EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this “Agreement”), is effective
as of December 31, 2018 (the “Effective Date”), by and between National Holdings
Corporation, a Delaware corporation (the “Company”), and John DeSena (the
“Executive”).
WITNESSETH:
WHEREAS, the Company desires to continue to employ the Executive as Chief
Operating Officer, and the Executive desires to continue to serve the Company in
such capacity, upon the terms and subject to the conditions contained in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1.Employment.
a.    Services. The Executive will continue to be employed by the Company and
shall serve as the Company’s Chief Operating Officer. The Executive shall report
exclusively to the Chief Executive Officer of the Company (the “CEO”) and shall
perform such duties as are consistent with his position and as directed by the
CEO. The Executive agrees to perform his assigned duties faithfully and to
devote such of his time, attention and energies to the business of the Company
as he deems necessary to carry out his role.
b.    Acceptance. The Executive hereby accepts continued employment with the
Company pursuant to the terms and conditions set forth in this Agreement.
2.    Term. The term of this Agreement, and the Executive’s employment pursuant
to the terms hereof, shall commence on the Effective Date and continue through
the date that is five (5) years from the Effective Date, unless earlier
terminated pursuant to Section 8 below (such period, the “Term”).
3.    Limited Extent of Service.
a.    Business Activities. Subject to Section 5, the Executive shall not be
restricted from pursuing, or being actively engaged in, any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage, and whether or not such business activity is
currently existing or is hereafter conducted.
b.    Location. The duties to be performed by the Executive hereunder shall be
performed primarily at the office of the Company in or around New York City,
subject to reasonable travel requirements on behalf of the Company, or such
other place as the CEO may reasonably designate. Notwithstanding the foregoing,
the Executive’s primary place of business may not be relocated to another city
without his written consent.
4.    Compensation. As full compensation for the performance by the Executive of
his duties under this Agreement, the Executive shall receive the following:
a.    Base Salary. During the Term, the Company shall pay the Executive a salary
(the “Base Salary”) at the rate of $250,000 per year. Payment shall be made
semi-monthly in accordance with the Company’s normal payroll practices. The CEO
shall review the Executive’s Base Salary annually and may increase (but not
decrease) the Executive’s Base Salary from year to year. Such adjusted salary
then shall become the Executive’s Base Salary for purposes of this Agreement.
The annual review of the Executive’s Base Salary by the CEO will consider, among
other things, the Executive’s own performance, the Company’s performance, and
market practice.
b.    Annual Bonus. During the Term, the Executive shall be eligible to receive,
following the end of each fiscal year, an annual cash and restricted stock bonus
pursuant to the terms and conditions of the Company’s 2017 Fiscal Year Bonus
Plan, as it may be amended or replaced from time to time in the sole discretion
of the CEO (the “Bonus Plan”). The Executive’s target cash bonus each fiscal
year shall be such amount established by the CEO, and communicated to the
Executive, on or around the beginning of each fiscal year (the “Target Bonus”)
and for the fiscal year that began October 1, 2018 will be $150,000. This cash
target bonus is the baseline bonus used to establish the actual cash bonus paid
based on the success of the Company’s annual goals and objectives, as outlined
in the Bonus Plan. The restricted stock component and calculation is also
outlined in the Company’s Bonus Plan.
c.    Withholding. The Company shall be entitled to withhold all applicable
federal, state and local taxes and social security and such other amounts as may
be required by law from all amounts payable to the Executive under this Section
4.
d.    Continued Equity Vesting. The Executive shall continue to vest in all
equity (including restricted stock and stock option) grants that were previously
awarded to him, pursuant to the terms, conditions, and vesting requirements set
forth in the applicable equity award documents governing the grants, but subject
to the equity acceleration permitted by Section 9 below.
e.    Additional Stock-Based Awards. During the Term, the Executive may be
eligible for additional stock-based awards under the long-term incentive plan of
the Company, as determined by the Board of Directors of the Company (the
“Board”), in addition to the stock awards under the Bonus Plan. Nothing herein
requires the Board to make additional grants of restricted stock or other awards
in any year.
f.    Expenses. During the Term, the Company shall reimburse the Executive for
all reasonable expenses incurred by the Executive in furtherance of the business
and affairs of the Company, including but not limited to travel and
entertainment expenses. The Executive will timely supply the Company with
appropriate vouchers or other proof of the Executive’s expenditures and
otherwise will comply with any expense reimbursement policy as may from time to
time be adopted by the Company. Notwithstanding anything in this Agreement to
the contrary, if the Executive is entitled to be paid or reimbursed for any
taxable expenses under this Agreement, and such payments or reimbursements are
includible in the Executive’s federal gross taxable income, then: (i) the amount
of any expense reimbursement or benefit provided during the Executive’s taxable
year shall not affect any expenses eligible for reimbursement or benefit to be
provided in any other taxable year; (ii) the reimbursement of any eligible
expense shall be made no later than the last day of the Executive’s taxable year
that immediately follows the taxable year in which the expense was incurred; and
(iii) the right to any such expense reimbursement or benefit shall not be
subject to liquidation or exchange for another benefit.
g.    Other Benefits. During the Term, the Executive shall be entitled to all
rights and benefits for which he shall be eligible under any benefit or other
plans (including, without limitation, 401(k), dental, medical, medical
reimbursement and hospital plans, pension plans, employee stock purchase plans,
profit sharing plans, bonus plans, prescription drug reimbursement plans, short
and long term disability plans, life insurance and other so-called “fringe”
benefits) as the Company shall make available to its senior executives from time
to time. The Executive shall also receive up to $1,000 per month as an
automobile allowance and up to $300 per month for reimbursement of his gym
membership expenses, each payable on the last pay date of each month after, for
the gym membership, receipt of substantiation.
h.    Vacation. During the Term, the Executive shall be entitled to a vacation
of 20 days per annum, in addition to holidays observed by the Company. During
the Term, the Executive shall not be entitled to carry forward vacation days
from one calendar year of employment to the next calendar year of employment,
except as may be required by applicable law or provided in a Company policy
applicable to the Executive.
5.    Non-Disclosure of Confidential Information and Trade Secrets; Return of
Property; Invention Assignment; Non-Competition; Non-Solicitation.
a.    The Executive understands and agrees that the Confidential Information (as
defined below) and Trade Secrets (as defined below) constitute valuable assets
of the Company and may not be converted to his own use. The Executive hereby
agrees that throughout the Term and at all times after his separation from
employment, for so long as the information at issue remains either Confidential
Information or a Trade Secret and except as otherwise permitted by Section 5(d)
below, the Executive will not, directly or indirectly, reveal, divulge, or
disclose to any person or entity not expressly authorized by the Company any
Confidential Information or Trade Secrets and will not, directly or indirectly,
use or make use of any Confidential Information or Trade Secrets in connection
with any business activity other than that of the Company.
Anything herein to the contrary notwithstanding, the Executive shall not be
restricted from disclosing or using Confidential Information or Trade Secrets
that are required to be disclosed by law, court order or other legal process;
provided, however, that in the event disclosure is required by law, and except
as otherwise permitted by Section 5(d) below, the Executive shall provide the
Company with prompt written notice of such requirement in time to permit the
Company to seek an appropriate protective order or other similar protection
prior to any such disclosure by the Executive.
The parties acknowledge and agree that this Agreement is not intended to, and
will not, alter or diminish either the Company’s rights or the Executive’s
obligations under any state or federal statutory or common law, rule or
regulation regarding confidential information, trade secrets and unfair trade
practices and all potential remedies under such laws remain available.
For purposes of this Agreement, “Confidential Information” means all data and
information relating to the business of the Company that is disclosed to the
Executive or of which the Executive becomes aware as a consequence of his
employment and that has value to the Company and is not generally known to those
not employed or otherwise engaged by the Company. “Confidential Information”
shall include, but is not limited to, financial plans and data concerning
Company; management planning information; Company’s business plans or strategies
(including, without limitation, any merger or acquisition plans); “know how;”
Company’s operational methods; market studies; marketing plans or strategies;
product development techniques or plans; client and prospective client lists;
details of client and vendor contracts; current and anticipated client
requirements; past, current and planned research and development; business
acquisition plans; employee compensation and other personnel information; and
new personnel acquisition plans. “Confidential Information” shall not include
data or information (a) which has been voluntarily disclosed to the public by
the Company, except where such public disclosure was made without authorization
from the Company; (b) which has been independently developed and disclosed by
Persons other than the Company or its principals or representatives; or (c)
which has otherwise entered the public domain through lawful means. This
definition shall not limit any definition of “confidential information” or any
equivalent term under applicable state or federal law.
For purposes of this Agreement, “Trade Secret” means information, without regard
to form, relating to the Company, its activities, businesses or clients,
including, but not limited to, technical or nontechnical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a drawing, a
process, financial data, financial plans, product plans, or a list of actual or
potential clients which is not commonly known by or available to the public via
lawful means and which: (A) derives economic value, actual or potential, from
not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use; and (B) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. Trade Secret shall include, but not be
limited to, client lists, client billing and pricing information, technical
information regarding the Company’s intellectual property, product development
information, patent information and all other information permitted to be
covered under the Uniform Trade Secrets Act. This definition shall not limit any
definition of “trade secret” or any equivalent term under applicable state or
federal law.
b.    The Executive agrees that he will not retain or destroy, and will
immediately return to the Company on or prior to his last day of employment, or
at any other time the Company requests such return, any and all property of the
Company that is in his possession or subject to his control, including, but not
limited to, keys, credit and identification cards, equipment, client files and
information, and all Confidential Information and Trade Secrets. The Executive
will not make, distribute or retain copies of any such information or property.
