ex10-28.htm


    Exhibit
10.28

     

    SECURITIES PURCHASE
AGREEMENT

    


    THIS SECURITIES PURCHASE
AGREEMENT (“Agreement”) is made and
entered into this 8th day of
April, 2009, by and among NATIONAL HOLDINGS CORPORATION,
a Delaware corporation (the “Company”) and FUND.COM INC., a Delaware
corporation, and/or its Affiliate (collectively, the “Investor”).

    


    Recitals

    


    A.           The
Company and the Investor are executing and delivering this Agreement and the
exhibits hereto, in order to provide working capital to the Company and the
Subsidiaries and to facilitate the expansion of the brokerage and investment
banking business of the Company and its Subsidiaries, as contemplated by Section
7.5 of this Agreement; and

    


    B.           The
Investor wishes to purchase from the Company and the Company wishes to sell and
issue to the Investor, upon the terms and conditions stated in this Agreement,
the following securities of the Company (collectively, the “Securities”):

    


    (i)           an
aggregate of 5,000 shares of Series C Preferred Stock, at a purchase price of
$1,000.00 per share, which is convertible (subject to adjustment) into 6,666,666
shares of the Company’s Common Stock, and which contains the rights,
designations and privileges as are set forth in the Series C Certificate of
Designations;

    


    (ii)           the
Class A Warrant; and

    


    (iii)           the
Class B Warrant; and

    


    C.           Contemporaneous
with the sale of the Series C Preferred Stock and the Warrants, (i) the parties
hereto will execute and deliver the Registration Rights Agreement, and (ii) the
Investor, the Company, Leonard J. Sokolow and Mark Goldwasser will execute and
deliver the Voting Agreement.

    


    NOW, THEREFORE, in
consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

    


    1.           Definitions.  In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth below:

    


    “10%
Convertible Note Holder(s)” shall mean St. Cloud Capital Partners II,
L.P. or any subsequent holders of the 10% Convertible Notes.

    


    “10%
Convertible Notes” shall mean the collective reference to the $3,000,000
principal of 10% senior subordinated convertible promissory notes of the
Company, dated March 31, 2008 and the $3,000,000 principal amount of 10% senior
subordinated convertible promissory notes of the Company dated June 30, 2008,
issued  to the 10% Convertible Note Holders, together with any
modifications, amendments or restatements thereof.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “50%
Threshold” shall mean, at any point in time, including, without
limitation, following the exercise of the Class A Warrant and/or the Class B
Warrant, the record ownership by the Investor or its Affiliates of such number
of shares of Series C Preferred Stock, Class B Warrant Shares and/or Common
Stock of the Company which if (a) owned outright as Common Stock, or (b) as to
Series C Preferred Stock (including, without limitation, Class A Warrant
Shares), was fully converted into Common Stock, would represent in the aggregate
fifty percent (50%) or more of the issued and outstanding shares of Common Stock
of the Company at such point in time.

    


    “Affiliate”
means, with respect to any particular Person means any other Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by or under common control with such Person.  For purposes of
this definition, “control” (including
the terms “ controlling,” “ controlled by ” and “
under common control
with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.

    


    “Approved
Strategic Acquisition” shall mean any proposed Strategic Acquisition that
the Company or its Board of Directors desires to consummate, which by a date
that shall be not later than five (5) Business Days following the (a)
negotiation of definitive terms and conditions of the acquisition agreements
with representatives or Affiliates of any Strategic Acquisition being considered
by the Company during 2009, and (b) completion of the Company’s and the
Investor’s due diligence investigation of such potential Strategic Acquisition,
the Investor shall approve in writing and advise the Company of its desire to
have the Company consummate.

    


    “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.

    


    “Certificate
of Amendment shall mean the amendment
to the certificate of incorporation of the Company which shall contain such
terms and conditions as are set forth in the form of Exhibit
H attached hereto and made a part hereof.

    


    “Certificates
of Deposit”  shall mean the certificate(s) of deposit
aggregating $500,000 and maturing on April 30, 2009 issued by Grand Adirondack
Federal Credit Union in favor of the Company or its Significant Subsidiaries
(National Securities Corporation and vFinance Investments Inc.), representing
the consideration paid to the Company for the Limited Recourse
Note.

    


    “Class A
Warrant” means the collective reference to: (a) the warrant expiring
December 31, 2009 (subject to extension to December 31, 2010 as provided
therein), entitling the Investor or any subsequent holder to purchase the Class
A Warrant Shares at the Class A Warrant Exercise Price, and containing such
other terms and conditions as are set forth in the form of Class A Warrant
attached hereto as Exhibit
B-1 and made a part hereof; and (b) upon consummation of the Class A
Warrant Exchange, the warrant expiring December 31, 2009 (subject to extension
to December 31, 2010, as provided therein), entitling the Investor or any
subsequent holder to purchase the Class A Warrant Shares in the form of Company
Common Stock at the Class A Warrant Exercise Price, and containing such other
terms and conditions as are set forth in the form attached hereto as Exhibit
B-2 and made a part hereof.

    


    
      
         

      

      
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    “Class A
Warrant Exchange” shall mean the exchange of the Class A Warrant in the
form of Exhibit
B-1 attached hereto for the Class A Warrant in the form of Exhibit
B-2 attached hereto, to be consummated within three (3) Business Days
following the date of filing of the Certificate of Amendment with the Secretary
of State of the State of Delaware, all as contemplated by Section 7.9 of this
Agreement.

    


    “Class A
Warrant Exercise Price” means: (a) as to Class A Warrant in the form of
Exhibit
B-1 attached hereto, One Thousand Dollars ($1,000.00) per share of Series
C Preferred Stock, subject to adjustment as provided in the Series C Certificate
of Designations; and (b) upon consummation of the Class A Warrant Exchange, as
to the Class A Warrant in the form of Exhibit
B-2 attached hereto, Seventy-Five Cents ($0.75) per share of Company
Common Stock, subject to adjustment as provided in such Class A
Warrant.

    


    “Class A
Warrant Shares” shall mean the collective reference to: (a) an aggregate
of Seventeen Thousand Five Hundred (17,500) shares of Series C Preferred Stock,
subject to adjustment as provided in the Series C Certificate of Designations,
that are issuable upon exercise of the Class A Warrant annexed hereto as Exhibit
B-1 and made a part hereof; and (b) upon consummation of the Class A
Class A Warrant Exchange, an aggregate of 23,333,333 shares of the Company’s
Common Stock, that are issuable upon exercise of in the Class A Warrant annexed
hereto as Exhibit
B-2 and made a part hereof, subject to adjustment as provided in such
Class A Warrant.

    


    “Class B
Warrant” means the warrant expiring on a date which shall be three (3)
years from the Closing Date” (hereinafter defined), entitling the Investor or
any subsequent holder to purchase the Class B Warrant Shares at the Class B
Warrant Exercise Price, and containing such other terms and conditions as are
set forth in the form attached hereto as Exhibit
C and made a part hereof.

    


    “Class B
Warrant Exercise Price” means Seventy-Five Cents ($0.75) per share of
Common Stock, subject to adjustment as provided in the Class B
Warrant.

    


    “Class B
Warrant Shares” shall mean an aggregate of 2,000,000 shares of Company
Common Stock, subject to adjustment as provided in the Class B
Warrant.

    


    “Closing
Date” means the date of the consummation of the transactions contemplated
by this Agreement and the sale by the Company and purchase by the Investor of
the Series C Preferred Stock and the Warrants.

    


    “Common
Stock” means the authorized shares of common stock, $0.02 par value per
share, of the Company, together with any securities into which such common stock
may be reclassified.

    


    
      
         

      

      
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    “Company
SEC Filings” has the meaning as defined in Section 4.6 of this
Agreement.

    


    “Company
Subsidiaries means the collective reference to (i) the Significant
Subsidiaries and the other direct and indirect subsidiaries of the Company
listed on Schedule
4.1 to this
Agreement, and (ii) any other Subsidiary of the Company to be formed following
the Closing Date to consummate a Strategic Acquisition.

    


    “Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

    


    “Conversion
Shares” means the shares of Common Stock issuable upon conversion of any
and all of the 22,500 shares of Series C Preferred Stock.

    


    “Environmental
Laws” has the meaning set forth in Section 4.15
hereof.

    


    “FINRA”
means the Financial Industry Regulatory Authority.

    


    “Fully-Diluted
Common Stock” shall mean the aggregate number of issued and outstanding
shares of Common Stock of the Company as at the Closing Date or as of a
particular measuring date following the Closing, on a fully-diluted basis, after
giving effect to (a) the exercise of all warrants, stock options and other
rights to purchase Common Stock, (including the Class A Warrant and the Class B
Warrant) then issued and outstanding, and (b) the conversion into Common Stock
of all notes, debentures, preferred stock and other convertible securities of
the Company then issued and outstanding, including, without limitation, all
Common Stock issuable upon conversion of the 5,000 shares of Series C Preferred
Stock issued to the Investor on the Closing Date and all Common Stock issuable
upon conversion of the 17,500 additional shares of Series C Preferred Stock that
may be issuable upon exercise of the Class A Warrant.

    


    “GAAP”
means United States generally accepted accounting principles applied on a
consistent basis.

    


    “Intellectual
Property” has the meaning set forth in Section 4.14 hereof.

    


    “Investor
Subsidiary” means Fund.com Capital Inc.

    


    “Investor
Lock Up Agreement” means that certain agreement to be delivered by the
Investor at Closing pursuant to which it will agree not to sell or otherwise
transfer any Securities (except to an Affiliate) for a period commencing on the
Closing Date and expiring on the close of business on December 31,
2009.

    


    “Investor
SEC Filings” has the meaning set forth in Section 5.12 of this
Agreement.

    


    
      
         

      

      
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    “Key
Employee(s)” means the individual or collective reference to Mark
Goldwasser, Leonard J. Sokolow and Christopher Dewey.

    


    “Key
Employees Employment Agreements” shall have the meaning set forth in
Section 6.1(n) hereof.

