Document:

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                                                                    Exhibit 10.2

                       SENIOR CONVERTIBLE PROMISSORY NOTE

$10,000,000.00 [Aggregate to Sellers]                          __________, 2001

         FOR VALUE RECEIVED, GBI CAPITAL MANAGEMENT CORP., a Florida corporation
("Maker"), having an address at 1055 Stewart Avenue, Bethpage, New York 11714,
hereby promises to pay to _____________________________, a ______________
corporation, its successors and/or permitted assigns (any of which is
hereinafter referred to as "Holder"), at
_______________________________________, in lawful money of the United States,
the sum of ______________ Dollars and No Cents ($_________.00) on December 31,
2005. Interest on the unpaid principal amount of this Note shall be paid at the
rate of seven and one half percent (7-1/2%) per annum on each March 31, June 30,
September 30 and December 31, commencing June 30, 2001 or the lesser of fifteen
percent(15%) per annum or the maximum interest rate permitted by applicable law
following an Event of Default. At the Holder's request payments shall be made by
wire transfer to an account designated by the Holder. If a payment date is not a
business day, payment may be made on the next business day and interest shall
accrue for the intervening period. This Note may not be prepaid.

         The Holder may, with or without notice to the Maker or any guarantor or
other party liable herefor, extend or renew this Note, or extend the time for
making payment of any amount provided for herein, or accept any amount in
advance, all without affecting the liability of the Maker or any other party or
guarantor liable herefor.

         This Note is issued pursuant to the terms of that certain Stock
Purchase Agreement ("Stock Purchase Agreement") dated February 8, 2001 between
the Maker, New Valley Corporation, Ladenburg, Thalmann Group Inc., Ladenburg,
Thalmann & Co. Inc. and Berliner Effektengesellschaft AG. and the Holder and the
Maker are entitled to the benefits provided for therein. Terms used but not
defined herein shall have their respective meanings assigned in the Stock
Purchase Agreement. This Note is entitled to the benefits of the security for
the payment hereof provided pursuant to that certain Pledge and Security
Agreement dated February 8, 2001 between the Maker, the Secured Parties named
therein and U.S. Bank Trust National Association, as Collateral Agent ("Pledge
Agreement").

         1.       CONVERSION OF NOTE

                  The principal of and accrued interest on this Note shall be
convertible, in whole or in part, at any time, at the election of the Holder,
into that number of fully paid and non-assessable shares of the Maker's common
stock, par value $0.0001 per share ("Common Stock"), determined by dividing the
amount of principal and interest to be so converted by the "Conversion Price"
(as hereinafter defined) in effect at the time notice of conversion is given to
the Maker as set forth below. As used herein, "Conversion Price" means,
initially, $2.60. If, at any time after the date hereof, there occurs, with
respect to the Common Stock, a reclassification, stock split, stock dividend,
spin-off or distribution, share combination or other similar change affecting
the Common Stock as a whole and all holders thereof or if the Maker shall

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consolidate with, or merge with or into, any other entity, sell or transfer all
or substantially all its assets or engage in any reorganization,
reclassification or recapitalization which is effected in such a manner that the
holders of Common Stock are entitled to receive stock, securities, cash or other
assets with respect to or in exchange for Common Stock (each, an "Adjustment
Event"), the Conversion Price and the kind and amount of stock, securities, cash
or other assets issuable upon conversion of this Note in effect at the time of
the record date for such dividend or distribution or of the effective date of
such share combination, split, consolidation, merger, sale, transfer,
reorganization, reclassification or recapitalization shall be appropriately
adjusted so that the conversion of the Note after such time shall entitle the
Holder to receive the aggregate number of shares of Common Stock or securities,
cash and other assets which, if this Note hade been converted immediately prior
to such time, the Holder would have owned upon such conversion and been entitled
to receive by virtue of such Adjustment Event, provided that if the kind or
amount of securities, cash and other property is not the same for each share of
Common Stock held immediately prior to such reclassification, change,
consolidation, merger, sale, transfer, or conveyance, any Holder who fails to
exercise any right of election shall receive per share the kind and amount of
securities, cash or other property received per share by a plurality of such
shares.

                  Promptly after an Adjustment Event, the Maker shall mail to
the Holder a notice of the adjustment together with a certificate from the
Maker's independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing it.

                  If (i) the Maker takes any action that would cause an
Adjustment Event, (ii) there is a liquidation or dissolution of the Maker or
(iii) the Maker declares a cash dividend, the Maker shall mail to the Holder a
notice stating the proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution, the Maker
shall mail the notice at least 15 days before such date.

                  If, during any period of twenty (20) consecutive trading days,
the closing sale price of the Common Stock is at least $8.00 per share (as
adjusted for all Adjustment Events occurring after the date of this Note), the
principal of and all accrued interest on this Note shall be automatically
converted, without further action on the part of the Holder, into shares of
Common Stock at the Conversion Price in effect on the last Trading Day of such
period.

                  In connection with any conversion of this Note, the Holder
shall surrender this Note and deliver it, together with written instructions to
convert in the form attached hereto, to the Maker at its principal executive
office. The date of such delivery shall be deemed the date of conversion. The
Maker shall, as soon as practicable, issue and deliver to a location in the
United States designated by the Holder certificates representing the securities
(or other assets) to which the Holder is entitled as a result of such conversion
together with a note for the unconverted balance.

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                  The Maker shall not be required to issue fractions of shares
of Common Stock upon conversion and in lieu thereof any fractional share shall
be rounded up or down to the nearest whole share. The Maker shall reserve and
shall at all times have reserved out of its authorized but unissued shares of
Common Stock sufficient shares of Common Stock to permit the conversion of the
unpaid principal amount and accrued interest as provided for herein. The Maker
shall list such shares on any national securities exchange on which the Common
Stock is then listed. If the Holder converts this Note, the Maker shall pay any
documentary, stamp or similar issue or transfer tax due on such conversion
except that the Holder shall pay any such tax due because the shares are issued
in a name other than the Holder's.

                  The certificates representing shares of Common Stock issued
upon conversion of this Note shall bear a legend to the effect that such shares
are not registered under the 1933 Act and may not be sold, assigned or otherwise
transferred or hypothecated except in accordance with the registration
provisions of the 1933 Act or an exemption therefrom and in accordance with the
provisions of that certain Investor Rights Agreement dated as of February 8,
2001 among New Valley Corporation, Ladenburg, Thalmann Group Inc., Berliner
Effektengesellschaft AG, the Maker, Frost-Nevada, Limited Partnership and the
Principals party thereto ("Investor Rights Agreement"). This legend shall be
removed on receipt of an opinion of counsel reasonably satisfactory to the Maker
that such legend is no longer required.

         2.       CHANGE OF CONTROL

         (i) Promptly after the occurrence of a Change of Control (as
hereinafter defined) (the date of such occurrence being the "Change of Control
Date"), the Maker shall commence (or cause to be commenced) an offer to purchase
all outstanding Notes pursuant to the terms described in paragraph (iii) of this
"Change of Control" section (the "Change of Control Offer") at a purchase price
equal to the unpaid principal amount of this Note and accrued interest thereon
(the "Change of Control Amount") on the Change of Control Payment Date (as
hereinafter defined), and shall purchase (or cause the purchase of) any Notes
tendered in the Change of Control Offer pursuant to the terms hereof. As used in
this Note, the term "Notes" means all Convertible Promissory Notes of the Maker
of like tenor to this Note (except as to principal amount, interest rate and
Conversion Price). The Change of Control Amount shall be payable in cash.

