Document:

EX-4.2 Non-negotiable Promissory Note

 

EXHIBIT 4.2

NON-NEGOTIABLE

PROMISSORY NOTE

$15,000,000

Miami, Florida

October 19, 2007

     FOR VALUE RECEIVED, Ladenburg Thalmann Financial Services Inc., and its successors and
assigns (hereinafter called the “Maker”), unconditionally promise(s) to pay to BRUCE A. ZWIGARD,
and his successors and assigns (hereinafter the “Holder”), the principal sum of FIFTEEN MILLION
AND NO/100 DOLLARS ($15,000,000), together with interest on the principal balance hereof from time
to time outstanding, when and as set forth below:

     1. Until the Maturity Date (as defined below)(unless the maturity is accelerated prior
thereto), the principal amount outstanding under this Note shall bear interest at the rate per
annum equal to four and eleven hundredths percent (4.11%), compounded monthly (the “Contract
Rate”).

     2. Interest shall be charged on the principal balance hereof from time to time outstanding and
shall be calculated on the basis of the actual number of days elapsed over a 365 day year.

     3. Except as provided in Section 6.5(b)(ii) of the Purchase Agreement (as defined in the
Pledge Agreement referred to below), principal and interest shall be payable in lawful money of the
United States, by wire transfer, to the account of the Holder which Holder shall designate in
writing to the Maker from time to time. Until the Maturity Date, or earlier if the maturity is
accelerated prior thereto, principal and interest shall be due and payable in thirty six (36) equal
monthly installments with each such installment in the combined amount of $443,594.15. If not
accelerated prior thereto in accordance with the terms hereof, thirty five (35) monthly
installments of principal and accrued interest shall be due and payable on the nineteenth
(19th) day (or the next succeeding business day, if such day is not a business day) of
each month commencing on November 19, 2007, and the thirty sixth (36th) installment,
together with all then accrued and unpaid interest hereon, shall be due and payable on the Maturity
Date.

     4. If not accelerated or prepaid prior thereto in accordance with the terms hereof, the full
principal balance of this Note shall be due and payable on October 18, 2010 (the “Maturity Date”).

     5. The Maker waives presentment, demand, protest and notice of protest and all requirements
necessary to hold it liable as Maker. Any failure of the Holder to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any other right at any time
and from time to time thereafter. No waiver shall be binding on the Holder, unless in a writing
signed by an authorized officer thereof, and then only to the extent specifically set forth
therein.

     6. This Note may be prepaid in full or in part at any time without premium or penalty;
provided, however, that any and all prepayments (including any amounts prepaid

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pursuant to Section 6.5(b)(ii) of the Purchase Agreement) shall be applied first to any costs
and expenses then due to the Holder, then to accrued and unpaid interest, and then to outstanding
principal payments due, in the order of maturity.

     7. The Maker hereby agrees to pay to the Holder, upon demand, all costs and expenses of every
kind and description reasonably incurred by the Holder in connection with the enforcement (whether
in connection with any appeal by the Holder of any lower court proceeding or otherwise) of the
rights of the Holder hereunder or in any wise related hereto, whether or not legal or equitable
proceedings are actually commenced, including, without limitation, the reasonable fees and
disbursements of counsel for the Holder.

     8. Notwithstanding any provisions to the contrary herein contained, and subject to the
limitations relating to the maximum interest allowed to be charged under applicable law set forth
herein, during the period that an Event of Default shall have occurred and be continuing, at the
option of the Holder, the Obligations (as defined hereinbelow) shall accrue interest at a rate per
annum equal to the “Default Rate” which shall mean a rate of interest per annum equal to four
percent (4%) above the Contract Rate, or if less, any interest rate which may be lawfully charged
under applicable law, computed from the date of the occurrence of an Event of Default and
continuing until (i) in the event the Holder, in its sole discretion, elects to waive or postpone
its right to accelerate the Obligations, such Event of Default is cured to the sole and absolute
satisfaction of the Holder, or (ii) in the event the Holder, in its sole discretion, elects to
accelerate the Obligations, or any of them, such Obligations are fully paid and performed.

     9. As used in this Note, the term “Obligations” shall mean (i) the principal balance of and
accrued interest on this Note; and (ii) all other obligations and liabilities (primary, secondary,
direct, indirect, contingent, sole, joint or several, whether similar or dissimilar or related or
unrelated) of the Maker to the Holder, due or to become due, now existing or hereafter incurred,
contracted or acquired, whether arising under this Note or under the Pledge Agreement referred to
herein below and/or any other Loan Documents (as such term is defined below).

     10. Any of the following shall constitute an event of default (each an “Event of Default”):

          (a) Any failure to make payment of principal or interest under this Note when due for more
than two (2) business days after the giving of written notice to the Maker; provided, however, that
such notice and cure period shall not apply (and no notice or cure period shall be required) after
such written notice has been given on three (3) prior occasions (whether or not such occasions were
concurrent);

          (b) A material default shall occur by the Maker in the due observance or performance of any
covenant, condition or agreement contained in this Note (other than under Section 10(a) above) or
in the Pledge Agreement (or any amendment, modification or renewal thereof) (giving effect to
applicable notice and grace periods, if any) (this Note and the Pledge Agreement, and any other
documents or instruments executed and delivered in connection therewith, as so amended, modified or
renewed, collectively the “Loan Documents”);

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          (c) Any representation or warranty contained in this Note, Section 5 of the Pledge Agreement,
or in the certification delivered from time to time pursuant to Section 6(h) of the Pledge
Agreement is materially false or misleading in any material respect as of the time when made;

          (d) The Maker shall: (i) make an assignment for the benefit of creditors, file a petition in
bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or any
trustee, or a substantial part of any of its properties or assets, or shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or if there shall have been
filed any such petition or application, or any such proceeding shall have been commenced against
the Maker in which an order for relief is entered or which remains undismissed for a period of
ninety (90) days or more; or the Maker by any act or omission shall indicate its consent to,
approval of or fail to timely object to any such petition, application or proceeding or order for
relief or the appointment of a custodian, receiver, or any trustee for the Maker or any substantial
part of any of its properties or assets, or shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of ninety (90) days or more; (ii) generally not
pay its debts as such debts become due or admit in writing its inability to pay its debts as they
mature; or (iii) have concealed, removed or permitted to be concealed or removed any part of its
properties or assets, with the intent to hinder, delay or defraud its creditors or any of them, or
made or suffered a transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any transfer of its property to or for the
benefit of a creditor at a time when other creditors similarly situated have not been paid; or
shall have suffered or permitted while solvent, any creditor to obtain a lien upon any of the
property of the Maker through legal proceedings or distraint which is not vacated within thirty
(30) days from the date thereof; or (iv) be “insolvent”, as such term is defined in the Bankruptcy
Code, § 11 U.S.C. § 101(31).

          (e) The making, directly or indirectly, of any payment by or on behalf of Maker and/or any
subsidiary or other Affiliate of the Maker (including any of the “Pledged Entities” (as defined in
the Pledge Agreement)) and/or any of their respective Affiliates (other than, if no Event of
Default shall have occurred, payments of interest but not principal) with respect to repayment of
any indebtedness directly or indirectly owed to any Frost Affiliate and/or other person or entity
permitted to be a holder of, or otherwise hold an interest in, the Frost Indebtedness pursuant to
Section 6(f) of the Pledge Agreement, that is being, or has been, incurred in connection with the
transactions contemplated by the Pledge Agreement (the “Frost Indebtedness”), in excess of payments
made by Maker in repayment of the then current principal amount of this Note while the then current
principal amount of the Frost Indebtedness is equal to or less than (with the understanding that it
is not intended that the Frost Indebtedness be less than) the then current principal amount of this
Note, but such payments on account of the Frost Indebtedness may only be made so long as (x) no
such payment would cause the occurrence of a breach of this Section 10(e) and /or an Event of
Default and/or (y) no Event of Default has occurred and then is continuing (regardless of whether
the Holder has then accelerated the maturity of the Obligations). As used in this Note, the
following terms have the following meanings: (A) “Affiliate” means, with respect to any person or
entity, any other person or entity controlling, controlled by or under common control with such
first person or entity; (B) “control” (including, with its correlative meanings, “controlled by”
and “under common control with”)

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shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a subject person or entity (whether through ownership of
securities or partnership or other ownership interests, by contract or otherwise); (C) “Frost”
means Dr. Phillip Frost, an individual; and (D) “Frost Affiliate” means, each of, and “Frost
Affiliates” means, collectively, any two or more of, the following Persons: (i) Frost, (ii) Frost’s
spouse, siblings, lineal descendants and lineal ancestors, (iii) any trusts established for the
benefit of any of the Persons identified in the preceding items (i) and/or (ii) (the Persons
identified in the preceding items (i)-(iii), collectively, the “Frost Family Group”), and (iv) any
Affiliates of any of the members of the Frost Family Group.

     Upon the occurrence of an Event of Default which shall be continuing, the Holder may, at any
time, without written notice, take any or all of the following actions, at the same or different
times (the right to take such actions shall be cumulative): (i) declare the Obligations, or any of
them, to be forthwith due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, (ii) take any and all actions and pursue any and
all remedies when and as may be permitted by this Note, the Pledge Agreement or any other Loan
Document, or by applicable law (including, without limitation, all rights of banker’s lien,
counterclaim or set-off), and (iii) apply amounts received by the Holder in reduction of the
Obligations in such order the Holder may elect in his sole and absolute discretion.

     11. The total sums for interest and in the nature of interest, reserved, charged or taken
hereunder or under any of the Loan Documents shall not exceed the maximum amount allowed by law,
and any excess portion of such sums that may have been reserved, charged or taken shall be refunded
to the Maker. Such refund may be made by application of the excess portion against the Obligations.

     12. The Maker agrees to pay to Holder, on demand, all taxes, duties, and other charges (other
than income taxes) incurred in respect of this Note, including, without limitation, all documentary
stamp and intangible taxes as from time to time payable or assessed.

