Document:

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                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY
                            INDEMNIFICATION AGREEMENT

            This Agreement, made and entered into effective as of the 4th day of
March, 2005 ("Agreement"), by and between Ladenburg Thalmann Financial Services
Inc., a Florida corporation ("Corporation"), and Mark D. Klein ("Indemnitee"):

            WHEREAS, highly competent persons recently have become more
reluctant to serve publicly-held corporations as directors, officers, or in
other capacities, unless they are provided with better protection from the risk
of claims and actions against them arising out of their service to and
activities on behalf of such corporation; and

            WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties related to indemnification have increased the
difficulty of attracting and retaining such persons; and

            WHEREAS, the Board of Directors of the Corporation ("Board") has
determined that the inability to attract and retain such persons is detrimental
to the best interests of the Corporation's stockholders and that such persons
should be assured that they will have better protection in the future; and

            WHEREAS, it is reasonable, prudent and necessary for the Corporation
to obligate itself contractually to indemnify such persons to the fullest extent
permitted by applicable law so that such persons will serve or continue to serve
the Corporation free from undue concern that they will not be adequately
indemnified; and

            WHEREAS, this Agreement is a supplement to and in furtherance of
Article VII of the By-laws of the Corporation, and Article XI of the Articles of
Incorporation of the Corporation, as amended, and any resolutions adopted
pursuant thereto and shall neither be deemed to be a substitute therefor nor to
diminish or abrogate any rights of Indemnitee thereunder; and

            WHEREAS, Indemnitee is willing to serve and to take on additional
service for or on behalf of the Corporation on the condition that he or she be
indemnified according to the terms of this Agreement;

            NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:

1.    Definitions. For purposes of this Agreement:

      1.1   "Change in Control" means a change in control of the Corporation
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended ("Act"), whether or not the

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Corporation is then subject to such reporting requirement provided, however,
that, without limitation, such a Change in Control shall be deemed to have
occurred if after the date hereof (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Act) is or becomes "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Corporation representing 20% or more of the combined voting power of the
then outstanding securities of the Corporation without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage interest; (ii) the Corporation is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority of the Board
thereafter; or (iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.

      1.2   "Corporate Status" means the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Corporation or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Corporation.

      1.3   "Disinterested Director" means a director of the Corporation who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.

      1.4   "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding.

      1.5   "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Corporation or
Indemnitee in any other matter material to either such party, or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the
Corporation or Indemnitee in an action to determine Indemnitee's rights under
this Agreement. Independent Counsel shall be selected by (a) the Disinterested
Directors or (b) a committee of the Board consisting of two or more
Disinterested Directors or if (a) and (b) above are not possible, then by a
majority of the full Board.

      1.6   "Proceeding" means any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee pursuant to Section 11 of this Agreement to enforce
his rights under this Agreement.

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2.    Services by Indemnitee.

      Indemnitee agrees to serve as a director of the Corporation. Indemnitee
may at any time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by operation of law).

3.    Indemnification - General.

      The Corporation shall indemnify, and advance Expenses to, Indemnitee as
provided in this Agreement to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit. The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set
forth in the other Sections of this Agreement.

4.    Proceedings Other Than Proceedings by or in the Right of the Corporation.

      Indemnitee shall be entitled to the rights of indemnification provided in
this Section if, by reason of his Corporate Status, he or she is, or is
threatened to be made, a party to any threatened, pending or completed
Proceeding, other than a Proceeding by or in the right of the Corporation.
Pursuant to this Section, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any such
Proceeding or any claim, issue or matter therein, if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.

5.    Proceedings by or in the Right of the Corporation.

      Indemnitee shall be entitled to the rights of indemnification provided in
this Section if, by reason of his Corporate Status, he or she is, or is
threatened to be made, a party to any threatened, pending or completed
Proceeding brought by or in the right of the Corporation to procure a judgment
in its favor. Pursuant to this Section, Indemnitee shall be indemnified against
Expenses actually and reasonably incurred by him or on his behalf in connection
with any such Proceeding if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Corporation. Notwithstanding the foregoing, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in any such
proceeding as to which Indemnitee shall have been adjudged to be liable to the
Corporation if applicable law prohibits such indemnification unless the court in
which such Proceeding shall have been brought or is pending, shall determine
that indemnification against Expenses may nevertheless be made by the
Corporation.