    


    “Knowledge”
means (a) as to the Key Employees, the actual knowledge of such Key Employee,
after due inquiry, and (b) as to the Company and its Significant Subsidiaries,
the actual knowledge of the executive officers (as defined in Rule 405
promulgated under the 1933 Act) of the Company and such Significant
Subsidiaries, after due inquiry.

    


    “Limited
Recourse Note” means the Five Hundred Thousand Dollar ($500,000) limited
recourse non-interest bearing convertible note of the Company payable to the
Investor in the form of Exhibit
L annexed hereto and made a part hereof.

    


    “Lock Up
Agreements” means those certain agreements to be delivered by the Key
Employees at Closing pursuant to which those Persons will agree not to sell or
otherwise transfer any Common Stock or other securities of the Company owned by
them, without the prior consent of the Investor, for a period of not less than
one year from the Closing.

    


    “Material
Adverse Effect” means a material adverse effect on (a) the assets,
liabilities, results of operations, condition (financial or otherwise), business
or prospects of (i) the Company or any of its Significant Subsidiaries, whether
individually or taken as a consolidated whole, or (ii) the Company and all of
the Company Subsidiaries, when taken as a consolidated whole, or (b) the ability
of the Company to perform its obligations under the Transaction
Documents.

    


     “Person”
means an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.

    


    “Purchase
Price” means Five Million ($5,000,000.00) Dollars.

     

    “Registration
Statement” has the meaning set forth in the Registration Rights
Agreement.

    


    “Registration
Rights Agreement” means the registration rights agreement, in the form
attached hereto as Exhibit
D, pursuant to which the Company will agree to provide certain
registration rights under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws.

    


    “Series A
Certificate of Designations” means the certificate of designations for
the Series A Preferred Stock, filed with the Secretary of State of the State of
Delaware on December 21, 2001, as amended or restated from time to time
thereafter.

    


    
      
         

      

      
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    “Series A
Preferred Holder(s)” means any one or more Persons who are holders of
Series A Preferred Stock.

    


    “Series A
Preferred Stock” mean an aggregate of 50,000 authorized shares of Series
A redeemable convertible preferred stock of the Company, par value $0.01 per
share, that have been authorized for issuance pursuant to the Series A
Certificate of Designations, of which 42,957 shares are issued and outstanding
as of March 31, 2009.

    


    “Series C
Preferred Stock”
means the aggregate of 22,500 shares of Series C convertible preferred stock of
the Company, par value $.01 per share and Stated Value of $1,000 per share, that
has been authorized for issuance to the Investor pursuant to the Series C
Certificate of Designations.

    


    “Series C
Certificate of Designations” means the certificate of designations for
the Series C Preferred Stock which shall contain the rights, designations and
privileges as are set forth in the certificate of designations attached as Exhibit
A hereto and made a part hereof.

    


    “Securities”
means the collective reference to the Series C Preferred Stock, the Warrants,
the Conversion Shares and the Warrant Shares.

    


    “Stated
Value” shall mean the $1,000.00 per share price of each share of Series C
Preferred Stock.

    


    “Stock
Option Plan” shall mean the 2009 stock option plan of the Company in the
form of Exhibit
I hereto and made a part hereof.

    


    “Significant
Subsidiary” shall mean as at the date hereof, the individual or
collective reference to National Securities Corporation, vFinance Investments
Inc. and EquityStation Inc.

    


    “Strategic
Acquisitions” shall have the meanings referred to in Section 7.5 of this
Agreement.

    


    “Subsidiary”
of any Person means another Person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient to elect
at least a majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first Person.

    


    “Transaction
Documents” means the collective reference to this Agreement, the Series C
Certificate of Designations, the Warrants, the Voting Agreement, the Certificate
of Amendment, the Registration Rights Agreement and the Lock-up
Agreement.

    


    “Triggering
Event” means the first to occur of either (a) the exercise of the Class A
Warrant and the payment of not less than $10,000,000 of the applicable Class A
Warrant Exercise Price, or (b) the 50% Threshold having been attained or
exceeded.

    


    
      
         

      

      
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    “Voting
Agreement” means the voting agreement, in the form attached hereto as
Exhibit
E  and made a part hereof, to be executed on the Closing Date,
among the Investor, the Company, Leonard Sokolow, Mark Goldwasser and
Christopher Dewey.

    


    “Waivers”
means the collective reference to:

    


    (a)           the
written waiver duly executed by the 10% Convertible Note Holder(s) in the form
of Exhibit
F-1 hereto; and

    


    (b)           the
written consent duly executed by holders of a majority of the Series A Preferred
Stock, in the form of Exhibit
F-2 hereto.

    


    “Warrant”
or “Warrants”
means the individual or collective reference to the Class A Warrant (both in the
form of Exhibit
B-1 or Exhibit
B-2 attached hereto) and the Class B Warrant.

    


    “Warrant
Shares” means the collective reference to the Class A Warrant Shares
issuable upon the exercise of the Class A Warrant and the Class B Warrant Shares
issuable upon the exercise of the Class B Warrant.

    


    “1933
Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

    


    “1934
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated
thereunder.

    


    2.           Purchase
and Sale of the Series C Preferred Stock and Warrants.  Subject
to the terms and conditions of this Agreement, on the Closing Date, the Investor
shall purchase from the Company, and the Company shall sell and issue to the
Investor, an aggregate of 5,000 shares of the Series C Preferred Stock and the
Warrants, in consideration for the payment by the Investor of the Purchase Price
as specified in Section 3
below.

    


    3.           Closing
and Closing Deliveries.

     

    3.1           Closing.

     

    (a)           The
Closing shall take place at the offices of Littman Krooks LLP, 655 Third Avenue,
20th Floor, New York, New York 10017 or at such place as may be mutually agreed
upon by the parties hereto (or remotely via the exchange of documents and
signatures) at 10:00 A.M. New York City time following the execution and
delivery of this Agreement, and on the first business day immediately following
the date on which the last of the conditions specified herein is fulfilled or
waived (other than conditions that by their nature are required to be performed
on the Closing Date, but subject to satisfaction of such conditions) but in any
event no later than April 30, 2009 (the “Closing
Date”) or at such other time and place and such other date as the Company
and the Investor mutually agree.  All events occurring at the Closing
will, unless otherwise specified, be deemed to have simultaneously
occurred.

     

    
      
         

      

      
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    (b)           In
the event that the Closing shall not have occurred by the Closing Date (or any
other date mutually agreed upon in writing by the Parties), then either the
Company or the Investor may, by written notice to the other party, terminate
this Agreement; in which event neither party hereto shall have any further
liability or obligation to the other.  Notwithstanding the foregoing
to the contrary, the foregoing termination shall not affect the respective
parties obligations pursuant to the Limited Recourse Note and Investor’s right
to terminate this Agreement shall be subject to the provisions of Section 3.1 of
the Limited Recourse Note in the event an Extension Period (as defined in the
Limited Recourse Note) is in effect.

     

    3.2           Closing
Deliveries.

     

    (a)                 At
the Closing, the Company (or the Key Employees if specified) shall deliver to
Investor:

     

    (i)           one
or more stock certificates or instruments registered in the name of Investor and
representing 5,000 shares of Series C Preferred Stock, which certificates bear
the legend set forth in Section
5.8(a);

     

    (ii)          the
Series C Certificate of Designation in the form of Exhibit
A, duly executed by the Company, and evidence of filing of such Series C
Certificate of Designation with the Secretary of State of the State of
Delaware;

     

    (iii)         the
Class A Warrant in the form of Exhibit
B-1, duly executed by the Company;

     

    (iv)         the
Class A Warrant in the form of Exhibit
B-2, duly executed by the Company, which form of Class A Warrant shall be
held in escrow by counsel to the Company pending the Class A Warrant
Exchange;

     

    (v)          the
Class B Warrant in the form of Exhibit
C, duly executed by the Company;

     

    (vi)         the
Registration Rights Agreement in the form of Exhibit
D, duly executed by the Company;

     

    (vii)        the
certificates referred to in Section 6.1(g) and
6.1(h) of this Agreement;

     

    (viii)       good
standing certificate of the Company dated within five (5) days of the Closing
Date;

     

    (ix)          the
Voting Agreement in the form of Exhibit
E duly executed by each of Leonard Sokolow and Mark Goldwasser and
Christopher Dewey;

     

    (x)           the
Certificate of Amendment in the form of Exhibit
H hereto;

     

    (xi)          the
Stock Option Plan in the form of Exhibit
I hereto;

     

    (xii)         the
Waivers, in the form of Exhibit
F-1 and Exhibit
F-2, duly executed by the 10% Convertible Note Holder(s) and the holders
of a majority of the Series A Preferred Stock;

     

    
      
         

      

      
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    (xiii)        the
Key-Employee Employment Agreements referred to in Section 6.1(n), in
the form of Exhibit
G-1 through Exhibit
G-3, duly executed by each of Mark Goldwasser, Leonard Sokolow and
Christopher Dewey, respectively.

     

    (xiv)       a
binder or certificate of insurance for term Key Employee Insurance in the total
amount of $6,000,000 insuring the life of Mark Goldwasser, and naming the
Company and the 10% Convertible Note Holder(s) as beneficiaries, as their
interests may appear (the “Key Man
Insurance”); and

     

    (xv)        the
Lock Up Agreements duly executed by the Key Employees.

     

    (b)           At
the Closing, the Investor shall deliver to the Company:

     

    (i)          the
Purchase Price, payable in accordance with the provisions of Section 3.2(c)
below;

     

    (ii)         the
certificate referred to in Section 6.2(e) of
this Agreement;

     

    (iii)        a
certified copy of each of the Investor’s and the Investor’s Subsidiary’s
certificate of incorporation, as amended;

     

    (iv)        good
standing certificates dated within five (5) days of the Closing Date of the
Investor and the Investor Subsidiary;

     

    (v)         the Registration Rights
Agreement, in the form attached hereto as Exhibit
D  and
made a part hereof, duly executed by the Investor;

     

    (vi)        the
Voting Agreement in the form of Exhibit
E, duly executed by the Investor;

     

    (vii)       the
Investor Lock Up Agreement; and

     

    (viii)      the
Limited Recourse Note, marked “cancelled.”

     

    (c)           Payment
of the Purchase Price.    On
the Closing Date, the Five Million Dollar ($5,000,000) Purchase Price shall be
paid by the Investor to the Company by one or more wire transfers of immediately
available funds to a bank account designated by the Company prior to the
Closing.  Such payment may be made either by:

     

    (i)           one
wire transfer to the Company of Five Million Dollars ($5,000,000), against the
Company’s repayment in cash of the Limited Recourse Note or the Company’s
delivery to Global Asset Fund Limited of the Certificate(s) of Deposit, marked
“cancelled” and accompanied by such other instruments transferring title to
$500,000 in cash or a certificate of deposit of $500,000 back to Global Asset
Fund Limited; or

     

    
      
         

      

      
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    (ii)           a
wire transfer to the Company of Four Million Five Hundred Thousand Dollars
($4,500,000), and a simultaneous wire transfer to the Company from Grand
Adirondack Federal Credit Union of Five Hundred Thousand Dollars ($500,000),
representing the proceeds of the Certificates of Deposit, with interest thereon
and without deduction therefrom.

     

    The
Investor and Amalphis (as that term is defined in Section 7.5(c) hereof) shall
advise the Company of the method by which such Five Million Dollar ($5,000,000)
Purchase Price shall be paid not later than three (3) Business Days prior to the
Closing Date.

     

    4.           Representations
and Warranties of the Company.  The Company does hereby
represent and warrant to the Investor that, except as set forth in the schedules
delivered herewith (collectively, the “Disclosure
Schedules”):

    


    4.1           Organization, Good Standing
and Qualification.  Each of the Company and the Company
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and to own its properties.  Each of the Company and the
Company Subsidiaries is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not and could not
reasonably be expected to have a Material Adverse Effect.  The
Company’s Subsidiaries, including the Significant Subsidiaries, are listed on
Schedule 4.1
hereto.

    


    4.2           Authorization.  The
Company has full power and authority and has taken all requisite action on the
part of such Person necessary for (i) the authorization, execution and delivery
of the Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder and (iii) the authorization,
issuance (or reservation for issuance) and delivery by the Company of the
Securities.  The Transaction Documents constitute the legal, valid and
binding obligations of the Company enforceable against such Persons in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.

    


    4.3           Capitalization.  Schedule 4.3 sets
forth the authorized capital stock of the Company and each of the Company
Subsidiaries on the date hereof.  All of the issued and outstanding
shares of the capital stock of the Company and each of the Company Subsidiaries
have been duly authorized and validly issued, fully paid, and
nonassessable.  Except as  described on Schedule 4.3, there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
the Company Subsidiaries is obligated to issue any equity securities of any
kind, or any rights to purchase equity securities.  Except as
described on Schedule
4.3, except for the Registration Rights Agreement, there are no
pre-emptive rights, voting agreements, buy-sell agreements, option or right of
first purchase agreements or other agreements of any kind that are binding upon
the Company, any of the Subsidiaries or and any of the securityholders of the
Company relating to the securities of the Company or any of the
Subsidiaries.  Except as described on Schedule 4.3, since
December 31, 2008, the Company has not granted any stock options or other rights
to purchase Common Stock.

    


    
      
         

      

      
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    4.4           Valid
Issuance.  The Series C Preferred Stock, the Conversion Shares
and the Warrant Shares have been duly and validly authorized.  Upon
payment of the Purchase Price, the Series C Preferred Stock will be validly
issued, fully paid and non-assessable, and shall be free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws and except
for those created by the Investor.  Upon the filing of the Certificate
of Amendment and due conversion of the Series C Preferred Stock, the Conversion
Shares will be validly issued, fully paid and non-assessable, and shall be free
and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws and except for permitted encumbrances that may be created by the
Investor.  Upon the due exercise of the Warrants, the Warrant Shares
will be validly issued, fully paid and non-assessable, and shall be free and
clear of all encumbrances and restrictions, except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities laws
and except for permitted encumbrances that may be created by the
Investor.

    


    4.5           Consents.  Except
for the Waivers or as otherwise as set forth in Schedule 4.5, the
execution, delivery and performance by the Company and each of its Subsidiaries
of the Transaction Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods.

    


    4.6           Company SEC
Filings.

    


    (a)           The
Company has made available to the Investor through the EDGAR system, true and
complete copies of all of the Company’s Form 10-K, Form 10-Q, Form 8-K, Form
14-A, Form 14-C and all other periodic filings with the SEC made by the Company
under the 34 Act (collectively, the “Company
SEC Filings”).

    


    (b)           Except
as set forth on Schedule 4.6 to the
Disclosures Schedules, the Company has fully and timely filed in the Company SEC
Filings all annual, quarterly and periodic reports required to be filed by it
under the 34 Act.  The Company is a fully-reporting company under
Section 12(g) of the 34 Act.  There are no letters of comment or other
correspondence from the SEC currently issued or outstanding in connection with
any Company SEC Filings. The Company Common Stock is traded on the OTC Bulletin
Board under the symbol “NHLD”.  No stop order or notice of suspension
of trading of the Common Stock has been received from or threatened by any
Person.

    


    (c)           The
information contained in the Company SEC Filings are complete and correct in all
material respects and does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.

    


    
      
         

      

      
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    4.7           No Material Adverse
Change.  Since September 30, 2008, except as identified and
described in the Company SEC Filings, there has not been any change in the
consolidated assets, liabilities, financial condition or operating results of
the Company and the Company Subsidiaries from that reflected in the financial
statements included in the Company SEC Filings, except for changes in the
ordinary course of business which have not had and could not reasonably be
expected to have a Material Adverse Effect, individually or in the
aggregate.

    


    4.8           No Investment
Company. Neither the Company nor any of its Subsidiaries is, and upon the
issuance and sale of the Securities as contemplated by this Agreement, will be
an “investment company” as defined under the Investment Company Act of 1940 (an
“Investment
Company”).  The Company is not controlled by an Investment
Company.

    


    4.9           No Conflict, Breach,
Violation or Default.  Except as set forth in Schedule 4.9, the
execution, delivery and performance of the Transaction Documents by the Company
and the issuance and sale of the Securities will not conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under (i) the Certificate of Incorporation or Bylaws of the Company or
any Company Subsidiaries, both as in effect on the date hereof (true and
complete copies of which have been made available to the Investor through the
EDGAR system), (ii) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company, any Company Subsidiary or any of their respective assets or properties,
or (iii) any agreement or instrument to which the Company or any Company
Subsidiary is a party or by which the Company or a Company Subsidiary is bound
or to which any of their respective assets or properties is
subject.

    


    4.10           Tax
Matters.  The Company and each Company Subsidiary has prepared
and filed all tax returns required to have been filed by the Company or such
Company Subsidiary with all appropriate governmental agencies and timely paid
all taxes shown thereon or otherwise owed by it.  The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company or any Company Subsidiary nor, to the
Company’s Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the
Company and the Company Subsidiaries, taken as a whole.  All taxes and
other assessments and levies that the Company or any Company Subsidiary is
required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper governmental entity or third party when
due.  There are no tax liens or claims pending or, to the Knowledge of
the Company and the Company Subsidiaries, threatened against the Company or any
Company Subsidiary or any of their respective assets or
property.  Except as described on Schedule 4.10, there
are no outstanding tax payments or tax sharing agreements or other such
arrangements between the Company and any Company Subsidiary or other corporation
or entity.

    


    4.11           Title to
Properties.  Except as disclosed in the Company SEC Filings,
the Company and each Company Subsidiary has good and marketable title to all
properties and assets owned by it, in each case free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or currently planned to be made thereof by them; and
except as disclosed in the Company SEC Filings, the Company and each Company
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.

    


    
      
         

      

      
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    4.12           Certificates, Authorities
and Permits.  Except as disclosed in the Company SEC Filings,
the Company and each Company Subsidiary possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it, and, except as set forth
on Schedule
4.12 hereto, neither the Company nor any Company Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Company Subsidiary, could reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate.

    


    4.13           Labor Matters;
Brokers.

    


    (a)           Neither
the Company nor any Company Subsidiary (i) is a party to or bound by any
collective bargaining agreements or other agreements with labor organizations,
(ii) has violated in any material respect any laws, regulations, orders or
contract terms, affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety,
welfare, wages and hours.

    


    (b)           The
Company and each of the Company Subsidiaries is, and at all times has been, in
compliance in all material respects with all applicable laws respecting
employment (including laws relating to classification of employees and
independent contractors) and employment practices, terms and conditions of
employment, wages and hours, and immigration and naturalization.

    


    (c)           The
Company has disclosed in writing to the Investor a complete list and detailed
description of all broker arbitration claims and other cases pending against
employees of or independent contractors to the Company or any of the Company
Subsidiaries.

    


    4.14           Intellectual
Property.  The Company and each of the Company Subsidiaries
(collectively, the “Corporations”) own or possess
the requisite licenses or rights to use all patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names and copyrights (“Intellectual
Property”) necessary to enable it to conduct its business as now operated; there
is no claim or action by any Person pertaining to, or proceeding pending, or to
the Knowledge of the Company threatened, which challenges the right of the any
of the Corporations with respect to any Intellectual Property necessary to
enable it to conduct its business as now operated; to the Knowledge of the
Company none of the Corporations’ current services and business activities
infringe on any Intellectual Property or other rights held by any
Person.  Each of the Corporations possesses all Copyrights, Patents,
Trademarks, Copyright Licenses, Patent Licenses or Trademark Licenses, each as
defined herein that are necessary to conduct its business as now
operated.  As used in this Section 4.14:

     

    
      
         

      

      
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    “Copyrights” shall mean (i)
copyrights, whether registered or unregistered, held pursuant to the laws of the
United States, any State thereof, or any other country; (ii) registrations,
applications and recordings in the United States Copyright Office or in any
similar office or agency of the United States, any State thereof or any other
country; (iii) any continuations, renewals or extensions thereof; (iv) any
registrations to be issued in any pending applications; (v) prior versions of
works covered by copyright and all works based upon, derived from or
incorporating such works; (vi) income, royalties, damages, claims and payments
now and hereafter due and/or payable with respect to copyrights, including,
without limitation, damages, claims and recoveries for past, present or future
infringement; (vii) rights to sue for past, present and future infringements of
any copyright; (viii) any rights in any material which is copyrightable or which
is protected by common law, United States copyright laws or similar laws, or any
law of any State, and (ix) any other rights corresponding to any of the
foregoing rights throughout the world.

