EX-4.1 Credit Agreement



 





EXHIBIT 4.1




CREDIT AGREEMENT




     THIS CREDIT AGREEMENT (this “Agreement”), dated as of October 19, 2007 (the “Initial Closing
Date”), is entered into by and between Ladenburg Thalmann Financial Services Inc., a Florida
corporation (“Borrower ”) and Frost Gamma Investments Trust, a Florida trust ( “Frost Gamma”).



RECITALS




     WHEREAS, Borrower is a party to that certain Stock Purchase Agreement (the “Stock Purchase
Agreement”) dated as of the Initial Closing Date, pursuant to which Borrower will purchase (the
“Acquisition”) the outstanding capital stock of Investacorp, Inc. and related companies
(capitalized terms used but not defined herein shall have the meanings ascribed to them in the
Stock Purchase Agreement).



     WHEREAS, Frost Gamma desires to provide Borrower with a senior line of credit (the “Line of
Credit”) in the amount of $30,000,000 (the “Available Amount”) on the terms set forth herein.



     NOW, THEREFORE, in consideration of the covenants, promises and representations set forth
herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby
expressly and mutually acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:



ARTICLE I




LINE OF CREDIT




     Section 1.1.  The Line of Credit. From time to time prior to the Maturity Date (as
defined in the Note (as hereafter defined)), subject to the provisions below, Frost Gamma shall
make Advances (as hereafter defined) to Borrower, which Borrower shall pay and may reborrow, so
long as the aggregate amount of Advances outstanding at any one time shall not exceed the Available
Amount.



     Section 1.2. Warrants. In consideration of the extension of credit hereunder,
Borrower will grant to Frost Gamma one or more Warrants (the “Warrants”), which warrants will be
issued substantially in the form attached hereto as Exhibit A , with an exercise price
equal to the closing price of Borrowers’ Common Stock on the Initial Closing Date and will provide
such parties the right to buy 2,000,000 shares of the Borrower’s common stock.



     Section 1.3. Note. The indebtedness of Borrower to Frost Gamma will be evidenced by
a senior note in substantially the form of Exhibit B (the “Note”). The original principal
amount of the Note will be $30,000,000; provided, however, that notwithstanding
the face amount of the Note, Borrower’s liability under the Note shall be limited at all times to
its actual indebtedness, principal, interest, fees, charges, expenses and reasonable attorneys’
fees and costs and other amounts, obligations, covenants and duties owing by Borrower to Frost
Gamma (or any permitted assignee) of any kind and description (whether pursuant to or evidenced by
the Note or this Agreement), whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, including Lender’s Expenses (collectively, the
“Obligations”), in each case as then outstanding hereunder and under the Note. As used herein,
“Lender’s Expenses” means all reasonable attorneys’ fees, costs and expenses incurred in amending,
enforcing or defending the Note (including fees and expenses of appeal or review), including the
exercise of any rights or remedies afforded under the Note or under applicable law, whether or not
suit is brought, whether before or after bankruptcy or insolvency, including without limitation all
fees and costs incurred by Frost Gamma in connection with Frost Gamma’s enforcement of its rights
in a bankruptcy or insolvency proceeding filed by or against Borrower.



     Section 1.4. Use of Proceeds. Funds advanced under the Line of Credit shall be used
for the Acquisition and for working capital or general corporate purposes of Borrower.



     Section 1.5. Payment of Outstanding Amount. The aggregate Obligations outstanding on
the Maturity Date shall be due and payable on the Maturity Date in accordance with the terms of the Note.



 









 





     Section 1.6. Interest. Interest on the outstanding principal amount of the Line of
Credit shall accrue at a rate equal to eleven percent (11%) per annum, compounded quarterly (the
“Interest Rate ”), and shall be payable on the last day of each calendar month until the repayment
in full of all Obligations, the termination of this Agreement and cancellation of the Note.



     Section 1.7. Default Rate. Upon the Maturity Date, whether by acceleration, demand
or otherwise, and at Frost Gamma’s option upon the occurrence of any Event of Default (as defined
in the Note) and during the continuance thereof, the Note shall bear interest at a rate that shall
be five percent (5.0%) in excess of the Interest Rate but not more than the maximum rate allowed by
law (the “Default Rate”). The Default Rate shall continue to apply whether or not judgment shall be
entered on the Note. The Default Rate is imposed as liquidated damages for the purpose of defraying
Frost Gamma’s expenses incident to the handling of delinquent payments, but are in addition to, and
not in lieu of, Frost Gamma’s exercise of any rights and remedies hereunder or under applicable
law, and any fees and expenses of any agents or attorneys which Frost Gamma may employ. In
addition, the Default Rate reflects the increased credit risk to Frost Gamma of carrying a loan
that is in default. Borrower agrees that the Default Rate is a reasonable forecast of just
compensation for anticipated and actual harm incurred by Frost Gamma, and that the actual harm
incurred by Frost Gamma cannot be estimated with certainty and without difficulty.



     Section 1.8. Advances. Borrower shall give Frost Gamma prior written notice not
later than 3:00 p.m., Eastern time, on the third business day prior to the date of any advance of
credit pursuant to the Line of Credit hereunder (an “Advance”). Any such notice shall be in the
form of the Borrowing Notice set forth as Exhibit C (the “Borrowing Notice”), shall be
certified by the president or Chief Financial Officer of Borrower, and shall set forth the
aggregate amount of the requested Advance. Upon receiving a request for an Advance to which
Borrower is entitled hereunder and under the Note, and provided there is no Event of Default (as
defined in the Note), Frost Gamma shall make available to Borrower the amount of the requested
Advance by wire transfer of immediately available funds to a bank account designated by Borrower on
the third business day after receipt of such Borrowing Notice. Notwithstanding the foregoing,
Borrower shall not be required to provide three business days’ advance notice of funding for the
first Advance on the Initial Closing Date.



