EXHIBIT 10.1
DEBT EXCHANGE AGREEMENT
     THIS DEBT EXCHANGE AGREEMENT (“Agreement”), dated as February 13, 2007,
among Ladenburg Thalmann Financial Services Inc., a Florida corporation (the
“Company”), and New Valley LLC, a Delaware corporation (the “Holder”).
     WHEREAS, on each of March 25, 2002 and July 16, 2002, the Company issued a
$2.5 million promissory note (collectively, the “Notes”) to the Holder;
     WHEREAS, the Company has requested that the Holder exchange the principal
amount of the Notes for common stock, par value $.0001 per share (“Common
Stock”), of the Company as set forth herein; and
     WHEREAS, the Company intends to pay the accrued interest on the Notes in
cash; and
     NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements of the parties hereinafter set forth, the parties hereto hereby
agree as follows:
     1. Debt Exchange.
          (a) New Valley hereby agrees, subject to the conditions set forth
herein, to exchange the $5,000,000 principal amount of Notes for 2,777,778
shares of the Company’s Common Stock (“Exchange Shares”) at an exchange price of
$1.80 per share, representing the average closing price of the Company’s Common
Stock for the 30 trading days ending on the date of this Agreement (“Debt
Exchange”), subject to appropriate adjustment for reclassifications, stock
splits, stock dividends, spin-offs or distributions, share combinations or other
similar changes affecting the Common Stock as a whole. The Company and the
Holder further agree to apply receipt of the Exchange Shares to the principal
portion of the Notes. The Company and the Holder shall treat the Debt Exchange
as a tax-free reorganization pursuant to Internal Revenue Code
Section 368(a)(1)(E).
          (b) At the Company’s 2007 Annual Meeting of Shareholders (“Shareholder
Meeting”), the Company will present the Debt Exchange to shareholders for their
approval. In connection with such Shareholder Meeting, the Company will prepare
and mail to its shareholders as promptly as practicable a proxy statement and
all other proxy materials (the “Proxy Statement”) for such meeting. The Company
and the Holder shall cooperate with each other in all reasonable respects with
the preparation of the Proxy Statement and any amendment or supplement thereto.
The Company shall notify the Holder of the receipt of any comments of the
Securities and Exchange Commission (“Commission”) with respect to the Proxy
Statement and any requests by the Commission for any amendment or supplement
thereto or for additional information, and shall provide to them promptly copies
of any correspondence between the Company or its counsel and the Commission with
respect to the Proxy Statement. The Company shall give the Holder and its
counsel the opportunity to review the Proxy Statement and all responses to
requests for additional

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information by and replies to comments of the Commission before their being
filed with, or sent to, the Commission. The Company will use its commercially
reasonable efforts, after consultation with the Holder, to respond promptly to
all such comments of and requests by the Commission and to cause the Proxy
Statement to be mailed to the Company’s shareholders entitled to vote at the
Shareholder Meeting at the earliest practicable time.
          (c) The Company will use its commercially reasonable efforts to obtain
the necessary approvals by its shareholders for the Debt Exchange and any
related matters (“Shareholder Approval”) at the Shareholder Meeting and shall
cause its Board of Directors to include in the Proxy Statement its
recommendation that the Company’s shareholders vote in favor of the matters
presented in the Proxy Statement. In the event that the Shareholder Approval is
not obtained on the date on which the Shareholder Meeting is initially convened,
the Board of Directors of the Company shall adjourn the meeting from time to
time as necessary for the purpose of obtaining the Shareholder Approval and
shall use its commercially reasonable efforts during any such adjournments to
obtain the Shareholder Approval.
          (d) By executing this Agreement, each of the Holder and Howard M.
Lorber, Richard J. Lampen, Henry C. Beinstein, Robert J. Eide and Jeffrey S.
Podell (“Proxy Parties”) hereby severally appoint Richard J. Rosenstock or Mark
Zeitchick, or either of them, with full power of substitution, as their agent,
attorney and proxy, representing an irrevocable proxy pursuant to
Section 607.0722 of the Florida Business Corporation Act, coupled with an
interest, so as to vote all the shares of Common Stock held by the Proxy Parties
in accordance with the vote of a majority of votes cast at the Shareholder
Meeting excluding the shares held by such Proxy Parties.
          (e) The Company shall comply with all legal requirements applicable to
the Shareholder Meeting and take such other actions as may be necessary to
effectuate the Debt Exchange, including, but not limited to, providing notices
to, and responding to queries from, all applicable regulatory authorities and
stock exchanges and obtaining all necessary third party consents.
          (f) Subject to the terms and conditions of this Agreement, the
consummation of the Debt Exchange contemplated by this Agreement shall take
place at a closing (“Closing”) to be held at 10:00 a.m., local time, on the
fourth business day after the date on which the last of the conditions set forth
in Section 4(c) below is fulfilled, at the offices of Graubard Miller, The
Chrysler Building, 405 Lexington Avenue, New York, New York 10174, or at such
other time, date or place as the parties may agree upon in writing. At the
Closing, the Holder shall deliver its Notes for cancellation and the Company
shall deliver to the Holder certificates representing the Exchange Shares. From
and after the Closing, the Notes shall represent solely the right to receive
Exchange Shares. In the event that as a result of the Debt Exchange, fractions
of shares would be required to be issued, such fractional shares shall be
rounded up or down to the nearest whole share. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on such Debt Exchange,
except that the Holder shall pay any such tax due because the Exchange Shares
are issued in a name other than the Holder’s.

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          (g) The maturity date of the Notes is hereby extended from March 31,
2007 to the later of (i) the Closing or (ii) ten business days after the
termination of this Agreement pursuant to Section 7 hereof. On or prior to the
Closing, the Company shall pay in cash to the Holder the amount of accrued
interest due on the Notes.
     2. Representations and Warranties of Company. The Company hereby represents
and warrants to the Holders as follows:
          (a) As of the date hereof, the Company has 400,000,000 shares of
Common Stock authorized, of which 156,893,312 shares of Common Stock are issued
and outstanding, and 2,000,000 shares of preferred stock authorized, of which no
shares are issued and outstanding. As of the date hereof, the Company has
reserved for issuance 24,266,707 shares of Common Stock upon exercise of all
outstanding options and warrants. All of the issued and outstanding shares of
the Company’s Common Stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized, validly issued,
fully paid and nonassessable. The Exchange Shares to be issued and delivered to
the Holder upon exchange of the Notes have been duly authorized and when issued
upon exchange of the Notes, will be validly issued, fully-paid and
non-assessable. The issuance of the Exchange Shares will be exempt from
registration pursuant to Section 3(a)(9) promulgated under the Securities Act of
1933, as amended (“Securities Act”), and such Exchange Shares will not be
“restricted securities” as defined under Rule 144 promulgated under the
Securities Act.
          (b) The Company has full legal power to execute and deliver this
Agreement and, subject to receipt of Shareholder Approval, to perform its
obligations hereunder. All acts required to be taken by the Company to enter
into this Agreement and, subject to receipt of Shareholder Approval, to carry
out the transactions contemplated hereby have been properly taken, and this
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms and does not conflict with, result in a
breach or violation of or constitute (or with notice of lapse of time or both
constitute) a default under any instrument, contract or other agreement to which
the Company or its subsidiaries is a party.
          (c) The affirmative vote of the holders of record of at least a
majority of the shares of the Company’s Common Stock cast at the Shareholder
Meeting with respect to the matters referred to in Section 1 hereof is the only
vote of the holders of any class or series of the capital stock of the Company
required to approve the transactions contemplated hereby.
          (d) None of the Company’s Articles of Incorporation, as amended, or
Bylaws, or the laws of Florida, California or New York, contains any applicable
anti-takeover provision or statute which would restrict the Company’s ability to
enter into this Agreement or consummate the transactions contemplated by this
Agreement or which would limit any of the Holder’s rights following consummation
of the transactions contemplated by this Agreement.