     

    “Copyright License” shall mean
any agreement, written or oral, granting any right in or to any Copyright or
Copyright registration, including, without limitation, licenses for the
exclusive right to use a copyright owned by a third Person.

     

    “Patents” shall mean (i)
letters patent of the United States or any other country, all registrations and
recordings thereof and all applications for letters patent of the United States,
or any other country, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, or any State thereof; (ii)
reissues, divisions, continuations, renewals, continuations in part or
extensions thereof; (iii) petty patents, divisionals and patents of addition;
(iv) patents to issue in any such applications; (v) income, royalties, damages,
claims and payments now and hereafter due and/or payable with respect to
patents, including, without limitation, damages, claims and recoveries for past,
present or future infringement; and (vi) rights to sue for past, present and
future infringements of any patent.

     

    “Patent License” shall mean any
agreement, whether written or oral, granting any right with respect to any
Patent.

     

    “Trademarks” shall mean (i)
trademarks, tradenames, corporate names, company names, business names, trade
styles, service marks, logos, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, registrations and recordings thereof and any
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country (collectively, the "Marks"); (ii) any
reissues, extensions or renewals thereof, (iii) income, royalties, damages,
claims and payments now and hereafter due and/or payable with respect to the
Marks, including, without limitation, damages, claims and recoveries for past,
present or future infringement and (v) rights to sue for past, present and
future infringements of the Marks.

     

    “Trademark License” shall mean
any agreement, written or oral, granting any right in and to any Trademark or
Trademark registration.

     

    
      
         

      

      
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    4.15           Environmental
Matters.  Neither the Company nor any Company Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or
operates any real property contaminated with any substance that is subject to
any Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim has had
or could reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Knowledge of the Company
and the Company Subsidiaries, threatened investigation that might lead to such a
claim.

    


    4.16           Litigation.  Except
as described in the Company SEC Filings or as otherwise disclosed in writing to
the Investor, there are no pending actions, arbitrations, suits or proceedings
against or affecting the Company or any of its properties; and to the Knowledge
of the Company, no such actions, suits or proceedings are threatened or
contemplated.

    


    4.17           Financial
Statements.  The financial statements included in each Company
SEC Filings present fairly, in all material respects, the consolidated financial
position of the Company and the Company Subsidiaries as of the dates shown and
its consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with GAAP (except as
may be disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934
Act).  Except as set forth in the financial statements of the Investor
included in the Company SEC Filings filed prior to the date hereof, neither the
Company nor any of the Company Subsidiaries has incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect.

    


    4.18           Insurance
Coverage.  The Company and each Company Subsidiary maintains in
full force and effect insurance coverage that is customary for comparably
situated companies for the business being conducted and properties owned or
leased by the Company and each Company Subsidiary, and the Company and the
Company Subsidiaries reasonably believe such insurance coverage to be adequate
against all liabilities, claims and risks against which it is customary for
comparably situated companies to insure.

    


    4.19           Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Company Subsidiary or the Investor for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company.

    


    4.20           No Directed Selling Efforts
or General Solicitation.  Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.

    


    
      
         

      

      
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    4.21           Private
Placement.  Subject to the accuracy of the Investor’s
representations in Section 5 of this Agreement, the offer and sale of the
Securities to the Investor as contemplated hereby is exempt from the
registration requirements of the 1933 Act.

    


    4.22           Broker-Dealer Representation
and Warranties.  The Company’s Significant Subsidiaries,
National Securities Corporation (“National
Securities”), vFinance Investments, Inc. (“vFinance”)
and EquityStation, Inc. (“Equity
Station”) severally, but not jointly, represent and warrant as
follows:  Each of National Securities, vFinance and Equity Station and, to
the extent legally required, their applicable Subsidiaries:

     

    (a)           has
filed with FINRA true and complete copies of all forms, reports and other
documents required to be filed by it, except where the failure to make such
filings would not have a Material Adverse Effect on National Securities,
vFinance, or Equity Station or such Subsidiaries, respectively;

     

    (b)           possesses
and is in substantial compliance with all SEC, FINRA and applicable state
governmental authorizations (collectively, “Governmental
and SRO Authorizations”) that are required to conduct their respective
broker-dealer businesses including, without limitation, all authorizations and
licenses issued to any principal, officer or employee of National Securities,
vFinance and Equity Station used in connection with the operations of their
respective businesses, except where the failure to obtain or comply with such
Governmental and SRO Authorization would not have a Material Adverse Effect on
National Securities, vFinance or Equity Station, as the case may
be;

     

    (c)           as
at the date of its most recently filed Financial and Operational Combined
Uniform Single Report (“Focus
Report”), each of the Significant Subsidiaries was in compliance with its
net capital requirements as provided in SEC Rule 15c-3(1) and Rule 15c-3(3) and
in substantial compliance with the other provisions of Rule 15c-3.

     

    4.23           Limited Recourse
Note.   The Company hereby acknowledges receipt of the sum
of Five Hundred Thousand Dollars ($500,000), representing the proceeds of a
$500,000 bridge loan heretofore made by the Investor to the Company as evidenced
by the Limited Recourse Note.

    


    5.           Representations,
Warranties of the Investor.  The Investor hereby represents and
warrants to the Company that:

    


    5.1           Organization and
Existence.  The Investor is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and to own its properties and to invest in the
Securities pursuant to this Agreement and to perform its obligations pursuant to
the Transaction Documents.

    


    5.2           Authorization.  The
execution, delivery and performance by the Investor of the Transaction Documents
to which Investor is a party have been duly authorized and will each constitute
the valid and legally binding obligation of Investor, enforceable against
Investor in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights
generally.

    


    
      
         

      

      
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    5.3           No Conflict, Breach,
Violation or Default.  The execution, delivery and performance
of the Transaction Documents by the Investor will not conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under (i) the Investor’s Certificate of Incorporation or the Investor’s
Bylaws, both as in effect on the date hereof (true and complete copies of which
have been made available to the Company through the EDGAR system), or (ii)(a)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Investor, any
Subsidiary or any of their respective assets or properties, or (b) any agreement
or instrument to which the Investor is a party or by which the Investor or a
Subsidiary is bound or to which any of their respective assets or properties is
subject.

    


    5.4           Purchase Entirely for Own
Account.  The Securities to be received by Investor hereunder
will be acquired for Investor’s own account, not as nominee or agent, and not
with a view to the resale or distribution of any part thereof in violation of
the 1933 Act, and Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the 1933
Act without prejudice, however, to Investor’s right at all times to sell or
otherwise dispose of all or any part of such Securities in compliance with
applicable federal and state securities laws.  Except to the
extent provided in the Investor Lock Up Agreement, nothing contained herein
shall be deemed a representation or warranty by Investor to hold the Securities
for any period of time.

    


    5.5           Investment
Experience.  Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby.

    


    5.6           Disclosure of
Information.  Investor has had an opportunity to receive all
information related to the Company and the Company Subsidiaries requested by it
and to ask questions of and receive answers from the Company regarding the
Company, the Company Subsidiaries and their respective businesses, and the terms
and conditions of the offering of the Securities.  Investor
acknowledges receipt of and has reviewed copies of the Company SEC Filings and
the Company Presentation.

    


    5.7           Restricted
Securities.  Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.  Furthermore, Investor agrees that no
direct or indirect transfers of Series C Preferred Stock can be made by the
Investor prior to January 1, 2010.

    


    
      
         

      

      
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    5.8           Legends.  It
is understood that, except as provided below, certificates and instruments
evidencing the Securities will bear the following or any similar
legend:

    


    (a)           NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE/CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  UNTIL MARCH __, 2010, THE TRANSFER OF
THESE SECURITIES IS ALSO SUBJECT TO THE TERMS AND CONDITIONS OF AN INVESTOR
LOCK-UP AGREEMENT, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
CORPORATION.

    


    (b)           If
required by the authorities of any state in connection with the issuance of sale
of the Securities, the legend required by such state authority.

    


    5.8           Accredited
Investor.  Investor is an accredited Investor as defined in
Rule 501(a) of Regulation D, as amended, under the 1933 Act.

    


    5.9           No General
Solicitation.  Investor did not learn of the investment in the
Securities as a result of any public advertising or general
solicitation.

    


    5.10           Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Company Subsidiary or Investor for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of Investor.

    


    5.11           Prohibited
Transactions.  During the last thirty (30) days prior to the
date hereof, neither Investor nor any Affiliate of Investor which (x) had
knowledge of the transactions contemplated hereby, (y) has or shares discretion
relating to Investor’s investments or trading or information concerning
Investor’s investments, including in respect of the Securities, or (z) is
subject to Investor’s review or input concerning such Affiliate’s investments or
trading (collectively, “Trading
Affiliates”) has, directly or indirectly, effected or agreed to effect
(i) any purchase or long sale of the Company’s securities or (ii) any short
sale, whether or not against the box, established any “put equivalent position”
(as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common
Stock, granted any other right (including, without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that
includes, relates to or derived any significant part of its value from the
Common Stock or otherwise sought to hedge its position in the Securities (each
of such transactions specified in this clause (ii), a “Prohibited
Transaction”).  Prior to the earliest to occur of (i) the
termination of this Agreement, (ii) the Effective Date or (iii) the
Effectiveness Deadline, such Investor shall not, and shall cause its Trading
Affiliates not to, engage, directly or indirectly, in a Prohibited
Transaction.  Investor acknowledges that the representations,
warranties and covenants contained in this Section 5.11 are
being made for the benefit of the Investor as well as the Company.

