the Hosted Third Party Software that is subject to such Excluded Licenses to perform its obligations hereunder, provided, that Company properly uses such Hosted Third Party Software.

ARTICLE 8.   INDEMNIFICATION

8.1 Company Indemnity.

8.1.1. Company Infringement Indemnity. The Company shall indemnify the Customer and its officers, agents and employees from and against any claims, demands or causes of action alleging infringement of any third party intellectual property rights resulting from (a) use by Customer of the Data Downloads, and (b) use by Customer of the Licensed Software; provided, however, that this indemnification by the Company shall not apply to any allegation or determination of infringement to the extent that such infringement is based on (a) specifications or functional requirements provided by the Customer, (b) the use of application code developed by the Customer or by a third party on behalf of Customer at Customer’s request, (c) the use of any other software or hardware that is used in conjunction with the Data Downloads or the Licensed Software if such software or hardware is required (i) pursuant to or to comply with the specifications or functional requirements provided by the Customer, including pursuant to any Statements of Work or SOW Amendment from the Professional Services Agreement or (ii) for compatibility with Third Party Software provided or specified by the Customer, (d) the unauthorized use of the Data Downloads or the Licensed Software or (e) use of the Data Downloads or the Licensed Software not in conformance with the specifications or the requirements of this Agreement.

8.1.2. Company General Indemnity. The Company shall indemnify and hold harmless the Customer, its officers, agents and employees from and against any claims, demands, or causes of action based on or resulting from any negligent act or omission or unlawful misconduct of Company, its subsidiaries or their officers, or employees, agents or representatives, resulting in any loss of or damage to any property or injury or death of any person as a result of the Company’s provision of the Data Downloads and Services hereunder.

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8.2 Customer Indemnity.

8.2.1. Customer Infringement Indemnity. The Customer shall indemnify, defend and hold harmless the Company and its officers, agents and employees from and against any claims, demands or causes of action (a) alleging infringement of any third party intellectual property rights based on (i) specifications or functional requirements provided by the Customer, (ii) the use of application code developed by the Customer or by a third party on behalf of Customer at Customer’s request, (iii) the use of any other software or hardware that is used in conjunction with the Data Downloads or the Licensed Software if such software or hardware is required (1) pursuant to or to comply with the specifications or functional requirements provided by the Customer, including pursuant to any Statements of Work or SOW Amendment from the Professional Services Agreement or (2) for compatibility with Third Party Software provided or specified by the Customer, or (iv) use of the Data Downloads or the Licensed Software not in conformance with the specifications or the requirements of this Agreement, (b) based on the unauthorized use of the Data Downloads or the Licensed Software by the Customer, or (c) based on or resulting from a breach of any provision of this Agreement by the Customer.

8.2.2. Customer General Indemnity. The Customer shall indemnify and hold harmless the Company, its officers, agents and employees from and against any claims, demands, or causes of action based on or resulting from any negligent act or omission or unlawful misconduct of Customer, its subsidiaries or their officers, or employees, agents or representatives, resulting in any loss of or damage to any property or injury or death of any person relating to the performance of this Agreement.

8.2.3. Customer Third Party Software Indemnity. The Customer shall indemnify and hold harmless the Company, its officers, agents and employees from and against any claims, demands, or causes of action based on, resulting from or related to the use by the Company of the Hosted Third Party Software that is subject to such Excluded Licenses to perform its obligations hereunder, provided, that Company properly uses such Hosted Third Party Software.

8.3. Procedure.

8.3.1. Notification and Assistance. The indemnification provisions provided in Sections 8.1 and 8.2 shall be contingent on the indemnified Party promptly notifying the indemnifying Party upon learning of an indemnifiable claim, demand or cause of action, and providing the indemnifying Party with such assistance as reasonably requested by the indemnifying Party in defending against such claim, demand or cause of action.

8.3.2. Mitigation. In the event that any claim, demand or cause of action is asserted against the Customer alleging infringement of any third party intellectual property rights resulting from the use by the Customer of the Data Downloads or the Licensed Software, the Company may, at its sole discretion, seek to resolve such claim, demand or cause of action by one or more of the following: (a) modifying the Data Downloads or the Licensed Software such that they no longer infringe, (b) obtaining a license to the asserted intellectual property, (c) replacing the infringing Data Downloads or the Licensed Software at the Company’s expense or (d) terminating the Customer’s right (and/or any license) to use the Licensed Software or terminating the Services and returning to the Customer any unallocated portion of the fees paid in advance by the Customer.

