UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
(Amendment
No. )
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o |
Preliminary
Proxy Statement
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o |
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)2))
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x |
Definitive
Proxy Statement
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o |
Definitive
Additional Materials
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o |
Soliciting
Material Pursuant to Rule 14(a)-12
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NATIONAL
HOLDINGS CORPORATION
(Name
of
Registrant as Specified in Charter)
Payment
of filing fee (check the appropriate box):
o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1) |
Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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o |
Fee
paid previously with preliminary materials.
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o |
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the form or schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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NATIONAL
HOLDINGS CORPORATION
Notice
of
Annual Meeting of Shareholders
To
Be
Held Wednesday, March 13, 2007 at 12:00 P.M.
To
the
Shareholders:
The
Annual Meeting of Shareholders of National Holdings Corporation will be held
on
March 13, 2007 at 12:00 P.M. at the Company’s headquarters, located at 120
Broadway, 27th
Floor,
New York, New York 10271, for the following purposes:
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1.
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To
elect two (2) Class III directors to serve until the 2010 Annual
Meeting
of Shareholders and until their successors are elected and
qualified;
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2.
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To
ratify the appointment of Marcum & Kliegman LLP as independent public
accountants for the fiscal year ending September 30, 2007;
and
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3.
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To
transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
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Owners
of
record at the close of business on January 16, 2007 will be entitled to vote
at
the Annual Meeting or at any adjournments or postponements thereof. A complete
list of the shareholders entitled to vote at the Annual Meeting will be made
available for inspection by any shareholder of record at the offices of the
Company during market hours from March
2,
2007
through the time of the Annual Meeting.
Your
vote
is very important. For
this
reason, our Board of Directors is soliciting your proxy to vote your shares
of
common stock at the meeting. The entire cost of soliciting proxies will be
borne
by the Company. The cost of solicitation will include the cost of supplying
necessary additional copies of the solicitation materials and the Company's
2006
Annual Report to Shareholders (the "Annual Report") to beneficial owners of
shares held of record by brokers, dealers, banks, trustees, and their nominees,
including the reasonable expenses of such recordholders for completing the
mailing of such materials and Annual Report to such beneficial owners.
In
voting
at the Annual Meeting, each shareholder of record on the Record Date shall
be
entitled to one vote on all matters. Holders of a majority of the outstanding
shares of Common Stock must be represented in person or by proxy in order to
achieve a quorum to vote on all matters other than the election of directors.
The Proxy Statement, the attached Notice of Meeting, the enclosed proxy card
and
the Annual Report to Shareholders are being mailed to shareholders on or about
January 25, 2007.
NO
PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN
THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED AND THE DELIVERY OF THIS
PROXY
STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROXY.
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By
Order of the Board of Directors
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/s/
Robert H. Daskal
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Robert
H. Daskal
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Secretary
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Chicago,
Illinois
January
25, 2007
NATIONAL
HOLDINGS CORPORATION
120
Broadway, 27th
Floor
New
York, New York 10271
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
To
Be
Held March 13, 2007
General
The
enclosed proxy is solicited on behalf of the Board of Directors of National
Holdings Corporation, a Delaware corporation (“National Holdings” or the
“Company”), for use at the Annual Meeting of Shareholders to be held on March
13, 2007, and any adjournment or postponement thereof. The Annual Meeting will
be held at 12:00 P.M. (local time) at the Company’s headquarters, located at 120
Broadway, 27th
Floor,
New York, New York 10271. This Proxy Statement, the enclosed proxy card and
the
Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2006 are being mailed on or about January 25, 2007 to shareholders entitled
to
vote at the meeting.
Record
Date and Voting Shares
The
close
of business on January 16, 2007 has been fixed as the record date (the “Record
Date”) for determining the shareholders of record entitled to notice of and to
vote at the Annual Meeting. At the close of business on the Record Date, there
were outstanding and entitled to vote 5,358,611 shares of Common Stock, $.02
par
value (the “Common Stock”), 35,316 shares of Series A Convertible Preferred
Stock, $.01 par value (the “Series A Preferred Stock”) and 10,000 shares of
Series B Convertible Preferred Stock, $.01 par value (the “Series B Preferred
Stock” and together with the Series A Preferred Stock, the “Preferred Stock”).
Each share of Series A Preferred Stock is convertible into Common Stock at
the
current conversion price of $1.25 per share and each share of Series B Preferred
Stock is convertible into Common Stock at the conversion price of $.75 per
share. The holder of each share of Preferred Stock is entitled to the number
of
votes equal to the number of shares of common stock into which such share of
Preferred Stock could be converted at the Record Date. Accordingly, as of the
Record Date, there were 9,517,224 shares entitled to vote, consisting of
5,358,611 shares of Common Stock outstanding, 2,825,280 shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and 1,333,333 shares
of
Common Stock issuable upon conversion of the Series B Preferred Stock. Each
share of Common Stock entitles the holder thereof to one vote upon any proposal
submitted for a vote at the Annual Meeting.
Directors
are elected by a plurality of the votes, which means that the nominee who
receives the largest number of properly executed votes will be elected as a
director. Shares that are represented by proxies that are marked “withhold
authority” for the election of the director nominee will not be counted in
determining the number of votes cast for that person. Any other matters properly
considered at the meeting will be determined by a majority of the votes
cast.
Voting
of Proxies
Shares
of
Common Stock represented by Proxies, which are properly executed, duly returned
and not revoked, will be voted in accordance with the instructions contained
therein. If no instruction is indicated on the Proxy, the shares of Common
Stock
represented thereby will be voted: (i) FOR
the
election of the Class III Directors for a term ending in 2010; (ii) FOR
the
ratification of the appointment of Marcum & Kliegman LLP as our independent
public accountants for the year ending September 30, 2007; and (iii) at the
discretion of the person or persons voting the Proxy, with respect to any other
matter that may properly be brought before the Meeting. The execution of a
Proxy
will in no way affect a shareholder's right to attend the Meeting and vote
in
person. Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business. If a broker
indicates on the enclosed proxy or its substitute that it does not have
discretionary authority as to certain shares to vote on a particular matter
(“broker non-votes”), those shares will not be considered as voting with respect
to that matter. The Company believes that the tabulation procedures to be
followed by the Inspector of Elections are consistent with the general
requirements of Delaware law concerning voting of shares and determination
of a
quorum.