The Executive agrees that he will reimburse the Company for all of its costs,
including reasonable attorneys’ fees, of recovering the above materials and
otherwise enforcing compliance with this provision if the Executive does not
return the materials to the Company on or prior to his separation from
employment or at any other time the materials are requested by Company, or if
the Executive otherwise fails to comply with this provision.
c.    The Executive agrees that he will promptly and fully disclose in writing
to the Company inventions, designs, concepts, discoveries, developments,
improvements, and innovations, whether or not they merit patent, trademark or
copyright protection, conceived of, designed or reduced to practice by the
Executive, either solely or in concert with others, at any time during his
employment, which (a) relate in any manner, whether at the time of conception,
design or reduction to practice, to the Company’s business or its actual or
demonstrably anticipated research or development; (b) result from any work
performed by the Executive on behalf of the Company; or (c) result from the use
of the Company’s equipment, facilities, Confidential Information or Trade
Secrets (collectively referred to as “Inventions”).
The Executive acknowledges and agrees that he will keep and maintain adequate
written records of all such Inventions at all stages thereof in the form of
notes, sketches, drawings, photographs, printouts, and/or reports relating
thereto. These records are and shall remain the property of, and be available
to, the Company or its designee(s) at all times. The Executive further
acknowledges that all such Inventions shall be the exclusive property of the
Company. As such, the Executive hereby assigns his entire right, title, and
interest in and to all such Inventions to the Company or its designee(s). The
Executive will, at the Company’s request and expense, execute specific
transfers, assignments, documents or other instruments and take such further
action as may be considered necessary by the Company at any time during or
subsequent to the Executive’s employment to obtain and defend any intellectual
property rights and vest complete title and ownership to such Inventions to the
Company or its designee(s).
d.    Nothing in this Agreement or elsewhere prohibits the Executive from
communicating with government agencies about possible violations of federal,
state, or local laws, rules or regulations, or otherwise providing information
to government agencies, filing a complaint with government agencies, or
participating in government agency investigations or proceedings. The Executive
is not required to notify the Company of any such communications; provided,
however, that nothing herein authorizes the disclosure of information the
Executive obtained through a communication that was subject to the
attorney-client privilege. Further, notwithstanding the Executive’s
confidentiality and nondisclosure obligations, the Executive is hereby advised
as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be
held criminally or civilly liable under any Federal or State trade secret law
for the disclosure of a trade secret that (A) is made (i) in confidence to a
Federal, State, or local government official, either directly or indirectly, or
to an attorney; and (ii) solely for the purpose of reporting or investigating a
suspected violation of law; or (B) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal. An
individual who files a lawsuit for retaliation by an employer for reporting a
suspected violation of law may disclose the trade secret to the attorney of the
individual and use the trade secret information in the court proceeding, if the
individual (A) files any document containing the trade secret under seal; and
(B) does not disclose the trade secret, except pursuant to court order.”
e.    The Executive acknowledges and agrees that his services are special,
unique and extraordinary and that in the course of performing such services the
Executive will be provided with and have access to and knowledge of Confidential
Information and Trade Secrets that would be extremely valuable to competitors of
the Company and its subsidiaries. The Executive therefore agrees that, during
the Term and for a period of three (3) months thereafter, the Executive will
not, in the geographical area where the Company does business, directly or
indirectly, whether as an owner, partner, officer, director, employee,
consultant, investor, lender or otherwise (except as the passive holder of not
more than 1% of the outstanding stock of a publicly-held company), engage or
assist others in engaging in any business or enterprise that is competitive with
the business of the Company or its subsidiaries.
f.    During the Term and for a period of nine (9) months thereafter, the
Executive will not, directly or indirectly, either alone or in association with
others, (i) solicit, induce or attempt to induce, any employee or independent
contractor (including any financial advisor) of the Company or any of its
subsidiaries to terminate his or her employment or other engagement with the
Company or any of its subsidiaries or (ii) hire or recruit, or attempt to hire
or recruit, or engage or attempt to engage as an independent contractor, any
person who was employed or otherwise engaged by the Company or any of its
subsidiaries at any time during the term of the Executive’s employment with the
Company; provided, that this clause (ii) shall not apply to the recruitment or
hiring or other engagement of any individual whose employment or other
engagement with the Company or any of its subsidiaries ended at least six (6)
months before the recruitment, hiring, or other engagement.
g.    The provisions of this Section 5 shall survive any termination of this
Agreement.
