Document:

EXHIBIT
      10.1

     

    THIS
      CONVERTIBLE NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE
      NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”) NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED,
      HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH
      RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY
      OR OTHER COUNSEL TO THE HOLDER OF THIS NOTE WHICH OTHER COUNSEL IS SATISFACTORY
      TO THE COMPANY THAT THIS NOTE AND/OR SUCH COMMON STOCK MAY BE PLEDGED, SOLD,
      ASSIGNED, HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES
      LAWS.

     

    NEWGEN
      TECHNOLOGIES, INC.

     

     

    
      	February 15, 2007	
              Charlotte,
                North Carolina

            
	 	 
	 	
              $850,000.00

            

    

     

    10%
      CONVERTIBLE UNSECURED PROMISSORY NOTE

     

    NEWGEN
      TECHNOLOGIES, INC. (the “Company”), for value received, hereby promises to pay
      to the order of Noel M. Corcoran, or his permitted assign (the “Holder”) on May
      14, 2007 (the “Maturity Date”), at the principal offices of the Company, the
      aggregate principal amount of $850,000.00 in such coin or currency of the United
      States of America as at the time of payment shall be legal tender for the
      payment of public and private debts, together with interest on the outstanding
      principal amount hereof accruing at the rate of ten percent (10%) per annum
      from
      the date hereof, payable, at the option of the Company, either (i) monthly
      in
      arrears commencing the first date of March 2007, by the fifth day of the
      successive calendar month, or (ii) on the Maturity Date, subject, in each case,
      to the further terms of this 10% Convertible Unsecured Promissory Note (this
      “Note”). Principal shall be payable on the Maturity Date in like coin or
      currency to the Holder hereof at the office of the Company as hereinafter set
      forth, provided that any payment otherwise due on a Saturday, Sunday or legal
      bank holiday may be paid on the following business day. In the event that for
      any reason whatsoever any interest or other consideration payable with respect
      to this Note shall be deemed to be usurious by a court of competent jurisdiction
      under the laws of the State of New York or the laws of any other state governing
      the repayment hereof, then so much of such interest or other consideration
      as
      shall be deemed to be usurious shall be held by the Holder as security for
      the
      repayment of the principal amount hereof and shall otherwise be
      waived.

     

    This
      Note
      is being issued by the Company to the Holder in order to evidence the working
      capital loans extended to the Company by the Holder as of the date hereof.
      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.     Transfers
      of Note to Comply with the 1933 Act

     

    The
      Holder agrees that this Note may not be sold, transferred, pledged, hypothecated
      or otherwise disposed of except as follows: (1) to a person whom the Note may
      legally be transferred without registration and without delivery of a current
      prospectus under the Securities Act with respect thereto and then only against
      receipt of an agreement of such person to comply with the provisions of this
      Section 1 with respect to any resale or other disposition of the Note; or (2)
      to
      any person upon delivery of a prospectus then meeting the requirements of the
      Securities Act relating to the Note and the offering thereof for such sale
      or
      disposition, and thereafter to all successive assignees.

     

    2.     
Prepayment;
      Conversion

     

    (a)    The
      Company may, without premium or other prepayment penalty, prepay all or a
      portion of the outstanding principal of this Note, and in connection therewith,
      shall provide written notice to the Holder of such prepayment. Following the
      date of the notice of prepayment, the Holder shall have a period of fifteen
      (15)
      calendar days to exercise the conversion rights provided in Section 2(b) hereof.
      After the lapse of such 15 day period, unless the Company shall have failed
      to
      tender to the Holder the amount to be prepaid and accrued interest under this
      Note, the Holder shall have no further rights of conversion with respect to
      the
      principal amount being prepaid. Upon any prepayment of all or part of the
      principal amount of this Note, all accrued, but unpaid, interest shall
      concomitantly be paid to the Holder. 

