EMPLOYMENT
      AGREEMENT

     

    This
      Employment Agreement (“Agreement”)
      is
      made and entered into as of July 1, 2008, by and between National Holdings
      Corporation, a Delaware corporation (the “Company”)
      and
      Leonard J. Sokolow (the “Executive”).
      

     

    Recitals

     

    WHEREAS,
      the
      Company wishes to employ the Executive, and Executive wishes to be so employed
      by the Company, on the terms and conditions hereinafter set forth.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and mutual covenants set forth herein, and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      mutually acknowledged, the Company and the Executive hereby agree as
      follows:

     

    Agreement

     

    1. Definitions.
      When
      used in this Agreement, the following terms shall have the following
      meanings:

     

    (a) “Accrued
      Obligations”
      shall
      mean:

     

    (i) any
      accrued but unpaid salary through the Termination Date; 

     

    (ii) any
      unpaid or unreimbursed expenses incurred in accordance with Company policy,
      including amounts due under Section 5(a) hereof, to the extent incurred during
      the Term of Employment; 

     

    (iii) any
      benefits provided under the Company’s Executive benefit plans upon a termination
      of employment, in accordance with the terms therein, including rights to equity
      in the Company pursuant to any plan or grant, and settlement of any Equity
      Awards in accordance with the terms of such Equity Awards; 

     

    (iv) any
      unpaid Bonus in respect to any completed fiscal year that has ended on or prior
      to the end of the Term of Employment; and 

     

    (v) rights
      to
      indemnification by virtue of the Executive’s position as an officer or director
      of the Company or its subsidiaries and the benefits under any directors’ and
      officers’ liability insurance policy maintained by the Company, in accordance
      with its terms thereof.

     

    (b) “Board”
      shall
      mean the Board of Directors of the Company.

     

    (c) “Bonus”
      shall
      mean any bonus payable to the Executive pursuant to Section 4(b)
      hereof.

     

    (d) “Bonus
      Period”
      shall
      mean each period for which a Bonus is payable. Unless otherwise specified by
      the
      Board, the Bonus Period shall be the Company’s fiscal year. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) “Cause”
shall
      mean, with respect to the Executive, the following:

     

    (i) the
      commission of a felony or other crime involving moral turpitude, or the
      commission of any other act or omission involving dishonesty or fraud with
      respect to the Company or any Related Entity or any of its or their respective
      customers or suppliers; or

     

    (ii) breach
      of
      fiduciary duty, willful misconduct or gross negligence with respect to the
      Company or any Related Entity; or

     

    (iii) substantial
      and repeated failure to perform duties as reasonably directed by the Board;
      provided,
      however,
      that if
      any such breach is subject to cure, Executive shall be entitled to written
      notice of and an opportunity to cure such breach to the Board’s reasonable
      satisfaction within 30 calendar days of notice of such breach; or

     

    (iv) material
      breach of this Agreement; provided,
      however,
      that if
      any such breach is subject to cure, Executive shall be entitled to written
      notice of and an opportunity to cure such breach to the Board’s reasonable
      satisfaction within 30 calendar days of notice of such breach; or

     

    (v) any
      action taken against Executive by a regulatory body or self-regulatory
      organization that materially impairs the Executive from performing his duty
      for
      a period of more than 180 days; or 

     

    (vi) alcoholism
      or drug addition which materially impairs the Executive’s ability to perform his
      duties. 

     

    An
      act or
      failure to act shall not be “willful” if (A) done by the Executive in good faith
      and (B) the Executive reasonably believed that such action or inaction was
      in
      the best interests of the Company and the Related Entities.

     

    (f) “CEO”
      shall
      mean the Chief Executive Officer of the Company. 

     

    (g) “Change
      in Control of the Company”
      shall
      mean:

     

    (i) consummation
      of a reorganization, merger or consolidation, sale, disposition of all or
      substantially all of the assets or stock of the Company or any other similar
      corporate event (a “Business Combination”), in each case, unless, following such
      Business Combination, all or substantially all of the individuals or entities
      who were the beneficial owners, respectively, of the voting securities of the
      Company entitled to vote generally in the election of directors immediately
      prior to such Business Combination beneficially own, directly or indirectly,
      more than 50% of, respectively, the then outstanding voting securities entitled
      to vote generally in the election of directors, as the case may be, of the
      corporation resulting from such Business Combination (including, without
      limitation, a corporation which as a result of such transaction owns the Company
      or all or substantially all of the Company’s assets either directly or through
      one or more subsidiaries); or (ii) approval by the Board of Directors of the
      Company of a complete dissolution or liquidation of the Company; or (iii) any
      “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange
      Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2)
      of the Exchange Act), is or becomes, after the Commencement Date, a “beneficial
      owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
      indirectly, of securities of the Company representing 35% or more of the
      combined voting power of the Company’s then outstanding securities eligible to
      vote for the election of the Board of Directors of the Company.

     

    
      
        
        

      

      
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    (h)  “COBRA”
      shall
      mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
      from
      time to time.

     

    (i) “Code”
      shall
      mean the Internal Revenue Code of 1986, as amended.

     

    (j) “Commencement
      Date”
      shall
      mean July 1, 2008.

     

    (k) “Confidential
      Information”
      shall
      mean all trade secrets and information disclosed to the Executive or known
      by
      the Executive as a consequence of or through the unique position of his
      employment with the Company or any Related Entity (including information
      conceived, originated, discovered or developed by the Executive and information
      acquired by the Company or any Related Entity from others) prior to or after
      the
      date hereof, and not generally or publicly known (other than as a result of
      unauthorized disclosure by the Executive), about the Company or any Related
      Entity or its business. 

     

    (l) “Disability”
      shall
      have the meaning set forth in a policy or policies of long-term disability
      insurance, if any, the Company obtains for the benefit of itself and/or its
      employees. If there is no definition of “disability” applicable under any such
      policy or policies, if any, then the Executive shall be considered disabled
      due
      to mental or physical impairment or disability, despite reasonable
      accommodations by the Company and any Related Entity, to perform his customary
      or other comparable duties with the Company and any Related Entity immediately
      prior to such disability for a period of at least 120 consecutive days or for
      at
      least 180 non-consecutive days in any 12-month period. 

     

    (m) “Draw”
      shall
      mean a loan or advance versus a Base Salary or other forms of compensation
      provided for in Section 4(a) hereof.

     

    (n) “Equity
      Awards”
      shall
      mean any stock options, restricted stock, restricted stock units, stock
      appreciation rights, phantom stock or other equity based awards granted by
      the
      Company to the Executive.

     

    (o) “Excise
      Tax”
      shall
      mean any excise tax imposed by Section 4999 of the Code, together with any
      interest and penalties imposed with respect thereto, or any interest or
      penalties incurred by the Executive with respect to any such excise tax.


     

    (p) “Expiration
      Date”
      shall
      mean the date on which the Term of Employment, including any renewals thereof
      under Section 3(b) hereof, shall expire.

     

    (q) “Good
      Reason”
      shall
      mean: 

     

    (i) the
      assignment to the Executive of any duties inconsistent in any material respect
      with the Executive’s position (including status, titles and reporting
      requirements), authority, duties or responsibilities as contemplated by Section
      2(b) hereof, or any other action by the Company that results in a material
      diminution in such position, authority, duties or responsibilities, excluding
      for this purpose an isolated, insubstantial and inadvertent action not taken
      in
      bad faith and which is remedied by the Company promptly after receipt of written
      notice thereof given by the Executive; or

     

    
      
        
        

      

      
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    (ii) any
      material failure by the Company to comply with any of the provisions of Section
      4 hereof, other than an isolated, insubstantial and inadvertent failure not
      occurring in bad faith and that is remedied by the Company promptly after
      receipt of written notice thereof given by the Executive; or 

     

    (iii) the
      Company’s requiring the Executive to be based at any office or location located
      more than fifty (50) miles outside of Palm Beach County, Florida, except for
      travel reasonably required in the performance of the Executive’s
      responsibilities; or

     

    (iv) any
      decrease in salary or bonuses payable pursuant to the terms of this Agreement
      without the Executive’s written consent. 

     

    (r) “President”
      shall be
      President of the Company. 

     

    (s) “Related
      Entity”
      shall
      mean the Company and any direct or indirect subsidiary of the Company or the
      subsidiary, and any business, corporation, partnership, limited liability
      company or other entity designated by the Board, in which the Company or a
      subsidiary holds a substantial ownership interest, directly or
      indirectly.

     

    (t) “Restricted
      Period”
      shall be
      the Term of Employment and the twelve (12) month period immediately following
      termination of the Term of Employment; provided, however, that if the Company
      terminates the Executive’s employment for Cause, or Executive terminates his
      employment without Good Reason, the twelve (12) month period shall be extended
      to eighteen (18) months. 