6.    Section 5 Remedies.
a.    In the event that the Executive breaches any provisions of Section 5 or
there is a threatened breach, then, in addition to any other rights which the
Company may have, the Company shall be entitled, without the posting of a bond
or other security, to seek injunctive relief to enforce the restrictions
contained in such Section. The Company and the Executive agree that any such
action for injunctive relief shall be heard in any of the courts set forth in
Section 12(c) below, and each of the parties hereto agrees to accept service of
process by registered or certified mail and to otherwise consent to the
jurisdiction of such courts. If the Executive violates any of the provisions of
Sections 5(e) or 5(f), the Executive shall continue to be bound by the
restrictions set forth in such provision until a period equal to the period of
restriction has expired without any violation.
b.    Each of the rights and remedies enumerated in Section 6(a) shall be
independent of the others and shall be in addition to and not in lieu of any
other rights and remedies available to the Company at law or in equity. If any
of the covenants contained in Section 5, or any part of any of them, is
hereafter construed or adjudicated to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions. If any of the covenants contained in Section 5 is held to be invalid
or unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court or arbitrator making such
determination shall have the power to reduce the duration and/or area of such
provision and in its reduced form such provision shall then be enforceable.
c.    In the event that an actual proceeding is brought in equity to enforce the
provisions of Section 5, the Executive shall not urge as a defense that there is
an adequate remedy at law nor shall the Company be prevented from seeking any
other remedies which may be available.
d.    The provisions of this Section 6 shall survive any termination of this
Agreement.
7.    Representations and Warranties. The Executive hereby represents and
warrants to the Company as follows:
a.    Neither the execution or delivery of this Agreement nor the performance by
the Executive of his duties and other obligations hereunder violate or will
violate any statute, law, determination or award, or conflict with or constitute
a default or breach of any covenant or obligation under (whether immediately,
upon the giving of notice or lapse of time or both) any prior employment
agreement, contract, or other instrument to which the Executive is a party or by
which he is bound.
b.    The Executive has the full right, power and legal capacity to enter and
deliver this Agreement and to perform his duties and other obligations
hereunder. This Agreement constitutes the legal, valid and binding obligation of
the Executive enforceable against him in accordance with its terms. No approvals
or consents of any persons or entities are required for the Executive to execute
and deliver this Agreement or perform his duties and other obligations
hereunder.
8.    Termination. This Agreement and the Executive’s employment hereunder shall
be terminated upon the Executive’s death and may be terminated as follows:
a.    The Executive’s employment hereunder may be terminated by the Board for
Cause. Any of the following actions by the Executive shall constitute “Cause”:
(i)    the Executive’s material breach of the covenants contained in Section 5
hereof, or material breach of any other provision of this Agreement, provided
that the Executive was given prior written notice of any material breach (in
which event notice must be given with sufficient details so that the Executive
could reasonably be expected to identify it as a material breach) and provided
further that, in such event, the Executive was granted not less than thirty (30)
days to correct any such breach, unless the Company reasonably expects that
irreparable injury would occur if the Executive was granted a thirty (30) day
cure period in which event the Company may give the Executive any such shorter
cure period as it deems reasonable under the circumstances, but not less than
ten (10) days;
(ii)    the willful and continual failure or refusal by the Executive to perform
his duties under this Agreement (other than by reason of death or Disability (as
defined below)), provided such failure or refusal continues for a period of
thirty (30) days after receipt of written notice thereof from the Board in
reasonable detail of such failure or refusal;
(iii)    any action by the Executive constituting willful misconduct or gross
negligence in respect of the Executive’s obligation to the Company that results
in material economic damage to the Company; and
(iv)    the conviction of the Executive of, or a plea of guilty or nolo
contendere by the Executive to, a felony.
Notwithstanding the foregoing, no action taken by the Executive in connection
with his duties hereunder shall constitute or be used to support a finding for
Cause if the Executive acted in good faith and in a manner he reasonably
believed to be in, and not opposed to, the best interests of the Company.
b.    The Executive’s employment hereunder may be terminated by the Board due to
the Executive’s Disability. For purposes of this Agreement, a termination for
“Disability” shall occur (i) when the Board has provided a written termination
notice to the Executive supported by a written statement from a reputable
independent physician, after an appropriate examination, to the effect that the
Executive shall have become so physically or mentally incapacitated as to be
unable to resume, within the ensuing six (6) months, his employment under this
Agreement by reason of physical or mental illness or injury or (ii) upon
rendering of a written termination notice by the Board after the Executive has
been unable to substantially perform his duties hereunder for ninety (90) or
more consecutive days, or more than one hundred and eighty (180) days in any
consecutive twelve month period, by reason of any physical or mental illness or
injury. For purposes of this Section 8(b), the Executive agrees to make himself
available and to cooperate in a reasonable examination by a reputable
independent physician retained by the Company.
c.    The Executive’s employment hereunder may be terminated by the Executive
for Good Reason.
