EXHIBIT 10.51
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of March
17, 2006, by and between NATIONAL HOLDINGS CORPORATION, a Delaware corporation
(the "Company") and the purchaser listed on Exhibit A hereto under the heading
"Purchaser" (the "Purchaser") who has become a party to this Agreement by
executing and delivering a financing signature page in the form attached hereto
as Exhibit B (the "Financing Signature Page").
WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Company 159,090 shares of the Company's common
stock, $0.02 par value per share (the "Common Stock"), pursuant to the
provisions of this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. Authorization; Sale of Common Stock.
1.1 Authorization. The Company has, or before the Closing (as
defined in Section 2.1) will have, duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of the Common Stock.
1.2 Sale of Common Stock. Subject to the terms and conditions of
this Agreement, at the Closing, the Company will sell and the Purchaser will
purchase the Common Stock in the principal amount set forth on Exhibit A hereto.
2. Purchase Price; Closing.
2.1 Purchase Price. The purchase price (the "Purchase Price") to be
paid by the Purchaser to the Company to acquire the Common Stock shall be
$175,000.
2.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing (the "Closing") of the sale and purchase of the Common
Stock under this Agreement shall take place at the offices of Littman Krooks
LLP, 655 Third Avenue, New York NY 10017 (or remotely via the exchange of
documents and signatures) on the date of this Agreement (the "Closing Date"). At
the Closing:
(a) the Company shall deliver to the Purchaser that number of
shares of Common Stock set forth opposite the Purchaser's name on Exhibit A
attached hereto, registered in the name of the Purchaser; and
(b) the Purchaser shall pay directly to the Company, by wire
transfer of immediately available funds, the Purchase Price for the Common Stock
being purchased.
3. Representations of the Company. The Company hereby represents and
warrants to the Purchaser that the statements contained in this Section 3 are
complete and accurate as of the date of this Agreement.
3.1 Organization and Standing. The Company and each of its
subsidiaries (as defined below) is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of existence, has all requisite corporate power and authority, and
has been duly authorized by all necessary approvals and orders, to own, lease
and operate its assets and properties to the extent owned, leased and operated
and to carry on its business as it is now being conducted and is duly qualified
and in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its assets and properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified and in good standing would not, when taken together with all
other such failures, reasonably be expected to have a material adverse effect on
the business, properties, condition (financial or otherwise), prospects (other
than effects that are the result of general economic changes or
industry-specific risks) or results of operations of the Company and its
subsidiaries taken as a whole (any such material adverse effect being hereafter
referred to as a "Company Material Adverse Effect"). As used in this Agreement,
the term "subsidiary" of a person shall mean any corporation or other entity
(including partnerships and other business associations) of which a majority of
the outstanding capital stock or other voting securities having voting power
under ordinary circumstances to elect directors or similar members of the
governing body of such corporation or entity shall at the time be held, directly
or indirectly, by such person.
3.2 Capitalization. The authorized and outstanding capital stock of
the Company consists of the following: (i) a total of Thirty Million
(30,000,000) shares of Common Stock, of which 5,064,878 shares are issued and
outstanding; and (ii) a total of Two Hundred Thousand (200,000) shares of
preferred stock, $0.01 par value per share, of which (A) 50,000 shares are
designated as Series A Convertible Preferred Stock (the "Series A Stock"),
33,320 of which are issued and outstanding and (B) 20,000 shares are designated
as Series B Convertible Preferred Stock (the "Series A Stock"), 10,000 of which
are issued and outstanding.
3.3 Issuance of Common Stock. The issuance, sale and delivery of the
Common Stock in accordance with this Agreement has been, or will be on or prior
to the Closing, duly authorized by all necessary corporate action on the part of
the Company, and all such shares have been duly reserved for issuance.
