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





<PAGE>



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

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC