SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 30th
day of
June, 2008 by and among National Holdings Corporation, a Delaware corporation
(the “Company”), and St. Cloud Capital Partners II, L.P. (the
“Investor”).
Recitals
A. The
Company and the Investor are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by the provisions
of
Regulation D (“Regulation D”), as promulgated by the U.S. Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended;
and
B. The
Investor wishes to purchase from the Company, and the Company wishes to sell
and
issue to the Investor, upon the terms and conditions stated in this Agreement,
(i) a 10%
senior
subordinated convertible promissory Note in the principal amount of $3,000,000
(the “Note”), in the form attached as Exhibit
A hereto
and (iii) a Warrant to purchase 468,750 shares
of
the Company’s common stock, par value $0.02 per share (together with any
securities into which the common stock may be reclassified, the “Common Stock”)
at an exercise price equal to $2.00 per share (subject to adjustment) in the
form attached hereto as Exhibit
B
(the
“Warrant”); and
C. Contemporaneous
with the sale of the Note and Warrant, the parties hereto will execute and
deliver a Registration Rights Agreement, in the form attached hereto as
Exhibit
C
(the
“Registration Rights Agreement”), pursuant to which the Company will agree to
provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, and applicable
state securities laws.
In
consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
1. Definitions.
In
addition to those terms defined above and elsewhere in this Agreement, for
the
purposes of this Agreement, the following terms shall have the meanings set
forth below:
“Affiliate”
means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is controlled by, or is under
common control with, such Person.
“Business
Day”
means
a
day, other than a Saturday, Sunday or holiday, on which banks in New York City
are open for the general transaction of business.
“Company’s
Knowledge”
means
the actual knowledge of the executive officers (as defined in Rule 405 under
the
0000 Xxx) of the Company, after due inquiry.
“Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Conversion
Shares”
means
the shares of Common Stock issuable upon conversion of the Note.
“Effective
Date”
means
the date on which the initial Registration Statement is declared effective
by
the SEC.
“Effectiveness
Deadline”
means
the date on which the initial Registration Statement is required to be declared
effective by the SEC under the terms of the Registration Rights
Agreement.
“Intellectual
Property”
means
all of the following: (i) patents, patent applications, patent disclosures
and
inventions (whether or not patentable and whether or not reduced to practice);
(ii) trademarks, service marks, trade dress, trade names, corporate names,
logos, slogans and Internet domain names, together with all goodwill associated
with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
registrations, applications and renewals for any of the foregoing; and (v)
proprietary computer software (including but not limited to data, data bases
and
documentation).
“Material
Adverse Effect”
means
a
material adverse effect on (i) the assets, liabilities, results of operations,
condition (financial or otherwise), or business of the Company and its
Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
its
obligations under the Transaction Documents.
“Note”
has
the
meaning set forth in the recitals.
“Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other
form of entity not specifically listed herein.
“Purchase
Price”
means
Three Million Dollars ($3,000,000.00).
“SEC
Filings”
has
the
meaning set forth in Section 4.6.
“Registration
Statement”
has
the
meaning set forth in the Registration Rights Agreement.
“Securities”
means
the Note, the Warrant, the Conversion Shares and the Warrant
Shares.
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“Subsidiary”
of
any
Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if
there
are no such voting interests, 50% or more of the equity interests of which)
is
owned directly or indirectly by such first Person.
“Transaction
Documents”
means
this Agreement, the Note, the Warrant and the Registration Rights
Agreement.
“Warrant”
has
the
meaning set forth in the recitals.
“Warrant
Shares”
means
the shares of Common Stock issuable upon the exercise of the
Warrant.
“1933
Act”
means
the Securities Act of 1933, as amended, or any successor statute, and the rules
and regulations promulgated thereunder.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, or any successor statute,
and
the rules and regulations promulgated thereunder.
2. Purchase
and Sale of the Note and Warrant.
Subject
to the terms and conditions of this Agreement, on the Closing Date, the Investor
shall purchase, and the Company shall sell and issue to the Investor, the Note
and Warrant in exchange for the payment of the Purchase Price as specified
in
Section 3 below.
3. Closing.
Upon
confirmation that the other conditions to closing specified herein have been
satisfied or duly waived by the Investor, the Company shall deliver to Xxxxxxxx,
Xxxxx & Xxxxx, LLP, in trust, a certificate registered in the name of the
Investor, representing the Warrant, along with original instrument, registered
in the name of the Investor, representing the Note, with instructions that
such
certificate and instrument are to be held for release to the Investor only
upon
payment in full of the Purchase Price to the Company by the Investor. Upon
such
receipt by Xxxxxxxx, Kahan & Xxxxx, LLP of the certificate and instrument,
the Investor shall promptly, but no more than one Business Day thereafter,
cause
a wire transfer in same day funds to be sent to the account of the Company
as
instructed in writing by the Company or its counsel, in an amount representing
the Purchase Price. On the date (the “Closing Date”) the Company receives the
Purchase Price, the certificate evidencing the Warrant and instrument evidencing
the Note shall be released to the Investor (the “Closing”). The Closing of the
purchase and sale of the Note and Warrant shall take place at the offices of
Xxxxxxx Krooks LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(or
remotely via the exchange of documents and signatures), or at such other
location and on such other date as the Company and the Investor shall mutually
agree.
4. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Investor that, except as set
forth
in the schedules delivered herewith (collectively, the “Disclosure
Schedules”):
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4.
1 Organization,
Good Standing and Qualification.
Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry
on
its business as now conducted and to own its properties. Each of the Company
and
its Subsidiaries is duly qualified to do business as a foreign corporation
and
is in good standing in each jurisdiction in which the conduct of its business
or
its ownership or leasing of property makes such qualification or leasing
necessary unless the failure to so qualify has not and could not reasonably
be
expected to have a Material Adverse Effect. The Company’s Subsidiaries are
listed on Schedule
4.1
hereto.
4.2 Authorization.
The
Company has full power and authority and has taken all requisite action on
the
part of the Company necessary for (i) the authorization, execution and delivery
of the Transaction Documents, (ii) the authorization of the performance of
all
obligations of the Company hereunder or thereunder and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the
Securities.
The
Transaction Documents constitute the legal, valid and binding obligations of
the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and
similar laws of general applicability, relating to or affecting creditors’
rights generally.
4.3 Capitalization.
Schedule
4.3
sets
forth the authorized capital stock of the Company on the date hereof. All of
the
issued and outstanding shares of the Company’s capital stock have been duly
authorized and validly issued, fully paid, and nonassessable. Except as
described on Schedule
4.3,
there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any
of
its Subsidiaries is obligated to issue any equity securities of any kind. Except
as described on Schedule
4.3,
except
for the Registration Rights Agreement, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements
of
any kind among the Company and any of the securityholders of the Company
relating to the securities of the Company held by them.
4.4 Valid
Issuance.
The
Conversion Shares and the Warrant Shares have been duly and validly authorized.
Upon the due conversion of the Note, the Conversion Shares will be validly
issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth
in
the Transaction Documents or imposed by applicable securities laws and except
for those created by the Investor. Upon the due exercise of the Warrant and
payment of the exercise price thereunder, the Warrant Shares will be validly
issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth
in
the Transaction Documents or imposed by applicable securities laws and except
for those created by the Investor.
4.5 Consents.
The
execution, delivery and performance by the Company of the Transaction Documents
and the offer, issuance and sale of the Securities require no consent of, action
by or in respect of, or filing with, any Person, governmental body, agency,
or
official other than filings that have been made pursuant to applicable state
securities laws and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the applicable
time
periods.
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4.6 Delivery
of SEC Filings.
The
Company has made available to the Investor through the XXXXX system, true and
complete copies of the Company’s most recent Annual Report on Form 10-K for the
fiscal year ended September 30, 2007 (the “2007 10-K”), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 2007
10-K
(including the Company’s most recent Quarterly Report on Form 10-Q for the
quarters ended December 31, 2007 and March 31, 2008 and the Company’s
Registration Statement on Form S-4 and declared effective by the SEC on May
9,
2008) and prior to the date hereof (collectively, the “SEC Filings”).
4.7 No
Material Adverse Change.
Since
December 31, 2007, except as identified and described in the SEC Filings, there
has not been any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the SEC Filings, except for changes in the
ordinary course of business which have not had and could not reasonably be
expected to have a Material Adverse Effect, individually or in the
aggregate.
4.8 SEC
Filings.
At the
time of filing thereof, the SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and did 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 the light of the circumstances
under which they were made, not misleading.
4.9 No
Conflict, Breach, Violation or Default.
The
execution, delivery and performance of the Transaction Documents by the Company
and the issuance and sale of the Securities will not conflict with or result
in
a breach or violation of any of the terms and provisions of, or constitute
a
default under (i) the Company’s Certificate of Incorporation or the Company’s
Bylaws, both as in effect on the date hereof (true and complete copies of which
have been made available to the Investor through the XXXXX system), or (ii)(a)
any statute, rule, regulation or order of any governmental agency or body or
any
court, domestic or foreign, having jurisdiction over the Company, any Subsidiary
or any of their respective assets or properties, or (b) any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or a Subsidiary is bound or to which any of their respective assets
or
properties is subject.
4.10 Tax
Matters.
The
Company and each Subsidiary has prepared and filed all tax returns required
to
have been filed by the Company or such Subsidiary with all appropriate
governmental agencies and timely paid all taxes shown thereon or otherwise
owed
by it. The charges, accruals and reserves on the books of the Company in respect
of taxes for all fiscal periods are adequate in all material respects, and
there
are no material unpaid assessments against the Company or any Subsidiary nor,
to
the Company’s Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state
or
local taxing authority except for any assessment which is not material to the
Company and its Subsidiaries, taken as a whole. All taxes and other assessments
and levies that the Company or any Subsidiary is required to withhold or to
collect for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or, to the Company’s Knowledge, threatened against the Company or any
Subsidiary or any of their respective assets or property. Except as described
on
Schedule
4.10,
there
are no outstanding tax payments or tax sharing agreements or other such
arrangements between the Company and any Subsidiary or other corporation or
entity.
