Form of Subscription Agreement



 






EXHIBIT 4.1




LADENBURG THALMANN FINANCIAL SERVICES INC.




SUBSCRIPTION AGREEMENT




AND




INVESTOR INFORMATION STATEMENT




INSTRUCTIONS




IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.

SIGNIFICANT REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.





	1.  	Fill in the missing information on Page 1.
	 
	2.  	Individual Investors must complete the requested information on pages 9
and 10 and sign the signature page on page 10.
	 
	3.  	Entity Investors must complete the requested information on pages 11
and 12 and if applicable, page 13 and sign the signature page on page 12 and if
applicable, page 13.





DELIVER THE EXECUTED AGREEMENTS TO:

LADENBURG THALMANN FINANCIAL SERVICES INC.

590 MADISON AVENUE, 34TH FLOOR

NEW YORK, NEW YORK 10022

ATTENTION: SALVATORE GIARDINA






 









 








Print Name of Subscriber __________________




Amount of Investment __________________




SUBSCRIPTION AGREEMENT AND INVESTOR INFORMATION STATEMENT




Ladenburg Thalmann Financial Services Inc. (the “Company”) and the Investor hereby agree as
follows:



     1. Subscription for Securities. I (sometimes referred to herein as the “Investor”)
hereby subscribe for and agree to purchase the number of shares of Common Stock (“Share(s)”) set
forth on the signature page hereto at $0.45 per share and upon the other terms and conditions
described in this Agreement. The Shares are being offered in a private placement in accordance
with the terms set forth in the Confidential Term Sheet dated December 28, 2004 (“Term Sheet”).
Capitalized terms not defined herein will have the same meaning as set forth in the Term Sheet.



     2. Offering Period. The Shares will be offered for sale until the day following the
Company’s 2004 Annual Meeting of Shareholders or such earlier date as determined by the Company
(such date is referred to as the “Commitment Date”).



     3. Investor Delivery of Subscription Agreement. I hereby tender to the Company one
manually executed copy of this Subscription Agreement. My delivery of the Subscription Agreement
represents my binding commitment to pay for the Shares subscribed for on the Closing (defined below
in Section 5).



     4. Acceptance or Rejection of Subscription. The Company has the right to reject this
subscription for the Shares, in whole or in part for any reason and at any time prior to the
Commitment Date, notwithstanding prior receipt by me of notice of acceptance of my subscription.
In the event my subscription is rejected, my payment will be returned promptly to me without
interest or deduction and this Subscription Agreement will have no force or effect. The Shares
subscribed for herein will not be deemed issued to or owned by me until one copy of this
Subscription Agreement has been executed by me and countersigned by the Company and the Closing
with respect to my subscription has occurred.



     5. Closing, Payment and Delivery of Securities. The offering is being made on a “best
efforts, no minimum, $20,000,000 maximum” basis. Accordingly, there is no minimum amount of Shares
that must be subscribed for in order for the Company to hold a closing with respect to those Shares
that are subscribed and paid for. The Company anticipates it will hold a closing (“Closing”)
subsequent to the Company’s 2004 Annual Meeting of Shareholders (“2004 Annual Meeting”) and prior
to May 13, 2005 (such date is referred to as the “Termination Date”) provided the following closing
conditions have been met:



          (i) The Company has obtained the approval of the terms of the Amended and Restated Debt
Conversion Agreement, Standby Commitment and the offering at the 2004 Annual Meeting;



          (ii) The Company has caused the Registration Statement (defined below) to be declared
effective by the SEC;



          (iii) The Company has not suffered any material adverse change in its assets, liabilities,
financial condition, results of operations or business from the Commitment Date until the Closing;
and



          (iv) The Company shall have caused the shares of Common Stock issuable pursuant to the Amended
and Restated Debt Conversion Agreement (as defined in the Term Sheet) and this offering (including
the Standby Commitment) to be approved for listing on the American Stock Exchange or any national
securities



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exchange
on which the Common Stock is then listed.



The Closing of the offering shall also be conditioned on and subject to the simultaneous
consummation of debt conversion transaction described in the Amended and Restated Debt Conversion
Agreement. In the event my subscription is accepted and there is a Closing, I agree to pay the
full purchase price of the Shares I am purchasing by check or wire transfer at the Closing.
Alternatively, if I hold outstanding promissory notes issued by the Company that are, by their
terms, convertible into the Shares, I may exchange such notes for Shares being offered hereby
(based upon the aggregate principal and accrued interest on such debt divided by $0.45 per Share).
Upon payment for the Shares, the certificates representing such Shares will be delivered promptly
to me along with a fully executed version of this Agreement. The Company agrees to notify me at
least five business days prior to the date on which the Closing is scheduled and provide me with
instructions on paying for the Shares subscribed for prior to the Closing. If a Closing does not
occur by the Termination Date, then this Subscription Agreement will be null and void.



     6. Offering to Accredited Investors. This offering is limited to accredited investors
as defined in Section 2(15) of the Securities Act of 1933, as amended (“Securities Act”), and Rule
501 promulgated thereunder, and is being made without registration under the Securities Act in
reliance upon the exemptions contained in Sections 3(b), 4(2) and/or 4(6) of the Securities Act and
applicable state securities laws. As indicated by the responses on the signature page hereof, the
Investor is an accredited investor within the meaning of Section 2(15) of the Securities Act and
Rule 501 promulgated thereunder.



     7. Investor Representations and Warranties. I acknowledge, represent and warrant to
the Company as follows:



          7.1 Obligations of the Company and the Investor. The Company has no
obligation to me other than as set forth in this Agreement. I am aware that I am not entitled to
cancel, terminate or revoke this subscription, and any agreements made in connection herewith will
survive my death or disability. In order to induce the Company to issue and sell the Shares to
me, I represent and warrant that the information relating to me stated herein is true and complete
as of the date hereof and will be true and complete as of the date on which my purchase of Shares
becomes effective. If, prior to the Closing, there should be any change in such information or any
of such information becomes incorrect or incomplete, I agree to notify the Company and supply the
Company promptly with corrective information.



          7.2 Information About the Company.



               (1) I have read the Term Sheet relating to this offering and all exhibits listed therein and
fully understand the Term Sheet, including the “Risk Factors” contained therein. I have been given
access to full and complete information regarding the Company and have utilized such access to my
satisfaction for the purpose of verifying the information included in the Term Sheet and exhibits
thereto, and I have either met with or been given reasonable opportunity to meet with officers of
the Company for the purpose of asking reasonable questions of such officers concerning the terms
and conditions of the offering of the Shares and the business and operations of the Company and all
such questions have been answered to my full satisfaction. I also have been given an opportunity to
obtain any additional relevant information to the extent reasonably available to the Company. I
have received all information and materials regarding the Company that I have reasonably requested.
After my reading of the materials about the Company, I understand that there is no assurance as to
the future performance of the Company.



               (2) I have received no representation or warranty from the Company or any of its respective
officers, directors, employees or agents in respect of my investment in the Company. I am not
participating in the Offering as a result of or subsequent to: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar media or broadcast
over television, radio or the



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Internet or (ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.



          7.3 Speculative Investment. I am aware that the Shares are a speculative investment
that involve a high degree of risk including, but not limited to, the risk of losses from
operations of the Company and the total loss of my investment. I acknowledge and am aware that
there is no assurance as to the future performance of the Company and recognize that the Shares, as
an investment, involve a high degree of risk including, but not limited to, the risk of losses from
operations of the Company and the total loss of my investment. I have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares and have obtained, in my judgment, sufficient information from the Company
to evaluate the merits and risks of an investment in the Company. I have not utilized any person
as my purchaser representative (as defined in Regulation D) in connection with evaluating such
merits and risks and have relied solely upon my own investigation in making a decision to invest in
the Company. I have been urged to seek independent advice from my professional advisors relating
to the suitability of an investment in the Company in view of my overall financial needs and with
respect to the legal and tax implications of such investment. I believe that the investment in the
Shares is suitable for me based upon my investment objectives and financial needs, and I have
adequate means for providing for my current financial needs and contingencies and have no need for
liquidity with respect to my investment in the Company. The investment in the Company does not
constitute all or substantially all of my investment portfolio.



          7.4 Restrictions on Transfer. I understand that (i) the Shares have not been
registered under the Securities Act or the securities laws of certain states in reliance on
specific exemptions from registration, (ii) no securities administrator of any state or the federal
government has recommended or endorsed this Offering or made any finding or determination relating
to the fairness of an investment in the Company, and (iii) the Company is relying on my
representations and agreements for the purpose of determining whether this transaction meets the
requirements of the exemptions afforded by the Securities Act and certain state securities laws. I
understand and agree that the Shares cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Securities Act and under applicable securities
laws of certain states, or an exemption from such registration is available. I acknowledge that,
notwithstanding the Company’s commitment described below in Section 8, there can be no assurance
that the Company will be able to keep the Registration Statement (defined below) effective until I
sell the Shares registered thereon.



