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EXHIBIT 10.4
EXECUTION COPY
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into effective as of the 4th
day of
March, 2005 ("Agreement"), by and between Ladenburg Thalmann
Financial Services
Inc., a Florida corporation ("Corporation"), and Mark D. Klein
("Indemnitee"):
WHEREAS, highly competent persons recently have become more
reluctant to serve publicly-held corporations as directors,
officers, or in
other capacities, unless they are provided with better
protection from the risk
of claims and actions against them arising out of their service
to and
activities on behalf of such corporation; and
WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties related to indemnification have
increased the
difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Corporation ("Board")
has
determined that the inability to attract and retain such persons
is detrimental
to the best interests of the Corporation's stockholders and that
such persons
should be assured that they will have better protection in the
future; and
WHEREAS, it is reasonable, prudent and necessary for the
Corporation
to obligate itself contractually to indemnify such persons to
the fullest extent
permitted by applicable law so that such persons will serve or
continue to serve
the Corporation free from undue concern that they will not be
adequately
indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance
of
Article VII of the By-laws of the Corporation, and Article XI of
the Articles of
Incorporation of the Corporation, as amended, and any
resolutions adopted
pursuant thereto and shall neither be deemed to be a substitute
therefor nor to
diminish or abrogate any rights of Indemnitee thereunder;
and
WHEREAS, Indemnitee is willing to serve and to take on
additional
service for or on behalf of the Corporation on the condition
that he or she be
indemnified according to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the
covenants
contained herein, the Corporation and Indemnitee do hereby
covenant and agree as
follows:
1. Definitions. For purposes of this Agreement:
1.1 "Change in Control" means a change in control of the
Corporation
occurring after the date hereof of a nature that would be
required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in
response to any similar item on any similar schedule or form)
promulgated under
the Securities Exchange Act of 1934, as amended ("Act"), whether
or not the
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Corporation is then subject to such reporting requirement
provided, however,
that, without limitation, such a Change in Control shall be
deemed to have
occurred if after the date hereof (i) any "person" (as such term
is used in
Sections 13(d) and 14(d) of the Act) is or becomes "beneficial
owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of
the Corporation representing 20% or more of the combined voting
power of the
then outstanding securities of the Corporation without the prior
approval of at
least two-thirds of the members of the Board in office
immediately prior to such
person attaining such percentage interest; (ii) the Corporation
is a party to a
merger, consolidation, sale of assets or other reorganization,
or a proxy
contest, as a consequence of which members of the Board in
office immediately
prior to such transaction or event constitute less than a
majority of the Board
thereafter; or (iii) during any period of two consecutive years,
individuals who
at the beginning of such period constituted the Board (including
for this
purpose any new director whose election or nomination for
election by the
Corporation's stockholders was approved by a vote of at least
two-thirds of the
directors then still in office who were directors at the
beginning of such
period) cease for any reason to constitute at least a majority
of the Board.
1.2 "Corporate Status" means the status of a person who is or
was a
director, officer, employee, agent or fiduciary of the
Corporation or of any
other corporation, partnership, joint venture, trust, employee
benefit plan or
other enterprise which such person is or was serving at the
request of the
Corporation.
1.3 "Disinterested Director" means a director of the Corporation
who is
not and was not a party to the Proceeding in respect of which
indemnification is
sought by Indemnitee.
1.4 "Expenses" means all reasonable attorneys' fees, retainers,
court
costs, transcript costs, fees of experts, witness fees, travel
expenses,
duplicating costs, printing and binding costs, telephone
charges, postage,
delivery service fees, and all other disbursements or expenses
of the types
customarily incurred in connection with prosecuting, defending,
preparing to
prosecute or defend, investigating, or being or preparing to be
a witness in a
Proceeding.
1.5 "Independent Counsel" means a law firm, or a member of a law
firm,
that is experienced in matters of corporation law and neither
presently is, nor
in the past five years has been, retained to represent: (i) the
Corporation or
Indemnitee in any other matter material to either such party, or
(ii) any other
party to the Proceeding giving rise to a claim for
indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel"
shall not include
any person who, under the applicable standards of professional
conduct then
prevailing, would have a conflict of interest in representing
either the
Corporation or Indemnitee in an action to determine Indemnitee's
rights under
this Agreement. Independent Counsel shall be selected by (a) the
Disinterested
Directors or (b) a committee of the Board consisting of two or
more
Disinterested Directors or if (a) and (b) above are not
possible, then by a
majority of the full Board.
1.6 "Proceeding" means any action, suit, arbitration, alternate
dispute
resolution mechanism, investigation, administrative hearing or
any other
proceeding, whether civil, criminal, administrative or
investigative, except one
initiated by an Indemnitee pursuant to Section 11 of this
Agreement to enforce
his rights under this Agreement.