(i)    For purposes of this Agreement, “Good Reason” shall mean the occurrence
of any of the following without the Executive’s express prior written consent
(any of which shall constitute a “Good Reason Condition”):  
(A)    any material breach of this Agreement by the Company;
(B)    a material reduction by the Company of the Executive’s duties,
responsibilities, or authority;
(C)    a reduction of the Executive’s Base Salary;
(D)    a requirement that the Executive report to anyone other than the CEO;
(E)    on or before December 31, 2021, a change in the composition of the Board
that results in the Continuing Directors (as defined below) no longer
constituting at least a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term “Continuing
Director” means at any date a member of the Board (i) who was a member of the
Board on the Effective Date or (ii) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; provided,
however, that there shall be excluded from this clause (ii) any individual whose
initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board;
(F)    the separation from employment of either Michael Mullen or Glenn Worman
from the Company and its affiliates prior to December 31, 2019, due to their
termination without Cause or resignation for Good Reason as defined in their
respective employment agreements; or
(G)    a material change in the geographic location at which the Executive must
perform services (which, for purposes of this Agreement, means a relocation of
the Company’s principal place of business of the Executive outside of the New
York City metropolitan area).
(ii)    The Executive may terminate his employment for Good Reason for any Good
Reason Condition only if (A) the Executive has provided the Company with written
notice of the asserted Good Reason Condition within ninety (90) days after its
initial existence; (B) the Company fails to cure the condition within thirty
(30) days after receiving such written notice; and (C) the Executive terminates
his employment within ninety (90) days following the Executive’s written notice
to the Company of the existence of the Good Reason Condition.
d.    The Executive’s employment may be terminated by the Company without Cause
or by the Executive without Good Reason following ninety (90) days prior written
notice to the other party. The Company may terminate the Executive’s employment
for Cause immediately, subject to the cure provisions set forth in the Cause
definition.
9.    Compensation upon Termination.
a.    If, during the Term, the Executive’s employment is terminated as a result
of his death or Disability, the Company (or such other entity as the Company
shall designate) shall pay to the Executive or to the Executive’s estate, as
applicable, (i) his Base Salary through the date of his termination, (ii) any
benefits which the Executive is entitled to receive under any Company plan,
(iii) any expense reimbursement amounts owed the Executive, and (iv) any accrued
but unpaid annual bonuses earned by the Executive prior to the date of his
termination of employment ((i)-(iv) collectively, the “Accrued Obligations”).
Subject to Section 9(d), any such payments of Base Salary and accrued but unpaid
annual bonus shall be made to the Executive or to the Executive’s estate, as
applicable, within sixty (60) days after his death or termination for
Disability. In addition to the foregoing, the Executive or the Executive’s
estate, as applicable, shall receive a pro-rated bonus under the Bonus Plan,
calculated based on an amount equal to (A) the Target Bonus for the year in
which the date of termination occurs, multiplied by (B) a fraction, the
numerator of which is the number of days worked by the Executive during the
fiscal year in which his date of termination occurs and the denominator of which
is 365 (the “Prorated Target Bonus”). The Prorated Target Bonus shall be paid to
the Executive or his estate in a lump sum in cash within sixty (60) days after
his date of termination (or such later date as may be required pursuant to
Section 9(d)). In addition, any shares of restricted stock awards or restricted
stock units outstanding on the date of the Executive’s termination shall become
fully vested and non-forfeitable as of his date of termination. The vested
portion of any stock options outstanding on the date of his termination shall
remain exercisable by the Executive or his estate for a period of twenty (24)
months following the date of his termination (or, if earlier, the normal
expiration date of such stock options), and any unvested portion of outstanding
stock options shall lapse and be forfeited without consideration as of the date
of termination.
b.    If, during the Term, the Executive’s employment is terminated for Cause or
by the Executive without Good Reason, then the Company (or such other entity as
the Company shall designate) shall pay to the Executive the Accrued Obligations.