    


    
      
         

      

      
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    5.12           Investor SEC Filings.
At the time of filing thereof, the Investor’s periodic filings made with the SEC
(collectively, the “Investor
SEC Filings”) complied as to form in all material respects with the
requirements of the 1934 Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.  The financial statements included in each
Investor SEC Filing present fairly, in all material respects, the consolidated
financial position of the Investor as of the dates shown and its consolidated
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with GAAP (except as may be
disclosed therein or in the Notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934
Act).  Except as set forth in the financial statements of the Investor
included in the Investor SEC Filings filed prior to the date hereof, neither the
Company nor any of its subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.

    


    5.13           Money Laundering,
etc.  Neither the Investor, its Affiliates, officers,
directors, members or managers is a Prohibited Person (as defined below), has
conducted any business or has engaged in any transaction or dealing with any
Prohibited Person (as defined below) or has engaged in any transaction relating
to any property or interests in property blocked pursuant to the Executive Order
(as defined below), has engaged in any transaction that evades or avoids any of
the requirements or prohibitions set forth in the Executive Order or the USA
PATRIOT Act (the “PATRIOT Act”).  Investor represents that it and its
officers, directors or managers are in compliance with all applicable orders,
rules and regulations issued by, and recommendations of, the U.S. Department of
the Treasury and OFAC (as defined below) pursuant to the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701 et seq. (“IEEPA”) and the PATRIOT
Act.  Investor represents that neither it nor any of the Investor
Subsidiaries is a “Prohibited Foreign Shell
Bank” (as defined in the PATRIOT Act), or is named on any available lists
of known or suspected terrorists, terrorist organizations or of other sanctioned
persons issued by the United States government and/or the government(s) of
any jurisdiction(s) in which Investor is doing business; “Prohibited Person”
means any Person:  (a) listed in the Annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, and relating to Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(the “Executive
Order”); (b) that is owned or controlled by, or acting for or on behalf
of, any person or entity that is listed in the Annex to, or is otherwise subject
to the provisions of the Executive Order; (c) that commits, threatens or
conspires to commit or supports “terrorism” as defined in the Executive Order;
(d) that is named as a “specifically designated national (SDN)” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control (“OFAC”) at its official website, http://www.treas.gov.ofac/t1lsdn.pdf
or at any replacement website or other replacement official publication of such
list or is named on any other U.S. or foreign government or regulatory list
issued post-09/11/01; (e) that is covered by IEEPA, OFAC or any other law,
regulation or executive order relating to the imposition of economic sanctions
against any country, region or individual pursuant to United States law or
United Nations resolution; or (f) that is an affiliate (including any principal,
officer, immediate family member or close associate) of a person or entity
described in one or more of clauses (a) - (e) of this definition of Prohibited
Person.

    


    
      
         

      

      
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    6.           
Conditions
to Closing.

    


    6.1           Conditions to the Investor’s
Obligations. The obligation of Investor to purchase the 5,000 shares of
Series C Preferred Stock and the Warrants at the Closing is subject to the
fulfillment to Investor’s satisfaction, on or prior to the Closing Date, of the
following conditions, any of which may be waived by the Investor:

    


    (a)           All
of the representations and warranties set forth in Section 4 hereof shall be
true and correct in all material respects at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date.

    


    (b)           The
Company and the other parties to the Transaction Documents shall have performed
in all material respects all obligations and conditions herein required to be
performed or observed by it or them on or prior to the Closing
Date.

    


    (c)           The
Company shall have made all of other the Closing Deliveries required pursuant to
Section 3.2(a)
of this Agreement.

    


    (d)           The
Company and the Company Subsidiaries (as applicable) shall have obtained the
Waivers and any and all other consents, permits, approvals, registrations and
waivers necessary or appropriate for consummation of the sale of the Securities
and the consummation of the other transactions contemplated by the Transaction
Documents, all of which shall be in full force and effect.

    


    (e)           No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.

    


    (f)           No
event shall have occurred or shall have failed to occur which has had or could
reasonably be expected to have a Material Adverse Effect on the Company or any
of its Significant Subsidiaries.

    


    (g)           The
Company shall have delivered a Certificate, executed on behalf of the Company by
its Chief Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections (a) through (f) of this Section
6.1.

    


    
      
         

      

      
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    (h)           The
Company shall have delivered a Certificate, executed on behalf of the Company by
its Secretary, dated as of the Closing Date, certifying the resolutions adopted
by the Board of Directors of the Company approving the transactions contemplated
by this Agreement and the other Transaction Documents, and the issuance of the
Securities, certifying the current versions of the Certificate of Incorporation
and Bylaws of the Company and each of its Company Subsidiaries and certifying as
to the signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company and (as applicable) the Company
Subsidiaries.

    


    (i)           The
Series C Certificate of Designation shall be filed with the Secretary of State
of the State of Delaware and the Investor shall receive a certified copy of such
filing.

    


    (j)           The
Voting Agreement shall be duly executed and delivered by each of the Company,
Leonard J. Sokolow, Mark Goldwasser and Christopher Dewey.

    


    (k)          The
Company shall deliver to the Investor the Stock Option Plan.

    


    (l)           The
Company shall issue and deliver to the Investor, certificate(s) evidencing the
5,000 shares of Series C Preferred Stock, and a duly executed Class A Warrant
and Class B Warrant.

    


    (m)         The
Company shall execute and deliver to the Investor the Registration Rights
Agreement.

    


    (n)          The
Company shall have entered into agreements with Mark Goldwasser and Leonard J.
Sokolow extending the terms of their respective employment agreements through
the fifth anniversary of the Closing Date and the Company shall have entered an
employment agreement with Christopher C. Dewey expiring on the fifth anniversary
of the Closing Date and containing the respective terms and conditions set forth
on Exhibits
G-1 through Exhibit
G-3 annexed hereto and made a part hereof (collectively, the “Key Employee Employment
Agreements”).

    


    (o)          The
Investor shall have received a duly executed copy of the requisite notification
given by the Company to FINRA of a change in control pursuant to Rule 1017 of
the FINRA Regulations, together with copies of all Company correspondence to
FINRA and FINRA responses thereto.

    


    (p)          The
Investor shall have received an opinion of counsel to the Company substantially
in the form attached hereto as Exhibit
J-1
and a separate opinion of special Delaware counsel to the Company in the form
attached hereto as Exhibit
J-2.

    


    6.2           Conditions to Obligations of
the Company. The Company's obligation to sell and issue the Series C
Preferred Stock and the Warrants at the Closing is subject to the fulfillment to
the satisfaction of the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:

    


    
      
         

      

      
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    (a)           The
representations and warranties made by the Investor in Section 5 hereof, other
than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
5.6, 5.7 and 5.8 (the “Investment Representations”),
shall be true and correct in all material respects when made, and shall be true
and correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date.  The
Investment Representations shall be true and correct in all respects when made,
and shall be true and correct in all respects on the Closing Date with the same
force and effect as if they had been made on and as of said date.  The
Investor shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by them on or prior to
the Closing Date.

    


    (b)           The
Investor shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase of the Securities and the consummation of the other transactions
contemplated by the Transaction Documents, all of which shall be in full force
and effect.

    


    (c)           No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.

    


    (d)           The
Investor shall have made all of the Closing Deliveries required pursuant to
Section 3.2(b)
of this Agreement.

    


    (e)           The
Investor shall have delivered a Certificate, executed on behalf of the Investor
by its Chief Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections (a), (b), (c) and (d) of this Section 6.2.

    


    (f)           the
Company shall have received an opinion of counsel to the Investor substantially
in the form attached hereto as Exhibit
K.

    


    
      
         

      

      
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    7.           Covenants
and Agreements of the Parties.

    


    7.1           Reservation of Common
Stock.  Subject to the next succeeding sentence, the Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of providing for the Conversion
Shares, the Class B Warrant Shares, such number of shares of Common Stock as
shall from time to time equal the number of shares sufficient to permit the
issuance of the Conversion Shares and the Class B Warrant Shares pursuant to the
Transaction Documents in accordance with their respective
terms.  Notwithstanding the foregoing, the Company does not currently
have sufficient authorized Common Stock to issue Common Stock to the Investor to
the extent of the full issuance of the Conversion Shares and Class B Warrant
Shares.

     

    7.2           Certificate of Amendment;
Shareholder Approval Covenant. 

     

    (a)           Promptly
following the Closing Date, the Company will file with the SEC  a Form
14A Proxy Statement under the 1934 Act. Upon obtaining the requisite stockholder
vote and approval at the Company stockholders’ meeting called for pursuant to
the Proxy Statement, the Company will file with the Secretary of State of the
State of Delaware the Certificate of Amendment, in order to, among other things,
authorize for issuance 150,000,000 shares of Company Common Stock, and
10,000,000 shares of Company preferred stock containing such rights, preferences
and designations as the board of directors of the Company may, from time to time
designate (including the Series A Preferred Stock and Series C Preferred
Stock).  The Company shall cause such Certificate of Amendment to be
filed with the Secretary of State of the State of Delaware by not later than
October 31, 2009.

     

    (b)           Each
of the Investor and the Key Employees do hereby covenant and agree to vote or
execute written consents with respect to all of their shares of Common Stock and
shares of Series C Preferred Stock in favor
of the Certificate of Amendment.

     

    (c)           The
Company’s failure or refusal to obtain the requisite shareholder approvals
referred to in Section
7.2(a) (except to the extent of a breach by the Investor under Section 7.2(b)
above), or its failure to file with the Secretary of State of the State of
Delaware the Certificate of Amendment by October 31, 2009, shall constitute a
material breach by the Company of the terms and conditions of this Agreement and
the other Transaction Documents.

    


    7.3           Compliance with
Laws.  The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities.

    


    7.4           Use of Proceeds. The
Company will use the proceeds from the sale of the Series C Preferred Stock for
general corporate and working capital purposes, including, without limitation,
capital contributions of $1,000,000 into each of the Company’s Significant
Subsidiaries for net capital purposes and other working capital.

