EX-10.3 Warrant



 





EXHIBIT 10.3




     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY SHARE MAY BE SOLD OR TRANSFERRED ABSENT SUCH
REGISTRATION OR AN EXEMPTION THEREFROM.



     Effective Date: October 19, 2007



WARRANT TO PURCHASE COMMON STOCK




LADENBURG THALMANN FINANCIAL SERVICES INC.




EXPIRING OCTOBER 19, 2017 (THE “EXPIRATION DATE”)




     THIS WARRANT CERTIFIES THAT Frost Gamma Investments Trust or their permitted assigns
(“Holder”), for good and valuable consideration, the receipt of which is hereby acknowledged, has
been granted the right to purchase from Ladenburg Thalmann Financial Services Inc., a Florida
corporation (the “Company”), at any time and from time to time, for a period commencing on the
Effective Date (as defined below) and ending on the Expiration Date, 2,000,000 (the “Warrant
Number”) validly issued, fully-paid and non-assessable shares (the “Shares”) of the Company’s
common stock, par value $.0001 per share, subject to adjustment as provided herein, at the exercise
price of $1.91 per share (the “Exercise Price”).



     1. Term of Warrant. Subject to the terms and conditions set forth herein, this Warrant shall
be exercisable, in whole or in part, during the term (“Term”) commencing at 9:00 a.m., New York,
New York time, on the date hereof (the “Effective Date”) and ending at 5:00 p.m., New York, New
York time on the Expiration Date, and shall be void thereafter.



     2. Exercise of Warrant.



     2.1. Manner of Exercise. The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, at any time, or from time to time, during the Term,
by the surrender of this Warrant and the Notice of Exercise (in the form annexed hereto as Exhibit
A), duly completed and executed on behalf of the Holder, at the office of the Company (or such
other office or agency of the Company as it may designate by notice in writing to the Holder), upon
payment of the purchase price of the Shares to be purchased (i) in cash or wire transfer to an
account designated by the Company, (ii) by tender for cancellation of a portion of the Company’s
11% notes due 2012, (iii) by a Net Issue Election as provided for below or (iv) a combination of
the foregoing.



     2.2. Time of Exercise. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for exercise as provided
above (the “Exercise Date”), and the Person entitled to receive the Shares issuable upon such
exercise shall be treated for all purposes as the holder of record of such Shares as of the close
of business on such date. As used in this Warrant, “Person” shall mean an individual, corporation,
limited liability company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or any agency or political subdivision thereof) or other
entity of any kind.



     2.3. Delivery of Certificate and Revised Warrant. As promptly as practicable on or
after the Exercise Date and in any event within fifteen (15) days thereafter, the Company at its
expense, will issue and deliver to the Person(s) entitled to receive the same a certificate or
certificates for the number of Shares issuable upon such exercise or other appropriate written
evidence of the issuance of the Shares. In the event that this Warrant is exercised in part, the
Company at its expense shall execute and deliver a new Warrant of like tenor exercisable for the
number of Shares for which this Warrant may then be exercised at the same time.



     2.4. No Fractional Shares. No fractional Shares or scrip representing fractional
Shares shall be issued upon the exercise of this Warrant. In lieu of any fractional Share to which
the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise
Price multiplied by such fraction.



 









 





     2.5. Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if
the fair market value of
one Share is greater than the Exercise Price, in lieu of exercising this Warrant for cash, the
Holder may elect to receive Shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and notice of such election in which event
the Company shall issue to the Holder a number of Shares computed using the following formula:



	 	 	 	 	 
	X

	 	=
	 	Y (A-B)
	 

	 	 	 	A






     Where:



     X = the number of Shares to be issued to the Holder



     Y = the number of Shares purchasable under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being canceled (at the date of such calculation)



     A = the fair market value of one Share (at the date of such calculation)



     B = Exercise Price



     For purposes of the above calculation, fair market value of one Share shall be determined in
good faith by the Board of Directors of the Company; provided, however, that where there exists a
public market for the Shares at the time of such exercise, the fair market value per Share shall be
the last reported sale price of the Common Stock or the closing price quoted on the American Stock
Exchange, the Nasdaq Stock Market, the OTC Bulletin Board or on any exchange or market on which the
Common Stock is listed, whichever is applicable, on the Exercise Date.