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3.4 Corporate Power; Authority for Agreement; No Conflict. The
Company will have, at the Closing, all requisite legal and corporate power to
execute and deliver this Agreement, to sell and issue the Common Stock, to
consummate the other transactions contemplated by the terms of this Agreement
and carry out and perform its obligations under the terms of this Agreement. The
execution, delivery and performance by the Company of this Agreement, and the
consummation by the Company of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action. This Agreement has
been, and when executed at the Closing will be, duly executed and delivered by
the Company and constitute valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject as to enforcement
of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting generally the enforcement of creditors' rights and
subject to a court's discretionary authority with respect to the granting of a
decree ordering specific performance or other equitable remedies. The execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and thereby and the compliance with their respective
provisions by the Company will not (a) conflict with or violate any provision of
the Certificate of Incorporation or By-laws of the Company, (b) require on the
part of the Company any filing with, or any permit, order, authorization,
consent or approval of, any court, arbitrational tribunal, administrative agency
or commission or other governmental or regulatory authority or agency (each of
the foregoing is hereafter referred to as a "Governmental Entity"), (c) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of obligations under,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, agreement or mortgage
for borrowed money, instrument of indebtedness, or other arrangement to which
the Company is a party or by which the Company is bound or to which its assets
are subject, other than any of the foregoing events listed in this clause (c)
which do not and will not, individually or in the aggregate, have a Company
Material Adverse Effect, or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its properties
or assets.
3.5 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Entity is required on the part of the Company in
connection with the offer, issuance, sale and delivery of the Common Stock or
the other transactions to be consummated at the Closing, as contemplated by this
Agreement, except such filings as shall have been made prior to and shall be
effective on and as of the Closing and such filings required to be made after
the Closing under applicable federal and state securities laws. Based on the
representations made by the Purchaser in Section 4 of this Agreement, the offer
and sale of the Common Stock to the Purchaser will be in material compliance
with applicable federal and state securities laws.
3.6 Financial Statements. The Purchaser has had the opportunity to
review the audited financial statements of the Company for the fiscal year ended
September 30, 2005, and the unaudited financial statements of the Company for
the quarter ended December 31, 2005 (all such financial statements being
collectively referred to herein as the "Financial Statements"), which have been
prepared on a consistent basis throughout the periods indicated and with each
other. Such Financial Statements (i) are in accordance with the books and
records of the Company; and (ii) are true, correct and complete, in all material
respects, and present fairly the financial condition of the Company at the date
or dates, and for the periods, indicated therein and the results of operations
for the period therein specified.
3.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by any entity
or individual.
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4. Representations of the Purchaser. The Purchaser represents and warrants
to the Company as follows:
4.1 Organization and Existence. The Purchaser is a validly existing
limited partnership and has all partnership power and authority to invest in the
Common Stock pursuant to this Agreement. The Purchaser was not formed solely for
the purpose of investing in the Common Stock.
4.2 Authorization; No Contravention. The execution delivery and
performance by the Purchaser of this Agreement to which the Purchaser is a party
and the transactions contemplated hereby and thereby do not violate, conflict
with or result in any breach or contravention of, or the creation of any lien
under, any material contractual obligation of such Purchaser or any requirement
of law applicable to the Purchaser, and do not violate any orders of any
Governmental Entity against, or binding upon, the Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Entity or any other person, and no lapse of a
waiting period under any requirement of law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Common Stock) by, or enforcement against, the
Purchaser of this Agreement to which it is a party or the transactions
contemplated hereby and thereby.
4.4 Binding Effect. This Agreement and the other documents to which
the Purchaser is a party have been duly executed and delivered by the Purchaser
and constitutes the legal, valid and binding obligations of the Purchaser,
enforceable against him in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting generally the enforcement of creditors' rights and
subject to a court's discretionary authority with respect to granting a decree
ordering specific performance or other equitable remedies.