     

    (u) “Severance
      Amount”
      shall
      mean (i) one hundred fifty percent (150%) of the Executive’s annual Base Salary
      in the event of termination of employment without Cause or with Good Reason
      and
      (ii) one hundred (100%) percent of the Executive’s annual Base Salary for any
      other termination of employment.

     

    (v) “Severance
      Term”
      shall
      mean the eighteen (18) month period following the Termination Date.

     

    (w) “Term
      of Employment”
      shall
      mean the period during which the Executive shall be employed by the Company
      pursuant to the terms of this Agreement.

     

    (x) “Termination
      Date”
      shall
      mean the date on which the Term of Employment ends.

     

    (y) “Termination
      Year Bonus”
      shall
      mean the Bonus payable under Section 4(b) hereof for the Bonus Period in which
      the Executive’s employment with the Company terminates for any reason.


     

    
      
        
        

      

      
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    2. Employment.

     

    (a) Employment
      and Term.
      The
      Company hereby agrees to employ the Executive, and the Executive hereby agrees
      to serve the Company, during the Term of Employment on the terms and conditions
      set forth herein.

     

    (b) Duties
      of Executive.
      During
      the Term of Employment, the Executive shall be employed and serve as the Vice
      Chairman and President, and shall have such duties typically associated with
      such title and shall exercise such power and authority as may from time to
      time
      be delegated to him by the Board. The Executive shall devote his full business
      time, attention and efforts to the performance of his duties under this
      Agreement, render such services to the best of his ability, and use his
      reasonable best efforts to promote the interests of the Company. The Executive
      shall not engage in any other business or occupation during the Term of
      Employment, including, without limitation, any activity that (i) conflicts
      with
      the interests of the Company or its Related Entities, (ii) interferes with
      the
      proper and efficient performance of his duties for the Company, or (iii)
      interferes with the exercise of his judgment in the Company’s best interests.
      Notwithstanding the foregoing or any other provision of this Agreement, it
      shall
      not be a breach or violation of this Agreement for the Executive to (x) serve
      on
      corporate (subject to prior approval of the Board), civic or charitable boards
      or committees, (y) deliver lectures, fulfill speaking engagements or teach
      at
      educational institutions, or (z) manage personal investments, so long as such
      activities do not significantly interfere with or significantly detract from
      the
      performance of the Executive’s responsibilities to the Company in accordance
      with this Agreement. The Executive represents he holds all licenses and
      regulatory approvals necessary to perform these responsibilities, including
      holding a Series 7 and a Series 24. As of the date hereof, the Executive is
      approved to be a member of the boards listed on Exhibit
      A
      attached
      hereto. 

     

    (c) Management
      Committee.
      At all
      times during the Term of Employment, the Executive shall serve as a member
      of
      the Executive Committee of the Company, and the Board shall take all necessary
      and appropriate actions to appoint and retain the Executive on such
      committee.

     

    3. Term.

     

    (a) Initial
      Term.
      The
      initial Term of Employment under this Agreement, and the employment of the
      Executive hereunder, shall commence on the Commencement Date and shall expire
      on
      the fifth anniversary of such Commencement Date, unless sooner terminated in
      accordance with Section 6 hereof.

     

    (b) Renewal
      Terms.
      At the
      end of the Initial Term, the Term of Employment automatically shall renew for
      successive one (1) year terms (subject to earlier termination as provided in
      Section 6 hereof), unless the Company or the Executive delivers written notice
      to the other at least ninety (90) days prior to the Expiration Date of its
      or
      his election not to renew the Term of Employment.

     

    (c) Release.
      Upon
      termination of this Agreement in accordance with the terms contained herein,
      as
      a condition to receiving any payments or benefits to which he is entitled under
      the terms of this Agreement, the Executive shall execute and deliver to the
      Company a release in the form attached hereto as Exhibit
      B
      within
      thirty (30) days following his termination of employment. Such release shall
      remain in full force and effect so long as the Company is in compliance with
      its
      obligations to pay severance and provide the other post-termination benefits
      hereunder, subject to the Executive continuing to abide by the post-termination
      obligations and covenants contained herein.

     

    
      
        
        

      

      
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    4. Compensation.

     

    (a) Base
      Salary.
      The
      Executive shall receive an initial base salary of $450,000 per annum which
      shall
      increase five percent (5%) per annum beginning on the first anniversary of
      the
      Commencement Date and each anniversary date thereafter (the "Base Salary").
      Such
      Base Salary shall be payable in installments consistent with the Company’s
      normal payroll schedule, subject to applicable withholding and other taxes.
      The
      Base Salary and Executive’s other forms of compensation shall be reviewed, at
      least annually, and may, by action and in the discretion of the Board, be
      increased (but may not be decreased) at any time or from time to time. In no
      event shall the Base Salary be deemed a Draw.

     

    (b) Bonuses.
      During
      the Term of Employment, the Executive shall be entitled to receive on a fiscal
      year basis a cash bonus from the Company determined in the discretion by the
      Compensation Committee; provided,
      however,
      that
      such Bonus on a fiscal year basis shall not be less than: 

     

    (i) Two
      Hundred Twenty Five Thousand ($225,000) Dollars, paid in quarterly installments
      as follows: with respect to the first three quarters of the Company’s fiscal
      year, the cash bonus shall be paid by the Company to the Executive within forty
      five (45) days after the end of the Company’s fiscal quarter and with respect to
      the last fiscal quarter, ninety (90) days after the end of the Company’s fiscal
      year (the “Guaranteed Bonus”); and 

     

    (ii) An
      amount
      equal to five percent (5%) of the Company’s fiscal year’s consolidated Net
      Income in excess of $4.5 million, but in no event to exceed an amount equal
      to
      the difference between (i) 100% of the then current Base Salary for such fiscal
      year and (ii) the Guaranteed Bonus, payable within ninety (90) days after the
      end of the Company’s fiscal year. Notwithstanding anything to the contrary in
      this sub-section (b)(ii), in the event that the Company’s Net Income is a
      negative number for any fiscal year, then the Bonus payment paid to the
      Executive for such fiscal year under this sub-section (ii) shall be $0 and
      the
      Executive shall not be required to reimburse the Company for any Bonus
      previously paid by the Company; and

     

    (iii) Such
      additional Bonuses, if any, as the Board may in its sole and absolute discretion
      determine based upon its assessment of the performance of the President in
      the
      following areas: (A) revenue growth of the Company, (B) new business
      development, (C) investor relations, (D) communication with the Board of
      Directors, (E) communication and collaboration with the other members of the
      Executive Committee of the Board of Directors, and (F) special projects as
      assigned by the Board of Directors.

     

    (iv) With
      respect to the first fiscal year in which the Commencement Date falls, the
      Bonus
      described in (i) and (ii) above shall be prorated accordingly with respect
      to
      such applicable Bonus Period. 

     

    
      
        
        

      

      
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    5. Expense
      Reimbursement and Other Benefits.

     

    (a) Reimbursement
      of Expenses.
      Upon the
      submission of proper substantiation by the Executive, and subject to such rules
      and guidelines as the Company may from time to time adopt with respect to the
      reimbursement of expenses of executive personnel, the Company shall reimburse
      the Executive for all reasonable expenses actually paid or incurred by the
      Executive during the Term of Employment in the course of and pursuant to the
      business of the Company, including, without limitation, expenses relating to
      his
      cell phone and his Blackberry or other similar devices. The Executive shall
      account to the Company in writing for all expenses for which reimbursement
      is
      sought and shall supply to the Company copies of all relevant invoices, receipts
      or other evidence reasonably requested by the Company. 

     

    (b) Compensation/Benefit
      Programs.
      During
      the Term of Employment, the Executive shall be entitled to participate in all
      medical, dental, hospitalization, accidental death and dismemberment,
      disability, travel and life insurance plans, and any and all other plans as
      are
      presently and hereinafter offered by the Company to its executive personnel,
      including savings, pension, profit-sharing and deferred compensation plans,
      subject to the general eligibility and participation provisions set forth in
      such plans. The benefits currently provided by the Company to its Executives
      are
      as stated in the Company’s Executive handbook, which is subject to change. In
      addition, during the Term of Employment, the Company shall pay (at the “Buy-Up
      Premium” level) all health insurance premiums required to be made on behalf of
      the Executive and his dependents with respect to their participation in such
      health plans. Should Executive not want to participate in the Company's health
      plan, the Company will reimburse Executive for the expense incurred in
      participating in another plan in an amount not to exceed the cost of
      participation of Executive and his dependents in the Company’s health plan.
      Additionally, Executive shall be added as an insured to any director and officer
      and errors and omissions insurance policy that the Company or any of the
      Company’s subsidiaries or affiliates hereafter procures. 