     Section 1.9. Prepayment. Borrower may prepay the outstanding Obligations under the
Line of Credit at any time without premium or penalty. Prepayments of all or any portion of the
Obligations shall not reduce the Available Amount, and funds may be reborrowed hereunder up to the
Available Amount, subject to the provision hereof and the Note.



     Section 1.10. Payment Application. Any and all payments on account of the
Obligations will be applied first to accrued and unpaid interest and second to outstanding
principal and other sums due hereunder. If Borrower makes a payment or payments and such payment or
payments, or any part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or any other person
under any bankruptcy act, state, provincial or federal law, common law or equitable cause, then to
the extent of such payment or payments, the Obligations or part thereof hereunder intended to be
satisfied shall be revived and continued in full force and effect as if said payment or payments
had not been made.



     Section 1.11. Conditions to First Advance. The obligation of Frost Gamma to make the
first Advance shall be subject to Frost Gamma’s receipt of the following documents, each in form
and substance satisfactory to Frost Gamma:




	 	(a)	 	This Agreement. This Agreement duly executed by Borrower and Frost Gamma.
	 
	 	(b)	 	Promissory Note. The Note duly executed by Borrower.
	 
	 	(c)	 	Borrowing Notice. A completed Borrowing Notice required under Section 1.8 hereof.
	 
	 	(d)	 	The Warrants. The Warrants duly executed by Borrower.
	 
	 	(e)	 	Borrower Secretary’s Certificate. The duly authorized Secretary of
Borrower shall have delivered




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	 	 	 	a certified copy of Borrower’s Articles of Incorporation, as amended, and a
certificate as to its Amended and Restated Bylaws and resolutions adopted by its
board of directors authorizing this Agreement and the transactions contemplated
hereby.
	 	(f)	 	Initial Funding Fee. Borrower shall have paid to Frost Gamma a
one-time initial funding fee of $150,000.
	 
	 	(g)	 	Other Documents. Such additional documents as Frost Gamma reasonably may request.





     Section 1.12. Subsequent Advances. The obligation of Frost Gamma to make additional
Advances shall be subject to Frost Gamma’s receipt of a completed Borrowing Notice and such
additional documents as Frost Gamma reasonably may request and the absence of any Event of Default.



     Section 1.13 Ranking. The Line of Credit and Note will rank senior in right of
payment to all of Borrower’s subordinated indebtedness incurred after the Initial Closing Date and
equal in right of payment with all other senior indebtedness of Borrower incurred after the Initial
Closing Date.



ARTICLE II




CLOSINGS




     Section 2.1. Initial Closing. The closing of this Agreement (the “Initial Closing”)
shall take place at 153 E. 53rd Street, 49th Floor, New York, NY or at such
other location(s) as the parties may agree commencing at 9:00 a.m. local time on the Closing Date
of the Stock Purchase Agreement (as defined therein). At the Initial Closing:




	 	(a)	 	Borrower shall deliver to Frost Gamma a fully executed copy of this Agreement,
the Note and the other documents described in Section 1.11.
	 
	 	(b)	 	Frost Gamma shall deliver to Borrower a fully executed copy of this Agreement.





     Section 2.2. Subsequent Closings. The closing of any subsequent advance under this
Agreement shall take place at 153 E. 53rd Street, 49th Floor, New York, NY or
at such other location(s) as the parties may agree commencing at 9:00 a.m. local time on the date
set forth in the Borrowing Notice (provided timely delivery of such Borrowing Notice to Frost Gamma
has been made). At each such subsequent closing, Frost Gamma shall have timely received a completed
Borrowing Notice and such additional documents as Frost Gamma reasonably may request.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF BORROWER




     Each of the representations and warranties of the Borrower (and any limitations thereon) set
forth in the Stock Purchase Agreement are hereby incorporated by reference herein and made by
Borrower in favor of Frost Gamma as if fully set forth in this Agreement. In addition, Borrower
represents and warrants to Frost Gamma as follows:



     Section 3.1 Capacity; Execution of Agreement. Borrower has all requisite power,
authority, and capacity to enter into this Agreement and to perform the transactions and
obligations to be performed by it hereunder. The execution and delivery of this Agreement, and the
performance by Borrower of the transactions and obligations contemplated hereby have been duly
authorized by all requisite corporate action of Borrower. This Agreement has been duly executed and
delivered by Borrower and constitutes a valid and legally binding agreement of Borrower,
enforceable in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws, both state and federal,
affecting the enforcement of creditors’ rights or remedies in general from time to time in effect
and the exercise by courts of equity powers or their application of principles of public policy.



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     Section 3.2. Power and Authority. Borrower has all requisite legal and other power
and authority to execute and deliver this Agreement and to carry out and perform its other
obligations hereunder.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF LENDER




     Except as set forth on the Schedule of Exceptions delivered to Borrower in connection with
this Agreement, Frost Gamma represents and warrants to Borrower as of the date of this Agreement as
follows:



     Section 4.1. Capacity; Execution of Agreement. Frost Gamma has all requisite power,
authority, and capacity to enter into this Agreement and to perform the transactions and
obligations to be performed by it hereunder. The execution and delivery of this Agreement, and the
performance by Frost Gamma of the transactions and obligations contemplated hereby have been duly
authorized by all requisite corporate action of Frost Gamma. This Agreement has been duly executed
and delivered by Frost Gamma and constitutes a valid and legally binding agreement of Frost Gamma,
enforceable in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws, both state and federal,
affecting the enforcement of creditors’ rights or remedies in general from time to time in effect
and the exercise by courts of equity powers or their application of principles of public policy.