Revocation
of Proxies
You
may
revoke or change your proxy at any time before the Annual Meeting by filing
with
the Secretary of the Company, at 875 North Michigan Avenue, Suite 1560, Chicago,
Illinois 60611, a notice of revocation or another signed proxy with a later
date. You may also revoke your proxy by attending the Annual Meeting and voting
in person.
If
any
shareholder is unable to attend the Annual Meeting, such shareholder may vote
by
proxy. If a proxy is properly executed and returned to the Company in time
to be
voted at the Annual Meeting, it will be voted as specified in the proxy, unless
it is properly revoked prior thereto. Votes cast in person or by proxy at the
Annual Meeting will be tabulated by the Inspector of Elections appointed for
the
meeting and will determine whether or not a quorum is present. The holders
of a
majority of the shares of stock entitled to vote at the meeting, present in
person or represented by proxy shall constitute a quorum for the transaction
of
business.
Solicitation
The
Company will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this Proxy Statement, the proxy and any
additional solicitation materials furnished to the shareholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
Shareholder
Proposals for 2008 Annual Meeting
Any
shareholder who intends to present a proposal at the Company's 2008 Annual
Meeting of Shareholders must ensure that the proposal is received by the
Corporate Secretary at National Holdings Corporation, 875 North Michigan Avenue,
Suite 1560, Chicago, Illinois 60611:
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not
later than September
27,
2007, if the proposal is submitted for inclusion in our proxy materials
for that meeting pursuant to Rule 14a-8 under the Securities Exchange
Act
of 1934; or
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· |
on
or after December
13,
2007, and on or before December
27,
2007, if the proposal is submitted pursuant to the Company’s by-laws, in
which case the notice of the proposal must meet certain requirements
set
forth in our by-laws.
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Dissenters’
Right of Appraisal
Under
Delaware law, shareholders are not entitled to dissenters’ rights on any
proposal referred to herein.
Security
Ownership of Certain Beneficial Owners and Management
Certain
Beneficial Owners
The
following table sets forth certain information with respect to persons known
by
the management of the Company to own beneficially more than five percent (5%)
of
the voting securities of the Company as of January 16, 2007:
Name
and Address of
Beneficial
Owner
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Amount
and Nature
of
Beneficial
Ownership
(1)
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Percentage
of
Class
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Marshall
S. Geller
c/o
St. Cloud Capital Partners, L.P.
10866
Wilshire Boulevard, Suite 1450
Los
Angeles, CA 90024
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2,303,383
(2)
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30.28%
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Mark
Goldwasser
120
Broadway, 27th Floor
New
York, NY 10271
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1,239,953
(3)
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19.00%
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Gregory
P. Kusnick and Karen Jo Gustafson
715
Second Avenue, Unit 1904
Seattle,
WA 98104
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610,000
(4)
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10.22%
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Gregory
C. Lowney and Maryanne K. Snyder
15207
NE 68th Street
Redmond,
WA 98052
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610,000
(4)
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10.22%
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Triage
Partners LLC
90
Park Avenue, 39th Floor
New
York, NY 10016
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1,134,040
(5)
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18.27%
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Steven
A. Rothstein
2737
Illinois Road
Wilmette,
IL 60091
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420,530
(6)
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7.56%
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Strategic
Turnaround Equity Partners, LP
c/o
Galloway Capital Management, LLC
720
Fifth Avenue, 10th Floor
New
York, NY 10019
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721,596
(7)
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13.47%
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Bedford
Oak Advisors, LLC
100
South Bedford Road
Mt.
Kisco, NY 10549
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308,090
(8)
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5.75%
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Christopher
C. Dewey
120
Broadway, 27th
Floor
New
York, NY 10271
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276,924
(9)
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5.10%
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(1)
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All
securities are beneficially owned directly by the persons listed
on the
table (except as otherwise
indicated).
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(2)
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Includes
1,133,333
shares issuable upon conversion of 8,500 shares of Series B Preferred
Stock, 850,000 shares issuable upon conversion of a convertible promissory
note, 255,000 shares issuable upon exercise of warrants owned indirectly
through St.
Cloud Capital Partners, L.P., and 10,000 shares issuable
upon exercise
of
vested stock options.
Mr. Geller disclaims beneficial ownership of the securities owned
by
St.
Cloud Capital Partners, L.P.
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(3)
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Includes
798,960 shares issuable upon conversion of 9,987 shares of Series
A
Preferred Stock owned indirectly through One Clark LLC, 20,425 shares
owned by direct family members and 367,000 shares issuable
upon exercise
of
vested stock options.
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(4)
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Includes
510,000 shares issuable upon conversion of 6,375 shares of Series
A
Preferred Stock and 100,000 shares issuable
upon exercise of warrants
owned as joint tenants with rights of
survivorship.
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(5)
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Includes
799,040 shares issuable upon conversion of 9,988 shares of Series
A
Preferred Stock and 50,000 shares
issuable upon exercise of
warrants.
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(6)
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Includes
shares owned directly and indirectly as provided in information filed
with
the SEC in a Schedule 13D/A dated August 23,
2006.
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(7)
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Includes
shares owned directly and indirectly as provided in information filed
with
the SEC in a Schedule 13D/A dated August 1,
2006.
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(8)
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Includes
shares owned directly and indirectly as provided in information filed
with
the SEC in a Schedule 13G dated March 16,
2006.
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(9)
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Includes
25,000 shares owned by Mr. Dewey’s daughters and 75,000 shares issuable
upon exercise of vested stock options. Mr. Dewey disclaims beneficial
ownership of the securities owned by his
daughters.
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Security
Ownership of Management
The
following information is furnished as of January 16, 2007 as to each class
of
equity securities of the Company beneficially owned by all directors and named
executive officers of the Company:
Name
of Beneficial Owner
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Amount
and Nature of
Beneficial
Ownership
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Percent
of Class
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Mark
Goldwasser - Chairman, President and Chief Executive
Officer
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1,239,953
(1)
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19.00%
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Gary
A. Rosenberg - Director
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50,000
(2)
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0.92%
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Peter
Rettman - Director
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150,000
(3)
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2.72%
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Robert
J. Rosan - Director
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50,000
(2)
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0.92%
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Norman
J. Kurlan - Director
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42,800
(4)
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0.79%
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Marshall
S. Geller - Director
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2,303,383
(5)
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30.28%
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Christopher
C. Dewey - Director
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276,924
(6)
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5.10%
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Robert
H. Daskal - Chief Financial Officer and Secretary
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116,875
(7)
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2.14%
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David
McCoy - Chief Operating Officer
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60,000
(2)
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1.11%
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Brian
Friedman - Executive
Vice President and Assistant
Secretary
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135,000
(8)
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2.46%
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All
executive officers and directors of the Company as a group (ten
persons)
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4,424,935
(9)
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46.96%
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(1)
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Includes
798,960 shares issuable upon conversion of 9,987 shares of Series
A
Preferred Stock owned indirectly through One Clark LLC, 20,425 shares
owned by direct family members and 367,000 shares issuable
upon exercise
of
vested stock options.