     

    (b)    At
      any
      time, or from time to time, prior to the repayment of this Note by the Company
      on or before the Maturity Date, the Holder may elect to convert some or all
      of
      the principal and accrued and unpaid interest hereunder into shares (“Conversion
      Shares”) of the Company’s common stock, par value $.001 per share (the “Common
      Stock”) at a per share rate equal to 80%
      of
      the average three (3) day trading price of the Common Stock (on the OTC-BB
      or
      other exchange on which the Common Stock is then trading) during the three
      trading days immediately prior to the date of such election,
      subject
      to adjustment as provided in Section 2A below (the “Conversion Rate”). Any such
      election to convert shall be effected via the surrender of this Note, along
      with
      a completed conversion notice in the form attached hereto indicating the amount
      of principal and accrued interest that the Holder wishes to convert, to the
      Company. The Company shall issue the Conversion Shares to Holder within fifteen
      calendar days of its receipt of such conversion notice. Upon partial conversion
      of this Note, within fifteen calendar days of its receipt of the conversion
      notice, the Company shall re-issue, free of charge to the Holder, a replacement
      note in an amount equal to the remaining principal amount of this Note not
      so
      converted but which shall otherwise contain the identical terms hereof. Any
      such
      replacement note shall be deemed for all purposes hereof to be included in
      a
      reference hereunder to this “Note”. 

     

    2A.    Adjustment
      for
Dividends,
      Reclassifications, etc. 

     

    In
      the
      event that the Company shall, at any time prior to the exercise of conversion
      rights hereunder: (i) declare or pay to the holders of the Common Stock a
      dividend payable in any kind of shares of capital stock of the Company; (ii)
      combine, subdivide or otherwise reclassify its Common Stock into the same or
      a
      different number of shares with or without par value, or into shares of any
      class or classes; (iii) transfer its property as an entirety or substantially
      as
      an entirety to any other company; or (iv) make any distribution of its assets
      to
      holders of its Common Stock as a liquidation or partial liquidation dividend
      or
      by way of return of capital; then, in each case, the Conversion Rate, and the
      number and kind of shares of Common Stock receivable upon conversion of this
      Note, in effect at the time of the record date for such dividend or
      distribution, or of the effective date of such subdivision, combination or
      reclassification, shall be proportionally adjusted so that the Holder upon
      the
      subsequent exercise of conversion rights, shall receive, in addition to or
      in
      substitution for the shares of Common Stock to which he would otherwise be
      entitled upon such exercise, such additional shares of capital stock or scrip
      of
      the Company, such reclassified shares of capital stock of the Company, such
      shares of the securities or property of the Company resulting from such
      transfer, or such assets of the Company, which he would have been entitled
      to
      receive had he exercised these conversion rights prior to the happening of
      any
      of the foregoing events. Such adjustment shall be made successively whenever
      any
      of the foregoing events shall occur.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.     Notices
      to be Provided by Company

     

    The
      Company covenants and agrees that, so long as any principal of, or interest
      on,
      this Note shall remain unpaid, unless the Holder shall otherwise consent in
      writing, it will comply with the following notice requirements:

     

    (a)    Notice
      Regarding Defaults.
      The
      Company will furnish to the Holder as soon as possible, and in any event within
      thirty (30) days after obtaining knowledge of the occurrence of (A) an “Event of
      Default“ (as hereinafter defined in Section 4(a) hereof) or (B) an event which,
      with the giving of notice or the lapse of time or both, would constitute an
      Event of Default, the written statement of the Chief Executive Officer or the
      Chief Financial Officer of the Company, setting forth (x) the details of such
      Event of Default or other event and (y) the action which the Company proposes
      to
      take with respect thereto.

     

    (b)     Notice
      Regarding Dividends, Merger, Etc.
      If, at
      any time while this Note is outstanding, the Company shall pay any dividend
      payable in cash or in Common Stock, shall offer to the holders of its Common
      Stock for subscription or purchase by them any shares of stock of any class
      or
      any other rights, or shall enter into an agreement to merge or consolidate
      with
      another corporation, the Company shall cause notice thereof to be mailed to
      the
      Holder of this Note at his address appearing on the registration books of the
      Company, at least ten (10) days prior to the record date as of which holders
      of
      Common Stock shall participate in such dividend, distribution or subscription
      or
      other rights or at least ten (10) days prior to the effective date of the merger
      or consolidation. Failure to give notice as required by this Section 3(b),
      or
      any defect therein, shall not affect the legality or validity of any dividend,
      distribution or subscription or other right.

