NATIONAL HOLDINGS CORPORATION COMMON STOCK PURCHASE WARRANT
THIS
WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS
SOLD
PURSUANT TO RULE 144 OF THE ACT.
| No._______ |
February
22,
2007
|
NATIONAL
HOLDINGS CORPORATION
THIS
CERTIFIES THAT, for value received, <HOLDER>,
is
entitled, upon the terms and subject to the conditions hereinafter set forth,
at
such times after the date hereof as are set forth below, to acquire from
National Holdings Corporation, a Delaware corporation (the “Company”), in whole
or, from time to time, in part, up to <SHARES>
fully
paid and nonassessable shares of Common Stock, $.02 par value, of the Company
(the “Warrant Shares”) at a purchase price per share (the “Exercise Price”) of
$1.40 Such number of shares, type of security and Exercise Price are subject
to
adjustment as provided herein, and all references to “Warrant Shares” and
“Exercise Price” herein shall be deemed to include any such adjustment or series
of adjustments. This Warrant is granted by the Company to the Holder pursuant
to
that certain Securities Purchase Agreement dated February 22, 2007 by and among
the Company and certain investors (the “Securities Purchase
Agreement”).
The
Warrant Shares shall vest immediately upon the Closing (as defined in the
Securities Purchase Agreement).
1. Term.
(a) Commencement
of Exercisability.
Subject
to the vesting provisions described above and Section 4 below, the Warrant
is
exercisable, in whole or in part, at any time and from time to time from the
date hereof through the Expiration Date (as defined in Section 1(b)
below).
(b) Termination
and Expiration.
If not
earlier exercised, the Warrant shall expire on the fifth (5th)
anniversary of the date hereof (the “Expiration Date”), subject to Section 4
below.
2. Method
of Exercise;
Payment; Issuance of New Warrant.
Subject
to Section 1 hereof, exercise of this Warrant shall be made, in whole or in
part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A
duly
executed) at the principal office of the Company and by the payment to the
Company of an amount equal to the Exercise Price multiplied by the number of
Warrant Shares being purchased, which amount may be paid in cash or by check.
In
the event of any exercise of the rights represented by this Warrant,
certificates for the Warrant Shares so purchased shall be delivered to the
Holder hereof within a reasonable time and, unless this Warrant has been fully
exercised or expired, a new Warrant representing that portion of the Warrant
Shares, if any, with respect to which this Warrant shall not then have been
exercised, shall also be issued to the Holder within such reasonable
time.
3. Stock
Fully Paid; Reservation of Warrant Shares.
All of
the Warrant Shares issuable upon the exercise of the rights represented by
this
Warrant will, upon issuance and receipt of the Exercise Price therefor, be
fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented
by
this Warrant may be exercised, the Company shall at all times have authorized
and reserved for issuance a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment
of Exercise
Price and Number of Shares of Warrant Shares.
Subject
to the provisions of Section 2 hereof, the number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price therefor
shall be subject to adjustment, from time to time, upon the occurrence of
certain events, as follows:
(a) In
the
event the Company shall at any time following the date hereof subdivide the
outstanding shares of Common Stock, or shall issue a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such subdivision or to the
issuance of such stock dividend shall be proportionately increased, and the
Exercise Price shall be proportionately decreased; and in the event the Company
shall at any time following the date hereof combine the outstanding shares
of
Common Stock, the number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
(b) If
the
Company is, following the date hereof, recapitalized through the subdivision
or
combination of its outstanding shares of Common Stock into a larger or smaller
number of shares, the number of shares of Common Stock for which this Warrant
may be exercised shall be increased or reduced in the same proportion as the
increase or decrease in the outstanding shares of Common Stock and the then
applicable Exercise Price shall be adjusted by multiplying by a fraction with
a
numerator equal to the number of shares of Common Stock purchasable upon
exercise hereof immediately prior to such subdivision or combination and the
denominator of which shall be the number of shares of Common Stock purchasable
immediately following such subdivision or combination.
