EMPLOYMENT TERMINATION AGREEMENT
This
Employment Termination Agreement (the “Agreement”) dated as of July 1, 2008 (the
“Effective Date”) is entered into between vFinance, Inc. (the “Employer”) and
Xxxxxxx X. Xxxxxxx (the “Employee”) (collectively, the “Parties”).
RECITALS:
A. The
Employee is employed as Chairman and Chief Executive Officer of Employer
pursuant to an Amended and Restated Employment Agreement dated November 16,
2004, as amended on May 12 and December 29, 2006 (the “Employment Agreement”);
B. Upon
the
merger with a wholly-owned subsidiary of National Holdings Corporation
(“National”), the principal office of the Employer will be relocated to New York
(the “Merger”);
C. Pursuant
to the terms of the Employment Agreement, as a result of the Merger of National
and the relocation of the principal office of the Employer, Employee would
be
entitled to a lump sum payment of One Million One Hundred and Fifty Thousand
($1,150,000) in cash as of the effective date (“Effective Date”) of such merger;
D. The
Parties have agreed that the Employment Agreement shall be terminated and
replaced with a new employment agreement with National of even date herewith
(the “New Employment Agreement”).
NOW,
THEREFORE, the Employer and Employee agree as follows:
1. Termination
of Employment.
The
Employee shall resign from his positions as Chairman and Chief Executive
Officer
of the Employer and the Employment Agreement shall terminate as of the Effective
Date. From and after the Effective Date, neither party has or will have any
right, liability or obligation arising under the Employment
Agreement.
2. Payments.
(a) Salary
and Bonus.
On the
Effective Date, the Employer shall pay to the Employee all salary and all
accrued payments due and payable to the Employee on the Effective Date pursuant
to the terms of the Employment Agreement.
(b) Triggering
Event Payment.
The
Employer shall pay to the Employee the principal sum of $1,150,000 on the
Effective Date.
3. Waiver
of Acceleration of Derivative Securities.
Notwithstanding the fact that in accordance with the terms of the Employment
Agreement, as of the Effective Date, all Employer stock options held by Employee
would otherwise become immediately and fully vested, Employee hereby waives
such
acceleration of Employer stock options and acknowledges that in connection
with
the Merger such stock options shall be exchanged for stock options of National
at the applicable exchange ratio of the Merger (the “Exchanged Options”).
However, in the event Employee is terminated by National with cause or Employee
voluntarily resigns from National for any reason, all Exchanged Options shall
become 100% vested and shall remain exercisable by the Employee or his
beneficiaries for a period of nine (9) months from the date of such event;
provided, however, such period of nine (9) months shall not exceed the earlier
of the latest date upon which such options could have expired by their original
terms under any circumstances or the tenth anniversary of the original date
of
grant of such options. Notwithstanding anything contained in the New Employment
Agreement to the contrary, the terms of this Section 3 shall control with
respect to the acceleration of the vesting terms of the Exchange Options
in the
event of Employee’s termination of employment from the National.
4. Taxes.
If any
of the payments under this Agreement or any other agreement, including the
acceleration of derivative securities pursuant to Section 3 of this Agreement
(the “Payments”),
will
be subject to the tax (the “Excise
Tax”)
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the
“Code”)
on the
Employee, (or any similar tax that may hereafter be imposed) the Company
shall
pay to the Employee an additional amount (the “Gross-Up
Payment”)
in a
manner consistent with Section 6(i) of the New Employment
Agreement.
5. Indemnification.
In
accordance with and subject to Employer’s corporate bylaws, Employer recognizes
its continuing duty to indemnify, defend and hold Employee harmless to the
fullest extent of Delaware law for any liabilities that may arise as a result
of
any acts taken by Employee (including, without limitation, the failure to
take
action) in the course of performing his duties for Employer. In addition,
in
accordance with Employer’s corporate bylaws, Employer shall pay any expenses
(including reasonable attorneys’ fees), judgments, penalties, fines,
settlements, and other liabilities incurred by Employee in investigating,
defending, settling or appealing any action, suit or proceeding in advance
of
the final disposition of such action, suit or proceeding. Employer shall
promptly pay the amount of such expenses to Employee, but in no event later
than
ten (10) days following Employee’s delivery to Employer of a written request for
an advance pursuant to this Section 5, together with a reasonable accounting
of
such expenses.
6. Release.
Simultaneous with the execution and delivery of this Agreement, the Employee
shall deliver a release in favor of the Company substantially in form and
substance identical to the release attached as Exhibit B to the New Employment
Agreement.
7. Severability;
Entire Agreement; Governing Law.
In the
event any provision hereof becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision. If any court refuses to
enforce
any part of this Agreement as written, the court shall modify that part to
the
minimum extent necessary to make it enforceable under applicable law, and
shall
enforce it as so modified. This Agreement represents the entire agreement
and
understanding concerning Employee’s separation from Employer. This
Agreement supersedes and replaces any and all prior agreements, understandings,
discussions, negotiations, or proposals concerning Employee’s relationship with
Employer.
This
Agreement may only be amended in writing signed by the Employee and an executive
officer of the Employer. This Agreement shall be governed by the laws of
the
State of Florida, without regard to its conflict of laws rules. Each Party
hereby irrevocably submits to the exclusive jurisdiction of any Federal or
state
court sitting in Palm Beach County, Florida for the adjudication of any dispute
arising out of or relating to the Agreement and the transactions contemplated
hereunder, and hereby irrevocably waives, and agrees not to assert in any
proceeding relating to this Agreement, any claim that he or it, as the case
may
be, is not personally subject to the jurisdiction of any such court, or that
any
such proceeding has been commenced in an improper or inconvenient forum.
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8. Attorneys'
Fees.
In the
event any dispute or litigation arises hereunder between any of the parties
hereto, the prevailing party shall be entitled to all reasonable costs and
expenses incurred by it in connection therewith (including, without limitation,
all reasonable attorneys' fees and costs incurred before and at any trial
or
other proceeding and at all tribunal levels), as well as all other relief
granted in any suit or other proceeding. As used herein, a party shall be
deemed
"prevailing" when it recovers (i) as to a damages claim, an aggregate of
more
than fifty percent (50%) of the damages which it seeks among its various
asserted claims exclusive of interest, attorney's fees, costs incurred and
exemplary damages and (ii) as to an equity claim, substantial injunctive
or
other equitable relief upon its asserted claim. Either of the parties herein
shall be entitled to request the trier of fact in any dispute, litigation
or
arbitration between them, to determine which of the parties is
"prevailing."
9. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
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vFinance,
Inc.
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By:
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/s/
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
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By:
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/s/
Xxxx X. Xxxxx
Xxxx
X. Xxxxx, Chief Financial Officer
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