     Section 4.2. Formation and Standing. Frost Gamma is a trust duly formed, validly
existing and in good standing under the laws of the State of Florida. Frost Gamma has the requisite
power and authority to own and operate its properties and assets, and to carry on its business as
currently conducted.



     Section 4.3. Power and Authority. Frost Gamma has all requisite legal and other
power and authority to execute and deliver this Agreement and to carry out and perform its other
obligations hereunder.



     Section 4.4. Accredited Investor. Frost Gamma is an “accredited investor” as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act.



     Section 4.5. Suitability and Sophistication. Frost Gamma has (i) such knowledge and
experience in financial and business matters that it is capable of independently evaluating the
risks and merits of entering into this Agreement acquiring the Warrants and (ii) independently
evaluated the risks and merits of acquiring the Warrants and has independently determined that the
Warrants are a suitable investment for it.



     Section 4.6. Brokers or Finders. Frost Gamma has not engaged any brokers, finders or
agents, or incurred, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with this Agreement and the transactions
contemplated hereby.



ARTICLE V




MISCELLANEOUS




     Section 5.1. Survival of Representations and Warranties; Indemnification.




	 	(a)	 	The representations and warranties of Borrower and Frost Gamma contained in or
made pursuant to this Agreement will survive the execution and delivery of this
Agreement and the Initial Closing, and for an additional 12 months subsequent to the
Initial Closing, and with respect to the representations and warranties of Borrower
only, for the longer of an additional 12 months subsequent to any subsequent Advance
and the time period during which any Obligations are outstanding.
	 
	 	(b)	 	Borrower hereby agrees to indemnify and hold harmless Frost Gamma and, as
applicable, its officers, directors, stockholders, agents and representatives from and
against any and all claims, demands, losses, damages, expenses or liabilities
(including reasonable attorneys’ fees) due to or




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	 	 	 	arising out of a material breach of any representation, warranty or covenant
provided, made or agreed to by Borrower hereunder or under the Note.
	 	(c)	 	Frost Gamma hereby agrees to indemnify and hold harmless Borrower and, as
applicable, its officers, managers, directors, stockholders, members, agents and
representatives from and against any and all claims, demands, losses, damages, expenses
or liabilities (including reasonable attorneys’ fees) due to or arising out of a
material breach of any representation, warranty or covenant provided, made or agreed to
by Frost Gamma hereunder.





     Section 5.2. Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their successors and assigns. Borrower may not assign this Agreement
or any rights or obligations hereunder without the prior written consent of Frost Gamma. Frost
Gamma may assign its rights and obligations hereunder to an entity directly or indirectly
controlled by or under common control with Frost Gamma.



     Section 5.3. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which together shall constitute
one instrument.



     Section 5.4. Facsimile. A facsimile copy of an original written signature shall be
deemed to have the same effect as an original written signature.



     Section 5.5. Captions and Headings. The captions and headings used in this Agreement
are used for convenience only and are not to be considered in construing or interpreting this
Agreement.



     Section 5.6. Notices. Unless otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Agreement will be in writing and will be
conclusively deemed to have been duly given (i) when hand delivered to the other party; (ii) upon
receipt, when sent by facsimile to the number set forth below or email to the address set forth
below; (iii) five business days after deposit in the U.S. mail, postage prepaid and addressed to
the other party at the address set forth below; or (iv) the next business day after deposit with a
national overnight delivery service, postage prepaid, addressed to the parties as set forth below
with next business day delivery guaranteed. Each person making a communication hereunder by
facsimile or email will promptly confirm by telephone to the person to whom such communication was
addressed each communication made by it by facsimile or email pursuant hereto but the absence of
such confirmation will not affect the validity of any such communication. A party may change or
supplement the addresses given below, or designate additional addresses for purposes of this
Section 5.6, by giving the other party written notice of the new address in the manner set forth
above.



If to Borrower:



Ladenburg Thalmann Financial Services Inc.

c/o Ladenburg Thalman &Co. Inc.

153 East 53rd Street

49th Floor

New York, NY 10022

Attention: Diane Chillemi

Phone: 631-270-1607

Facsimile: 631-270-1988




with a copy to:



Ladenburg Thalman &Co. Inc.

153 East 53rd Street

49th Floor

New York, NY 10022

Attention: Joseph Giovanniello, Jr.

Phone: 212-409-2544

Facsimile: 212-409-2575




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If to Frost Gamma:



Frost Gamma Investments Trust

4400 Biscayne Blvd.

15  th  Floor

Miami, FL 33137

Attention: AnneMarie Pascual.

Phone: 305-575-6511

Facsimile: 305-575-6444




     Section 5.7. Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of Borrower and
Frost Gamma.