6.    Indemnification for Expenses of Party Who is Wholly or Partly Successful.

      Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a party to and is successful,
on the merits or otherwise, in any Pro-

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ceeding, he or she shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Corporation shall indemnify Indemnitee against
all Expenses actually and reasonably incurred by him or on his behalf in
connection with each successfully resolved claim, issue or matter. For the
purposes of this Section and without limiting the foregoing, the termination of
any claim, issue or matter in any such Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.

7.    Indemnification for Expenses as a Witness.

      Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he or she shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.

8.    Advancement of Expenses.

      The Corporation shall advance all Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within twenty days after the
receipt by the Corporation of a statement or statements from Indemnitee
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses.

9.    Procedure for Determination of Entitlement to Indemnification.

      9.1   To obtain indemnification under this Agreement in connection with
any Proceeding, and for the duration thereof, Indemnitee shall submit to the
Corporation a written request, including therein or therewith such documentation
and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Corporation shall, promptly upon receipt
of any such request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.

      9.2   Upon written request by Indemnitee for indemnification pursuant to
Section 9.1 hereof, a determination, if required by applicable law, with respect
to Indemnitee's entitlement thereto shall be made in such case: (i) if a Change
in Control shall have occurred, by Independent Counsel (unless Indemnitee shall
request that such determination be made by the Board or the stockholders, in
which case in the manner provided for in clauses (ii) or (iii) of this Section
9.2) in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of Disinterested Directors, or
(B) if a quorum of the Board consisting of Disinterested Directors is not
obtainable, by a majority of a committee of the Board consisting of two or more
Disinterested Directors, or (C) by Independent Counsel in a written opinion to
the Board, a copy of which shall be

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delivered to Indemnitee, or (D) by the stockholders of the Corporation, by a
majority vote of a quorum consisting of stockholders who are not parties to the
proceeding, or if no such quorum is obtainable, by a majority vote of
stockholders who are not parties to such proceeding; or (iii) as provided in
Section 10.2 of this Agreement. If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Corporation (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

      9.3   If a Change of Control shall have occurred, Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board), and Indemnitee shall give written notice to the
Corporation advising it of the identity of Independent Counsel so selected. In
either event, Indemnitee or the Corporation, as the case may be, may, within
seven days after such written notice of selection shall have been given, deliver
to the Corporation or to Indemnitee, as the case may be, a written objection to
such selection. Such objection may be asserted only on the ground that
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 1 of this Agreement, and the objection shall set
forth with particularity the factual basis of such assertion. If such written
objection is made, Independent Counsel so selected may not serve as Independent
Counsel unless and until a court has determined that such objection is without
merit. If, within 20 days after submission by Indemnitee of a written request
for indemnification pursuant to Section 9.1 hereof, no Independent Counsel shall
have been selected and not objected to, either the Corporation or Indemnitee may
petition a court of competent jurisdiction, for resolution of any objection
which shall have been made by the Corporation or Indemnitee to the other's
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by such court or by such other person as such court
shall designate, and the person with respect to whom an objection is so resolved
or the person so appointed shall act as Independent Counsel under Section 9.2
hereof. The Corporation shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with its
actions pursuant to this Agreement, and the Corporation shall pay all reasonable
fees and expenses incident to the procedures of this Section 9.3, regardless of
the manner in which such Independent Counsel was selected or appointed. Upon the
due commencement date of any judicial proceeding pursuant to Section 11.1(iii)
of this Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

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10.   Presumptions and Effects of Certain Proceedings.

      10.1  In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 9.1 of this Agreement, and the Corporation shall have
the burden of proof to overcome that presumption in connection with the making
by any person, persons or entity of any determination contrary to that
presumption.

      10.2  If the person, persons or entity empowered or selected under Section
9 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within 60 days after receipt
by the Corporation of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) prohibition of such indemnification under
applicable law provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith require(s) such additional time for the obtaining or evaluating of
documentation and/or information relating thereto and provided, further, that
the foregoing provisions of this Section 10.2 shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 9.2 of this Agreement and if (A) within 15 days
after receipt by the Corporation of the request for such determination the Board
has resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making such determination, such meeting is held for such purpose within 60 days
after having been so called and such determination is made thereat, or (ii) if
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 9.2 of this Agreement.