     

    4.     Events
      of Default and Remedies

     

    (a)    Any
      one
      or more of the following events which shall have occurred and be continuing
      shall constitute an event of default (“Event of Default“):

     

    (i)     Default
      in
      the payment of interest upon this Note, as and when the same shall become due,
      if
      such
      failure to pay is not cured within fifteen (15) business days after the
      occurrence thereof;
      

     

    (ii)     Default
      in
      the payment of the principal of this Note, as and when the same shall become
      due, if
      such
      failure to pay is not cured within fifteen (15) business days after the
      occurrence thereof;
      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii)     Default
      in
      the payment of any other obligation of the Company in an amount in excess of
      $5,000,000;

     

    (iv)     One
      or more
      final judgments or orders for the payment of money in excess of $5,000,000
      shall
      be rendered against the Company, and either (A) enforcement proceedings shall
      have been commenced by any creditor upon any such judgment or order, or (B)
      there shall be any period of thirty (30) days during which enforcement of any
      such judgment or order shall have not been discharged, stayed or fully
      satisfied.

     

    (v)     The
      Company
      or any of its subsidiaries (A) shall institute any proceeding or voluntary
      case
      seeking to adjudicate it bankrupt or insolvent, or seeking dissolution,
      liquidation, winding up, reorganization, arrangement, adjustment, protection,
      relief or composition of it or its debts under any law relating to bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      any
      order for relief or the appointment of a receiver, trustee, custodian or other
      similar official for such the Company or any subsidiary or for any substantial
      part of its property, or shall consent to the commencement against it of such
      a
      proceeding or case, or shall file an answer in any such case or proceeding
      commenced against it consenting to or acquiescing in the commencement of such
      case or proceeding, or shall consent to or acquiesce in the appointment of
      such
      a receiver, trustee, custodian or similar official; (B) shall be unable to
      pay
      its debts as such debts become due, or shall admit in writing its inability
      to
      apply its debts generally after the application of funds advanced hereunder;
      (C)
      shall make a general assignment for the benefit of creditors; or (D) shall
      take
      any action to authorize or effect any of the actions set forth above in this
      Section 4(a)(v); or

     

    (vi)     Any
      proceeding shall be instituted against the Company seeking to adjudicate it
      a
      bankrupt or insolvent, or seeking dissolution, liquidation, winding up,
      reorganization, arrangement, adjustment, protection, relief of debtors, or
      seeking the entry of an order for relief or the appointment of a receiver,
      trustee, custodian or other similar official for the Company or for any
      substantial part of its property, and either such proceeding shall not have
      been
      dismissed or shall not have been stayed for a period of sixty (60) days or
      any
      of the actions sought in such proceeding (including, without limitation, the
      entry of any order for relief against it or the appointment of a receiver,
      trustee, custodian or other similar official for it or for any substantial
      part
      of its property) shall occur.

     

    (b)    If
      an
      Event of Default described above has occurred, then the Holder may, without
      further notice to the Company, declare the principal amount of this Note at
      the
      time outstanding, together with accrued unpaid interest thereon, and all other
      amounts payable under this Note to be forthwith due and payable, whereupon
      such
      principal, interest and all such amounts shall become and be forthwith due
      and
      payable. During
      the period in which an Event of Default remains uncured, the interest rate
      of
      this Note shall increase by the amount of 3%. 

     

    5.      Restrictions
      on Transfer of Conversion Shares 

     

    The
      Holder hereby acknowledges that the Conversion Shares shall be subject to the
      resale restrictions governing the disposition thereof under Rule 144 under
      the
      Securities Act, and that the stock certificate(s) for the Conversion Shares
      shall bear applicable restrictive legends required under the Securities Act
      and
      state blue sky laws evidencing the Conversion Shares’ status as “restricted
      securities” (as defined under Rule 144 under the Securities Act). The Company’s
      transfer agent shall place stop transfer orders against the stock certificates
      for the Conversion Shares, which shall remain in place until the receipt of
      an
      opinion of counsel as to the Holder’s compliance with Rule 144 under the
      Securities Act with respect to a prospective disposition of the Conversion
      Shares.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.     Miscellaneous

     

    (a)     This
      Note has
      been issued by the Company pursuant to authorization of the Board of Directors
      of the Company.

     

    (b)    Payments
      of principal and interest shall be made as specified above to the registered
      Holder of this Note. No interest shall be due on this Note for such period
      of
      time that may elapse between the Maturity Date of this Note and its presentation
      for payment. 