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(2)
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Includes
50,000 shares issuable
upon exercise
of
vested stock options.
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(3)
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Includes
150,000 shares
issuable upon exercise of
warrants.
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(4)
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Includes
2,800 shares owned by a direct family member and 40,000 shares
issuable
upon exercise
of
vested stock options.
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(5)
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Includes
1,133,333
shares issuable upon conversion of 8,500 shares of Series B Preferred
Stock, 850,000 shares issuable upon conversion of a convertible promissory
note and 255,000 shares issuable upon exercise of warrants owned
indirectly through St.
Cloud Capital Partners, L.P., and 10,000 shares issuable
upon exercise
of
vested stock options.
Mr. Geller disclaims beneficial ownership of the securities owned
by
St.
Cloud Capital Partners, L.P.
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(6) |
Includes
25,000 shares owned by Mr. Dewey’s daughters and 75,000 shares issuable
upon exercise of vested stock options. Mr. Dewey disclaims beneficial
ownership of the securities owned by his
daughters.
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(7)
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Includes
110,000 shares issuable upon exercise
of
vested stock
options.
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(8)
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Includes
125,000 shares issuable upon exercise
of
vested stock
options.
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(9)
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Includes
798,960 shares issuable upon conversion of 9,987 shares of Series
A
Preferred Stock, 1,133,333 shares issuable upon conversion of 8,500
shares
of Series B Preferred Stock, 850,000 shares
issuable upon conversion of a convertible promissory note, 877,000
shares
issuable upon exercise of vested stock options and 405,000 shares
issuable
upon exercise of warrants.
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PROPOSAL
1
ELECTION
OF DIRECTORS
Our
Board
of Directors currently consists of seven (7) members and is divided into three
(3) classes, one class of which is elected at each Annual Meeting of
Shareholders to hold office for a three-year term and until successors of such
class have been elected and qualified. A majority of the Board of Directors
is
comprised of independent directors. The nominees to serve as Class III Directors
of the Board of Directors are set forth below and each has consented to being
named in this proxy statement and has agreed to serve if elected. Mr. Rettman,
a
Class III director, is not seeking re-election at this year’s Annual Meeting.
Mr. Rettman’s decision not to stand for re-election was not the result of any
disagreement with the Company or management. Accordingly, we will have a vacancy
for a Class III Board member which is not being filled at this year’s Annual
Meeting. The Company is currently in the process of identifying a candidate
for
this position. The proxy holders intend to vote all proxies received by them
in
the accompanying form for the nominees for director listed below. In the event
that a nominee is unable or declines to serve as a director at the time of
the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as a director, the proxy
holders intend to vote all proxies received by them for the nominees listed
below. As of the date of this Proxy Statement, the Board of Directors is not
aware of any nominee who is unable or will decline to serve as a
director.
Each
shareholder will be entitled to one (1) vote for each share of Common Stock
held
as of the Record Date. Shares represented by your proxy will be voted in
accordance with your direction as to the election as a director of the person
listed below as a nominee. In the absence of direction, the shares represented
by your proxy will be voted FOR
such
election. Election requires the affirmative vote by the holders of a majority
of
the Common Stock voting at the Annual Meeting.
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Class
and Year
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Director
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In
Which Term
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Name
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Age
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Since
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Will
Expire
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Nominees
for Director
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Mark
Goldwasser
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48
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2001
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Class
III, 2010
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Gary
A. Rosenberg (1)(2)(3)
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66
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1997
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Class
III, 2010
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Directors
Continuing in Office
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Class
and Year
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Director
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In
Which Term
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Name
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Age
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Since
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Will
Expire
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Marshall
S. Geller (2)(3)
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67
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2006
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Class
I, 2008
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Christopher
C. Dewey (2)
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62
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2006
|
Class
I, 2008
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Robert
J. Rosan (1)(2)(3)
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75
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2001
|
Class
II, 2009
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Norman
J. Kurlan (1)(3)
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54
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2003
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Class
II, 2009
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____________________
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(1)
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Member
of Audit Committee
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(2)
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Member
of Compensation Committee
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(3)
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Member
of Governance Committee
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Set
forth
below is the principal occupations of each director during the past five (5)
years.
Mark
Goldwasser has
served as a director of the Company since December 28, 2001. Mr. Goldwasser
joined the Company in June 2000. Mr. Goldwasser was named President in August
2000, Chief Executive Officer in December 2001 and Chairman in April 2005.
Prior
to joining the Company, Mr. Goldwasser was the Global High Yield Sales Manager
at ING Barings from 1997 to 2000. From 1995 to 1997, Mr. Goldwasser was the
Managing Director of High Yield Sales at Schroders & Co., and from 1991 to
1995, the Vice President of Institutional High Yield Sales at Lazard Freres
& Co. From 1984 to 1991, Mr. Goldwasser served as the Associate Director of
Institutional Convertible Sales and Institutional High Yield Sales at Bear
Stearns & Co., Inc. From 1982 to 1984, Mr. Goldwasser was a Floor member of
the New York Mercantile Exchange (NYMEX) and the Commodity Center (COMEX).
Mr.
Goldwasser received his BA with Honors from the University of Capetown in
1979.
Gary
A. Rosenberg
has
served
as a director of the Company since its inception in February 1997 and served
as
its President from August 1997 until April 1998. Mr. Rosenberg was Chairman
and
CEO of UDC Homes, Inc. (and its predecessors) from 1968 to 1994, and the
Chairman (non-management) from 1994 to 1996. Presently, Mr. Rosenberg is
President and Chief Executive Officer of Urban R2 Development Company LLC.
In
February 2004, Mr. Rosenberg filed for bankruptcy protection under Chapter
7 in
the U.S. Bankruptcy Court for the Northern District of Illinois. Mr. Rosenberg
is also Chairman and Director of the Rosenberg Foundation; Founder and Chairman
of the Real Estate Research Center and a member of the Board at The Kellogg
Graduate School of Management at Northwestern University; and a Trustee of
St.
