REGISTRATION RIGHTS AGREEMENT
This
Registration
Rights Agreement
(the
“Agreement”) is made and entered into as of this 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”).
WHEREAS,
the Company has agreed to issue and sell to the Investor, and the Investor
has
agreed to purchase from the Company, a 10% senior subordinated convertible
promissory note in the principal amount of $3,000,000 (the “Note”), which is
initially convertible into 1,875,000 shares of the Company’s common stock, $0.02
par value per share (the “Common Stock”) and a warrant to purchase 468,750
shares of Common Stock (the “Warrant”), all upon the terms and conditions set
forth in that certain Securities Purchase Agreement of even date herewith,
by
and among the Company and the Investor (the “Purchase Agreement”),
and
WHEREAS,
the terms of the Purchase Agreement provide that it shall be a condition
precedent to the closing of the transactions thereunder for the Company and
the
Investor to execute and deliver this Agreement.
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means,
with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Allowed
Delay”
as
defined in Section 2(d)(ii) hereto.
“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.
“Common
Stock”
shall
have the meaning as defined in the recitals, and any securities into which
such
shares may hereinafter be reclassified.
“Conversion
Shares”
means
the shares of Common Stock issuable upon conversion of the Note.
“Effectiveness
Date”
means,
with respect to the Initial Registration Statement, the earlier of (i) one
hundred eighty (180) days of the closing of the Company’s proposed merger with
vFinance, Inc. or (ii) one hundred eighty (180) days of the termination of
the
Company’s proposed merger with vFinance, Inc.
“Effectiveness
Period”
as
defined in Section 3(a) hereto.
“Filing
Date”
means,
with respect to the Initial Registration Statement, the earlier of (i) ninety
(90) days of the closing of the Company’s proposed merger with vFinance, Inc.
(ii) ninety (90) days of the termination of the Company’s proposed merger with
vFinance, Inc. or (iii) November 15, 2008.
“Initial
Registration Statement”
as
defined in Section 2(a) hereto.
“Note”
shall
have the meaning as defined in the recitals.
“Prospectus”
shall
mean the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by
reference or deemed to be incorporated by reference in such
prospectus.
“Register,”
“registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable
Securities”
shall
mean (i) the Conversion Shares, (ii) the Warrant Shares and (iii) any other
securities issued or issuable with respect to or in exchange for Registrable
Securities; provided, that, a security shall cease to be a Registrable Security
upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933
Act, or (B) such security becoming eligible for resale by the Investor without
restrictions pursuant to Rule 144.
“Registration
Statement”
shall
mean any registration statement of the Company filed under the 1933 Act that
covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus and any amendments and
supplements to such Registration Statement, including pre- or post-effective
amendments, all exhibits thereto and all material incorporated by reference
or
deemed incorporated by reference in such Registration Statement.
“Rule
144”
shall
mean Rule 144 promulgated by the SEC pursuant to the 1933 Act and any successor
or substitute rule, law or provision.
“SEC”
means
the U.S. Securities and Exchange Commission.
“SEC
Guidance”
means
(i) any publicly-available written guidance, or rule of general
applicability of the SEC staff, or (ii) written comments, requirements or
requests of the SEC staff to the Company in connection with the review of a
Registration Statement.
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
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“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Warrant”
shall
have the meaning as defined in the recitals.
“Warrant
Shares”
means
the shares of Common Stock issuable upon the exercise of the
Warrant.
2. Registration.
(a) Filing
of Initial Registration Statement.
Subject
to the terms and conditions of this Agreement, the Company shall prepare and
file with the SEC, no later than the Filing Date, a Registration Statement
under
the 1933 Act on any form for which the Company then qualifies (the “Initial
Registration Statement”)
for
the resale by the Investor of the Registrable Securities. The Company shall
have
the right to include in such Initial Registration Statement on a pari passu
basis with the Registrable Securities shares of Common Stock remaining unsold
by
the persons or entities who have continuing registration rights and who are
set
forth in the selling stockholders section of that certain prospectus of the
Company dated November 6, 2006, and certain additional shares of Common Stock
issued or underlying securities issued subsequent to such date, including those
persons or entities who took part in the Company’s February 2007 $1,000,000
financing and its March 2008 $3,000,000 financing or which such Persons have
the
right to acquire pursuant to the exercise, conversion or exchange of securities
of the Company held on the date hereof. Such Initial Registration Statement
shall include the plan of distribution attached hereto as Exhibit
A.
The
Initial Registration Statement (and each amendment thereto) shall be provided
to
the Investor prior to its filing or other submission in accordance with Section
4(c) hereof.