    


    
      
         

      

      
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    7.5           Working Capital and
Strategic Acquisitions.

    


    (a)           The
Parties hereto do hereby mutually acknowledge and agree that their collective
intention and the purpose of entering into this Agreement and consummating the
Transactions contemplated hereby and by the other Transaction Documents, is for
(i) the Investor or its Affiliates to provide working capital for the Company
and the existing Company Subsidiaries through its payment of the Purchase Price
for the 5,000 shares of Series C Preferred Stock to be issued to such Person(s)
on the Closing Date, and (ii) following the Closing Date and during 2009 and
thereafter, through its full or partial exercise of the Class A Warrant, for the
Investor or its Affiliates to facilitate the expansion of the Company’s
brokerage and investment banking business by providing additional equity capital
to the Company to enable the Company or an existing or newly formed Company
Subsidiary to consummate one or more Strategic Acquisitions (as defined
below).

    


    (b)           The
Parties hereto do hereby intend that the Company or one or more existing or
newly formed Company Subsidiaries shall seek to acquire control of one or more
companies engaged in the securities brokerage, investment banking and related
businesses, whether by merger, consolidation, or purchase of substantially all
of the assets or securities of such Persons (collectively, “Strategic Acquisitions”). Each
of the Company, the Company Subsidiaries and the Investor do hereby mutually
agree to cooperate with each other in good faith in connection with the
negotiation, due diligence, documentation and potential closing(s) of any
potential Strategic Acquisitions; provided,
that neither the Company, any Company Subsidiary nor the Investor shall be
obligate in any respect as at the date hereof or as at the Closing Date to
consummate any Strategic Acquisition.

    


    (c)      
By its execution of this Agreement, the Company does hereby covenant and agree
that, at all times on or before the expiration date of the Class A Warrant
(December 31, 2009, subject to extension to December 31, 2010, in accordance
with its terms to the earlier of (i) December 31, 2010, or (ii) the date in
which the full exercise of the Class A Warrant may occur), the Investor and its
Affiliates shall possess the sole, exclusive and absolute right (but not the
obligation) to provide the Company or any Company Subsidiary with all of the
capital to enable the Company or such Company Subsidiary to consummate one or
more Strategic Acquisitions subject to the provisions of this Section
7.5(c).  The Investor has advised the Company that Amalphis
Group, Inc. (“Amalphis”),
an Affiliate of the Investor, has indicated a willingness to undertake, directly
or through its Affiliates or associates, to provide the Investor with additional
funding to enable the Investor to exercise the Class A Warrant for the Class A
Warrant Exercise Price, in an amount sufficient to finance the purchase price of
one or more Approved Strategic Acquisitions.

    


    (d)           Notwithstanding
the foregoing, in the event that: (i) the Investor (through its Board member
designees or otherwise) has indicated in writing that it is not in favor of the
Company pursuing or consummating a particular Strategic Acquisition, (ii) the
Investor fails to timely notify the Company of its intention to exercise the
Class A Warrant in whole or in part to finance an Approved Strategic
Acquisition, or (iii) the Investor (whether directly, through Amalphis, its
Affiliates or associates or otherwise) commits a “Warrant Default” (as that term
is defined in the Series C Certificate of Designation and the Class A Warrant),
the Company and its Subsidiaries shall have the immediate right to obtain debt
or equity financing for any such Strategic Acquisition from any source or
Person, other than the Investor or its Affiliates.

    


    
      
         

      

      
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    (e)           
In the event that the Company fails to proceed with the consummation of any
proposed Strategic Acquisition (a “Rejected Strategic
Acquisition”), then following the Board’s deliberations in which it has
elected not to proceed with such Rejected Strategic Acquisition, the Investor or
its Affiliates or associates will have the right in its sole and exclusive
discretion to pursue the Rejected Strategic Acquisition.

    


    (f)           Notwithstanding
the foregoing or any other provisions contained in this Section 7.5 or elsewhere
in this Agreement nothing herein or in any other Transaction Document shall in
any manner prohibit the Investor, Amalphis or any other Affiliate or associate
of the Investor from pursing for its or their own account any one or more
acquisitions of, or joint ventures or other business transactions with, any
other Person, including any Person engaged in the securities, investment banking
or brokerage businesses, and such activities shall not, in any manner, be deemed
or construed to be a misappropriation of any corporate opportunity for the
Company; provided,
however, that neither the Investor, Amalphis nor any other Affiliate or
associate of the Investor shall unilaterally pursue any Strategic Acquisition(s)
that was initiated by management of the Company, until such time as the same has
become a Rejected Strategic Acquisition.

    


    (g)         (i)           At
all times on or before the expiration date of the Class A Warrant (December 31,
2009, subject to extension to December 31, 2010, in accordance with its terms to
the earlier of (x) December 31, 2010, or (y) the date in which the full exercise
of the Class A Warrant may occur), in the event that the Company shall determine
to seek a third party for, or solicit interest from third parties with respect
to, any financing for the Company or any of its Subsidiaries, other than a
financing to fund a Strategic Acquisition (a “Working Capital Financing”),
then prior to initiating any marketing or soliciting or entering into
negotiations with any third parties with respect to such Working Capital
Financing, the Company shall give written notice (the “Working Capital Financing Request
Notice”) of such determination to the Investor (including the dollar
amount of Working Capital Financing being sought).  The Investor shall
have the right, exercisable within five (5) Business Days following delivery of
the Working Capital Financing Request Notice, to advise the Company in writing
(the “”Negotiation
Notice”) whether or not the Investor or its Affiliates or associates are
interested in provide such Working Capital Financing.  If the Investor
desires to exercise such right of first offer and proceed with such Working
Capital Financing, the Investor and the Company will negotiate in good faith
during a period of ten (10) Business Days following the date of the Negotiation
Notice (the “Negotiation
Period”) as to the terms and conditions of such Working Capital
Financing.   On or before the expiration of the Negotiation
Period, the Investor shall submit to the Company its written final offer of the
terms and conditions (including price, structure, consideration and other
substantive economic terms) on which the Investor would be willing to provide
such Working Capital Financing (the “Investor Final
Offer”).  A failure by the Investor to give the Investor Final
Offer by the expiration of the Negotiation Period shall be deemed to constitute
a waiver of the Investor’s right of first offer with respect to such Working
Capital Financing.

    


    
      
         

      

      
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    (ii)           Upon
receipt of the Investor Final Offer, the Company shall give written notice (the
“Company Notice”) to the
Investor within five (5) days after receipt of such Investor Final Offer stating
whether or not the Company determines accept or reject the Investor Final Offer
regarding a Working Capital Financing on the terms set forth in the Investor
Final Offer.  A failure by the Company to give the Company Notice shall be
deemed to constitute a decision by the Company not to pursue a Working Capital
Financing with the Investor.

     

    (iii)           If
the Company determines to accept the Investor Final Offer regarding a Working
Capital Financing, the Parties shall use diligent, good faith efforts to enter
into a binding agreement with respect to such Working Capital Financing,
consistent with the terms and conditions contained in the Investor Final Offer
within ten (10) Business Days after the Investor’s receipt of the Company
Notice, and to consummate such Working Capital Financing as promptly as
commercially practicable thereafter.

     

    (iv)           In
the event that: (A) the Investor fails to timely deliver a Negotiation Notice
following receipt of a Working Capital Financing Request Notice, or does not
deliver the Investor Final Offer within the allowed period of time, or (B) the
Parties are unable to consummate such Working Capital Financing within thirty
(30) days of receipt of the Company Notice accepting the Investor Final Offer,
the Company shall thereafter have the right to pursue a Working Capital
Financing with any other Person; provided,
however, that if the Company shall be unable, within the next succeeding
thirty (30) days, to obtain substantially the same amount of Working Capital
Financing from any Person who is not an Affiliate of the Investor on terms and
conditions that, in the aggregate, are more favorable to the Company than those
contained in the Investor Final Offer, the Company shall provide the Investor
with all of the terms and conditions of any offer(s) received from such
unaffiliated Person(s), and the Investor shall have five (5) Business Days to
match any such third party offer(s).

     

    7.6           Board Composition and
Voting.  At or promptly following the Closing, the
composition of the Board of Directors of the Company shall be constituted in the
manner set forth in the Voting Agreement, and the requisite majority of the
members of such Board of Directors to approve, ratify or consent to actions by
the Company and/or any Subsidiary of the Company shall be as set forth in the
Voting Agreement.

    


    7.7           Stock Option
Plan.  The Company and the Investor do hereby agree that the
Stock Option Plan, by its terms shall provide, inter alia,
that for so long as the Investor and/or its or their Affiliates own at
least 1,250 shares of Series C Preferred Stock (as adjusted for stock splits,
stock dividends, recapitalizations and the like):

    


    (a)           the
maximum number of options (the “Stock Options”) that may be
issued under the Stock Option Plan shall not exceed 19,333,333 shares of Common
Stock, (inclusive of the approximately 6.5 million outstanding stock options as
at the date hereof), or such other number of shares of Common Stock as shall
represent twenty-five percent (25%) of the Fully-Diluted Common Stock of the
Company at the Closing Date (the “Option Shares”);

    


    (b)           in
the event and to the extent that the Investor shall not fully exercise the Class
A Warrant and the Class B Warrant providing the Investor with ownership of or
the right to receive an aggregate of 32,000,000 shares of Company Fully-Diluted
Common Stock, the aggregate number of Option Shares available for issuance under
the Stock Option Plan shall be appropriately reduced to an amount equal to (25%)
of the Fully-Diluted Common Stock of the Company, as so proportionately reduced
and calculated after giving effect to the unexercised portions of the Class A
Warrant and the Class B Warrant  as of the expiration dates
thereof;

    


    
      
         

      

      
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    (c)           Stock
Options may be granted only to directors and employees of or consultants to the
Company or any of the Company Subsidiaries;

    


    (d)           all
Stock Options (other than holders of the approximately 6.5 million issued Stock
Options) shall vest and may be exercised over a period of not less than four
years, in equal annual installments, commencing on the first anniversary of the
Closing Date;

    


    (e)           except
for the approximately 6.5 million currently issued Stock Options, no new Stock
Options granted under the Stock Option Plan shall vest prior to the first
anniversary of the Closing Date;

    


    (f)           the
exercise price of all Stock Options shall be not less than 100% of the closing
price of the Company’s Common Stock, as traded on the OTC Bulletin Board or any
other national securities exchange, as at the date of grant of the applicable
Stock Options;

    


    (g)           the
Key Employees may not be granted in the aggregate more than 50% of the total
number of Stock Options available for grant under the Stock Option
Plan;

    


    (h)           if
any holder of a Stock Option shall leave the employ of the Company or any
Company Subsidiary, shall cease rending consulting services to the Company or
any Company Subsidiary, or such employment or services shall be terminated, all
unvested Stock Option shall immediately terminate and vested Stock Options, if
any, must be exercised within ninety (90) days of the termination of employment
or such consulting services or such other period as is set forth in employment
or other similar agreements or arrangements existing as of the Closing
Date;

    


    (i)           vested
Stock Options and Option Shares may be registered for resale pursuant to a Form
S-8 Registration Statement; and

    


    (j)           Stock
Options shall not contain “cashless exercise” provisions.

