Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
November
7, 2007
(Date
of
earliest event reported)
vFINANCE,
INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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1-11454-03
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58-1974423
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(State
or Other Jurisdiction
of Incorporation)
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(Commission
File No.)
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(IRS
Employer
Identification
No.)
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3010
North Military Trail, Suite 300
Boca
Raton, Florida 33431
(Address
of Principal Executive Offices)
(561)
981-1000
(Registrant's
telephone number, including area code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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| x |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01 Entry
Into a Material Definitive Agreement.
Merger
Agreement
On
November 7, 2007, National Holdings Corporation (“National”), vFin Acquisition
Corporation (“Merger
Sub”), a wholly-owned subsidiary of National, and vFinance, Inc. (“vFin”)
entered into an Agreement and Plan of Merger (the “Merger Agreement”). The
following description of the Merger Agreement does not purport to be a complete
description and is qualified in its entirety by reference to the full text
of
the Merger Agreement, which is attached hereto as Exhibit 2.1 and is
incorporated herein by reference.
Under
the
terms and subject to the conditions set forth in the Merger Agreement, which
has
been unanimously approved by the special committees of the boards of directors
of National and vFin and the boards of directors of National, Merger Sub and
vFin, Merger Sub will be merged with and into vFin (the “Merger”), the separate
corporate existence of Merger Sub will cease and vFin will continue as a
surviving corporation of the Merger and as a wholly-owned subsidiary of
National. The Merger is intended to qualify as a tax-free reorganization under
the Internal Revenue Code of 1986, as amended, and to be tax-free to National
and to vFin’s stockholders.
Pursuant
to the Merger Agreement, upon the closing of the Merger (the “Effective
Date”), each
share of common stock of vFin outstanding immediately prior to the closing
of
the Merger (other than shares held by National or vFin or any stockholders
of
vFin who properly exercised dissenters’ rights under Delaware law) will
automatically be converted into the right to receive 0.14 shares of National
common stock, plus any cash in lieu of fractional shares of National common
stock.
Each
option to purchase shares of vFin common stock outstanding upon the Effective
Date will be converted into options to acquire the number of shares of National
common stock determined by multiplying (i) the number of vFin shares of common
stock underlying each outstanding vFin stock option immediately prior to the
effective time of the Merger by (ii) 0.14, at a price per share of National
common stock equal to (i) the exercise price per share of each stock option
otherwise purchasable pursuant to the vFin stock option divided by (ii) 0.14.
Each warrant to purchase shares of vFin common stock outstanding on the Effective
Date will be exercisable to purchase the number of shares of National common
stock determined by multiplying (i) the number of vFin shares of common stock
underlying each outstanding warrant by (ii) 0.14, at a price per share of National
common stock equal to (i) to aggregate exercise price of such outstanding warrant
to purchase vFin common stock divided by (ii) the number of shares of National
common stock for which such warrant is exercisable, as determined above.
Completion
of the Merger is subject to various customary conditions, including, among
others, (i) requisite approvals of vFin stockholders, (ii) completion by
National of a private placement of equity securities resulting in gross proceeds
of at least $3 million, (iii) effectiveness of the registration statement for
the National securities to be issued in the Merger, (iv) absence of any suit,
proceeding or investigation challenging or seeking to restrain or prohibit
the
Merger and (v) and FINRA and any other applicable regulatory approvals.
The
Merger Agreement contains a non-solicitation or “no-shop” provision restricting
each of National and vFin from soliciting alternative acquisition proposals
from
third parties and from providing information to and engaging in discussions
with
third parties regarding alternative acquisition proposals. The no-shop provision
is subject to a customary “fiduciary-out” provision, which allows each National
and vFin under certain circumstances to provide information to and participate
in discussions with third parties with respect to bona fide written unsolicited
alternative acquisition proposals and under certain circumstances, coupled
with
the payment of a termination fee of $1.5 million, to terminate the Merger
Agreement.
On
the
Effective Date, National’s board of directors will consist of Mark Goldwasser
(Chairman of the Board), Leonard J. Sokolow (Vice Chairman of the Board),
Christopher Dewey (Vice Chairman of the Board), Charles Modica, Jorge Ortega,
up
to three designees of National and up to one designee of vFin. Messrs. Modica
and Ortega and the designees will be independent directors. The designees must
be reasonably acceptable to the boards of directors of National and vFin.
The
Merger Agreement, which has been included to provide investors with information
regarding its terms, contains representations and warranties of each of National
and vFin. The assertions embodied in those representations and warranties were
made for purposes of the Merger Agreement and are subject to qualifications
and
limitations agreed by the respective parties in connection with negotiating
the
terms of the Merger Agreement. In addition, certain representations and
warranties were made as of a specific date, may be subject to a contractual
standard of materiality different from what might be viewed as material to
stockholders, or may have been used for purposes of allocating risk between
the
respective parties rather than establishing matters as facts. Investors should
read the Merger Agreement together with the other information concerning
National that National publicly files and reports on statements with the
Securities and Exchange Commission.