     13. EACH OF THE MAKER AND THE HOLDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES
ANY RIGHT IT OR HE MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (INCLUDING BUT NOT
LIMITED TO ANY CLAIMS, CROSS-CLAIMS, OR THIRD PARTY CLAIMS) ARISING OUT OF, UNDER, OR IN CONNECTION
WITH THIS NOTE, OR THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN.
EACH OF THE MAKER AND THE HOLDER HEREBY CERTIFIES TO THE OTHER PARTY THAT NO REPRESENTATIVE OR
AGENT OF HIS OR IT NOR HIS OR ITS COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER
OR THE MAKER, AS APPLICABLE, WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH OF THE MAKER AND THE HOLDER ACKNOWLEDGES THAT THE
OTHER PARTY HERETO HAS BEEN INDUCED TO ENTER INTO THIS TRANSACTION, INCLUDING THIS NOTE, BY, INTER
ALIA, THE PROVISIONS OF THIS PARAGRAPH.

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     The Maker hereby specifically authorizes any action brought upon the enforcement of this Note
and/or the other Loan Documents by the Holder to be instituted and prosecuted in either the Circuit
Court of Miami-Dade County, Florida or the United States District Court for the Southern District
of Florida, at the election of the Holder.

     The Maker hereby consents and submits to the personal jurisdiction of the State and Federal
courts of Florida in any action instituted by the Holder arising under or related to this Note
and/or the other Loan Documents.

     14. This is the “Note” referred to in (i) the Purchase Agreement and (ii) that certain Pledge
Agreement dated the date of this Note, by and among the Maker and the Holder (the “Pledge
Agreement”). This Note constitutes a portion of the Obligations and is secured, inter
alia, by the Pledged Collateral referred to in the Pledge Agreement, reference to which is
hereby made for a description of the Pledged Collateral and the rights of the Holder, or any other
holder of this Note, in respect of such Pledged Collateral.

     15. This Note is to be construed and enforced according to the internal laws of the State of
Florida, without giving effect to principles of conflict of laws.

     16. Each provision of this Note is intended to be severable and the invalidity or illegality
of any portion of this Note shall not affect the validity or legality of the remainder hereof.

     17. This Note is not assignable or otherwise transferable by the Maker nor are its obligations
hereunder assumable without the prior consent of the Holder, unless the Maker agrees to remain
liable for all the Obligations.

     18. This Note is subject to the provisions of 6.5(b)(ii) of the Purchase Agreement.

(signature page follows)

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	 	MAKER:

Ladenburg Thalmann Financial Services Inc.

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

6EX-4.3 Pledge Agreement

 

EXHIBIT 4.3

PLEDGE AGREEMENT

     This PLEDGE AGREEMENT, dated as of October 19, 2007 (the “Agreement”), is by and
between Ladenburg Thalmann Financial Services Inc., a Florida corporation (the “Pledgor”),
and Bruce A. Zwigard (the “Lender”).

WITNESSETH:

     WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of October 19, 2007, by
and among the Lender, the Pledgor, and others (the “Purchase Agreement”) the Lender is
making a loan (the “Loan”) to Pledgor to finance the purchase by the Pledgor of the Pledged
Collateral (as such term is defined below), evidenced by that certain Non-Negotiable Promissory
Note in the original principal amount of $15,000,000, dated as of the date hereof, made by Pledgor
in favor of the Lender (the “Note”); and

     WHEREAS, Pledgor is, or in the case of Investacorp Advisory Services, Inc. will be
concurrently upon the release from the escrow arrangement provided for in Section 1.7 of the
Purchase Agreement, the record and beneficial owner of one hundred percent (100%) of the capital
stock in each of the Pledged Entities (as defined below);

     WHEREAS, in order to induce the Lender to make the Loan, Pledgor has agreed to pledge the
Pledged Collateral to Lender in accordance herewith;

     NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, it
is agreed as follows:

	 	1.	 	Definitions. Unless otherwise defined herein, terms defined in the
Note are used herein as therein defined, and the following shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms defined):

     “Bankruptcy Code” means title 11, United States Code, as amended from time to time,
and any successor statute thereto.

     “Frost Indebtedness” has the meaning set forth in the Note.

     “Insolvency Event” has the meaning set forth in Section 7 hereof.

     “Lien” has the meaning assigned to such terms in Section 5(g) hereof.

     “Pledged Collateral” has the meaning assigned to such term in Section 2
hereof.

     “Pledged Entity” and “Pledged Entities” mean respectively, an issuer of
Pledged Shares and collectively, the issuers of Pledged Shares.

     “Pledged Shares” means those shares of capital stock of the Pledged Entities described
in Schedule I hereto.

 

 

     “Secured Obligations” has the meaning assigned to such term in Section 3
hereof.

	 	2.	 	Pledge. Pledgor hereby pledges to Lender, and grants to Lender, a
continuing first priority security interest in and to the following (collectively, the
“Pledged Collateral”):

     (a) Subject to the other provisions hereof, all of the Pledged Shares and the
certificates representing the Pledged Shares, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; and

     (b) Subject to the other provisions hereof, any shares of stock of a Pledged Entity
from time to time hereafter issued to Pledgor in any manner (which shares shall be deemed to
be part of the Pledged Shares), and the certificates representing such shares and all
dividends, distributions, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for any or all of
such stock.

	 	3.	 	Security for Obligations. This Agreement secures, and the Pledged
Collateral is collateral security for, the prompt payment in full when due, whether at
stated maturity, by acceleration or otherwise, and performance of all Obligations of
any kind, under the Note and all other Loan Documents, and all obligations of Pledgor
now or hereafter existing under this Agreement including, without limitation, all fees,
costs and expenses incurred by the Lender, whether in connection with collection
actions hereunder or otherwise in the administration and enforcement of the Obligations
(collectively, the “Secured Obligations”).