(c) Subject
to Section 1
hereof, in the event of any consolidation or merger of the Company with another
entity in a bona
fide
transaction (i.e.,
not a
mere recapitalization, reincorporation for the purpose of changing corporate
domicile, or similar transaction), at any time prior to the Expiration Date,
the
Holder shall have the right upon exercise of this Warrant, to receive the same
kind and number of Warrant Shares and other securities, cash or other property
as would have been distributed to the Holder had the Holder exercised this
Warrant immediately prior to such consolidation or merger. Notwithstanding
the
foregoing, in the event that the per share consideration price paid in the
bona
fide
transaction is lower than the then effective Exercise Price, this Warrant shall
expire without value upon consummation of the bona
fide
transaction.
5. Fractional
Shares.
No
fractional shares of Common Stock will be issued in connection with any exercise
hereunder, but in lieu thereof, the Company shall make a cash payment therefor
upon the basis of the Exercise Price then in effect.
6. Transfer,
Assignment or Loss of Warrant and Warrant Shares.
(a) This
Warrant and the
Warrant Shares to be issued or issuable upon exercise of this Warrant, may
not
be assigned or transferred except as provided in this Section 6 and in
accordance with and subject to the provisions of the Securities Act of 1933,
as
amended, and the Rules and Regulations promulgated thereunder (said Act and
such
Rules and Regulations being hereinafter collectively referred to as the “Act”).
Upon exercise of this Warrant, the holder hereof shall confirm in writing,
in
the form of Exhibit
B,
that
the shares of Common Stock so purchased are being acquired for investment and
not with a view toward distribution or resale. Any purported transfer
or assignment made other than in accordance with this Section 6 shall
be null and void and of no force and effect.
(b) Any
assignment permitted hereunder shall be made by surrender of this Warrant to
the
Company at its principal office with the Assignment Form attached hereto as
Exhibit C
duly
executed. In such event the Company shall, upon payment by the Holder of any
issuance or transfer tax incurred or to be incurred by the Company with respect
to such transfer, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined with other warrants which
carry the same rights upon presentation thereof at the principal office of
the
Company together with a written notice signed by the Holder thereof, specifying
the names and denominations in which new warrants are to be issued. Upon any
partial transfer, the Company will sign, issue and deliver to the Holder a
new
Warrant with respect to any portion not so transferred.
(c) Upon
receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant (provided that an affidavit of the Holder shall
be
satisfactory for such purpose), and of indemnity satisfactory to it (provided
that if the Holder is the original Holder of this Warrant, its own
indemnification agreement shall under all circumstances be satisfactory, and
no
bond shall be required), and upon surrender and cancellation of this Warrant,
if
mutilated, the Company will execute and deliver a new Warrant of like tenor
and
date and any such lost, stolen, or destroyed Warrant shall thereupon become
void.
(d) In
order
to ensure compliance with the restrictions referred to herein, the Company
may
issue appropriate “stop transfer” instructions to its transfer
agent.
(e) The
Company shall not be required (i) to transfer on its books the Warrant or any
Warrant Shares that have been sold or otherwise transferred in violation of
any
of the provisions of this Warrant or (ii) to treat as owner of such Warrant
Shares or to accord the right to vote or pay dividends to an purchaser or other
transferee to whom such Warrant Shares shall have been so
transferred.
7. Representations
and Covenants of the Holder.
The
Holder represents that this Warrant and any Warrant Shares issued or issuable
upon exercise of this Warrant, will be acquired for investment for its own
account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and that it has no present intention of
selling, granting any participation in or otherwise distributing the same.
Such
Holder understands and acknowledges that the offering of this Warrant, and
any
issuance of Common Stock on exercise thereof, will not be registered under
the
Securities Act on the ground that the sale provided for in this Agreement and
the issuance of securities hereunder is exempt from registration pursuant to
Section 4(2) of the Act, and that the Company’s reliance on such exemption
is predicated on the Holder’s representations set forth herein. Such Holder
represents that it is experienced in evaluating companies such as the Company,
is able to fend for itself in investments such as this one, and has such
knowledge and experience in financial and business matters that it is capable
of
evaluating the merits and risks of its prospective investment in the Company.
8. Rights
of
Stockholders.
No
holder of this Warrant shall be entitled, as a Warrant holder, to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or
upon any matter submitted to stockholders at any meeting thereof, or to give
or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value or change
of
stock to no par value, consolidation, merger, conveyance, or otherwise) or
to
receive notice of meetings, or to receive dividends or subscription rights
or
otherwise until the Warrant shall have been exercised and the Warrant Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
9. Registration
Rights.
The
shares of Common Stock obtained upon exercise of this Warrant shall have the
registration rights set forth in the Registration Rights Agreement dated
February 22, 2007 and the term “Registrable Securities” as defined in such
Registration Rights Agreement shall include the Common Stock obtained upon
exercise of this Warrant.
10. Notices,
Etc.
All
notices and other communications from the Company to the Holder shall be mailed
by first class registered or certified mail, postage prepaid, at such address
as
may have been furnished to the Company in writing by the Holder.
11. Governing
Law, Headings.
This
Warrant shall be construed and enforced in accordance with and governed by
the
laws of the State of New York. The headings in this Warrant are for purposes
of
reference only, and shall not limit or otherwise affect any of the terms
hereof.
EXHIBIT
A
NOTICE
OF EXERCISE
TO: NATIONAL
HOLDINGS CORPORATION
(i) The
undersigned hereby elects to purchase ___________ shares of Common Stock
pursuant to the terms of the attached Warrant, and tenders herewith payment
of
the purchase price of such Common Stock in full.
(ii) Please
issue a
certificate or certificates representing said Common Stock in the name of the
undersigned or in such other name as is specified below:
Name:
Address:
Social
Security of Federal I.D. No.:
(iii) The
undersigned hereby represents and warrants that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment
and
not with a view to, or, for resale in connection with the distribution thereof,
and that the undersigned has no present intention of distributing or reselling
such shares.
By:
Name:
Title:
Date:
EXHIBIT
B
INVESTMENT
REPRESENTATION STATEMENT
| PURCHASER: | |
| COMPANY: | NATIONAL HOLDINGS CORPORATION |
| SECURITY: | COMMON STOCK |
| AMOUNT: | |
| DATE: |
In
connection with the purchase of the above-listed securities (the “Securities”),
I, the Purchaser, represent to the Company the following:
(a) I
am
aware of the Company’s business affairs and financial condition, and have
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any “distribution” thereof for
purposes of the Securities Act of 1933 (the “Securities Act”).
(b) I
understand that the Securities have not been registered under the Securities
Act
in reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of my investment intent as expressed
herein. In this connection, I understand that, in the view of the Securities
and
Exchange Commission (the “SEC”), the statutory basis for such exemption may be
unavailable if my representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in
the
market price of the Securities, or for a period of one year or any other fixed
period in the future.
(c) I
further
understand that the Securities must be held for at least one (1) year under
Rule
144 promulgated under the Securities Act, unless subsequently registered under
the Securities Act or unless an exemption from registration is otherwise
available. Moreover, I understand that the Company is under no obligation to
register the Securities except as set forth in the Registration Rights
Agreement. In addition, I understand that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of
the
Securities unless they are registered or such registration is not required
in
the opinion of counsel for the Company.
(d) I
am
aware of the provisions of Rule 144, promulgated under the Securities Act,
which, in substance, permits limited public resale of “restricted securities”
acquired, directly or indirectly, from the issuer thereof (or from an affiliate
of such issuer), in a non-public offering subject to the satisfaction of certain
conditions.
(e) I
am aware that the
Securities involve a high degree of risk and that I may suffer a total loss
of
my investment. I have been provided with the Company’s periodic reports filed
with the Securities and Exchange Commission under the Securities Exchange Act
of
1934, as amended (the “34 Act Filings”), including the Company’s most recently
filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Proxy
Statement on Schedule 14A . I have read the information in such reports,
including the information under the caption “Risk Factors” contained in the
Company’s 34 Act Reports.
(f) I
further
understand that in the event all of the requirements of Rule 144 are not
satisfied, registration under the Securities Act, compliance with Regulation
A,
or some other registration exemption will be required; and that, notwithstanding
the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed
its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have
a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own
risk.
_______________________________
Name
of Purchaser
_______________________________
Signature
of Authorized Signatory
_______________________________
Print
Name and Title
_______________________________
Date
