Debt Conversion Agreement - Ladenburg Thalmann Financial Services Inc., New Valley Corp. and Frost-Nevada Investments Trust
DEBT CONVERSION AGREEMENT
THIS DEBT CONVERSION AGREEMENT ("AGREEMENT"), dated as March 29, 2004,
among Ladenburg Thalmann Financial Services Inc., a Florida corporation (the
"Company"), New Valley Corporation, a Delaware corporation ("New Valley"), and
Frost-Nevada Investments Trust ("Frost-Nevada" and together with New Valley, the
"Holders").
WHEREAS, on May 7, 2001, the Company issued Senior Convertible
Promissory Notes due December 31, 2005, as amended from time to time, to the
Holders in an aggregate principal amount of $18,010,000 (the "Notes");
WHEREAS, the Holders have previously agreed to forbear the interest
payments due on the Notes until January 15, 2005;
WHEREAS, as a result of the Notes and the Company's other outstanding
indebtedness, the Company is highly leveraged and has a negative net worth of
approximately $16.2 million at December 31, 2003;
WHEREAS, the foregoing has continued to negatively impact the Company's
operations, including its ability to attract and retain brokers;
WHEREAS, the Company has requested that the Holders convert their Notes
into common stock, par value $.0001 per share ("Common Stock"), of the Company
as set forth herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements of the parties hereinafter set forth, the parties
hereto hereby agree as follows:
1. DEBT CONVERSION.
(a) Each of New Valley and Frost-Nevada hereby severally
agrees, subject to the conditions set forth herein, to convert the principal and
accrued interest on its Notes into shares of the Company's Common Stock
("Conversion Shares") at a conversion price of $1.10 and $0.70 per share,
respectively ("Debt Conversion"), subject to appropriate adjustment for
reclassifications, stock splits, stock dividends, spin-offs or distributions,
share combinations or other similar changes affecting the Common Stock as a
whole. The entire amount of the Conversion Shares shall be allocated in a manner
as mutually agreed to by the parties and the Debt Conversion shall be classified
as mutually agreed to by the parties.
(b) The Company shall cause a meeting of its shareholders
("Shareholder Meeting") to be duly called and held as soon as reasonably
practicable after the date of execution of this Agreement for the purposes of
voting on the Debt Conversion and such other matters as may be mutually agreed
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upon by the parties. In connection with such Shareholder Meeting, the Company
will prepare and mail to its shareholders as promptly as practicable a proxy
statement and all other proxy materials (the "Proxy Statement") for such
meeting. The Company and the Holders severally shall cooperate with each other
in all reasonable respects with the preparation of the Proxy Statement and any
amendment or supplement thereto. The Company shall notify the Holders of the
receipt of any comments of the Securities and Exchange Commission ("Commission")
with respect to the Proxy Statement and any requests by the Commission for any
amendment or supplement thereto or for additional information, and shall provide
to them promptly copies of any correspondence between the Company or its counsel
and the Commission with respect to the Proxy Statement. The Company shall give
the Holders and their counsel the opportunity to review the Proxy Statement and
all responses to requests for additional information by and replies to comments
of the Commission before their being filed with, or sent to, the Commission. The
Company will use its best efforts, after consultation with the Holders, to
respond promptly to all such comments of and requests by the Commission and to
cause the Proxy Statement to be mailed to the Company's shareholders entitled to
vote at the Shareholder Meeting at the earliest practicable time.
(c) The Company will use its best efforts to obtain the
necessary approvals by its shareholders for the Debt Conversion and any related
matters ("Shareholder Approval") at the Shareholder Meeting and shall cause its
Board of Directors to include in the Proxy Statement its recommendation that the
Company's shareholders vote in favor of the matters presented in the Proxy
Statement. In the event that the Shareholder Approval is not obtained on the
date on which the Shareholder Meeting is initially convened, the Board of
Directors of the Company shall adjourn the meeting from time to time as
necessary for the purpose of obtaining the Shareholder Approval and shall use
its best efforts during any such adjournments to obtain the Shareholder
Approval.
