AMENDMENT
NO. 1 TO
 EMPLOYEMENT
AGREEMENT
  THIS AMENDMENT, dated as of November
23, 2009 (this “Amendment”), between National Holdings Corporation(the “Company”) and Leonard Sokolow(the
“Executive”).
 
 W I T N E S S E T
H
  WHEREAS, the parties hereto have
heretofore entered into an Employment Agreement, dated July 1, 2008 (the
“Agreement”); and
  WHEREAS,
the Company and the Executive wish to amend the Agreement on the terms set forth
herein.
  NOW,
THEREFORE, the parties hereto, in consideration of the mutual promises herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby agree to amend the Agreement
as follows:
  1.           Definitions; References;
Continuation of Agreement.  Unless otherwise specified herein,
each term used herein that is defined in the Agreement shall have the meaning
assigned to such term in the Agreement.  Each reference to “hereof,”
“hereto,” “hereunder,” “herein” and “hereby” and each other similar reference,
and each reference to “this Agreement” and each other similar reference,
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby.  Except as amended hereby, all terms and
provisions of the Agreement shall continue unmodified and remain in full force
and effect.
   2.           Compensation.  Section
4(b) is hereby amended in its entirety as follows:
  “(b)(i)  Bonuses.  During
the Term of Employment, the Executive shall be entitled to receive the following
bonuses from the Company:
 
 ·
              for
      the first fiscal quarter, an amount equal to seven and one-half (7.5%)
      percent of the Company’s Adjusted EBITDA (as defined below) in excess of
      $375,000 for such first fiscal quarter (“First Interim
      Amount”);
  ·
              for
      the second fiscal quarter, an amount equal to the difference between (x)
      seven and one-half (7.5%) percent of the Company’s Adjusted EBITDA in
      excess of $750,000 for the first six months of the fiscal year and (y) the
      First Interim Amount (“Second Interim
Amount”);
  ·
              for
      the third fiscal quarter, an amount equal to the difference between (x)
      seven and one-half (7.5%) percent of the Company’s Adjusted EBITDA in
      excess of $1,125,000 for the first nine months of the fiscal year and (y)
      the Second Interim Amount (“Third Interim Amount”);
  and
  ·
              for
      the fourth fiscal quarter, an amount equal to the difference between (x)
      seven and one-half (7.5%) percent of the Company’s Adjusted EBITDA in
      excess of $1,500,000 for the entire fiscal year and (y) the Third Interim
      Amount (“Fourth Interim Amount”; and with the First, Second and Third
      Interim Amounts, the “Annualized
Bonus”);
  provided, however, fifty
percent (50%) of the First, Second, Third and Fourth Interim Amounts shall be
paid in cash as soon as practicable after the end of each fiscal quarter (“Paid
Portion”), and fifty percent (50%) of the First, Second, Third and Fourth
Interim Amounts shall accrue until the conclusion of the fiscal year (“Accrued
Portion”).
  1
  For the
purpose of this Agreement, “Adjusted EBITDA” shall mean the net income of the
Company for a particular fiscal quarter before interest, taxes, depreciation and
amortization, adjusted to exclude non-cash compensation expense (including the
amortization of costs associated with the issuance of stock options) and write
down of forgivable loans.
  Notwithstanding
anything to the contrary in this sub-section (b)(i):
  ·
              at
      the conclusion of the fiscal year, the Company and the Executive shall
      ‘true up’ the Annualized Bonus, the Paid Portion and the Accrued Portion,
      with payment (if any) to made as soon as practicable following the
      determination of such ‘true up’
amount.
  ·
              To
      the extent that the Adjusted EBITDA for such fiscal year is between
      $1,500,000 and $4,500,000), up to 100% of the Accrued Portion may, at the
      Board’s discretion, be satisfied by the issuance of the Company’s
      restricted common stock, at its then fair market
  value.
  ·
              To
      the extent that the Adjusted EBITDA for such fiscal year exceeds
      $4,500,000, the Accrued Portion shall be paid in
  cash.
  ·
              To
      the extent that the ‘true up’ calculation results in a negative amount
      (i.e., the Paid Portion exceeds the Annualized Bonus) then (i) the Company
      shall have no right to clawback such amount from the Executive but (ii)
      such amount shall first be deducted from the Annualized Bonus (if any) to
      be paid for future periods.
  ·
              All
      bonuses shall be subject to applicable withholding taxes which shall be
      paid by the Company and other similar deductions and any payment of
      Accrued Bonus payable in Company common stock shall accordingly be
      calculated net of such withholding on the aggregate bonus amount
      paid.
  Notwithstanding
anything to the contrary in this Section 2(b)(i), in no event shall the
Annualized Bonus  exceed an amount equal to 100% of the then current
Base Salary for such fiscal year.
 
 (ii)           In
addition to the bonus set forth is 4(b)(i) above, the Executive shall be
entitled to 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.  Payment of such
additional Bonuses may be in the form of cash and/or Company common stock at the
Board’s discretion.
 
 4.           Counterparts.  This
Amendment may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
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  5.           Governing
Law.  This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
  IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed on the date first above written.
  NATIONAL
      HOLDINGS CORPORATIONBy:/S/
      MARK GOLDWASSER
                    Mark
      Goldwasser, Chief Executive Officer/S/
      LEONARD SOKOLOWLeonard
      Sokolow
 
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