    


    7.8           Key Employee
Insurance.    On or following the Closing Date, in
addition to the insurance on the life of Mark Goldwasser referred to in Section 3.2(a)(xv)
above, upon the written request of the Investor, the Company shall use its
commercially reasonable efforts to obtain and maintain in force key Person life
insurance policies of $5,000,000 (or such lesser amount as the Investor may
request) on the lives of each of Leonard Sokolow and Christopher Dewey, with the
Company designated as beneficiary under each such policy (the “Key
Employee Insurance”).

    


    
      
         

      

      
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    7.9           Class A Warrant Exchange
Procedure.

    


    (a)           On
a date which shall be not later than three (3) Business Days after the filing of
the Certificate of Amendment with the Secretary of State of the State of
Delaware (the “Class A
Warrant Exchange Date”), the Investor shall deliver to counsel to the
Company, the Class A Warrant, in the form of Exhibit
B-1 attached hereto (the “Preferred
Class A Warrant”) and any shares of Class C Preferred Stock previously
issued upon the prior exercise of such Preferred Class A Warrant, and receive in
exchange therefore the duly executed Class A Warrant in the form of Exhibit
B-2 attached hereto (the “Common
Class A Warrant”) and the shares of Common Stock set forth in Section 7.9(b) below;
at which time, the Preferred Class A Warrant, or the unexercised portion
thereof, shall be destroyed and thereafter deemed to be null and void, ab
initio.

    


    (b)           In
the event and to the extent that, prior to the Class A Warrant Exchange Date,
the Preferred Class A Warrant shall have been fully or partially exercised, than
and in such event, on such Class A Warrant Exchange Date, the escrow agent shall
deliver to the holder(s) of such Preferred Class A Warrant:

    


    (i)           if
as a result of a partial exercise of the Preferred Class A Warrant, a Common
Class A Warrant, entitling the holder(s) to purchase that number of shares of
Common Stock equal to (x) the aggregate number of Warrant Shares that would have
been issuable upon the full exercise of the Common Class A Warrant immediately
prior to the Class A Warrant Exchange Date, had such Common Class A Warrant not
been previously exercised, less (y) the number of shares of Common Stock to be
delivered pursuant to clause (ii) below; plus

    


    (ii)           an
applicable number of shares of Common Stock of the Company that would have been
issuable to such holder(s) of the Common Class A Warrant, if such Common Class A
Warrant had been held by the holder(s) at the time of exercise of the Preferred
Class A Warrant.

    


    
      	
              8.

            	
              No
      Violation of Voting Agreement or Changes in Transaction
      Documents.

            


    

     

    8.1           Standstill.  The
Investor agrees that during the period commencing on the Closing Date and ending
on the third anniversary of the date hereof,  neither the Investor nor
any of its Affiliates or any Person acting at its or their direction, initiate,
propose or otherwise “solicit” (as such term is used in the proxy rules of the
SEC) shareholders of the Company for the approval of any shareholder proposals
whether made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act,
or otherwise, or cause or encourage or attempt to cause or encourage any other
Person to initiate any such shareholder proposal; otherwise communicate with the
Company’s shareholders or others pursuant to Rule 14a-1(l)(2)(iv) under the
Exchange Act; or participate in, or take any action pursuant to, any
“shareholder access” proposal which may be adopted by the SEC, whether in
accordance with proposed Rule 14a-11 or otherwise or otherwise initiate,
take, or solicit, cause or encourage others to take, any action inconsistent
with any of the foregoing.

    


    8.2           Voting
Agreement.  The Investor does hereby covenant and agree that
neither it nor any of its Affiliates shall take any action that would violate
any of the provisions of the Voting Agreement.  In such connection,
neither the Investor nor any of its Affiliates shall, in connection with any
annual or special meeting of the stockholders of the Company, or pursuant to a
written consent of the holders of a majority of the voting capital stock of the
Company and a related Rule 14C Information Statement, make any changes or seek
to make any change in either:

    


    
      
         

      

      
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    (a)           the
Board of Directors of the Company or any Company Subsidiary that would violate
the terms of the Voting Agreement, or

    


    (b)           the
executive officers or senior management of the Company or any of its
Subsidiaries (absent a breach by any Key Employee or any other executive
employee of a Company Subsidiary of the terms of their individual employment
agreements or their fiduciary duties and obligations to the Company or such
Company Subsidiary); it being understood that the sole and exclusive right to
make any such management changes shall be vested solely in the Board of
Directors of the Company and the applicable Company Subsidiary.

    


    Any
breach by the Investor of the provisions of Section 8.1 or 8.2 shall constitute
a material breach by the Investor of the terms and conditions of this Agreement
and the other Transaction Documents.

    


    8.3           Neither
the Company nor the Board of Directors of the Company shall amend, modify or
otherwise change any of the Transaction Documents (except to the extent
otherwise provided in the applicable Transaction Document), without the express
prior written consent of the Investor, which consent may be withheld of any
reason or no reason.

    


    Any
breach by the Company or the Board of Directors of the provisions of Section 8.3
shall constitute a material breach by the Company of the terms and conditions of
this Agreement and the other Transaction Documents.

    


    9.           Survival
and Indemnification.

    


    9.1  Survival.  The
respective representations and warranties of the parties hereto contained in
this Agreement shall survive the Closing of the transactions contemplated by
this Agreement; provided, however, that the representations and warranties
contained in this Agreement shall expire on the later to
occur of (a) twelve (12) months after the Closing Date, or (b) six (6) months
after a Triggering Event.

    


    9.2  Indemnification.

    


    (a)           Subject
to the provisions of Section 9.1, the
Company and the Company Subsidiaries severally agree to indemnify and hold
harmless Investor and its Affiliates and their respective directors, officers,
employees and agents from and against any and all losses, claims, damages,
liabilities and expenses,(including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof (collectively, “Losses”) to which such Person
may become subject as a result of any breach of any representation or warranty
made by the Company or any Company Subsidiary under the Transaction Documents,
and will reimburse any such Person for all such amounts as they are incurred by
such Person.

    


    
      
         

      

      
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    (b)           Subject
to the provisions of Section 9.1, the
Investor agrees to indemnify and hold harmless the Company and its Subsidiaries
and their respective directors, officers, employees and agents from and against
any and all Losses to which such Person may become subject as a result of any
breach of representation or warranty made by the Investor under the Transaction
Documents, and will reimburse any such Person for all such amounts as they are
incurred by such Person.

    


    (c)           In
the event that at any time, the Company shall:

    


    (i)           fail
or refuse to file the Certificate of Amendment with the Secretary of State of
the State of Delaware and consummate the Warrant Exchange by 5:00 p.m. (East
coast time) on October 31, 2009 (except to the extent caused by a breach by the
Investor under Section
7.2(b) hereto); or

     

    (ii)           default
in the performance of or compliance with any covenant or agreement on Company’s
part to be performed or complied with as provided in Section 7 and such
default has not been cured for twenty (20) Business Days after the earlier of
(i) the Company obtained Knowledge of such default and (ii) written notice of
default is given to the Company by the Investor; or

     

    (iii)           default
in the performance of or compliance with any agreement or covenant on the
Company’s part to be performed or complied with contained in any of the
Transaction Documents, and such default has not been cured for twenty (20)
Business Days after the earlier of (i) a Key Employee or the Company obtained
Knowledge of such default and (ii) written notice of default is given to the
Company by the Investor;

     

    the
Investor and/or other holders of Series C Preferred Stock or Warrants may
proceed to protect and enforce the rights of such holder by an action at law for
monetary damages, or by a suit or other appropriate proceeding in equity,
including seeking specific performance of the Company’s covenants and agreements
contained herein or in any other Transaction Document, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or
otherwise.

    


    (d)           In
the event that at any time, the Investor or any of its Affiliates
shall:

    


    (i)           default
in the performance of or compliance with any covenant or agreement on Investor’s
part to be performed or complied with as provided in Section 7 or in Sections 8.1 or 8.2
and such default has not been cured for twenty (20) Business Days after the
earlier of (i) the Investor obtained Knowledge of such default and (ii) written
notice of default is given to the Investor by the Company; or

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    (ii)           default
in the performance of or compliance with any agreement or covenant on the
Investor’s part to be performed or complied with contained in any of the
Transaction Documents, and such default has not been cured for twenty (20)
Business Days after the earlier of (i) a Key Employee or the Company obtained
Knowledge of such default and (ii) written notice of default is given to the
Company by the Investor;

     

    the
Company may proceed to protect and enforce its rights by an action at law for
monetary damages, or by a suit or other appropriate proceeding in equity,
including seeking specific performance of the Investor’s covenants and
agreements contained herein or in any other Transaction Document, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or
otherwise.

