Document:

EX-10.3 STOCK OPTION AGREEMENT,DATED AS OF JUNE 1,

 

Exhibit 10.3

LADENBURG THALMANN FINANCIAL SERVICES INC.

590 Madison Avenue,
34th Floor

New York, NY 10022

as of June 1, 2005

Mr. Keith Mullins

210 Doolittle Drive

P.O. Box 470

Norfolk, CT 06058

Dear Mr. Mullins:

     We are pleased to inform you that Ladenburg Thalmann Financial Services Inc. (the
“Company”) has granted you a nonqualified option (the “Option”) to purchase 3,000,000 shares of the
Company’s common stock, par value $.0001 per share (the “Common Stock”), at a purchase price of
$0.645 per share (any of the underlying shares of Common Stock to be issued upon exercise of the
Option are referred to hereinafter as the “Shares”). Capitalized forms used and not otherwise
defined herein shall have the meanings ascribed to them in the employment agreement of even date
herewith between you and the Company (“Employment Agreement”).

     1. Subject to the terms hereof, the Option may be exercised on or prior to June 1, 2015 (after
which date the Option will, to the extent not previously exercised, expire). The Option shall vest
and become exercisable as to (i) 500,000 on and after each of June 1, 2006, 2007, 2008 and 2009;
(ii) an additional 250,000 of the shares on and after June 1, 2006, 2007, 2008 and 2009; provided,
in each case, you are then employed by the Company and/or one of its present or future subsidiaries
or affiliates (for purposes of this Agreement, any other entity controlling, controlled by, or
under common control with, the Company); and provided, further, that the Shares referred to in (ii)
above shall vest on such dates only if an initial closing of investments in Greenwood Capital
Partners has occurred.

     2. The Option, from and after the date it vests and becomes exercisable pursuant to Section 1
hereof, may be exercised in whole or in part by delivering to the Company a written notice of
exercise in the form attached hereto as Exhibit A (or such other form approved by the Company),
specifying the number of the Shares to be purchased and the purchase price therefor, together with
payment of the purchase price of the Shares to be purchased. The purchase price is to be paid in
cash or by delivering shares of Common Stock already owned by you for at least six months (“Mature
Shares”) and having a “Fair Market Value” on the date of exercise equal to the purchase price of
the Option being exercised, or a combination of such shares and cash. “Fair Market Value,” unless
otherwise required by any applicable provision of the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated thereunder, means, as
of any given date: (i) if the Common Stock is listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq Small Cap

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Mr. Keith Mullins

as of June 1, 2005

Page 2

Market, the last sale price of the Common Stock in
the principal trading market for the Common Stock on the last trading day preceding the date of
grant of an award hereunder, as reported by the exchange or Nasdaq, as the case may be; (ii) if the
Common Stock is not listed on a national securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market, but is traded in the over-the-counter market, the closing bid price for the Common Stock on
the last trading day preceding the date of grant of an award hereunder for which such quotations
are reported by the OTC Bulletin Board or the National Quotation Bureau, Incorporated or similar
publisher of such quotations; and (iii) if the Fair Market Value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Compensation Committee of the
Company shall determine, in good faith.

          In addition, payment of the purchase price of the Shares to be purchased may also be made by
delivering a properly executed notice to the Company, together with a copy of the irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the purchase price, and, if required, the amount of any federal, state or local
withholding taxes.

          No Shares shall be issued until full payment therefor has been made. You shall have all of
the rights of a stockholder of the Company holding the Common Stock that is subject to the Option
(including, if applicable, the right to vote the Shares and the right to receive dividends
thereon), when you have given written notice of exercise, have paid in full for such Shares and, if
requested, have given the certificate described in Section 8 hereof.

     3. In the event that your employment is terminated by reason of your death or Disability, all
unvested Options that would have vested had you remained employed for the remainder of the then
current year (June 1 to May 31) of your Employment Period shall immediately vest and the portion of
the Option which has vested shall remain exercisable and effective for a period of one year
following termination of employment, but not beyond the term. In the event your employment is
terminated for any reason other than death or Disability, the Option shall thereupon terminate;
provided, however, that if your employment is terminated by the Company without Cause or by
Employee for Good Reason, then the portion of the Option which has vested by the date of
termination of employment shall remain exercisable and effective for a period of three months
following termination of employment, but not beyond the term. In the event of your death or
Disability, the Option may be exercised by your personal representative or representatives, or by
the person or persons to whom your rights under the Option shall pass by will or by the applicable
laws of descent and distribution.