Norbert College. Mr. Rosenberg received his BS and MBA from Northwestern
University and his JD from the University of Wisconsin.
Robert
J. Rosan has
served as a director of the Company since December 28, 2001. He has
been
a
partner in the law firm of Rosan & Rosan P.C. for 34 years, specializing in
real estate, banking and contract law. Mr. Rosan received his LLB from Columbia
Law School, and is an active real estate investor and developer.
Norman
J. Kurlan
has
served as a director of the Company since July 28, 2003. Mr. Kurlan is
currently
an independent commissioned representative with the broker dealer American
Portfolios, and has held similar position with Nathan and Lewis Securities.
Mr.
Kurlan was employed by Bear Stearns & Co. in Private Client Services in New
York City from 1981 to 1996. Mr. Kurlan received his BS in business
administration from Boston University, an MBA in accounting from St. Johns
University and an advanced profession post graduate degree in investment
management and finance from New York University.
Marshall
S. Geller
has
served
as a director of the Company since January 11, 2006. Mr.
Geller is the Co-Founder and Senior Managing Partner of St. Cloud Capital
Partners, L.P., a Los Angeles based private investment fund formed in December
2001. He is also Chairman, CEO and Founding Partner of Geller & Friend
Capital Partners, Inc., a private merchant bank formed in November 1995. Mr.
Geller has spent more than 35 years in corporate finance and investment banking,
including 21 years as Senior Managing Director for Bear, Stearns and Company,
with oversight of all operations in Los Angeles, San Francisco, Chicago, Hong
Kong and the Far East. Mr. Geller currently serves as Non-Executive Chairman
of
the Board of Directors of ShopNBC-Value Vision Media, Inc. (Nasdaq:VVTV) and
as
director on the Boards of GP Strategies Corporation (NYSE:GPX), 1st Century
Bank
N.A., (Nasdaq:FCNA), SCPIE Holdings (NYSE.SKP) and Blue Holdings, Inc.
(Nasdaq:BLUE) and is on the Board of Governors of Cedars-Sinai Medical Center,
Los Angeles. Mr. Geller graduated from California State University, Los Angeles,
with a BS in Business Administration, where he currently serves on the Dean's
Advisory Council for the College of Business & Economics.
Christopher
C. Dewy has
served as a director of the Company since December 27, 2006. From 1993 to prior
to joining the Company, Mr. Dewey served as Executive Vice President of
Jefferies & Company, Inc. Prior to joining Jefferies & Company, Inc.,
Mr. Dewey was a partner of Merrion Group (1990-1993) and Bear Stearns
(1979-1990). Mr. Dewey earned an MBA from the Wharton School in 1987.
CORPORATE
GOVERNANCE
The
Company’s business affairs are conducted under the direction of the Board of
Directors in accordance with the Delaware Business Corporation Act and the
Company’s Certificate of Incorporation and Bylaws. Members of the Board of
Directors are informed of the Company’s business through discussions with
management, by reviewing materials provided to them and by participating in
meetings of the Board of Directors and its committees. Certain corporate
governance practices that the Company follows are summarized below.
Code
of Ethics and Business Conduct
We
have
adopted the National Holdings Corporation Code of Ethics and Business Conduct
(the “Code of Conduct”), a code of conduct that applies to our directors,
officers and employees. The Code of Conduct was filed as an exhibit to our
Annual Report on Form 10-K for the fiscal year ended September 30, 2003 and
is
publicly available on the SEC’s website at www.sec.gov.
If we
make any substantive amendments to the Code of Conduct or grant any waiver,
including any implicit waiver from a provision of the Code of Conduct to our
directors or executive officers, we will disclose the nature of such amendment
or waiver in a report on Form 8-K.
Meetings
and Committees of the Board of Directors and Corporate Governance
Matters
During
the fiscal year ended September 30, 2006, the Company’s Board of Directors met
or acted by unanimous written consent a total of 13 times. Each director
attended or participated in 75% or more of the aggregate of the total number
of
meetings of the Board of Directors.
Committees
of the Board of Directors
The
Board
of Directors has an Audit Committee, a Compensation Committee and a Governance
Committee, all the members of which, with the exception of Mr. Dewey, are
independent, as defined by Securities and Exchange Commission (the “SEC”) rules.
Each director attended or participated in 75% or more of the aggregate of the
total number of meetings held by all committees of the Board of Directors on
which such director served during fiscal year 2006.
Director
Qualifications.
The
Board of Directors does not currently have a nominating committee, as the
Company believes that having the full Board deliberate the nomination process
is
in the Company’s best interest. Board of Director nominations are recommended by
the directors, which has recommended the nominees named above for election
at
the 2007 Annual Meeting, other than Mr. Dewey who joined the Board after such
recommendation was made. In making its nominations, the Board of Director
identifies candidates who meet the current challenges and needs of the Board
of
Directors. In determining whether it is appropriate to add or remove
individuals, the Board of Directors will consider issues of judgment, diversity,
age, skills, background and experience. In making such decisions, the Board
of
Directors considers, among other things, an individual’s business experience,
industry experience, financial background and experiences. The Board of
Directors also considers the independence, financial literacy and financial
expertise standards required by our Board of Directors committees’ charters and
applicable laws, rules and regulations, and the ability of the candidate to
devote the time and attention necessary to serve as a director and a committee
member.
Identifying
and Evaluating Nominees for Director. In
the event that vacancies are anticipated or otherwise arise, the Board of
Directors considers various potential candidates for director. Candidates may
come to the attention of the Board through current directors, professional
search firms engaged by us, shareholders or other persons. Candidates are
evaluated at regular or special meetings of the Board of Directors and may
be
considered at any point during the year.
Shareholder
Nominees. Candidates
for director recommended by shareholders will be considered by the Board of
Directors. Such recommendations should include the candidate’s name, home and
business contact information, detailed biographical data, relevant
qualifications for membership on our Board of Directors, information regarding
any relationships between the candidate and us within the last three years,
including stockholdings in us, and a written indication by the recommended
candidate of the candidate’s willingness to serve, and should be sent to the
Board of Directors at the address listed on page 10 of this proxy
statement.
The
Board
of Directors will evaluate recommendations for director nominees submitted
by
directors, management or qualifying shareholders in the same manner, using
the
criteria stated above. All directors and director nominees will submit a
completed form of directors’ and officers’ questionnaire as part of the
nominating process. The process may also include interviews and additional
background and reference checks for non-incumbent nominees, at the discretion
of
the Board of Directors.