    


    9.3  Conduct of Indemnification
Proceedings.  Promptly
after any one or more Person entitled to indemnification under this Section 9
(each an “Indemnified
Person”) becoming aware of any demand, claim or circumstances which would
or might give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to Section 9.2, such
Indemnified Person shall promptly notify the indemnifying Person(s) (each an
“Indemnifying Person”)
in writing and the Indemnifying Person shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any
Indemnified Person so to notify the Indemnifying Person shall not relieve the
Indemnifying Person of its obligations hereunder except to the extent that the
Indemnifying Person is materially prejudiced by such failure to
notify.  In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless: (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the retention of such
counsel; or (ii) in the reasonable judgment of counsel to such Indemnified
Person representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.  The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Person shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.  Without the prior
written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Indemnifying Person shall not effect any settlement
of any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Person from all liability arising out
of such proceeding.

    


    9.4           Indemnity Basket; Maximum
Liability.   Notwithstanding anything to the contrary
contained in this Agreement:

    


    (a)           the
Company shall only be liable for Losses indemnified under this Section 9 in the
event that the aggregate amount of such Losses shall exceed the sum of $150,000
(the “Indemnity
Basket”); provided, that if the aggregate amount of any such Losses
incurred shall exceed $150,000, there shall be no Indemnity Basket;
and

    


    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    (b)           except
only for acts or omissions by the Company or Company Subsidiaries constituting
securities fraud or common law fraud in the inducement, in no event shall the
indemnification obligations of the Company and the Company Subsidiaries under
this Section 9 in respect of Losses exceed the aggregate amount of the cash
investment made by the Investor in the Company or any Company Subsidiary in
respect of the payment of the Purchase Price, the full or partial exercise of
the Class A Warrant and/or Class B Warrant and any Working Capital Financing
provided by the Investor.

    


    9.5           No Waivers or Election of
Remedies, Expenses, Etc.  No course of dealing and no delay on
the part of any Indemnified Person in exercising any right, power or remedy
shall operate as a waiver thereof or otherwise prejudice such holder's rights,
powers or remedies. No right, power or remedy conferred by this Agreement or any
other Transaction Document upon any Indemnified Person shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of any Indemnifying Person under this Section 9, the Indemnifying
Persons(s) will pay to the Indemnified Person(s) on demand such further amount
as shall be sufficient to cover all costs and expenses of such Indemnified
Person(s) incurred in any enforcement or collection under this Section 9,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.

    


    10.           Miscellaneous.

    


    10.1                      Successors and
Assigns.

    


    (a)           This
Agreement may not be assigned by a party hereto without the prior written
consent of the Company or the Investor, as applicable, provided, however, that,
without the prior written consent of the Company (i) the Investor may assign its
rights and delegate its duties hereunder in whole or in part to any Affiliate,
and (ii) may assign or transfer less than a majority of the Securities to any
third Person not an Affiliate in any public offering or public sale or in
private transaction, subject in either or both cases to such assignee’s specific
written assumption of the specific obligations and duties of the Investor set
forth herein and in any of the other Transaction Documents and in all cases to
the provisions of the applicable securities laws.

    


    (b)           Notwithstanding
the provisions of Section 10.1(a), except for (i) the pledge of this Agreement,
the Limited Recourse Note and the Common Stock issuable upon conversion of such
Limited Recourse Note to Global Asset Fund Limited, as at the date of execution
of this Agreement and (ii) the pledge of all of the Securities, this Agreement
and the other Transaction Documents to Amalphis to secure financing from
Amalphis to enable the Company to pay the Purchase Price on the Closing Date,
without the prior written consent of the Company, the Investor shall not sell,
pledge, hypothecate, assign or otherwise transfer, directly or indirectly, any
of the Securities or any of its rights or obligations under any of the
Transaction Documents until the earlier of (i) December 31, 2009, or (ii) the
occurrence of a Triggering Event.

    


    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    (c)           The
provisions 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.

    


    10.2         Counterparts.  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 (including a financing signature page)
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.

     

    10.3         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.

    


    10.4         Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by
an internationally recognized overnight air courier, then such notice shall be
deemed given one Business Day after delivery to such carrier.  All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:

    


    If to the Company:

    


    National
Holdings Corporation

    120
Broadway, 27th
Floor

    New York,
NY 10271

    Attention:  Mark
Goldwasser, CEO

    Fax:  (212)
417-8010

    


    With a copy to:

    


    Littman
Krooks LLP

    655 Third
Avenue, 20th
Floor

    New York,
NY 10017

    Attention:  Mitchell
C. Littman, Esq.

    Fax:  (212)
490-2990

    


    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    If to the Investor:

    


    Fund.Com Inc.

    14 Wall Street, 20th
Floor

    New York, NY 10005

    Attention: Gregory Webster,
CEO

    Fax: (212) 618-1705

    


    With copies to:

     

    
      
        
          
            	
                    Pillsbury
      Winthrop Shaw Pittman LLP

                  	
                    Hodgson
      Russ LLP

                  
	
                    1540
      Broadway

                  	
                    1540
      Broadway

                  
	
                    New
      York, NY 10036-4039

                  	
                    New
      York, NY 10036

                  
	
                    Attention:
      Ronald A. Fleming, Esq.

                  	
                    Attention:  Stephen
      A. Weiss, Esq.

                  
	
                    Fax:
      (212) 298-9931

                  	
                    Fax:
      (212) 751-0928

                  


          

        

      

    

     

    10.5          Expenses.  The
parties hereto shall pay their own costs and expenses in connection herewith,
except that, in the event of a Closing, the Company shall pay the reasonable
fees and expenses of Investor and its Affiliates,
including Amalphis,
in an amount not to exceed $75,000. Such expenses shall be paid by the Company
only at the Closing.

    


    10.6          Amendments and
Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor.  Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.

    


    10.7          Publicity.  Except
as set forth below, no public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investor
without the prior consent of the Company (in the case of a release or
announcement by the Investor) or the Investor (in the case of a release or
announcement by the Company) (which consents shall not be unreasonably
withheld), except as such release or announcement may be required by law or the
applicable rules or regulations of any securities exchange or securities market,
in which case the Company or the Investor, as the case may be, shall allow the
Investor or the Company, as applicable, to the extent reasonably practicable in
the circumstances, reasonable time to comment on such release or announcement in
advance of such issuance.  In addition, the Company and Investor will
make such other filings and notices in the manner and time required by the
SEC.

    


    10.8          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 provision hereof prohibited or unenforceable in any
respect.

    


    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    10.9          Entire
Agreement.  This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof, other than any written confidentiality agreement between the Company
and Investor, which shall continue in full force and effect.

    


    10.10        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.

    


    10.11        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 the choice of law principles thereof.  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.

    


    10.12        Confidentiality.  Each
party hereto agrees that, except with the prior written permission of the
other party or as required by applicable  federal or state securities
law, it shall at all times keep confidential and not divulge, furnish or make
accessible to anyone any confidential information, knowledge or data concerning
or relating to the business or financial affairs of the other parties to which
such party has been or shall become privy by reason of this Agreement,
discussions or negotiations relating to this Agreement, the performance of
its obligations hereunder or the ownership of the Securities purchased
hereunder.  The provisions of this Section 10.12 shall be in addition
to, and not in substitution for, the provisions of any separate nondisclosure
agreement executed by the parties hereto with respect to the transactions
contemplated hereby.

    


    [SIGNATURE PAGE
FOLLOWS]

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    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.

    


    
      	
              The
      Company: 

            	
              NATIONAL
      HOLDINGS CORPORATION

            


    

    


    


    By: /S/ MARK
GOLDWASSER

    Mark
Goldwasser

    Chairman
and Chief Executive Officer

    


    The
Company Significant Subsidiaries

    As
to Section 4.22 only:

    


    NATIONAL
SECURITIES CORPORATION

    


    


    By: 
/S/ MARK
GOLDWASSER

    Mark
Goldwasser

    Chairman
and Chief Executive Officer

    


    vFINANCE
INVESTMENTS, INC.

    


    


    By: 
/S/ LEONARD J.
SOKOLOW

    Leonard
J. Sokolow,

    Chairman

    


    EQUITYSTATION,
INC.

    


    


    By: 
/S/ WILLIAM
GROENEVELD

    William
Groeneveld,

    President

    


     

    
      
        	
                The
      Investor: 

              	
                FUND.COM
      INC.

              


      

    

     

     

    By: 
/S/ GREGORY
WEBSTER

    Gregory
Webster

    Chief
Executive Officer

     

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

    


    SERIES
C CERTIFICATE OF DESIGNATIONS

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    EXHIBIT
B-1

    


    CLASS
A WARRANT

    


    (for
Series C Preferred Stock)

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    EXHIBIT
B-2

    


    CLASS
A WARRANT

    


    (for
Common Stock)

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    EXHIBIT
C

    


    CLASS
B WARRANT

    


    


    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    EXHIBIT
D

    


    REGISTRATION
RIGHTS AGREEMENT

     

    
 

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    EXHIBIT
E

    


    VOTING
AGREEMENT

     

    
 

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    EXHIBIT
F-1

    


    WAIVER

    


    (Holders
of 10% Convertible Notes)

     

    
 

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    EXHIBIT
F-1

    


    WAIVER

    


    (Holders
of Series A Preferred Stock)

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    


    EXHIBIT
G-1

    


    MARK
GOLDWASSER EMPLOYMENT AGREEMENT

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    


    EXHIBIT
G-2

    


    LEONARD
SOKOLOW EMPLOYMENT AGREEMENT

     

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    


    EXHIBIT
G-3

    


    CHRISTOPHER
DEWEY EMPLOYMENT AGREEMENT

     

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    


    


    EXHIBIT
H

    


    CERTIFICATE
OF AMENDMENT

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    


    EXHIBIT
I

    


    FORM
OF STOCK OPTION PLAN

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    


    EXHIBIT
J-1

    


    COMPANY
COUNSEL LEGAL OPINION

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    


    EXHIBIT
J-2

    


    COMPANY
DELAWARE COUNSEL LEGAL OPINION

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    


    


    EXHIBIT
K


    
      	 
      


    

    INVESTOR
COUNSEL LEGAL OPINION

     

     

     

     

     

    52