	 	4.	 	Delivery of Pledged Collateral. All certificates evidencing the
Pledged Collateral are being concurrently delivered to and held by or on behalf of the
Lender pursuant hereto, except for the certificates evidencing the record and
beneficial ownership of one hundred percent (100%) of the Pledged Shares of Investacorp
Advisory Services, Inc. which will be delivered to the Lender concurrently upon their
release from the escrow arrangement provided for in Section 1.7 of the Purchase
Agreement. All Pledged Shares shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the Lender.

	 	5.	 	Representations and Warranties. Pledgor represents and warrants to the
Lender that:

	 	(a)	 	The Pledgor is, and at the time of delivery of the Pledged
Shares to the Lender will be, or, in the case of Pledged Shares of Investacorp
Advisory Services, Inc., when released from the escrow arrangement provided for
in

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	 	 	 	Section 1.7 of the Purchase Agreement will be, the sole holder of record and
the sole beneficial owner of the Pledged Collateral, and Pledgor has not
placed, nor has there arisen by or through Pledgor upon the sale of the
Pledged Shares pursuant to the Purchase Agreement or at any time thereafter,
whether by creation of law or otherwise, any Liens or encumbrance in or to
the Pledged Shares or affecting the right, title and interest of the Pledgor
therein, except for the Liens created by this Agreement.
	 
	 	(b)	 	Pledgor has the right and requisite authority to pledge,
assign, transfer, deliver, deposit and set over the Pledged Collateral pledged
by Pledgor to the Lender as provided herein.
	 
	 	(c)	 	The Pledged Shares owned or to be owned by Pledgor constitute
one hundred percent (100%) of the issued and outstanding stock of the Pledged
Entities, and are presently represented by the certificates listed on
Schedule I hereto.
	 
	 	(d)	 	Pledgor has not issued or granted and will not issue or grant
any options, warrants, calls or commitments or any nature whatsoever relating
to the Pledged Shares.
	 
	 	(e)	 	No consent, approval, authorization or other order or other
action by, and no notice to or filing with, any Governmental Authority or any
other Person or entity is required for the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Pledgor, except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally.
	 
	 	(f)	 	The pledge, assignment and delivery of the Pledged Collateral
pursuant to this Agreement will create a valid perfected first priority
security interest in favor of the Lender in the Pledged Collateral and the
proceeds thereof, securing the payment of the Secured Obligations, subject to
no other security interest, lien, charge or encumbrance by or through Pledgor
(collectively, “Liens”).
	 
	 	(g)	 	This Agreement has been duly authorized, executed and delivered
by Pledgor and constitutes a legal, valid and binding obligation of Pledgor,
enforceable against Pledgor in accordance with its terms.
	 
	 	(h)	 	Attached hereto is a true and correct copy of each of the
documents evidencing or relating to the Frost Indebtedness as of the date
hereof.

     The representations and warranties set forth in this Section 5 shall survive the
execution and delivery of this Agreement and payment in full of the Secured Obligations.

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	 	6.	 	Covenants. The Pledgor covenants and agrees that until the all Secured
Obligations are paid and satisfied in full:

	 	(a)	 	Without the prior written consent of the Lender in his sole and
absolute discretion:

	 	(i)	 	Pledgor will not sell, assign, transfer,
pledge, or otherwise encumber or cause or permit a Lien to exist at any
time upon the Pledged Collateral or any of its right, title or interest
in or to the Pledged Collateral, or any unpaid dividends, interest or
other distributions or payments with respect to the Pledged Collateral;
and
	 
	 	(ii)	 	Pledgor shall not grant a Lien in and to the
Pledged Collateral, any other property, rights or interests of the
Pledgor, or any property, rights or interests of any Pledged Entity
(the “Pledged Entity Property”) in each case to secure the
Frost Indebtedness, and in the case of the Pledged Entity Property, to
secure any other direct or indirect obligation of the Pledgor and/or
any Pledged Entity, or any affiliate thereof whensoever incurred,
arising or acquired, in all cases under this clause (ii) of Section
6(a) whether such Lien is perfected or unperfected, arises by operation
of law or otherwise; and
	 
	 	(iii)	 	Pledgor shall not amend, modify or otherwise
change, or take any action directly or indirectly to change, in any
way, the Articles of Incorporation or by-laws of any Pledged Entity, as
such documents are in effect immediately prior to the date of this
Agreement that could adversely affect any of Lender’s rights or
remedies under the Note or this Agreement, or the effectuation of same.