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4.11 Title
to Properties.
Except
as disclosed in the SEC Filings, the Company and each Subsidiary has good and
marketable title to all properties and assets owned by it, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and each Subsidiary holds any leased real or personal property under valid
and
enforceable leases with no exceptions that would materially interfere with
the
use made or currently planned to be made thereof by them.
4.12 Certificates,
Authorities and Permits.
Except
as disclosed in the SEC Filings, the Company and each Subsidiary possess
adequate certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by it, and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate, authority
or
permit that, if determined adversely to the Company or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect, individually or in
the
aggregate.
4.13 Labor
Matters.
(a) The
Company is not a party to or bound by any collective bargaining agreements
or
other agreements with labor organizations. The Company has not violated in
any
material respect any laws, regulations, orders or contract terms, affecting
the
collective bargaining rights of employees, labor organizations or any laws,
regulations or orders affecting employment discrimination, equal opportunity
employment, or employees’ health, safety, welfare, wages and hours.
(b) The
Company is, and at all times has been, in compliance in all material respects
with all applicable laws respecting employment (including laws relating to
classification of employees and independent contractors) and employment
practices, terms and conditions of employment, wages and hours, and immigration
and naturalization.
4.14 Intellectual
Property.
All
Intellectual Property of the Company and its Subsidiaries is currently in
compliance with all legal requirements (including timely filings, proofs and
payments of fees) and, to the Company’s Knowledge, is valid and enforceable. No
Intellectual Property of the Company or its Subsidiaries which is necessary
for
the conduct of Company’s and each of its Subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted has been or is
now
involved in any cancellation, dispute or litigation, and, to the Company’s
Knowledge, no such action is threatened.
4.15 Environmental
Matters.
Neither
the Company nor any Subsidiary is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic
or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment
or
human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property contaminated with any substance that
is subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, and is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability
or
claim has had or could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate; and there is no pending or, to the Company’s
Knowledge, threatened investigation that might lead to such a
claim.
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4.16 Litigation.
Except
as described in the SEC Filings or on Schedule
4.16,
there
are no pending actions, suits or proceedings against or affecting the Company,
its Subsidiaries or any of its or their properties; and to the Company’s
Knowledge, no such actions, suits or proceedings are threatened or
contemplated.
4.17 Financial
Statements.
The
financial statements included in each SEC Filing present fairly, in all material
respects, the consolidated financial position of the Company as of the dates
shown and its consolidated results of operations and cash flows for the periods
shown, and such financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a consistent
basis (“GAAP”) (except as may be disclosed therein or in the Note thereto, and,
in the case of quarterly financial statements, as permitted by Form 10-Q under
the 1934 Act). Except as set forth in the financial statements of the Company
included in the SEC Filings filed prior to the date hereof, neither the Company
nor any of its Subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.
4.18 Insurance
Coverage.
The
Company and each Subsidiary maintains in full force and effect insurance
coverage that is customary for comparably situated companies for the business
being conducted and properties owned or leased by the Company and each
Subsidiary, and the Company reasonably believes such insurance coverage to
be
adequate against all liabilities, claims and risks against which it is customary
for comparably situated companies to insure.
4.19 Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or the Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company.
4.20 No
Directed Selling Efforts or General Solicitation.
Neither
the Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation
D) in
connection with the offer or sale of any of the Securities.
4.21 Private
Placement.
Subject
to the accuracy of the Investor’s representations in Section 5 of this
Agreement, the offer and sale of the Securities to the Investor as contemplated
hereby is exempt from the registration requirements of the 1933
Act.
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4.22 Financial
Transactions.
The
Company has not engaged in any account trading for its own benefit that creates
an obligation to provide liquidity or other guarantees for special purpose
entities (variable interest entities); that creates an obligation to repurchase
subprime assets; nor has it any undisclosed transactions involving special
purpose entities or special investment vehicles which utilize off balance sheet
financing.
4.23 Sarbanes
Oxley Act.
The
Company is in compliance in all material respects with applicable requirements
of the Xxxxxxxx-Xxxxx Act of 2002 and applicable rules and regulations
promulgated by the SEC thereunder in effect as of the date of this Agreement,
except where such noncompliance could not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.24 Disclosure.
The
Transaction Documents, including the Schedules to this Agreement, as the same
relate to the Company, are true and correct in all material respects 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 the light of
the
circumstances under which they were made, not misleading; it being understood
that the Company has not provided the Investor, and the Investor is not relying
on, any information constituting a forecast or projection.
5. Representations,
Warranties and Covenants of the Investor.
The
Investor hereby represents, warrants and covenants to the Company
that:
5.1 Organization
and Existence.
The
Investor is a validly existing limited partnership and has all requisite
partnership power and authority to invest in the Securities pursuant to this
Agreement. The Investor was not formed solely for the purpose of investing
in
the Securities.