         (ii) Within 10 days following a Change in Control Date, the Maker shall
send, by first-class mail, postage prepaid, a notice to the Holder. Such notice
shall contain all instructions and materials necessary to enable the Holder to
tender this Note pursuant to the Change of Control Offer and shall state:

                  (a) that a Change of Control has occurred, that a Change of
Control Offer is being made pursuant to this "Change of Control" section and
that all Notes validly tendered and not withdrawn will be accepted for payment;

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                  (b) the Change of Control Amount and the purchase date (which
must be no earlier than 10 days nor later than 20 days from the date such notice
is mailed, other than as may be required by law) (the "Change of Control Payment
Date");

                  (c) that any Notes not tendered will continue to accrue
interest;

                  (d) that, unless the Maker defaults in making payment
therefor, any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;

                  (e) that holders electing to have any Notes purchased pursuant
to a Change of Control Offer will be required to surrender such Notes, properly
endorsed for transfer, together with such other customary documents as the Maker
may reasonably request to the Maker at the address specified in the notice prior
to the close of business on the business day prior to the Change of Control
Payment Date;

                  (f) that holders of Notes will be entitled to withdraw their
election if the Maker receives, not later than two business days prior to the
Change of Control Payment Date, a telegram, facsimile transmission or letter
setting forth the name of the holder, the principal amount of the Notes the
holder delivered for purchase and a statement that such holder is withdrawing
its election to have such Notes purchased;

                  (g) that holders who tender only a portion of their Notes
will, upon purchase of the Notes tendered, be issued a Note representing the
Notes not purchased; and

                  (h) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of Control).

         (iii) The Maker will comply with any tender offer rules under the
Exchange Act which then may be applicable in connection with any offer made by
the Maker to repurchase the Notes as a result of a Change of Control. If the
provisions of any securities laws or regulations conflict with provisions of
this Note, in reliance on an opinion of counsel, the Maker may comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligation under this Note by virtue thereof.

         (iv) On the Change of Control Payment Date, the Maker shall (A) accept
for payment the Notes validly tendered pursuant to the Change of Control Offer,
(B) pay to the holders of Notes so accepted the Change of Control Amount
therefor in cash as provided above and (C) cancel each surrendered Note. Unless
the Maker defaults in the payment for the Notes tendered pursuant to the Change
of Control Offer, interest will cease to accrue with respect to the Notes
tendered and all rights of holders of such tendered Notes will terminate, except
for the right to receive payment therefor on the Change of Control Payment Date.

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         (v) To accept the Change of Control Offer, the holder of a Note shall
deliver, prior to the close of business on the business day prior to the Change
of Control Payment Date, written notice to the Maker (or an agent designated by
the Maker for such purpose) of such holder's acceptance, together with the Notes
with respect to which the Change of Control Offer is being accepted, duly
endorsed for transfer.

         (vi) For the avoidance of doubt, nothing in this "Change of Control"
section shall restrict the right of the holders of Notes, in connection with a
Change of Control, to convert and to receive the kind and amount of
consideration payable to holders of Common Stock in respect of the Common Stock
into which the Notes may be converted.

         (vii) As used in this "Change of Control" section,

         "Change of Control" means: (a) the sale, lease, transfer, conveyance,
         merger, consolidation or other disposition (other than a merger or
         consolidation that does not result in any change in the Maker's stock
         and in which a majority of the successor's voting securities is held by
         holders of the Maker's Common Stock immediately before such transaction
         ), in one or a series of related transactions, of all or substantially
         all the assets of the Maker and its subsidiaries, taken as a whole, to
         any "person" (as such term is used in Section 13(d)(3) of the Exchange
         Act), (b) the consummation of any transaction (including any merger or
         consolidation) the result of which is that any "person" (as defined
         above), other than the Principals party to the Investor Rights
         Agreement, New Valley Corporation, Ladenburg, Thalmann Group Inc.,
         Berliner Effektengesellschaft AG and Dr. Phillip Frost, individually or
         collectively, becomes the beneficial owner (as determined in accordance
         with Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
         will be deemed to have beneficial ownership of all Voting Securities
         (as hereinafter defined) that such person has the right to acquire,
         whether such right is exercisable immediately or only after the passage
         of time), directly or indirectly, of more than 50% of the Voting
         Securities of the Maker, or (c) the first day on which a majority of
         the members of the Board of Directors of the Maker are not Continuing
         Directors;

         "Continuing Directors" means individuals who constituted the Board of
         Directors of the Maker on the date hereof (the "Incumbent Directors");
         PROVIDED that any individual becoming a director after the date hereof
         shall be considered to be an Incumbent Director if such individual's
         election, appointment or nomination was recommended or approved by at
         least two-thirds of the other Incumbent Directors continuing in office
         following such election, appointment or nomination present, in person
         or by telephone, at any meeting of the Board of Directors of the Maker,
         after the giving of a sufficient notice to each Incumbent Director so
         as to provide a reasonable opportunity for such Incumbent Directors to
         be present at such meeting; and

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         "Voting Securities" means securities of the Maker ordinarily having the
         power to vote for the election of directors of the Maker.

         3.       EVENTS OF DEFAULT

                  Upon the occurrence of any of the following events (herein
called "Events of Default"):

                  (i) The Maker shall fail to make any payment of principal on
this Note on the date specified herein for such payment;

                  (ii) The Maker shall fail to make any payment of interest on
this Note or any other payment due under this Note or the Pledge Agreement
within ten (10) days after it is due;

                  (iii) (a) The Maker or Ladenburg shall commence, or consent to
the entry of an order for relief in, any proceeding or other action relating to
it in bankruptcy or seek reorganization, arrangement, readjustment of its debts,
receivership, dissolution, liquidation, winding-up, composition or any other
relief under any bankruptcy law, or under any other insolvency, reorganization,
liquidation, dissolution, arrangement, composition, readjustment of debt or any
other similar act or law, of any jurisdiction, domestic or foreign, now or
hereafter existing; or (b) the Maker or Ladenburg shall admit the material
allegations of any petition or pleading in connection with any such proceeding;
or (c) the Maker or Ladenburg shall apply for, or consent or acquiesce to, the
appointment of a receiver, conservator, trustee or similar officer for it or for
all or a substantial part of its property; or (d) the Maker or Ladenburg shall
make a general assignment for the benefit of creditors; or (e) the Maker or
Ladenburg shall become unable, admit in writing its inability or fail generally
to pay its debts as they become due;

                  (iv) (a) The commencement of any proceedings or the taking of
any other action against the Maker or Ladenburg in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts, liquidation,
dissolution, arrangement, composition, or any other relief under any bankruptcy
law or any other similar act or law of any jurisdiction, domestic or foreign,
now or hereafter existing and the continuance of any of such events for sixty
(60) days undismissed, unbonded or undischarged; or (b) the appointment of a
receiver, conservator, trustee or similar officer for the Maker or Ladenburg for
any of its property and the continuance of any of such events for sixty (60)
days undismissed, unbonded or undischarged; or (c) the issuance of a warrant of
attachment, execution or similar process against any of the property of the
Maker or Ladenburg and the continuance of such event for sixty (60) days
undismissed, unbonded and undischarged;