4.5 Purchase for Own Account. The Common Stock hereby acquired by
the Purchaser pursuant to this Agreement are being acquired for the Purchaser's
own account and with no intention of distributing or reselling such securities
in any transaction that would be in violation of the securities laws of the
United States of America or any state, without prejudice. If the Purchaser
should in the future decide to dispose of any of such Common Stock, the
Purchaser understands and agrees that it may do so only in compliance with the
Securities Act and applicable state securities laws, as then in effect. The
Purchaser agrees to the imprinting, so long as required by law, of legends on
certificates representing all of its Common Stock:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS."
4.6 Restricted Securities. The Purchaser understands the Common
Stock will not be registered at the time of their issuance under the Securities
Act since they are being acquired from the Company in a transaction exempt from
the registration requirements of the Securities Act and that the reliance of the
Company on such exemption is predicated in part on the Purchaser's
representations set forth herein.
4.7 Brokers, Finder's or Similar Fees. The Company has not incurred,
and will not incur, directly or indirectly, as a result of any action taken by
the Purchaser, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement.
4.8 Accredited Investor. The Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D under the Securities Act, as
presently in effect.
4.9 Experience. The Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement and has made
detailed inquiry concerning the Company, its business and its personnel; the
officers of the Company have made available to the Purchaser any and all written
information which he has requested and have answered to the Purchaser's
satisfaction all inquiries made by the Purchaser; and the Purchaser has
sufficient knowledge and experience in finance and business that he is capable
of evaluating the risks and merits of his, her or its investment in the Company
and the Purchaser is able financially to bear the risks thereof.
4.10 No General Solicitation. Such Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
4.11 SEC Reports. The Purchaser acknowledges that it has had the
opportunity to review the SEC Reports filed with the SEC, including the
information contained in the Company's most recently filed Annual Report on Form
10-K, Quarterly Report on Form 10-Q and Proxy Statement on Schedule 14A. The
Purchaser acknowledged that it has read the information in such reports,
including the information under the caption "Risk Factors" contained in the SEC
Reports.
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4.12 Investment in Brokerage Business. The Purchaser acknowledges
that it is familiar with the risks involved in the security brokerage business.
The Purchaser acknowledges that it understands that a securities broker-dealer
is subject to uncertainties that are common in the securities industry,
including, the volatility of domestic and international financial, bond and
stock markets; extensive governmental regulation; litigation; intense
competition; substantial fluctuations in the volume and price level of
securities; and dependence on the solvency of various third parties. The
Purchaser acknowledges that it has had access to the NASD Investor Alert
entitled, "Brokerage Firm Private Securities Offerings: Buying Your Brokerage,"
dated June 14, 2004.
5. Conditions of Closing of the Purchaser. The obligations of the
Purchaser to purchase the Common Stock and transfer the Purchase Price for the
Common Stock being purchased at the Closing are subject to the fulfillment at or
before the Closing, as applicable, of the following conditions precedent, any
one or more of which may be waived in whole or in part by the Purchaser, which
waiver shall be at the sole discretion of the Purchases:
5.1 Representations and Warranties. The representations and
warranties made by the Company in this Agreement shall have been true and
correct in all respects as of the date when made and as of the Closing Date,
except for the representations and warranties that are expressly made as of a
particular date (which shall remain true and correct as of such date).
5.2 Agreements. All agreements, and conditions contained in this
Agreement to be performed or complied with by the Company prior to Closing shall
have been performed or complied with by the Company prior to or at the Closing.
5.3 Consents, Etc. The Company shall have secured and delivered to
the Purchaser all consents and authorizations that shall be necessary or
required lawfully to consummate this Agreement and to issue the Common Stock to
be purchased by the Purchaser at the Closing.
5.4 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be in a form and
substance reasonably satisfactory to the Purchaser and his counsel, and the
Purchaser and his counsel shall have received all such counterpart originals or
certified or other copies of such documents as the Purchaser or his counsel may
reasonably request.
6. Conditions of Closing of the Company. The Company's obligations to sell
and issue the Common Stock at the Closing are subject to the fulfillment at or
before the Closing of the following conditions, which conditions may be waived
in whole or in part by the Company, and which waiver shall be at the sole
discretion of the Company:
6.1 Representations and Warranties. The representations and
warranties made by the Purchaser in this Agreement shall have been true and
correct in all respects as of the date when made and as of the Closing Date,
except for the representations and warranties that are expressly made as of a
particular date (which shall remain true and correct as of such date).