5.2 Authorization.
The
execution, delivery and performance by the Investor of the Transaction Documents
to which Investor is a party have been duly authorized and will each constitute
the valid and legally binding obligation of Investor, enforceable against
Investor in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of
general applicability, relating to or affecting creditors’ rights
generally.
5.3 Purchase
Entirely for Own Account.
The
Securities to be received by Investor hereunder will be acquired for Investor’s
own account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the 1933 Act, and Investor
has
no present intention of selling, granting any participation in, or otherwise
distributing the same in violation of the 1933 Act
without
prejudice, however, to 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.
Nothing
contained herein shall be deemed a representation or warranty by Investor to
hold the Securities for any period of time. Neither Investor
nor any Affiliate of Investor is a broker-dealer registered with the SEC under
the 1934 Act or an entity engaged in a business that would require it to be
so
registered.
5.4 Investment
Experience.
Investor acknowledges that it can bear the economic risk and complete loss
of
its investment in the Securities and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.
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5.5 Disclosure
of Information.
Investor has had an opportunity to receive all information related to the
Company requested by it and to ask questions of and receive answers from the
Company regarding the Company, its business and the terms and conditions of
the
offering of the Securities. Investor acknowledges receipt of and has reviewed
copies of the SEC Filings.
5.6 Restricted
Securities.
Investor understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering
and
that under such laws and applicable regulations such securities may be resold
without registration under the 1933 Act only in certain limited
circumstances.
5.7 Legends.
It is
understood that, except as provided below, certificates and instruments
evidencing the Securities may bear the following or any similar
legend:
(a) “The
securities represented hereby may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities
Act
of 1933 or qualification under applicable state securities laws.”
(b) If
required by the authorities of any state in connection with the issuance of
sale
of the Securities, the legend required by such state authority.
5.8 Accredited
Investor.
Investor is an accredited Investor as defined in Rule 501(a) of Regulation
D, as
amended, under the 1933 Act.
5.9 No
General Solicitation.
Investor did not learn of the investment in the Securities as a result of any
public advertising or general solicitation.
5.10 Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of Investor.
5.11 Prohibited
Transactions.
During
the last thirty (30) days prior to the date hereof, neither Investor nor any
Affiliate of Investor which (x) had knowledge of the transactions contemplated
hereby, (y) has or shares discretion relating to Investor’s investments or
trading or information concerning Investor’s investments, including in respect
of the Securities, or (z) is subject to Investor’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading Affiliates”)
has, directly or indirectly, effected or agreed to effect (i) any purchase
or
long sale of the Company’s securities or (ii) any short sale, whether or not
against the box, established any “put equivalent position” (as defined in Rule
16a-1(h) under the 0000 Xxx) with respect to the Common Stock, granted any
other
right (including, without limitation, any put or call option) with respect
to
the Common Stock or with respect to any security that includes, relates to
or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Securities (each of such transactions
specified in this clause (ii), a “Prohibited Transaction”). Prior to the
earliest to occur of (i) the termination of this Agreement, (ii) the Effective
Date or (iii) the Effectiveness Deadline, such Investor shall not, and shall
cause its Trading Affiliates not to, engage, directly or indirectly, in a
Prohibited Transaction. Investor acknowledges that the representations,
warranties and covenants contained in this Section 5.11 are being made for
the
benefit of the Investor as well as the Company.
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6.
Conditions
to Closing.
6.1 Conditions
to the Investor’s Obligations.
The
obligation of Investor to purchase the Note and the Warrant at the Closing
is
subject to the fulfillment to Investor’s satisfaction, on or prior to the
Closing Date, of the following conditions, any of which may be waived by
Investor:
(a) The
representations and warranties made by the Company in Section 4 hereof qualified
as to materiality shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date, and, the representations
and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects
as
of such earlier date. The Company shall have performed in all material respects
all obligations and conditions herein required to be performed or observed
by it
on or prior to the Closing Date.
(b) The
Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall
be in
full force and effect.
(c) No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order
of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in
the
other Transaction Documents.
(d) The
Company shall have reimbursed the Investor for its legal fees and expenses
up to
a maximum amount of $20,000 in the aggregate.
(e) The
Company shall have paid the Investor a closing fee equal to
$60,000.
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(f) The
Company shall have executed and delivered the Registration Rights
Agreement.
(g) The
Company shall have delivered a Certificate, executed on behalf of the Company
by
its Chief Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections (a), (b) and (c) of this Section 6.1.
(h) The
Company shall have delivered a Certificate, executed on behalf of the Company
by
its Secretary, dated as of the Closing Date, certifying the resolutions adopted
by the Board of Directors of the Company approving the transactions contemplated
by this Agreement and the other Transaction Documents, and the issuance of
the
Securities, certifying the current versions of the Certificate of Incorporation
and Bylaws of the Company and certifying as to the signatures and authority
of
persons signing the Transaction Documents and related documents on behalf of
the
Company.