     Section 5.8. Enforceability; Severability. The parties hereto agree that each
provision of this Agreement will be interpreted in such a manner as to be effective and valid under
applicable law. If one or more provisions of this Agreement are nevertheless held to be prohibited,
invalid or unenforceable under applicable law, such provision will be effective to the fullest
extent possible excluding the terms affected by such prohibition, invalidity or unenforceability,
without invalidating the remainder of such provision or the remaining provisions of this Agreement.
If the prohibition, invalidity or unenforceability referred to in the prior sentence requires such
provision to be excluded from this Agreement in its entirety, the balance of the Agreement will be
interpreted as if such provision were so excluded and will be enforceable in accordance with its
terms.



     Section 5.9. Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of Florida.



     Section 5.10. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF
THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT. EACH OF THE
PARTIES HERETO HEREBY FURTHER ACKNOWLEDGES AND AGREES THAT EACH HAS REVIEWED OR HAD THE OPPORTUNITY
TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT
OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.



     Section 5.11. Further Assurances; Access. Frost Gamma and Borrower will from time to
time and at all times hereafter make, do, execute, or cause or procure to be made, done and
executed such further acts, deeds, conveyances, consents and assurances without further
consideration, which may reasonably be required to effect the transactions contemplated by this
Agreement. Upon reasonable written notice, Borrower shall afford the officers, employees and
authorized agents and representatives of Frost Gamma reasonable access, during normal business
hours, to the offices, properties, books, records and such additional financial and operating data
and other information regarding the assets, goodwill and business of the Borrower as Frost Gamma
may from time to time reasonably request.



     Section 5.12. Entire Agreement. This Agreement and all exhibits hereto and thereto
constitute the entire agreement among the parties with respect to the subject matter hereof and
thereof and no party will be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.



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     Section 5.13. Delays or Omissions. No delay or omission to exercise any right power
or remedy accruing to any party under this Agreement, or upon any breach or default of any other
party under this Agreement, will impair any such right, power or remedy of such non-breaching or
non-defaulting party nor will it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter occurring; nor will any
waiver of any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any provisions or conditions of this Agreement, must be in
writing and will be effective only to the extent specifically set forth in such writing. Except as
otherwise set forth herein, all remedies, either under this Agreement or by law or otherwise
afforded to any party, will be cumulative and not alternative.



     Section 5.14. Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other person or entity.



     Section 5.15. Equitable Relief. The parties hereto recognize that, if such party
fails to perform or discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to the other parties. Each party hereto therefore agrees that the
other parties are entitled to seek temporary and permanent injunctive relief and any other
equitable remedy a court of competent jurisdiction may deem appropriate in any such case.



     Section 5.16. No Strict Construction. The language used in this Agreement is deemed
to be the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.



     Section 5.17. Public Announcements. No public announcements shall be made by any
party hereto relating to the transactions contemplated by this Agreement without the prior written
consent of the Borrower and Frost Gamma, such consent not to be unreasonably            withheld,
except where required by applicable law; provided, however, that in the event of such a legally
required disclosure, the disclosing party will consult with the other consenting party with respect
to the text of such disclosure and will provide the other consenting party with a copy of the
disclosure prior to its publication.



     Section 5.18. Expenses. Each party shall bear its own costs and expenses in
connection with the transactions contemplated hereby, except to the extent that Lender’s Expenses
shall be Obligations subject to the provisions hereof.



     Section 5.19. Exhibits and Schedule of Exceptions. All exhibits, annexes and
schedules, including the Schedule of Exceptions set forth as Exhibit D hereto, annexed
hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. A disclosure in any particular Schedule of the Schedule of Exceptions or
otherwise in this Agreement will be deemed adequate to disclose another exception to a
representation or warranty made herein if the disclosure identifies the exception with reasonable
particularity so that any exception to any other Schedule is reasonably apparent.



[Signatures begin on next page.]




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     IN WITNESS THEREOF, this Agreement has been executed by the undersigned as of the day, month
and year first above written.



	 	 	 	 	 
	 	Ladenburg Thalmann Financial Services Inc. 

 	 
	 	By:  	/s/
Richard J. Lampen	 
	 	 	Name:  	Richard J. Lampen         	 
	 	 	Title:  	President and CEO 	 
	 



	 	 	 	 	 
	 	Frost Gamma Investments Trust 

 	 
	 	By:  	/s/
Phillip Frost	 
	 	 	Name:  	Phillip Frost, M.D.       	 
	 	 	Title:  	Trustee 	 
	 




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EXHIBIT A




FORM OF WARRANT




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EXHIBIT B




NOTE 




			
	$30,000,000
	 	New York, NY
	 
	 	 
	 
	 	Dated as of October 19, 2007






     FOR VALUE RECEIVED, Ladenburg Thalmann Financial Services Inc., a Florida corporation
with offices at 4400 Biscayne Blvd., 12th Floor, Miami, FL 33137 (“Borrower”),
pursuant to this Note (“Note”), hereby promises to pay to Frost Gamma Investments Trust, a
Florida trust, (“Lender”) at such place as Lender may designate from time to time in
writing, in lawful money of the United States of America, the principal amount of $30,000,000, or
such lesser amount as shall equal the outstanding principal balance of the loan (the
“Loan”) made to Borrower by Lender pursuant to that certain Credit Agreement, dated as of
October 19, 2007, by and between Borrower and Lender (the “Credit Agreement”) and this
Note, and to pay all other amounts due with respect to the Loan on the dates and in the amounts set
forth in the Credit Agreement and this Note.