     

    (c) Working
      Facilities.
      During
      the Term of Employment, the Company shall furnish the Executive with an office,
      a personal assistant, other secretarial help and such other facilities and
      services suitable to his position and adequate for the performance of his duties
      hereunder. The Company and the Executive acknowledge and agree that the personal
      assistant or other secretarial help assigned to the Executive shall also be
      responsible for handling certain personal matters that may be assigned to them
      from time to time by the Executive.

     

    (d) Automobile.
      During
      the Term of Employment, the Company shall provide the Executive with a
      non-accountable automobile allowance (inclusive of parking) of $1,000 per month.
      

     

    (e) Equity
      Awards.
      The
      Company and Executive shall enter into the Stock Option Agreement attached
      hereto as Exhibit
      C
      pursuant
      to which the Company shall grant to Executive certain options (“Options”) to
      purchase common stock of the Company upon such terms and conditions set forth
      therein. To the extent that any stock options granted hereunder are not made
      pursuant to the Company’s 2006 Stock Option Plan or other plan covered by a
      registration statement declared effective by the Securities and Exchange
      Commission (the “SEC”), the Company agrees to file with the SEC, within a
      reasonable period following the grant of such options, a Form S-8 registration
      statement covering the shares of common stock issuable upon exercise of the
      stock options. In addition, the Executive shall be eligible to be granted Equity
      Awards under (and therefore subject to all terms and conditions of) the
      Company’s 2006 Stock Option Plan or such other plans or programs as the Company
      may from time to time adopt, and subject to all rules of regulation of the
      Securities and Exchange Commission applicable thereto. The number and type
      of
      Equity Awards, and the terms and conditions thereof, shall be determined by
      the
      Compensation Committee of the Board of the Company, in its discretion and
      pursuant to the plan or arrangement pursuant to which they are granted.
      Notwithstanding any other provision in this Agreement, in the event of a Change
      in Control during the Term of Employment, all Options granted to Executive
      as
      described in Exhibit
      C
      hereto
      shall immediately vest and be exercisable.

     

    
      
        
        

      

      
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    (f) Other
      Benefits.
      The
      Executive shall be entitled to five (5) weeks of paid vacation each calendar
      year during the Term of Employment, to be taken at such times as the Executive
      and the Company shall mutually determine and provided that no vacation time
      shall significantly interfere with the duties required to be rendered by the
      Executive hereunder. Any vacation time not taken by Executive during any
      calendar year may be carried forward into any succeeding calendar year. The
      Executive shall receive such additional benefits, if any, as the Board shall
      from time to time determine.

     

    (g) Minimum
      Compensation.
      In
      no
      event will the Executive’s total compensation be less than the total
      compensation (including without limitation, Base Salaries, Bonuses, other
      incentive compensation, options or other securities, or benefits) paid to the
      CEO. 

     

    (h) Gym
      or Club Membership Fees. During
      the Term, the Company agrees to pay up to $150 per month for Executive to belong
      to a health club of his choosing.

     

    6. Termination.

     

    (a) General.
      The Term
      of Employment shall terminate upon the earliest to occur of (i) the Executive’s
      death, (ii) a termination by the Company by reason of the Executive’s
      Disability, (iii) a termination by the Company with or without Cause or (iv)
      a
      termination by Executive with or without Good Reason. Upon any termination
      of
      Executive’s employment for any reason, except as may otherwise be requested by
      the Company in writing and agreed upon in writing by Executive, the Executive
      shall resign from any and all directorships, committee memberships or any other
      positions the Executive holds with the Company or any of its Related Entities.
      Upon termination of Executive’s employment with the Company pursuant to this
      Section, all compensation and benefits shall cease to accrue upon discharge
      of
      Executive and the Company shall have no further obligations to the Executive
      or
      his heirs, administrators, or executors with respect to compensation and
      benefits thereafter, except to pay the Executive or his heirs, administrators
      or
      executors as set forth in this Section.

     

    (b) Termination
      by Company for Cause.
      The
      Company shall at all times have the right, upon written notice to the Executive,
      to terminate the Term of Employment for Cause. For purposes of this Section
      6(b), any good faith determination by the Board of Cause shall be binding and
      conclusive on all interested parties. In the event that the Term of Employment
      is terminated by the Company for Cause, the Executive shall be entitled only
      to
      the Accrued Obligations, payable within a reasonable period following the
      Termination Date. 

     

    
      
        
        

      

      
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    (c) Disability.
      The
      Company shall have the option to terminate the Term of Employment upon written
      notice to the Executive, at any time during which the Executive is suffering
      from a Disability. In the event that the Term of Employment is terminated due
      to
      the Executive’s Disability, the Executive shall be entitled to:

     

    (i) the
      Accrued Obligations, payable as soon as reasonably practicable following the
      Termination Date; 

     

    (ii) the
      Termination Year Bonus, payable within four (4) months after the last day of
      the
      Bonus Period in which the Termination Date occurs; 

     

    (iii) the
      Severance Amount, payable in equal monthly installments during the Severance
      Term commencing with the first calendar month immediately following the month
      in
      which the employment of Executive has been terminated; 

     

    (iv) continuation
      of the health benefits provided to the Executive and his covered dependents
      under the Company health plans as in effect from time to time after the date
      of
      such termination with the Company paying all premiums relating thereto until
      the
      earlier of: (A) eighteen (18) months following the Termination Date, or (B)
      the
      date the Executive commences employment with any person or entity and, thus,
      is
      eligible for health insurance benefits; provided, however, that as a condition
      of continuation of such benefits, the Company may require the Executive to
      elect
      to continue his health insurance pursuant to COBRA; and

     

    (v) all
      Options granted to Executive as described in Exhibit C hereto and any other
      options granted to Executive to purchase the Company’s common stock prior to
      after the date of this Agreement shall immediately vest and be exercisable
      for a
      period of nine (9) months from the date of the termination; provided, however,
      such period of nine (9) months shall not exceed the earlier of the latest date
      upon which such options could have expired by their original terms under any
      circumstances or the tenth anniversary of the original date of grant of such
      options.

     

    (d) Death.
      In the
      event that the Term of Employment is terminated due to the Executive’s death,
      the estate of the Executive shall be entitled to:

     

    (i) the
      Accrued Obligations, payable as soon as reasonably practicable following the
      Termination Date; 

     

    (ii) the
      Termination Year Bonus, payable within four (4) months after the last day of
      the
      Bonus Period in which the Termination Date occurs; 

     

    (iii) the
      Severance Amount, payable in equal monthly installments during the Severance
      Term commencing with the first calendar month immediately following the month
      in
      which the employment of Executive has been terminated; 

     

    (iv) continuation
      of the health benefits provided to the Executive’s covered dependents under the
      Company health plans as in effect from time to time after the Executive’s death
      with the Company paying all premiums relating thereto until eighteen (18) months
      following the Termination Date; provided, however, that as a condition of
      continuation of such benefits, the Company may require the covered dependents
      to
      elect to continue such health insurance pursuant to COBRA; and

     

    
      
        
        

      

      
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    (v) all
      Options granted to Executive as described in Exhibit C hereto and any other
      options granted to Executive to purchase the Company’s common stock prior to
      after the date of this Agreement shall immediately vest and be exercisable
      for a
      period of nine (9) months from the date of the termination; provided, however,
      such period of nine (9) months shall not exceed the earlier of the latest date
      upon which such options could have expired by their original terms under any
      circumstances or the tenth anniversary of the original date of grant of such
      options.

     

    (e) Termination
      Without Cause.
      The
      Company may terminate the Term of Employment at any time without Cause, by
      written notice to the Executive. In the event that the Term of Employment is
      terminated by the Company without Cause (other than due to the Executive’s death
      or Disability), the Executive shall be entitled to:

     

    (i) Accrued
      Obligations, payable as soon as reasonably practicable following the Termination
      Date;

     

    (ii) the
      Termination Year Bonus, payable within four (4) months after the last day of
      the
      Bonus Period in which the Termination Date occurs;

     

    (iii) the
      Severance Amount, payable in equal installments during the Severance Period
      commencing with the first business day in the first calendar month immediately
      following the month in which the employment of Executive has been terminated;
      

     

    (iv) continuation
      of the health benefits provided to the Executive and his covered dependents
      under the Company health plans as in effect from time to time after the date
      of
      such termination with the Company paying all premiums until the earlier of:
      (A)
      eighteen (18) months following the Termination Date, or (B) the date the
      Executive commences employment with any person or entity and, thus, is eligible
      for health insurance benefits; provided, however, that as a condition of
      continuation of such benefits, the Company may require the Executive to elect
      to
      continue his health insurance pursuant to COBRA; and

     

    (v) all
      Options granted to Executive as described in Exhibit C hereto and any other
      options granted to Executive to purchase the Company’s common stock prior to
      after the date of this Agreement shall immediately vest and be exercisable
      for a
      period of nine (9) months from the date of the termination; provided, however,
      such period of nine (9) months shall not exceed the earlier of the latest date
      upon which such options could have expired by their original terms under any
      circumstances or the tenth anniversary of the original date of grant of such
      options.