(i) The
Investor shall have received an opinion of counsel to the Company substantially
in the form attached hereto as Exhibit
D.
6.2 Conditions
to Obligations of the Company.
The
Company's obligation to sell and issue the Note and the Warrant at the Closing
is subject to the fulfillment to the satisfaction of the Company on or prior
to
the Closing Date of the following conditions, any of which may be waived by
the
Company:
(a) The
representations and warranties made by the Investor in Section 5 hereof, other
than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and
correct in all material respects when made, and shall be true and correct in
all
material respects on the Closing Date with the same force and effect as if
they
had been made on and as of said date. The Investment Representations shall
be
true and correct in all respects when made, and shall be true and correct in
all
respects on the Closing Date with the same force and effect as if they had
been
made on and as of said date. The Investor shall have performed in all material
respects all obligations and conditions herein required to be performed or
observed by them on or prior to the Closing Date.
(b) The
Investor shall have executed and delivered the Registration Rights
Agreement.
(c) The
Investor shall have delivered or caused to be delivered the Purchase Price
to
the Company.
7. Covenants
and Agreements of the Company.
7.1 Reservation
of Common Stock.
The
Company shall at all times reserve and keep available out of its authorized
but
unissued shares of Common Stock, solely for the purpose of providing for the
conversion of the Note and the exercise of the Warrant, such number of shares
of
Common Stock as shall from time to time equal the number of shares sufficient
to
permit the issuance of the Conversion Shares and the Warrant Shares pursuant
to
the Transaction Documents in accordance with their respective
terms.
-11-
7.2 No
Conflicting Agreements.
The
Company will not take any action, enter into any agreement or make any
commitment that would conflict or interfere in any material respect with the
Company’s obligations to the Investor under the Transaction
Documents.
7.3 Insurance.
The
Company shall not materially reduce the insurance coverages described in Section
4.18.
7.4 Compliance
with Laws.
The
Company will comply in all material respects with all applicable laws, rules,
regulations, orders and decrees of all governmental authorities.
7.5 Use
of
Proceeds
. The
Company will use the proceeds from the sale of the Note for general corporate
and working capital purposes.
7.6 Key
Man Life Insurance.
The
Company shall undertake to obtain a $3 million key-man life insurance policy
on
Xxxx Xxxxxxxxxx, President and Chief Executive Officer of the Company, naming
the Company as beneficiary, on commercially reasonable rates. The foregoing
covenant shall remain in place until such date as the Note is paid in full.
7.7 Board
Composition.
Pursuant to that certain Securities Purchase Agreement, dated January 11, 2006,
by and between the Company, St. Cloud Capital Partners, L.P. (“St. Cloud”) and
the other investors signatory thereto (the “Prior Agreement”), the Company
agreed to elect one nominee of St. Cloud as a director to fill an existing
vacancy on the Board of Directors and to include such nominee in its proxy
statement for the Company’s 2006 Annual Meeting to continue to serve on the
Company’s Board of Directors. Such Nominee was Xxxxxxxx X. Xxxxxx, an Affiliate
of St. Cloud and the Investor. The Company hereby reconfirms its covenant to
elect a nominee of St. Cloud to continue to serve on the Company’s Board of
Directors. Xx. Xxxxxx was re-elected to the Company’s Board of Directors at the
Company’s 2008 annual meeting of stockholders. In addition, at or promptly
following the Closing, one additional nominee of Investor reasonably acceptable
to the Company shall be elected by the Board of Directors of the Company to
fill
an existing vacancy on the Board of Directors and the Company shall undertake
to
include such nominee in its proxy statement for the Company’s 2009 Annual
Meeting to continue to serve on the Company’s Board of Directors.
7.8 Board
Observer Rights.
So long
as the principal balance of the Note is unpaid, or Investor or any of its
Affiliates are the beneficial owners (as defined under Rule 13d-3 promulgated
under the 0000 Xxx) of at least 5% of the Common Stock (as determined pursuant
to such Rule 13d-3), the Company shall give Investor written notice of each
meeting of the Company’s Board of Directors and each committee thereof at least
at the same time and in the same manner as notice is given to the directors,
and
the Company shall permit a representative of Investor to attend as an observer
all meetings of the Company’s Board of Directors and all committees thereof;
provided that in the case of telephonic meetings conducted in accordance with
the Company’s bylaws and applicable law, the Investor representative shall be
given the opportunity to listen to such telephonic meetings; and provided,
further, that the Company shall have the right to exclude the Investor
representative from any portion of a meeting if, in the good faith judgment
of
the Company’s counsel, the inclusion of the Investor representative therein
would result in the waiver of any applicable privilege. The Investor
representative shall be entitled to receive all written materials and other
information (including without limitation copies of meeting minutes) given
to
directors in connection with such meetings at the same time such materials
and
information are given to the directors; provided, however, that the Company
shall have the right to provide information to the Investor representative
if,
in the good faith judgment of the Company’s counsel, the provision of such
information to the Investor representative would result in the waiver of any
applicable privilege. If the Company proposes to take any action by written
consent in lieu of a meeting of its Board of Directors or of any committee
thereof, the Company shall give written notice thereof to the Investor
representative and each of the Company’s directors prior to the effective date
of such consent describing in reasonable detail the nature and substance of
such
action. The Company shall pay the reasonable out-of-pocket expenses of the
Investor representative incurred in connection with attending such board and
committee meetings. This covenant shall be a reconfirmation of that similar
right granted in the Prior Agreement and shall not be construed to grant the
Investor and its Affiliates an additional observer right.