(d) By executing this Agreement, each of the Holders and
Bennett S. LeBow, Howard M. Lorber, Richard J. Lampen, Henry C. Beinstein,
Robert J. Eide and Victor M. Rivas ("Proxy Parties") hereby severally appoint
Richard J. Rosenstock, Mark Zeitchick or Vincent A. Mangone, or any of them,
with full power of substitution and to act without the others, as their agents,
attorneys and proxies, representing an irrevocable proxy pursuant to Section
607.0722 of the Florida Business Corporation Act, coupled with an interest, so
as to vote the shares of Common Stock held by the Proxy Parties in accordance
with the vote of a majority of votes cast at the Shareholder Meeting excluding
the shares held by such Proxy Parties.
(e) The Company shall comply with all legal requirements
applicable to the Shareholder Meeting and take such other actions as may be
necessary to effectuate the Debt Conversion, including, but not limited to,
providing notices to, and responding to queries from, all applicable regulatory
authorities and stock exchanges and obtaining all necessary third party
consents.
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(f) Subject to the terms and conditions of this Agreement, the
consummation of the transactions contemplated by this Agreement shall take place
at a closing ("Closing") to be held at 10:00 a.m., local time, on the fourth
business day after the date on which the last of the conditions set forth in
Section 4 (c) and (d) below is fulfilled, at the offices of Graubard Miller, 600
Third Avenue, New York, New York 10016, or at such other time, date or place as
the parties may agree upon in writing. The Company shall send to each Holder at
least two business days prior to the Closing a notice indicating the amount of
interest accrued through the date of the Closing and the number of shares of
Common Stock each Holder will be issued upon the Debt Conversion. At the
Closing, each Holder shall deliver its Notes for cancellation and the Company
shall deliver to each Holder certificates representing the Conversion Shares to
which such Holder is entitled as a result of such Debt Conversion. From and
after the Closing, the Notes shall represent solely the right to receive
Conversion Shares. If a Holder has lost its Note and is unable to deliver its
Notes at the Closing, it shall submit an affidavit of loss and indemnity
agreement so that the Notes may be replaced and deemed cancelled in accordance
with the terms hereof. In the event that as a result of the Debt Conversion,
fractions of shares would be required to be issued, such fractional shares shall
be rounded up or down to the nearest whole share. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on such Debt Conversion,
except that the Holder shall pay any such tax due because the Conversion Shares
are issued in a name other than the Holder's.
2. REPRESENTATIONS AND WARRANTIES OF COMPANY. The Company hereby
represents and warrants to the Holders as follows:
(a) As of the date hereof, the Company has 200,000,000 shares
of Common Stock authorized, of which 43,627,130 shares of Common Stock are
issued and outstanding, and 2,000,000 shares of preferred stock authorized, of
which no shares are issued and outstanding. As of the date hereof, the Company
has reserved for issuance 8,153,030 shares of Common Stock upon exercise of all
outstanding options and warrants. All of the issued and outstanding shares of
the Company's Common Stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized, validly issued,
fully paid and nonassessable. The Conversion Shares to be issued and delivered
to the Holders upon conversion of the Notes have been duly authorized and when
issued upon such conversion, will be validly issued, fully-paid and
non-assessable. The issuance of the Conversion Shares will be exempt from
registration pursuant to Section 3(a)(9) promulgated under the Securities Act of
1933, as amended ("Securities Act") and such Conversion Shares will not be
"restricted securities" as defined under Rule 144 promulgated under the
Securities Act.
(b) The Company has full legal power to execute and deliver
this Agreement and to perform its obligations hereunder. All acts required to be
taken by the Company to enter into this Agreement and to carry out the
transactions contemplated hereby have been properly taken, and this Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable in
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accordance with its terms and does not conflict with, result in a breach or
violation of or constitute (or with notice of lapse of time or both constitute)
a default under any instrument, contract or other agreement to which the Company
or its subsidiaries is a party.
(c) The affirmative vote of the holders of record of at least
a majority of the shares of the Company's Common Stock present at the
Shareholder Meeting with respect to the matters referred to in Section 1 hereof
is the only vote of the holders of any class or series of the capital stock of
the Company required to approve the transactions contemplated hereby.
