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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