     4. The Option is not transferable except by will or the applicable laws of descent and
distribution. Notwithstanding the foregoing, with the approval of the Compensation Committee, you
may transfer the Option (i) (A) by gift, for no consideration, or (B) pursuant to a domestic
relations order, in either case, to or for the benefit of your “Immediate Family” (as defined
below), or (ii) to an entity in which you and/or members of your Immediate Family own more

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Mr. Keith Mullins

as of June 1, 2005

Page 3

than
fifty percent of the voting interest, in exchange for an interest in that entity, provided that
such transfer is being made for estate, tax and/or personal planning purposes and will not have
adverse tax consequences to the Company and subject to such limits as the Compensation Committee
may establish and the execution of such documents as the Compensation Committee may require. In
such event, the transferee shall remain subject to all the terms and conditions applicable to the
Option prior to such transfer. The term “Immediate Family” shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, any person sharing your household (other than a tenant or
employee), a trust in which these persons have more than fifty percent beneficial interest, and a
foundation in which these persons (or you) control the management of the assets.

     5. In the event of any change in the shares of Common Stock of the Company as a whole occurring as
the result of a stock split, reverse stock split, stock dividend payable on shares of Common Stock,
combination or exchange of shares, or other extraordinary or unusual event occurring after the date
hereof, the Board of Directors of the Company (the “Board”) shall make appropriate adjustments in
the terms of the Option to preserve the economic interest of the grant. Any such adjustments will
be made by the Board, whose determination will be final, binding and conclusive.

     6. The grant of the Option does not confer on you any right to continue in the employ of the
Company or any of its subsidiaries or affiliates or interfere in any way with the right of the
Company or its subsidiaries or affiliates to terminate the term of your employment.

     7. The Company shall require as a condition to the exercise of any portion of the Option that you
pay to the Company, or make other arrangements regarding the payment of, any federal state or local
taxes required by law to be withheld as a result of such exercise. If the Board consents, you may
pay such taxes using Mature Shares, valued at Fair Market Value.

     8. Unless at the time of the exercise of any portion of the Option a registration statement under
the Securities Act of 1933, as amended (the “Act”), is in effect as to the Shares, the Shares shall
be acquired for investment and not for sale or distribution, and if the Company so requests, upon
any exercise of the Option, in whole or in part, you agree to execute and deliver to the Company a
reasonable certificate to such effect.

     9. You agree to abide by all of the Company’s policies in effect at the time you acquire any Shares
and thereafter, including the Company’s Insider Trading Policy, with respect to the ownership and
trading of the Company’s securities.

     10. The Company represents and warrants to you as follows: (i) this Agreement and the grant of the
Option hereunder have been authorized by all necessary corporate action by the Company and this
letter is a valid and binding Agreement of the Company enforceable against

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Mr. Keith Mullins

as of June 1, 2005

Page 4

the Company in
accordance with its terms; (ii) the Company will obtain, at its expense, any regulatory approvals
necessary or advisable in connection with the grant of the Option or the issuance of the Shares;
and (iii) the Company currently has reserved and available, and will continue to have reserved and
available during the term of the Option, sufficient authorized and issued shares of its Common
Stock for issuance upon exercise of the Option.

     11. Promptly following the date hereof, the Company shall use its best efforts to file and keep in
effect a Registration Statement on Form S-8 or other applicable form to register under the Act the
resale of the Shares issuable to you upon exercise of the Option.

     12. This Agreement contains all the understandings between the Company and you pertaining to the
matters referred to herein, and supercedes all undertakings and agreements, whether oral or in
writing, previously entered into by the Company and you with respect hereto. No provision of this Agreement may be amended or waived unless such amendment
or waiver is agreed to in writing signed by you and a duly authorized officer of the Company. No
waiver by the Company or you of any breach by the other party hereto of any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same time, any prior time or any subsequent time. If any
provision of this Agreement or the application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any
extent, the remainder of this Agreement or the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid and unenforceable, shall
not be affected thereby, and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to its conflicts of laws principles. This
Agreement may be executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

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Mr. Keith Mullins

as of June 1, 2005

Page 5

     Would you kindly evidence your acceptance of the Option and your agreement to comply with the
provisions hereof by executing this Agreement in the space provided below.

	 	 	 	 	 
	 	Very truly yours, 

LADENBURG THALMANN FINANCIAL SERVICES INC.

 	 
	 	By:  	/s/ Salvatore Giardina
 	 
	 	 	Salvatore Giardina 	 
	 	 	Vice President and Chief Financial Officer 	 
	 

	 	 	 
	AGREED TO AND ACCEPTED:

	 	 
	 
	 	 
	/s/ Keith Mullins

KEITH MULLINS

	 	 

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EXHIBIT A

Ladenburg Thalmann Financial Services Inc.

590 Madison Avenue, 34th Floor

New York, NY 10022

Gentlemen:

     Notice is hereby given of my election to purchase                                 shares of Common Stock,
$.0001 par value (the “Shares”), of Ladenburg Thalmann Financial Services Inc., at a price of
$                     per Share, pursuant to the provisions of the stock option granted to me as of May                     ,
2005. Enclosed in payment for the Shares is:

	 	 	 	o my check in the amount of $                                        .
	 
	 	 	 	o                                          Shares having a total value of $                                        , such value
being based on the closing price(s) of the Shares on the date hereof.

     The following information is supplied for use in issuing and registering the Shares
purchased hereby:

	 	 	 	 	 	 	 
	 

	 	Number of Certificates
and Denominations
	 	

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name
	 	

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address
	 	

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	

	 	 
	 
	 	 	 	 	 	 
	 

	 	Social Security No.
	 	