Audit
Committee
The
Audit
Committee for fiscal year 2006 consisted of Gary A. Rosenberg, Robert J. Rosan
and Norman J. Kurlan. The members are “independent” as defined in SEC Rule 10A-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and
Rule 4200 of the Nasdaq Market Place Rules.
On
January 22, 2003, the Board adopted a charter for the Audit Committee, as
amended and restated on January 12, 2004. The Audit Committee oversees the
Company's financial reporting process on behalf of the Board of Directors.
Management is responsible for the Company's internal controls, financial
reporting process and compliance with laws and regulations and ethical business
standards. The independent public accountants are responsible for performing
an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee has the power and authority to engage the
independent public accountants, reviews the preparations for and the scope
of
the audit of the Company’s annual financial statements, reviews drafts of the
statements and monitors the functioning of the Company’s accounting and internal
control systems by through discussions with representatives of management,
the
independent public accountants and the internal auditors.
Under
SEC
rules, companies are required to disclose whether their audit committees have
an
“audit committee financial expert” as defined in Item 401(h) of Regulation S-K
under the Securities Exchange Act of 1934 and whether that expert is
“independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Exchange Act. The Board of Directors has determined that Mr.
Rosenberg is a “financial expert” and is also “independent.” The
Audit
Committee meets quarterly and on an on-needed basis. The Committee met four
times during the year ended September 30, 2006.
Compensation
Committee
The
Company’s Compensation Committee for fiscal year 2006 consisted of Robert J.
Rosan, Gary A. Rosenberg and Marshall S. Geller, all of whom are
considered to be “independent.” On December 27, 2006, Christopher C. Dewey was
appointed to the Compensation Committee. Mr. Dewey is not considered to be
“independent” under SEC rules. On January 12, 2004, the Compensation Committee
adopted a formal Compensation Committee Charter, which contains a detailed
description of the committee's duties and responsibilities. The Compensation
Committee meets annually and on an on-needed basis. The Committee met one time
during the year ended September 30, 2006.
Governance
Committee
The
Governance Committee for fiscal year 2006 consisted of Marshall S. Geller,
Gary
A. Rosenberg, Robert J. Rosan and Norman J. Kurlan. The members are
“independent” as defined in SEC Rule 10A-3 under the Exchange Act and Rule 4200
of the Nasdaq Market Place rules.
The
Governance Committee was created with certain duties and responsibilities
including setting the Company’s trading policy, monitoring Sarbanes-Oxley
matters, resolving Board conflicts and/or such other duties and responsibilities
as set forth in the Corporate Governance Committee charter. The Governance
Committee meets on an on-needed basis. The Committee met one time during the
year ended September 30, 2006.
Compensation
Committee Interlocks and Insider Participation
No
interlocking relationships existed between any members of the Company’s Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company during the fiscal year ended September 30, 2006,
nor has any such interlocking relationship existed in the past.
Procedures
for Shareholder Communications to Directors
Shareholders
may communicate directly with the Board of Directors. All communications should
be directed to our Corporate Secretary at the address below and should
prominently indicate on the outside of the envelope that it is intended for
the
Board of Directors or for non-management directors. If no director is specified,
the communication will be forwarded to the entire Board. Shareholder
communications to the Board should be sent to:
Corporate
Secretary
Attention:
Board of Directors
National
Holdings Corporation
875
North
Michigan Avenue, Suite 1560
Chicago,
IL 60611
Director
Attendance Policy
Attendance
of directors at our annual meetings of shareholders can provide our shareholders
with an opportunity to communicate with directors about issues affecting the
Company. Accordingly, all directors are encouraged to attend annual meetings
of
shareholders; however, attendance is not mandatory. All of the Company’s
directors attended the last annual meeting of shareholders, which was held
in
March 2006.
Directors
Compensation
Effective
January 1, 2004, each outside director is paid a directors fee of $15,000 per
annum, payable quarterly. Outside directors are also granted options to purchase
10,000 shares of the Company’s Common Stock each year of their tenure on the day
after the date of the Company’s Annual Meeting of Shareholders, which fully vest
six (6) months after the date of issuance. The exercise price of such options
equal or exceed fair market value of the Common Stock on the date of grant.
The
Company reimburses all directors for expenses incurred traveling to and from
Board meetings. The Company does not pay inside directors any compensation
as a
director. The compensation for directors was approved by the disinterested
members of the Board of Directors.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AS A
DIRECTOR OF THE COMPANY.
PROPOSAL
2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The
Board
of Directors, acting on the recommendation of the Audit Committee, has appointed
Marcum & Kliegman LLP, as the independent public accountants for the Company
for the fiscal year ending September 30, 2007. The Board of Directors requests
that the shareholders ratify the appointment. If the shareholders do not ratify
the appointment, the Board of Directors will consider the selection of another
public accounting firm for fiscal year 2007 and future years. One or more
representatives of Marcum & Kliegman LLP may attend the Annual Meeting and,
if so, will have an opportunity to make a statement if they so desire, and
would
be available to answer questions.
Audit
Fees.
Fees
for services performed by Marcum & Kliegman LLP during fiscal years 2006 and
2005 relating to the audit of our consolidated annual financial statements,
the
review of our consolidated quarterly financial statements included in our Forms
10-Q and preparation of Federal and state income tax returns were $225,000
and
$219,000, respectively.
Audit-Related
Fees.
“Audit-related fees” include fees billed for assurance and related services that
are reasonably related to the performance of the audit and not included in
the
“audit fees” mentioned above. There were no such fees paid in fiscal years 2006
or 2005.
Tax
Fees.
The
fees billed in fiscal years 2006 or 2005 for tax compliance, tax advice or
tax
planning are included in Audit Fees above.
All
Other Fees.
Fees
for
services performed by Marcum & Kliegman LLP during fiscal year 2006 relating
to the Company’s registration statement were $15,000. There were no fees for
other audit related services in fiscal year 2005.
Pre-Approval
Policies
Pursuant
to the rules and regulations of the SEC, before the Company’s independent public
accountant is engaged to render audit or non-audit services, the engagement
must
be approved by the Company’s audit committee or entered into pursuant to the
committee’s pre-approval policies and procedures. The policy granting
pre-approval to certain specific audit and audit-related services and specifying
the procedures for pre-approving other services is set forth in the Amended
and
Restated Charter of the Audit Committee.
Required
Vote
The
affirmative vote of the holders of a majority of the shares present, or
represented, and entitled to vote at the Annual Meeting is needed to ratify
the
appointment of Marcum & Kliegman LLP as the Company's independent public
accountants.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF
MARCUM & KLIEGMAN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY IN
FISCAL YEAR 2007.
EXECUTIVE
OFFICERS
The
following sets forth information as to persons who serve as our executive
officers as of December 31, 2006:
Mark
Goldwasser,
48
years old. Chief Executive Officer, President and Chairman of the Board. For
information regarding Mr. Goldwasser,
see
“Proposal 1 -
Election
of Directors.”
Christopher
C. Dewey,
62 years
old. Vice Chairman of the Board. For
information regarding Mr. Dewey,
see
“Proposal 1 -
Election
of Directors.”
Robert
H. Daskal ,
65
years old,
has
served as Chief Financial Officer and Secretary of the Company since March
2006.
Mr. Daskal served as Acting Chief Financial Officer and Acting Secretary of
the
Company from January 2002 to March 2006, and served as Senior Vice President,
Chief Financial Officer, Secretary and Treasurer of the Company from February
1997 through December 2001. From 1994 to 1997, Mr. Daskal was a director,
Executive Vice President and Chief Financial Officer of Inco Homes Corporation,
and from 1985 to 1994, Mr. Daskal was a director, Executive Vice
President-Finance and Chief Financial Officer of UDC Homes, Inc. (and its
predecessors). Mr. Daskal, a former Tax Partner with Arthur Andersen & Co.,
became a CPA in Illinois in 1967. He received his BBA and JD from the University
of Michigan in Ann Arbor.
David
McCoy,
44
years old, has served as Chief Operating Officer since March 2006. Mr.
McCoy joined National Securities in November 2005 as Chief Operating
Officer. Prior
to
joining the Company, Mr. McCoy was the Chief Operating Officer of GunnAllen
Financial from 2002 to 2005. From 2000 to 2002, Mr. McCoy was the Director
of Retail Sales at Montauk Financial. Prior to 2000, Mr. McCoy was a
producing registered representative and affiliate owner for various firms dating
back to 1985. Mr. McCoy received his bachelor’s degree in both Economics
and Business Administration from Rollins College and attended the Crummer School
of Business.
Brian
Friedman,
35
years old, has served as Executive Vice President since March 2006. Mr.
Friedman joined National Securities in 1997 as an associate in the investment
banking department. During his tenure with the company, Mr. Friedman has
served as a vice-president of corporate finance and as the managing director
of
corporate finance. Prior to joining the Company Mr. Friedman served as an
Associate at Liberty Hampshire, where he helped structure, raise capital and
operate a special purpose finance company that grew to over $1.0 billion under
management. Mr. Friedman earned his B.A. from the University of Iowa and
his JD/MBA from IIT.
Executive
Compensation
The
following table sets forth the cash compensation paid by the Company to each
of
its executive officers whose total annual salary and bonus exceeded $100,000
for
fiscal year 2006 (the “Named Executive Officers”) during the fiscal years ended
2006, 2005 and 2004:
ANNUAL
COMPENSATION
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
Year
|
|
|
|
|
|
Underlying
|
|
|
Name
and Capacity
|
|
Ended
|
|
Salary
(1)
|
|
Bonus
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Goldwasser
|
|
|
2006
|
|
$
|
311,033
|
|
$
|
105,300
|
|
|
-
|
|
|
Chairman,
President and Chief
|
|
|
2005
|
|
$
|
316,712
|
|
$
|
-
|
|
|
367,000
|
|
(2)
|
Executive
Officer
|
|
|
2004
|
|
$
|
250,000
|
|
$
|
149,000
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
H. Daskal
|
|
|
2006
|
|
$
|
160,000
|
|
$
|
32,500
|
|
|
-
|
|
|
Chief
Financial Officer and Secretary
|
|
|
2005
|
|
$
|
160,000
|
|
$
|
-
|
|
|
110,000
|
|
(2)
|
|
|
|
2004
|
|
$
|
109,167
|
|
$
|
39,500
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
McCoy, Chief Operating Officer
|
(3)
|
|
2006
|
|
$
|
168,974
|
|
$
|
20,500
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Friedman, Executive Vice President
|
(4)
|
|
2006
|
|
$
|
147,500
|
|
$
|
52,000
|
|
|
-
|
|
|
|
(1) |
Amounts
include, if any, commissions earned in the normal course of business,
fees
received for corporate finance services and profit from the sale
during
the year of the Company’s Common Stock obtained through the exercise of
options
|
|
(2)
|
Amounts
include options that were repriced on February 14,
2005.
|
|
(3) |
Mr.
McCoy joined the Company in November 2005, and became an executive
officer
in March 2006.
|
|
(4) |
Mr.
Friedman became an executive officer in March
2006.
|
Securities
Authorized for Issuance under Equity Compensation Plans
The
following table sets forth information as of September 30, 2006 with respect
to
compensation plans under which equity securities of the Company are authorized
for issuance.
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|
(a)
|
(b)
|
(c)
|
Equity
compensation
plans
approved by
security
holders
|
932,000
(1)
|
$1.30
|
1,500,000
(2)
|
(1)
Includes options issued and outstanding under the 2001 Stock Option
Plan.
(2)
Includes options available for issuance under the 2006 Stock Option
Plan.
Option
Grants in Last Fiscal Year
The
Company granted options to certain officers and directors. The options granted
to the Named Executive Officers during the fiscal year ended September 30,
2006
are as follows:
|
|
Option
Grants in Last Fiscal Year
|
|
|
|
Number
of
|
|
%
of Total
|
|
|
|
|
|
|
Potential
Realized Value
|
|
|
|
Securities
|
|
Options
|
|
|
|
|
|
|
at
Assumed Annual Rates
|
|
|
|
Underlying
|
|
Granted
to
|
|
|
|
|
|
|
of
Stock Price Appreciation
|
|
|
|
Options
|
|
Employees
|
|
|
Exercise
|
|
Expiration
|
|
for
Option Term
|
|
Name
|
|
Granted
|
|
in
Fiscal Year
|
|
|
Price
|
|
Date
|
|
5%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
McCoy
|
|
|
100,000
|
|
|
100.00
|
%
|
|
$
|
1.00
|
|
|
11/28/10
|
|
$
|
28,000
|
|
$
|
61,000
|
|
No
options were exercised by the Named Executive Officers in the fiscal year ended
September 30, 2006. The values of unexercised options at September
30, 2006
are as
follows:
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
|
|
|
|
Number
of Securities
|
|
Value
of Unexercised
|
|
|
|
Underlying
Unexercised
|
|
In-the-Money
Options
|
|
|
|
Options
at Fiscal Year End
|
|
at
Fiscal Year End
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Goldwasser
|
|
|
367,000
|
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
H. Daskal
|
|
|
110,000
|
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
McCoy
|
|
|
50,000
|
|
|
50,000
|
|
$
|
12,500
|
|
$
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Friedman
|
|
|
125,000
|
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Employment
Agreements
Mr.
Goldwasser entered into an Employment Agreement with the Company dated March
15,
2006. The Agreement is for a three-year term with annual one-year renewal
periods unless notice of non-renewal is given by either party. The initial
base
salary is $350,000 per annum, subject to annual increases. Mr. Goldwasser will
also participate in any senior management bonus pools, and receives normal
employee benefits.
Mr.
Dewey
entered into a Compensation Agreement with the Company dated December 27, 2006.
The Agreement is at will. The initial base salary is $120,000 per annum, subject
to annual increases, and Mr. Dewey was granted an option to purchase 150,000
shares of Common Stock at $1.30 per share, of which half is currently
exercisable and half becomes exercisable on December 27, 2007. Mr. Dewey will
also participate in any senior management bonus pools, and receives normal
employee benefits.
Other
Compensation.
The
Company’s senior officers and members of its corporate finance department are
entitled to a portion of underwriter or placement agent warrants received in
the
course of the Company’s corporate finance activities. Placement agent warrants
are allocated in part based upon the individual’s contribution to both the
Company’s overall business activities and the particular corporate finance
transaction in which they are issued. Such warrants typically have no
value at the time of allocation.
Report
of the Compensation Committee
This
report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating the Proxy Statement by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the “Acts”), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The
Committee is responsible for reviewing and approving the compensation of the
Company's Chief Executive Officer and recommending to the Board of Directors
the
compensation of the Company's other officers and the Company’s chairman,
consistent with employment contracts, where appropriate. The
Committee believes the compensation paid to the Company’s Executive Officers is
competitive with companies within its industry that are comparable in size
and
by companies outside the industry with which the Company competes for executive
talent.
The
Company has a compensation program that consists of salary and performance
bonus
(that are generally reviewed annually) and stock options. For the fiscal year
ended September 30, 2006, the Compensation Committee approved a bonus pool,
whereby 20% of the Company’s net income was paid as a bonus to certain members
of the Company’s senior management. A similar bonus pool plan was approved by
the Company’s Board of Directors, with the recommendation of the Compensation
Committee, for the fiscal year ending September 30, 2007. The overall executive
compensation philosophy is based upon the premise that compensation should
be
aligned with and support the Company's business strategy and long-term goals.
The Company believes it is essential to maintain an executive compensation
program that provides overall compensation competitive with that paid executives
with comparable qualifications and experience. This is critical to attract
and
retain competent executives.
Annual
cash bonuses are determined by the Compensation Committee. Stock options may
be
granted to key employees of the Company pursuant to the Company's stock option
plan that provides additional incentive to maximize shareholder value. The
plans
may also utilize vesting periods to encourage option recipients to continue
in
the employ of the Company. The Company grants stock options to its officers,
directors, employees, investment executives and consultants.
The
Compensation Committee regularly evaluates its policies with respect to
executive compensation. The Compensation Committee believes that a combination
of salary, bonus, and stock options provides a mix of short and long-term
rewards necessary to attract motivate and retain an excellent management
team.
The
Company intends to comply with the requirements of Section 162 (m) of the
Internal Revenue Code of 1986 for the fiscal year 2007.
Compensation
of the Chief Executive Officer.
In
March 2006, the Company and Mr. Goldwasser entered into an Employment Agreement
for a three-year term with annual one-year renewal periods unless notice of
non-renewal is given by either party. The Compensation Committee performed
its
review of Mr. Goldwasser’s compensation package in accordance with the
principles of our compensation philosophy described above. Information
considered by the compensation committee included competitive compensation
data
and Mr. Goldwasser’s record as the chief executive officer of the Company.
The compensation committee determined that the total compensation package
offered to Mr. Goldwasser was appropriate under prevailing market
conditions and that a package of materially lesser value would have been
insufficient to secure Mr. Goldwasser’s services. The
initial base salary is $350,000 per annum, subject to annual increases. Mr.
Goldwasser will also participate in any senior management bonus pools, and
receives normal employee benefits.
Compensation
Committee:
Robert
J.
Rosan
Gary
A.
Rosenberg
Marshall
S. Geller
Christopher
C. Dewey
Audit
Committee Report
On
December 6, 2006, the Audit Committee met to review the results of the fiscal
year 2006 audit. The Audit Committee reviewed the Company's audited financial
statements as of and for the fiscal year ended September 30, 2006 with
management and the Company's independent public accountants, Marcum &
Kliegman LLP. This review included the matters required to be discussed by
Statement on Auditing Standards No. 61, “Communication with Audit Committees,”
as issued and amended by the Auditing Standards Board of the American Institute
of Certified Public Accountants. The Audit Committee discussed with Marcum
&
Kliegman LLP their independence from management and from the Company, and
received a letter from Marcum & Kliegman LLP confirming their
independence.
Based
on
the above review and discussions, the Audit Committee recommended to the Board
of Directors that the audited financial statements as of and for the fiscal
year
ended September 30, 2006 be included in the Company's Annual Report on Form
10-K
for the fiscal year ended September 30, 2006.
Audit
Committee:
Gary
A.
Rosenberg
Robert
J.
Rosan
Norman
J.
Kurlan
Section
16(a) Beneficial Ownership Reporting Compliance
Pursuant
to Section 16 of the Exchange Act, the Company's directors and executive
officers and beneficial owners of more than 10% of the Common Stock are required
to file certain reports, within specified time periods, indicating their
holdings of and transactions in the Common Stock. Based
solely on the Company’s review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during fiscal year 2006, the Company’s insiders have complied with all
Section 16(a) filing requirements applicable to them.