Voting
Agreements
In
connection with the Merger Agreement, National and Merger Sub have entered
into
a voting agreement (the “Stockholder Voting Agreement”) with Leonard J. Sokolow
and Dennis De Marchena, who own approximately 10.7% and 9.9%, respectively,
of
vFin’s outstanding shares of common stock as of November 7, 2007. Pursuant to
the Stockholder Voting Agreement, Mr. Sokolow has agreed to vote all of his
shares and Mr. De Marchena has agreed to vote 2,000,000 of his shares in favor
of the Merger and against any transaction or other action that would interfere
with the Merger.
Pursuant
to the Merger Agreement, Mark Goldwasser, Chairman of the board of directors
of
National, Christopher Dewey, Vice Chairman of the board of directors of
National, and Leonard J. Sokolow, Chief Executive Officer and Chairman of the
board of directors of vFin, will enter into an agreement (the “Director Voting
Agreement”) on the Effective Date to vote their shares of National for the
election of each other and up to three designees
of Mr. Goldwaser and up to three designees of Mr. Sokolow
until the earlier to occur of: (i)
National’s merger, consolidation or reorganization whereby the holders of
National’s voting stock own less than 50% of the voting power of National after
such transaction, (ii) by mutual consent of the parties thereto, (iii) the
date
that Messrs. Goldwasser, Sokolow and Dewey own in the aggregate less than one
percent of the outstanding voting securities of National, (iv) upon the fifth
anniversary of the Director Voting Agreement or (v) upon listing of National’s
common stock on AMEX, the NASDAQ Capital Market or the NASDAQ Global Market.
The
descriptions of the Stockholder Voting Agreement and the Director Voting
Agreement do not purport to be complete and are qualified in their entirety
by
reference to the full text of such agreements. The Stockholder Voting Agreement,
which is attached hereto as Exhibit 99.1, and the Director Voting Agreement,
which is included within Exhibit 2.1 hereto, are incorporated herein by
reference.
Sokolow
Employment Termination Agreement to
be Entered into on the Effective Date
On
the
Effective Date, Mr. Sokolow’s present employment as Chairman and Chief Executive
Officer of vFin and his present employment agreement with vFin dated November
16, 2004, as amended, will be terminated and the principal office of vFin will
be relocated to New York City, New York. Accordingly, pursuant to the terms
of
Mr. Sokolow’s present employment agreement with vFin dated November 16, 2004, as
amended, Mr. Sokolow is entitled to a lump sum cash payment of $1,150,000 as
of
the Effective Date. On the Effective Date, Mr. Sokolow and vFin will enter
into
an employment termination agreement (“Termination Agreement”). The following
description of the Termination Agreement is qualified in its entirety by
reference to the full text of the Termination Agreement, which is included
within Exhibit 2.1 heretoand is incorporated herein by reference.
Pursuant
to the Termination Agreement, Mr. Sokolow’s employment as Chairman and Chief
Executive Officer of vFin and his employment agreement with vFin will terminate.
Notwithstanding the fact that his stock options to purchase shares of vFin
common stock that have not vested as of the Effective Date would have vested
pursuant to his employment agreement with vFin, Mr. Sokolow has agreed to waive
such accelerated vesting. He will receive a lump sum cash payment of $1,150,000
as required under the terms of his employment agreement with vFin. However,
if:
(i) Mr. Sokolow’s employment is terminated by National with cause or (ii) Mr.
Sokolow voluntarily resigns his employment with National, all stock options Mr.
Sokolow received in exchange for his vFin stock options pursuant to the terms
of
the Merger Agreement will become 100% vested and will remain exercisable by
Mr.
Sokolow or his beneficiaries for a period of nine months from the date of such
event; provided, however, such period of nine months will not exceed the earlier
of the latest date upon which such options could have expired by the original
terms under the circumstances or the tenth anniversary of the original date
of
the grant of the options.
Pursuant
to the terms of the Termination Agreement, if any payments made to Mr. Sokolow,
including the acceleration of the vesting of his National stock options, will
be
subject to the tax imposed by Section 4999 of the Internal Revenue Code of
1986,
as amended, vFin has agreed to pay Mr. Sokolow an additional amount such that
the net amount retained by him, after deduction of any tax on such payment,
will
equal the payments received by Mr. Sokolow under the Termination Agreement.
