NATIONAL HOLDINGS CORPORAION VOTING AGREEMENT
NATIONAL
HOLDINGS CORPORAION
THIS
VOTING AGREEMENT (the “Agreement”) is made and entered into as of this
1st
day of
July, 2008 by and among National Holdings Corporation, a Delaware corporation
(the "Company"), and the persons listed on Schedule I hereto (individually,
a "Director" and collectively the "Directors").
RECITALS:
A. The
Directors are the beneficial owners of an aggregate of 2,111,821 shares of
the
common stock of the Company, par value $.02 per share, including shares
underlying the Company’s Series A Preferred Stock (the "Common
Stock").
B. The
Company has entered into that certain Agreement and Plan of Merger dated as
of
November 7, 2007 (as the same may be amended, supplemented or otherwise modified
in accordance with its terms, the “Merger Agreement”) by and among the Company,
vFinance, Inc. (“vFinance”) and VFIN Acquisition Corporation, a wholly-owned
subsidiary of the Company (“Merger Sub”) whereby the Merger Sub shall merge with
and into vFinance (the "Merger").
C. Pursuant
to Section 8.1(i) of the Merger Agreement, it is a condition to the completion
of the Merger that the Directors enter into this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
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Voting.
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1.1 Director
Shares.
Each of
the Directors agrees to hold all shares of Common Stock of the Company
registered in their respective names or beneficially owned by them as of the
date hereof and any and all other securities of the Company beneficially owned
by each of the Directors after the date hereof (hereinafter collectively
referred to as the "Director Shares") subject to, and to vote the Director
Shares in accordance with, the provisions of this Agreement.
1.2 Nomination
of Directors.
(a) Each
of
the Directors shall vote and shall take all other necessary or desirable actions
within his control, (including, without limitation, execution of written
consents or resolutions in lieu of meetings), from time to time and at all
times
in whatever manner shall be necessary, to ensure that each of the following
persons is nominated to serve as a director of the Company: Xxxx Xxxxxxxxxx
("Xxxxxxxxxx"), Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxxxxxxx X. Xxxxx (“Xxxxx”),
Xxxxxxx Xxxxxx (“Xxxxxx”), Xxxxx Xxxxxx (“Xxxxxx”), and up to three directors
nominated by Xxxxxxxxxx, who shall be reasonably satisfactory to vFinance (the
"Xxxxxxxxxx Nominated Director") and up to one additional director nominated
by
Xxxxxxx, who shall be reasonably satisfactory to the Company (together with
Xxxxxx and Xxxxxx, the “Xxxxxxx Nominated Directors”). In the event that: (i)
Xxxxxxxxxx beneficially owns less than 150,000 shares of the Common Stock,
then
the other Directors will not be obligated to nominate Xxxxxxxxxx to serve as
a
member of the Company's board of directors and the Xxxxxxxxxx Nominated
Directors to serve as members of the Company's board of directors, and, as
long
as Xxxxxxxxxx owns more than 150,000 shares
of
the Common Stock, Xxxxxxxxxx shall have the right to designate a person (the
"Replacement Director") to replace any Xxxxxxxxxx Nominated Director and,
assuming the Replacement Director is reasonably satisfactory to the other
Directors, all of the other Directors shall vote to nominate the Replacement
Director to the Company's board of directors; (ii) Xxxxx beneficially owns
less
than 150,000 shares of the Common Stock, then the other Directors will not
be
obligated to nominate such person; and (iii) Xxxxxxx beneficially owns less
than
150,000 shares of the Common Stock, then the other Directors will not be
obligated to nominate such person, or the Xxxxxxx Nominated Directors to serve
as members of the Company's board of directors, and, as long as Xxxxxxx owns
more than 150,000 shares
of
the Common Stock, Xxxxxxx shall have the right to designate a Replacement
Director to replace a Xxxxxxx Nominated Director and, assuming the Replacement
Director is reasonably satisfactory to the other Directors, all of the other
Directors shall vote to nominate the Replacement Director to the Company's
board
of directors.
(b) In
the
event that the Company’s outstanding Common Stock is listed for trading on AMEX
or NASDAQ, the provisions of Section 1.2(a) shall be limited to provide
that:
(i) Xxxxxxxxxx
and Xxxxxxx shall have the right to nominate persons to the Company’s board of
directors or nominating committee, if any, but the board or nominating
committee, if any, shall not be obligated to accept such nominees;
and
(ii) In
addition to the rights set forth in Section 1.2(b)(i), provided that Messrs.