	 	(b)	 	The Pledgor will, at its expense, promptly execute, acknowledge
and deliver all such instruments and take all such actions as the Lender from
time to time may reasonably request in order to ensure to the Lender the
benefits of the liens and security interest in and to the Pledged Collateral
intended to be created and perfected by this Agreement, including the filing of
any Uniform Commercial Code financing statements, which may be filed by Lender,
from time to time, without further notice to or consent by Pledgor and without
the signature of Pledgor, and will at the Lender’s reasonable request cooperate
with the Lender, at Pledgor’s expense, in obtaining all necessary approvals and
making all necessary and advisable filings under federal, state, local or
foreign law in connection with such liens and security interests, the exercise
of any rights or remedies hereunder or any sale or transfer of the Pledged
Collateral;
	 
	 	(c)	 	The Pledgor has, and will, at all times, defend the title to
the Pledged Collateral and the Lien solely of the Lender in and to the Pledged
Collateral, against the claim of any person or entity, and will maintain and
preserve the first and only priority of such Liens;

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	 	(d)	 	The business, assets and/or operations of each of the Pledged
Entities shall:

	 	(i)	 	at all times be sufficiently capitalized in
order to fully meet any and all legal and regulatory requirements
applicable to such Debtor (including the Securities and Exchange
Commission’s net capital rule, as applicable);
	 
	 	(ii)	 	at all times be owned, held and operated by the
Pledged Entities as a stand-alone operation and wholly-owned
subsidiaries of the Pledgor, operated in all respects as separate
entities; and
	 
	 	(iii)	 	at all times be hereafter operated so that the
registered representatives of the Pledged Entities existing as of the
date hereof (“Existing RRs”) shall not have any required sales
quotas for proprietary products and Pledgor and its subsidiaries shall
not intentionally use the client lists of the Existing RRs to directly
market any individual proprietary products to such clients without the
prior consent of the Existing RRs, except for general mailings not
specifically targeted to clients of the Existing RRs or as may be
required to fulfill regulatory supervisory obligations.

	 	(e)	 	Without the prior written consent of the Lender in his sole and
absolute discretion, none of the Pledge Entities will sell, assign or transfer
any of their respective clients, registered representatives or such client’s or
registered representative’s business to Pledgor, any of its affiliates, or any
other person or entity.
	 
	 	(f)	 	Pledgor shall not permit any sale, assignment, or other
transfer of the Frost Indebtedness to other than Frost Affiliates and shall not
allow any additional documents or any amendments thereto or to existing
documents evidencing or relating to the Frost Indebtedness which would give
effect to transfers, if any, to any persons or entities who are not Frost
Affiliates (as defined in the Note); provided however, up to an aggregate
amount not to exceed twenty percent (20%) of the commitment by the applicable
Frost Affiliate(s) to make advances of the Frost Indebtedness to Pledgor,
together with an equal percentage of the then outstanding principal of the
Frost Indebtedness, may be sold or otherwise assigned or transferred, including
by the issuance of a participation interest therein, to persons or entities
which are not Frost Affiliates.
	 
	 	(g)	 	Pledgor shall not change its name, identity, company structure
or jurisdiction of formation in any manner unless it shall have given Lender at
least thirty (30) days’ prior written notice thereof and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary
or reasonably requested by Lender to continue Lender’s perfection and priority
of its liens and security interests in, to and upon the Pledged Collateral.

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	 	(h)	 	Unless separately and specifically described in Pledgor’s
quarterly report on Form 10-Q and annual report on Form 10-K, after issuance of
any such Form 10-Q or 10-K for any period beginning with the quarter ending
December 31, 2007, Pledgor shall upon ten (10) business days’ prior request by
the Lender, deliver to Lender a certification setting forth the principal
balance of the Frost Indebtedness and certifying that it has not made any
payment on account of the Frost Indebtedness during the applicable quarterly
period that caused or would cause an Event of Default to have occurred under
Section 10(e) of the Note.

	 	7.	 	Pledgor’s Rights. As long as no Event of Default shall have occurred
and be continuing or the Lender shall not have accelerated the maturity of the Secured
Obligations and until written notice shall be given to Pledgor as provided at the
beginning of Section 8 hereof (other than an Event of Default under Section
8(e) of the Note (such Event of Default is referred to herein as an “Insolvency
Event”), in which case the rights under this Section 7 shall be ineffective,
without notice, upon the occurrence thereof):

	 	(a)	 	Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral, or any part thereof for
all purposes not inconsistent with the provisions of this Agreement or any
other Loan Document; provided, however, that no vote shall be
cast, and no consent shall be given or action taken, which would have the
effect of impairing the position or interest of the Lender in respect of the
Pledged Collateral, or which would authorize, effect or consent to:

	 	(i)	 	the dissolution or liquidation, in whole or in
part, of a Pledged Entity;
	 
	 	(ii)	 	the consolidation or merger of a Pledged Entity
with any other person or entity;
	 
	 	(iii)	 	the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for sales
or dispositions of assets in the ordinary course of the businesses of
the Pledged Entities;
	 
	 	(iv)	 	any change in the authorized number of shares,
the stated capital or the authorized share capital of a Pledged Entity
or the issuance of any additional shares of its capital stock or option
or other right thereto; or
	 
	 	(v)	 	the alteration of the voting rights with
respect to the capital stock of a Pledged Entity; and

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	 	(b)	  (i)	The Pledgor shall be entitled, from time to time, to
collect and receive for its own use all cash dividends and other amounts paid
in cash in respect of the Pledged Shares, other than any and all:

	 	(1)	 	dividends and other amounts paid
or payable other than in cash in respect of any Pledged
Collateral, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral;
	 