          7.5 No Market for Shares. I am purchasing the Shares for my own account for
investment and not with a view to, or for sale in connection with, any subsequent distribution of
the Shares, nor with any present intention of selling or otherwise disposing of all or any part of
the Shares. I understand that, although there is a public market for the Shares, there is no
assurance that such market will continue.



          7.6 Entity Authority. If the Investor is a corporation, partnership, company, trust,
employee benefit plan, individual retirement account, Keogh Plan or other tax-exempt entity, it is
authorized and qualified to become an investor in the Company and the person signing this
Subscription Agreement and Investor Information Statement on behalf of such entity has been duly
authorized by such entity to do so.



          7.7 No Offer Until Determination of Suitability. I acknowledge that any delivery to
me of the documents relating to the offering of the Shares prior to the determination by the
Company of my suitability will not constitute an offer of the Shares until such determination of
suitability is made.



     8. Registration Rights.



          (a)(i) The Company shall file a registration statement (the “Registration Statement”) to
register the Shares received by the investors in the offering (collectively the “Registrable
Securities”) for resale pursuant to the Securities Act no later than ten business days after the
Commitment Date. The



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Company shall use commercially reasonable efforts to cause the Registration Statement to be
declared effective by the SEC as promptly as practicable.



               (ii) In connection the foregoing, the Company will, as expeditiously as possible, use its best
efforts to: (A) furnish to investors copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits), and each of the investors 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 SEC 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 investors: (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 SEC with respect to any filing referred to in clause (A) and of any written request by the
SEC for amendments or supplements to such Registration Statement or prospectus; and (3) of the
notification to the Company by the SEC of its initiation of any proceeding with respect to the
issuance by the SEC of, or of the issuance by the SEC of, any stop order suspending the
effectiveness of such Registration Statement; (D) furnish investors 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 investors may reasonably
request to facilitate the disposition of its Registrable Securities; (E) notify investors 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
investors promptly prepare and furnish investors 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 investors and any attorney, accountant or other agent
retained by any such 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, but the investors shall pay any and all sales commissions and the expenses of any legal
counsel selected by them to represent them 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 Holders of an opinion of counsel to the Company to
the effect set forth in Section 8(h).



          (c)(i) The Company will indemnify the investors, their 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



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(including any related registration statement, notification or the like) incident to any
registration, qualification or compliance pursuant to this Section 8 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 investors, their directors and
officers, each such underwriter and each person who controls any such underwriter 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 an investor 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 such investor 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 an investor or any such
director, officer or controlling person, and shall survive the transfer of such securities by any
investor.



               (ii) Each of the investors, severally and not jointly, 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 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 such investor specifically stating that it is intended for inclusion in such
document; provided, however, that the obligations of each investor hereunder shall be limited to an
amount equal to the proceeds received by such investor 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 any investor.



               (iii) Each party desiring indemnification or contribution under this Section 8(c) 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



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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 8. 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
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 this Section 8(c) 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 each of the Holders 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 Holders, 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) Each of the investors 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 8.



          (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 Shares. The Company shall cooperate with each
investor in supplying such information as may be necessary for such investor to complete and file
any information reporting forms presently or hereafter required by the Commission as a condition to
the availability of Rule 144.



          (g) The Company represents and warrants to the holders of Registrable Securities that the
granting of the registration rights to the investors hereby does not and will not violate any
agreement



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between the Company and any other security holders with respect to registration rights granted
by the Company.



          (h) The rights granted under this Section 8 shall terminate upon delivery to the investors of
an opinion of counsel to the Company reasonably satisfactory to the investors 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 8 shall not be transferable.



     9. For Florida Residents. None of the Shares have been registered under the
Securities Act of 1933, as amended, or the Florida Securities Act, by reason of specific exemptions
thereunder relating to the limited availability of the offering. The Shares cannot be sold,
transferred or otherwise disposed of to any person or entity unless subsequently registered under
the Securities Act of 1933, as amended, or the Securities Act of Florida, if such registration is
required. Pursuant to Section 517.061(11) of the Florida Securities Act, when sales are made to
five (5) or more persons in Florida, any sale made pursuant to Subsection 517.061(11) of the
Florida Securities Act will be voidable by such Florida purchaser either within three days after
the first tender of consideration is made by the purchaser to the issuer, an agent of the issuer,
or an escrow agent, or within three days after the availability of the privilege is communicated to
such purchaser, whichever occurs later. In addition, as required by Section 517.061(11)(a)(3),
Florida Statutes and by Rule 3-500.05(a) thereunder, if I am a Florida resident I may have, at the
offices of the Company, at any reasonable hour, after reasonable notice, access to the materials
set forth in the Rule that the Company can obtain without unreasonable effort or expense.



     10. Indemnification. I hereby agree to indemnify and hold harmless the Company, its
respective officers, directors, stockholders, employees, agents and attorneys against any and all
losses, claims, demands, liabilities, and expenses (including reasonable legal or other expenses
incurred by each such person in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such person or whether incurred by the
indemnified party in any action or proceeding between the indemnitor and indemnified party or
between the indemnified party and any third party) to which any such indemnified party may become
subject, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact made by me and
contained herein or (b) arise out of or are based upon any breach by me of any representation,
warranty or agreement made by me contained herein.



     11. Governing Law and Jurisdiction. This Subscription Agreement will be deemed to
have been made and delivered in New York City and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State of New York. Each
of the Company and the Investor hereby (i) agrees that any legal suit, action or proceeding arising
out of or relating to this Subscription Agreement will be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for the Southern District
of New York, (ii) waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum for such suit, action or proceeding,
(iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York in any such suit,
action or proceeding, (iv) agrees to accept and acknowledge service of any and all process that may
be served in any such suit, action or proceeding in New York State Supreme Court, County of New
York or in the United States District Court for the Southern District of New York and (v) agrees
that service of process upon it mailed by certified mail to its address set forth on my signature
page will be deemed in every respect effective service of process upon it in any suit, action or
proceeding.



     12. Counterparts. This Subscription Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together will constitute
one and the same



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instrument. The execution of this Subscription Agreement may be by actual or facsimile
signature.



     13. Benefit. Except as otherwise set forth herein, this Subscription Agreement is
binding upon and inures to the benefit of the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns.



     14. Notices. All notices, offers, acceptance and any other acts under this
Subscription Agreement (except payment) must be in writing, and is sufficiently given if delivered
to the addressees in person, by overnight courier service, or, if mailed, postage prepaid, by
certified mail (return receipt requested), and will be effective three days after being placed in
the mail if mailed, or upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. All communications to me should be sent to
my preferred address on the signature page hereto. All communications to the Company should be
sent to:



Ladenburg Thalmann Financial Services Inc.

590 Madison Avenue, 34th Floor

New York, New York 10022

Attn: Charles I. Johnston, Chief Executive Officer

Tel: (212) 409-2500



     15. Entire Agreement. This Subscription Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all prior oral and
written agreements between the parties hereto with respect to the subject matter hereof; provided,
however, that if the undersigned is a party to the Amended and Restated Debt Conversion Agreement,
the Amended and Restated Debt Conversion Agreement controls in the event there is any inconsistency
or ambiguity set forth in this Subscription Agreement. In the event any parts of this Subscription
Agreement are found to be void, the remaining provisions of this Subscription Agreement are
nevertheless binding with the same effect as though the void parts were deleted. This Subscription
Agreement may not be changed, waived, discharged, or terminated orally, but rather, only by a
statement in writing signed by the party or parties against which enforcement or the change,
waiver, discharge or termination is sought.



     16. Section Headings. Section headings herein have been inserted for reference only
and will not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in
whole or in part, any of the terms or provisions of this Subscription Agreement.



     17. Survival of Representations, Warranties and Agreements. The representations,
warranties and agreements contained herein will survive the delivery of, and the payment for, the
Shares.



     18. Acceptance of Subscription. The Company may accept this Subscription Agreement at
any time for all or any portion of the Shares subscribed for by executing a copy hereof as provided
and notifying me within a reasonable time thereafter.



[SIGNATURE PAGES FOLLOW]





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SIGNATURE PAGE FOR INDIVIDUAL INVESTORS - COMPLETE ALL INFORMATION




	 	 	 	 	 
	Name:
	 


	 	Name of Joint Investor (if any):	 










		
	Residence Address: 	 







	 	 	 	 	 	 	 
	Telephone:

	 	(H) ____________________________	 	(W) ____________________________	 	Fax ____________________________






	 	 	 	 	 	 	 
	Occupation:
	 	 


	 	Employer:	 	 










			
	Business Address: 	 	







	 	 	 	 	 	 	 	 	 
	Send communications to:

	 	o Home
	 	o Office
	 	o E-Mail:	 	 










		
	Age: 	
 _______________






		
	Social Security Number: 	
 ____________________





Check manner in which securities are to be held:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o
	 	Individual Ownership	 	o	 	Tenants in Common	 	 	o	 	 	Joint Tenants with Right of Survivorship (both parties must sign)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o
	 	Community Property	 	 	 	 	 	 	 	 	o	 	 	Other (please indicate)
 

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 






Amount of Investment:





		
	Number of Shares: 	
 ______________





Corresponding dollar amount ($0.45 multiplied by number of Shares): $_______________




Accredited Investor Status For Individuals. (INVESTORS THAT ARE CORPORATIONS, LIMITED
LIABILITY COMPANIES, PARTNERSHIPS, REVOCABLE TRUSTS, IRREVOCABLE TRUSTS, EMPLOYEE BENEFIT PLAN
TRUSTS AND INDIVIDUAL RETIREMENT ACCOUNTS SHOULD IGNORE THE FOLLOWING QUESTIONS AND PROCEED TO THE
ENTITY SIGNATURE PAGE).



9








 





     (a) I am an accredited investor within the meaning of Section 2(15) of the Securities Act and
Rule 501 promulgated thereunder because (check any boxes that apply):



	 	 	 
	o

	 	My individual annual income during each of the two most recent years exceeded
$200,000 and I expect my annual income during the current year will exceed
$200,000.
	 
	 	 
	o

	 	If I am married, my joint annual income with my spouse during each of the two
most recent years exceeded $300,000 and I expect my joint annual income with my
spouse during the current year will exceed $300,000.
	 
	 	 
	o

	 	My individual or joint (together with my spouse) net worth (including my home,
home furnishings and automobiles) exceeds $1,000,000.






                         (b) The aggregate value of my assets is approximately $___.



                         (c) My aggregate liabilities are approximately $___.



                         (d) My current and expected income is:



	 	 	 	 	 	 
	 	YEAR
	 	 	INCOME	 
	 	2004 (Estimated)
	 	 	$	 
	 	2003 (Actual)
	 	 	$	 
	 	2002 (Actual)
	 	 	$	 
	 





     I hereby confirm the information set forth above is true and correct in all respects as of the
date hereof and will be on the date of the purchase of Shares.



	 	 	 	 	 	 
	 	 
	 	ALL INVESTORS MUST SIGN AND PRINT
	 	 	The foregoing subscription is	 
	 	NAME BELOW
	 	 	accepted and the Company hereby	 
	 	 
	 	 	agrees to be bound by its terms.	 
	 	 
	 	 	 	 
	 	Signature: _____________________________
	 	 	LADENBURG THALMANN FINANCIAL	 
	 	 
	 	 	SERVICES INC.	 
	 	 
	 	 	 	 
	 	Print Name: _____________________________
	 	 	By:	 
	 	 
	 	 	 	 
	 	Date: _________________________________
	 	 	 	 
	 	 
	 	 	 	 
	 	Signature: ______________________________
	 	 	Name: ____________________________	 
	 	 
	 	 	 	 
	 	Print Name: _____________________________
	 	 	Title: _____________________________	 
	 	 
	 	 	 	 
	 	Date: _________________________________
	 	 	Date: ______________________________	 
	 	 
	 	 	 	 
	 







10









 






SIGNATURE PAGE FOR ENTITY INVESTORS - COMPLETE ALL INFORMATION





		
	Name of Entity: 	









		
	Address of Principal Office: 	








	 	 	 
	Telephone:




	 	Fax:











		
	Taxpayer Identification Number: 	








Check type of Entity:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o

	 	Employee Benefit
Plan Trust
	 	o
	 	Limited Partnership
	 	o
	 	General Partnership
	 	o
	 	Individual Retirement Account
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o

	 	Limited Liability Company
	 	o
	 	Revocable Trust
	 	o
	 	Corporation
	 	o
	 	Other

(please indicate)






	 	 	 
	o

	 	Irrevocable Trust (If the Investor is an Irrevocable Trust, a supplemental questionnaire
must be completed by the person directing the decision for the trust to determine by
accredited investor status. Please contact Graubard Miller for a copy of such supplemental
questionnaire.)