ARTICLE 9.   LIMITATION OF LIABILITY

9.1 Limitation of Liability.

EXCEPT AS PROVIDED IN THE FOLLOWING SECTION, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING BUT NOT LIMITED TO LOST DATA, LOST PROFITS OR SAVINGS, LOSS OF BUSINESS OR OTHER ECONOMIC LOSS) ARISING OUT OF OR RELATED TO THIS AGREEMENT OR CUSTOMERS' USE OF THE DATA DOWNLOADS OR THE LICENSED SOFTWARE, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OR KNEW OF THE POSSIBILITY OF SUCH DAMAGES, AND REGARDLESS OF THE NATURE OF THE CAUSE OF ACTION OR THEORY ASSERTED. THE MAXIMUM AGGREGRATE LIABILITY OF COMPANY FOR ALL CLAIMS UNDER THIS AGREEMENT SHALL BE A SUM EQUAL TO THE AGGREGATE PAYMENTS MADE BY CUSTOMER TO COMPANY HEREUNDER DURING THE SIX (6) MONTHS PRECEDING THE DATE OF ASSERTION OF A FIRST CLAIM BY A PARTY.

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9.2 Exceptions from Limitation.

The preceding Section 9.1 shall not apply to (a) amounts indemnifiable under Sections 8.1 and 8.2, (b) a material breach by a Party of Article 11 (Confidential Information), or (c) damages, losses and claims arising out of a Party’s gross negligence, willful misconduct or fraud.

9.3 Separately Negotiated.

The Parties acknowledge that this Limitation of Liability Article has been separately negotiated, is a material inducement to the Parties entering into this Agreement on the terms provided herein (including Section 9.1) and shall be enforceable regardless of whether any remedy provided for fails of its essential purpose.

ARTICLE 10.   FEES; PAYMENT; TAXES

10.1 Fees. Customer acknowledges that the fees charged by the Company for the Services, the DD License and the License provided hereunder are comprised of a number of different payment structures, including Hosted Services Fees, Transaction Fees and Support and Maintenance Fees (collectively, “Fees”), [ * * * * ] but are a total payment amount for all of the services and licenses provided hereunder.

10.1.1. Hosted Services Fees. Customer shall pay to the Company [ * * * * ] for the Services, the DD License and the License in the amount as set forth in Exhibit A (“Hosted Services Fees”), as amended by the Parties from time to time.

10.1.2. Transaction Fees. Customer shall pay to the Company [ * * * * ] for the Services, the DD License and the License in the amounts as set forth in Exhibit A (“Transaction Fees”), as amended by the Parties from time to time.

10.1.3. Support and Maintenance Fees. Customer shall pay to the Company [ * * * * ] in the amounts as set forth in Exhibit A (“Support and Maintenance Fees”), as amended by the Parties from time to time.

10.1.4. Renewals. Unless this Agreement is terminated or not renewed in accordance with Article 5, the Fees for each renewal period shall be at the rates agreed to by the Parties prior to the inception of the renewal period.

10.2 Payment.

10.2.1. [ * * * * ]. As consideration for the Services provided to Customer herein, Customer shall pay to Company the applicable Fees as stated herein. Company represents and warrants that [ * * * * ] hereunder for substantially [ * * * * ], including based on the [ * * * * ]. In the event Company [ * * * * ] provided hereunder, such [ * * * * ]. The preceding sentence shall have [ * * * * ], but only to the [ * * * * ]. This provision shall not apply to any [ * * * * ] that were not in existence as of the date of completion of the work set forth in Statements of Work ##1.01 and 1.02 under the Professional Services Agreement.

10.2.2. Expenses. All reasonable travel and out-of-pocket expenses which are itemized, pre-approved by Customer and incurred by Company’s personnel while providing Services conducted at Customer’s site shall be paid within thirty (30) days after receipt of an undisputed invoice.

10.3 Taxes.

Company’s invoices shall include and Customer shall pay all federal, state, local or other sales or use taxes that may be imposed by law upon Company or Customer, other than taxes based upon the net income of Company, with respect to the Services and Licensed Software and any material, supplies, equipment or activities furnished in the performance of the Services (the “Taxes”). Company shall maintain full and detailed records of all Taxes charged to Customer and paid to the applicable tax authority by Company. Customer may copy and audit these tax records during regular business hours, including any records maintained at Company’s office pertaining to Taxes billed to Customer, for a period of thirty-six (36) months after the termination of this Agreement.

[ * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.]

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10.4 Financial Audit. Each Party shall maintain full and detailed records of all items upon which the Fees are calculated and each Party shall have the right to audit, by itself or by a nationally recognized audit firm, acceptable to the other Party, once per year, during regular business hours and on reasonable advance notice, the records pertaining to the calculation of the Transaction Fees,