      10.3  The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that his or
her conduct was unlawful.

11.   Remedies of Indemnitee.

      11.1  In the event that (i) a determination is made pursuant to Section 9
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8
of this Agreement, (iii) the determination of indemnification is to be made by
Independent Counsel pursuant to Section 9.2 of this Agreement and

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such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Corporation of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
7 of this Agreement within ten days after receipt by the Corporation of a
written request therefor, or (v) payment of indemnification is not made within
ten days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 9 or 10 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Florida, or in any other
court of competent jurisdiction, of his or her entitlement to such
indemnification or advancement of Expenses. The Corporation shall not oppose
Indemnitee's right to seek any such adjudication.

      11.2  In the event that a determination shall have been made pursuant to
Section 9 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding commenced pursuant to this Section shall be conducted in
all respects as a de novo trial on the merits and Indemnitee shall not be
prejudiced by reason of that adverse determination. The presumptions in Section
10.1 hereof shall apply to any such judicial proceeding to the extent legally
permissible.

      11.3  If a determination shall have been made or deemed to have been made
pursuant to Section 9 or 10 of this Agreement that Indemnitee is entitled to
indemnification, the Corporation shall be bound by such determination in any
judicial proceeding commenced pursuant to this Section, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) prohibition of such
indemnification under applicable law.

      11.4  The Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Corporation is bound by all the provisions
of this Agreement.

      11.5  In the event that Indemnitee, pursuant to this Section, seeks a
judicial adjudication of his or her rights under, or to recover damages for
breach of, this Agreement, Indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any and all
expenses (of the kinds described in the definition of Expenses) actually and
reasonably incurred by him in such judicial adjudication, but only if he or she
prevails therein. If it shall be determined in such judicial adjudication that
Indemnitee is entitled to receive all of the indemnification or advancement of
expenses sought, the expenses incurred by Indemnitee in connection with such
judicial adjudication shall be appropriately prorated.

12.   Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

      12.1  The rights of indemnification and to receive advancement of Expenses
as provided by this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under applicable law, the
certificate of incorporation or by-laws of the Corporation, any agreement, a
vote of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or any provision hereof shall be
effective as to any Indemnitee

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with respect to any action taken or omitted by such Indemnitee in his Corporate
Status prior to such amendment, alteration or repeal.

      12.2  To the extent that the Corporation maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Corporation or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Corporation, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee, agent or fiduciary under such policy or policies.

      12.3  In the event of any payment under this Agreement, the Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Corporation to bring suit to enforce such rights.

      12.4  The Corporation shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

13.   Duration of Agreement.

      This Agreement shall continue until and terminate upon the later of: (a)
ten years after the date that Indemnitee shall have ceased to have any Corporate
Status with the Corporation, (b) final termination of all pending Proceedings in
respect of which Indemnitee is granted rights of indemnification or advancement
of Expenses hereunder and or any proceeding commenced by Indemnitee pursuant to
Section 11 of this Agreement; and (c) expiration of the statute of limitations
for any claims that could be asserted for which Indemnitee would be indemnified
hereunder. This Agreement shall be binding upon the Corporation and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.

14.   Severability.

      If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.

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15.   Exception to Right of Indemnification or Advancement of Expenses.

      Except as provided in Section 11.5 or with the consent of the Board of
Directors, Indemnitee shall not be entitled to indemnification or advancement of
Expenses under this Agreement with respect to any Proceeding, or any claim
therein, brought or made by him against the Corporation.

16.   Identical Counterparts.

      This Agreement may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original but all of which together
shall constitute one and the same Agreement.

17.   Headings.

      The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.

18.   Modification and Waiver.

      No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.

19.   Notice by Indemnitee.

      Indemnitee agrees promptly to notify the Corporation in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.

20.   Notices.

      All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom such notice or other communication shall
have been directed, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:

      If to Indemnitee, to:

            Mark D. Klein
            3 Olmstead Road
            Scarsdale, New York  10583

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      If to the Corporation, to:

            Ladenburg Thalmann Financial Services Inc.
            590 Madison Avenue, 34th Floor
            New York, New York 10022
            Attention: Corporate Secretary

or to such other address or such other person as Indemnitee or the Corporation
shall designate in writing in accordance with this Section, except that notices
regarding changes in notices shall be effective only upon receipt.