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2. Services by Indemnitee.
Indemnitee agrees to serve as a director of the Corporation.
Indemnitee
may at any time and for any reason resign from such position
(subject to any
other contractual obligation or any obligation imposed by
operation of law).
3. Indemnification - General.
The Corporation shall indemnify, and advance Expenses to,
Indemnitee as
provided in this Agreement to the fullest extent permitted by
applicable law in
effect on the date hereof and to such greater extent as
applicable law may
thereafter from time to time permit. The rights of Indemnitee
provided under the
preceding sentence shall include, but shall not be limited to,
the rights set
forth in the other Sections of this Agreement.
4. Proceedings Other Than Proceedings by or in the Right of the
Corporation.
Indemnitee shall be entitled to the rights of indemnification
provided in
this Section if, by reason of his Corporate Status, he or she
is, or is
threatened to be made, a party to any threatened, pending or
completed
Proceeding, other than a Proceeding by or in the right of the
Corporation.
Pursuant to this Section, Indemnitee shall be indemnified
against Expenses,
judgments, penalties, fines and amounts paid in settlement
actually and
reasonably incurred by him or on his behalf in connection with
any such
Proceeding or any claim, issue or matter therein, if he or she
acted in good
faith and in a manner he or she reasonably believed to be in or
not opposed to
the best interests of the Corporation, and, with respect to any
criminal
Proceeding, had no reasonable cause to believe his conduct was
unlawful.
5. Proceedings by or in the Right of the Corporation.
Indemnitee shall be entitled to the rights of indemnification
provided in
this Section if, by reason of his Corporate Status, he or she
is, or is
threatened to be made, a party to any threatened, pending or
completed
Proceeding brought by or in the right of the Corporation to
procure a judgment
in its favor. Pursuant to this Section, Indemnitee shall be
indemnified against
Expenses actually and reasonably incurred by him or on his
behalf in connection
with any such Proceeding if he or she acted in good faith and in
a manner he or
she reasonably believed to be in or not opposed to the best
interests of the
Corporation. Notwithstanding the foregoing, no indemnification
against such
Expenses shall be made in respect of any claim, issue or matter
in any such
proceeding as to which Indemnitee shall have been adjudged to be
liable to the
Corporation if applicable law prohibits such indemnification
unless the court in
which such Proceeding shall have been brought or is pending,
shall determine
that indemnification against Expenses may nevertheless be made
by the
Corporation.
6. Indemnification for Expenses of Party Who is Wholly or Partly
Successful.
Notwithstanding any other provision of this Agreement, to the
extent that
Indemnitee is, by reason of his Corporate Status, a party to and
is successful,
on the merits or otherwise, in any Pro-
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ceeding, he or she shall be indemnified against all Expenses
actually and
reasonably incurred by him or on his behalf in connection
therewith. If
Indemnitee is not wholly successful in such Proceeding but is
successful, on the
merits or otherwise, as to one or more but less than all claims,
issues or
matters in such Proceeding, the Corporation shall indemnify
Indemnitee against
all Expenses actually and reasonably incurred by him or on his
behalf in
connection with each successfully resolved claim, issue or
matter. For the
purposes of this Section and without limiting the foregoing, the
termination of
any claim, issue or matter in any such Proceeding by dismissal,
with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or
matter.
7. Indemnification for Expenses as a Witness.
Notwithstanding any other provision of this Agreement, to the
extent that
Indemnitee is, by reason of his Corporate Status, a witness in
any Proceeding,
he or she shall be indemnified against all Expenses actually and
reasonably
incurred by him or on his behalf in connection therewith.
8. Advancement of Expenses.
The Corporation shall advance all Expenses incurred by or on
behalf of
Indemnitee in connection with any Proceeding within twenty days
after the
receipt by the Corporation of a statement or statements from
Indemnitee
requesting such advance or advances from time to time, whether
prior to or after
final disposition of such Proceeding. Such statement or
statements shall
reasonably evidence the Expenses incurred by Indemnitee and
shall include or be
preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that
Indemnitee is
not entitled to be indemnified against such Expenses.
9. Procedure for Determination of Entitlement to
Indemnification.
9.1 To obtain indemnification under this Agreement in connection
with
any Proceeding, and for the duration thereof, Indemnitee shall
submit to the
Corporation a written request, including therein or therewith
such documentation
and information as is reasonably available to Indemnitee and is
reasonably
necessary to determine whether and to what extent Indemnitee is
entitled to
indemnification. The Secretary of the Corporation shall,
promptly upon receipt
of any such request for indemnification, advise the Board in
writing that
Indemnitee has requested indemnification.
9.2 Upon written request by Indemnitee for indemnification
pursuant to
Section 9.1 hereof, a determination, if r
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