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6.2 Agreements. All agreements, and conditions contained in this
Agreement to be performed or complied with by the Purchaser prior to the Closing
shall have been performed or complied with by the Company prior to or at the
Closing.
6.3 Payment of Purchase Price. The Purchaser shall have tendered the
Purchase Price in exchange for the Common Stock being issued hereunder in
accordance with Section 2.1.
6.4 Delivery of Documents. All of the documents to be delivered by
the Purchaser pursuant to Section 2.1 or 2.2, as applicable, shall be in a form
and substance reasonably satisfactory to the Company and its counsel, and shall
have been executed and delivered to the Company by each of the other parties
thereto.
7. Registration Rights. If the Company shall determine to prepare and file
with the Securities and Exchange Commission a registration statement relating to
an offering for its own account or the account of others under the Securities
Act of any of its equities securities, other than on Form S-4 or Form S-8 (each
as promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with the stock
option or other employee benefit plans, then the Company shall send to the
Purchaser a written notice of such determination and, if within 15 days after
the date of such notice, the Purchaser shall so request in writing, the Company
shall include in such registration statement all or any part of the Common Stock
purchased hereunder (the "Shares") the Purchaser requests to be registered,
subject to customary underwriter cutbacks applicable to all selling holders
proportionately in such offering; provided, that the Company shall not be
required to register any Shares pursuant to this section that are eligible for
resale pursuant to Rule 144(k) promulgated under the Securities Act and all fees
and expenses incurred by the Purchaser in connection with such registration
shall be paid for by the Company (other than underwriting discounts and
commissions and legal expenses of the Purchaser). In addition, the Purchaser
shall be entitled to similar indemnification and related rights and benefits
provided by the Company to any other selling holders in such offering. The
Company shall have the right to terminate or withdraw any registration statement
initiated by it pursuant to this Section 7 prior to the effectiveness of such
registration statement whether or not the Purchaser has elected to include its
Shares in such registration statement.
8. Miscellaneous.
8.1 Successors and Assigns. This Agreement, and the rights and
obligations of the Purchaser hereunder, may be assigned by the Purchaser to (a)
any person or entity to which Common Stock are transferred by the Purchaser, or
(b) to any Affiliated Party (as hereinafter defined), and, in each case, such
transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that such assignment of rights shall be contingent upon the transferee
providing a written instrument to the Company notifying the Company of such
transfer and assignment and agreeing in writing to be bound by the terms of this
Agreement. The Company may not assign its rights under this Agreement. For
purposes of this Agreement, "Affiliated Party" shall mean, with respect to the
Purchaser, any person or entity which, directly or indirectly, controls, is
controlled by or is under common control with the Purchaser, including, without
limitation, any general partner, officer or director of the Purchaser and any
venture capital fund now or hereafter existing which is controlled by one or
more general partners of, or shares the same management company as, the
Purchaser.
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8.2 Expenses. Each party hereto shall pay its or his own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, financial
advisors and accountants.
8.3 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
8.4 Specific Performance. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, the
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
8.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York (without reference
to the conflicts of law provisions thereof).
8.6 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) three business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, to National Holdings Corporation, 875 North
Michigan Avenue, Suite 1560, Chicago, IL 60611, Attention: Chief Executive
Officer, or at such other address as may have been furnished in writing by the
Company to the other parties hereto, with a copy to Littman Krooks LLP, 655
Third Avenue, New York, NY 10017, Attention: Mitchell C. Littman, Esq.; or
If to the Purchaser, at its address set forth on Exhibit A, or at
such other address as may have been furnished in writing by the Purchaser to the
Company.