(b)
Additional
Registration Statements.
If
during the Effectiveness Period, subject to Section 2(d)(ii), the number of
Registrable Securities at any time exceeds 100% of the number of Registrable
Securities then registered for resale in the Initial Registration Statement,
then the Company shall file as soon as reasonably practicable an additional
Registration Statement covering the resale by the Investor of not less than
the
number of such unregistered Registrable Securities.
(c)
Expenses.
Except
as set forth in Section 4(f), the Company will pay all expenses associated
with
each registration, including filing and printing fees, the Company’s counsel and
accounting fees and expenses, costs associated with clearing the Registrable
Securities for sale under applicable state securities laws, listing fees.
Investor shall be responsible for all other expenses in connection with the
registration, including fees and expenses of counsel, discounts, commissions,
fees of underwriters, selling brokers, dealer managers or similar securities
industry professionals with respect to the Registrable Securities being
sold.
(d) Effectiveness.
(i)
The
Company shall use commercially reasonable efforts to have the Initial
Registration Statement declared effective within ninety (90) days of the Filing
Date but in any event by the Effectiveness Date. The Company shall notify the
Investor by facsimile or e-mail as promptly as practicable, after any
Registration Statement is declared effective and shall simultaneously provide
the Investor with copies of any related Prospectus to be used in connection
with
the sale or other disposition of the securities covered thereby.
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(ii)
For
not more than twenty (20) consecutive days or for a total of not more than
sixty
(60) days in any twelve (12) month period, the Company may delay the disclosure
of material non-public information concerning the Company, by suspending the
use
of any Prospectus included in any Registration Statement contemplated hereunder
containing such information, the disclosure of which at the time is not, in
the
good faith opinion of the Company, in the best interests of the Company (an
“Allowed Delay”); provided, that the Company shall promptly (a) notify the
Investor in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such Investor
any
of the facts or circumstances regarding) material non-public information giving
rise to an Allowed Delay, (b) advise the Investor in writing to cease all sales
under the Registration Statement until the end of the Allowed Delay and (c)
use
commercially reasonable efforts to terminate an Allowed Delay as promptly as
practicable.
3.
Liquidated
Damages.
(a)
If the Initial Registration Statement is not (i) filed on or prior
to the Filing Date, or (ii) declared effective by the SEC by the
Effectiveness Date (any such failure or breach being referred to as an “Event”,
and the date on which such Event occurs being referred to as an “Event
Date”), then, on each 30 day period following such Event Date (if the applicable
Event shall not have been cured by such date) until the applicable Event is
cured, as liquidated damages and not as a penalty, the interest rate of the
Note
shall increase by 1% per annum, but in no event shall the interest rate of
the
Note exceed 15% per annum.
4. Company
Obligations.
In
connection with the Company’s obligations under Section 2 hereof to file a
Registration Statement with the SEC and to use its commercially reasonable
efforts to cause a Registration Statement to become effective in accordance
with
the terms hereof, the Company will, as expeditiously as possible:
(a) use
commercially reasonable efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period that will terminate
upon the earlier of (i) the date on which all Registrable Securities covered
by
such Registration Statement as amended from time to time, have been sold, and
(ii) the date on which all Registrable Securities covered by such Registration
Statement may be sold without restriction pursuant to Rule 144 (the
“Effectiveness Period”) and advise the Investor in writing when the
Effectiveness Period has expired. Thereafter, the Company shall be entitled
to
withdraw such Registration Statement and the Investor shall have no further
right to offer or sell any of the Registrable Securities registered for resale
thereon pursuant to the respective Registration Statement (or any prospectus
relating thereto);
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(b) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the period specified in Section 4(a) and
to
comply with the provisions of the 1933 Act and the 1934 Act with respect to
the
distribution of all of the Registrable Securities covered thereby;
(c) provide
copies to the Investor in an effort to permit counsel designated by the Investor
to review each Registration Statement and all amendments and supplements thereto
no fewer than three (3) Business Days prior to their filing with the
SEC;
(d) furnish
to the Investor such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as Investor may reasonably request in order to facilitate the disposition of
the
Registrable Securities owned by Investor that are covered by the related
Registration Statement;
(e) use
commercially reasonable efforts to (i) prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement and, (ii) if
such
order or suspension is issued, obtain the withdrawal of any such order or
suspension at the earliest possible moment and notify each holder of Registrable
Securities of the issuance of such order and the resolution thereof or its
receipt of notice of the initiation of any proceeding such purpose;
(f) prior
to
any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Investor and its counsel
in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
requested by the Investor as shall be reasonably appropriate in the opinion
of
the Company and do any and all other commercially reasonable acts or things
necessary or advisable to enable the distribution in such jurisdictions of
the
Registrable Securities covered by the Registration Statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4(f), (ii) subject itself to general taxation in any jurisdiction where
it would not otherwise be so subject but for this Section 4(f), or (iii) file
a
general consent to service of process in any such jurisdiction;
(g) use
