EMPLOYMENT AGREEMENT



         EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 9th day of March,

2004 (the "Effective Date"), by and between LADENBURG THALMANN FINANCIAL

SERVICES INC. (the "Company"), a Delaware corporation, and CHARLES I. JOHNSTON

("Executive").



         WHEREAS, the Board of Directors of the Company (the "Board") wishes

Executive to serve as President and Chief Executive Officer of the Company and

various of its subsidiaries; and



         WHEREAS, Executive is willing to provide his services and experience to

the Company and its subsidiaries in such capacities upon the terms, conditions

and provisions hereinafter set forth.



         NOW, THEREFORE, in consideration of the promises and mutual

representations, covenants and agreements set forth herein, and for other good

and valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, the parties hereto agree as follows:



         1. TERM: The term of the Agreement shall commence on the Effective Date

and continue until terminated as provided in Section 7 below.



         2. EMPLOYMENT:



                  (A) Subject to the terms and conditions and for the

compensation hereinafter set forth, the Company hereby agrees to employ

Executive for and during the term of this Agreement. Commencing April 1, 2004,

Executive shall serve as the Company's President and Chief Executive Officer.

Executive's powers and duties shall be those of an executive nature which are

appropriate for a President and Chief Executive Officer in accordance with the

Company's By-Laws; and Executive does hereby accept such employment and agrees

to devote his full business time to the performance of his duties upon the

conditions hereinafter set forth. Executive shall report to the Board. During

the period from the Effective Date until April 1, 2004, Executive shall assist

the Company in transition matters. The Company shall not require Executive to be

employed in any location other than the metropolitan New York area unless he

consents in writing to such location. Commencing April 1, 2004, Executive also

shall serve as Chairman and Chief Executive Officer of the Company's subsidiary,

Ladenburg Thalmann & Co. Inc. ("Ladenburg").



                  (B) During the term of this Agreement, Executive shall be

furnished with office space and facilities commensurate with his position and

adequate for the performance of his duties; Executive also shall be provided

with the perquisites customarily associated with the position of President and

Chief Executive Officer of the Company. During the term of this Agreement, the

Company and Ladenburg shall use their best efforts to cause Executive to be

nominated to serve as a director of the Company and Ladenburg, and Executive

agrees to serve as a director of the Company and Ladenburg, if so appointed,

without additional compensation.







<PAGE>



                  (C) CHARITABLE AND OTHER ACTIVITIES: Executive shall be

allowed, to the extent such activities do not substantially interfere with the

performance of his duties and responsibilities hereunder, (i) to manage his

personal, financial and legal affairs, (ii) to be engaged in civic, charitable,

religious and educational activities, and (iii) to serve on other corporate

boards with the prior written approval of the Board.



         3. COMPENSATION:



                  (A) SALARY: During the term of this Agreement, the Company

agrees to pay Executive, and Executive agrees to accept, an annual salary of not

less than Two Hundred and Fifty Thousand Dollars ($250,000) per year, payable in

accordance with the Company's policies, for services rendered by Executive

hereunder.



                  (B) INCREASES: The annual salary is subject to periodic

increase at the discretion of the Company's Compensation Committee (the

"Committee") (or the Board in lieu thereof), with such increases to take effect

no later than on each anniversary date of this Agreement; PROVIDED, HOWEVER,

that the Committee (or the Board in lieu thereof) shall review the annual salary

for possible increase not less than annually.

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