     1. Definitions. All terms used, but not defined herein, shall have the meanings ascribed
to them in the Credit Agreement. In addition, the terms set forth below shall have the following
meanings:



          (a) “Advances” means amounts advanced under the Note upon prior written notice to the
Lender by the Borrower not later than 3:00 p.m., Eastern Standard Time, on the third business day
prior to the date of any advance of credit pursuant hereto. Any such notice shall be in the form
of the Borrowing Notice (as hereafter defined), shall be certified by the president or chief
financial officer of Borrower, and shall set forth the aggregate amount of the requested Advance.
Upon receiving a request for an Advance to which Borrower is entitled hereunder, the Lender shall
make the requested Advance available to Borrower by wire transfer of immediately available funds to
a bank account designated by Borrower. Notwithstanding the foregoing, Borrower shall not be
required to provide three (3) business days advance notice of funding for the first Advance on the
Initial Closing Date.




          (b) “Available Amount” means thirty million dollars ($30,000,000).




          (c) “Borrowing Notice” means the Notice of Borrowing set forth as Exhibit C to the
Credit Agreement.




          (d) “Credit Agreement” means the Credit Agreement, dated as of the date hereof,
between Borrower and Lender.




          (e) “Default Rate” shall mean a rate that shall be five percent (5.0%) in excess of
the Interest Rate but not more than the maximum rate allowed by law. The Default Rate is imposed
as liquidated damages for the purpose of defraying the Lender’s expenses incident to the handling
of delinquent payments, but are in addition to, and not in lieu of, the Lender’s exercise of any
rights and remedies hereunder or under applicable law, and any fees and



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expenses of any agents or attorneys which the Lender may employ. In addition, the Default
Rate reflects the increased credit risk to the Lender of carrying a loan that is in default.
Borrower agrees that the Default Rate is a reasonable forecast of just compensation for anticipated
and actual harm incurred by the Lender, and that the actual harm incurred by the Lender cannot be
estimated with certainty and without difficulty.




          (f) “Event of Default” shall mean the occurrence of one or more of the following
events:




               (1) Borrower shall fail to make any payment due to Lender under this Note when the same shall
become due and payable, whether at maturity, by acceleration or otherwise, within five (5) business
days after receipt of written notice from Lender that such payment is due and unpaid.




               (2) Borrower violates any of the covenants contained in Sections 6 and 7 of this Note and
fails to remedy such violation within ten (10) days after receipt of written notice from Lender
that such a violation has occurred.




               (3) Any material portion of Borrower’s assets is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or
person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) business days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs, or if a judgment or other claim becomes a lien or
encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any of Borrower’s assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any state, county,
municipal or governmental agency, and the same is not paid within ten (10) business days after
Borrower receives notice thereof; provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been posted pending a good
faith contest by Borrower.




               (4) Any document executed in connection with the Loan ceases to be, or Borrower asserts that
such document is not, in any material respect, a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms.




               (5) A proceeding shall have been instituted in a court having jurisdiction in the premises
seeking a decree or order for relief in respect of Borrower in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or liquidation of its
affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of
sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought
in such proceeding.




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               (6) Borrower commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an order for relief in an involuntary
case under any such law, or consents to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar
official) of Borrower or for any substantial part of its property, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its debts, other than debts
contested in good faith, as they become due, or shall take any corporate action in furtherance of
any of the foregoing.




               (7) One or more defaults shall exist under any agreement with any third party or parties which
consists of the failure to pay any Indebtedness at maturity or which results in the acceleration of
any Indebtedness prior to its stated maturity and the aggregate amount of such Indebtedness is in
excess of Five Hundred Thousand Dollars ($500,000) and such acceleration is not annulled within
thirty (30) days or such payment default continues for thirty (30) days.




               (8) A final, non-appealable judgment or judgments entered by a court or courts of competent
jurisdiction for the payment of money in an amount, individually or in the aggregate, of at least
Five Hundred Thousand Dollars ($500,000) shall be rendered against Borrower and shall remain
unsatisfied, unbonded and unstayed for a period of thirty (30) days or more.




               (9) Any material misrepresentation or material misstatement that exists now or hereafter in
any warranty, representation, statement, certification or report made to Lender by Borrower or any
officer, employee, agent or director of Borrower shall prove to have been false or misleading in
any material respect when made or furnished.




          (g) “Indebtedness” means, with respect to Borrower, the aggregate amount of, without
duplication, (a) all obligations of Borrower for borrowed money, (b) all obligations of Borrower
evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of Borrower
to pay the deferred purchase price of property or services (excluding trade payables aged less than
one hundred eighty (180) days), (d) all capital lease obligations of Borrower, (e) all obligations
or liabilities of others secured by a Lien on any asset of Borrower, whether or not such obligation
or liability is assumed, (f) all obligations or liabilities of others guaranteed by Borrower, and
(g) any other obligations or liabilities which are required by GAAP to be shown as debt on the
balance sheet of Borrower.




          (h) “Interest Rate” shall be 11% per annum.




          (i) “Lender’s Expenses” means all reasonable attorneys’ fees, costs and expenses
incurred in amending, enforcing or defending the Note (including fees and expenses of appeal or
review), including the exercise of any rights or remedies afforded under the Note; or under
applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency,
including without limitation all fees and costs incurred by Lender in connection with Lender’s
enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower or
its property.




-12-









 








          (j) Lien” means any voluntary or involuntary security interest, pledge, bailment,
lease, mortgage, hypothecation, conditional sales and title retention agreement, encumbrance or
other lien with respect to any property of the Borrower in favor of any person.