-12-
7.9 Right
of First Offer.
Subject
to the terms and conditions specified in this Section 7.9, if the Company
proposes to offer or sell any additional debt financing, ("New Debt") then
the
Company shall first make an offering of such New Debt to the Investor in
accordance with the following provisions of this Section 7.9. The Investor
shall
be entitled to apportion the right of first offer hereby granted to it among
itself and its Affiliates in such proportions as it deems
appropriate.
(a)
Company
shall deliver a notice, in accordance with the notice provisions hereof, (the
“Debt Offer Notice”) to the Investor
stating
(i) its bona fide intention to offer such New Debt, (ii) the amount of
such New Debt to be offered, and (iii) the price and terms, if any, upon
which it proposes to offer such New Debt.
(b)
By
written notification received by the Company, within fifteen (15) calendar
days
after receipt of the Debt Offer Notice, the Investor
may
elect to purchase all or less than all of the New Debt being
offered.
(c)
If
the New Debt is not elected to be purchased or obtained as provided in
Section 7.9(b)
hereof,
the Company may sell such New Debt during the ninety (90) day period following
the expiration of the period provided in Section 7.9(b)
hereof,
to any Person or Persons at a price not less than, and upon terms no more
favorable to the offeree than, those specified in the Debt Offer Notice. If
the
Company does not enter into an agreement for the sale of such New Debt within
such period, or if such agreement is not consummated within thirty (30) days
of
the execution thereof, the right provided hereunder shall be deemed to be
revived, and such New Debt shall not be offered unless first reoffered to the
Investor in accordance with this Section
7.9.
7.10 Certain
Negative Covenants.
From
and after the date of this Agreement and for so long as any Note remain
outstanding, the Company shall not without first obtaining the approval (by
vote
or written consent, as provided by law) of the holders of a majority of the
outstanding principal face amount of the Note, which consent shall not be
unreasonably withheld or delayed, take any of the following actions:
-13-
(a) Incur
additional indebtedness; provided, however, that, the foregoing restriction
shall not preclude (i) up to $1,000,000 dollars of Other Senior Debt (as defined
in the Note), (ii) additional debt that is expressly subordinated to the Note,
as evidenced by a subordination agreement reasonably acceptable to the holder
of
the Note and (iii) indebtedness under purchase money security interests incurred
in the ordinary course of business;
(b) Declare
or pay any dividend of any kind, in cash or in property, on any class of its
common stock equity securities, nor purchase, redeem, retire or otherwise
acquire for value any shares of such stock, nor make any distribution of any
kind in respect thereof.
(c) Make
loans, advances to, or guarantees for the benefit of any its officers, directors
or stockholders who beneficially own five percent (5%) or more of the Company’s
Common Stock;
(d) Enter
into, amend, modify or supplement, any agreement, transaction, commitment,
or
arrangement with any of its officers, directors or stockholders who beneficially
own five percent (5%) or more of the Common Stock, except for (a) customary
employment arrangements and benefit programs on reasonable terms, and (b) any
agreement, transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company; for purposes hereof,
any
director who is also an officer of the Company or any subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment, or arrangement.
(e) Enter
into the active management or operation of any business other than the business
currently conducted by Company and a similar business;
(f) Enter
into employment agreements not terminable at will with new or existing employees
(other than employment agreements with senior management that are approved
by
the Board, including those contemplated by the merger with vFinance, Inc.);
or
renew any existing employment agreements with non-senior management (except
those which are terminable at will) or establish or modify equity options
(unless approved by the Board), retirement allowances, pensions and remuneration
of Directors (unless approved by the Board), consultants or strategic partners
of Company;
-14-
(g) Allow
any
officer of Company to use any assets of Company in such a manner as would
violate such person’s fiduciary duties to Company or its
shareholders;
(h) Enter
or
consummate any off-balance sheet transactions other than operating
leases;
(i)
Change
the tax or accounting policies of Company, other than to comply with Generally
Accepted Accounting Principles (“GAAP”) or existing rules of the Internal
Revenue Code;
(j) Settle
claims, litigation or disputes (including tax claims or audits) involving an
amount in excess of one-hundred thousand dollars ($100,000), unless approved
by
the Board, other than any claims to the extent covered by Company’s errors and
omissions, worker’s compensation or general liability insurance;
(k) File
any
petition for bankruptcy or similar action relating to Company or voluntarily
dissolve or terminate Company;
(l) Consummate
any merger, reorganization, restructuring, reverse stock split consolidation,
sale of all or substantially all of the Company’s assets or any similar
transaction or related transactions, other than the contemplated merger with
vFinance, Inc.; or
(m) Amend
its
Certificate of Incorporation or By-Laws.
7.11 Termination
of Covenants.
The
provisions of Sections 7.2 through 7.4 shall terminate and be of no further
force and effect on the later of the date (i) on which the Company’s obligations
under the Registration Rights Agreement to register or maintain the
effectiveness of any registration covering the Registrable Securities (as such
term is defined in the Registration Rights Agreement) shall terminate and (ii)
of full repayment of obligations under the Note.
8. Survival
and Indemnification.
8.1 Survival.
The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transactions contemplated by this
Agreement; provided, however, that the representations and warranties contained
in this Agreement shall expire twelve (12) months after the
Closing.
8.2 Indemnification.
Subject
to the provisions of Section 8.1, the Company agrees to indemnify and hold
harmless Investor and its Affiliates and their respective directors, officers,
employees and agents from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney
fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company
under the Transaction Documents, and will reimburse any such Person for all
such
amounts as they are incurred by such Person.
-15-
8.3 Conduct
of Indemnification Proceedings.
Promptly
after receipt by any Person (the “Indemnified
Person”) of notice of any demand, claim or circumstances which would or might
give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to Section
8.2, such Indemnified Person shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person, and shall assume
the
payment of all fees and expenses; provided,
however, that
the
failure of any Indemnified Person so to notify the Company shall not relieve
the
Company of its obligations hereunder except to the extent that the Company
is
materially prejudiced by such failure to notify. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the
fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually agreed
to
the retention of such counsel; or (ii) in the reasonable judgment of counsel
to
such Indemnified Person representation of both parties by the same counsel
would
be inappropriate due to actual or potential differing interests between them.
The Company shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Company shall indemnify and hold harmless such Indemnified Person
from and against any loss or liability (to the extent stated above) by reason
of
such settlement or judgment. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, the
Company shall not effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.
9.
Disclosure
Provisions.
9.1 Use
of
Proceeds-Statements and Access.
At such
times as Investor reasonably requests, Company shall deliver to Investor a
written statement certified by Company’s chief financial officer describing in
reasonable detail the use of the proceeds from the transactions contemplated
by
the Transaction Documents by Company.
9.2 Use
of
Proceeds-Public Interest.
The
Company shall not, and shall not permit its Subsidiaries to, use any proceeds
from the transactions contemplated by the Transaction Documents for any purpose
contrary to public interest (including, but not limited to, activities which
are
in violation of law) or inconsistent with free enterprise, in each case within
the meaning of 13 C.F.R. Section 107.720.
9.3
Economic
Impact Information.
Promptly after the end of each calendar year (but in any event prior to February
28 of each year), the Company shall deliver to Investor a written assessment
of
the economic impact of Investor’s investment in the Company, specifying the
full-time equivalent jobs created or retained in connection with the investment,
the impact of the investment on the businesses of the Company and its
Subsidiaries and on taxes paid by Company and its employees.
-16-
10. Miscellaneous.
10.1 Successors
and Assigns.
This
Agreement may not be assigned by a party hereto without the prior written
consent of the Company or the Investor, as applicable, provided, however, that
Investor may assign its rights and delegate its duties hereunder in whole or
in
part to an Affiliate or to a third party acquiring some or all of its Securities
in a private transaction without the prior written consent of the Company,
after
notice duly given by Investor to the Company provided, that no such assignment
or obligation shall affect the obligations of Investor hereunder. The provisions
of this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
10.2 Counterparts.
This agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which shall constitute one and
the
same document. in the event that any signature (including a financing signature
page) is delivered by facsimile transmission or by e-mail delivery of a “.pdf”
format data file, 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 or “.pdf” signature page were an
original thereof.
10.3 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
10.4 Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given
by
an internationally recognized overnight air courier, then such notice shall
be
deemed given one Business Day after delivery to such carrier. All notices shall
be addressed to the party to be notified at the address as follows, or at such
other address as such party may designate by ten days’ advance written notice to
the other party:
If
to the
Company:
National
Holdings Corporation
000
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxx Xxxxxxxxxx, CEO
Fax:
(000) 000-0000
-17-
With
a
copy to:
Xxxxxxx
Krooks LLP
000
Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxxx X. Xxxxxxx, Esq.
Fax:
(000) 000-0000
If
to the
Investor:
St.
Cloud
Capital Partners II, L.P.
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxxx
Fax:
(000) 000-0000
With
a
copy to:
Xxxxxxxx,
Xxxxx & Xxxxx, LLP
000
Xxxx
X Xxxxxx, 00xx Xxxxx
Xxx
Xxxxx, XX 00000
Attention:
Xxx X. Xxxxxx, Esq.