commercially reasonable efforts to cause all Registrable Securities covered
by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
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(h) immediately
notify the Investor, at any time when a Prospectus relating to Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus included
in a Registration Statement, as then in effect, includes an untrue statement
of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of
the circumstances then existing, and at the request of any such holder, promptly
prepare and furnish to such holder a reasonable number of copies of a supplement
to or an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(i) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, take such other
actions as may be reasonably necessary to facilitate the registration of the
Registrable Securities hereunder; and
(j) With
a
view to making available to the Investor the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time
permit the Investor to sell shares of Common Stock to the public without
registration, the Company covenants and agrees to use commercially reasonable
efforts to: (i) make and keep public information available, as those terms
are
understood and defined in Rule 144; (ii) file with the SEC in a timely manner
all reports and other documents required of the Company under the 1934 Act;
and
(iii) furnish to Investor upon request, as long as Investor owns any Registrable
Securities, (A) a written statement by the Company that it has complied with
the
reporting requirements of the 1934 Act, (B) a copy of the Company’s most recent
annual or quarterly report, and (C) such other information as may be reasonably
requested in order to avail Investor of any rule or regulation of the SEC that
permits the selling of any such Registrable Securities without
registration.
5. Due
Diligence Review; Information.
The
Company shall make available, during normal business hours, for inspection
and
review by the Investor, advisors to and representatives of the Investor (who
may
or may not be affiliated with the Investor and who are reasonably acceptable
to
the Company), all financial and other records, all SEC Filings (as defined
in
the Purchase Agreement) and other filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for
the
purpose of such review, and cause the Company’s officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investor or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made
or
submitted by any of them), prior to and from time to time after the filing
and
effectiveness of the Registration Statement for the sole purpose of enabling
the
Investor and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.
The
Company shall not disclose material nonpublic information to the Investor,
or to
advisors to or representatives of the Investor, unless prior to disclosure
of
such information the Company identifies such information as being material
nonpublic information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and if Investor wishes to obtain such
information, it enters into an appropriate confidentiality agreement with the
Company with respect thereto.
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6. Obligations
of the Investor.
(a) Investor
shall furnish in writing to the Company such information regarding itself,
the
Registrable Securities held by it, the intended method of disposition of the
Registrable Securities held by it and its beneficial ownership of the Company’s
securities, including who has the right to vote or dispose of such securities
on
behalf of Investor, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute and deliver such documents
in
connection with such registration as the Company may reasonably request. At
least five (5) Business Days prior to the first anticipated filing date of
any
Registration Statement, the Company shall notify Investor of the information
the
Company requires from Investor if Investor elects to have any of the Registrable
Securities included in the Registration Statement. Investor shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if Investor elects to
have any of the Registrable Securities included in the Registration
Statement.
(b) Investor,
by its acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless Investor
has notified the Company in writing of its election to exclude all of its
Registrable Securities from such Registration Statement.
(c) Investor
agrees that, upon receipt of any notice from the Company of either (i) the
commencement of an Allowed Delay pursuant to Section 2(d) or (ii) the happening
of an event pursuant to Section 4(h) hereof, Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Investor’s receipt of
the copies of the supplemented or amended prospectus filed with the SEC and
until any related post-effective amendment is declared effective and, if so
directed by the Company, the Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in the Investor’s possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such
notice.
7. Indemnification.
(a) Indemnification
by the Company.
The
Company will indemnify and hold harmless Investor and its officers, directors,
members, employees and agents, successors and assigns, and each other person,
if
any, who controls Investor within the meaning of the 1933 Act, against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based
upon: (i) any untrue statement or alleged untrue statement of any material
fact
contained in any Registration Statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof; (ii)
any
blue sky application or other document executed by the Company specifically
for
that purpose or based upon written information furnished by the Company filed
in
any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application,
document or information herein called a “Blue
Sky
Application”);
(iii)
the omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading;
(iv)
any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included
in
any such Registration in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on Investor’s behalf and will reimburse
Investor, and each such officer, director or member and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in
conformity with information furnished by Investor or any such controlling person
in writing specifically for use in such Registration Statement or
Prospectus.
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(b) Indemnification
by the Investor.