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          (e) No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
          (f) The Company has delivered or made available to the Holder prior to
the execution of this Agreement true and complete copies of all periodic
reports, registration statements and proxy statements filed by it with the
Commission since January 1, 2006. Each of such filings with the Commission
(collectively, the “SEC Filings”), as of its filing date, complied in all
material respects with the requirements of the rules and regulations promulgated
by the Commission with respect thereto and did not contain any untrue statement
of a material fact or omit a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which such statements were made.
          (g) Since September 30, 2006, except as disclosed in the SEC Filings
filed by the Company with the Commission before the date of this Agreement, the
Company and its subsidiaries, taken as a whole, has not suffered any material
adverse change in its assets, liabilities, financial condition, results of
operations or business, except for those occurring as a result of general
economic or financial conditions affecting the United States as a whole or the
region in which the Company conducts its business or developments that are not
unique to the Company but also affect other entities engaged or participating in
the brokerage industry generally in a manner not materially less severely. For
purposes of this section, revenues and operating results materially consistent
with the Company’s revenues and operating results for the quarter ended
September 30, 2006, as reflected in the Company’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006, shall not be deemed a material adverse
change.
          (h) No information to be contained in the Proxy Statement to be
prepared pursuant to this Agreement and no representation or warranty by the
Company contained in this Agreement contains any untrue statement of a material
fact or omits a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which such statements were made.
          (i) Since September 30, 2006 and except as disclosed in the SEC
Filings filed by the Company with the Commission before the date of this
Agreement, the Company has conducted its business in compliance in all material
respects with all applicable laws, rules, regulations, court or administrative
orders and processes and rules, directives and orders of regulatory and
self-regulatory agencies and bodies, except as would not reasonably be expected,
singly or in the aggregate, to be materially adverse to the business, assets or
financial condition of the Company.
     3. Representations and Warranties of the Holder. The Holder represents and
warrants to the Company as follows:
          (a) The Holder has full legal power to execute and deliver this
Agreement

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and to perform its obligations hereunder. All acts required to be taken by the
Holder to enter into this Agreement and to carry out the transactions
contemplated hereby have been properly taken; and this Agreement constitutes a
legal, valid and binding obligation of the Holder enforceable in accordance with
its terms.
          (b) The Holder has reviewed the filings of the Company referred to in
Section 2(f) above.
          (c) The Holder has been given an opportunity to ask questions and
receive answers from the officers and directors of the Company and to obtain
additional information from the Company.
          (d) The Holder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Company’s securities and has obtained, in its judgment,
sufficient information about the Company to evaluate the merits and risks of an
investment in the Company.
          (e) The Holder is relying solely on the representations and warranties
contained in Section 2 hereof and in certificates delivered hereunder, as well
as the SEC Filings, in making their decision to enter into this Agreement and
consummate the transactions contemplated hereby and no oral representations or
warranties of any kind have been made by the Company or its officers, directors,
employees or agents to the Holder.
          (f) No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Holder.
     4. Conditions.
          (a) The obligations of the Company to consummate the transactions
contemplated by this Agreement, including the Debt Exchange, shall be subject to
the fulfillment of the following conditions:
               (i) The representations and warranties of the Holder set forth in
Section 3 hereof shall be true and correct on and as of the Closing date and a
certificate certifying such shall be delivered.
               (ii) All proceedings, corporate or otherwise, to be taken by the
Holder in connection with the consummation of the transactions contemplated by
this Agreement shall have been duly and validly taken and all necessary
consents, approvals or authorizations of any governmental or regulatory
authority or other third party required to be obtained by the Company or the
Holder shall have been obtained in form and substance reasonably satisfactory to
the Company.
               (iii) The Shareholder Approval shall be obtained by the necessary
affirmative vote of the shareholders of the Company as described above in
Section 2(c).

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               (iv) The Holder shall have delivered to the Company for
cancellation the Notes.
          (b) The obligation of the Holder to consummate the Debt Exchange shall
be subject to the fulfillment of the following conditions on or prior to the
Closing Date:
               (i) The representations and warranties of the Company set forth
in Section 2 hereof shall be true and correct on and as of such date and a
certificate certifying such shall be delivered.
               (ii) All proceedings, corporate or otherwise, required to be
taken by the Company on or prior to such date in connection with the
consummation of the transactions contemplated by this Agreement shall have been
duly and validly taken and all necessary consents, approvals or authorizations
of any governmental or regulatory authority or other third party required to be
obtained by the Company or the Holder on or prior to such date shall have been
obtained in form and substance reasonably satisfactory to the Holders.
               (iii) The Shareholder Approval shall be obtained by the necessary
affirmative vote of the shareholders of the Company as described above in
Section 2(c).
               (iv) The Company shall have caused the Exchange Shares to be
approved for listing on the American Stock Exchange or any national securities
exchange on which the Common Stock is then listed.
               (v) The Holder shall have received a legal opinion of Graubard
Miller, counsel to the Company, addressed to the Holder dated as of such date
covering such matters as is customary of transactions of this nature and in form
and substance reasonably satisfactory to the Holder.
               (vi) The Required Registration Statement (defined below) shall
have been filed with the Commission.
               (vii) All accrued interest on the Notes shall have been paid by
the Company to the Holder.