	 	(2)	 	dividends and other distributions
paid or payable in cash in respect of any Pledged Shares (x) in
connection with a partial or total liquidation or dissolution,
or (y) in connection with a reduction of capital, capital
surplus (including retained earnings) or paid-in capital of a
Pledged Entity if, after giving effect to such dividend or other
distribution, the capital, capital surplus (including retained
earnings), or paid-in capital of the Pledged Entities taken as a
whole is, or would be, less than $5,000,000, or if less, the
then outstanding principal balance of the Note, without for
purposes of such determination, giving effect to non-cash
compensation expense and non-cash purchase accounting
adjustments under generally accepted accounting principles
accrued on and after the date hereof; and
	 
	 	(3)	 	cash paid, payable or otherwise
distributed, in respect of principal of, in redemption of, or in
exchange for, any Pledged Collateral; provided,
however, that until such permitted payments under this
Section 7(b) are actually paid to the Pledgor, all rights to
such distributions shall remain subject to the Lien created by
this Agreement; and

	 	(ii)	 	All dividends (other than such cash dividends
permitted to be paid to Pledgor in accordance with clause
(i) above) and all other distributions in respect of any of the
Pledged Shares, whenever paid or made, shall be delivered to the Lender
to hold as Pledged Collateral and shall, if received by Pledgor, be
received in trust for the benefit of the Lender, be segregated from the
other property or
funds of Pledgor, and be forthwith delivered to the Lender as Pledged
Collateral in the same form as so received (with any necessary
endorsement).

7

 

	 	8.	 	Defaults and Remedies; Proxy. Upon the occurrence of an Event of
Default and during the continuation of an Event of Default or after acceleration by the
Lender of the maturity of the Obligations, and concurrently with written notice to
Pledgor (or automatically upon the occurrence of an Insolvency Event):

	 	(a)	 	the Lender (personally or through an agent) is hereby
authorized and empowered to transfer and register in his name or in the name of
his nominee the whole or any part of the Pledged Collateral, to exchange
certificates representing or evidencing Pledged Collateral for certificates of
smaller or larger denominations, to exercise the voting and all other rights as
a holder of the Pledged Collateral with respect thereto, to collect and receive
all cash dividends and/or other distributions made thereon, to sell in one or
more sales after ten (10) days’ notice of the time and place of any public sale
or of the time at which a private sale is to take place (which notice Pledgor
agrees is commercially reasonable), the whole or any part of the Pledged
Collateral and to otherwise act with respect to the Pledged Collateral as
though the Lender was the outright owner thereof. Any sale shall be made at a
public or private sale at the Lender’s place of business, or at any place to be
named in the notice of sale, either for cash or upon credit or for future
delivery at such price as the Lender may deem fair and commercially reasonable,
and the Lender may be the purchaser of the whole or any part of the Pledged
Collateral so sold and hold the same thereafter in its own right free from any
claim of Pledgor or any right of redemption. Each sale shall be made to the
highest bidder, but the Lender reserves the right to reject any and all bids at
such sale which, in its discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for, notices of
sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may be conducted by an auctioneer or any officer or agent of
the Lender, and, in addition, and without limiting the generality of the
foregoing during the continuation of an Event of Default or after acceleration
by the Lender of the maturity of the Secured Obligations, the Pledgor shall,
and shall cause each and all of its subsidiaries and other affiliates,
including, without limitation, each and all of the Pledged Entities, to, at
Lender’s direction, in order to directly or indirectly realize upon or protect
the Pledged Collateral and/or the assets or property of the Pledge Entities or
otherwise in connection with directly or indirectly recovering or seeking to
recovery all or any portion of the Secured Obligations, at any time and from
time to time:

	 	(i)	 	waive, and release any and all agents,
officers, employees, contractors, consultants, businesses and/or
registered
representatives of the Pledged Entities that are designated by Lender
from, any and all contractual and other restrictions and/or
obligations that would prevent, restrict or otherwise limit such
agents, officers, employees, contractors, consultants, businesses
and/or representatives from contracting with or otherwise being
engaged by any parties (including any and all non-competition,
non-circumvention and non-solicitation covenants and other
obligations and any and all penalties, liquidated damages,
termination fees and/or other fees and other amounts that would be
payable in connection with such contracting or engagement); and

8

 

	 	(ii)	 	subject to compliance with applicable legal and
regulatory requirements, effectuate one or more block transfers of all
clients of the Pledged Entities that are designated by Lender to one or
more parties designated by Lender in his sole discretion. The Pledgor
acknowledges and agrees that Lender shall in no way be prevented or
otherwise restricted from receiving or contracting with respect to the
payment to Lender or his designees of any fees or other compensation in
connection with any such transfers, waivers and releases and Pledgor
hereby expressly covenants not to assert any claim relating to, or
otherwise attempt to restrict, any such payment to the Lender or his
designees or his contracting with respect to such fees or other
compensation.

          PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS LENDER AS THE PROXY AND ATTORNEY-IN-FACT
OF PLEDGOR WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT SO LONG AS (AND ONLY SO LONG
AS), AN EVENT OF DEFAULT EXISTS AND IS CONTINUING OR AFTER THE LENDER HAS ACCELERATED THE MATURITY
OF THE SECURED OBLIGATIONS, TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF SUBSTITUTION TO DO SO.
THE APPOINTMENT OF LENDER AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL ALL SECURED OBLIGATIONS ARE PAID AND SATISFIED IN FULL. IN ADDITION TO THE RIGHT
TO VOTE THE PLEDGED SHARES, THE APPOINTMENT OF LENDER AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE
THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE
PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE
EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY
PLEDGED SHARES ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF
THE PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF) UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT OR AFTER THE LENDER HAS ACCELERATED THE MATURITY OF THE SECURED OBLIGATIONS.
NOTWITHSTANDING THE FOREGOING, LENDER SHALL NOT HAVE
ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS SECTION, LENDER SHALL NOT EXERCISE SUCH POWER OF ATTORNEY UNLESS AN EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING OR AFTER THE LENDER HAS ACCELERATED THE MATURITY OF THE SECURED
OBLIGATIONS AND, TO THE EXTENT PROVIDED FOR HEREIN, LENDER HAS DELIVERED TO PLEDGOR THE WRITTEN
NOTICE DESCRIBED IN THE FIRST SENTENCE OF THIS SECTION.

9

 

	 	(b)	 	If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or if the Pledged Collateral be offered for sale in lots, if at any of such
sales, the highest bid for the lot offered for sale would indicate to the
Lender, in its discretion, that the proceeds of the sales of the whole of the
Pledged Collateral would be unlikely to be sufficient to discharge all the
Secured Obligations, the Lender may, on one or more occasions and in its
discretion, postpone any of said sales by public announcement at the time of
sale or the time of previous postponement of sale, and no other notice of such
postponement or postponements of sale need be given, any other notice being
hereby waived, provided, however, that any sale or sales made
after such postponement shall be after ten (10) days’ notice to Pledgor.
	 
	 	(c)	 	If, at any time upon an Event of Default and during the
continuance of an Event of Default or after Lender has accelerated the maturity
of the Secured Obligation, when the Lender shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as
amended (or any similar statute then in effect) (the “Act”), the Lender
may, in his sole and absolute discretion (subject only to applicable
requirements of law), sell such Pledged Collateral or part thereof by private
sale in such manner and under such circumstances as the Lender deem necessary
or advisable, but subject to the other requirements of this Section 8,
and shall not be required to effect such registration or to cause the same to
be effected. Without limiting the generality of the foregoing, in any such
event, the Lender in his sole and absolute discretion (x) may, in accordance
with applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Collateral or part thereof could be or shall have been filed under
the Act (or similar statute), (y) may approach and negotiate with a single
possible purchaser to effect such sale, and (z) may restrict such sale to a
purchaser who is an accredited investor under the Act and who will represent
and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution or
sale of such Pledged Collateral or any part thereof. In addition to a
private sale as provided above in this Section 8, if any of the
Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or similar statute) at the time of any proposed
sale pursuant to this Section 8, then the Lender shall not be
required to effect such registration or cause the same to be effected but,
in its discretion (subject only to 

10

 

	 	 	 	applicable requirements of law), may
require that any sale hereunder (including a sale at auction) be conducted
subject to restrictions:

	 	(i)	 	as to the financial sophistication and ability
of any person or entity permitted to bid or purchase at any such sale;
	 
	 	(ii)	 	as to the content of legends to be placed upon
any certificates representing the Pledged Collateral sold in such sale,
including restrictions on future transfer thereof;
	 
	 	(iii)	 	as to the representations required to be made
by each person or entity bidding or purchasing at such sale relating to
that person’s or entity’s access to financial information about Pledgor
and such person’s or entity’s intentions as to the holding of the
Pledged Collateral so sold for investment for its own account and not
with a view to the distribution thereof; and
	 
	 	(iv)	 	as to such other matters as the Lender may, in
his sole and absolute discretion, deems necessary or appropriate in
order that such sale (notwithstanding any failure so to register) may
be effected in compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors’ rights and the Act and all
applicable state securities laws.

	 	(d)	 	Pledgor recognizes that pursuant to the provisions of this
Agreement and applicable law, the Lender may resort to one or more private
sales of the Pledged Collateral in accordance with clause (c) above.
Pledgor also acknowledges that any such private sale may result in prices and
other terms less favorable to the Lender than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. The Lender shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the Pledged Entity to register such securities for
public sale under the Act, or under applicable state securities laws, even if
Pledgor and the Pledged Entity would agree to do so.
	 
	 	(e)	 	Pledgor agrees to the maximum extent permitted by applicable
law that following the occurrence of an Event of Default which shall be
continuing
or after acceleration of the maturity of the Secured Obligations, it will
not at any time plead, claim or take the benefit of any appraisal,
valuation, stay, extension, moratorium or redemption law now or hereafter in
force in order to prevent or delay the enforcement of this Agreement, or the
absolute sale of the whole or any part of the Pledged Collateral or the
possession thereof by any purchaser at any sale hereunder, and Pledgor
waives the benefit of all such laws to the extent it lawfully may do so.
Pledgor agrees that it will not interfere with any right, power and remedy

11

 

	 	 	 	of the Lender provided for in this Agreement or now or hereafter existing at
law or in equity or by statute or otherwise, or the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers or
remedies. No failure or delay on the part of the Lender to exercise any
such right, power or remedy and no notice or demand which may be given to or
made upon Pledgor by the Lender with respect to any such remedies shall
operate as a waiver thereof, or limit or impair the Lender’s right to take
any action or to exercise any power or remedy hereunder, without notice or
demand, or prejudice its rights as against Pledgor in any respect.