Investor agrees to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its directors, officers, employees, stockholders and each
person who controls the Company (within the meaning of the 0000 Xxx) against
any
losses, claims, damages, liabilities and expense (including reasonable attorney
fees) resulting from any untrue statement of a material fact or any omission
of
a material fact required to be stated in the Registration Statement or
Prospectus or preliminary prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but
only
to the extent, that such untrue statement or omission is contained in any
information furnished in writing by Investor to the Company specifically for
inclusion in such Registration Statement or Prospectus or amendment or
supplement thereto. In no event shall the liability of Investor be greater
in
amount than the dollar amount of the proceeds (net of all expense paid by
Investor in connection with any claim relating to this Section 7 and the amount
of any damages Investor has otherwise been required to pay by reason of such
untrue statement or omission) received by Investor upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
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(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of
such loss, claim, damage or liability in such proportion as is appropriate
to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 7 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution obligation.
8. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by the Company and the
Investor.
The
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the
Investor.
(b) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 10.4 of the Purchase Agreement.
(c) Assignments
and Transfers by Investor.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the Investor and its successors and assigns. Investor may transfer or assign,
in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by Investor to such
person, provided that Investor complies with all laws applicable thereto and
provides written notice of assignment to the Company promptly after such
assignment is effected.
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(d) Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Investor, provided, however,
that the Company may assign its rights and delegate its duties hereunder to
any
surviving or successor corporation in connection with a merger or consolidation
of the Company with another corporation, or a sale, transfer or other
disposition of all or substantially all of the Company’s assets to another
corporation, without the prior written consent of the Investor, after notice
duly given by the Company to Investor.
(e) Benefits
of the Agreement.
The
terms and conditions 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.
(f) Counterparts;
Faxes.
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 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.
(g) 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.
(h) 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 provisions hereof prohibited or unenforceable in any
respect.
(i) 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.
(j) Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
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(k) 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 conflicts of laws concepts
which
would apply the substantive law of some other jurisdiction, and shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors or assigns. 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.
-11-
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.
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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
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President
and Chief Executive Officer
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The
Investor:
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ST.
CLOUD CAPITAL PARTNERS II, L.P.
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By:
SGCP II, LLC
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Its:
General Partner
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By:
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/S/
XXXXXXXX X. XXXXXX
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Xxxxxxxx
X. Xxxxxx
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Managing
Member
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-12-
Exhibit
A
Plan
of Distribution
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock
or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any
or
all of their shares of common stock or interests in shares of common stock
on
any stock exchange, market or trading facility on which the shares are traded
or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale,
or at
negotiated prices.
The
selling stockholders may use any one or more of the following methods when
disposing of shares or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the shares as agent,
but
may position and resell a portion of the block as principal to facilitate the
transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
-
short
sales effected after the date the registration statement of which this
Prospectus is a part is declared effective by the SEC;
-
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
-
a
combination of any such methods of sale; and
-
any
other method permitted pursuant to applicable law.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock, from time to time, under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the 1933 Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also
may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
-13-
In
connection with the sale of our common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
aggregate proceeds to the selling stockholders from the sale of the common
stock
offered by them will be the purchase price of the common stock less discounts
or
commissions, if any. Each of the selling stockholders reserves the right to
accept and, together with their agents from time to time, to reject, in whole
or
in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering. Upon any
exercise of the Warrant by payment of cash, however, we will receive the
exercise price of the Warrant.
The
selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the 1933 Act, provided
that
they meet the criteria and conform to the requirements of that
rule.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the 1933 Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the 1933 Act. Selling
stockholders who are "underwriters" within the meaning of Section 2(11) of
the
1933 Act will be subject to the prospectus delivery requirements of the 1933
Act.
To
the
extent required, the shares of our common stock to be sold, the names of the
selling stockholders, the respective purchase prices and public offering prices,
the names of any agents, dealer or underwriter, any applicable commissions
or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.
In
order
to comply with the securities laws of some states, if applicable, the common
stock may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the common stock may not be
sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
-14-
We
have
advised the selling stockholders that the anti-manipulation rules of Regulation
M under the 1934 Act may apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates. In addition, we
will make copies of this prospectus (as it may be supplemented or amended from
time to time) available to the selling stockholders for the purpose of
satisfying the prospectus delivery requirements of the 1933 Act. The selling
stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the 1933 Act.
We
have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the 1933 Act and state securities laws, relating to the
registration of the shares offered by this prospectus.
We
have
agreed with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier of (1) such
time
as all of the shares covered by this prospectus have been disposed of pursuant
to and in accordance with the registration statement or (2) the date on which
the shares may be sold without restriction pursuant to Rule 144 of the 1933
Act.
-15-