                  (v) The Maker or Ladenburg shall default with respect to any
indebtedness of $250,000 or more for borrowed money if either (a) such default
is a payment default or the effect of such default is to accelerate the maturity
of such indebtedness (in each instance giving effect to any applicable grace
periods) or (b) the holder of such indebtedness declares the Maker or Ladenburg
to be in default (giving effect to any applicable grace periods);

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                  (vi) The failure by the Maker to observe any of the covenants
contained in this Note (other than the covenants to pay principal and interest
and the covenants in Sections 2 or 5) or in the Pledge Agreement (other than
Section 4.14) which failure is not cured within 30 days after notice thereof is
given to the Maker by any of the Secured Parties thereunder (or, if such failure
is not capable of being cured within such 30-day period, the failure of the
Maker to continue to proceed in a diligent matter to effect such cure);

                  (vii) The failure by the Maker to observe any of the covenants
contained in Sections 2 or 5 of this Note or in Section 4.14 of the Pledge
Agreement or the lien of Pledge Agreement will at any time not constitute a
first perfected lien on the collateral intended to be covered thereby; or

                  (viii) Any judgment or judgments against the Maker or
Ladenburg or any attachment, levy or execution against any of its properties for
any amount in excess of $250,000 in the aggregate shall remain unpaid, or shall
not be released, discharged, dismissed, stayed or fully bonded for a period of
sixty (60) days or more after its entry, issue or levy, as the case may be;

then, and in any such event, the Holder, at its option and with written notice
to the Maker, may declare the entire principal amount of this Note then
outstanding together with accrued unpaid interest thereon immediately due and
payable, and the same shall forthwith become immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
expressly waived. The Events of Default listed herein are solely for the purpose
of protecting the interests of the Holder of this Note. If the Note is not paid
in full upon acceleration, as required above, interest shall accrue on the
outstanding principal of and interest on this Note from the date of the Event of
Default up to and including the date of payment at a rate equal to the lesser of
fifteen percent (15%) per annum or the maximum interest rate permitted by
applicable law.

                  Upon the occurrence a default under this Note (whether or not
it has become an Event of Default), the Maker agrees to pay the costs, expenses,
attorneys' and other fees paid or incurred by the Holder, or adjudged by a
court, including: (i) costs of suit and such amount as the court adjudges for
the fees of an attorney in an action to enforce this Note in whole or in part;
and (ii) reasonable costs of collection, costs and expenses of, and attorneys'
fees incurred or paid towards, the collection, enforcement, or sale of this Note
in whole or in part, or of any security for it.

         4.       PAYMENT OF CLAIMS

                  Pursuant to Section 7.6 of the Stock Purchase Agreement, the
Maker may offset against amounts due under this Note any amounts owed by the
Holder to the Maker except that, prior to December 31, 2005, the Maker shall not
offset against amounts due under this Note any Claims against the Holder prior
to settlement or the entry of a final judgment and the expiration of all
applicable appeal periods and the failure of the Holder to pay such Claim within
ten (10) Business Days after such settlement or expiration. If any payment of

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the indemnity obligations of the Holder pursuant to Section 8.1 of the Stock
Purchase Agreement is required to be made, the Holder may satisfy such payment
by delivery to the Maker of Notes acquired by it pursuant to the Stock Purchase
Agreement in a principal amount, together with accrued interest, equal to the
amount of the Claims for which payment is required in which case the Maker will
issue a new Note to the Holder for the remainder.

         5.       CONSOLIDATION AND MERGERS.

                  The Maker shall not consolidate or merge into, or transfer or
lease all or substantially all of its assets to, any person unless (1) the
person is a corporation; (2) the person assumes in a writing reasonably
acceptable to the Holder all the obligations of the Maker under this Note; and
(3) immediately after the transaction no Event of Default exists. The surviving,
transferee or lessee corporation shall be the successor Maker, but the
predecessor Maker in the case of a transfer or lease shall not be released from
the obligation to pay the principal of and interest of this Note.

         6.        PROVISIONS

                  The Maker and each other party liable herefor, whether
principal, endorser, guarantor or otherwise, jointly and severally hereby (i)
waive presentment, demand, protest, notice of dishonor and/or protest, notice of
non-payment and all other notices or demands in connection with the delivery,
acceptance, performance, default, enforcement or guaranty of this Note, and (ii)
waive recourse to suretyship defenses generally, including extensions of time,
releases of security and other indulgences which may be granted from time to
time by the Holder to the Maker or any party liable herefor.

                  Nothing contained in this Note or in any other agreement
between the Maker and the Holder shall require the Maker to pay, or the Holder
to accept, interest in an amount which would subject the Holder to any penalty
or forfeiture under applicable law. In no event shall the total of all charges
payable hereunder, whether of interest or of such other charges which may or
might be characterized as interest, exceed the maximum rate permitted to be
charged under applicable law. Should the Holder receive any payment which is or
would be in excess of that permitted to be charged under such applicable law,
such payment shall have been and shall be deemed to have been made in error and
shall automatically be applied to reduce the principal balance outstanding on
this Note.

                  The Holder shall not, by any act, delay, omission or
otherwise, be deemed to have waived any of its rights and/or remedies hereunder,
and no waiver whatsoever shall be valid unless in writing, signed by the Holder,
and then only to the extent therein set forth. The making of any demands or the
giving of any notices by the Holder or a waiver by the Holder of any right
and/or remedy hereunder on any one occasion shall not be construed as a bar to
or waiver of any right and/or remedy which the Holder would otherwise have on
any future occasion. All rights and remedies of the Holder shall be cumulative
and may be exercised singly or concurrently.

                  The terms and provisions hereof shall survive the payment,
cancellation or surrender of this Note. Any instrument taken by the Holder in
payment of, or for application against, any obligation of the Maker or any other

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party liable herefor shall not operate as a discharge of such obligation until
the instrument is finally paid, notwithstanding the fact that a bank may be the
maker, drawer or acceptor of such instrument.

                  This Note may be assigned by the Holder only as permitted by
the provisions of the Investor Rights Agreement. In the event of a permitted
assignment of less than the entire unpaid principal amount of this Note, at the
request of the Holder the Maker shall issue new Notes to the transferee and the
Holder in the amounts assigned and not assigned, respectively. If this Note is
lost, destroyed or wrongfully taken, the Maker shall issue a replacement Note.
The Maker may require a reasonable indemnity bond.

                  The authority to assert, and to determine to defend against,
claims with respect to this Note on behalf of the Maker shall be vested solely
in the Enforcement Committee established under the Stock Purchase Agreement.
This Note may not be amended and no rights of the Maker hereunder may be waived
except with the consent of the Enforcement Committee.

                  This Note shall be governed by, and construed in accordance
with, the law of the State of New York without giving effect to principles of
conflicts of law. The provisions of Section 10.2 (Notices) and 10.12 of the
Stock Purchase Agreement (Consent to Jurisdiction and Service of Process) shall
apply to this Note as if fully set forth herein. THE MAKER HEREBY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
THIS NOTE OR ANY TRANSACTION RELATING THERETO.

