EXHIBIT 10.2
 
INTERIM FUNDING AND SERVICES AGREEMENT

           This agreement (the “Agreement”) is made as of the 14th day of
January, 2011, by and among National Securities Corporation, a Washington
corporation (“NSC”), National Holdings Corporation, a Delaware corporation
(“National”), and OPN Holdings, LLC, a Delaware limited liability company (“OPN
Holdings”).

WHEREAS, National and Opus Point Partners, LLC (“Opus”) have entered into  that
certain OPN Joint Venture Limited Liability Company Operating Agreement (the “JV
Operating Agreement”) to form a joint venture (the “Joint Venture”) to operate
an investment banking business focused on global life sciences, biotechnology,
biopharmaceutical, specialty pharmaceutical, pharmaceutical, med-tech, medical
device and other healthcare-related sectors;

WHEREAS, the parties contemplate forming an independent broker-dealer registered
with the Financial Industry Regulatory Authority (“FINRA”) to carry out the
purpose of the Joint Venture as a wholly-owned subsidiary of OPN Holdings (the
“Joint Venture Operating Subsidiary”);

WHEREAS, the parties recognize that it may take four to six months to obtain the
FINRA registration for the Joint Venture Operating Subsidiary and in the interim
OPN Holdings desires to retain NSC to operate the Core Business (defined below),
on a contract basis, under the terms and conditions set forth in this Agreement;
and

WHEREAS, NSC has agreed to operate the Core Business on a contract basis pending
the establishment and FINRA registration of the Joint Venture Operating
Subsidiary.

NOW, THEREFORE, National, NSC and Holdings do hereby agree to the following
terms and conditions:

 
1.
Services and Operations.

a.           Services.  NSC shall establish an internal business unit which
shall do business under the trade name “OPN Capital Markets” or “OPN” or such
other name chosen by OPN Holdings, and which shall operate an investment banking
business initially focused on global life sciences, biotechnology,
biopharmaceutical, specialty pharmaceutical, pharmaceutical, med-tech, medical
device and other healthcare related-sectors (for purposes of this Agreement,
such internal business unit and the business it conducts are referred to as the
“Core Business”).  In consultation with OPN Holdings, NSC shall provide to the
Core Business such services as it reasonably requires in order to conduct the
Core Business, including, without limitation, hiring key employees at the
request of OPN Holdings and providing support services for such employees,
including, compliance, supervisory, operational and accounting services.

 
 

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In consideration for providing the services set forth in this Section 1, OPN
Holdings hereby agrees to provide the funding arrangements set forth in Section
2.

b.           Management.  OPN Holdings hereby designates its Chairman of the
Board of Managers as its authorized representative (the “Representative”).  The
Representative shall appoint one or more persons who are registered
representatives of NSC and possess all appropriate license to act as the
“General Manager(s)” of the Core Business, and such General Manager(s) will have
the authority to direct the activities to be performed by NSC under this
Agreement.

c.           Infrastructure Support. NSC shall provide financial, compliance,
supervisory and regulatory infrastructure to the Core Business and make
available office space and related office services to the Core Business at it’s
New York City offices, in each case during the term hereof.  National shall make
a reasonable allocation of expenses to the Core Business using a consistent
methodology employed by National for NSC, for the services described in this
Section 1.c. (the “National Expense Allocation”).  Notwithstanding the forgoing,
the National Expense Allocation shall be zero ($0) for the first full fiscal
year of the operation under this Agreement.

 
2.
Profits/Losses and Distributions/Payments.

 
a.           Monthly Net Profit/Monthly Net Loss.  “Monthly Net Profit” and
“Monthly Net Loss” shall mean the net income or net loss of the Core Business
for any calendar quarter, calculated in accordance with generally accepted
accounting principles, encompassing all of the revenues and expenses associated
with operating the Core Business, including, but not limited to those associated
with employees of NSC assigned to the Core Business and the National Expense
Allocation.  In calculating the monthly expenses to determine whether there was
a Monthly Net Profit or Monthly Net Loss, the monthly expenses will be reduced
by the Pre-Paid Salary Allowance (defined below).