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     5. Registration.
          (a)(i) The Company shall file a registration statement (the “Required
Registration Statement”) to register the Exchange Shares received by the Holder
under this Agreement (collectively the “Registrable Securities”) for resale
pursuant to the Securities Act no later than 60 days after the date hereof. The
Company shall use commercially reasonable efforts to cause the Required
Registration Statement to be declared effective by the Commission as promptly as
practicable.
               (ii) In connection the foregoing, the Company will, as
expeditiously as possible, use its best efforts to: (A) furnish to the Holder
copies of reasonably complete drafts of all such documents proposed to be filed
(including exhibits), and the Holder shall have the opportunity to object to any
information pertaining solely to it that is contained therein and the Company
will make the corrections reasonably requested by either of them with respect to
such information prior to filing any such registration statement or amendment;
(B) prepare and file with the Commission such amendments and supplements to such
registration statement and any prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration statement and to
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration statement;
(C) promptly notify the Holder: (1) when such registration statement or any
prospectus used in connection therewith, or any amendment or supplement thereto,
has been filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective; (2) of any
written comments from the Commission with respect to any filing referred to in
clause (A) and of any written request by the Commission for amendments or
supplements to such registration statement or prospectus; and (3) of the
notification to the Company by the Commission of its initiation of any
proceeding with respect to the issuance by the Commission of, or of the issuance
by the Commission of, any stop order suspending the effectiveness of such
registration statement; (D) furnish the Holder such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 promulgated under the Securities Act relating to the Registrable
Securities, and such other documents, as Holder may reasonably request to
facilitate the disposition of its Registrable Securities; (E) notify the Holder
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which any
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
at the request of the Holder promptly prepare and furnish such Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (F) make available
for inspection by the Holder and any attorney, accountant or other agent
retained by any such

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seller or underwriter (collectively, the “Inspectors”), all financial and other
records, pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement, and permit the inspectors to participate in
the preparation of such registration statement and any prospectus contained
therein and any amendment or supplement thereto.
          (b) The Company shall bear all fees and expenses attendant to
registering the Registrable Securities, and shall bear all fees the Holder may
incur in connection with its review and due diligence of the Required
Registration Statement, but the Holder shall pay any and all sales commissions
and the expenses of any legal counsel selected by it to represent it in
connection with the sale of the Registrable Securities. The Company shall use
its best efforts to cause any registration statement filed pursuant to this
section to remain effective until all the Registrable Securities registered
thereunder are sold or until the delivery to the Holder of an opinion of counsel
to the Company to the effect set forth in Section 5(h).
          (c)(i) The Company will indemnify the Holder, its directors and
officers and each underwriter, if any, and each person who controls any of them
within the meaning of the Securities Act or the Exchange Act against all claims,
losses, damages and liabilities (or actions or proceedings, commenced or
threatened, in respect thereof), joint or several, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any registration,
qualification or compliance pursuant to this Section 5 or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse the Holder, its directors and
officers, each such underwriter and each person who controls any of them within
the meaning of the Securities Act or the Exchange Act for any legal and any
other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action or proceeding;
provided that the Company will not be liable to the Holder in any such case to
the extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission based upon written information
furnished to the Company by or on behalf of the Holder specifically stating that
it is intended for inclusion in any registration statement under which
Registrable Securities are registered. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Holder or
any such director, officer or controlling person, and shall survive the transfer
of such securities by the Holder.
               (ii) Holder shall indemnify the Company, each of its directors
and officers and each underwriter, if any, of the Company’s securities covered
by such registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the Exchange Act and
the rules and regulations thereunder, each other