     3. Adjustments to the Shares.



     3.1. Merger, Sale of Assets, etc. If at any time while this Warrant, or any portion
thereof, is outstanding and unexpired there shall be (i) a reorganization (other than a
combination, reclassification, exchange or subdivision of securities otherwise provided for
herein), (ii) a merger or consolidation of the Company with or into another entity in which the
Company is not the surviving entity, or a reverse triangular merger in which the Company is the
surviving entity but the Company’s shares of capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, or (iii) a sale or transfer of the Company’s properties and assets
as, or substantially as, an entirety to any other person, this Warrant shall thereafter represent
the right to acquire the number of Shares or other securities or property which the Holder of this
Warrant would have owned immediately after the consummation of such reorganization, merger,
consolidation, sale or transfer, if the Holder of this Warrant had exercised this Warrant
immediately before the effective date of the reorganization, merger, consolidation, sale or
transfer.



     3.2. Reclassification, etc. If the Company, at any time while this Warrant, or any
portion hereof, remains outstanding and unexpired by reclassification of securities or otherwise,
shall change any of the securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or other change and
the Warrant Number shall be appropriately adjusted, all subject to further adjustment as provided
for herein.



     3.3. Split, Subdivision or Combination of Shares. If the Company at any time while
this Warrant, or any portion hereof, remains outstanding and unexpired shall split, subdivide or
combine the securities as to which purchase rights under this Warrant exist, into a different
number of securities of the same class, the Warrant Number shall be proportionately increased (and
the Exercise Price decreased correspondingly) in the case of a split or subdivision or
proportionately decreased (and the Exercise Price increased correspondingly) in the case of a
combination.



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     3.4. Adjustments for Dividends in Shares or Other Securities or Property. If while
this Warrant, or any portion hereof, remains outstanding and unexpired, the holders of the
securities as to which purchase rights under this Warrant exist at the time shall have received,
or, on or after the record date fixed for the determination of eligible shareholders, shall have
become entitled to receive, without payment therefor, other or additional securities or property
(other than cash) of the Company by way of dividend, then and in each case, this Warrant shall
represent the right to acquire, in addition to the number of Shares receivable upon exercise of
this Warrant, and without payment of any additional consideration therefor, the amount of such
other or additional securities or property (other than cash) of the Company that such Holder would
hold on the date of such exercise had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such Shares and/or all other additional
securities available to it as aforesaid during such period, giving effect to all adjustments called
for during such period by the provisions of this Warrant.



     4. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment
pursuant to Section 3, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each Holder a certificate setting
forth, in reasonable detail, the event requiring the adjustment or readjustment, the amount of such
adjustment or readjustment, the method by which such adjustment or readjustment was calculated, the
Exercise Price, and the number of Shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant. The Company shall upon the written request, at
any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate.



     5. Share Legend. Each certificate for Shares issued upon exercise of this Warrant may bear
the following legend, unless at the time of exercise such Shares are registered under the
Securities Act:



     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 UNLESS
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.



     6. Shares to be Fully Paid. The Company will issue Shares pursuant to this Warrant as fully
paid, non-assessable and free from all liens and encumbrances.



     7. Company to Reserve Shares. At all times before the date on which the Warrant expires (the
“Expiration Date”), the Company will reserve and keep available, free from preemptive rights, out
of its authorized but unissued Shares or Shares held in the treasury of the Company, for the
purpose of effecting the exercise of this Warrant, the full number of Shares then deliverable upon
the exercise of this Warrant. The issuance of this Warrant shall constitute full authority to those
officers of the Company who are charged with the duty of executing stock certificates to execute
and issue the necessary certificates for Shares upon exercise of this Warrant.



     8. Exchange of Warrant. The Holder may exchange this Warrant, at the Company’s expense, at
any time prior to the Expiration Date, by surrendering this Warrant to the Company, for other
warrant certificates, upon the same terms and conditions of this Warrant, which in the aggregate
entitle the Holders to purchase the balance of Shares then covered by this Warrant.