     

    (f) Termination
      by Executive for Good Reason.
      The
      Executive may terminate the Term of Employment for Good Reason by providing
      the
      Company thirty (30) days’ written notice setting forth in reasonable specificity
      the event that constitutes Good Reason, which written notice, to be effective,
      must be provided to the Company within thirty (30) days of the occurrence of
      such event. During such thirty (30) day notice period, the Company shall have
      a
      cure right (if curable), and if not cured within such period, the Executive’s
      termination shall be effective upon the date immediately following the
      expiration of the thirty (30) day notice period, and the Executive shall be
      entitled to the same payments and benefits as provided in Section 6(e) above
      for
      a termination without Cause. 

     

    
      
        
        

      

      
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    (g) Termination
      by Executive Without Good Reason.
      The
      Executive may terminate his employment without Good Reason by providing the
      Company thirty (30) days’ written notice of such termination. In the event of a
      termination of employment by the Executive under this Section 6(g), the
      Executive shall be entitled only to the Accrued Obligations. In the event of
      termination of the Executive’s employment under this Section 6(g), the Company
      may, in its sole and absolute discretion, by written notice, accelerate such
      date of termination and still have it treated as a termination without Good
      Reason. 

     

    (h) Termination
      Upon Expiration Date.
      In the
      event that Executive’s employment with the Company terminates upon the
      expiration of the Term of Employment, the Executive shall be entitled to only
      the Accrued Obligations, payable within a reasonable period following the
      Termination Date. In addition, if the Term of Employment terminates either
      because the Company refused to extend the Term of Employment without Cause
      (and
      other than by reason of the Executive’s Disability), or the Executive refused to
      extend the Term for Good Reason, the Company shall pay the
      Executive:

     

    (i) the
      Accrued Obligations, payable as soon as practicable following the Termination
      Date; 

     

    (ii) the
      Termination Year Bonus, payable within 2 1/2 months after the last day of the
      Bonus Period in which the Termination Date occurs;

     

    (iii) the
      Severance Amount, payable in equal monthly installments during the Severance
      Term; 

     

    (iv) continuation
      of the health benefits provided to the Executive and his covered dependants
      under the Company health plans as in effect from time to time after the date
      of
      such termination until the earlier of: (A) eighteen (18) months following the
      Termination Date, or (B) the date the Executive commences employment with any
      person or entity and, thus, is eligible for health insurance benefits; provided,
      however, that as a condition of continuation of such benefits, the Company
      may
      require the Executive to elect to continue his health insurance pursuant to
      COBRA; and

     

    (v) all
      Options granted to Executive as described in Exhibit B hereto and any other
      options granted to Executive to purchase the Company’s common stock prior to
      after the date of this Agreement shall immediately vest and be exercisable
      for a
      period of nine (9) months from the date of the termination; provided, however,
      such period of nine (9) months shall not exceed the earlier of the latest date
      upon which such options could have expired by their original terms under any
      circumstances or the tenth anniversary of the original date of grant of such
      options.

     

    (i) Change
      in Control of the Company.
      If the
      Executive’s employment is terminated by the Company without Cause or by the
      Executive for Good Reason during the six (6) month period immediately following
      the Change in Control of the Company, then in lieu of any amounts otherwise
      payable under Sections 6(e) or 6(f) hereof, the Executive shall be entitled
      to:

     

    
      
        
        

      

      
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    (i) the
      Accrued Obligations, payable as soon as reasonably practicable following the
      Termination Date;

     

    (ii) the
      Termination Year Bonus, payable within four (4) months after the last day of
      the
      Bonus Period in which the Termination Date occurs;

     

    (iii) the
      Severance Amount, payable in equal monthly installments during the Severance
      Period commencing with the first calendar month immediately following the month
      in which the employment of Executive has been terminated; 

     

    (iv) continuation
      of the health benefits provided to Executive and his covered dependants under
      the Company health plans as in effect from time to time after the date of such
      termination with the Company paying all premiums until the earlier of: (A)
      eighteen (18) months following the Termination Date, or (B) the date the
      Executive commences employment with any person or entity and, thus, is eligible
      for health insurance benefits; provided, however, that as a condition of
      continuation of such benefits, the Company may require the Executive to elect
      to
      continue his health insurance pursuant to COBRA; and

     

    (v) all
      Options granted to Executive as described in Exhibit B hereto and any other
      options granted to Executive to purchase the Company’s common stock prior to
      after the date of this Agreement shall immediately vest and be exercisable
      for a
      period of nine (9) months from the date of the termination; provided, however,
      such period of nine (9) months shall not exceed the earlier of the latest date
      upon which such options could have expired by their original terms under any
      circumstances or the tenth anniversary of the original date of grant of such
      options.

     

    (j) Section
      280G Additional Payments by the Company. 

     

    (i) Anything
      in this Agreement to the contrary notwithstanding, in the event that the
      Executive shall become entitled to payments and/or benefits provided by this
      Agreement or any other amounts in the “nature of compensation” (whether pursuant
      to the terms of any plan, arrangement or agreement with the Company, any person
      whose actions result in a change of ownership or effective control covered
      by
      Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”)
      or any
      person affiliated with the Company or such person) as a result of such change
      in
      ownership or effective control (collectively, the “Company
      Payments”),
      and
      such Company Payments will be subject to the tax (the “Excise
      Tax”)
      imposed by Section 4999 of the Code (and any similar tax that may hereafter
      be
      imposed by any taxing authority), the Company shall pay to the Executive at
      the
      time specified in clause (iv) hereof an additional amount (the “Gross-Up
      Payment”)
      such
      that the net amount retained by the Executive, after deduction of any Excise
      Tax
      on the Company Payments and any U.S. federal, state, and local income or payroll
      tax upon the Gross-Up Payment provided for by this clause (i), but before
      deduction for any U.S. federal, state, and local income or payroll tax on the
      Company Payments, shall be equal to the Company Payment.

     

    
      
        
        

      

      
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    (ii) For
      purposes of determining whether any of the Company Payments and Gross-Up Payment
      (collectively, the “Total
      Payments”)
      will
      be subject to the Excise Tax and the amount of such Excise Tax, (A) the Total
      Payments shall be treated as “parachute payments” within the meaning of Section
      280G(b)(2) of the Code, and all “parachute payments” in excess of the “base
      amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as
      subject to the Excise Tax, unless and except to the extent that, in the opinion
      of the Company’s independent certified public accountants appointed prior to any
      change in ownership (as defined under Section 280G(b)(2) of the Code) or tax
      counsel selected by such accountants or the Company (the “Accountants”)
      such
      Total Payments (in whole or in part): (1) do not constitute “parachute
      payments,” (2) represent reasonable compensation for services actually rendered
      within the meaning of Section 280G(b)(4) of the Code in excess of the “base
      amount” or (3) are otherwise not subject to the Excise Tax, and (B) the value of
      any non-cash benefits or any deferred payment or benefit shall be determined
      by
      the Accountants in accordance with the principles of Section 280G of the Code.
      In the event that the Accountants are serving as accountants or auditors for
      the
      individual, entity or group effecting the change in control (within the meaning
      of Section 280G of the Code), the Executive may appoint another nationally
      recognized accounting firm to make the determinations hereunder (which
      accounting firm shall then be referred to as the “Accountants” hereunder). All
      determinations hereunder shall be made by the Accountants which shall provide
      detailed supporting calculations both to the Company and the Executive at such
      time as it is requested by the Company or the Executive. The determination
      of
      the Accountants shall be final and binding upon the Company and the
      Executive.