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securityholder participating in such distribution and each of their officers and
directors and each person controlling such other securityholder, against all
claims, losses, damages and liabilities (or actions or proceedings, commenced or
threatened, in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and such other security holders, directors, officers,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action or proceeding, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such document in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Holder specifically stating that it is intended
for inclusion in such document; provided, however, that the obligations of the
Holder hereunder shall be limited to an amount equal to the proceeds received by
the Holder of securities sold as contemplated herein. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person, and
shall survive the transfer of such securities by the Holder.
               (iii) Each party desiring indemnification or contribution under
Section 5(c) and 5(d) hereof (the “Securities Indemnified Party”) shall give
notice to the party required to provide indemnification or contribution (the
“Securities Indemnifying Party”) promptly after such Securities Indemnified
Party has actual knowledge of any claim as to which indemnity or contribution
may be sought, and shall permit the Securities Indemnifying Party to assume, at
its sole cost and expense, the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Securities Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Securities Indemnified Party (whose approval
shall not be unreasonably withheld). The Securities Indemnified Party may
participate in such defense at the Securities Indemnified Party’s expense unless
(A) the employment of counsel by the Securities Indemnified Party has been
authorized in writing by the Securities Indemnifying Party, (B) the Securities
Indemnified Party has been advised by such counsel employed by it that there are
legal defenses available to it involving potential conflict with those of the
Securities Indemnifying Party (in which case the Securities Indemnifying Party
will not have the right to direct the defense of such action on behalf of the
Securities Indemnified Party), or (C) the Securities Indemnifying Party has not
in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees and expenses of counsel for the
Securities Indemnified Party shall be at the expense of the Securities
Indemnifying Party. The failure of any Securities Indemnified Party to give
notice as provided herein shall not relieve the Securities Indemnifying Party of
its obligations under this Section 5. No Securities Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Securities Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Securities Indemnified Party of a release from
all liability in respect to such claim or

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litigation. No Securities Indemnified Party shall settle any claim or demand
without the prior written consent of the Securities Indemnifying Party (which
consent will not be unreasonably withheld). Each Securities Indemnified Party
shall furnish such information regarding itself or the claim in question as the
Securities Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom.
               (iv) The provisions of Section 5(c) and 5(d) shall be in addition
to any other rights to indemnification or contribution which an Indemnified
Party may have pursuant to law, equity, contract or otherwise.
          (d) In order to provide for just and equitable contribution under the
Securities Act in any case in which (A) any person entitled to indemnification
under Section (c) makes a claim for indemnification pursuant hereto but such
indemnification is not enforced in such case notwithstanding the fact that this
section provides for indemnification in such case, or (B) contribution under the
Securities Act, the Exchange Act or otherwise is required on the part of any
such person in circumstances for which indemnification is provided under this
section, then, and in each such case, the Company and the Holder shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement (including legal and other
expenses reasonably incurred in connection with investigation or defense)
incurred by the Company and the Holder, as incurred, in proportion to their
relative fault and the relative knowledge and access to information of the
Securities Indemnifying Party, on the one hand, and the Securities Indemnified
Party, on the other hand, concerning the matters resulting in such losses,
liabilities, claims, damages and expenses, the opportunity to correct and
prevent any untrue statement or omission, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission of a material
fact relates to information supplied by the Securities Indemnifying Party, on
the one hand, or the Securities Indemnified Party, on the other hand, and any
other equitable considerations appropriate under the circumstances; provided
that no person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
section, each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as
the Company.
          (e) The Holder shall furnish to the Company such information regarding
itself and the distribution proposed by it as the Company may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 5.
          (f) The Company shall comply with all of the reporting requirements of
the Exchange Act and with all other public information reporting requirements of
the Commission, which are conditions to the availability of Rule 144 for the
sale of the Common Stock. The Company shall cooperate with the Holder in
supplying such information as may be necessary for the Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.

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          (g) The Company represents and warrants to the holders of Registrable
Securities that the granting of the registration rights to the Holder hereby
does not and will not violate any agreement between the Company and any other
security holders with respect to registration rights granted by the Company.
          (h) The rights granted under this Section 5 shall terminate upon
delivery to the Holder of an opinion of counsel to the Company reasonably
satisfactory to the Holder to the effect that such rights are no longer
necessary for the public sale of the Registrable Securities without restriction
as to the number of securities that may be sold at any one time or the manner of
sale.
          (i) The rights granted under this Section 5 shall not be transferable.
     6. Press Release; Filings. Promptly after execution of this Agreement, the
Company shall issue a press release announcing the Debt Exchange. The Company
shall also file with the Securities and Exchange Commission a Current Report on
Form 8-K with respect to the transactions contemplated hereby. The Company shall
provide the Holder with drafts of both the press release and Form 8-K and a
reasonable opportunity to comment thereon. No party hereto shall make any public
announcements in respect of this Agreement or the transactions contemplated
herein inconsistent with the press release and Form 8-K without the prior
approval of the other parties as to the form and content thereof, which approval
will not be unreasonably withheld. Notwithstanding the foregoing, any disclosure
may be made by a party which its counsel advises is required by applicable law
or regulation, in which case the other party shall be given such reasonable
advance notice as is practicable in the circumstances and the parties shall use
their best efforts to cause a mutually agreeable release or announcement to be
issued. The parties may also make appropriate disclosure of the transactions
contemplated by this Agreement to their officers, directors, agents and
employees.
     7. Termination. This Agreement may be terminated no later than the Closing:
          (a) At the option of any party in the event that the transactions
contemplated by this Agreement have not occurred by June 30, 2007 and such delay
was not as a result of any breach of this Agreement by the terminating party;
          (b) By the Holder if the Company’s Board of Directors failed to
recommend or withdrew or modified in a manner adverse to the Holder its approval
or recommendation of the Debt Exchange;