     9. No Rights as Stockholder. Except as otherwise provided herein, this Warrant will not
entitle the Holder to any of the rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive distributions.



     10. Amendment. This Warrant may not be amended except with the prior written consent of the
Holder and the Company. Any instrument given by or on behalf of the Holder in connection with any
consent to any modification or amendment will be conclusive and binding on all subsequent holders
of this Warrant.



     11. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or



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any stock certificate relating to the Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company issue or cause to be issued a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.




     12. Transfer. The securities evidenced hereby have not been registered under the Securities
Act of 1933 or any state securities laws; such securities may not be transferred, sold, pledged, or
otherwise disposed of unless such securities are registered under the Securities Act of 1933 and
such state laws or such transactions are exempt from the registration requirements thereof. Upon
surrender of this Warrant as a result of a transfer hereof, the Company, at the expense of the
transferee or transferor hereof, as the transferee and transferor may decide between themselves,
will issue and deliver to, or to the order of, the transferee a new Warrant in the name of such
transferee, or as such transferee (on payment by such transferee of any applicable transfer taxes)
may direct, calling in the aggregate on the face thereof for the number of Shares called for on the
face of this Warrant. As a condition to effecting any transfer, the Holder shall notify the Company
of the proposed transfer by delivering a Notice of and Form of Assignment (in the form annexed
hereto as Exhibit B), duly completed and executed on behalf of the Holder at the office of the
Company (or such other office or agency of the Company as it may designate by notice in writing to
the Holder).



     13. Successors and Assigns. This Warrant shall not be assignable by the Company without the
prior written consent of the Holder and any such assignment in violation hereof shall be null and
void. Subject to the foregoing, this Warrant shall bind and inure to the benefit of the Company and
its permitted successors and assigns, the Holder and its successors and assigns.



     14. Applicable Law. This Warrant shall be construed in accordance with, and governed by, the
laws of the State of Florida without giving effect to the conflict of laws provisions thereof.



     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the
Effective Date set forth above.



	 	 	 	 	 
	 	LADENBURG THALMANN FINANCIAL SERVICES INC. 

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




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EXHIBIT A




NOTICE OF EXERCISE





     Dated: ____________________________



     1. The undersigned hereby elects to purchase ____________________________ shares of
the common stock of Ladenburg Thalmann Financial Services Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such securities in full.
Such purchase price is being paid [insert whether by cash and/or cancellation of indebtedness].



     1. The undersigned hereby elects to convert the attached Warrant into shares of the common
stock of Ladenburg Thalmann Financial Services Inc. in the manner specified in Section 2.5 of the
Warrant. This conversion is exercised with respect to _____________________ of the
securities covered by the Warrant.



[Strike paragraph that does not apply.]




     2. Please issue certificate(s) representing said shares in the name of the undersigned or in
such other name(s) as is specified below and deliver such certificates to the address(es) specified
below:



[insert name(s) and address(es)]




     3. Please issue a new Warrant for the unexercised portion of the attached Warrant in the name
of the undersigned or in such other name as is specified below:



[strike if not applicable]




	 	 	 	 	 
	 	[Insert name of Holder] 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



 









 






EXHIBIT B




NOTICE OF AND

FORM OF ASSIGNMENT




(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)





     For
value received, the undersigned hereby sells, assigns, and transfer unto _______________, federal taxpayer identification number ____________, whose address is _______________, the right represented by the
within Warrant to purchase
_________ shares of common stock of Ladenburg Thalmann
Financial Services Inc. to which the within Warrant relates, and
appoints the Secretary of
_______________ Attorney to transfer such right on the books of _______________ with full power of substitution in the premises.



	 	 	 
	 
	 	 
	Dated:
	 	 
	 

	 	 
	 

	 	(Signature must conform to name of holder as

specified on the face of the Warrant)
	 
	 	 
	Signed in the presence of:
	 	 
	 

	 	 
	 

	 	Address