	 	(f)	 	Pledgor further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the
Lender, that the Lender shall have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 8 shall be specifically enforceable against Pledgor, and
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that the
Secured Obligations are not then due and payable in accordance with the
agreements and instruments governing and evidencing such obligations.

	 	9.	 	Waiver. No delay on the Lender’s part in exercising any power of sale,
security interest or lien, option or other right hereunder, and no notice or demand
which may be given to or made upon Pledgor by the Lender with respect to any power of
sale, security interest or lien, option or other right hereunder, shall constitute a
waiver thereof, or limit or impair the Lender’s right to take any action or to exercise
any power of sale, security interest or lien, option, or any other right hereunder,
without notice or demand, or prejudice the Lender’s rights as against Pledgor in any
respect.

	 	10.	 	No Assignment. Neither Pledgor nor Lender shall assign this Agreement
to any person or entity.

	 	11.	 	Termination. Lender shall deliver to Pledgor the Pledged Collateral
then in its possession and all instruments of assignment reasonably requested by
Pledgor executed in connection therewith, free and clear of the Lien hereof upon the
payment and indefeasible satisfaction in full of the Secured Obligations whereupon,
subject to Section 14 hereof, this Agreement shall terminate.

	 	12.	 	Lien Absolute. All rights of the Lender hereunder, and all obligations
of Pledgor hereunder, shall be absolute and unconditional irrespective of:

	 	(a)	 	any lack of validity or enforceability of the Note or any other
Loan Document;
	 
	 	(b)	 	any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Note or any
other Loan Document;

12

 

	 
	 	(c)	 	the insolvency of any of Pledgor or any of the Pledged
Entities; or
	 
	 	(d)	 	any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor.

	 	13.	 	Release. Pledgor consents and agrees that the Lender may at any time,
or from time to time, in its sole and absolute discretion:

	 	(a)	 	renew, extend or change the time of payment, and/or the manner,
place or terms of payment of all or any part of the Secured Obligations; and
	 
	 	(b)	 	exchange, release and/or surrender all or any of the Pledged
Collateral or any other collateral security for the Secured Obligations, or any
part thereof, by whomsoever deposited, which is now or may hereafter be held by
the Lender or in which it otherwise maintains a Lien, in connection with all or
any of the Secured Obligations, all in such manner and upon such terms as the
Lender may deem proper, and without notice to or further assent from Pledgor;
it being hereby agreed that Pledgor shall be and remain bound upon this
Agreement, irrespective of the value or condition of any of the Pledged
Collateral or any other collateral security for the Secured Obligations, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount thereof set
forth in the Note, or any other agreement governing any Secured Obligations.
Pledgor hereby waives notice of acceptance of this Agreement, and also
presentment, demand, protest and notice of dishonor of any and all of the
Secured Obligations, and promptness in commencing suit against any party hereto
or liable hereon, and in giving any notice to or of making any claim or demand
hereunder upon Pledgor. No act or omission of any kind on the Lender’s part
shall in any event affect or impair this Agreement.

	 	14.	 	Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Pledgor or any
Pledged Entity for liquidation or reorganization, should Pledgor or any Pledged Entity
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Pledgor’s or any
Pledged Entity’s assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference”, “fraudulent transfer or conveyance”, or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

13

 

	 	15.	 	Miscellaneous.

	 	(a)	 	The Lender may execute any of his duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
	 
	 	(b)	 	Pledgor agrees to promptly reimburse the Lender, upon its
demand, for reasonable actual out-of-pocket expenses, including, without
limitation, reasonable counsel fees, incurred by the Lender in connection with
the administration and enforcement of this Agreement.
	 
	 	(c)	 	Neither the Lender, nor any of his employees, agents or counsel
shall be liable for any action lawfully taken or omitted to be taken by it or
them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
	 
	 	(d)	 	THIS AGREEMENT SHALL BE BINDING UPON PLEDGOR AND ITS SUCCESSORS
AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF PLEDGOR), AND SHALL
INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, THE LENDER AND ITS SUCCESSORS
AND ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO PRINCIPLES OR
CONFLICT OR LAWS AND NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE
WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON
BEHALF OF LENDER AND PLEDGOR.

	 	16.	 	Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such invalidity
shall not impair the operation of or effect those portions of this Agreement which are
valid.

	 	17.	 	Notices. All notices shall be given to the parties hereto in the
manner set forth in Section 9.1 of the Purchase Agreement, and all such notices shall
be effective when and as provided therein.

	 	18.	 	Section Titles. The Section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.

14

 

	 	19.	 	Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one agreement.

	 	20.	 	Benefit of Lender. All security interests granted or contemplated
hereby shall be for the benefit of the Lender, and all proceeds or payments realized
from the Pledged Collateral in accordance herewith shall be applied to the Obligations
in accordance with the terms of the Note.

[signature page follows]

15

 

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

	 	 	 	 	 
	 	Pledgor:

Ladenburg Thalmann Financial Services Inc.

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

	 	 	 	 	 
	 	Lender:

 	 
	 	/s/ Bruce A. Zwigard
 	 
	 	Bruce A. Zwigard 	 
	 	 	 
	 

16

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