Employment
Agreements to be Entered into on the Effective Date
On
the
Effective Date, Mark Goldwasser and Leonard J. Sokolow will each enter into
substantially identical five-year employment agreements with National, pursuant
to which Mr. Goldwasser will be employed by National as Chairman and Chief
Executive Officer and Mr. Sokolow will be employed by National as Vice Chairman
and President. Under the terms of the employment agreements, Messrs. Goldwasser
and Sokolow will each receive an annual base salary of $450,000, which will
increase 5% per year, and a non-accountable automobile expense allowance of
$1,000 per month. In addition, each of them will be entitled to receive on
a
fiscal year basis a cash bonus determined in the discretion of the Compensation
Committee of the board of directors of National of not less than: (i) $225,000,
(ii) 5% of National’s fiscal year consolidated net income in excess of $4.5
million, up to 100% of the difference between their then current base salaries
and $225,000 and (iii) such additional bonuses as the board of directors of
National may determine based upon the Board’s assessment of their performance in
the following areas: revenue growth of National, new business development,
investor relations, communications with the board of directors, communication
and collaboration with the other members of the Executive Committee of the
board
of directors and special projects as assigned by the board of directors.
Each employment
agreement terminates upon the earliest to occur of: (i) the death of the employee;
(ii) a termination by National by reason of the disability of the employee;
(iii) a termination by National with or without cause; (iv) a termination by
the employee with or without good reason; (v) upon a “Change
in Control”
(as defined in the employment agreements); or (vi) the non-renewal of the agreement.
Upon the termination due to the death or disability of the employee, by National
without cause, by the employee with good reason, (upon a “Change
of Control”)
or upon the expiration of the employment agreement if National or the employee
refuses to extend the term of the employment agreement, the employee will be
entitled to: (i) any accrued but unpaid salary or bonus or unreimbursed expenses;
(ii) any bonus payable for the portion of the fiscal year during which the termination
occurs; (iii) 100% of the employee’s base salary (150% in the event of
termination by National without cause or by the employee with good reason);
(iv) the continuation of health benefits until the earlier of (a) 18 months
after termination and (b) the date the employee accepts other employment; and
(v) all unvested options granted pursuant to the employment agreements will
become immediately vested and be exercisable for a period of nine months.
Pursuant
to each employment agreement, on the Effective Date, each of Messrs. Goldwasser
and Sokolow will be granted non-qualified stock options to purchase the greater
of (i) 1,000,000 shares of National’s common stock or (ii) 5% of National’s
issued and outstanding shares of common stock immediately after consummation
of the Merger at a purchase price equal to the average of the 10-day closing
market price of National’s common stock prior to the Effective Date. The
options vest and become exercisable as to 25% of the shares underlying the options
every 12 months. The options expire seven years from the effective date of the
Merger.
In
accordance with the terms of the Merger Agreement, on the Effective Date, Alan
B. Levin, the Chief Financial Officer of vFin, will enter into a one-year
employment agreement with National, pursuant to which he will be employed as
the
Chief Financial Officer. Under the terms of the agreement, Mr. Levin will
receive an annual base salary of $180,000. In addition, he will be entitled
to
receive an annual cash bonus determined in the discretion of the Compensation
Committee of the board of directors of National based upon its assessment
by the President of National of Mr. Levin’s performance in the following areas:
revenue, net income and revenue growth of National, new business development,
investor relations, communications with the board of directors, communication
and collaboration with the other members of the Executive Committee of the
board
of directors, and other factors including, without limitation, special projects
as assigned by the Chief Executive Officer, Executive Committee or the board
of
directors of National.
The
description of the employment agreements does not purport to be complete and
is
qualified in its entirety by reference to the full text of such agreements,
which are included within Exhibit 2.1 hereto and are incorporated herein by
reference.
Item
9.01 Financial
Statements and Exhibits.
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Exhibit
No.
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Description
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2.1
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Agreement
and Plan of Merger dated November 7, 2007 by and among vFinance,
Inc.,
National Holdings Corporation and vFin Acquisition Corporation.
*
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99.1
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Voting
Agreement dated November 7, 2007, by and among National Holdings
Corporation, vFin Acquisition Corporation, Leonard J. Sokolow and
Dennis
De Marchena.
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99.2
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Press
Release dated November 7,
2007.
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*
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
Exhibit F to the Merger Agreement has been omitted from Exhibit 2.1 and is
filed
as Exhibit 99.1 to this Form 8-K. The Company hereby undertakes to furnish
copies of any of the omitted schedules upon request by the Securities and
Exchange Commission.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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vFINANCE, INC. |
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By: |
/s/ Leonard J. Sokolow |
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Name:
Leonard J. Sokolow
Title:
Chief
Executive Officer
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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2.1
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Agreement
and Plan of Merger dated November 7, 2007 by and among vFinance,
Inc.,
National Holdings Corporation, and vFin Acquisition
Corporation.
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99.1
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Voting
Agreement dated November 7, 2007, by and among National Holdings Corporation,
vFin Acquisition Corporation, Leonard J. Sokolow and Dennis De Marchena.
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99.2
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Press
Release dated November 7, 2007.
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