     

    (iii) For
      purposes of determining the amount of the Gross-Up Payment, the Executive shall
      be deemed to pay U.S. federal income taxes at the highest marginal rate of
      U.S.
      federal income taxation in the calendar year in which the Gross-Up Payment
      is to
      be made and state and local income taxes at the highest marginal rate of
      taxation in the state and locality of the Executive’s residence for the calendar
      year in which the Company Payments are to be made, net of the maximum reduction
      in U.S. federal income taxes which could be obtained from deduction of such
      state and local taxes if paid in such year. In the event that the Excise Tax
      is
      subsequently determined by the Accountants to be less than the amount taken
      into
      account hereunder at the time the Gross-Up Payment is made, the Executive shall
      repay to the Company, at the time that the amount of such reduction in Excise
      Tax is finally determined, the portion of the prior Gross-Up Payment
      attributable to such reduction (plus the portion of the Gross-Up Payment
      attributable to the Excise Tax and U.S. federal, state and local income tax
      imposed on the portion of the Gross-Up Payment being repaid by the Executive
      if
      such repayment results in a reduction in Excise Tax or a U.S. federal, state
      and
      local income tax deduction), plus interest on the amount of such repayment
      at
      the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
      foregoing, in the event that any portion of the Gross-Up Payment to be refunded
      to the Company has been paid to any U.S. federal, state and local tax authority,
      repayment thereof (and related amounts) shall not be required until actual
      refund or credit of such portion has been made to the Executive, and interest
      payable to the Company shall not exceed the interest received or credited to
      the
      Executive by such tax authority for the period it held such portion. The
      Executive and the Company shall mutually agree upon the course of action to
      be
      pursued (and the method of allocating the expense thereof) if the Executive’s
      claim for refund or credit is denied. In the event that the Excise Tax is later
      determined by the Accountants or the Internal Revenue Service (or other taxing
      authority) to exceed the amount taken into account hereunder at the time the
      Gross-Up Payment is made (including by reason of any payment the existence
      or
      amount of which cannot be determined at the time of the Gross-Up Payment),
      the
      Company shall make an additional Gross-Up Payment in respect of such excess
      (plus any interest or penalties payable with respect to such excess) promptly
      after the amount of such excess is finally determined.

     

    
      
        
        

      

      
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    (iv) The
      Gross-Up Payment or portion thereof provided for in clause (iii) shall be paid
      not later than the thirtieth (30th) day following an event occurring which
      subjects the Executive to the Excise Tax; provided,
      however,
      that if
      the amount of such Gross-Up Payment or portion thereof cannot be finally
      determined on or before such day, the Company shall pay to the Executive on
      such
      day an estimate, as determined in good faith by the Accountants, of the minimum
      amount of such payments and shall pay the remainder of such payments (together
      with interest at the rate provided in Section 1274(b)(2)(B) of the Code),
      subject to further payments pursuant to clause (iii), as soon as the amount
      thereof can reasonably be determined, but in no event later than the ninetieth
      (90th) day after the occurrence of the event subjecting the Executive to the
      Excise Tax. Subject to clauses (iii) and (viii) hereof, in the event that the
      amount of the estimated payments exceeds the amount subsequently determined
      to
      have been due, such excess shall constitute a loan by the Company to the
      Executive, payable on the fifth (5th) day after demand by the Company (together
      with interest at the rate provided in Section 1274(b)(2)(B) of the Code).


     

    (v) In
      the
      event of any controversy with the Internal Revenue Service (or other taxing
      authority) with regard to the Excise Tax, the Executive shall permit the Company
      to control issues related to the Excise Tax (at the Company’s expense), provided
      that such issues do not potentially materially adversely affect the Executive,
      but the Executive shall control any other issues. In the event that the issues
      are interrelated, the Executive and the Company shall in good faith cooperate
      so
      as not to jeopardize resolution of either issue, but if the parties cannot
      agree, the Executive shall make the final determination with regard to the
      issues. In the event of any conference with any taxing authority as to the
      Excise Tax or associated income taxes, the Executive shall permit the
      representative of the Company to accompany the Executive, and the Executive
      and
      the Executive’s representative shall cooperate with the Company and its
      Representatives. 

     

    (vi) The
      Company shall be responsible for all charges of the Accountants. 

     

    (vii) The
      Company and the Executive shall promptly deliver to each other copies of any
      written communications, and summaries of any verbal communications, with any
      taxing authority regarding the Excise Tax covered by this Section 6(i).


     

    (viii) Nothing
      in this Section 6(i) is intended to violate the Sarbanes-Oxley Act of 2002
      and
      to the extent that any advance or repayment obligation hereunder would do so,
      such obligation shall be modified so as to make the advance a nonrefundable
      payment to the Executive and the repayment obligation null and void. The
      provisions of this Section 6(i) shall survive the termination of the Executive’s
      employment with the Company for any reason.

     

    
      
        
        

      

      
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    (k) Cooperation.
      Following the Term of Employment, the Executive shall give his assistance and
      cooperation willingly, upon reasonable advance notice with due consideration
      for
      his other business or personal commitments, in any matter relating to his
      position with the Company, or his expertise or experience as the Company or
      any
      Related Entity may reasonably request, including his attendance and truthful
      testimony where deemed appropriate by the Company or any Related Entity, with
      respect to any investigation or the Company’s or any Related Entity’s defense or
      prosecution of any existing or future claims or litigations or other proceedings
      relating to matters in which he was involved or potentially had knowledge by
      virtue of his employment with the Company. In no event shall his cooperation
      materially interfere with his services for a subsequent employer or other
      similar service recipient. To the extent permitted by law, the Company agrees
      that (i) it shall promptly reimburse the Executive for his reasonable and
      documented expenses in connection with his rendering assistance and/or
      cooperation under this Section 6(k) upon his presentation of documentation
      for
      such expenses and (ii) the Executive shall be reasonably compensated for any
      continued material services as required under this Section 6(k).

     

    (l) Section
      409A.

     

    (i) The
      intent of the parties is that payments and benefits under this Agreement comply
      with Internal Revenue Code Section 409A and the regulations and guidance
      promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to
      the maximum extent permitted, this Agreement shall be interpreted to be in
      compliance therewith. If the Executive notifies the Company (with specificity
      as
      to the reason therefore) that the Executive believes that any provision of
      this
      Agreement (or of any award of compensation, including equity compensation or
      benefits) would cause the Executive to incur any additional tax or interest
      under Code Section 409A, the Company shall, after consulting with the Executive,
      reform such provision to try to comply with Code Section 409A through good
      faith
      modifications to the minimum extent reasonably appropriate to conform with
      Code
      Section 409A. To the extent that any provision hereof is modified in order
      to
      comply with Code Section 409A, such modification shall be made in good faith
      and
      shall, to the maximum extent reasonably possible, maintain the original intent
      and economic benefit to the Executive and the Company of the applicable
      provision without violating the provisions of Code Section 409A.

     

    (ii) Notwithstanding
      any provision to the contrary in this Agreement, if the Executive is deemed
      on
      the date of termination to be a “specified employee” within the meaning of that
      term under Code Section 409A(a)(2)(B), then with regard to any payment or the
      provision of any benefit that constitutes an item of deferred compensation
      under
      Section 409A and becomes payable by reason of the Executive’s separation from
      service, such payment or benefit shall not be made or provided (subject to
      the
      last sentence of this Section 6(k)(ii)) prior to the earlier of (i) the
      expiration of the six (6)-month period measured from the date of the Executive’s
“separation from service” (as such term is defined under Code Section 409A), and
      (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of
      the Delay Period, all payments and benefits delayed pursuant to this Section
      6(k)(ii) (whether they would have otherwise been payable in a single sum or
      in
      installments in the absence of such delay) shall be paid or reimbursed to the
      Executive in a lump sum, and any remaining payments and benefits due under
      this
      Agreement shall be paid or provided in accordance with the normal payment dates
      specified for them herein.

     

    
      
        
        

      

      
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    (m) Contact
      Management Database Rights.
      The
      Company and the Executive each acknowledge and agree that the Executive has
      developed and currently maintains a contact management database (the
“Database”), and the Company acknowledges and agrees that the Executive shall
      have non-exclusive access to such Database at all times during the Term of
      Employment and after the Termination Date of this Agreement for any reason
      not
      in violation of Section 12 hereof.

     

    7. Intentionally
      Deleted. 

     

    8. Taxes.
      Anything in this Agreement to the contrary notwithstanding, all payments
      required to be made by the Company hereunder to the Executive or his estate
      or
      beneficiaries shall be subject to the withholding of such amounts relating
      to
      taxes as the Company may reasonably determine it should withhold pursuant to
      any
      applicable law or regulation. In lieu of withholding such amounts, in whole
      or
      in part, the Company may, in its sole discretion, accept other provisions for
      payment of taxes and withholding as required by law, provided it is satisfied
      that all requirements of law affecting its responsibilities to withhold have
      been satisfied.

     

    9. Assignment.
      The
      Company shall have the right to assign this Agreement and its rights and
      obligations hereunder in whole, but not in part, to any corporation or other
      entity with or into which the Company may hereafter merge or consolidate or
      to
      which the Company may transfer all or substantially all of its assets, if in
      any
      such case said corporation or other entity shall by operation of law or
      expressly in writing assume all obligations of the Company hereunder as fully
      as
      if it had been originally made a party hereto, but may not otherwise assign
      this
      Agreement or its rights and obligations hereunder. The Executive may not assign
      or transfer this Agreement or any rights or obligations hereunder.