b.           Payments/Distributions.  On a monthly basis, NSC shall determine
whether the Core Business has had a Monthly Net Profit or Monthly Net Loss.  If
NSC determines that the Core Business generated a Monthly Net Loss, then NSC
shall invoice OPN Holdings for such Monthly Net Loss, with a reasonable
accounting of the financial activity that led to such loss.  If NSC determines
that the Core Business generated a Monthly Net Profit, then NSC shall deliver to
OPN Holdings, by check or wire transfer, an amount equal to such Monthly Net
Profit, with a reasonable accounting of the financial activity that led to such
profit.  Invoices and/or payments shall be sent within 15 days of the end of the
calendar month.  Notwithstanding the foregoing, at the request of NSC, prior to
the 10th calendar day of each month, OPN Holdings shall advance an amount to NSC
equal to the payroll obligations attributable to the Core Business (the
“Pre-Paid Salary Allowance”).  This provision shall survive the termination of
this Agreement until all open payments or distributions described above are
settled between NSC and OPN Holdings.

 
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3.           Transfer and Termination.  Not later than five (5) business days
following the final approval of the FINRA registration of the Joint Venture
Operating Subsidiary, as a registered broker-dealer with FINRA, NSC shall cease
to operate the Core Business on behalf of OPN Holdings and NSC shall transfer
all of its interests in the Core Business to OPN Holdings (the “OPN Effective
Date”).  As of the OPN Effective Date, NSC shall offer to terminate the
registrations and affiliations of all employees and independent contractors of
NSC that are, as of the OPN Effective Date, designated as employees associated
with the Core Business.  Such employees and independent contractors shall be
offered employment with the Joint Venture Operating Subsidiary, and, if they
accept, their registration shall be transferred to the Joint Venture Operating
Subsidiary.  From and after the OPN Effective Date, this Agreement shall
terminate, and except as set forth herein, shall be of no further force or
effect.

4.           Confidentiality/Proprietary Information.  The parties to this
Agreement acknowledge and understand that any and all technical, trade secret,
or business information, including, without limitation, financial information,
business or marketing strategies or plans, product development or customer
information, which is disclosed to, or is otherwise obtained by, the other
party, its affiliates, agents or representatives during the term of and in
connection with this Agreement (the “Confidential Information”) is confidential
and proprietary, may constitute trade secrets of the owner, and is of great
value and importance to the success of the owner’s business.  Each party agrees
not to use or disclose Confidential Information for any purpose other than to
carry out the purpose for which Confidential Information was provided to such
party as set forth in the Agreement, and each party agrees to cause all of its
respective employees, agents, representatives, or any other party to whom it may
provide access to or disclose Confidential Information to limit the use and
disclosure of Confidential Information to that purpose.

5.           Indemnification.

(a)           National and NSC.  National shall indemnify, defend and hold
harmless OPN Holdings and its affiliates from and against any and all losses,
claims, damages, liabilities and expenses (excluding loss of profits as well as
indirect, special and consequential damages, but including reasonable attorneys’
fees) they incur (“Losses”) relating to, arising out of or based upon (i) the
provision of services and infrastructure support by National or NSC, as set
forth in Section 1, (ii) National or NSC’s gross negligence, willful misconduct
or violation of applicable law in the performance of its duties and obligations
under this Agreement, other than the gross negligence, willful misconduct or
violation of applicable law of the Representative, or employees or independent
contractors of NSC who are solely dedicated to the Core Business, (iii) any
breach by National or NSC of any material provision of this Agreement, and (iv)
any material breach by National or NSC of a representation, warranty or covenant
made by it in this Agreement.

 
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(b)           OPN Holdings.  OPN Holdings shall indemnify, defend and hold
harmless National and NSC and each of their agents from and against any and all
Losses relating to, arising out of or based upon (i) the gross negligence,
willful misconduct or violation of applicable law of or by OPN Holdings in the
performance of its duties and obligations under this Agreement, and the gross
negligence, willful misconduct or violation of applicable law of the
Representative, or employees or independent contractors of NSC who are solely
dedicated to the Core Business, (ii) any breach by OPN Holdings of any material
provision of this Agreement, and (iii) any material breach by OPN Holdings of a
representation, warranty or covenant made by it in this Agreement.