The Executive shall have no further entitlement hereunder to any other
compensation or benefits except to the extent otherwise provided by law. Any
shares of unvested restricted stock awards or restricted stock units outstanding
on the date of the Executive’s termination shall be forfeited without
consideration as of the date of termination. The vested portion of any stock
options outstanding on the date of the Executive’s termination shall remain
exercisable by the Executive for a period of thirty (30) days following the date
of his termination (or, if earlier, the normal expiration date of such stock
options), and any unvested portion of outstanding stock options shall lapse and
be forfeited without consideration as of the date of termination.
c.     If, during the Term, the Executive’s employment is terminated other than
as a result of the Executive’s death or Disability and other than for reasons
specified in Section 9(b), or if the Executive terminates his employment for
Good Reason, then, in addition to the Accrued Obligations, and provided that
within sixty (60) days after the date of termination the Executive shall have
executed the Company’s standard general release of claims and covenant not to
sue (the “Release”) and not revoked such Release, (i) the Company (or such other
entity as the Company shall designate) shall pay to the Executive a severance
amount equal to the product of (A) two (2) and (B) the amount equal to the sum
of (1) the Base Salary and (2) the Target Bonus in effect for the fiscal year in
which the termination occurs; (ii) if the Executive elects to continue
participation in any group medical, dental, vision and/or prescription drug plan
benefits to which the Executive and/or the Executive’s eligible dependents would
be entitled under Section 4980B of the Code (COBRA), then for a period of twelve
(12) months following termination, the Company (or such other entity as the
Company shall designate) shall pay the entire COBRA cost of such coverage,
provided, however, that such period shall run concurrently with any period for
which the Executive is eligible to elect health coverage under COBRA and no
payment shall be made if the payment would cause taxes on the Executive in
excess of the amount of the premiums or would impose taxes or penalties on the
Company or other employees; (iii) the Company (or such other entity as the
Company shall designate) shall pay to the Executive an amount equal to the
annual cash bonus that would have been otherwise payable to the Executive for
the fiscal year in which his termination occurs, assuming the Executive’s
employment had not terminated prior to the payment date for such bonus,
multiplied by a fraction, the numerator of which is the number of days elapsed
in the fiscal year of termination through the date of the Executive’s separation
from employment, and the denominator of which is 365, to be paid at the same
time as such bonuses are paid to executives of the Company; (iv) any shares of
restricted stock awards and restricted stock units outstanding on the date of
the Executive’s termination shall become fully vested and non-forfeitable as of
his date of termination; and (v) any stock options outstanding on the date of
the Executive’s termination shall become fully vested and shall remain
exercisable by the Executive for a period of twelve (12) months following the
date of his termination (or, if earlier, the normal expiration date of such
stock options). Subject to Section 9(d) the payments specified in clauses (i)
and (iii) of the preceding sentence shall be paid to the Executive in a lump sum
within sixty (60) days following the Executive’s date of termination.
d.    This Agreement shall be interpreted and administered in a manner so that
any amount or benefit payable hereunder shall be paid or provided in a manner
that is either exempt from or compliant with the requirements of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations
and other guidance thereunder and any state law of similar effect (collectively
“Section 409A”). Nevertheless, the tax treatment of the benefits provided under
the Agreement is not warranted or guaranteed. Neither the Company nor its
affiliates, nor their directors, officers, employees or advisers, shall be held
liable for any taxes, interest, penalties or other monetary amounts owed by the
Executive as a result of the application of Section 409A of the Code.
(i)    Notwithstanding anything in this Agreement to the contrary, to the extent
that any amount or benefit that would constitute non-exempt “deferred
compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred
Compensation”) would otherwise be payable or distributable hereunder, or a
different form of payment of such Non-Exempt Deferred Compensation would be
effected, by reason of a Change in Control or Executive’s termination of
employment, such Non-Exempt Deferred Compensation will not be payable or
distributable to Executive, and/or such different form of payment will not be
effected, by reason of such circumstance unless the circumstances giving rise to
such Change in Control or termination of employment, as the case may be, meet
any description or definition of “change in control event” or “separation from
service” or “substantial risk of forfeiture” as the case may be, in Section 409A
of the Code and applicable regulations (without giving effect to any elective
provisions that may be available under such definition). This provision does not
affect the dollar amount or prohibit the vesting of any Non-Exempt Deferred
Compensation upon a Change in Control or termination of employment, however
defined. If this provision prevents the payment or distribution of any
Non-Exempt Deferred Compensation, or the application of a different form of
payment, then, subject to subsection (iii) below, such payment or distribution
shall be made at the time and in the form that would have applied absent the
non-409A-conforming event.
(ii)    It is intended that (A) each payment of termination benefits under this
Agreement shall be regarded as a separate “payment” for purposes of Treasury
Regulations Section 1.409A-2(b)(2)(i), for purposes of Section 409A of the Code,
(B) all payments of any such benefits shall satisfy, to the greatest extent
possible, the exemptions from the application of Section 409A provided under
Treasury Regulations Sections 1.409A-1(b)(4) and 1.409A-1(b)(9)(iii), and (C)
any such benefits consisting of premiums payable under the COBRA also shall
satisfy, to the greatest extent possible, the exemption from the application of
Section 409A provided under Treasury Regulations Section 1.409A-1(b)(9)(v).
Notwithstanding anything in this Agreement to the contrary, if any amount or
benefit that would constitute Non-Exempt Deferred Compensation would otherwise
be payable or distributable under this Agreement by reason of Executive’s
separation from service during a period in which the Executive is a “specified
employee” of the Company, as such term is defined in Section 409A(a)(2)(B)(i),
then, subject to any permissible acceleration of payment by the Company under
Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii)
(conflicts of interest), or (j)(4)(vi) (payment of employment taxes), (i) the
timing of such amounts or payments shall be delayed until the earlier of (a) the
date that is six (6) months and one (1) day after the Executive’s Separation
from Service and (b) the date of the Executive’s death (such applicable date,
the “Delayed Initial Payment Date”), and (ii) the Company shall (a) pay the
Executive a lump sum amount equal to the sum of the benefit payments that the
Executive would otherwise have received through the Delayed Initial Payment Date
(or, with respect to death, the earliest administratively practicable date
provided that payment complies with the timing requirements of Section 409A) if
the commencement of the payment of the benefits had not been delayed pursuant to
this paragraph and (b) commence paying the balance, if any, of the benefits in
accordance with the applicable payment schedule.  
(iii)    Whenever in this Agreement a payment or benefit is conditioned on the
Executive’s execution of the Release, the Company shall provide such Release to
the Executive promptly following the date of termination, and such Release must
be executed and all revocation periods shall have expired in accordance with
terms set forth in the release, but in no case later than sixty (60) days after
the date of termination; failing which such payment or benefit shall be
forfeited. If such payment or benefit constitutes “Non-Exempt Deferred
Compensation,” then, subject to subsection (ii) above, such payment or benefit
(including any installment payments) that would have otherwise been payable
during such 60-day period shall be accumulated and paid on the 60th day after
the date of termination provided such release shall have been executed and such
revocation periods shall have expired. If such payment or benefit is exempt from
Section 409A of the Code, the Company may elect to make or commence payment at
any time during such 60-day period.
10.    Mandatory Reduction of Payments in Certain Events.
a.    Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Company to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
“Payment”) would be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then, prior to the making of any Payment to Executive,
a calculation shall be made comparing (i) the net benefit to Executive of the
Payment after payment of the Excise Tax, to (ii) the net benefit to Executive if
the Payment had been limited to the extent necessary to avoid being subject to
the Excise Tax. If the amount calculated under (i) above is less than the amount
calculated under (ii) above, then the Payment shall be limited to the extent
necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). The
reduction of the Payments due hereunder, if applicable, shall be made by first
reducing cash Payments and then, to the extent necessary, reducing those
Payments having the next highest ratio of Parachute Value to actual present
value of such Payments as of the date of the change of control, as determined by
the Determination Firm (as defined in Section 10(b) below). For purposes of this
Section 10, present value shall be determined in accordance with Section
280G(d)(4) of the Code. For purposes of this Section 10, the “Parachute Value”
of a Payment means the present value as of the date of the change of control of
the portion of such Payment that constitutes a “parachute payment” under Section
280G(b)(2) of the Code, as determined by the Determination Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such
Payment.
b.    The determination of whether an Excise Tax would be imposed, the amount of
such Excise Tax, and the calculation of the amounts referred to Section 10(a)(i)
and (ii) above shall be made by an independent, nationally recognized accounting
firm or compensation consulting firm mutually acceptable to the Company and
Executive (the “Determination Firm”) which shall provide detailed supporting
calculations. Any determination by the Determination Firm shall be binding upon
the Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Determination Firm hereunder, it is possible that Payments the Executive was
entitled to, but did not receive pursuant to Section 10(a), could have been made
without the imposition of the Excise Tax (“Underpayment”). In such event, the
Determination Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of Executive but no later than March 15 of the year after the
year in which the Underpayment is determined to exist, which is when the legally
binding right to such Underpayment arises.
c.    In the event that the provisions of Code Section 280G and 4999 or any
successor provisions are repealed without succession, this Section 10 shall be
of no further force or effect.
11.    Indemnification. The Company shall defend and indemnify the Executive to
the fullest extent permitted under the Delaware General Corporate Law (the
“DGCL”) notwithstanding any provision to the contrary or any inconsistent choice
of law provision contained in this Agreement, the Company’s charter or bylaws.
The rights to indemnification shall survive any termination of this Agreement.
The Executive shall also have the right to choose his own counsel under Section
11 of this Agreement, and the Company shall not object to the Executive’s
choice, provided that there is no actual conflict regarding the representation.
12.    Dispute Resolution.
a.    The Executive and the Company agree that any and all controversies or
claims (whether contract, tort or statutory) between the Executive and the
Company arising out of the Executive’s employment, the termination of that
employment, and any agreements previously or hereafter entered into by the
Executive and the Company in connection with such employment relationship, that
could have been filed in a court of law (or an administrative agency) shall be
settled by final and binding arbitration. The claims covered by this Agreement
include, but are not limited to, claims for wrongful termination, wages or other
compensation due, breach of contract, tort, discrimination or harassment
(including race, sex, religion, national origin, age, marital status, medical
condition or disability), violation of any public policies, and claims for
violation of federal, state or other governmental law, statute, regulation or
ordinance.
b.    The arbitration shall be conducted in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect before a single arbitrator mutually selected by the
Executive and the Company. If the Executive and the Company cannot agree on the
selection of an arbitrator, each party shall select an arbitrator and the two
arbitrators shall select a third arbitrator who shall resolve the dispute. For
the purpose of any judicial proceeding to enforce such award or incidental to
such arbitration or to compel arbitration and for purposes of Sections 5 and 6
hereof, the parties hereby submit to the non-exclusive jurisdiction of the state
or federal courts, as appropriate, within the State of New York, and agree that
service of process in such arbitration or court proceedings shall be
satisfactorily made upon it if sent by registered mail addressed to it at the
address referred to below in Section 13(f).
c.    The arbitrator shall be empowered to award any party any remedy at law or
in equity to which the prevailing party would otherwise have been entitled had
the matter been litigated or pursued in a civil court or administrative forum
including, but not limited to, general, special, and punitive damages, and
injunctive relief. However, the arbitrator’s authority to award any remedy is
subject to whatever limitations, if any, exist in the applicable law on such
remedies. Any award pursuant to arbitration hereunder shall be included in a
written decision that will state the legal and factual basis for the award and
shall set forth the basis for calculating any damages award. The arbitrator’s
award, order or judgment shall be deemed final and binding upon the parties.
d.    A demand for arbitration must be submitted within the limitations period
that would be applicable in court. If either party does not submit and serve a
written demand for arbitration within the applicable statute of limitations,
such failure shall constitute an absolute bar to the institution of any
proceedings in any forum, and shall constitute a waiver of any rights regarding
that claim.
e.    Neither party nor the arbitrator may disclose the existence, content or
results of any arbitrations under this Agreement without the prior written
consent of all parties hereto.
f.    Pending such resolution of any claim, the Executive shall be entitled to
continue to receive all payments and benefits due under this Agreement or
otherwise, unless the arbitration panel determines otherwise. Judgment on the
arbitration award may be entered by any court of competent jurisdiction.
g.    Nothing in this Agreement shall prevent the parties from agreeing
voluntarily after a claim or controversy has arisen to submit such claim or
controversy to mediation or other informal settlement process. However, if the
dispute is not resolved through mediation or such other process, it shall be
submitted to binding arbitration pursuant to this Agreement.
13.    Miscellaneous.
a.    This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York, without giving effect to its
principles of conflicts of laws.
b.    This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective heirs, legal representatives, successors
and assigns.
c.    This Agreement, and the Executive’s rights and obligations hereunder, may
not be assigned by the Executive. The Company may assign its rights, together
with its obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets.
d.    This Agreement cannot be amended orally, or by any course of conduct or
dealing, but only by a written agreement signed by the parties hereto.
e.    The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
f.    All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be delivered
personally or by an overnight courier service or sent by registered or certified
mail, postage prepaid, return receipt requested, to the Company at its principal
headquarters (attention Chief Executive Officer) and to the Executive at the
address set forth in his personnel file, and shall be deemed given when so
delivered personally or by overnight courier or when actually received if sent
by registered or certified mail. Each party may designate another address, for
receipt of notices hereunder by giving notice to the other party in accordance
with this paragraph (f) of this Section 13.
g.    This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof, including the Executive’s employment agreement dated
October 28, 2015. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
h.    As used in this Agreement, “affiliate” of a specified Person shall mean
and include any Person controlling, controlled by or under common control with
the specified Person.
i.    The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
j.    This Agreement may be executed in any number of counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument.
k.    As used in this Agreement, the masculine, feminine or neuter gender, and
the singular or plural, shall be deemed to include the others whenever and
wherever the context so requires. Additionally, unless the context requires
otherwise, “or” is not exclusive.
Remainder of Page Intentionally Left Blank; Signature Page Follows

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, which shall
be deemed effective as of the Effective Date set forth herein.
NATIONAL HOLDINGS CORPORATION
By:
/s/ Michael Mullen
Name: Michael Mullen
Title: Chairman & CEO
EXECUTIVE
/s/ John DeSena
John DeSena

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