Any party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail or
electronic mail), but no such notice, request, consent or other communication
shall be deemed to have been duly given unless and until it is actually received
by the party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
8.7 Complete Agreement. This Agreement (including its exhibits)
constitutes the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
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8.8 Amendments and Waivers. This Agreement may not be amended or
terminated without the prior written consent of the Company.
8.9 Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
8.10 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts (including, in the case of the Purchaser,
Financing Signature Pages), each of which shall be deemed to be an original, and
all of which shall constitute one and the same document. This Agreement
(including the Financing Signature Pages) may be executed by facsimile
signatures.
8.11 Section Headings and References. The section headings are for
the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties. Any reference in this
agreement to a particular section or subsection shall refer to a section or
subsection of this Agreement, unless specified otherwise.
8.12 Confidentiality. The Purchaser acknowledges and agrees not to
use the Confidential Information (as hereafter defined) disclosed to him by the
Company for any purpose except as set forth in this Agreement. The Purchaser
will not disclose any Confidential Information to any third party except those
directors, officers, employees, consultants and agents who are required to have
the information in order to carry out the purpose of this Agreement. The
Purchaser also understands that certain of the Confidential Information may
constitute material non-public information and that trading in the Company's
securities while in possession of Confidential Information, recommending trading
in the Company's securities based upon Confidential Information or providing
Confidential Information to others who may trade in the Company's securities
could constitute a violation of federal securities laws and expose the Purchaser
to civil and criminal liability. The Purchaser specifically acknowledges that
the Confidential Information is subject to the public disclosure requirements of
Regulation FD promulgated under the Securities Exchange Act of 1934, as amended,
and that the Company is specifically relying on the Purchaser's execution of,
and performance under, this Agreement in providing the Purchaser with the
Confidential Information in compliance with Regulation FD. "Confidential
Information" means any the information herein and any information, financial
data, research, technical data, or know-how disclosed to the Purchaser by the
Company, including, but not limited to, that which relates to services,
products, plans for future products and services, clients, markets, operational
methods, plans for future development, research, software, inventions,
processes, designs, drawings, engineering, hardware configuration information,
marketing, financial information, know-how and other trade secrets. Confidential
Information does not include information, technical data or know-how that the
Purchaser can show: (i) was rightfully in the possession of the Purchaser at the
time of disclosure; (ii) becomes a matter of public knowledge, not as a result
of any inaction or action of the Purchaser; or (iii) was received from a third
party without a duty or confidentiality.
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Executed as of the date first written above.
COMPANY:
NATIONAL HOLDINGS CORPORATION
By: /s/ Mark Goldwasser
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Mark Goldwasser
Chief Executive Officer
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EXHIBIT A
Name and Address No. of Shares of
of Purchaser Purchase Price Common Stock
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Bedford Oak Partners, LP $175,000 159,090
100 South Bedford Road
Mt. Kisko, NY 10549
A-1
EXHIBIT B
FINANCING SIGNATURE PAGE
By execution and delivery of this signature page, the undersigned hereby
agrees to become a Purchaser, as defined in that certain Securities Purchase
Agreement (the "Purchase Agreement") by and among National Holdings Corporation,
a Delaware corporation (the "Company"), and the Purchaser (as defined in the
Purchase Agreement), dated as of the Closing Date (as defined in the Purchase
Agreement), acknowledges having read the representations in the Purchase
Agreement section entitled "Representations of the Purchaser," and hereby
represents that the statements contained therein are complete and accurate with
respect to the undersigned as a Purchaser. The undersigned further hereby agrees
to be bound by the terms and conditions of the Purchase Agreement as a
"Purchaser" thereunder and authorizes this signature page to be attached to the
Purchase Agreement.
Executed, in counterpart, as of the date set forth below.
PURCHASER:
BEDFORD OAK PARTNERS, LP
By: /s/ Harvey Eisen
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Name: Harvey Eisen
Title: Chairman and Managing Partner
Date:
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Contact Person:
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Telephone No.:
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Fax No.:
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E-mail Address:
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B-1