     Amount of Investment:




		
	Number of Shares: 	








		
	Corresponding dollar amount ($0.45 multiplied by number of Shares): $ 	







	 	 	 	 	 	 	 
	Date of Formation or incorporation:

	 	 

	 	State of Formation:	 	 








Describe the business of the Entity:






















List the names and positions of the executive officers, managing members, partners or
trustees authorized to act with respect to investments by the Entity generally and specify who has
the authority to act with respect to this investment.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name
	 	 	Position	 	 	Authority for this investment (yes or no)	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 





11








 






Accredited Investor Status for Entities.





	(a)  	Check all boxes which apply (IRA Entities can skip this question and go to (b)):





The Entity was not formed for the specific purpose of investing in the
Company



The Entity has total assets in excess of $5 million dollars



For Employee Benefit Plan Trusts Only: The decision to invest in the
Company was made by a plan fiduciary, as defined in Section 3(21) of ERISA, who
is either a bank, insurance company or registered investment advisor.




	(b)  	If you did not check the first two of the three boxes in Question (a) or if the Entity is an
Individual Retirement Account, a Self-directed Employee Benefit Plan Trust or an Irrevocable Trust,
list the name of each person who:





          (i) owns an equity interest in the Entity (i.e., each shareholder if the Entity is a
corporation, each member if the Entity is a limited liability company and each partner if the
Entity is a partnership); or



          (ii) is a grantor for the revocable trust or Individual Retirement Account; or



          (iii) is the person making the investment decision for a self-directed Employee Benefit Plan
Trust; or



          (iv)is the person making the investment decisions for an Irrevocable Trust.



	 	 	 
	

	 	

	 
	


	 	






EACH PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT TO THE COMPANY THE ANSWERS TO THE
QUESTIONS FOLLOWING THE SIGNATURE BOX BELOW AND SIGN THE WRITTEN CONFIRMATION IMMEDIATELY
FOLLOWING.




	 	 	 	 	 	 
	 	INVESTOR:

	 	 	The foregoing subscription is accepted
and the Company hereby agrees to be
bound by its terms.	 
	 	 
	 	 	 	 
	 	

Signature of Authorized Signatory

	 	 	LADENBURG THALMANN FINANCIAL SERVICES
INC.	 
	 	 
	 	 	 	 
	 	

	 	 	By:	 
	 	 
	 	 	 	 
	 	Name: ______________________

	 	 	Name: ______________________	 
	 	 
	 	 	 	 
	 	Title: ______________________

	 	 	Title: ______________________	 
	 	 
	 	 	 	 
	 	Date: ______________________

	 	 	Date: ______________________	 
	 	 
	 	 	 	 
	 





12









 






Accredited Investor Questions for Entity equity owners and investment decision makers





	(a)  	I am an accredited investor within the meaning of Section 2(15) of the Securities Act and Rule
501 promulgated thereunder because (check any boxes that apply):





	 	 	 
	o

	 	My individual annual income during each of the two most recent years exceeded
$200,000 and I expect my annual income during the current year will exceed
$200,000.
	 
	 	 
	o

	 	If I am married, my joint annual income with my spouse during each of the two
most recent years exceeded $300,000 and I expect my joint annual income with my
spouse during the current year will exceed $300,000.
	 
	 	 
	o

	 	My individual or joint (together with my spouse) net worth (including my home,
home furnishings and automobiles) exceeds $1,000,000.







	(b)  	The aggregate value of my assets is approximately $____________.
	 
	(c)  	My aggregate liabilities are approximately $____________.
	 
	(d)  	My current and expected income is:





	 	 	 	 	 	 
	 	YEAR
	 	 	INCOME	 
	 	2004 (Estimated)
	 	 	$	 
	 	2003 (Actual)
	 	 	$	 
	 	2002 (Actual)
	 	 	$	 
	 





I hereby confirm the information set forth above is true and correct in all respects as of the date
hereof and will be on the date of the purchase of Shares.



	 	 	 
	Date: ______________________

	 	_______________________________
Name: 







13