(d) None of the Company's Articles of Incorporation, as
amended, or Bylaws, or the laws of Florida, California or New York, contains any
applicable anti-takeover provision or statute which would restrict the Company's
ability to enter into this Agreement or consummate the transactions contemplated
by this Agreement or which would limit any of the Holders' rights following
consummation of the transactions contemplated by this Agreement.
(e) No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company other than the fees of any investment banking firm that
has been engaged by the Company to render the Fairness Opinion (defined below),
the fees of which will be paid by the Company.
(f) The Company has delivered or made available to the Holders
prior to the execution of this Agreement true and complete copies of all
periodic reports, registration statements and proxy statements filed by it with
the Commission since January 1, 2002. Each of such filings with the Commission
(collectively, the "SEC Filings"), as of its filing date, complied in all
material respects with the requirements of the rules and regulations promulgated
by the Commission with respect thereto and did not contain any untrue statement
of a material fact or omit a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which such statements were made.
(g) Since the date of the draft financials of the Company for
the year ended December 31, 2003 to be filed with the Commission in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003 (a
copy of which has been made available to the Holders), the Company and its
subsidiaries, taken as a whole, has not suffered any material adverse change in
its assets, liabilities, financial condition, results of operations or business,
except for those occurring as a result of general economic or financial
conditions affecting the United States as a whole or the region in which the
Company conducts its business or developments that are not unique to the Company
but also affect other entities engaged or participating in the brokerage
industry generally in a manner not materially less severely.
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(h) The Company has received the opinion of Capitalink, L.C.
(a copy of which will be furnished to each Holder) to the effect that the
average price at which the Notes will be converted is fair from a financial
point of view to the unaffiliated shareholders of the Company.
(i) No information to be contained in the Proxy Statement to
be prepared pursuant to this Agreement and no representation or warranty by the
Company contained in this Agreement contains any untrue statement of a material
fact or omits a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which such statements were made.
(j) Since January 1, 2002 and except as disclosed in the SEC
Filings, the Company has conducted its business in compliance in all material
respects with all applicable laws, rules, regulations, court or administrative
orders and processes and rules, directives and orders of regulatory and
self-regulatory agencies and bodies, except as would not reasonably be expected,
singly or in the aggregate, to be materially adverse to the business, assets or
financial condition of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. New Valley and
Frost-Nevada severally and not jointly represent and warrant to the Company as
follows:
(a) Each Holder has full legal power to execute and deliver
this Agreement and to perform its obligations hereunder. All acts required to be
taken by such Holder to enter into this Agreement and to carry out the
transactions contemplated hereby have been properly taken; and this Agreement
constitutes a legal, valid and binding obligation of such Holder enforceable in
accordance with its terms.
(b) Each Holder has reviewed the filings of the Company
referred to in Section 2(f) above.
(c) Each Holder has been given an opportunity to ask questions
and receive answers from the officers and directors of the Company and to obtain
additional information from the Company.
(d) Each Holder 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 Company's securities and has obtained, in its judgment,
sufficient information about the Company to evaluate the merits and risks of an
investment in the Company.
(e) Each Holder is relying solely on the representations and
warranties contained in Section 2 hereof and in certificates delivered hereunder
in making their decision to enter into this Agreement and consummate the
transactions contemplated hereby and no oral representations or warranties of
any kind have been made by the Company or its officers, directors, employees or
agents to such Holders.
(f) Each Holder hereby consents to the Company's repurchase of
the $1,990,000 aggregate principal amount of Notes, together with all accrued
but unpaid interest thereon, held by Berliner Effektengesellschaft AG for
$1,000,000 in cash simultaneously with the execution of this Agreement and
agrees that it will not exercise any rights or remedies it may have against the
Company in connection with such repurchase.
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4. CONDITIONS.
(a) The obligations of the Company to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
of the following conditions:
(i) The representations and warranties of each of the
Holders set forth in Section 3 hereof shall be true and correct on and as of the
Closing date and a certificate certifying such shall be delivered.
(ii) All proceedings, corporate or otherwise, to be
taken by the Holders in connection with the consummation of the transactions
contemplated by this Agreement shall have been duly and validly taken and all
necessary consents, approvals or authorizations of any governmental or
regulatory authority or other third party required to be obtained by the Company
or the Holders shall have been obtained in form and substance reasonably
satisfactory to the Company.
