FORBEARANCE AND WARRANT MODIFICATIONAGREEMENT
EXHIBIT
10.25
FORBEARANCE
AND WARRANT MODIFICATIONAGREEMENT
This
Forbearance and Warrant Modification Agreement (this “Agreement”) is made and
entered into this 25th day of February 2009, by and between NATIONAL HOLDINGS CORPORATION,
a Delaware corporation (the “Borrower”) and XXXXXXXXXXX X. XXXXX (the
“Lender “).
W
I T N E S S E T H:
WHEREAS, prior hereto,
Borrower and Lender entered into a Securities Purchase Agreement dated February
22, 2007 (the “Securities Purchase Agreement”), whereby Lender agreed to loan
Borrower Five Hundred Thousand ($500,000) Dollars, as evidenced by that certain
promissory note of even date therewith (the “Note”) in favor of Lender;
and
WHEREAS, as of February 22,
2009 (the “Principal Payment Date”), $500,000 of principal was due and owing
under the Note, not giving effect to expiration of applicable grace periods;
and
WHEREAS, pursuant to the
Securities Purchase Agreement, the Borrower issued to Lender a warrant, dated
February 22, 2007 (the “Warrant”), to purchase 125,000 shares of Borrower’s
Common Stock, $0.02 par value at a purchase price per share (the “Exercise
Price”) of $1.40; and
WHEREAS, the Borrower desires
Lender to presently forbear from exercising its rights and remedies to collect
principal and accrued interest due under the Note (the “Indebtedness”) as of the
Principal Payment Date; and
WHEREAS, Lender is willing to
presently forbear from exercising its rights and remedies to collect the
Indebtedness, subject to a modification of the Exercise Price, and on the other
terms and subject to the conditions contained in this Agreement.
NOW, THEREFORE, in
consideration of the foregoing, the mutual promises and understandings of the
parties hereto set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Lender and the Borrower
each hereby agree as set forth in this Agreement.
1. Use of Defined
Terms. Except as expressly set forth in this Agreement, all
terms which have an initial capital letter where not required by the rules of
grammar are defined to the Note or Securities Purchase Agreement.
2. Reservation of
Rights. Subject to Section 3 below, Lender reserves the right,
in its discretion, to exercise any or all of its rights and remedies arising
under the Note or Securities Purchase Agreement, applicable law or otherwise, as
a result of any Events of Default occurring after the date
hereof. Subject to Section 3 hereof, nothing contained herein shall
be construed as a waiver of the failure of the Borrower to comply with the terms
of the Note or Securities Purchase Agreement after the date hereof.
3. Forbearance. For
good and valuable consideration, Lender agrees that it shall not demand payment,
exercise setoff rights or seek to collect from the Borrower any obligations
evidenced by the Note or join in any petition or otherwise initiate any
insolvency case, reorganization or any other similar legal proceeding against
the Borrower, for a period of expiring on the close of business on May 1,
2009.
4. Modification of Exercise
Price. As a material inducement to the Lender to enter into
this Agreement, the Warrant is hereby amended as follows: the
Exercise Price of the Warrant is One Dollar ($1.00). Except as
modified hereby, the Warrant shall remain in full force and effect.
5. Authority to Execute this
Agreement. The Borrower represents and warrants that it has
the right, power and capacity and is duly authorized and empowered to enter
into, execute, deliver and perform this Agreement.
6. Construction.
A. This
Agreement shall be interpreted, construed and governed by and under the laws of
the State of New York, without regard to its conflicts of law
doctrine.
B. This
Agreement shall be binding on the Borrower and its respective successors and
heirs, and shall inure to the benefit of Lender, its successors, assigns,
affiliates, divisions and parent. This Agreement cannot be assigned
by the Borrower at any time. Lender may assign this Agreement without
notice or to the consent of the Borrower.
C. Whenever required by context, the
masculine pronouns will include the feminine and neuter genders, and the
singular will include the plural, and vice versa. This Agreement
constitutes the entire agreement between the Borrower and Lender with regard to
the subject matter hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the Borrower and Lender have executed this Agreement as of the
date first set forth above.
NATIONAL
HOLDINGS CORPORATION
By:
/S/ XXXX
XXXXXXXXXX
Xxxx
Xxxxxxxxxx, CEO
/S/ XXXXXXXXXXX X.
XXXXX
Xxxxxxxxxxx
X. Xxxxx