     

    (c)    The
      Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
      of the Company, whether at law or in equity, and the rights of the Holder are
      limited to those expressed in this Note until such time as the Holder shall
      convert the Note into Conversion Shares, if ever.

     

    (d)    Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Note, and (in the case of loss, theft
      or destruction) of reasonably satisfactory indemnification, and upon surrender
      and cancellation of this Note, if mutilated, the Company shall execute and
      deliver a new Note of like tenor and date. 

     

    (e)    This
      Note
      shall be construed and enforced in accordance with the laws of the State of
      New
      York, without
      giving effect to any choice of law or conflict of law rules or provisions
      (whether of the State of New York or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      York.
      The
      Company and the Holder hereby consent to the jurisdiction of the Courts of
      the
      State of New York and the United States District Court for the Southern District
      of New York in connection with any action concerning the provisions of this
      Note.

     

    (f)     Except
      as
      otherwise expressly provided herein, the provisions of this Note may be amended
      if, and the Company may take any action herein prohibited or omit to perform
      any
      act herein required to be performed by it if, and only if, the Company has
      obtained the written consent of the then registered Holder of this
      Note.

     

    (g)    If
      any
      term or provision of this Note shall be held invalid, illegal or unenforceable,
      the validity of all other terms and provisions hereof shall in no way be
      affected thereby. 

     

    (h)     All
      communications provided hereunder shall be in writing and, if to the Company,
      delivered or mailed by registered or certified mail or facsimile to: NewGen
      Technologies, Inc. c/o Mr. Bruce Wunner, 6000 Fairview Road, 12th
      Floor,
      Charlotte, North Carolina 28210, Facsimile: 704-552-3705 with a copy to Reed
      Smith LLP, 599 Lexington Avenue, New York, New York, 10022, Attention: Gerard
      S.
      DiFiore, Esq., Facsimile (212) 521-5450, or, if to the Holder, delivered
      or mailed by registered or certified mail or facsimile to: Mr. Noel Corcoran,
      +353 (-1) -846 1859 facsimile: +353 (-1) -846 1905 or at
      the
      address shown for the Holder in the registration books maintained by the
      Company. 

     

    (i)     The
      Company may consider and treat the entity in whose name this Note shall be
      registered as the absolute Holder hereof for all purposes whatsoever (whether
      or
      not this Note shall be overdue) and the Company shall not be affected by any
      notice to the contrary. Subject to the limitations stated in Section 1 hereof,
      the registered Holder of this Note shall have the right to transfer this Note
      by
      assignment, and the transferee hereof shall, upon his, her or its registration
      as holder of this Note become vested with all of the powers and rights of the
      Holder hereof. Registration of a new Holder of this Note shall take place upon
      presentation of this Note to the Company at its principal offices, together
      with
      a duly authenticated assignment in which the transferee hereof agrees to be
      bound by the terms hereof. In case of transfer by operation of law, the
      transferee agrees to notify the Company of such transfer and of his, her or
      its
      address and to submit appropriate evidence regarding the transfer (including
      an
      agreement to be bound by the terns hereof) so that this Note may be registered
      in the name of the transferee. This Note is transferable only on the books
      of
      the Company by the Holder hereof, on the surrender hereof, duly endorsed.
      Communications sent to any registered Holder shall be effective as against
      any
      transferee of the Note not registered as the Holder as of the time of the
      sending of the communication.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this 10% Convertible Unsecured
      Promissory Note to be signed and delivered in its name by its Chief Executive
      Officer as of the date first above written.

    
      	 	 	 
	 	NEWGEN
              TECHNOLOGIES, INC. 
	 
 	 
 	 
 
	 	By:  	/s/ S.
              Bruce
              Wunner
	 	
              
S.
              Bruce Wunner
	 	Vice
              Chairman and CEO

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF
      CONVERSION

     

    (To
      be
      executed and delivered by the registered Holder in order to convert all or
      part
      of the interest or principal due under the Note and to be accompanied by the
      surrendered Note)

    

     

    The
      undersigned hereby elects to convert $___________ of the principal and
      $___________ of the interest due on the 10% Convertible Unsecured Promissory
      Note (the “Note”), dated February 15, 2007, in a principal amount of
      $850,000.00,
      issued
      by NEWGEN TECHNOLOGIES, INC. (the “Company”) into shares of Common Stock of the
      Company at a per share Conversion Rate equal to 80% of the average three (3)
      day
      trading price of the Company’s Common Stock (on the OTC-BB or other exchange on
      which the Company’s Common Stock is then trading) during the three trading days
      immediately prior to the date hereof (subject to adjustment as specified in
      the
      Note), subject to the further conditions set forth in the Note, as of the date
      hereof.