21.   Governing Law.

      The parties agree that this Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida.

22.   Miscellaneous.

      Use of the masculine pronoun shall be deemed to include usage of the
feminine pronoun where appropriate.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

                              LADENBURG THALMANN FINANCIAL SERVICES INC.

                              By: /s/ Salvatore Giardina
                                  ----------------------
                                      Salvatore Giardina, Vice President and CFO

                              INDEMNITEE

                              /s/ Mark D. Klein
                              -----------------
                              MARK D. KLEIN

                                       10<PAGE>

                                                                    EXHIBIT 10.5

                                                                  EXECUTION COPY

            SUBSCRIPTION AGREEMENT AND INVESTOR INFORMATION STATEMENT

      Ladenburg Thalmann Financial Services Inc. (the "Company") and Mark D.
Klein (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 $999,999.90, 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 on which the Company's previously announced debt conversion and private
placement closes which is currently scheduled to occur on March 11, 2005.

      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

<PAGE>

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.

            (a)   (i)   The Company shall file a registration statement (the
"Registration Statement") on Form S-8, S-3 or other suitable form to register
the Shares (collectively the "Registrable Securities") for resale pursuant to
the Securities Act no later than April 30, 2005. The 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 Investor
copies of reasonably complete drafts of all such documents proposed to be filed
(including exhibits), and the Investor shall have the opportunity to object to
any information pertaining solely to him that is contained therein and the
Company will make the corrections reasonably requested by the Investor 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 Investor: (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 the Registration Statement 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 Registration
Statement or of the issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement; (D) furnish Investor 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 Investor may reasonably
request to facilitate the disposition of his Registrable Securities; (E) notify
Investor 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 Investor promptly prepare and furnish Investor 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 Investor and any attorney, accountant or other agent
retained by the Investor (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company as
shall be

                                       2
<PAGE>

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 Investor 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 Investor
of an opinion of counsel to the Company to the effect set forth in Section 4(h).

            (c)   (i)   The Company will indemnify the Investor 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 (including any related registration
statement, notification or the like) incident to any registration, qualification
or compliance pursuant to this Section 4 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 Investor, 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 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 the 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 Investor or any underwriter or controlling person, and
shall survive the transfer of such securities by Investor.

                  (ii)  Investor 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
Investor specifically stating that it is intended for inclusion in such
document; provided, however, that the obligations of Investor hereunder shall be
limited to an amount equal to the proceeds received by 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 Investor.

                                       3
<PAGE>

                  (iii) Each party desiring indemnification or contribution
under this Section 4(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 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 4. 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 4(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 the
Investor 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 Investor, 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.

                                       4
<PAGE>

            (e)   The Investor shall furnish to the Company such information
regarding himself and the distribution proposed by him 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
4.

            (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 the 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 Investor that the
granting of the registration rights to the Investor hereby does not and will not
violate any agreement between the Company and any other security holders with
respect to registration rights granted by the Company.

            (h)   The rights granted under this Section 4 shall terminate upon
delivery to the Investor of an opinion of counsel to the Company reasonably
satisfactory to the Investor 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 4 shall not be
transferable; provided, however, that if Investor transfers any of the Shares to
members of his immediate family or trusts and limited partnerships established
for their benefit (collectively, "Immediate Family Members") for estate planning
purposes, such transferees shall be entitled to the benefit of this Section as
fully as if they were the Investor.

      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

                                       5
<PAGE>

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.

      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.

                                       6
<PAGE>

SIGNATURE PAGE FOR INDIVIDUAL INVESTORS - COMPLETE ALL INFORMATION

Name: Mark D. Klein

Residence Address: 3 Olmstead Road, Scarsdale, New York  10583

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): $999,999.90

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):

            [X]   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.

            [X]   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/ Salvatore Giardina
                                     ----------------------

Signature: /s/ Mark D. Klein     Name:  Sal Giardina
           -----------------

Print Name:  Mark D. Klein       Title:  Vice President and Chief Financial
                                         Officer

Date:  As of March 4, 2005       Date:  As of March 4, 2005

                                       7

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