Fax:
(000) 000-0000
10.5 Expenses.
The
parties hereto shall pay their own costs and expenses in connection herewith,
except that the Company shall pay the reasonable fees and expenses of
Investor not
to
exceed $20,000. Such expenses shall be paid not later than the Closing. In
the
event that legal proceedings are commenced by any party to this Agreement
against another party to this Agreement in connection with this Agreement or
the
other Transaction Documents, the party or parties which do not prevail in such
proceedings shall severally, but not jointly, pay their pro rata share of the
reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings. In addition and
notwithstanding anything contained herein to the contrary, the Company agrees
to
pay the reasonable fees and expenses incurred by Investor in connection with
its
preparation, filing and updating of all required SEC filings related to this
transaction; provided that counsel to the Company prepares the Schedule 13(d)
and related amendments required to be filed.
10.6 Amendments
and Waivers.
Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investor. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, each future holder of all such
Securities, and the Company.
-18-
10.7 Publicity.
Except
as set forth below, no public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investor
without the prior consent of the Company (in the case of a release or
announcement by the Investor) or the Investor (in the case of a release or
announcement by the Company) (which consents shall not be unreasonably
withheld), except as such release or announcement may be required by law or
the
applicable rules or regulations of any securities exchange or securities market,
in which case the Company or the Investor, as the case may be, shall allow
the
Investor or the Company, as applicable, to the extent reasonably practicable
in
the circumstances, reasonable time to comment on such release or announcement
in
advance of such issuance. In addition, the Company will make such other filings
and notices in the manner and time required by the SEC.
10.8 Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which
renders any provision hereof prohibited or unenforceable in any
respect.
10.9 Entire
Agreement.
This
Agreement, including the Exhibits and the Disclosure Schedules, and the other
Transaction Documents constitute the entire agreement among the parties hereof
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof, other than any written
confidentiality agreement between the Company and Investor, which shall continue
in full force and effect.
10.10 Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
10.11 Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York
for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served
on
each party hereto anywhere in the world by the same methods as are specified
for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that
any
such suit, action or proceeding brought in any such court has been brought
in an
inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
-19-
10.12 Confidentiality.
Each
party hereto agrees that, except with the prior written permission of the
other party or as required by applicable federal or state securities law, it
shall at all times keep confidential and not divulge, furnish or make accessible
to anyone any confidential information, knowledge or data concerning or relating
to the business or financial affairs of the other parties to which such party
has been or shall become privy by reason of this Agreement, discussions or
negotiations relating to this Agreement, the performance of its obligations
hereunder or the ownership of the Securities purchased hereunder. The
provisions of this Section 10.12 shall be in addition to, and not in
substitution for, the provisions of any separate nondisclosure agreement
executed by the parties hereto with respect to the transactions contemplated
hereby.
[SIGNATURE
PAGE FOLLOWS]
-20-
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
authorized officers to execute this Agreement as of the date first above
written.
|
The
Company:
|
NATIONAL
HOLDINGS CORPORATION
|
|
|
By:
|
/S/
XXXX XXXXXXXXXX
|
|
|
Xxxx
Xxxxxxxxxx
|
||
|
President
and Chief Executive Officer
|
||
|
The
Investor:
|
ST.
CLOUD CAPITAL PARTNERS II, L.P.
|
|
|
By:
SGCP II, LLC
|
||
|
Its:
General Partner
|
||
|
By:
|
/S/
XXXXXXXX X. XXXXXX
|
|
|
Xxxxxxxx
X. Xxxxxx
|
||
|
Managing
Member
|
||
-21-
EXHIBIT
A
NOTE
-22-
EXHIBIT
B
WARRANT
-23-
EXHIBIT
C
REGISTRATION
RIGHTS AGREEMENT
-24-
EXHIBIT
D
FORM
OF
LEGAL OPINION
[THE
FOLLOWING IS SUBJECT TO CUSTOMARY ASSUMPTIONS AND DISCLAIMERS TO BE SET FORTH
IN
ACTUAL OPINION]
|
1.
|
The
Company is a corporation validly existing and in good standing under
the
laws of the State of Delaware.
|
|
2.
|
The
Company has the corporate power and corporate authority to enter
into and
perform each of the Transaction
Documents.
|
|
3.
|
The
Company has taken all corporate action necessary to authorize the
execution, delivery and performance of each of the Transaction Documents
and has duly executed and delivered each of the Transaction
Documents.
|
|
4.
|
Each
of the Transaction Documents is a valid and binding obligation of
the
Company, enforceable by the Investor against the Company in accordance
with its terms.
|
|
5.
|
Neither
the execution and delivery of the Transaction Documents on behalf
of the
Company, nor the issuance and sale of the Note and the Warrant to
the
Investor at the Closing, violates any provision of the Certificate
of
Incorporation or Bylaws of the
Company.
|
|
6.
|
The
shares of Common Stock issuable upon (i) conversion of the Note and
(ii)
exercise of the Warrant have been duly and validly authorized and
reserved
as of the date hereof. The issuance of the shares of Common Stock
issuable
upon (i) conversion of the Note and (ii) exercise of the Warrant
are not
subject to any statutory or, to our knowledge, contractual or other
preemptive rights, other than as set forth in the Transaction
Documents.
|
-25-