     

     

     

    
      	Date
              of Conversion: 	                      
              
	Number
              of Shares To Be Delivered:	          
              
	Signature:
	          
              
	Print
              Name: 	           
              
	Address:THIS
      WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE EXERCISE
      OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
      STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
      PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
      COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
      PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
      REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS
      SOLD
      PURSUANT TO RULE 144 OF THE ACT.

     

    
      	No._______	
              February
                22,
                2007

            

    

             

    NATIONAL
      HOLDINGS CORPORATION

     

    COMMON
      STOCK PURCHASE WARRANT

     

    THIS
      CERTIFIES THAT, for value received, <HOLDER>,
      is
      entitled, upon the terms and subject to the conditions hereinafter set forth,
      at
      such times after the date hereof as are set forth below, to acquire from
      National Holdings Corporation, a Delaware corporation (the “Company”), in whole
      or, from time to time, in part, up to <SHARES>
      fully
      paid and nonassessable shares of Common Stock, $.02 par value, of the Company
      (the “Warrant Shares”) at a purchase price per share (the “Exercise Price”) of
      $1.40 Such number of shares, type of security and Exercise Price are subject
      to
      adjustment as provided herein, and all references to “Warrant Shares” and
“Exercise Price” herein shall be deemed to include any such adjustment or series
      of adjustments. This Warrant is granted by the Company to the Holder pursuant
      to
      that certain Securities Purchase Agreement dated February 22, 2007 by and among
      the Company and certain investors (the “Securities Purchase
      Agreement”).

    

    The
      Warrant Shares shall vest immediately upon the Closing (as defined in the
      Securities Purchase Agreement).

    

    1.   Term.

    

    (a)   Commencement
      of Exercisability.
      Subject
      to the vesting provisions described above and Section 4 below, the Warrant
      is
      exercisable, in whole or in part, at any time and from time to time from the
      date hereof through the Expiration Date (as defined in Section 1(b)
      below).

     

    (b)   Termination
      and Expiration.
      If not
      earlier exercised, the Warrant shall expire on the fifth (5th)
      anniversary of the date hereof (the “Expiration Date”), subject to Section 4
      below.

    

    2.   Method
      of Exercise;
      Payment; Issuance of New Warrant.
      Subject
      to Section 1 hereof, exercise of this Warrant shall be made, in whole or in
      part, by the surrender of this Warrant (with the notice of exercise form
      attached hereto as Exhibit A
      duly
      executed) at the principal office of the Company and by the payment to the
      Company of an amount equal to the Exercise Price multiplied by the number of
      Warrant Shares being purchased, which amount may be paid in cash or by check.
      In
      the event of any exercise of the rights represented by this Warrant,
      certificates for the Warrant Shares so purchased shall be delivered to the
      Holder hereof within a reasonable time and, unless this Warrant has been fully
      exercised or expired, a new Warrant representing that portion of the Warrant
      Shares, if any, with respect to which this Warrant shall not then have been
      exercised, shall also be issued to the Holder within such reasonable
      time.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.   Stock
      Fully Paid; Reservation of Warrant Shares.
      All of
      the Warrant Shares issuable upon the exercise of the rights represented by
      this
      Warrant will, upon issuance and receipt of the Exercise Price therefor, be
      fully
      paid and nonassessable, and free from all taxes, liens and charges with respect
      to the issue thereof. During the period within which the rights represented
      by
      this Warrant may be exercised, the Company shall at all times have authorized
      and reserved for issuance a sufficient number of shares of Common Stock to
      provide for the exercise of the rights represented by this Warrant.