(iii) The Shareholder Approval shall be obtained by
the necessary affirmative vote of the shareholders of the Company as described
above in Section 1.
(iv) Each of the Holders shall have delivered to the
Company for cancellation their Notes or an affidavit of loss and indemnity.
(b) The obligations of the Holders to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
of the following conditions:
(i) The representations and warranties of the Company
set forth in Section 2 hereof shall be true and correct on and as of the Closing
date and a certificate certifying such shall be delivered.
(ii) All proceedings, corporate or otherwise, to be
taken by the Company in connection with the consummation of the transactions
contemplated by this Agreement shall have been duly and validly taken and all
necessary consents, approvals or authorizations of any governmental or
regulatory authority or other third party required to be obtained by the Company
or the Holders shall have been obtained in form and substance reasonably
satisfactory to the Holders.
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(iii) The Shareholder Approval shall be obtained by
the necessary affirmative vote of the shareholders of the Company as described
above in Section 1.
(iv) The Company shall have caused the Conversion
Shares to be approved for listing on the American Stock Exchange or any national
securities exchange on which the Common Stock is then listed.
(v) The Holders shall have received a legal opinion
of Graubard Miller, counsel to the Company, addressed to the Holders dated as of
the Closing date covering such matters as is customary of transactions of this
nature and in form and substance reasonably satisfactory to the Holders.
(vi) Each of the Holders shall have delivered to the
Company for cancellation their Notes or an affidavit of loss and indemnity
5. REGISTRATION.
(a)(i) The Company shall file, and use reasonable best efforts
to cause to be declared effective by the Commission as promptly as practicable
but in no event later than six months following the Closing Date, a registration
statement (the "Required Registration Statement") to register the Conversion
Shares received by the Holders upon the Debt Conversion for resale pursuant to
the Securities Act.
(ii) In connection the foregoing, the Company will, as
expeditiously as possible, use its best efforts to: (A) furnish to New Valley
and Frost-Nevada copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits), and each of New Valley and
Frost-Nevada shall have the opportunity to object to any information pertaining
solely to it that is contained therein and the Company will make the corrections
reasonably requested by either of them with respect to such information prior to
filing any such registration statement or amendment; (B) prepare and file with
the Commission 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
Conversion Shares covered by such registration statement; (C) promptly notify
New Valley and Frost-Nevada: (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 Commission with respect to any filing referred to in
clause (A) and of any written request by the Commission for amendments or
supplements to such registration statement or prospectus; and (3) of the
notification to the Company by the Commission of its initiation of any
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proceeding with respect to the issuance by the Commission of, or of the issuance
by the Commission of, any stop order suspending the effectiveness of such
registration statement; (D) furnish New Valley and Frost-Nevada 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
Conversion Shares, and such other documents, as New Valley or Frost-Nevada may
reasonably request to facilitate the disposition of its Conversion Shares; (E)
notify New Valley and Frost-Nevada 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 New Valley or Frost-Nevada
promptly prepare and furnish New Valley and Frost-Nevada 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 New Valley and
Frost-Nevada and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement, and permit the inspectors to participate in
the preparation of such registration statement and any prospectus contained
therein and any amendment or supplement thereto.
(b) The Company shall bear all fees and expenses attendant to
registering the Conversion Shares, but the Holders 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 Conversion Shares. The Company shall use
its best efforts to cause any registration statement filed pursuant to this
section to remain effective until all the Conversion Shares registered
thereunder are sold or until the delivery to the Holders of an opinion of
counsel to the Company to the effect set forth in Section 5(h).
(c)(i) The Company will indemnify the Holders, their directors
and officers and each underwriter, if any, and each person who controls any of
them within the meaning of the Securities Act or the Exchange Act against all
claims, losses, damages and liabilities (or actions or proceedings, commenced or
threatened, in respect thereof), joint or several, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any registration,
qualification or compliance pursuant to this Section 5 or based on any omission
(or alleged omission) to state therein a material fact required to be stated
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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 Holders, their directors and
officers, each such underwriter and each person who controls any such
underwriter within the meaning of the Securities Act or the Exchange Act for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action or
proceeding; provided that the Company will not be liable to a Holder in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by or on behalf of such Holder specifically
stating that it is intended for inclusion in any registration statement under
which Conversion Shares are registered. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of a
Holder or any such director, officer or controlling person, and shall survive
the transfer of such securities by any Holder.
(ii) Each of the Holders, severally and not jointly, shall
indemnify the Company, each of its directors and officers and each underwriter,
if any, of the Company's securities covered by such registration statement, each
person who controls the Company or such underwriter within the meaning of the
Securities Act and the Exchange Act and the rules and regulations thereunder,
each other securityholder participating in such distribution and each of their
officers and directors and each person controlling such other securityholder,
against all claims, losses, damages and liabilities (or actions or proceedings,
commenced or threatened, in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such other security holders,
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action or proceeding, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
document in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder specifically stating that it is
intended for inclusion in such document; provided, however, that the obligations
of each Holder hereunder shall be limited to an amount equal to the proceeds
received by such Holder of securities sold as contemplated herein. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person, and shall survive the transfer of such securities by any Holder.
(iii) Each party desiring indemnification or contribution
under this Section 5(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
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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 5. 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 5(c) shall be in
addition to any other rights to indemnification or contribution which an
Indemnified Party may have pursuant to law, equity, contract or otherwise.
(d) In order to provide for just and equitable contribution
under the Securities Act in any case in which (A) any person entitled to
indemnification under Section (c) makes a claim for indemnification pursuant
hereto but such indemnification is not enforced in such case notwithstanding the
fact that this section provides for indemnification in such case, or (B)
contribution under the Securities Act, the Exchange Act or otherwise is required
on the part of any such person in circumstances for which indemnification is
provided under this section, then, and in each such case, the Company and each
of the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
(including legal and other expenses reasonably incurred in connection with
investigation or defense) incurred by the Company and the Holders, as incurred,
in proportion to their relative fault and the relative knowledge and access to
information of the Securities Indemnifying Party, on the one hand, and the
Securities Indemnified Party, on the other hand, concerning the matters
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resulting in such losses, liabilities, claims, damages and expenses, the
opportunity to correct and prevent any untrue statement or omission, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission of a material fact relates to information supplied by the Securities
Indemnifying Party, on the one hand, or the Securities Indemnified Party, on the
other hand, and any other equitable considerations appropriate under the
circumstances; provided that no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this section, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
(e) Each of the Holders shall furnish to the Company such
information regarding itself and the distribution proposed by it as the Company
may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Section 5.
(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 Common Stock. The Company shall cooperate with each
Holder in supplying such information as may be necessary for such Holder to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.
(g) The Company represents and warrants to the holders of
Conversion Shares that the granting of the registration rights to the Holders
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 5 shall terminate
upon delivery to the Holders of an opinion of counsel to the Company reasonably
satisfactory to the Holders to the effect that such rights are no longer
necessary for the public sale of the Conversion Shares 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 5 shall not be
transferable.
6. PRESS RELEASE; FILINGS. Promptly after execution of this
Agreement, the Company shall issue a press release announcing the Debt
Conversion. The Company shall also file with the Securities and Exchange
Commission a Current Report on Form 8-K with respect to the transactions
contemplated hereby. The Company shall provide the Holders with drafts of both
the press release and Form 8-K and a reasonable opportunity to comment thereon.
No party hereto shall make any public announcements in respect of this Agreement
or the transactions contemplated herein inconsistent with the press release and
Form 8-K without the prior approval of the other parties as to the form and
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content thereof, which approval will not be unreasonably withheld.
Notwithstanding the foregoing, any disclosure may be made by a party which its
counsel advises is required by applicable law or regulation, in which case the
other party shall be given such reasonable advance notice as is practicable in
the circumstances and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued. The parties may also
make appropriate disclosure of the transactions contemplated by this Agreement
to their officers, directors, agents and employees.