Xxxxxxxxxx and Xxxxxxx own sufficient voting shares of capital stock of the
Company to satisfy the voting rights requirements of the securities exchange
on
which the Company’s securities are listed, they may mutually agree to designate
one person who shall serve on the Company’s board of directors as long as such
person is reasonably satisfactory to the Company’s board of directors or
nominating committee, if any.
(c) In
the
event of changes in all of the outstanding Common Stock by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations, or exchanges of shares or other similar transactions, the number
of shares set forth in Section 1.2(a) hereof, shall automatically be
proportionately adjusted.
1.3 Election
of Directors.
(a) Each
of
the Directors shall vote all of his Director Shares and take all other necessary
or desirable actions within his control (including, without limitation,
execution of written consents or resolutions in lieu of meetings), from time
to
time and at all times in whatever manner shall be necessary, to ensure that
all
of the persons nominated to be members of the Company's board of directors
pursuant to Section 1.2 hereof are elected as directors of the Company;
provided,
however,
that in
the event that the Company’s outstanding Common Stock is listed for trading on
AMEX or NASDAQ, a Director’s obligation to vote his Director Shares shall be
limited to the election of the Xxxxxxxxxx Nominated Directors and the Xxxxxxx
Nominated Directors and any Replacement Director of either group. If all of
the
Xxxxxxx Nominated Directors are not accepted by the Company’s board of directors
or nominating committee, if any, Xxxxxxx shall not be obligated to vote for
the
Xxxxxxxxxx Nominated Directors. Similarly, if the Xxxxxxxxxx Nominated Directors
are not accepted by the Company’s board of directors or nominating committee, if
any, Xxxxxxxxxx and Xxxxx shall not be obligated to vote for the Xxxxxxx
Nominated Directors.
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(b) The
Directors will be present, in person or by proxy, at all meetings of the
stockholders of the Company at which directors are elected so that all Director
Shares may be counted for the purpose of determining the presence of a quorum
at
meetings and voted as required herein.
1.4 Legend.
(a) Concurrently
with the execution of this Agreement, there shall be imprinted or otherwise
placed, on certificates representing the Director Shares owned or hereinafter
acquired the following restrictive legend (the "Legend"):
“THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS
OF A VOTING AGREEMENT WHICH PLACES CERTAIN RESTRICTIONS ON THE VOTING OF THE
SHARES REPRESENTED HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH SHARES
SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF
SUCH
VOTING AGREEMENT. A COPY OF SUCH VOTING AGREEMENT WILL BE FURNISHED TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.”
(b) Except
as
provided in Section 1.4 (c) hereof, the Company agrees that, during the term
of
this Agreement, it will not remove, and will not permit to be removed (upon
registration of transfer, reissuance of otherwise), the Legend from any such
certificate and will place or cause to be placed the Legend on any new
certificate issued to represent Director Shares theretofore represented by
a
certificate carrying the Legend.
(c) The
Company shall instruct the transfer agent to remove the Legend in the case
of a
bona fide sale or transfer which does not represent a Negotiated Sale, as such
term is defined in Section 1.5 hereof.
1.5 Successors.
The
provisions of this Agreement shall be binding upon the successors in interest
to
any of the Director Shares in a private sale or transfer or in a privately
negotiated public block sale or transfer (collectively, a “Negotiated Sale”). In
the case of a Negotiated Sale, the Company shall not permit the transfer of
any
of the Director Shares on its books or issue a new certificate representing
any
of the Director Shares unless and until the person to whom such security is
to
be transferred shall have executed a written agreement, substantially in the
form of this Agreement, pursuant to which such person becomes a party to this
Agreement and agrees to be bound by all the provisions hereof as if such person
were a Director.
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1.6 Other
Rights.
Except
as provided by this Agreement or any other agreement entered into in connection
with the Merger Agreement, each Director shall exercise the full rights of
a
holder of capital stock of the Company with respect to the Director Shares.
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2.
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Termination.
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2.1 This
Agreement shall continue in full force and effect from the date hereof through
the earliest of the following dates, on which date it shall terminate in its
entirety:
(a) the
date
of the closing of the Company’s merger into or consolidation with any other
corporation or other entity, or any other corporate reorganization, in which
the
holders of the Company’s outstanding voting stock immediately prior to such
transaction own, immediately after such transaction, securities representing
less than fifty percent (50%) of the voting power of the corporation or other
entity surviving such transaction, provided that this Section 2.1(a) shall
not
apply to a merger effected exclusively for the purpose of changing the domicile
of the Company;
(b) the
date
as of which all the parties hereto terminate this Agreement by written
consent;
(c) the
date
that all of the Directors beneficially own less than one percent (1%) of the
Common Stock; or
(d) upon
the
fifth anniversary of this Agreement.
2.2 In
the
event that (i) Xxxxxxxxxx shall cease to be employed with the Company, then
Xxxxxxx’x obligation to vote for Xxxxxxxxxx and the Xxxxxxxxxx Nominated
Director shall terminate but Xxxxxxxxxx’x obligation to vote for Xxxxxxx and the
Xxxxxxx Nominated Directors shall not be terminated and (ii) Xxxxxxx shall
cease
to be employed with the Company then Xxxxxxxxxx’x obligation to vote for Xxxxxxx
and the Xxxxxxx Nominated Directors shall terminate but Xxxxxxx’x obligation to
vote for Xxxxxxxxxx and the Xxxxxxxxxx Nominated Directors shall not be
terminated; provided
further however,
that
nothing contained in this Section 2.2 shall prohibit Xxxxxxxxxx or Xxxxxxx
from
voting for the other or their nominated directors regardless of the employment
status of Xxxxxxxxxx or Xxxxxxx, as the case may be.
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3.
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Miscellaneous.
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3.1 Director
Ownership.
Each
Director represents and warrants to each other that (a) such Director now owns
the Director Shares set forth opposite his name on Schedule I, free and clear
of
liens or encumbrances, and has not, prior to or on the date of this Agreement,
executed or delivered any proxy or entered into any other voting agreement
or
similar arrangement other than one which has expired or terminated prior to
the
date hereof, and (b) such Director has full power and capacity to execute,
deliver and perform this Agreement, which has been duly executed and delivered
by, and evidences the valid and binding obligation of, such Director enforceable
in accordance with its terms.
3.2 Director
Further Action.
If and
whenever the Director Shares are sold, the Directors or the personal
representative of the Directors shall do all things and execute and deliver
all
documents and make all transfers, and cause any transferee of the Director
Shares to do all things and execute and deliver all documents, as may be
necessary to consummate such sale consistent with this Agreement.
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3.3 Specific
Performance.
The
parties hereto hereby declare that it is impossible to measure in money the
damages which will accrue to a party hereto or to their heirs, personal
representatives, or assigns by reason of a failure to perform any of the
obligations under this Agreement and agree that the terms of this Agreement
shall be specifically enforceable. If any party hereto or his heirs, personal
representatives, or assigns institutes any action or proceeding to specifically
enforce the provisions hereof, any person against whom such action or proceeding
is brought hereby waives the claim or defense therein that such party or such
personal representative has an adequate remedy at law, and such person shall
not
offer in any such action or proceeding the claim or defense that such remedy
at
law exists.
3.4 Governing
Law.
This
Agreement, and the rights of the parties hereto, shall be governed by and
construed in accordance with the laws of the State of Delaware as such laws
apply to agreements to be performed entirely within the State of
Delaware.
3.5 Amendment
or Waiver.
This
Agreement may be amended (or provisions of this Agreement waived) only by an
instrument in writing signed by all of the parties hereto. Any amendment or
waiver so effected shall be binding upon the Company, each of the parties hereto
and any assignee of any such party.
3.6 Severability.
In the
event one or more of the provisions of this Agreement should, for any reason,
be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal
or
unenforceable provision had never been contained herein.
3.7 Successors.
This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors, assigns, administrators, executors
and
other legal representatives.
3.8 Additional
Shares.
In the
event that subsequent to the date of this Agreement any shares or other
securities are issued on, or in exchange for, any of the Director Shares by
reason of any stock dividend, stock split, combination of shares,
reclassification or the like, such shares or securities shall be deemed to
be
Director Shares for purposes of this Agreement.
3.9 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original but all of which together shall constitute one and the same
agreement.
3.10 Waiver.
No
waivers of any breach of this Agreement extended by any party hereto to any
other party shall be construed as a waiver of any rights or remedies of any
other party hereto or with respect to any subsequent breach.
3.11 Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified,
(ii)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient; if not, then on the next business day, (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the party to be
notified at the address as set forth on the signature page hereof or at such
other address as such party may designate by ten (10) days advance written
notice to the other parties hereto.
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3.12 Entire
Agreement.
This
Agreement and the Schedule attached hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except
as
specifically set forth herein and therein.
3.13 Consent
To the Exclusive Jurisdiction Of the Courts Of New York; Waiver of Jury Trial;
Arbitration.
(a) SUBJECT
TO THE ARBITRATION PROVISONS OF SUBSECTION (e) BELOW, EACH OF THE PARTIES HERETO
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL, STATE AND LOCAL
COURTS LOCATED IN THE STATE OF NEW YORK, AS WELL AS TO THE JURISDICTION OF
ALL
COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF
ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATION, ANY PROCEEDING RELATING TO ANCILLARY MEASURES IN AID OF ARBITRATION,
PROVISIONAL REMEDIES AND INTERIM RELIEF, OR ANY PROCEEDING TO ENFORCE ANY
ARBITRAL DECISION OR AWARD.
(b) EACH
PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING ANY SUIT, ACTION
OR
OTHER PROCEEDING IN OR BEFORE ANY COURT OR TRIBUNAL OTHER THAN THE FEDERAL,
STATE AND LOCAL COURTS LOCATED IN THE STATE OF NEW YORK AND COVENANTS THAT
IT
SHALL NOT SEEK IN ANY MANNER TO RESOLVE ANY DISPUTE OTHER THAN AS SET FORTH
IN
THIS ARTICLE XIV OR TO CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT
OBTAINED IN ACCORDANCE WITH THE PROVISIONS HEREOF.
(c) EACH
OF
THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE
TO
VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY
OF
SUCH COURTS. IN ADDITION, EACH OF THE PARTIES CONSENTS TO THE SERVICE OF PROCESS
BY PERSONAL SERVICE OR ANY MANNER IN WHICH NOTICES MAY BE DELIVERED HEREUNDER
IN
ACCORDANCE WITH SECTION 12(k).
(d) EACH
OF
THE PARTIES HERETO HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY
IN
ANY ACTION OR OTHER PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT, ANY
OF
THE OTHER TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.
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(e) Any
controversy, dispute or claim arising out of or in connection with or relating
to this Agreement, or the breach, termination or validity hereof or any
transaction contemplated hereby (any such controversy, dispute or claim being
referred to as a “Dispute”) shall be finally settled by arbitration conducted
expeditiously in accordance with the Commercial Arbitration Rules then in force
(the “AAA Rules”) of the American Arbitration Association (the “AAA”). There
shall be a panel of three arbitrators who shall be appointed pursuant to AAA
procedure, in each case, within fifteen (15) business days of receipt of the
demand for arbitration by the respondent(s) in any such proceeding. Each of
the
arbitrators shall be an attorney with no less than fifteen (15) years’
experience in the practice of business law (preferably with experience in the
acquisition and financing of businesses such as those engaged in by the Company
and the Subsidiaries at the time such dispute arises) who shall not have
performed any legal services for any of the parties or person controlled by
any
of the parties for a period of 5 years prior to the date the demand for
arbitration is received by the respondent(s). The situs for an arbitration
pursuant to this Section shall be New York, New York. A final award shall be
rendered as soon as reasonably possible and, in any event, within ninety (90)
days of the appointment of the panel of arbitrators; provided, however, that
if
the arbitrators determine by majority vote that fairness so requires, such
ninety (90) day period may be extended by no more than sixty (60) additional
days. The parties agree that the arbitrators shall have the right and power
to
shorten the length of any notice periods or other time periods provided in
the
AAA Rules and to implement Expedited Procedures under the AAA Rules in order
to
ensure that the arbitration process is completed within the time frames provided
herein. The arbitration decision or award shall be reasoned and in writing.
Judgment on the decision or award rendered by the arbitrators may be entered
and
specifically enforced in any court having jurisdiction thereof. Notwithstanding
the provisions of Section 12(d), any arbitration held pursuant to the provisions
of this Section shall be governed by the Federal Arbitration Act. All
arbitrations commenced pursuant to this Agreement while any other arbitration
hereunder shall be in progress shall be consolidated and heard by the initially
constituted panel of arbitrators.
3.14 Counterparts.
This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when two
or
more of the counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that each party need not sign the
same
counterpart.
3.15 Interpretation.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
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IN
WITNESS WHEREOF, the parties hereto have executed this Voting Agreement as
of
the date first above written.
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COMPANY:
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National
Holdings Corporation
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By:
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/S/
XXXX XXXXXXXXXX
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Xxxx
Xxxxxxxxxx, Chairman and CEO
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DIRECTORS:
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/S/
XXXX XXXXXXXXXX
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Xxxx
Xxxxxxxxxx
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/S/
XXXXXXX XXXXXXX
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Xxxxxxx
Xxxxxxx
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/S/
XXXXXXXXXXX XXXXX
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Xxxxxxxxxxx
Xxxxx
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SCHEDULE
I
LIST
OF STOCKHOLDERS
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No. of Shares
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1.
Xxxx Xxxxxxxxxx
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932,473
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823,622
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3.
Xxxxxxxxxxx X. Xxxxx
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355,674
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