          (k) “Obligations” shall mean actual indebtedness, principal, interest, fees, charges,
expenses and reasonable attorneys’ fees and costs and other amounts, obligations, covenants and
duties owing by Borrower to the Lender (or any permitted assignee) of any kind and description
(whether pursuant to or evidenced by this Note or the Credit Agreement), whether direct or
indirect, absolute or contingent, due or to become due, now existing or hereafter arising,
including Lender’s Expenses, in each case as then outstanding hereunder.




          (l) “Permitted Indebtedness” means and includes:




               (1) Indebtedness of Borrower to Lender;




               (2) Indebtedness arising from the endorsement of instruments in the ordinary course of
business;




               (3) Indebtedness existing on the date hereof and disclosed in the Schedule of Exceptions to
the Credit Agreement;




               (4) Indebtedness of Borrower which is subordinated to the Indebtedness of Borrower under this
Note; and which is in an aggregate original principal amount not to exceed $250,000 at any time and




               (5) Extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness above, provided that the principal amount thereof is not increased or the
terms thereof are not modified to impose more burdensome terms upon Borrower.




          (m) “Permitted Liens” means:




               (1) Liens for fees, taxes, levies, imposts, duties or other governmental charges of any kind
which are not yet delinquent or which are being contested in good faith by appropriate proceedings
which suspend the collection thereof (provided that Borrower has adequately bonded
such Lien or reserves sufficient to discharge such Lien have been provided on the books of
Borrower).




               (2) Liens existing as of the date of this Note and identified in the Schedule of Exceptions to
the Credit Agreement.




               (3) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens
arising in the ordinary course of business and which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate proceedings (provided
that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien
have been provided on the books of Borrower).





-13-









 








               (4) Liens upon any equipment or other personal property acquired by Borrower after the date
hereof to secure (i) the purchase price of such equipment or other personal property, or (ii) lease
obligations or indebtedness incurred solely for the purpose of financing the acquisition of such
equipment or other personal property; provided that such Liens are confined solely to the equipment
or other personal property so acquired and the proceeds thereof and the amount secured does not
exceed the acquisition price thereof.




               (5) Bankers’ liens, rights of setoff and similar Liens incurred on deposits made in the
ordinary course of business and Liens in favor of financial institutions arising in connection with
Borrower’s deposit accounts or securities accounts held at such institutions to secure customary
fees and charges;




               (6) Any judgment, attachment or similar Lien not resulting in an Event of Default hereunder;
and




               (7) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described above but any extension, renewal or replacement Lien must be limited to the
property encumbered by the existing Lien and the principal amount of the indebtedness may not
increase.




          (n) “Person” means and includes any individual, any partnership, any corporation, any
business trust, any joint stock company, any limited liability company, any unincorporated
association or any other entity and any domestic or foreign national, state or local government,
any political subdivision thereof, and any department, agency, authority or bureau of any of the
foregoing.




     2. Advances Under the Note and Obligations. From time to time prior to the Maturity Date,
subject to the provisions below, the Lender may make Advances to the Borrower, which the Borrower
shall pay and may reborrow, so long as the aggregate amount of Advances outstanding at any one time
shall not exceed the Available Amount. Notwithstanding the face amount of the Note, Borrower’s
liability under the Note shall include the Obligations. Lender may determine to include Obligations
other than interest payable at the Interest Rate in calculating the Available Amount. The
obligation of the Lender to make Advances shall be subject to the Lender’s receipt of a completed
Borrowing Notice and such documents as the Lender may reasonably request and the absence of any
continuing Event of Default. Prior to making the first Advance and as a condition to such Advance,
Borrower shall provide Lender with a certificate of the duly authorized Secretary of Borrower as to
its Bylaws and resolutions adopted by its board of directors authorizing the Credit Agreement, this
Note and the transactions contemplated hereby and thereby, and a certified copy of Borrower’s
Articles of Incorporation as well as any and all third-party consents which are required to be
procured by Borrower before it can incur the indebtedness evidenced by this Note and otherwise
commit itself to its obligations hereunder.



     3. Payments of Obligations, including Principal and Interest. The principal amount of
the Loan evidenced hereby, together with any accrued and unpaid interest, and any and all the
Obligations, including unpaid costs, fees and expenses accrued, such as Lender’s Expenses, shall be
due and payable on October 19, 2012 (the “Maturity Date”).



-14-









 





     4. Interest; Ranking. All amounts outstanding from time to time hereunder shall bear
interest until such amounts are paid, at the Interest Rate. Following any Event of Default
(including before or after any judgment is entered) and after the Maturity Date, the principal
balance outstanding hereunder, together with all such other amounts outstanding hereunder, shall
bear interest at a rate per annum equal to the Default Rate. This Note shall rank senior in right
of payment to all of Borrower’s subordinated indebtedness incurred after the Initial Closing Date
and equal in right of payment with all other senior indebtedness of Borrower incurred after the
Initial Closing Date.



     5. Prepayments. Borrower may prepay in cash, at any time or from time to time, all or
any portion of the amounts due hereunder, without penalty or premium; provided,
however, that any prepayment (whether voluntary or involuntary) shall be applied first to
accrued and unpaid interest and second to outstanding principal and other Obligations due
hereunder. Prepayments of all or any portion of the Obligations shall not reduce the Available
Amount, and funds may be reborrowed hereunder up to the Available Amount, subject to the provision
hereof and the Note. If Borrower makes a payment or payments and such payment or payments, or any
part thereof, are subsequently invalidated, declared to be fraudulent or preferential, set aside or
are required to be repaid to a trustee, receiver, or any other person under any bankruptcy act,
state, provincial or federal law, common law or equitable cause, then to the extent of such payment
or payments, the obligations or part thereof hereunder intended to be satisfied shall be revived
and continued in full force and effect as if said payment or payments had not been made.