Comparison
of Five-Year Cumulative Total Return
On
November 1, 2004 the Company’s Common Stock was delisted from The American Stock
Exchange (AMEX) and commenced trading on the Over-the-Counter Bulletin Board
under the symbol “OLYD”. In March 2006 the Company changed its name to “National
Holdings Corporation” and changed its symbol to “NHLD”.
The
following chart and graph compares cumulative total stockholder return on the
Company’s Common Stock with the cumulative total stockholder return on the
common equity of the companies in the AMEX U.S. Index and the AMEX U.S.
Financial Index (the “Peer Group”) for the period from October 1, 2001 to
September 30, 2006. We assume a $100 investment on October 1, 2001, in each
of
National Holdings Common Stock, AMEX U.S. Index and the AMEX U.S. Financial
Index (the “Peer Group”), and further assume the reinvestment of all dividends.
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National
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AMEX
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Measurement
Period
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Holdings
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AMEX
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U.S.
Financial
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(Fiscal
Year Covered)
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Corporation
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U.S.
Index
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Index
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2001
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100.00
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100.00
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100.00
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2002
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25.00
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88.86
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108.90
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2003
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70.75
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111.12
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125.04
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2004
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30.66
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125.22
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135.77
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2005
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37.74
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140.45
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139.10
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2006
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66.04
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157.56
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156.32
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logo123
Certain
Relationships and Related Transactions
Messrs.
Goldwasser, Rettman, McCoy and Friedman have brokerage margin accounts with
National Securities. The transactions, borrowings and interest charges in these
accounts are handled in the ordinary course of business and are consistent
with
similar third party customer accounts.
In
February 2001, National Securities entered into a secured demand note collateral
agreement valued at $1.0 million with Peter Rettman, a member of the Board
of
Directors of the Company, to borrow securities that can be used by the Company
for collateral agreements. In February 2006, upon
the
maturity of the previously issued secured demand note, National
Securities and the holder entered into a new $1.0 million secured demand note
collateral
agreement with
a
maturity date of March 1, 2007. The holder also entered into a warrant agreement
to
purchase 150,000 shares of common stock at a price of $1.25 per share, with
an expiration
date of July 31, 2007. National Securities and Mr. Rettman have agreed that
the
note will not be extended beyond its maturity
date of March 1, 2007.
Mr.
Daskal entered into a Termination and Consulting Agreement with the Company
dated December 14, 2001. The agreement with Mr. Daskal provided for the
termination of all provisions and obligations pursuant to his Employment
Agreement dated January 1, 1997, as amended on July 1, 1999, and payment by
the
Company of a monthly consulting fee of $10,000 for a period of 27 months which
was to commence April 1, 2002. The effective date of the payment of his monthly
consulting fee has been deferred until such time as Mr. Daskal’s employment with
the Company is terminated. Mr. Daskal subsequently agreed to serve as the
Company’s Chief Financial Officer and Secretary.
In
January 2006, the Company completed a
transaction whereby certain new investors made a $2,000,000 investment in the
Company by purchasing an aggregate of (i)
$1,000,000 of the Company’s newly created Series B Preferred Stock, which is
convertible into Common Stock at a price of $.75 per share, (ii) 11%
convertible promissory notes in the principal amount of $1,000,000, which
is
convertible into Common Stock at a price of $1.00 per share
and
(iii) warrants
to purchase an aggregate of 300,000 shares of Common Stock at an exercise price
of $1.00 per share. The investment included $1,700,000 by St. Cloud Capital
Partners, L.P., whose managing partner is Marshall S. Geller, who became a
member of the Board of Directors of the Company simultaneous with the closing
of
the transaction, and $300,000 by two unrelated investors.
Mr.
Dewey
has previously served as an advisor to Robotic Ventures Fund I, L.P. (the
“Fund”), a venture capital fund dedicated to investing in companies engaged in
the business of robotics and artificial intelligence. The Company serves as
the
managing member of Robotic Ventures Group LLC, the general partner of the Fund
(the “Fund General Partner”), and owns 24.5% of the Fund General Partner. Mr.
Dewey is a 9.6% limited partner in the Fund. Mr. Dewey also serves on the Board
of Directors of both Z-Kat, Inc, and Mako Surgical Corp., which are investee
companies of the Fund.
OTHER
BUSINESS
Management
knows of no business to be brought before the Annual Meeting of Shareholders
other than that set forth herein. However, if any other matters properly come
before the meeting, it is the intention of the persons named in the proxy to
vote such proxy in accordance with their judgment on such matters. Even if
you
plan to attend the meeting in person, please execute, date and return the
enclosed proxy promptly. Should you attend the meeting, you may revoke the
proxy
by voting in person. A postage-paid, return-addressed envelope in enclosed
for
your convenience. Your cooperation in giving this your prompt attention will
be
appreciated.
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By
Order of the Board of Directors
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/s/
Robert H. Daskal
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Robert
H. Daskal
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Secretary
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PROXY
CARD
NATIONAL
HOLDINGS CORPORATION
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NATIONAL
HOLDINGS CORPORATION
The
undersigned shareholder of National Holdings Corporation, a Delaware corporation
(the “Company”), hereby constitutes and appoints Mark Goldwasser and Robert H.
Daskal, and each of them, attorneys and proxies of the undersigned, with full
power of substitution, to attend, vote and act for and in the name, place and
stead of the undersigned at the Annual Meeting of Shareholders of the Company,
to be held on March 13, 2007 at 12:00 P.M. at 120 Broadway, 27th Floor, New
York, New York 10271, and at any adjournments thereof, with respect to the
following:
Proposals:
1. |
Election
of Directors:
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The
Board
of Directors recommends a vote FOR
the
listed nominees.
Mark
Goldwasser
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Gary
A. Rosenberg
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2. |
The
Board of Directors recommends a vote to
ratify the appointment of Marcum & Kliegman LLP as independent public
accountants of the Company for the fiscal year ending September 30,
2007.
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This
proxy will be voted as directed, but if no direction is indicated, it will
be
voted FOR
the
election of the nominees named in proposal 1 and FOR
proposal
2 as described herein.
The
Board
of Directors recommends voting in favor of both of the two (2)
proposals.
Signature
__________________________
Date
______________________________
Signature
__________________________
(if
held
jointly)
Note:
Please sign exactly as your name appears hereon. If signing as attorney,
executor, administrator, trustee, guardian or the like, please give your full
title as such. If signing for a corporation, please give your
title.
PLEASE
DATE, SIGN AND MAIL AT ONCE IN THE ENCLOSED POSTAGE PAID ENVELOPE.