     

    10. Governing
      Law.
      This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      internal laws of the State of New York, without regard to principles of conflict
      of laws.

     

    11. Arbitration.

     

    (a) Exclusive
      Remedy.
      The
      parties recognize that litigation in federal or state courts or before federal
      or state administrative agencies of disputes arising out of the Executive’s
      employment with the Company or out of this Agreement, or the Executive’s
      termination of employment or termination of this Agreement, may not be in the
      best interests of either the Executive or the Company, and may result in
      unnecessary costs, delays, complexities, and uncertainty. Except as otherwise
      provided in Section 12 hereof, the parties agree that any dispute between the
      parties arising out of or relating to the Executive’s employment, or to the
      negotiation, execution, performance or termination of this Agreement or the
      Executive’s employment, including, but not limited to, any claim arising out of
      this Agreement, claims under Title VII of the Civil Rights Act of 1964, as
      amended, the Civil Rights Act of 1991, the Age Discrimination in Employment
      Act
      of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil
      Rights Act of 1966, as amended, the Family Medical Leave Act, the Executive
      Retirement Income Security Act, and any similar federal, state or local law,
      statute, regulation, or any common law doctrine, whether that dispute arises
      during or after employment shall be resolved by arbitration in the New York,
      New
      York area, in accordance with the National Employment Arbitration Rules of
      the
      American Arbitration Association, as modified by the provisions of this Section
      11. The parties each further agree that the arbitration provisions of this
      Agreement shall provide each party with its exclusive remedy, and each party
      expressly waives any right it might have to seek redress in any other forum,
      except as otherwise expressly provided in this Agreement. The parties
      acknowledge and agree that their obligations under this arbitration agreement
      survive the expiration or termination of this Agreement and continue after
      the
      termination of the employment relationship between the Executive and the
      Company. Except
      as otherwise provided in Section 12 hereof, by election of arbitration as the
      means for final settlement of all claims, the parties hereby waive their
      respective rights to, and agree not to, sue each other in any action in a
      federal, state or local court with respect to such claims, but may seek to
      enforce in court an arbitration award rendered pursuant to this Agreement.
      The
      parties specifically agree to waive their respective rights to a trial by jury,
      and further agree that no demand, request or motion will be made for trial
      by
      jury.

     

    
      
        
        

      

      
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    (b) Arbitration
      Procedure and Arbitrator’s Authority.
      In the
      arbitration proceeding, each party shall be entitled to engage in any type
      of
      discovery permitted by the Federal Rules of Civil Procedure, to retain its
      own
      counsel, to present evidence and cross-examine witnesses, to purchase a
      stenographic record of the proceedings, and to submit post-hearing briefs.
      In
      reaching his/her decision, the arbitrator shall have no authority to add to,
      detract from, or otherwise modify any provision of this Agreement. The
      arbitrator shall submit with the award a written opinion which shall include
      findings of fact and conclusions of law. Judgment upon the award rendered by
      the
      arbitrator may be entered in any court having competent
      jurisdiction.

     

    (c) Effect
      of Arbitrator’s Decision; Arbitrator’s Fees.
      The
      decision of the arbitrator shall be final and binding between the parties as
      to
      all claims which were or could have been raised in connection with the dispute,
      to the full extent permitted by law. In all cases in which applicable federal
      law precludes a waiver of judicial remedies, the parties agree that the decision
      of the arbitrator shall be a condition precedent to the institution or
      maintenance of any legal, equitable, administrative, or other formal proceeding
      by the Executive in connection with the dispute, and that the decision and
      opinion of the arbitrator may be presented in any other forum on the merits
      of
      the dispute. If the arbitrator finds that the Executive was terminated in
      violation of law or this Agreement, the parties agree that the arbitrator acting
      hereunder shall be empowered to provide the Executive with any remedy available
      should the matter have been tried in a court, including equitable and/or legal
      remedies, compensatory damages and back pay. The arbitrator’s fees and expenses
      and all administrative fees and expenses associated with the filing of the
      arbitration shall be borne by the non-prevailing party.

     

    12. Restrictive
      Covenants. 

     

    (a) Executive
      recognizes and acknowledges that the Company, Related Entities and their
      subsidiaries, through the expenditure of considerable time and money, have
      developed and will continue to develop in the Confidential Information. In
      consideration of his continued employment by the Company hereunder, Executive
      agrees that he will not, during the Restricted Period, directly or indirectly,
      make any disclosure of Confidential Information now or hereafter possessed
      by
      the Company, Related Entities, and/or any of their current or future, direct
      or
      indirect subsidiaries (collectively, the "Group"), to any person, partnership,
      corporation or entity either during or after the term hereunder, except to
      employees of the Group and to others within or without the Group, as Executive
      may deem necessary in order to conduct the Group's business and except as may
      be
      required pursuant to any court order, judgment or decision from any court of
      competent jurisdiction. The foregoing shall not apply to information which
      is in
      the public domain on the date hereof; which, after it is disclosed to Executive
      by the Group, is published or becomes part of the public domain through no
      fault
      of Executive; which is known to Executive prior to disclosure thereof to him
      by
      the Group as evidenced by his written records; or, after Executive is no longer
      employed by the Group, which is thereafter disclosed to Executive in good faith
      by a third party which is not under any obligation of confidence or secrecy
      to
      the Group with respect to such information at the time of disclosure to him.
      The
      provisions of this Section 6 shall continue in full force and effect
      notwithstanding termination of Executive's employment under this Agreement
      or
      otherwise.

     

    
      
        
        

      

      
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    (b) Executive
      agrees that if the Company has made and is continuing to make all required
      payments to him upon and after termination of his employment, then during the
      Restricted Period, Executive shall neither directly and/or indirectly (a)
      solicit, hire and/or contact any prior (within twelve (12) months) or then
      current employee of the Company and/or Related Entities nor any of their
      respective direct and/or indirect subsidiaries (collectively, the "Applicable
      Entities"), nor (b) solicit any business with any prior (within twelve (12)
      months of termination) or then current customer and/or client of the Applicable
      Entities. In addition, Executive shall not attempt (directly and/or indirectly)
      to do anything either by himself or through others that he is prohibited from
      doing pursuant to this Section 12. Given that this Agreement is providing
      significant benefits to Executive, Executive hereby agrees that during the
      Restricted Period, without the prior written consent of the Board, he will
      not,
      directly or indirectly, either as principal, manager, agent, consultant,
      officer, director, stockholder, partner, investor, lender or employee or in
      any
      other capacity, carry on, be engaged in or have any financial interest in,
      any
      business which is in competition with any business of the Applicable Entities.
      For purposes of this section, a business shall be deemed to be in competition
      with any business of the Applicable Entities if it is materially involved in
      the
      purchase, sale or other dealing in any property or the rendering of any service
      purchased, sold, dealt in or rendered by any member of the Applicable Entities
      within the same geographic area in which such member of the Applicable Entities
      effects such purchases, sales or dealings or renders such services; provided,
      however,
      that for
      the period commencing with the termination of Executive's employment, a business
      shall be deemed to be in competition with any business of the Applicable
      Entities only if it is materially involved in the retail brokerage business.
      Notwithstanding the foregoing, Executive shall be allowed to make passive
      investments in publicly held competitive businesses as long as his ownership
      is
      less than 5% of such business.

     

    (c) Executive
      acknowledges that the restrictive covenants (the "Restrictive Covenants")
      contained in this Section 12 are a condition of his continued employment and
      are
      reasonable and valid in geographical and temporal scope and in all other
      respects. If any court determines that any of the Restrictive Covenants, or
      any
      part of any of the Restrictive Covenants, is invalid or unenforceable, the
      remainder of the Restrictive Covenants and parts thereof shall not thereby
      be
      affected and shall be given full effect, without regard to the invalid portion.
      If any court determines that any of the Restrictive Covenants, or any part
      thereof, is invalid or unenforceable because of the geographic or temporal
      scope
      of such provision, such court shall have the power to reduce the geographic
      or
      temporal scope of such provision, as the case may be, and, in its reduced form,
      such provision shall then be enforceable. If Executive breaches, or threatens
      to
      breach, any of the Restrictive Covenants, the Company, in addition to and not
      in
      lieu of any other rights and remedies it may have at law or in equity, shall
      have the right to injunctive relief; it being acknowledged and agreed to by
      Executive that any such breach or threatened breach would cause irreparable
      and
      continuing injury to the Company and that money damages would not provide an
      adequate remedy to the Company.