                                   GBI CAPITAL MANAGEMENT CORP.

                                   By:
                                       -----------------------------------
                                        Richard Rosenstock, President

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                                                                    EXHIBIT 10.3

                         PLEDGE AND SECURITY AGREEMENT

PLEDGE AND SECURITY AGREEMENT dated as of _____________, 2001 between:

                  (1)      GBI Capital Management Corp., a corporation duly
                           organized and validly existing under the laws of the
                           State of Florida (the "SECURING PARTY");

                  (2)      Ladenburg, Thalmann Group Inc. ("LTGI"), a
                           corporation duly organized and validly existing under
                           the laws of the State of Delaware;

                  (3)      Berliner Effektengesellschaft AG ("BERLINER"), a
                           corporation duly organized and validly existing under
                           the laws of Germany;

                  (4)      Frost-Nevada, Limited Partnership, a Nevada limited
                           partnership (the "LENDER"); and

                  (5)      U.S. Bank Trust National Association, as collateral
                           agent for the Secured Parties (as defined below) (in
                           such capacity, together with its successors in such
                           capacity, the "COLLATERAL AGENT").

                  A. The Securing Party, New Valley Corporation, LTGI and
Berliner are parties to a Stock Purchase Agreement dated February 8, 2001 (the
"STOCK PURCHASE AGREEMENT") pursuant to which the Securing Party has agreed to
purchase from LTGI and Berliner all of the outstanding capital stock of
Ladenburg, Thalmann & Co. Inc. ("Ladenburg") and, in partial payment of the
Purchase Price, will issue to LTGI and Berliner convertible promissory notes in
an aggregate principal amount of $10,000,000 (the "PURCHASE NOTES").

                  B. The Securing Party and the Lender are parties to a Loan
Agreement dated as of February 8, 2001 (the "LOAN AGREEMENT") pursuant to which
the Lender has agreed to lend to the Securing Party the sum of $10,000,000 that
will be evidenced by a convertible promissory note in that principal amount (the
"LENDER NOTE" and, together with the Purchase Notes, the "NOTES").

                  To induce LTGI, Berliner and the Lender (collectively, with
all permitted assigns of any of the Notes, the "SECURED PARTIES") to enter into
the Stock Purchase Agreement and the Loan Agreement, as the case may be, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Securing Party, the Secured Parties and the Collateral
Agent have agreed as follows:

                  Section 1. DEFINITIONS. Terms used herein and not otherwise
defined herein shall have the meanings set forth in the Stock Purchase
Agreement. The following terms have the meanings ascribed to them below or in
the Sections of this Agreement indicated below:

                  "COLLATERAL" shall have the meaning ascribed thereto in
Section 3 hereof.

                  "DEFAULT" shall mean any event or condition that constitutes
         an Event of Default or will on notice, lapse of time or both become an
         Event of Default.

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                  "EVENT OF DEFAULT" shall have the meaning ascribed thereto in
the Notes.

                  "ISSUER" shall mean Ladenburg.

                  "PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 3(a) hereof.

                  "REQUIRED SECURED PARTIES" shall mean Secured Parties holding
a majority in principal amount of the Notes.

                  "SECURED OBLIGATIONS" shall mean the due and punctual payment
         by the Securing Party of the principal of and interest on the Notes,
         when and as due, whether at maturity, by acceleration, upon one or more
         dates set for prepayment or otherwise, and all other amounts from time
         to time owing by the Securing Party to the Secured Parties thereunder
         and hereunder.

                  "STOCK COLLATERAL" shall mean, collectively, the Pledged
         Stock, together with all other certificates, shares, securities,
         instruments, moneys, or other property as may from time to time be
         pledged hereunder pursuant to Section 3(b) hereof and the proceeds of
         and to any such property and, to the extent related to any such
         property or such proceeds, all books, correspondence, credit files,
         records, invoices and other papers.

                  "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
         Code as in effect from time to time in the State of New York.

                  Section 2. REPRESENTATIONS AND WARRANTIES. The Securing Party
represents and warrants to the Secured Parties and the Collateral Agent that:

                  (a) It is the sole beneficial owner of the Collateral in which
         it purports to grant a security interest pursuant to Section 3 hereof,
         no lien exists or will exist upon such Collateral at any time (and no
         right or option to acquire the same exists in favor of any other person
         or entity) and such pledge and security interest in favor of the
         Collateral Agent for the benefit of the Secured Parties created or
         provided for herein constitutes a first priority perfected pledge and
         security interest in and to all of such Collateral.

                  (b) The Pledged Stock represented by the certificates
         identified in Annex 1 hereto is, and all other Pledged Stock in which
         the Securing Party shall hereafter grant a security interest pursuant
         to Section 3 hereof will be, duly authorized, validly existing, fully
         paid and non-assessable and none of such Pledged Stock is or will be
         subject to any contractual restriction, or any restriction under the
         charter or by-laws of the Issuer upon the transfer of such Pledged
         Stock.

                  (c) The Pledged Stock identified in Annex 1 hereto, and the
         certificates, if any, representing such capital stock, constitute and
         will continue to constitute all of the issued and outstanding shares of
         capital stock of any class of the Issuer (all of which are registered

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         in the name of the Securing Party) and Annex 1 correctly identifies, as
         at the date hereof, the class and par value of the shares comprising
         such Pledged Stock and the number of shares represented by each such
         certificate.

                  Section 3. COLLATERAL. The Securing Party hereby assigns,
pledges, grants, transfers, and conveys to the Collateral Agent (for the benefit
of each of the Secured Parties as set forth herein) as collateral security for
the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the Secured Obligations, a security interest in all of the
Securing Party's right, title and interest in the following property, whether
now owned by the Securing Party or hereafter acquired and whether now existing
or hereafter coming into existence (collectively, the "COLLATERAL"):

                  (a) the shares of capital stock of the Issuer identified in
         Annex 1 hereto and the certificates, if any, representing such capital
         stock and all additional shares of capital stock of whatever class of
         the Issuer, now or hereafter owned by the Securing Party, in each case
         together with the certificates, if any, evidencing the same
         (collectively, the "PLEDGED STOCK");

                  (b) all certificates, shares, securities, instruments, moneys
         or other property representing a dividend on any of the Pledged Stock,
         or representing a distribution or return of capital upon or in respect
         of the Pledged Stock, or resulting from a split-up, revision,
         reclassification or other like change of the Pledged Stock or otherwise
         received in exchange therefor or on redemption or conversion hereof,
         and any subscription warrants, rights or options issued to the holders
         of, or otherwise in respect of, the Pledged Stock other than any of the
         foregoing the Securing Party is entitled to retain pursuant to Section
         4.03(b) and the other provisions of this Agreement;

                  (c) in the event of any consolidation or merger in which the
         Issuer is not the surviving entity, all ownership interests of any
         class or character of the successor entity formed by or resulting from
         such consolidation or merger; and

                  (d) all proceeds, products, offspring, accessions, rents,
         profits, income, benefits, substitutions and replacements of and to any
         of the property described in the preceding clauses of this Section 3
         (including, without limitation, all causes of action, claims and
         warranties now or hereafter held by the Securing Party in respect of
         any of the items listed above).

                  Section 4. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Securing Party hereby agrees with each Secured Party and the Collateral Agent as
follows:

                                       3
<PAGE>   4

                  4.01 DELIVERY AND OTHER PERFECTION. The Securing Party shall:

                  (a) if any of the shares, securities, moneys or properties
         required to be pledged by the Securing Party under Section 3 hereof are
         received by the Securing Party (other than any of such items the
         Securing Party is entitled to retain pursuant to Section 4.03(b)
         hereof), forthwith as the Collateral Agent may request either (i)
         transfer and deliver to the Collateral Agent such shares, securities,
         moneys and properties so received by the Securing Party (together with
         the certificates for any such shares and securities duly endorsed in
         blank or accompanied by undated stock powers duly executed in blank),
         all of which thereafter shall be held by the Collateral Agent, pursuant
         to the terms of this Agreement, as part of the Collateral or (ii) take
         such other action as the Collateral Agent shall deem necessary or
         appropriate to duly record the lien created hereunder in such shares,
         securities, moneys or property in Section 3;

                  (b) give, execute, deliver, file and/or record any financing
         statement, notice, instrument, document, agreement or other papers that
         may be necessary or desirable (in the judgment of the Collateral Agent)
         to create, preserve, perfect or validate the security interest granted
         pursuant hereto or to enable the Collateral Agent to exercise and
         enforce its rights hereunder with respect to such pledge and security
         interest including without limitation registering the Pledged Stock in
         the name of the Collateral Agent;

                  (c) keep full and accurate books and records relating to the
         Collateral, and stamp or otherwise mark such books and records in such
         manner as the Collateral Agent may reasonably require in order to
         reflect the security interests granted by this Agreement; and

                  (d) permit representatives of the Collateral Agent, upon
         reasonable notice, at any time during normal business hours to inspect
         and make abstracts from its books and records pertaining to the
         Collateral and forward copies of any notices or communications received
         by the Securing Party with respect to the Collateral, all in such
         manner as the Collateral Agent may reasonably require.

                  4.02 PRESERVATION OF RIGHTS. The Collateral Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.

                  4.03 SPECIAL PROVISIONS RELATING TO THE COLLATERAL.

                  (a) So long as no Event of Default shall have occurred and be
         continuing, the Securing Party shall have the right to exercise all
         voting, consensual and other powers of ownership pertaining to the
         Stock Collateral for all purposes not inconsistent with the terms of
         this Agreement, the Stock Purchase Agreement, the Notes or any other
         instrument or agreement referred to herein or therein; and the
         Collateral Agent shall execute and deliver to the Securing Party or
         cause to be executed and delivered to the Securing Party all such
         proxies, powers of attorney, dividend and other orders, and all such
         instruments, without recourse, as the Securing Party may reasonably
         request for the purpose of enabling the Securing Party to exercise the
         rights and powers that it is entitled to exercise pursuant to this
         Section 4.03(a).

                                       4
<PAGE>   5

                  (b) Unless and until a Default has occurred and is continuing,
         the Securing Party shall be entitled to receive and retain all cash
         dividends on the Stock Collateral.

                  (c) If any Event of Default shall have occurred, then so long
         as such Event of Default shall continue, and whether or not the
         Collateral Agent or any Secured Party exercises any available right to
         declare any Secured Obligation due and payable or seeks or pursues any
         other relief or remedy available to it under applicable law or under
         this Agreement, the Notes or any other agreement relating to such
         Secured Obligation, and all dividends and other distributions on the
         Stock Collateral shall be paid directly to the Collateral Agent as part
         of the Stock Collateral, subject to the terms of this Agreement, and,
         if the Collateral Agent shall so request in writing, the Securing Party
         agrees to execute and deliver to the Collateral Agent appropriate
         additional dividend, distribution and other orders and documents to
         that end, PROVIDED that if such Event of Default is cured, any such
         dividend or distribution theretofore paid to the Collateral Agent
         shall, upon request of the Securing Party (except to the extent
         theretofore applied to the Secured Obligations), be returned by the
         Collateral Agent to the Securing Party.

                  4.04 NOTICE OF EVENT OF DEFAULT; REMEDIES. Upon the occurrence
of an Event of Default becoming known to it, the Securing Party or a Secured
Party shall give notice thereof to the Collateral Agent (with copies to each of
the other parties hereto). During the period during which an Event of Default
shall have occurred and be continuing, the Collateral Agent, as directed by
Secured Parties holding a majority of the outstanding principal amount of the
Notes:

                  (a) may make any reasonable compromise or
         settlement deemed desirable with respect to any of the Collateral and
         may extend the time of payment, arrange for payment in installments, or
         otherwise modify the terms of, any of the Collateral;

                  (b) shall have all of the rights and
         remedies with respect to the Collateral of a secured party under the
         Uniform Commercial Code (whether or not said Code is in effect in the
         jurisdiction where the rights and remedies are asserted) and such
         additional rights and remedies to which a secured party is entitled
         under the laws in effect in any jurisdiction where any rights and
         remedies hereunder may be asserted, including, without limitation, the
         right, to the maximum extent permitted by law, to exercise all voting,
         consensual and other powers of ownership pertaining to the Collateral
         as if the Collateral Agent were the sole and absolute owner thereof
         (and the Securing Party agrees to take all such action as may be
         appropriate to give effect to such right);

                  (c) in its discretion may, in its name or
         in the name of the Securing Party or otherwise, demand, sue for,
         collect or receive any money or property at any time payable or
         receivable on account of or in exchange for any of the Collateral, but
         shall be under no obligation to do so;

                  (d) may, upon ten (10) Business Days'
         prior written notice to the Securing Party of the time and place, with
         respect to the Collateral or any part thereof that shall then be or
         shall thereafter come into the possession, custody or control of the
         Collateral Agent, the Secured Parties or any of their respective

                                       5
<PAGE>   6

         agents, sell, lease, assign or otherwise dispose of all or any part of
         such Collateral, at such place or places as the Collateral Agent deems
         best, and for cash or for credit or for future delivery (without
         thereby assuming any credit risk), at public or private sale, without
         demand of performance or notice of intention to effect any such
         disposition or of the time or place thereof (except such notice as is
         required above or by applicable statute and cannot be waived), and the
         Collateral Agent or any Secured Party or any other person or entity may
         be the purchaser, lessee, assignee or recipient of any or all of the
         Collateral so disposed of at any public sale (or, to the extent
         permitted by law, at any private sale) and thereafter hold the same
         absolutely, free from any claim or right of whatsoever kind, including
         any right or equity of redemption (statutory or otherwise) of the
         Securing Party, any such demand, notice and right or equity being
         hereby expressly waived and released. The Collateral Agent may, without
         notice or publication, adjourn any public or private sale or cause the
         same to be adjourned from time to time by announcement at the time and
         place fixed for the sale, and such sale may be made at any time or
         place to which the sale may be so adjourned.

The proceeds of each collection, sale or other disposition under this Section
4.04 shall be applied in accordance with Section 4.07 hereof.

                  The Securing Party recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and applicable
state securities laws and regulatory requirements, the Collateral Agent may be
compelled, with respect to any sale of all or any part of the Collateral, to
limit purchasers to those who meet the requirements of the NYSE and other
regulatory agencies for the ownership of a broker-dealer and member of the NYSE
and who will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. The Securing Party acknowledges that any such private sales may be at
prices and on terms less favorable to the Collateral Agent than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agree that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Collateral for the period of time necessary to permit the Issuer to
register it for public sale.

                  4.05 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 4.04 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Securing Party shall remain liable for
any deficiency.

                  4.06 PRIVATE SALE. The Collateral Agent and the Secured
Parties shall incur no liability as a result of the sale of the Collateral, or
any part thereof, at any private sale pursuant to Section 4.04 hereof conducted
in a commercially reasonable manner. The Securing Party hereby waives any claims
against the Collateral Agent or any Secured Party arising by reason of the fact
that the price at which the Collateral may have been sold at such a private sale
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations.

                  4.07 APPLICATION OF PROCEEDS. Except as otherwise expressly
provided herein and except as provided below in this Section 4.07, the proceeds
of any collection, sale or other realization of all or any part of the

                                       6
<PAGE>   7

Collateral pursuant hereto, and any other cash at the time held by the
Collateral Agent under this Section 4, shall be applied by the Collateral Agent:

                  FIRST, to the payment of the costs and expenses of such
         collection, sale or other realization, including reasonable
         out-of-pocket costs and expenses of the Collateral Agent and the fees
         and expenses of its agents and counsel, and all expenses incurred and
         advances made by the Collateral Agent in connection therewith;

                  NEXT, to the payment in full of the Secured Obligations, in
         each case ratably in accordance with the respective amounts thereof
         then due and owing to each of the Secured Parties or as the Secured
         Parties holding the same may otherwise agree; and

                  FINALLY, to the payment to the Securing Party, or its
         successors or assigns, or as a court of competent jurisdiction may
         direct, of any surplus then remaining.

                  As used in this Section 4, "PROCEEDS" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Securing Party or the Issuer.

                  4.08 ATTORNEY-IN-FACT. Upon the occurrence and during the
continuance of any Event of Default the Collateral Agent is hereby appointed the
attorney-in-fact of the Securing Party for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instruments
that the Collateral Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing, so
long as the Collateral Agent shall be entitled under this Section 4 to make
collections in respect of the Collateral, the Collateral Agent shall have the
right and power to receive, endorse and collect all checks made payable to the
order of the Securing Party representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same. The Collateral Agent is hereby authorized to prepare and
file in the name of the Securing Party any financing statements describing the
Collateral and the security interests created hereby without the signature of
the Securing Party (to the extent permitted by applicable law).

                  4.09 PERFECTION. The Securing Party shall (a) at the Closing,
deliver to the Collateral Agent all certificates identified in Annex 1 hereto,
accompanied by undated stock powers duly executed in blank, and (b) in the event
of a substitution of Collateral pursuant to Section 4.12, execute and deliver to
the Collateral Agent for filing such financing statements and other documents in
such offices as the Collateral Agent may request to perfect the security
interests granted by Section 3 hereof.

                  4.10 TERMINATION. When all Secured Obligations shall have been
paid in full, the Securing Party shall give notice thereof to the Collateral
Agent, with copies to each Secured Party. This Agreement shall terminate, and
the Collateral Agent shall forthwith cause to be transferred and delivered,
against receipt but without any recourse, warranty or representation whatsoever,
any remaining Collateral and money received in respect thereof, to or on the
order of the Securing Party, five business days after such notice has been
given; provided, however, that if a Secured Party, within such five-day period,

                                       7
<PAGE>   8

gives notice to the Collateral Agent (with copies to the Securing Party and the
other Secured Parties) that it disputes that the Secured Obligations have been
paid in full, the Collateral Agent shall continue to retain the Collateral and
money until it receives a notice signed by the Secured Party giving such notice
and the Securing Party that such dispute has been resolved and providing for the
release of the Collateral and money to the Securing Party. The Collateral Agent
shall also execute and deliver to the Securing Party upon such termination such
other documentation as shall be reasonably requested by the Securing Party to
effect the termination and release of the liens on the Collateral.

                  4.11 FURTHER ASSURANCES. The Securing Party agrees that, from
time to time upon the written request of the Collateral Agent, the Securing
Party will execute and deliver such further documents and do such other acts and
things as the Collateral Agent may reasonably request in order fully to effect
the purposes of this Agreement.

                  4.12 RELEASE AND SUBSTITUTION OF COLLATERAL. So long as no
Event of Default shall have occurred and be continuing, upon the request of the
Securing Party, at the Securing Party's expense, the Collateral Agent shall
execute and deliver to the Securing Party such instruments as the Securing Party
shall reasonably request to release the security interest of the Collateral
Agent in any Collateral pledged by the Securing Party upon the delivery to the
Collateral Agent of substitute collateral of (a) equivalent value to the unpaid
amount of the Secured Obligations if in the form of a letter of credit of a bank
or financial institution having a combined capital and surplus of not less than
$500,000,000, direct obligations of the United States government or any agency
thereof or obligations guaranteed by the United States government or an agency
thereof or other readily marketable financial instrument of substantially
equivalent creditworthiness or (b) 150% of the value of the unpaid amount of the
Secured Obligations if in any other form, in which event such substitution may
be made only upon the consent of the Secured Parties, which consent will not
unreasonably be withheld . Any substitute collateral delivered pursuant to this
Section 4.12 shall be deemed to be Collateral for all purposes of this
Agreement.

                  4.13 AFFIRMATIVE COVENANTS. The Securing Party hereby
covenants that so long any of the Secured Obligations remains outstanding and
unpaid, it will cause the Issuer to, unless otherwise consented to in writing by
the Secured Parties:

                  (a) keep all of its material property in working order and
         condition, ordinary wear and tear excepted; and maintain, with
         financially sound and reputable insurance companies, insurance on its
         properties in such amounts and against such risks as are mandated by
         sound business practice;

                  (b) continue to engage in business of the same general type as
         now conducted and contemplated to be conducted by it and preserve,
         renew and keep in full force and effect its existence and take all
         reasonable action to maintain its rights, privileges, licenses and
         franchises necessary or desirable in the normal conduct of the Issuer's
         business; and

                  (c) keep proper and accurate books and records of its accounts
         and properties in which full, true and correct entries in conformity
         with appropriate accounting principles and all requirements of law
         shall be made of all dealings and transactions in relation to its

                                       8
<PAGE>   9

         business and activities and, subject to appropriate agreements
         respecting confidentiality, permit any Representatives of the Secured
         Parties to visit and inspect any of its properties and examine and make
         abstracts from any of its books and records at any reasonable time and
         as often as may reasonably be desired.

                  4.14 NEGATIVE COVENANTS. The Securing Party hereby covenants
that so long as any of the Secured Obligations remains outstanding and unpaid,
it will not grant any security interest in or lien on the Collateral to any
person or entity other than the lien granted hereby and will cause the Issuer
not to liquidate or dissolve itself (or suffer any liquidation or dissolution)
or convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of related transactions, all or a substantial part of its property
(real or personal), business, or assets, or make any material change in the
method of conducting business presently contemplated unless, in either instance,
otherwise consented to in writing by the Secured Parties in advance.

                  4.15 ACKNOWLEDGMENT. The Issuer hereby acknowledges and
consents to the pledge of the Pledged Stock made by the Securing Party hereby,
including without limitation the rights and obligations of the Secured Parties,
the Securing Parties and the Collateral Agent with respect to developments and
distributions on the Pledge Stock.

                  Section 5. THE COLLATERAL AGENT.

                  (a) Each of the Secured Parties hereby irrevocably appoints
         the Collateral Agent as its agent hereunder and authorizes the
         Collateral Agent to take such actions on its behalf and to exercise
         such powers as are delegated to the Collateral Agent by the terms
         hereof together with such actions and powers as are reasonably
         incidental thereto.

                  (b) The person serving as the Collateral Agent hereunder shall
         have the same rights and powers in its capacity as a Secured Party as
         any other Secured Party and may exercise the same as though it were not
         the Collateral Agent, and such Person and its Affiliates may accept
         deposits from, lend money to and generally engage in any kind of
         business with the Securing Party or any Subsidiary or other Affiliate
         thereof as if it were not the Collateral Agent hereunder.

                  (c) The Collateral Agent shall not have any duties or
         obligations except those expressly set forth herein. Without limiting
         the generality of the foregoing, (i) the Collateral Agent shall not be
         subject to any fiduciary or other implied duties, regardless of whether
         a Default has occurred and is continuing, (ii) the Collateral Agent
         shall not have any duty to take any discretionary action or exercise
         any discretionary powers, except discretionary rights and powers
         expressly contemplated hereby that the Collateral Agent is required to
         exercise in writing by the Required Secured Parties, and (iii) except
         as expressly set forth herein, the Collateral Agent shall not have any
         duty to disclose, and shall not be liable for the failure to disclose,
         any information relating to the Securing Party or any of its
         Subsidiaries that is communicated to or obtained by the bank serving as
         Collateral Agent or any of its affiliates in any capacity. The
         Collateral Agent shall not be liable for any action taken or not taken

                                       9
<PAGE>   10

         by it with the consent or at the request of the Required Secured
         Parties or in the absence of its own gross negligence or willful
         misconduct. The Collateral Agent shall be deemed not to have knowledge
         of any Default unless and until written notice thereof is given to the
         Collateral Agent by the Borrower or a Secured Party, and the Collateral
         Agent shall not be responsible for or have any duty to ascertain or
         inquire into (i) any statement, warranty or representation made in or
         in connection with this Agreement, (ii) the contents of any
         certificate, report or other document delivered hereunder or thereunder
         or in connection herewith or therewith, (iii) the performance or
         observance of any of the covenants, agreements or other terms or
         conditions set forth herein or therein, or (iv) the validity,
         enforceability, effectiveness or genuineness of this Agreement or any
         other agreement instrument or document, or (v) the satisfaction of any
         condition set forth herein other than to confirm receipt of items
         expressly required to be delivered to the Collateral Agent.

                  (d) The Collateral Agent shall be entitled to rely upon, and
         shall not incur any liability for relying upon, any notice, request,
         certificate, consent, statement, instrument, document or other writing
         believed by it to be genuine and to have been signed or sent by the
         proper person. The Collateral Agent also may rely upon any statement
         made to it orally or by telephone and believed by it to be made by the
         proper person, and shall not incur any liability for relying thereon.
         The Collateral Agent may consult with legal counsel, independent
         accountants and other experts selected by it, and shall not be liable
         for any action taken or not taken by it in accordance with the advice
         of any such counsel, accountants or experts.

                  (e) The Collateral Agent may perform any and all its duties
         and exercise its rights and powers by or through any one or more
         sub-agents appointed by the Collateral Agent. The Collateral Agent and
         any such sub-agent may perform any and all its duties and exercise its
         rights and powers through their respective related parties. The
         exculpatory provisions of the preceding paragraphs shall apply to any
         such sub-agent and to the related parties of the Collateral Agent and
         any such sub-agent, and shall apply to their respective activities in
         connection with the syndication of the credit facilities provided for
         herein as well as activities as Collateral Agent.

                  (f) The Collateral Agent may resign at any time by notifying
         the Secured Parties and the Securing Party. Upon any such resignation,
         the Required Secured Parties shall have the right, in consultation with
         the Securing party, to appoint a successor. If no successor shall have
         been so appointed by the Required Secured Parties and shall have
         accepted such appointment Within 30 days after the retiring Collateral
         Agent gives notice of its resignation, then the retiring Collateral
         Agent's resignation shall nonetheless become effective and (i) the
         retiring Collateral Agent shall be discharged from its duties and
         obligations hereunder and (ii) the Required Secured Parties shall
         perform the duties of the Collateral Agent (and all payments and
         communications provided to be made by, to or through the Collateral
         Agent shall instead be made by or to each Secured Party directly) until
         such time as the Required Secured Parties appoint a successor agent as

                                       10
<PAGE>   11

         provided for above in this paragraph. Upon the acceptance of its
         appointment as Collateral Agent hereunder by a successor, such
         successor shall succeed to and become vested with all the rights,
         powers, privileges and duties of the retiring (or retired) Collateral
         Agent and the retiring Collateral Agent shall be discharged from its
         duties and obligations hereunder (if not already discharged therefrom
         as provided above in this paragraph). After the Collateral Agent's
         resignation hereunder, the provisions of this Section 5 shall continue
         in effect for its benefit in respect of any actions taken or omitted to
         be taken by it while it was acting as Collateral Agent.

                  (g) Each Secured Party acknowledges that it has, independently
         and without reliance upon the Collateral Agent or any other Secured
         Party and based on such documents and information as it has deemed
         appropriate, made its own credit analysis and decision to enter into
         this Agreement. Each Secured Party also acknowledges that it will,
         independently and without reliance upon the Collateral Agent or any
         other Secured Party and based on such documents and information as it
         shall from time to time deem appropriate, continue to make its own
         decisions in taking or not taking action under or based upon this
         Agreement or any related agreement or any document furnished hereunder
         or thereunder.

                  (h) The Collateral Agent may, with the prior consent of the
         Required Secured Parties (but not otherwise), consent to any
         modification, supplement or waiver under this Agreement, provided that,
         without the prior consent of each Secured Party, the Collateral Agent
         shall not release all or substantially all of the collateral or
         otherwise terminate all or substantially all of the liens under this
         Agreement, agree to additional obligations being secured by all or
         substantially all of such collateral security (unless the lien for such
         additional obligations shall be junior to the lien in favor of the
         other obligations secured hereby, in which event the Collateral Agent
         may consent to such junior lien provided that It obtains the consent of
         the Required Secured Parties thereto), alter the relative priorities of
         the obligations entitled to the benefits of the liens created hereunder
         with respect to all or substantially all of such collateral, except
         that no such consent shall be required, and the Collateral Agent is
         hereby authorized, to release any lien covering property that is the
         subject of either a disposition of property permitted hereunder or a
         disposition to which the Required Secured Parties have consented.

                  (i) The Collateral Agent shall be entitled to receive the fees
         set forth in Annex 2 hereto, which shall be paid by the Securing Party.

                  Section 6. MISCELLANEOUS.

                  6.01 NO WAIVER. No failure on the part of the Collateral Agent
or any Secured Party to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any Secured Party of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.

                  6.02 NOTICES. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered by overnight delivery
by a nationally recognized express carrier to the intended recipient at its
address specified in Annex 3 and shall be deemed to be delivered on the date
telecopied or on the first business day following delivery to such express
carrier.

                                       11
<PAGE>   12

                  6.03 EXPENSES. The Securing Party agrees to reimburse each of
the Secured Parties and the Collateral Agent for all reasonable costs and
expenses incurred by them in enforcing the rights granted to them hereunder
(including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with (i) any Default and any enforcement or collection
proceeding resulting therefrom, including, without limitation, all manner of
participation in or other involvement with (w) performance by the Collateral
Agent or a Secured Party of any obligations of the Securing Party in respect of
the Collateral that the Securing Party has failed or refused to perform, (x)
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Collateral, and
for the care of the Collateral and defending or asserting rights and claims of
the Collateral Agent in respect thereof, by litigation or otherwise, including
expenses of insurance, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 6.03, and all such costs and expenses shall be
Secured Obligations entitled to the benefits of the collateral security provided
pursuant to Section 3.

                  6.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Securing Party, the Collateral Agent, the Secured Parties and each holder of any
of the Secured Obligations.

                  6.05 CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.

                  6.06 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart. Delivery by telecopier of an executed counterpart
of this Agreement shall be effective as delivery of an original executed
counterpart thereof.

                  6.07 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York, without giving
effect to principles of conflicts of law.

                  6.08 AGENTS AND ATTORNEYS-IN-FACT. The Collateral Agent may
employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.

                  6.09 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Agent
and the Secured Parties in order to carry out the intentions of the parties
hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

                                       12
<PAGE>   13

                  6.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. LTGI and
Berliner each hereby irrevocably appoints the President of New Valley
Corporation, at its office at 590 Madison Avenue, 35th Floor, New York, New York
10022, and the Securing Party hereby irrevocably appoints the President of GBI
Capital Management Corp., at its offices at 1055 Stewart Avenue, Bethpage, New
York 11714, its lawful agent and attorney to accept and acknowledge service of
any and all process against it in any action, suit or proceeding arising out of
or relating to this Agreement or any of the transactions contemplated hereby and
upon whom such process may be served, with the same effect as if such Party were
a resident of the State of New York and had been lawfully served with such
process in such jurisdiction, and waives all claims of error by reason of such
service, provided that in the case of any service upon such agent and attorney,
the Party effecting such service shall also deliver a copy thereof to the other
Parties at the address and in the manner specified in Section 6.02. LTGI,
Berliner and the Securing Party will enter into such agreements with such agents
as may be necessary to constitute and continue the appointment of such agents
hereunder. In the event that such agent and attorney resigns or otherwise
becomes incapable of acting as such, such Party will appoint a successor agent
and attorney in the City of New York, reasonably satisfactory to the other
Parties, with like powers. The Lender hereby agrees that service of process in
any action, suit or proceeding arising out of or relating to this Agreement or
any of the transactions contemplated hereby may be made upon it by registered
mail, return receipt requested, at the address specified in Section 3.1 of the
Loan Agreement. Each Party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York or any court of the State of New York located in the Borough of
Manhattan in the City of New York in any such action, suit or proceeding arising
out of or relating to this Agreement or any of the transactions contemplated
hereby, and agrees that any such action, suit or proceeding shall be brought
only in such court, provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this Section 6.10 and shall not be deemed
to be a general submission to the jurisdiction of said courts or in the State of
New York other than for such purpose. Each Party hereby irrevocably waives, to
the fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such action, suit or proceeding brought
in such a court and any claim that any such action, suit or proceeding brought
in such a court has been brought in an inconvenient forum. EACH PARTY HEREBY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF THIS AGREEMENT. As used in this Section 6.10, the term "Party"
includes the Collateral Agent, upon whom service of process may be made by
registered mail addressed to it at the address specified in Section 6.02.

                            [Signature page follows]

                                       13
<PAGE>   14

                  IN WITNESS WHEREOF, the parties hereto have caused this Pledge
and Security Agreement to be duly executed and delivered as of the day and year
first above written.

                       GBI CAPITAL MANAGEMENT CORP.

                       By:
                           -------------------------------------------------
                             Name:
                             Title:

                       LADENBURG, THALMANN GROUP INC.

                       By:
                           -------------------------------------------------
                        Name:
                        Title:

                       BERLINER EFFEKTENGESELLSCHAFT AG

                       By:
                           -------------------------------------------------
                             Name:
                             Title:

                       FROST-NEVADA, LIMITED PARTNERSHIP
                       By: Frost-Nevada Corporation, General Partner

                       By:
                           -------------------------------------------------
                             Name:
                             Title:

                       US BANK TRUST NATIONAL ASSOCIATION

                       By:
                           -------------------------------------------------
                              Name:
                              Title:

                       LADENBURG, THALMANN & CO. INC.
                       (with respect to Section 4.15 only)

                       By:
                           -------------------------------------------------
                             Name:
                             Title:

                                       14
<PAGE>   15

                                                                         ANNEX 1

                                  PLEDGED STOCK

CLASS OF STOCK                CERTIFICATE NOS.                NUMBER OF SHARES

                                       15
<PAGE>   16

                                                                         ANNEX 2

                            FEES OF COLLATERAL AGENT

Initial Fee - $1,000 payable on execution of Agreement

Annual Fee - $1,500 payable annually on each anniversary of execution of
             Agreement

                                       16
<PAGE>   17

                                                                         ANNEX 3

                                NOTICE ADDRESSES

SECURING PARTY

         GBI Capital Management Corp.
         1055 Stewart Avenue
         Bethpage, New York 11741
         Attention: Richard Rosenstock
         Telecopier: 01149-30-8902-196

WITH A COPY TO:

         Graubard Mollen & Miller
         600 Third Avenue
         New York, New York 10016
         Attention: David Alan Miller, Esq.
         Telecopier: 212-818-8881

LTGI

         Ladenburg, Thalmann Group Inc.
         c/o New Valley Corporaiton
         100 S.E. Second Street, 32nd Floor
         Miami, Florida 33131
         Attention: Richard Lampen
         Telecopier: 305-579-8009

WITH A COPY TO:

         Milbank, Tweed, Hadley & McCloy LLP
         1 Chase Manhattan Plaza
         New York, New York 10005-1413
         Attention: Mark Weissler, Esq.
         Telecopier: 212-530-5219

                                       17
<PAGE>   18

BERLINER

         Berliner Effektengesellschaft AG
         Kurfurstendamm 119
         10711 Berlin, German
         Attention: Dr. Wolfgang Janka
         Telecopier: 01149-30-8902-196

LENDER

         Frost-Nevada, Limited Partnership
         3500 Lakeside Court
         Suite 200
         Reno, Nevada 89509
         Telecopier:775-827-2185

WITH A COPY TO:

         Akerman, Senterfitt & Eidson, P.A.
         SunTrust International Center
         One Southeast Third Avenue, 28th Floor
         Miami, Florida 33131-1714
         Attention:  Teddy D. Klinghoffer, Esq.
         Telecopier: 305-374-5095

COLLATERAL AGENT

         180 East Fifth Street
         St. Paul, Minnesota 55101
         Attention: Thomas M. Gronlund, Vice President
         Telecopier: 775-827-2185

                                       18

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