UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report: March 31, 2008
NATIONAL
HOLDINGS CORPORATION
(Exact
name of Registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
001-12629
(Commission
File Number)
|
36-4128138
(I.R.S.
Employer
Identification
No.)
|
120
Broadway, 27th
Floor, New York, NY 10271
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (212)
417-8000
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry
into a Material Definitive Agreement.
On
March
31, 2008, National Holdings Corporation (the “Company,” “we” or “us”) completed
a private placement of securities pursuant to the terms of a Securities Purchase
Agreement (the “Purchase Agreement”), dated March 31, 2008, by and between the
Company and St. Cloud Capital Partners II, L.P., a Los Angeles, California
based
private mezzanine investment fund formed in May 2007 that invests in debt and
equity securities of lower middle market companies (“St. Cloud”).
In
connection with the private placement, we sold to St. Cloud a 10%
senior
subordinated convertible promissory note (the “Note”) in the principal amount of
$3,000,000 and
a
warrant (the “Warrant”) to purchase 375,000 shares of our common stock, par
value $0.02 per share (the “Common Stock”). The Company and St. Cloud also
entered into a Registration Rights Agreement (the “Registration Rights
Agreement”) in connection with the private placement. Marshall S. Geller, the
Co-Founder and Senior Managing Partner of St. Cloud, is a member of the
Company’s board of directors. The Company paid a $60,000 closing fee in
connection with this transaction.
Note
The
principal amount of the Note issued in the private placement was $3,000,000.
The
Note bears interest at 10% per annum payable quarterly in arrears, matures
four
years from the date of issuance, is unsecured and is initially convertible
into
1,500,000 shares of Common Stock.
The
Note may be redeemed at the option of the Company at redemption prices as
follows: (i) 125% of the principal amount of the note plus accrued and unpaid
interest if redeemed between March 31, 2009 and March 31, 2010, (ii) 145% of
the
principal amount of the note plus accrued and unpaid interest if redeemed
between March 31, 2010 and March 31, 2011, and (iii) 165% of the principal
amount of the note plus accrued and unpaid interest if redeemed between March
31, 2011 and March 31, 2012. St Cloud may convert the Note at any time. In
addition, the Company may force St. Cloud to convert the Note if the market
price and trading volume of the Company’s Common Stock reaches certain levels,
as set forth in the Note. The Note is automatically prepayable upon the
occurrence of a Change of Control (as defined in the Note) or at the option
of
the holder in event of the death of, or termination under certain circumstances
of the employment of Mark Goldwasser, the Company’s President and Chief
Executive Officer.
Warrant
In
connection with the private placement, the Company issued a Warrant to purchase
375,000 shares of Common Stock. The Warrant has an exercise price of $2.50
per
share and expires five years from the date of issuance. The
number of shares of Common Stock subject to the Warrant is subject to adjustment
in the event of stock splits, dividends, distributions and similar adjustments
to our capital stock.
Registration
Rights Agreement
We
entered into a Registration Rights Agreement with the Investor in connection
with the private placement. Pursuant to the terms of the Registration Rights
Agreement, the Company has agreed to use its best efforts to register
(i) the shares of Common Stock that are issuable upon conversion of the
Note and (ii) the shares of Common Stock issuable upon exercise of the
Warrant (collectively, “Registrable Shares”). The Company is required to
prepare
and file with the SEC a registration statement upon the earlier of (i)
90
days
following the consummation or termination of the Company’s proposed merger with
vFinance, Inc. or (ii) November 15, 2008 and shall use commercially reasonable
efforts to have the registration statement declared effective as soon as
practicable, but in any event within 180 days following the consummation or
termination of the Company’s proposed merger with vFinance, Inc. If the
registration statement is not filed or declared effective by the SEC prior
to such dates (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
St.
Cloud II Note shall increase by 1% per annum, but in no event shall the interest
rate of the Note exceed 15% per annum.
The
description of the Purchase Agreement, the Registration Rights Agreement, and
the terms of the Note and Warrant issued in the private placement, contained
in
this Item 1.01 is a summary and is qualified in its entirety by reference
to the copies of the Purchase Agreement, Registration Rights Agreement, Note
and
Warrant that are attached hereto as exhibits, each of which is incorporated
herein by reference. A copy of the press release that we issued regarding the
completion of the private placement is attached hereto as Exhibit 99.1, and
is
also incorporated herein by reference.
| Item
2.03 |
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
|
The
information set forth in Item 1.01 hereof is incorporated herein by
reference.
The
information set forth in Item 1.01 hereof is incorporated herein by
reference.
The
issuance and sale of the securities in the private placement is exempt from
registration under the Securities Act of 1933 pursuant to Regulation D and
Rule 506 promulgated thereunder. We have furnished certain information to
St. Cloud as required by Regulation D, and St. Cloud has provided certain
representations to us evidencing that it is an “accredited investor” as defined
in Regulation D. We have not engaged in general solicitation or advertising
with regard to the private placement and have not offered securities to the
public in connection with the private placement.
Item 8.01. Other
Events.
On
April
2,
2008,
the Company issued a press release announcing the closing of the private
placement described in Item 1.01. A copy of the Company’s press release is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item
9.01 |
Financial
Statements and Exhibits.
|
(c)
Exhibits.
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Exhibit
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4.6
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Form
of Warrant.
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|
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4.7
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Form
of 10% Promissory Note.
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10.31
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Securities
Purchase Agreement, dated as of March 31, 2008 by and between National
Holdings Corporation and St. Cloud Capital Partners II,
L.P.
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10.32
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Registration
Rights Agreement, dated as of March 31, 2008 by and between National
Holdings Corporation and St. Cloud Capital Partners II,
L.P.
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99.1
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Press
Release dated April 2, 2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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NATIONAL
HOLDINGS CORPORATION
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By: |
/S/ MARK GOLDWASSER |
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Mark
Goldwasser |
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President
and Chief Executive Officer
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