     

    
      
        
        

      

      
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    13. Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties hereto with
      respect to the subject matter hereof and, upon its effectiveness, shall
      supersede all prior agreements, understandings and arrangements, both oral
      and
      written, between the Executive and the Company (or any of its affiliates) with
      respect to such subject matter. This Agreement may not be modified in any way
      unless by a written instrument signed by both the Company and the
      Executive.

     

    14. Survival.
      The
      respective rights and obligations of the parties hereunder shall survive any
      termination of the Executive’s employment hereunder, including without
      limitation, the Company’s obligations under Section 6, and the expiration of the
      Term of Employment, to the extent necessary to the intended preservation of
      such
      rights and obligations.

     

    15. Notices.
      All
      notices required or permitted to be given hereunder shall be in writing and
      shall be personally delivered by courier or sent by registered or certified
      mail, return receipt requested addressed as set forth herein. Notices personally
      delivered or sent by overnight courier shall be deemed given on the date of
      delivery and notices mailed in accordance with the foregoing shall be deemed
      given upon the earlier of receipt by the addressee, as evidenced by the return
      receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall
      be sent (i) if to the Company, addressed to National Holdings Corporation,
      120
      Broadway, 27th
      Floor,
      New York, NY 10271, Attention: Chairman, and (ii) if to the Executive, to his
      address as reflected on the payroll records of the Company, or to such other
      address as either party shall request by notice to the other in accordance
      with
      this provision.

     

    16. Benefits;
      Binding Effect.
      This
      Agreement shall be for the benefit of and binding upon the parties hereto and
      their respective heirs, personal representatives, legal representatives,
      successors and, where permitted and applicable, assigns, including, without
      limitation, any successor to the Company, whether by merger, consolidation,
      sale
      of stock, sale of assets or otherwise.

     

    17. Right
      to Consult with Counsel; No Drafting Party.
      The
      Executive acknowledges having read and considered all of the provisions of
      this
      Agreement carefully, and having had the opportunity to consult with counsel
      of
      his own choosing, and, given this, the Executive agrees that the obligations
      created hereby are not unreasonable. The Executive acknowledges that he has
      had
      an opportunity to negotiate any and all of these provisions and no rule of
      construction shall be used that would interpret any provision in favor of or
      against a party on the basis of who drafted the Agreement.

     

    18. Severability.
      The
      invalidity of any one or more of the words, phrases, sentences, clauses,
      provisions, sections or articles contained in this Agreement shall not affect
      the enforceability of the remaining portions of this Agreement or any part
      thereof, all of which are inserted conditionally on their being valid in law,
      and, in the event that any one or more of the words, phrases, sentences,
      clauses, provisions, sections or articles contained in this Agreement shall
      be
      declared invalid, this Agreement shall be construed as if such invalid word
      or
      words, phrase or phrases, sentence or sentences, clause or clauses, provisions
      or provisions, section or sections or article or articles had not been inserted.
      If such invalidity is caused by length of time or size of area, or both, the
      otherwise invalid provision will be considered to be reduced to a period or
      area
      which would cure such invalidity.

     

    
      
        
        

      

      
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    19. Waivers.
      The
      waiver by either party hereto of a breach or violation of any term or provision
      of this Agreement shall not operate nor be construed as a waiver of any
      subsequent breach or violation.

     

    20. No
      Mitigation.
      In no
      event shall the Executive be obligated to seek other employment or take any
      other action by way of mitigation of the amounts payable to the Executive under
      any of the provisions of this Agreement.

     

    21. Section
      Headings.
      The
      article, section and paragraph headings contained in this Agreement are for
      reference purposes only and shall not affect in any way the meaning or
      interpretation of this Agreement.

     

    22. No
      Third Party Beneficiary.
      Nothing
      expressed or implied in this Agreement is intended, or shall be construed,
      to
      confer upon or give any person other than the Company, the parties hereto and
      their respective heirs, personal representatives, legal representatives,
      successors and permitted assigns, any rights or remedies under or by reason
      of
      this Agreement.

     

    23. Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original but all of which together shall constitute one and
      the
      same instrument and agreement.

     

    24. Indemnification.

     

    (a) Subject
      to limitations imposed by law, the Company shall indemnify and hold harmless
      the
      Executive to the fullest extent permitted by law from and against any and all
      claims, damages, expenses (including reasonable attorneys’ fees), judgments,
      penalties, fines, settlements, and all other liabilities incurred or paid by
      him
      in connection with the investigation, defense, prosecution, settlement or appeal
      of any threatened, pending or completed action, suit or proceeding, whether
      civil, criminal, administrative or investigative and to which the Executive
      was
      or is a party or is threatened to be made a party by reason of the fact that
      the
      Executive is or was an officer, Executive or agent of the Company, or by reason
      of anything done or not done by the Executive in any such capacity or
      capacities, provided that the Executive acted in good faith, in a manner that
      was not grossly negligent or constituted willful misconduct and in a manner
      he
      reasonably believed to be in or not opposed to the best interests of the
      Company, and, with respect to any criminal action or proceeding, had no
      reasonable cause to believe his conduct was unlawful. The Company also shall
      pay
      any and all expenses (including reasonable attorney’s fees) incurred by the
      Executive as a result of the Executive being called as a witness in connection
      with any matter involving the Company and/or any of its officers or
      directors.

     

    (b) The
      Company shall pay any expenses (including reasonable attorneys’ fees),
      judgments, penalties, fines, settlements, and other liabilities incurred by
      the
      Executive in investigating, defending, settling or appealing any action, suit
      or
      proceeding described in this Section 24 in advance of the final disposition
      of
      such action, suit or proceeding. The Company shall promptly pay the amount
      of
      such expenses to the Executive, but in no event later than 10 days following
      the
      Executive’s delivery to the Company of a written request for an advance pursuant
      to this Section 24, together with a reasonable accounting of such
      expenses.

     

    
      
        
        

      

      
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    (c) The
      Executive hereby undertakes and agrees to repay to the Company any advances
      made
      pursuant to this Section 24 if and to the extent that it shall ultimately be
      found that the Executive is not entitled to be indemnified by the Company for
      such amounts.

     

    (d) The
      Company shall make the advances contemplated by this Section 24 regardless
      of
      the Executive’s financial ability to make repayment, and regardless whether
      indemnification of the Indemnitee by the Company will ultimately be required.
      Any advances and undertakings to repay pursuant to this Section 24 shall be
      unsecured and interest-free.

     

    (e) The
      provisions of this Section 24 shall survive the termination of the Term of
      Employment or expiration of the term of this Agreement.

     

    25. Vesting
      of Exchange Options.
      The
      Company hereby acknowledges and agrees to the terms of Section 3 of that certain
      Employment Termination Agreement of even date hereof, by and between Executive
      and vFinance, Inc., as it relates to the Exchange Options, as defined
      therein.

     

    
      
        
        

      

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

     

    
      	
              COMPANY:

            
	
               

            
	
              NATIONAL
                HOLDINGS CORPORATION

            
	
               

            	
               

            
	
              By:

            	
              /S/
                MARK GOLDWASSER

            
	
              Name:
                Mark Goldwasser

            
	
              Title:
                Chairman and CEO

            
	
               

            
	
              EXECUTIVE:

            
	
               

            
	
              /S/
                LEONARD J. SOKOLOW

            
	
              LEONARD
                J. SOKOLOW

            


    

     

    
      
        
        

      

      
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    EXHIBIT
      A

    CURRENT
      BOARDS

    


    Consolidated
      Water Co. Ltd. 


    
      
        
        

      

      
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    EXHIBIT
      B

    


    FORM
      OF RELEASE

     

    I,
      LEONARD J. SOKOLOW, on behalf of myself and my heirs, successors and assigns,
      in
      consideration of the performance by National Holdings Corporation., a Delaware
      corporation (together with its Subsidiaries, the “Company”),
      of
      its material obligations under the Employment Agreement, dated as of July 1,
      2008 (the “Agreement”),
      do
      hereby release and forever discharge as of the date hereof the Company, its
      Affiliates, each such Person’s respective successors and assigns and each of the
      foregoing Persons’ respective present and former directors, officers, partners,
      stockholders, members, managers, agents, representatives, employees (and each
      such Person’s respective successors and assigns) (collectively, the
“Released
      Parties”)
      to the
      extent provided below.

     

    1. I
      understand that any payments or benefits paid or granted to me under
Section
      6
      of the
      Agreement represent, in part, consideration for signing this General Release
      and
      are not salary, wages or benefits to which I was already entitled. I understand
      and agree that I will not receive the payments and benefits specified in
Section
      6
      of the
      Agreement unless I execute this General Release and do not revoke this General
      Release within the time period permitted hereafter or breach this General
      Release.