(c)           Neither National, NSC nor OPN Holdings will have any obligation of
indemnity to the extent said loss, claim, damage, liability or expense results
from the willful misconduct or negligence, as measured by industry standards, of
the party seeking to be indemnified.  Each party will use commercially
reasonable efforts to mitigate the costs and expenses.

(d)           Notwithstanding anything to the contrary in this Agreement, under
no circumstances shall any party be liable for indirect, special, consequential,
speculative, punitive, exemplary or incidental damages (including, without
limitation, lost profits), regardless of the form of action, and even if the
party is advised of such damages.

 
6.
Representations and Warranties.

 
(a)           National and NSC.  National and NSC, jointly and severally,
represent and warrant that (i) they have full power and authority under
applicable law, and have taken all action necessary, to enter into and perform
this Agreement and the person executing this Agreement on their behalf is duly
authorized and empowered to execute and deliver this Agreement; (ii) this
Agreement constitutes a legal, valid and binding obligation, enforceable against
each of them in accordance with its terms; (iii) no consent or authorization of,
filing with, or other act by or in respect of any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement; and (iv) the execution, performance and
delivery of this Agreement by National and NSC will not result in it violating
any applicable law or breaching or otherwise impairing any of their contractual
obligations.

(b)           OPN Holdings.  OPN Holdings hereby represents and warrants to
National and NSC that (i) it has full power and authority under applicable law,
and has taken all action necessary, to enter into and perform this Agreement and
the person executing this Agreement on its behalf is duly authorized and
empowered to execute and deliver this Agreement; (ii) this Agreement constitutes
a legal, valid and binding obligation, enforceable against it in accordance with
its terms; (iii) no consent or authorization of, filing with, or other act by or
in respect of any governmental authority is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement;
and (iv) the execution, performance and delivery of this Agreement by OPN
Holdings will not result in it violating any applicable law or breaching or
otherwise impairing any of its contractual obligations.

 
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7.           Termination.  This Agreement may be terminated by OPN Holdings at
any time by: (a) giving 90 days written notice to National and NSC, (b) giving
15 days’ written notice to NSC in the event of a material breach of this
Agreement, and such breach shall not have been cured within 30 days thereafter.

8.           Governing Law. If any dispute arises out of this Agreement, it is
agreed that jurisdiction and venue shall lie exclusively in a competent court in
the county of New York in the State of New York.

9.           Amendment and Waiver.  This Agreement may be amended only in
writing, executed by all parties hereto.  No waiver of any provision of this
Agreement will be binding unless in writing and executed by the party granting
such waiver.  Any valid waiver of a provision set forth herein shall not
constitute a waiver of any other provision of this Agreement.  In addition, any
such waiver shall constitute a present waiver of such provisions and shall not
constitute a permanent future waiver of such provision.

10.         Assignment.  This Agreement may not be assigned by any party hereto
without the written consent of the other parties; provided, however, consent
shall not be required (but prior written notice must be provided) with respect
to any assignment by any party that controls, is controlled by or is under
common control with such party.

11.         Entire Agreement/Modification. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the subject matter hereof, and no other agreement, statement, or
promise relating to the subject matter of this Agreement, which is not contained
herein shall be valid or binding; with the express exception, however, of the
OPN Joint Venture Limited Liability Company Operating Agreement, dated January
__, 2011, by and between National and Opus.

12.         Notices.  All notices hereunder shall be deemed to have been duly
given if sent by first-class mail or by overnight delivery (postage prepaid) to
the respective parties as follows:

          if to National or NSC:

120 Broadway, 27th Floor,
New York, New York 10271

 
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          if to Holdings:

787 Seventh Avenue, 48th Floor,
New York, NY 10019

Either party may change its address for notice purposes by notifying the other
party in writing of the new address.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

NATIONAL HOLDINGS CORPORATION

/s/ Mark Goldwasser

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By:  Mark Goldwasser
Title: Chief Executive Officer

NATIONAL SECURITIES CORPORATION

/s/ Leonard J. Sokolow

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By:  Leonard J. Sokolow
Title: Authorized Representative

OPN HOLDINGS, LLC

/s/ Michael Weiss

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By: Michael Weiss
Title: Chairman of the Board of Managers
 
 
 
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