7. TERMINATION. This Agreement may be terminated no later than the
Closing:
(a) At the option of any party in the event that the Debt
Conversion has not occurred by December 31, 2004 and such delay was not as a
result of any breach of this Agreement by the terminating party;
(b) By the Holders if the Company's Board of Directors failed
to recommend or withdrew or modified in a manner adverse to the Holders its
approval or recommendation of the Debt Conversion;
(c) At the option of any party in the event that Shareholder
Approval was not obtained at the Shareholder Meeting and any adjournment
thereof;
(d) At the option of any party if any other party has
materially breached a term of this Agreement and has not cured such breach
within 30 days; or
(e) At the option of any party if any competent regulatory
authority shall have issued an order making illegal or otherwise restricting,
preventing, prohibiting or refusing to approve the transactions contemplated
hereby, and such order shall have become final and non-appealable.
8. MISCELLANEOUS.
(a) Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(b) This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same agreement.
(c) This Agreement shall be a contract made under and governed
by the laws of the State of New York.
(d) All obligations of the Company and rights of the Holders
expressed herein shall be in addition to and not in limitation of those provided
by applicable law.
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(e) This Agreement shall be binding upon the Company, the
Holders and their respective successors and assigns, and shall inure to the
benefit of the Company, the Holders and their respective successors and
permitted assigns.
(f) The terms and provisions of this Agreement are intended
solely for the benefit of each party hereto and their respective successors or
permitted assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other person or entity.
(g) All amendments or modifications of this Agreement and all
consents, waivers and notices delivered hereunder or in connection herewith
shall be in writing.
(h) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties with
respect thereto.
(i) Whether or not the Closing occurs, the Company shall pay
all costs and expenses, including reasonable attorneys' fees, incurred by it or
the Holders with respect to the negotiation, execution, delivery and performance
of this Agreement, including any expenses of enforcing this provision. This
provision shall survive termination of the Agreement. The Company further agrees
that it shall reimburse (or advance) to the Holders any costs and expenses
incurred in connection with the engagement by such Holders of a nationally
recognized appraiser to perform an appraisal of the value of each Holder's
Conversion Shares upon the Closing for purposes of preparing each Holder's tax
returns.
9. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE HOLDERS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
10. SPECIFIC PERFORMANCE. THE PARTIES HERETO ACKNOWLEDGE AND
AGREE THAT ANY REMEDY AT LAW FOR ANY BREACH OF THE PROVISIONS OF THIS AGREEMENT
WOULD BE INADEQUATE, AND EACH PARTY HERETO HEREBY CONSENTS TO THE GRANTING BY
ANY COURT OF AN INJUNCTION OR OTHER EQUITABLE RELIEF, WITHOUT THE NECESSITY OF
ACTUAL MONETARY LOSS BEING PROVED, IN ORDER THAT THE BREACH OR THREATENED BREACH
OF SUCH PROVISIONS MAY BE EFFECTIVELY RESTRAINED.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the date
first above written.
LADENBURG THALMANN FINANCIAL
SERVICES INC.
By: /s/ VICTOR M. RIVAS
--------------------------------------------
Name: Victor M. Rivas
Title: President and CEO
NEW VALLEY CORPORATION
By: /s/ RICHARD J. LAMPEN
--------------------------------------------
Name: Richard J. Lampen
Title: Executive Vice President
FROST-NEVADA INVESTMENTS TRUST
By: /s/ PHILLIP FROST
--------------------------------------------
Name: Phillip Frost, M.D.
Title: President
/s/ BENNETT S. LEBOW
--------------------------------------------
Bennett S. LeBow
(solely with respect to Section 1(d) hereof)
/s/ HOWARD M. LORBER
--------------------------------------------
Howard M. Lorber
(solely with respect to Section 1(d) hereof)
/s/ RICHARD J. LAMPEN
--------------------------------------------
Richard J. Lampen
(solely with respect to Section 1(d) hereof)
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/s/ HENRY C. BEINSTEIN
--------------------------------------------
Henry C. Beinstein
(solely with respect to Section 1(d) hereof)
/s/ ROBERT J. EIDE
--------------------------------------------
Robert J. Eide
(solely with respect to Section 1(d) hereof)
/s/ VICTOR M. RIVAS
--------------------------------------------
Victor M. Rivas
(solely with respect to Section 1(d) hereof)
15