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          (c) At the option of any party in the event that Shareholder Approval
was not obtained at the Shareholder Meeting and any adjournment thereof;
          (d) At the option of any party if any other party has materially
breached a term of this Agreement and has not cured such breach within 30 days;
or
          (e) At the option of any party if any competent regulatory authority
shall have issued an order making illegal or otherwise restricting, preventing,
prohibiting or refusing to approve the transactions contemplated hereby, and
such order shall have become final and non-appealable.
8. Miscellaneous.
          (a) Section headings used in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
          (b) This Agreement may be executed in any number of counterparts and
by the different parties on separate counterparts and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same agreement.
          (c) This Agreement shall be a contract made under and governed by the
laws of the State of New York.
          (d) All obligations of the Company and rights of the Holder expressed
herein shall be in addition to and not in limitation of those provided by
applicable law.
          (e) The rights and obligations under this Agreement are not
assignable. This Agreement shall be binding upon the Company, the Holder and
their respective successors and permitted assigns, and shall inure to the
benefit of the Company, the Holder and their respective successors and permitted
assigns.
          (f) The terms and provisions of this Agreement are intended solely for
the benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person or entity.
          (g) All amendments or modifications of this Agreement and all
consents, waivers and notices delivered hereunder or in connection herewith
shall be in writing.
          (h) This Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, among the parties with respect thereto.
          (i) Whether or not the Closing occurs, the Company shall pay all costs
and expenses, including reasonable attorneys’ fees, incurred by it or the Holder
with respect to the negotiation, execution, delivery and performance of this
Agreement, including without limitation any expenses of enforcing this provision
and any expenses incurred in connection with any filings made by the Holder with
the Commission relating to this Agreement and any legal fees incurred by the
Holder in connection with its review of the Required Registration Statement;
provided, however, that in the event the Holder materially breaches its
obligations hereunder, the Company shall no longer be responsible to pay such
costs and expenses and any payments previously made by the Company to the Holder
shall be reimbursed by the Holder. This provision shall survive termination of
the Agreement.
     9. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE HOLDER HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
     10. Specific Performance. The parties hereto acknowledge and agree that any
remedy at law for any breach of the provisions of this Agreement would be
inadequate, and each party hereto hereby consents to the granting by any court
of an injunction or other equitable relief, without the necessity of actual
monetary loss being proved, in order that the breach or threatened breach of
such provisions may be effectively restrained.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

            LADENBURG THALMANN FINANCIAL
SERVICES INC.
      By:   /s/ Diane Chillemi         Name:   Diane Chillemi        Title:  
Vice President and Chief Financial Officer        NEW VALLEY LLC
      By:   /s/ J. Bryant Kirkland III         Name:   J. Bryant Kirkland III   
    Title:   Vice President, Chief Financial Officer and Treasurer             
/s/ Howard M. Lorber       Howard M. Lorber      (solely with respect to Section
1(d) hereof)              /s/ Richard J. Lampen       Richard J. Lampen     
(solely with respect to Section 1(d) hereof)              /s/ Henry C. Beinstein
      Henry C. Beinstein      (solely with respect to Section 1(d) hereof)     
        /s/ Robert J. Eide       Robert J. Eide      (solely with respect to
Section 1(d) hereof)              /s/ Jeffrey S. Podell       Jeffrey S. Podell 
    (solely with respect to Section 1(d) hereof)     

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