	 	 
	 
	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Keith Mullins	 	 

13EX-10.4 SUBSCRIPTION AGREEMENT BETWEEN COMPANY AND

 

EXHIBIT 10.4

SUBSCRIPTION AGREEMENT AND INVESTOR INFORMATION STATEMENT

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

     1. Subscription for Securities. Investor hereby subscribes for and agrees to purchase
2,222,222 shares of Common Stock (“Share(s)”) at $0.45 per share upon the terms and conditions
described in this Agreement.

     2. Investor Deliveries. On the Closing Date (as hereafter defined), the Investor
shall wire to the Company the sum of $1,000,000, representing full payment for the Shares.
Certificates representing the Shares will be delivered to the Investor as soon thereafter as
practicable. “Closing Date” shall mean the date mutually agreed to by the Company and Investor
promptly after approval by the American Stock Exchange, but not later than three business days
after such approval.

     3. Investor Representations and Warranties. Investor acknowledges, represents and
warrants to the Company as follows:

          (a) Information about the Company. Investor has read the Company’s recent filings
under the Securities Exchange Act of 1934 (“Exchange Act”). Investor has been given access to full
and complete information regarding the Company and has utilized such access to his satisfaction for
the purpose of verifying the information included in those filings. Investor has 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
Investor’s full satisfaction. Investor has been given an opportunity to obtain any additional
relevant information to the extent reasonably available to the Company. Investor has received all
information and materials regarding the Company that he has reasonably requested.

          (b) Speculative Investment. Investor is 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 his investment. Investor acknowledges and is
aware that there is no assurance as to the future performance of the Company. Investor has such
knowledge and experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Shares and has obtained, in his judgment, sufficient
information from the Company to evaluate the merits and risks of an investment in the Company.
Investor has not utilized any person as his purchaser representative (as defined in Regulation D)
in connection with evaluating such merits and risks and has relied solely upon his own
investigation in making a decision to invest in the Company. Investor believes that the investment
in the Shares is suitable for him based upon his investment objectives and financial needs, and
Investor has adequate means for providing for his current financial needs and contingencies and has
no need for liquidity with respect to his investment in the Company.

          (c) Restrictions on Transfer. Investor understands that (i) the Shares have not been
registered under the Securities Act of 1933 (“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 of Shares or made any
finding or determination relating to the fairness of an investment in the Company, and (iii) the
Company is relying on his 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. Investor understands and agrees 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. Investor acknowledges that, notwithstanding the Company’s commitment described
below in Section 4, there can be no assurance that the Company will be able to keep the
Registration Statement (defined below) effective until he sells the Shares registered thereon.

          (d) No Market for Shares. Investor is purchasing the Shares for his 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. Investor understands that, although there is a public market for the Shares, there is
no assurance that such market will continue.

     4. Registration Rights. Promptly following the date hereof, the Company shall use its
best efforts to file and keep in effect a Registration Statement on Form S-8 or other applicable
form to register under the Act the resale of the Shares.

     5. Lock-up and Insider Trading Policy. The Investor agrees that he will not sell,
assign or transfer any of the Shares until November 15, 2005, except to an Immediate Family Member
who shall agree to continue to be bound by this restriction. Investor understands that he will be
required to abide by all of the Company’s policies in effect, including the Company’s Insider
Trading Policy, with respect to the ownership and trading of the Company’s securities.

     6. Indemnification. Investor hereby agrees 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 Investor and
contained herein or (b) arise out of or are based upon any breach by Investor of any
representation, warranty or agreement made by him contained herein.

     7. 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.

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

2

 

     9. 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.

     10. 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
Investor’s residence 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: Sal Giardina, Chief Financial Officer

     11. 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. 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.

     12. 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.

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

3

 

SIGNATURE PAGE FOR INDIVIDUAL INVESTORS - COMPLETE ALL INFORMATION

Name: Keith Mullins

 

Residence Address:

 

							
	Telephone:      
	 	(H)
	 	(W)
	 	(Cell)                    

 

Social Securities Number:

 

Amount of Investment:

Number of Shares: 2,222,222

Corresponding dollar amount ($0.45 multiplied by number of Shares): $1,000,000

Accredited Investor Status For Individuals.

               (i) 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):

	                    ý      	 	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.

	                     ̈     	 	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.

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

     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.

	 	 	 	 
	

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

	 	 	LADENBURG THALMANN FINANCIAL SERVICES INC.
	 
	 	 	 
	

	 	 	By: /s/ Sal Giardina
	 
	 	 	 
	Signature: /s/ Keith Mullins
	 	 	Name: Sal Giardina
	 
	 	 	 
	Print Name: Keith Mullins

	 	 	Title: Vice President and Chief Financial Officer
	 

	 	 	 
	 
	 	 	 
	Date: As of June 1, 2005

	 	 	Date: As of June 1, 2005
	 

	 	 	 

 

 

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