     

    2. I
      knowingly and voluntarily release and forever discharge the Company and the
      other Released Parties from any and all claims, controversies, actions, causes
      of action, cross-claims, counter-claims, demands, debts, compensatory damages,
      liquidated damages, punitive or exemplary damages, other damages, claims for
      costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in
      equity, both past and present (through the date of this General Release),
      whether under the laws of the United States or another jurisdiction and whether
      known or unknown, suspected or claimed against the Company or any of the
      Released Parties which I, my spouse, or any of my heirs, executors,
      administrators or assigns, have or may have, which arise out of or are connected
      with my employment with, or my separation from, the Company (including, but
      not
      limited to, any allegation, claim or violation, arising under: Title VII of
      the
      Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
      Discrimination in Employment Act of 1967, as amended (including the Older
      Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the
      Americans with Disabilities Act of 1990; the Family and Medical Leave Act of
      1993; the Civil Rights Act of 1866, as amended; the Worker Adjustment Retraining
      and Notification Act; the Employee Retirement Income Security Act of 1974;
      any
      applicable Executive Order Programs; the Fair Labor Standards Act; or their
      state or local counterparts; or under any other federal, state or local civil
      or
      human rights law, or under any other local, state, or federal law, regulation
      or
      ordinance; or under any public policy, contract or tort, or under common law;
      or
      arising under any policies, practices or procedures of the Company; or any
      claim
      for wrongful discharge, breach of contract, infliction of emotional distress,
      or
      defamation; or any claim for costs, fees, or other expenses, including
      attorneys’ fees incurred in these matters) (all of the foregoing collectively
      referred to herein as the “Claims”);
      provided,
      however, that nothing contained in this General Release shall apply to, or
      release the Company from, (i) any obligation of the Company contained in the
      Agreement to be performed after the date hereof or (ii) any vested or accrued
      benefits pursuant to any employee benefit plan, program or policy of the
      Company.

     

    
      
        
        

      

      
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    3. I
      represent that I have made no assignment or transfer of any right, claim,
      demand, cause of action, or other matter covered by paragraph 2
      above.

     

    4. I
      agree
      that this General Release does not waive or release any rights or claims that
      I
      may have under the Age Discrimination in Employment Act of 1967 which arise
      after the date I execute this General Release. I acknowledge and agree that
      my
      separation from employment with the Company in compliance with the terms of
      the
      Agreement shall not serve as the basis for any claim or action (including,
      without limitation, any claim under the Age Discrimination in Employment Act
      of
      1967).

     

    5. In
      signing this General Release, I acknowledge and intend that it shall be
      effective as a bar to each and every one of the Claims hereinabove mentioned
      or
      implied. I expressly consent that this General Release shall be given full
      force
      and effect according to each and all of its express terms and provisions,
      including those relating to unknown and unsuspected Claims (notwithstanding
      any
      state statute that expressly limits the effectiveness of a general release
      of
      unknown, unsuspected and unanticipated Claims), if any, as well as those
      relating to any other Claims hereinabove mentioned or implied. I acknowledge
      and
      agree that this waiver is an essential and material term of this General Release
      and that without such waiver the Company would not have agreed to the terms
      of
      the Agreement. I covenant that I shall not directly or indirectly, commence,
      maintain or prosecute or sue any of the Released Persons either affirmatively
      or
      by way of cross-complaint, indemnity claim, defense or counterclaim or in any
      other manner or at all on any Claim covered by this General Release. I further
      agree that in the event I should bring a Claim seeking damages against the
      Company, or in the event I should seek to recover against the Company in any
      Claim brought by a governmental agency on my behalf, this General Release shall
      serve as a complete defense to such Claims. I further agree that I am not aware
      of any pending charge or complaint of the type described in paragraph 2 as
      of
      the execution of this General Release.

     

    6. I
      agree
      that neither this General Release, nor the furnishing of the consideration
      for
      this General Release, shall be deemed or construed at any time to be an
      admission by the Company, any Released Party or myself of any improper or
      unlawful conduct.

     

    7. I
      agree
      that this General Release is confidential and agree not to disclose any
      information regarding the terms of this General Release, except to my immediate
      family and any tax, legal or other counsel I have consulted regarding the
      meaning or effect hereof or as required by law, and I will instruct each of
      the
      foregoing not to disclose the same to anyone.

     

    8. Any
      non-disclosure provision in this General Release does not prohibit or restrict
      me (or my attorney) from responding to any inquiry about this General Release
      or
      its underlying facts and circumstances by the Securities and Exchange
      Commission, FINRA or any other self-regulatory organization or governmental
      entity.

     

    9. Without
      limitation of any provision of the Agreement, I hereby expressly re-affirm
      my
      obligations under Section
      12
      under
      the Agreement.

     

    10. Whenever
      possible, each provision of this General Release shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this General Release is held to be invalid, illegal or unenforceable in
      any
      respect under any applicable law or rule in any jurisdiction, such invalidity,
      illegality or unenforceability shall not affect any other provision or any
      other
      jurisdiction, but this General Release shall be reformed, construed and enforced
      in such jurisdiction as if such invalid, illegal or unenforceable provision
      had
      never been contained herein. 

     

    
      
        
        

      

      
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    “Affiliate”
means,
      with respect to any Person, any Person that controls, is controlled by or is
      under common control with such Person or an Affiliate of such
      Person.

     

    “Person”
means
      an individual, a partnership, a limited liability company, a corporation, an
      association, a joint stock company, a trust, a joint venture, an unincorporated
      organization, investment fund, any other business entity and a governmental
      entity or any department, agency or political subdivision thereof. 

     

    “Subsidiary”
means,
      with respect to any Person, any corporation, limited liability company,
      partnership, association, or business entity of which (i) if a corporation,
      a
      majority of the total voting power of shares of stock entitled (without regard
      to the occurrence of any contingency) to vote in the election of directors,
      managers, or trustees thereof is at the time owned or controlled, directly
      or
      indirectly, by that Person or one or more of the other Subsidiaries of that
      Person or a combination thereof, or (ii) if a limited liability company,
      partnership, association, or other business entity (other than a corporation),
      a
      majority of partnership or other similar ownership interest thereof is at the
      time owned or controlled, directly or indirectly, by that Person or one or
      more
      Subsidiaries of that Person or a combination thereof. For purposes hereof,
      a
      Person or Persons shall be deemed to have a majority ownership interest in
      a
      limited liability company, partnership, association, or other business entity
      (other than a corporation) if such Person or Persons shall be allocated a
      majority of limited liability company, partnership, association, or other
      business entity gains or losses or shall be or control any managing director
      or
      general partner of such limited liability company, partnership, association,
      or
      other business entity.

     

    BY
      SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

     

    (a) I
      HAVE
      READ IT CAREFULLY;

     

    (b) I
      UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS,
      INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
      ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED;
      THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND
      THE
      EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

     

    (c) I
      VOLUNTARILY CONSENT TO EVERYTHING IN IT;

     

    (d) I
      HAVE
      BEEN ADVISED TO CONSULT WITH AN ATTORNEY (VIA THE AGREEMENT AND THIS RELEASE)
      BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND
      CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

     

    (e) I
      HAVE
      HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY
      IN ITS FINAL FORM ON _______________ __, _____ TO CONSIDER IT AND THE CHANGES
      MADE SINCE THE _______________ __, _____ VERSION OF THIS RELEASE ARE NOT
      MATERIAL AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;

     

    
      
        
        

      

      
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    (f) THE
      CHANGES TO THE AGREEMENT SINCE _______________ ___, _____ EITHER ARE NOT
      MATERIAL OR WERE MADE AT MY REQUEST.

     

    (g) I
      UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE
      IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE
      EIGHTH DAY FOLLOWING EXECUTION OF THE AGREEMENT;

     

    (h) I
      HAVE
      SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF
      ANY
      COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

     

    (i) I
      AGREE
      THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED
      OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED
      REPRESENTATIVE OF THE COMPANY AND BY ME.

     

    (j) THIS
      RELEASE SHALL REMAIN IN FULL FORCE AND EFFECT SO LONG AS THE COMPANY IS IN
      COMPLIANCE WITH ITS OBLIGATIONS TO PAY SEVERANCE AND PROVIDE THE OTHER
      POST-TERMINATION BENEFITS UNDER THE AGREEMENT, SUBJECT TO THE EXECUTIVE
      CONTINUING TO ABIDE BY THE POST-TERMINATION OBLIGATIONS AND COVENANTS CONTAINED
      IN THE AGREEMENT.

    

      
        	
                DATE:
                  ___________ __, ______

              	 


      

    


    
      
        
        

      

      
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    EXHBIIT
      C

     

    OPTION
      GRANT

    


    
      
        
        

      

      
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