    

    4.   Adjustment
      of Exercise
      Price and Number of Shares of Warrant Shares.
      Subject
      to the provisions of Section 2 hereof, the number and kind of securities
      purchasable upon the exercise of this Warrant and the Exercise Price therefor
      shall be subject to adjustment, from time to time, upon the occurrence of
      certain events, as follows:

    

    (a)   In
      the
      event the Company shall at any time following the date hereof subdivide the
      outstanding shares of Common Stock, or shall issue a stock dividend on its
      outstanding Common Stock, the number of shares of Common Stock issuable upon
      exercise of this Warrant immediately prior to such subdivision or to the
      issuance of such stock dividend shall be proportionately increased, and the
      Exercise Price shall be proportionately decreased; and in the event the Company
      shall at any time following the date hereof combine the outstanding shares
      of
      Common Stock, the number of shares of Common Stock issuable upon exercise of
      this Warrant immediately prior to such combination shall be proportionately
      decreased, and the Exercise Price shall be proportionately increased, effective
      at the close of business on the date of such subdivision, stock dividend or
      combination, as the case may be.

    

    (b)   If
      the
      Company is, following the date hereof, recapitalized through the subdivision
      or
      combination of its outstanding shares of Common Stock into a larger or smaller
      number of shares, the number of shares of Common Stock for which this Warrant
      may be exercised shall be increased or reduced in the same proportion as the
      increase or decrease in the outstanding shares of Common Stock and the then
      applicable Exercise Price shall be adjusted by multiplying by a fraction with
      a
      numerator equal to the number of shares of Common Stock purchasable upon
      exercise hereof immediately prior to such subdivision or combination and the
      denominator of which shall be the number of shares of Common Stock purchasable
      immediately following such subdivision or combination.

    

    (c)   Subject
      to Section 1
      hereof, in the event of any consolidation or merger of the Company with another
      entity in a bona
      fide
      transaction (i.e.,
      not a
      mere recapitalization, reincorporation for the purpose of changing corporate
      domicile, or similar transaction), at any time prior to the Expiration Date,
      the
      Holder shall have the right upon exercise of this Warrant, to receive the same
      kind and number of Warrant Shares and other securities, cash or other property
      as would have been distributed to the Holder had the Holder exercised this
      Warrant immediately prior to such consolidation or merger. Notwithstanding
      the
      foregoing, in the event that the per share consideration price paid in the
      bona
      fide
      transaction is lower than the then effective Exercise Price, this Warrant shall
      expire without value upon consummation of the bona
      fide
      transaction. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.   Fractional
      Shares.
      No
      fractional shares of Common Stock will be issued in connection with any exercise
      hereunder, but in lieu thereof, the Company shall make a cash payment therefor
      upon the basis of the Exercise Price then in effect.

    

    6.   Transfer,
      Assignment or Loss of Warrant and Warrant Shares.

    

    (a)   This
      Warrant and the
      Warrant Shares to be issued or issuable upon exercise of this Warrant, may
      not
      be assigned or transferred except as provided in this Section 6 and in
      accordance with and subject to the provisions of the Securities Act of 1933,
      as
      amended, and the Rules and Regulations promulgated thereunder (said Act and
      such
      Rules and Regulations being hereinafter collectively referred to as the “Act”).
      Upon exercise of this Warrant, the holder hereof shall confirm in writing,
      in
      the form of Exhibit
      B,
      that
      the shares of Common Stock so purchased are being acquired for investment and
      not with a view toward distribution or resale. Any purported transfer
      or assignment made other than in accordance with this Section 6 shall
      be null and void and of no force and effect.

    

    (b)   Any
      assignment permitted hereunder shall be made by surrender of this Warrant to
      the
      Company at its principal office with the Assignment Form attached hereto as
      Exhibit C
      duly
      executed. In such event the Company shall, upon payment by the Holder of any
      issuance or transfer tax incurred or to be incurred by the Company with respect
      to such transfer, execute and deliver a new Warrant in the name of the assignee
      named in such instrument of assignment and this Warrant shall promptly be
      canceled. This Warrant may be divided or combined with other warrants which
      carry the same rights upon presentation thereof at the principal office of
      the
      Company together with a written notice signed by the Holder thereof, specifying
      the names and denominations in which new warrants are to be issued. Upon any
      partial transfer, the Company will sign, issue and deliver to the Holder a
      new
      Warrant with respect to any portion not so transferred.

    

    (c)   Upon
      receipt by the
      Company of evidence satisfactory to it of the loss, theft, destruction or
      mutilation of this Warrant (provided that an affidavit of the Holder shall
      be
      satisfactory for such purpose), and of indemnity satisfactory to it (provided
      that if the Holder is the original Holder of this Warrant, its own
      indemnification agreement shall under all circumstances be satisfactory, and
      no
      bond shall be required), and upon surrender and cancellation of this Warrant,
      if
      mutilated, the Company will execute and deliver a new Warrant of like tenor
      and
      date and any such lost, stolen, or destroyed Warrant shall thereupon become
      void. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)   In
      order
      to ensure compliance with the restrictions referred to herein, the Company
      may
      issue appropriate “stop transfer” instructions to its transfer
      agent.

    

    (e)   The
      Company shall not be required (i) to transfer on its books the Warrant or any
      Warrant Shares that have been sold or otherwise transferred in violation of
      any
      of the provisions of this Warrant or (ii) to treat as owner of such Warrant
      Shares or to accord the right to vote or pay dividends to an purchaser or other
      transferee to whom such Warrant Shares shall have been so
      transferred.

    

    7.   Representations
      and Covenants of the Holder.
      The
      Holder represents that this Warrant and any Warrant Shares issued or issuable
      upon exercise of this Warrant, will be acquired for investment for its own
      account, not as a nominee or agent, and not with a view to the sale or
      distribution of any part thereof, and that it has no present intention of
      selling, granting any participation in or otherwise distributing the same.
      Such
      Holder understands and acknowledges that the offering of this Warrant, and
      any
      issuance of Common Stock on exercise thereof, will not be registered under
      the
      Securities Act on the ground that the sale provided for in this Agreement and
      the issuance of securities hereunder is exempt from registration pursuant to
      Section 4(2) of the Act, and that the Company’s reliance on such exemption
      is predicated on the Holder’s representations set forth herein. Such Holder
      represents that it is experienced in evaluating companies such as the Company,
      is able to fend for itself in investments such as this one, and has such
      knowledge and experience in financial and business matters that it is capable
      of
      evaluating the merits and risks of its prospective investment in the Company.
      

    

    8.   Rights
      of
      Stockholders.
      No
      holder of this Warrant shall be entitled, as a Warrant holder, to vote or
      receive dividends or be deemed the holder of Common Stock or any other
      securities of the Company which may at any time be issuable on the exercise
      hereof for any purpose, nor shall anything contained herein be construed to
      confer upon the holder of this Warrant, as such, any of the rights of a
      stockholder of the Company or any right to vote for the election of directors
      or
      upon any matter submitted to stockholders at any meeting thereof, or to give
      or
      withhold consent to any corporate action (whether upon any recapitalization,
      issuance of stock, reclassification of stock, change of par value or change
      of
      stock to no par value, consolidation, merger, conveyance, or otherwise) or
      to
      receive notice of meetings, or to receive dividends or subscription rights
      or
      otherwise until the Warrant shall have been exercised and the Warrant Shares
      purchasable upon the exercise hereof shall have become deliverable, as provided
      herein.

    

    9.   Registration
      Rights.
      The
      shares of Common Stock obtained upon exercise of this Warrant shall have the
      registration rights set forth in the Registration Rights Agreement dated
      February 22, 2007 and the term “Registrable Securities” as defined in such
      Registration Rights Agreement shall include the Common Stock obtained upon
      exercise of this Warrant.

    

    10.  Notices,
      Etc.
      All
      notices and other communications from the Company to the Holder shall be mailed
      by first class registered or certified mail, postage prepaid, at such address
      as
      may have been furnished to the Company in writing by the Holder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11.   Governing
      Law, Headings.
      This
      Warrant shall be construed and enforced in accordance with and governed by
      the
      laws of the State of New York. The headings in this Warrant are for purposes
      of
      reference only, and shall not limit or otherwise affect any of the terms
      hereof.

     

    
      	“COMPANY”	 	 	 
	 	 	 	 
	NATIONAL HOLDINGS
              CORPORATION  	 	 	 
	 	 	 	 
	 	 	 	 
	By:	 	 	 
	
              
Name:
              Mark Goldwasser 	 	 	
            
	Title: 
Chief
              Executive Officer 	 	 	 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
      A

    

    NOTICE
      OF EXERCISE

    

    TO:   NATIONAL
      HOLDINGS CORPORATION 

    

    (i)   The
      undersigned hereby elects to purchase ___________ shares of Common Stock
      pursuant to the terms of the attached Warrant, and tenders herewith payment
      of
      the purchase price of such Common Stock in full. 

    

    (ii)   Please
      issue a
      certificate or certificates representing said Common Stock in the name of the
      undersigned or in such other name as is specified below:

    

    Name:
      

    

    Address:
      

    

    Social
      Security of Federal I.D. No.:

    

    (iii)   The
      undersigned hereby represents and warrants that the aforesaid shares of Common
      Stock are being acquired for the account of the undersigned for investment
      and
      not with a view to, or, for resale in connection with the distribution thereof,
      and that the undersigned has no present intention of distributing or reselling
      such shares.

    

    By:      

    

    Name:      

    

    Title:      

    

    Date:      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      B

    

    INVESTMENT
      REPRESENTATION STATEMENT

     

    
      
        	PURCHASER:	 
	 	 
	COMPANY: 	NATIONAL HOLDINGS CORPORATION
	 	 
	SECURITY: 	COMMON STOCK
	 	 
	AMOUNT:	 
	 	 
	DATE:	 

      

    

    

    In
      connection with the purchase of the above-listed securities (the “Securities”),
      I, the Purchaser, represent to the Company the following:

    

    (a)   I
      am
      aware of the Company’s business affairs and financial condition, and have
      acquired sufficient information about the Company to reach an informed and
      knowledgeable decision to acquire the Securities. I am purchasing these
      Securities for my own account for investment purposes only and not with a view
      to, or for the resale in connection with, any “distribution” thereof for
      purposes of the Securities Act of 1933 (the “Securities Act”).

    

    (b)   I
      understand that the Securities have not been registered under the Securities
      Act
      in reliance upon a specific exemption therefrom, which exemption depends upon,
      among other things, the bona fide nature of my investment intent as expressed
      herein. In this connection, I understand that, in the view of the Securities
      and
      Exchange Commission (the “SEC”), the statutory basis for such exemption may be
      unavailable if my representation was predicated solely upon a present intention
      to hold these Securities for the minimum capital gains period specified under
      tax statutes, for a deferred sale, for or until an increase or decrease in
      the
      market price of the Securities, or for a period of one year or any other fixed
      period in the future.

    

    (c)   I
      further
      understand that the Securities must be held for at least one (1) year under
      Rule
      144 promulgated under the Securities Act, unless subsequently registered under
      the Securities Act or unless an exemption from registration is otherwise
      available. Moreover, I understand that the Company is under no obligation to
      register the Securities except as set forth in the Registration Rights
      Agreement. In addition, I understand that the certificate evidencing the
      Securities will be imprinted with a legend which prohibits the transfer of
      the
      Securities unless they are registered or such registration is not required
      in
      the opinion of counsel for the Company.

    

    (d)   I
      am
      aware of the provisions of Rule 144, promulgated under the Securities Act,
      which, in substance, permits limited public resale of “restricted securities”
acquired, directly or indirectly, from the issuer thereof (or from an affiliate
      of such issuer), in a non-public offering subject to the satisfaction of certain
      conditions.

    

    (e)   I
      am aware that the
      Securities involve a high degree of risk and that I may suffer a total loss
      of
      my investment. I have been provided with the Company’s periodic reports filed
      with the Securities and Exchange Commission under the Securities Exchange Act
      of
      1934, as amended (the “34 Act Filings”), including the Company’s most recently
      filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Proxy
      Statement on Schedule 14A . I have read the information in such reports,
      including the information under the caption “Risk Factors” contained in the
      Company’s 34 Act Reports. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f)   I
      further
      understand that in the event all of the requirements of Rule 144 are not
      satisfied, registration under the Securities Act, compliance with Regulation
      A,
      or some other registration exemption will be required; and that, notwithstanding
      the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed
      its
      opinion that persons proposing to sell private placement securities other than
      in a registered offering and otherwise than pursuant to Rule 144 will have
      a
      substantial burden of proof in establishing that an exemption from registration
      is available for such offers or sales, and that such persons and their
      respective brokers who participate in such transactions do so at their own
      risk.

    

     

    _______________________________

    Name
      of Purchaser

    

    _______________________________

    Signature
      of Authorized Signatory

    

    _______________________________

    Print
      Name and Title

    

    _______________________________

    Date

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