     6. Affirmative Covenants. Borrower covenants that, so long as any amounts are due and
payable hereunder to Lender or any commitment to make any Loan still exists, Borrower shall:



          (a) Maintain its corporate existence and its good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a material adverse effect on the financial condition,
operations or business of Borrower. Borrower shall maintain in force all licenses, approvals and
agreements, the loss of which could reasonably be expected to have a material adverse effect on its
financial condition, operations or business.




          (b) Comply with all statutes, laws, ordinances and government rules and regulations to which
it is subject, noncompliance with which could reasonably be expected to materially adversely affect
the financial condition, operations or business of Borrower.




          (c) As soon as possible, and in any event within five (5) days after the discovery of a
default or an Event of Default, provide Lender with an Officer’s Certificate setting forth the
facts relating to or giving rise to such default or Event of Default and the action which Borrower
proposes to take with respect thereto.




     7. Negative Covenants. Except as identified in the Schedule of Exceptions to the Credit
Agreement, Borrower covenants that, so long as any amounts are due and payable hereunder to Lender
or any commitment to make any Loan still exists, without the prior approval of Lender, Borrower
shall not:



-15-









 





          (a) Change its name, jurisdiction of incorporation, or principal place of business without
thirty (30) days prior written notice to Lender.




          (b) Create, incur, assume or suffer to exist any Lien of any kind upon any of
Borrower’s property, whether now owned or hereafter acquired, except Permitted Liens.




          (c) (i) Prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the
scheduled repayment thereof any Indebtedness for borrowed money (other than amounts due or
permitted to be prepaid under this Agreement) or lease obligations, or (ii) amend, modify or
otherwise change the terms of any Indebtedness for borrowed money or lease obligations so as to
accelerate the scheduled repayment thereof.




          (d) Create, incur, assume or permit to exist any Indebtedness except Permitted Indebtedness.




     8. Lender’s Rights and Remedies.


Upon the occurrence of an Event of Default, while such Event of Default is continuing (provided
that an Event of Default shall be continuing at all times after any cure period therefor expires),
Lender shall not have any further obligation to advance money or extend credit to or for the
benefit of Borrower. In addition, upon the occurrence and during the continuance of an Event of
Default, the entire unpaid principal sum hereunder, plus any and all interest accrued thereon, plus
all other sums due and payable to Lender hereunder shall, at the option of Lender, become due and
payable immediately without presentment, demand, notice of nonpayment, protest, notice of protest,
or other notice of dishonor, all of which are hereby expressly waived by Borrower.




     9. Remedies Cumulative, Etc.



          (a) No right or remedy conferred upon or reserved to Lender hereunder or now or hereafter
existing at law or in equity is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and concurrent, and in addition to every other such
right or remedy, and may be pursued singly, concurrently, successively or otherwise, at the sole
discretion of Lender, and shall not be exhausted by any one exercise thereof but may be exercised
as often as occasion therefor shall occur.




          (b) Borrower hereby waives presentment, demand, notice of nonpayment, protest, notice of
protest, notice of dishonor and any and all other notices in connection with any default in the
payment of, or any enforcement of the payment of, all amounts due under this Note. To the extent
permitted by law, Borrower waives the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect.




          (c) Costs and Expenses. Following the occurrence of any Event of Default, Borrower
shall pay upon demand all costs and expenses (including reasonable attorneys’ fees and expenses)
incurred by Lender in the exercise of any of its rights, remedies or powers under this Note and any
amount thereof not paid promptly following demand therefor shall be added to the principal sum
hereunder and shall bear interest at the Default Rate from the date of such demand until paid in
full.





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     10. Indemnification and Waiver. Whether or not the transactions contemplated hereby shall
be consummated:



          (a) General Indemnity. Borrower agrees upon demand to pay or reimburse Lender for all
liabilities, obligations and out-of-pocket expenses, including Lender’s expenses and reasonable
fees and expenses of counsel for Lender from time to time arising in connection with the
enforcement or collection of sums due under this Note or the Credit Agreement, and in connection
with any amendment or modification of such documents or any “work-out” in connection with such
documents. Borrower shall indemnify, reimburse and hold Lender, and each of its respective
successors, assigns, agents, attorneys, officers, directors, shareholders, servants, agents and
employees (each an “Indemnified Person”) harmless from and against all liabilities, losses,
damages, actions, suits, demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent
they may be incurred or suffered by such Indemnified Person in connection therewith (including
reasonable attorneys’ fees and expenses), fines or penalties (and other charges of any applicable
governmental authority) (each, a “Claim”), directly or indirectly relating to or arising
out of the use of the proceeds of the Loans or otherwise, the falsity of any representation or
warranty of Borrower or Borrower’s failure to comply with the terms of this Note or the Credit
Agreement. Such indemnities shall continue in full force and effect, notwithstanding the
expiration or termination of this Note. Upon Lender’s written demand, Borrower shall assume and
diligently conduct, at its sole cost and expense, the entire defense of Lender, each of its
partners, and each of their respective, agents, employees, directors, officers, shareholders,
successors and assigns against any indemnified Claim described in this Section. Borrower shall not
settle or compromise any Claim against or involving Lender without first obtaining Lender’s written
consent thereto, which consent shall not be unreasonably withheld.




     11. Notices. All notices required to be given to any of the parties hereunder shall be in
writing and shall be deemed to have been sufficiently given for all purposes when presented
personally to such party or sent by hand delivery, facsimile, courier service guaranteeing next
business day delivery, or overnight U.S. express mail, return receipt requested, to such party at
its address set forth in the Credit Agreement with copies to the parties designated to receive
copies in the Credit Agreement. Such notice shall be deemed to be given when received. Any notice
of any change in such address shall also be given in the manner set forth above. Whenever the
giving of notice is required, the giving of such notice may be waived in writing by the party
entitled to receive such notice.



     12. Severability. In the event that any provision of this Note is held to be invalid,
illegal or unenforceable in any respect or to any extent, such provision shall nevertheless remain
valid, legal and enforceable in all such other respects and to such extent as may be permissible.
Any such invalidity, illegality or unenforceability shall not affect any other provisions of this
Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.



     13. Successors and Assigns. This Note inures to the benefit of Lender and binds Borrower,
and their respective successors and assigns, and the words “Borrower” and “Lender” whenever
occurring herein shall be deemed and construed to include such respective successors and assigns;
provided, however, that neither this Note nor any rights hereunder may be assigned



-17-









 




by Borrower without Lender’s prior written consent, which consent may be granted or withheld
in Lender’s sole discretion and further provided that for so long as that certain non-negotiable
promissory note dated as of the date hereof made by Borrower in favor of Bruce A. Zwigard is
outstanding, Lender shall not sell, assign, transfer or issue a participation interest in more than
an aggregate amount of 20% of the funding commitment hereunder, together with an equal percentage
of the then outstanding principal amount hereunder, to any person or entity other than a Frost
Affiliate.




     14. Governing Law. This Note shall be governed by and construed in accordance with the
laws of the State of Florida. Borrower agrees that any action or proceeding against it to enforce
the Note may be commenced in state or federal court in any county in the State of Florida, and
Borrower waives personal service of process and agrees that a summons and complaint commencing an
action or proceeding in any such court shall be properly served and shall confer personal
jurisdiction if served by registered or certified mail in accordance with the notice provisions set
forth herein.



     15. Entire Agreement; Construction; Amendments and Waivers.




          (a) Entire Agreement. This Note and each of the related loan documents dated as of
the date hereof, taken together, constitute and contain the entire agreement between Borrower and
Lender with respect to the subject matter hereof and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications between the parties, whether
written or oral, with respect to such subject matter. Borrower acknowledges that it is not relying
on any representation or agreement made by Lender or any employee, attorney or agent thereof, other
than the specific agreements set forth in this Note and the related loan documents.




          (b) Construction. This Note is the result of negotiations between and has been
reviewed by each of Borrower and Lender as of the date hereof and their respective counsel;
accordingly, this Note shall be deemed to be the product of the parties hereto, and no ambiguity
shall be construed in favor of or against Borrower or Lender. Borrower and Lender agree that they
intend the literal words of this Note and the related loan documents and that no parol evidence
shall be necessary or appropriate to establish Borrower’s or Lender’s actual intentions.




          (c) Amendments and Waivers. Any and all amendments, modifications, discharges or
waivers of, or consents to any departures from any provision of this Note or of any of the related
loan documents shall not be effective without the written consent of Lender and Borrower. Any
waiver or consent with respect to any provision of such loan documents shall be effective only in
the specific instance and for the specific purpose for which it was given. No notice to or demand
on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar
or other circumstances. Any amendment, modification, waiver or consent affected in accordance with
this Section shall be binding upon Lender and on Borrower.




     16. Reliance by Lender. All covenants, agreements, representations and warranties made
herein by Borrower shall be deemed to be material to and to have been relied upon by Lender,
notwithstanding any investigation by Lender.



-18-









 





     17. No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Note or any of
the related loan documents shall be payable without notice or demand and shall be payable in United
States Dollars without set-off or reduction of any manner whatsoever.



     18. Survival. All covenants, representations and warranties made in this Agreement shall
continue in full force and effect so long as any obligations hereunder or commitment to fund remain
outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses,
damages, losses, costs and liabilities described in Section 10 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought against Lender have run.



     19. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY.



[SIGNATURE PAGE FOLLOWS]




-19-









 





     IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above
written.



	 	 	 	 	 
	 	LADENBURG THALMANN FINANCIAL SERVICES INC. 

 	 
	 	By:  	 	 
	 	 	Name:  	Richard J. Lampen                                                                	 
	 	 	Title:  	President and CEO 	 
	 




20









 





EXHIBIT C




NOTICE OF BORROWING




Frost Gamma Investments Trust
 4400
Biscayne Blvd.
 15th  Floor
 Miami,
FL 33137



RE:  Notice of Borrowing



Date ___




Gentlemen:




     Pursuant to the terms of a Credit Agreement dated as of October 19, 2007 (“Credit Agreement”),
we hereby request you to make an advance in the amount of $___.



     This notice constitutes a reaffirmation by the undersigned that the representations and
warranties in the Credit Agreement are true, correct and accurate in all material respects as if
the date hereof was the Initial Closing Date and a certification by the undersigned that it is in
compliance with the Credit Agreement and the Note in all material respects as of the date of this
Notice of Borrowing as if the date hereof was the Initial Closing Date.



     Capitalized terms used but not defined herein shall have the meanings ascribed to them in the
Credit Agreement.



	 	 	 	 	 
	 	Very truly yours, 



Ladenburg Thalmann Financial Services Inc. 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: