FREEDOM SECURITIES CORP /DE/, S-1/A, 1998-09-30

FREEDOM SECURITIES CORP /DE/
S-1/A, 1998-09-30
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

Previous: U S RENTALS INC, 15-12B, 1998-09-30

Next: NATIONWIDE FINANCIAL SERVICES INC/, 8-K, 1998-09-30

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1998
REGISTRATION NO. 333-62857

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------

AMENDMENT NO. 1
TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FREEDOM SECURITIES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 6211 04-3335712
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

ONE BEACON STREET
BOSTON, MA 02108
(617) 725-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

JOHN H. GOLDSMITH
CHIEF EXECUTIVE OFFICER
ONE BEACON STREET
BOSTON, MA 02108
(617) 725-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

Copy to:
JAMES WESTRA, ESQUIRE
HUTCHINS, WHEELER & DITTMAR
A PROFESSIONAL CORPORATION
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-6600

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the earlier
registration statement number of the earlier effective registration statement
for the same offering. [ ]_____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

-----------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value
per share....................... 55,231 $13.9687 $771,508 $230
============================================================================================================
</TABLE>

(1) Estimated solely for the purpose of computing the registration fee, based
upon the average of the high and low prices of the Company's Common Stock as
reported on the New York Stock Exchange on August 31, 1998, in accordance
with Rule 457(c) under the Securities Act of 1933, as amended.

-----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

================================================================================
<PAGE> 2

PROSPECTUS

SEPTEMBER 29, 1998

776,555 SHARES

[FREEDOM SECURITIES CORPORATION LOGO]

COMMON STOCK

This Prospectus relates to the public offering, which is not being
underwritten, of up to 776,555 shares of Common Stock, par value $0.01 per share
(the "Shares"), of Freedom Securities Corporation ("Freedom" or the "Company"),
which may be offered from time to time by certain stockholders of the Company
(the "Selling Stockholders"). The Company will receive no part of the proceeds
of such sales. All of the Shares being offered were originally issued by the
Company in connection with the Company's acquisition of Cleary Gull Reiland &
McDevitt Inc., a Delaware corporation ("Cleary Gull"), or in connection with the
exercise of stock options by employees of Cleary Gull under the Company's 1998
Long-Term Incentive Plan. The acquisition of Cleary Gull was consummated by and
through a merger of Cleary Gull with and into a wholly-owned subsidiary of
Freedom, CGRM Acquisition Corp.("Merger Corp.") (the "Cleary Gull Acquisition").
The Shares were issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
provided by Regulation D thereunder. The sale of the Shares is being registered
by the Company pursuant to the Agreement and the Plan of Merger dated as of
March 9, 1998 (the "Agreement") by and among Freedom, Merger Corp. and Cleary
Gull.

The Shares may be offered by the Selling Stockholders from time to time in
one or more transactions as described under "Plan of Distribution." The
aggregate proceeds to the Selling Stockholder(s) from the sale of the shares
offered from time to time hereby will be the purchase price of the shares sold
less commissions, discounts and other compensation, if any, paid by the Selling
Stockholder(s) to any agent or broker-dealer. The price at which any of the
Shares may be sold, and the commissions, if any paid in connection with any such
sale, are unknown and may vary from transaction to transaction. The Company will
pay all expenses incident to the offering and sale of the Shares to the public
other than any commissions and discounts of underwriters, dealers or agents and
any transfer taxes. See "Selling Stockholders" and "Plan of Distribution."

The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "FSI." On September 28, 1998, the last sale price of the Company's
Common Stock was $13.00 per share.

------------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF RISK FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.

------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

------------------------------

The Securities and Exchange Commission (the "Commission") may take the view
that, under certain circumstances, the Selling Stockholders and any
broker-dealers or agents that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Securities Act. Commissions, discounts or concessions received by any
such broker-dealer or agent may be deemed to be underwriting commissions under
the Securities Act. The Company and the Selling Stockholders have agreed to
certain indemnification arrangements. See "Plan of Distribution."
<PAGE> 3
- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in the Prospectus. Unless the context otherwise requires, the terms "Freedom"
and "the Company" mean Freedom Securities Corporation and its consolidated
subsidiaries during the periods following the Acquisition described below and
its predecessor (the "Predecessor Company") during periods prior to the
Acquisition. Certain market information contained herein is based on securities
industry publications.

THE COMPANY

Freedom, through its three brokerage subsidiaries, Tucker Anthony
Incorporated ("Tucker Anthony"), Sutro & Co. Incorporated ("Sutro") and Cleary
Gull Reiland & McDevitt Inc. ("Cleary Gull"), and its asset management
subsidiary, Freedom Capital Management Corporation ("Freedom Capital"), is a
full-service, regionally focused retail brokerage and investment banking firm.
The Company was formed in November 1996 to effect the acquisition (the
"Acquisition") of Freedom Securities Holding Corporation (the "Predecessor
Company") and its subsidiaries, including Tucker Anthony, Sutro and Freedom
Capital, from John Hancock Mutual Life Insurance Company ("Hancock"). Tucker
Anthony, headquartered in Boston and focused primarily on the northeastern
United States, and Sutro, headquartered in San Francisco and focused primarily
on the western United States, are both over 100 years old and have well
established reputations in their respective regions. Cleary Gull, headquartered
in Milwaukee, Wisconsin, was founded in 1987 and is focused primarily on the
midwestern United States. On April 16, 1998, the Company closed into escrow and
funded its previously announced acquisition of Cleary Gull. The acquisition was
completed on May 1, 1998 and was accounted for under the purchase method of
accounting. The consolidated financial and other data included elsewhere in this
Prospectus include the results of Cleary Gull's operations from the date of
acquisition. Management believes that it can best serve the needs of these
distinct regions through separate, locally managed organizations, while avoiding
cost duplication through the use of shared clearing and support services. This
approach enables the Company to capitalize on each organization's name
recognition, historical areas of expertise and close community ties while
lessening the Company's reliance on a single region's economy.

The Company's three primary areas of focus, described below, are (i) its
full-service retail brokerage operations; (ii) its equity capital markets
activities; and (iii) its asset management operations.

Retail Operations. The retail operations of Tucker Anthony and Sutro,
conducted in 13 states and the District of Columbia, have together generated
between 56% and 62% of the Company's operating revenues in each of the last
three calendar years and have historically represented the Company's core
business. In its retail operations, the Company focuses on maintaining and
developing strong client relationships through a dedicated community focus while
providing the breadth and quality of services and products offered by national
brokerage firms. As of June 30, 1998, customers had over $29 billion of assets
in over 200,000 Tucker Anthony and Sutro brokerage accounts. Management believes
that the experience of its 707 investment executives and their strong ties to
their communities help differentiate the Company from its competitors and enable
the Company to more effectively access and serve its clients. Management also
believes that its strategy of providing its investment executives with a high
level of support and the flexibility to operate in an entrepreneurial manner has
allowed the Company to recruit and retain highly effective, motivated investment
executives, many of whom have significant tenure at their local branch offices.

Equity Capital Markets. Each of Tucker Anthony, Sutro and Cleary Gull has
historically demonstrated strengths in offering various investment banking
services, such as merger and acquisition services, to clients within its
respective region. The Company's strategy is to develop equally strong
research-driven equity capital markets groups including equity research,
investment banking, institutional sales, trading and syndication services.
Tucker Anthony's, Sutro's and Cleary Gull's research and investment banking
departments target emerging and middle-market companies within their respective
regions and within the industries in which they specialize. Equity capital
markets activities have generated 16% to 17% of the Company's operating revenues

- --------------------------------------------------------------------------------
3
<PAGE> 4
- --------------------------------------------------------------------------------

in each of the past three calendar years. For the first six months of 1998,
equity capital markets activities generated approximately 23% of the Company's
operating revenues.

Asset Management. Freedom Capital, headquartered in Boston, was formed in
1930 and as of June 30, 1998 managed approximately $6.2 billion of assets,
including approximately $3.4 billion of investments by public sector entities,
high net worth individuals and others, with the remainder comprised of money
market funds for the benefit of Tucker Anthony, Sutro and Cleary Gull clients.
Freedom Capital has developed a leading position in the management of public
funds for local Massachusetts municipalities and agencies, has also developed an
important presence in certain sectors of the union pension fund market and is
growing its corporate funds management business. Asset management revenues have
represented approximately 5% to 6% of the Company's operating revenues in each
of the past three calendar years.

The Company's subsidiaries also engage in a number of other activities,
including trading fixed income securities, underwriting municipal securities,
and purchasing and selling securities in arbitrage transactions. Additionally,
the Company, through a subsidiary, has a 25% interest in the profits and losses
of a joint specialist account in which it participates with two other NYSE
specialist firms. See "Business" for a more complete description of the
Company's activities.

The following chart depicts in simplified form the Company's corporate
structure, including its primary subsidiaries:

------------------
FREEDOM SECURITIES
CORPORATION
------------------
|
---------------------------------------------------------
| | | |
-------------- ------------ --------------- ---------------
CLEARY GULL FREEDOM CAPITAL
TUCKER ANTHONY SUTRO & CO. REILAND & MANAGEMENT
INCORPORATED INCORPORATED MCDEVITT INC. CORPORATION
-------------- ------------ --------------- ---------------

BUSINESS STRATEGY

Since the Acquisition, management formulated and is implementing a strategy
to (i) enhance the services the Company offers its customers; (ii) improve the
profitability of Tucker Anthony's and Sutro's retail operations; (iii) expand
the equity capital markets activities of Tucker Anthony, Sutro and Cleary Gull;
and (iv) increase Freedom Capital's money management business. Management also
plans to supplement the Company's internal growth with strategic acquisitions.
See "Business -- Business Strategy." The principal elements of the Company's
strategy are set forth below:

Enhance Personalized, High-End Service. Tucker Anthony, Sutro and Cleary
Gull have traditionally sought to attract and retain brokerage clients by
offering a high level of personal service responsive to customer needs. The
Company intends to increase its commitment to service by providing its
investment executives with advanced account information systems and flexibility
in determining appropriate fee schedules for certain services based upon the
level of customer needs, and by providing an array of one-stop investment and
financial planning services.

Improve Profitability of Retail Brokerage Operations. The Company intends
to continue to improve the profitability of its retail operations by hiring
additional experienced and highly productive investment executives and by
providing Tucker Anthony's and Sutro's investment executives with enhanced
training, product offerings, information systems and support.

Expand Regional and Speciality Equity Capital Markets Activities. The
Company intends to continue to increase Tucker Anthony's, Sutro's and Cleary
Gull's investment banking business by committing greater

- --------------------------------------------------------------------------------
4
<PAGE> 5
- --------------------------------------------------------------------------------
resources to, and by carefully focusing their research and investment banking
coverage on, companies in geographic regions and industries which management
believes offer the greatest opportunities.

Increase Asset Management Business. Management intends to grow Freedom
Capital's business by extending its public funds business from Massachusetts to
other states, by improving coordination with the Tucker Anthony and Sutro retail
brokerage networks and by increasing the assets under its management and the
number of its portfolio managers through acquisitions or recruiting. The Company
also intends to continue to encourage the growth of Cleary Gull's investment
management services.

Supplement Growth With Strategic Acquisitions. Management plans to
actively pursue opportunities to acquire other firms with complementary
businesses which would strengthen or expand the Company's geographic or product
offering base, such as the acquisition of Cleary Gull, which has allowed the
Company to expand its geographic coverage. Management believes that acquisitions
may also allow the Company to realize cost benefits by leveraging its
infrastructure.

THE ACQUISITION

To finance the Acquisition of Freedom from Hancock in November 1996,
approximately 350 employees of the Company, including senior management and
investment executives, purchased an aggregate of approximately 28% of the
Company's equity (after giving effect to the Company's initial public offering),
with additional equity financing provided by affiliates of Thomas H. Lee Company
("THL") and SCP Private Equity Partners, L.P. ("SCP"). Incentive equity programs
have been established pursuant to which employees have acquired or may acquire
additional equity of the Company, which, when added to shares previously owned,
would result in employees owning up to approximately 45% of the shares of Common
Stock outstanding. See "Certain Relationships and Related Transactions -- The
Acquisition" for a more complete description of the Acquisition and "Management"
for a description of the Company's incentive equity programs.

Management believes that the Company's independence and employee ownership
resulted in progressively higher levels of employee motivation, confidence and
commitment during 1997, as compared to 1996 when the Predecessor Company was for
sale and it was uncertain whether the Acquisition would be consummated or
whether the Predecessor Company would be sold to another organization.
Management believes that uncertainty surrounding the future of the Company
adversely affected the Company's performance in 1996 and, to a lesser extent, in
early 1997 by weakening employee motivation and the Company's ability to recruit
personnel, creating uncertainty among customers and prospective customers,
consuming management's time and inhibiting the Company's ability to pursue new
initiatives. The Company believes that the Acquisition and the strategies
instituted in connection therewith have been successful. For example, Tucker
Anthony, Sutro and Cleary Gull managed or co-managed 19 equity offerings in the
first half of 1998 compared to 17 in the first half of 1997. For the full year
1997, the Company managed or co-managed 34 equity offerings compared to 16 in
1996 and 9 in 1995. In 1997, the Company reported net income of $18.7 million, a
52% increase over net income of $12.3 million in 1996 and a 43% increase over
net income of $13.1 million in 1995. For the first six months of 1998, the
Company reported net income of $12.6 million, before extraordinary item, a 98%
increase over net income of $6.4 million for the first half of 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

INITIAL PUBLIC OFFERING

On April 2, 1998, the Company completed its 7.4 million share initial
public offering, including 4.2 million shares of Common Stock sold by the
Company. The initial public offering raised approximately $76.7 million for the
Company, after deducting underwriting discounts, commissions and expenses.

CLEARY GULL ACQUISITION

- --------------------------------------------------------------------------------

5
<PAGE> 6

research analysts cover such areas as distribution and logistics, business
services, applied technology and growth companies in the midwestern United
States. Cleary Gull's equity capital markets activities include a national
institutional sales force and over-the-counter and listed trading services.
Cleary Gull's investment banking activities are focused primarily on merger and
acquisition advisory services and financing assignments in both public and
private equity and debt markets. Cleary Gull recently established its Private
Client Group to provide retail brokerage and investment management services to
institutional accounts and high net worth individuals.

RISK FACTORS

No assurances can be given that the Company's objectives or strategies will
be achieved. Prospective investors should consider carefully the factors
discussed in detail elsewhere in this Prospectus under the caption "Risk
Factors."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholders....... 776,555 shares
Common Stock to be outstanding after the Offering...... 19,993,833 shares(1)
Dividend policy........................................ The Company declared a dividend of $0.04 per
share on the outstanding shares of Common
Stock beginning with the dividend payable in
the third quarter of 1998 with respect to
the second quarter of 1998 and currently
intends to declare similar quarterly
dividends in the future. See "Dividend
Policy."
Use of proceeds........................................ The Company will not receive any proceeds
from the sale of the Common Stock offered
hereby.
See "Use of Proceeds."
NYSE symbol............................................ "FSI"
</TABLE>

- ------------------------------

(1) Excludes 2,530,769 shares of Common Stock issuable upon exercise of
outstanding stock options under the Company's stock option plans at June 30,
1998, with a weighted average exercise price of $6.85, of which 449,900
shares were exercisable as of such date at a weighted average exercise price
of $5.38, and up to 88,176 shares issuable to Hancock for no additional
consideration upon such exercise. See "Management -- Stock Option and Stock
Purchase Plans" and "Certain Relationships and Related
Transactions -- Additional Share Agreement."

6
<PAGE> 7
- --------------------------------------------------------------------------------

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The information set forth below should be read in conjunction with
"Selected Historical Consolidated Financial and Other Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's and Predecessor Company's Consolidated Financial Statements and
Notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------------
YEARS ENDED ELEVEN MONTHS ONE MONTH
DECEMBER 31, ENDED ENDED
------------------------ NOVEMBER 29, DECEMBER 31,
1993 1994 1995 1996 1996
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total revenues......... $385.6 $327.1 $368.5 $347.5 $30.6
Net revenues(2)........ 364.5 296.9 332.5 321.0 28.8
Total non-interest
expenses............. 335.8 286.0 310.2 300.6 26.8
Acquisition interest
expense.............. -- -- -- -- 0.6
Income before income
taxes................ 28.7 10.9 22.3 20.4 1.4
Extraordinary item (net
of applicable taxes
of $0.9)(4).......... -- -- -- -- --
Net income after
extraordinary item... 16.7 6.4 13.1 11.6 0.7
Basic earnings per
share before
extraordinary
item(5).............. -- -- -- -- $0.05
Diluted earnings per
share before
extraordinary
item(5).............. -- -- -- -- 0.05
Basic earnings per
share after
extraordinary
item(5).............. -- -- -- -- $0.05
Diluted earnings per
share after
extraordinary
item(5).............. -- -- -- -- 0.05

<CAPTION>
SIX MONTHS
COMBINED(1) ENDED
------------ JUNE 30,
YEAR ENDED YEAR ENDED (UNAUDITED)
DECEMBER 31, DECEMBER 31, -------------------
1996 1997 1997 1998
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total revenues......... $378.1 $398.2 $181.4 $235.8
Net revenues(2)........ 349.8 375.8 169.6 221.8
Total non-interest
expenses............. 327.4 337.3(3) 155.5 198.5(3)
Acquisition interest
expense.............. 0.6 6.1 3.0 1.5
Income before income
taxes................ 21.8 32.4 11.1 21.8
Extraordinary item (net
of applicable taxes
of $0.9)(4).......... -- -- -- 1.2
Net income after
extraordinary item... 12.3 18.7 6.4 11.4
Basic earnings per
share before
extraordinary
item(5).............. -- $ 1.31 $ 0.45 $ 0.73
Diluted earnings per
share before
extraordinary
item(5).............. -- 1.27 0.44 0.69
Basic earnings per
share after
extraordinary
item(5).............. -- $ 1.31 $ 0.45 $ 0.66
Diluted earnings per
share after
extraordinary
item(5).............. -- 1.27 0.44 0.62

<CAPTION>
AS OF
JUNE 30, 1998
(UNAUDITED)
-------------
(IN MILLIONS,
EXCEPT PER
SHARE DATA)
<S> <C>
STATEMENT OF FINANCIAL CONDITION DATA:
Total assets.............................................. $655.5
Long-term debt............................................ 19.1
Stockholders' equity...................................... 212.7
Book value per common share outstanding................... $10.64

<CAPTION>
PREDECESSOR SIX MONTHS
COMPANY COMBINED(1) ENDED
--------------------- ----------- JUNE 30,
YEARS ENDED DECEMBER 31, (UNAUDITED)
-------------------------------------------- ---------------
1993 1994 1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
After-tax return on average equity(6)....................... 12.6% 4.5% 8.8% 10.6% 20.6% 15.5% 15.1%
Compensation and benefits expense as a percentage of net
revenues.................................................. 64.9 66.8 65.4 65.2 65.5 64.7 66.0
Non-compensation and benefits operating expense as a
percentage of net revenues................................ 27.3 29.5 27.8 28.4 24.3 27.0 23.5
Amortization of acquisition-related intangibles (in
millions)................................................. -- -- -- $ 0.2 $ 2.5 $ 1.2 $ 3.5(7)
Assets in retail brokerage accounts (at end of period) (in
billions)................................................. $15.0 $17.0 $20.0 $ 23.0 $ 28.0 $ 24.6 $ 29.3
</TABLE>

- ------------------------------
(1) Year ended December 31, 1996 combined financial data refer to the
consolidated results of the Predecessor Company for the eleven months ended
November 29, 1996 combined with the consolidated results of the Company for
the one month ended December 31, 1996. These periods are not directly
comparable due to the effects of the Acquisition, including related purchase
accounting adjustments and the Acquisition financing.
(2) Net revenues equals total revenues less interest expense other than the
Acquisition interest expense.
(3) Includes the effect of $1.4 and $0.5 million of non-cash compensation
expense for the year ended December 31, 1997 and for the six months ended
June 30, 1998, respectively, resulting from issuance of Common Stock and
stock options to employees.
(4) The extraordinary item is a write-off of capitalized debt issuance costs
resulting from the early retirement of $77.5 million in debt with the
proceeds from the Company's second quarter initial public offering.
(5) Basic earnings per share ("Basic EPS") is calculated by dividing net income
by the weighted average number of outstanding shares. Diluted earnings per
share ("Diluted EPS") also includes the effects of the issuance of stock
options and other exercisable shares. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Earnings Per
Share" for a detailed calculation of earnings per share.
(6) After-tax return on average equity is calculated by dividing net income
after extraordinary item by average stockholders' equity for the year or six
month period. For the six months ended June 30, 1998, after-tax return on
average equity before extraordinary item was 16.7%.
(7) Includes amortization of acquisition-related goodwill of $1.0 million,
write-off of debt issuance costs of $2.4 million and amortization of
goodwill relating to the acquisition of Cleary Gull of $0.1 million.

- --------------------------------------------------------------------------------
7
<PAGE> 8

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered in evaluating the Company and its
business before purchasing the shares of Common Stock offered hereby.

ADVERSE CONSEQUENCES OF THE VOLATILE NATURE OF THE SECURITIES BROKERAGE BUSINESS

The stock market has recently experienced significant volatility, including
some of the largest single day point declines in history. After the stock market
declines in October 1987 and October 1989, many firms in the industry suffered
financial losses and the level of individual investor trading activity
decreased. Reduced trading volume and lower prices generally result in reduced
transaction revenues. A severe market fluctuation in the future could have a
material adverse effect on the Company's business, financial condition and
operating results. Lower price levels of securities may result in (i) reduced
volumes of securities transactions, with a consequent reduction in commission
revenues, and (ii) reduced management fees calculated as a percentage of assets
managed. Sudden sharp declines in market values of securities and the failure of
issuers and counterparties to perform their obligations can result in illiquid
markets which, in turn, may result in the Company having difficulty selling
securities, hedging its securities positions and investing funds under its
management.

The securities brokerage business is, by its nature, subject to significant
risks, particularly in volatile or illiquid markets. Risks inherent in the
securities brokerage business discussed elsewhere herein, such as the risk of
trading losses, losses resulting from the ownership or underwriting of
securities, risks associated with principal activities, the failure of
counterparties to meet commitments, customer fraud, employee fraud, issuer
fraud, litigation and errors, misconduct and failures in connection with the
processing of securities transactions, are enhanced in periods of volatility and
illiquidity. The Company's principal business activity, its retail broker-dealer
operations, as well as its investment banking, institutional sales, proprietary
trading, investment advisory and other services, are subject to these enhanced
risks present during volatile trading markets and fluctuations in the volume of
market activity.

In addition, to the extent the Company, through Wexford Clearing Services
Corporation ("Wexford"), the Company's clearing broker, permits customers to
purchase securities on margin, the Company is subject to risks inherent in
extending credit, especially during periods of rapidly declining markets in
which collateral value could fall below the amount of a customer's indebtedness.
Any resulting losses could have a material adverse effect on the Company's
business, financial condition and operating results.

BUSINESS SUBJECT TO GENERAL ECONOMIC AND POLITICAL CONDITIONS

The securities business is directly affected by many factors, including
economic and political conditions, broad trends in business and finance,
legislation and regulation affecting the national and international business and
financial communities, currency values, inflation, market conditions, the
availability and cost of short-term or long-term funding and capital, the credit
capacity or perceived creditworthiness of the securities industry in the
marketplace and the level and volatility of interest rates. Any one or more of
these factors may contribute to reduced levels of trading activity, securities
offerings and merger and acquisition activities, which would result in lower
revenues from the Company's brokerage, trading, institutional sales and
investment banking activities. In addition, these and other factors can
contribute to lower price levels for securities and illiquid markets.

SIGNIFICANT COMPETITION

All aspects of the Company's business and of the securities business in
general are highly competitive. The principal competitive factors influencing
the Company's business are its professional staff, its reputation in the
marketplace, its existing client relationships, its ability to commit capital to
client transactions and its mix of market capabilities. The Company's ability to
compete effectively in its securities brokerage and investment banking
activities will also be influenced by the adequacy of its capital levels and by
its ability to raise additional capital.

8
<PAGE> 9

The Company competes directly with national and regional full service
broker-dealers and, to a lesser extent, with discount brokers, dealers,
investment banking firms, investment advisors and certain commercial banks. In
addition, the Company competes indirectly for investment assets with insurance
companies and others. In addition to competition from firms currently in the
securities business, domestic commercial banks and investment banking boutiques
have recently entered the business. In recent years, large international banks
have entered the markets served by United States investment banks, including the
markets in which the Company competes. The Company expects competition from
domestic and international banks to increase as a result of recent and
anticipated legislative and regulatory initiatives in the United States to
remove or relieve certain restrictions on commercial banks relating to the sale
of securities. The financial services industry has become considerably more
concentrated as numerous securities firms have either ceased operations or have
been acquired by or merged into other firms. Such mergers and acquisitions have
increased competition from these firms, many of which have significantly greater
equity capital and financial and other resources than the Company. Many of these
firms, because of their significantly greater financial capital and scope of
operations, are able to offer their customers more product offerings, broader
research capabilities, access to international markets and other products and
services not offered by the Company, which may provide such firms with
competitive advantages over the Company.

The Company also faces competition from a rapidly developing industry
comprised of companies offering discount and/or electronic brokerage services.
These competitors may have lower costs and may offer their customers more
attractive pricing or other terms than those offered by the Company. The Company
also anticipates competition from underwriters who attempt to effect public
offerings for emerging and middle-market companies through new means of
distribution, including transactions effected using electronic media such as the
Internet. In addition, issuers may attempt to sell their securities directly to
purchasers, including through sales using electronic media such as the Internet.
To the extent that issuers and purchasers of securities are able to transact
business without the assistance of financial intermediaries such as the Company,
the Company's operating results could be adversely affected.

DEPENDENCE ON PERSONNEL

The Company's business is dependent on the highly skilled and often highly
specialized individuals it employs. Retention of senior management and retail
investment executives, research, investment banking, public finance,
institutional sales and trading, money management and administrative
professionals is particularly important to the Company's prospects. The Company
generally does not have written employment agreements with its investment
professionals.

The departure of an investment executive typically results in such
executive taking his or her clients with him or her. The departure of investment
executives could adversely impact the Company's operating results.

The Company's strategy with respect to investment banking is to establish
relationships with the Company's prospective corporate clients in advance of any
transaction and to maintain such relationships over the long term by providing
advisory services to corporate clients in public or private offerings of equity
or debt securities and merger and acquisition transactions. Similarly, the
Company's strategy with respect to state and local government clients is to
establish long-term relationships by providing advisory services to governmental
entities as well as underwriting services. Research professionals contribute
significantly to the Company's ability to secure a role in managing public
offerings and in providing other investment banking services. From time to time,
the Company has experienced losses of equity research, investment banking,
public finance, and institutional sales and trading professionals. The loss of a
significant number of such professionals could materially adversely affect the
Company's operating results.

The intense competition for skilled professionals has led to escalating
compensation packages in the industry for such individuals. Upfront payments,
increased payouts and guaranteed contracts make hiring of employees more
difficult and can be a major factor in an employee leaving the Company. There
can be no assurance that losses of key personnel due to such competition or
otherwise will not occur in the future.

The Company's business, financial condition and operating results depend,
to a significant extent, on the ability of the management of the Company and its
subsidiaries to implement the Company's strategy outlined

9
<PAGE> 10

in this Prospectus. See "Business -- Business Strategy." There is no guarantee,
however, that management will be able to successfully implement such strategy or
that such strategy will be effective, and the inability of management to succeed
in its efforts may have an adverse effect on the Company's business, financial
condition and operating results.

GEOGRAPHIC CONCENTRATION OF THE COMPANY'S BUSINESS

Because of the Company's focus on investors and equity capital market
clients based in the northeastern, midwestern and western United States, a
significant economic downturn in any of those regions could adversely affect the
Company's revenues. Approximately 59% of the Company's 1997 operating revenue
(and a significantly greater percentage of the Company's operating income) was
generated by Tucker Anthony whose clients are primarily located in the
northeastern United States and approximately 35% was generated by Sutro whose
clients are primarily located in the western United States. During the second
quarter of 1998, Cleary Gull, whose clients are primarily located in the
midwestern United States, generated 8% of the Company's operating revenue. As a
result, an economic downturn in one of these regions could adversely affect the
companies in these regions, which in turn could reduce the Company's
underwriting and brokerage business relating to those companies. In addition, a
regional economic downturn in one of these regions could have an adverse effect
on the Company's retail clients in that region or emerging and middle-market
companies in that region. Any adverse effect on emerging and middle-market
companies or growth industries concentrated in the northeastern, midwestern or
western United States or, to a lesser extent, in other regions in which emerging
or middle-market technology, healthcare, financial service, consumer product,
distribution and logistics, applied technology and business services companies
are also concentrated could also reduce the Company's business relating to those
companies.

DEPENDENCE ON CERTAIN RELATIONSHIPS

The Company has entered into an arrangement with Wexford pursuant to which
Wexford acts as the Company's clearing broker. The Company's communications and
information systems are coordinated with the clearing information systems of
Wexford. Additionally, Wexford furnishes the Company with information necessary
to run the Company's business, including commission runs, transaction summaries,
data feeds for various reports including compliance and risk management,
execution reports, trade confirmations, monthly account statements, cashiering
functions and the handling of margin accounts. Accordingly, the Company is
currently dependent upon Wexford's clearing capabilities and systems. The
Company and Wexford are parties to an agreement setting forth the terms and
conditions of their relationship. The initial term of the Agreement expires
April 3, 2001 and renews annually thereafter (unless either party gives notice
of its intent not to renew), subject to earlier termination by Wexford in the
event the Company fails to meet certain financial tests. The per trade charge
under the Wexford Agreement is subject to adjustment based on a consumer price
index commencing in April 1999. The Agreement provides that either Wexford or
the Company have the right to renegotiate the financial terms and services of
the contract to apply after the end of the initial term. Any interruption of
service by or at Wexford, or the inability of the Company to extend the Wexford
arrangement on acceptable terms or find an acceptable alternative for the
Company's financing or clearing arrangements could have a material adverse
effect on the Company's business, financial condition and operating results. For
1997 the Company paid clearing and financing fees to Wexford totaling
approximately $20 million, which represented approximately 5% of net revenues.
Assuming similar trading volumes in 1998, the Company expects that these charges
will continue for the remainder of 1998.

DEPENDENCE ON OUTSIDE SOURCES OF FINANCING

The principal sources of the Company's cash and liquidity are financing
activities, commissions, collateralized repurchase agreements and collateralized
loans. The Company currently has an uncommitted financing arrangement with
Wexford through which the Company finances its customer accounts and firm
trading positions. Such financing of customer accounts is not reflected in the
Company's Statements of Financial Condition. The Company retains risk with
respect thereto, however, because the Company has agreed to indemnify Wexford
for losses it may sustain in connection with the accounts of the Company's
customers. The availability of financing to the Company may vary depending on
market conditions, the

10
<PAGE> 11

volume of certain trading activities, credit ratings, credit capacity and the
overall availability of credit to the financial services industry. There can be
no assurance that the Company will be able to access the necessary lines of
credit or that financing adequate to support the Company's business will be
available in the future.

CONSTRAINTS IMPOSED BY BANK DEBT

The Company currently maintains a senior revolving credit facility with
BankBoston, N.A. as agent for several lenders (the "Credit Facility"), with no
outstanding balance. The Company also maintains through two of its subsidiaries,
a fixed asset leasing arrangement with BancBoston Leasing Inc. (the "Fixed Asset
Facility") with an outstanding balance at June 30, 1998 of approximately $19.1
million.

The terms of the Credit Facility require the Company and certain of its
subsidiaries to maintain specified financial ratios and satisfy certain tests,
including, among others, a minimum interest coverage ratio, a minimum debt
service coverage ratio and a maximum leverage ratio. The ability of the Company
to comply with the foregoing financial ratios and tests may be affected by
events beyond the control of the Company, and there can be no assurance that the
Company will achieve operating results that comply with such provisions. A
breach of any of the foregoing covenants would result in a default under the
Credit Facility. In the event of any such default, the lenders could elect to
declare all amounts borrowed under the Credit Facility, together with accrued
interest thereon, to be immediately due and payable and pursuant to a
cross-default provision in the Fixed Asset Facility, BancBoston Leasing, Inc.
may accelerate the amounts due under the Fixed Asset Facility. If the Company
were unable to repay such amounts, the lenders could proceed against the
collateral granted to them to repay the indebtedness and other obligations due
and payable under the Credit Facility. If the Credit Facility were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full such indebtedness and the other indebtedness of the
Company. If the Company were to default under the Credit Facility and the
lenders thereunder were to foreclose on such subsidiary stock, such subsidiary
stock could be sold to a third party, which would adversely affect the Company.

DEPENDENCE ON TECHNOLOGY

The Company's business is highly dependent on communications and
information systems. Any failure or interruption of the Company's or its
subsidiaries' systems, or of the systems of Wexford, could cause delays in the
Company's securities trading activities which could have a material adverse
effect on the Company's operating results. Such failures and interruptions may
result from the inability of certain computing systems (including those of the
Company, Wexford and other third party vendors) to recognize the Year 2000.
There can be no assurance that these Year 2000 issues can be adequately
addressed by the Company, that the costs incurred in connection therewith will
not exceed anticipated amounts or that any such additional payments would not
have a material adverse effect on the results of operations or financial
condition of the Company. In addition, there can be no assurance that the
Company, its subsidiaries or Wexford will not suffer any systems failure or
interruption, whether caused by earthquake, fire, other natural disaster, power
or telecommunications failure, act of God, act of war or otherwise, or that the
Company's or its subsidiaries' or Wexford's back-up procedures and capabilities
in the event of any such failure or interruption will be adequate. Furthermore,
any deterioration in Wexford's or its parent's financial condition could
materially adversely affect the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Year 2000
Compliance."

LITIGATION IN THE COMPANY'S SECURITIES BROKERAGE BUSINESS

Many aspects of the Company's securities brokerage business involve
substantial risks of liability. From time to time the Company or its
subsidiaries may be named as defendants in civil litigation arising from their
business activities as retail broker-dealers. The plaintiffs in such litigation
may allege misconduct on the part of the Company's investment executives,
claiming, for example, that investments sold to such plaintiffs by the Company's
investment executives were unsuitable for their portfolios, or that such
investment executives engaged in excessive trading with respect to such
plaintiffs' accounts. Factors affecting the likelihood of such litigation
include the conduct of individual investment executives and the performance of
the investment vehicles sold by the Company's investment executives. Such
factors have resulted in the Company making payments to plaintiffs in the past,
and there can be no assurance that substantial payments in connection with the
resolution of such litigation will not occur in the future.

11
<PAGE> 12

In recent years, there has been a substantial amount of litigation
involving the securities brokerage industry, including class action lawsuits
that generally seek substantial damages and other suits seeking punitive
damages. Companies engaged in the underwriting of securities, including Tucker
Anthony Sutro and Cleary Gull, are subject to substantial potential liability,
including for material misstatements or omissions in prospectuses and other
communications with respect to underwritten offerings of securities or
statements made by securities analysts, under federal laws such as Rule 10b-5
promulgated under the Securities and Exchange Act of 1934 and Section 11 of the
Securities Act and similar state statutes and common law doctrines. See
"-- Business Subject to Significant Regulation." Like other securities brokerage
firms, the Company and its subsidiaries have been named as defendants in class
action and other lawsuits and have in the past been subject to substantial
settlements and judgments. The risk of liability may be higher for an
underwriter which, like the Company, is active in the underwriting of securities
offerings for emerging and middle-market companies due to the higher degree of
risk and volatility associated with the securities of such companies. The
defense of these or any other lawsuits or arbitrations may divert the efforts
and attention of the Company's management and staff, and the Company may incur
significant legal expense in defending such litigation or arbitration. This may
be the case even with respect to frivolous claims or litigation. The amount of
time that management and other employees may be required to devote in connection
with the defense of litigation could be substantial and might divert their
attention from other responsibilities within the Company.

In the normal course of business, the Company and its subsidiaries are also
defendants in various civil actions and arbitrations arising out of their
activities as employers and as a result of other business activities. The
Company and its subsidiaries have in the past made substantial payments in
connection with the resolution of disputed claims, and there can be no assurance
that substantial payments in connection with the resolution of disputed claims
will not occur in the future.

As of July 31, 1998, there were approximately 36 lawsuits and arbitrations
pending against the Company and its subsidiaries. The Company does not believe
that these lawsuits and arbitrations, in the aggregate, will have a material
adverse effect on the Company's results of operations or financial condition.

As is common in the securities industry, the Company does not carry
insurance that would cover payments made in connection with certain types of
lawsuits. In addition, the Company's and its subsidiaries' charter documents
require indemnification of the Company's and such subsidiaries' officers,
directors and agents to the maximum extent permitted by law.

POTENTIAL LOSSES DUE TO FRAUD OR MISTAKES OF CUSTOMERS OR EMPLOYEES

The Company is exposed to the risk of significant losses as a result of
customer fraud, employee errors, misconduct and fraud (including unauthorized
transactions by traders) and failures in connection with the processing of
securities transactions. There can be no assurance that the Company's risk
management procedures and internal controls will prevent such losses from
occurring.

The Company has determined that a former employee improperly valued
securities positions of the Company over the first eleven months of 1997 in
order to conceal trading losses for which such former employee was responsible.
The Company determined in the fourth quarter of 1997 that approximately $2.6
million of trading losses arose from the actions of the former employee. The
loss has been included in the Company's financial results as follows: $228,000
in the first quarter, $1,071,000 in the second quarter, $431,000 in the third
quarter and $901,000 in the fourth quarter. The Company notified the Securities
and Exchange Commission (the "Commission") and the NYSE of this situation. The
Company has conducted an internal review of the specific trading loss and the
Company's reports and procedures relating thereto and the Company has enhanced
procedures where appropriate. The Commission and the NYSE are investigating this
matter. The Company does not expect that the results of these investigations
will have a material adverse effect on the Company's business, financial
condition or operating results.

12
<PAGE> 13

MARKET, CREDIT AND LIQUIDITY RISKS ASSOCIATED WITH MARKET MAKING, PRINCIPAL
TRADING, ARBITRAGE AND UNDERWRITING ACTIVITIES

The Company's market making, principal trading, arbitrage and underwriting
activities often involve the purchase, sale or short sale of securities as
principal. Such activities subject the Company's capital to significant risks
from markets that may be characterized by relative illiquidity or that may be
particularly susceptible to rapid fluctuations in liquidity. Such market
conditions could limit the Company's ability to resell securities purchased or
to repurchase securities sold short. Such activities subject the Company's
capital to significant risks, including market, credit, counterparty and
liquidity risks. Market risk relates to the risk of fluctuating values based on
market prices without any action on the part of the Company. Credit risk relates
generally to the ability of third parties to whom the Company has extended
credit to repay amounts owed to the Company. Counterparty risk relates to
whether a counterparty on a derivative or other transaction will fulfill its
contractual obligations, which may include delivery of securities or payment of
funds. Liquidity risk relates to the Company's inability to liquidate assets or
redirect the deployment of assets contained in illiquid investments.

As a result of its underwriting and arbitrage activities, from time to time
the Company has large position concentrations in securities of, or commitments
to, a single issuer or issuers engaged in a specific industry. In addition, the
trend in all major capital markets, for competitive and other reasons, toward
larger commitments on the part of lead underwriters means that, from time to
time, an underwriter (including a co-manager) may retain significant position
concentrations in individual securities. Such concentrations increase the
Company's exposure to specific credit and market risks.

CONSTRAINTS IMPOSED BY NET CAPITAL REQUIREMENTS

The Commission, the NYSE, and various other securities exchanges and other
regulatory bodies in the United States have rules with respect to net capital
requirements which affect each broker-dealer subsidiary of the Company. These
rules are designed to ensure that broker-dealers maintain adequate regulatory
capital in relation to their liabilities and the size of their customer
business. These rules (the "Net Capital Rules") have the effect of requiring
that a substantial portion of a broker-dealer's assets be kept in cash or highly
liquid investments. Failure to maintain the required net capital may subject a
firm to suspension or revocation of its registration by the Commission and
suspension or expulsion by the National Association of Securities Dealers (the
"NASD") and other regulatory bodies, and ultimately may require its liquidation.
Compliance by the Company's broker-dealer subsidiaries with such Net Capital
Rules could limit certain operations that require intensive use of capital, such
as underwriting or trading activities. These rules could also restrict the
ability of the Company to withdraw capital, even in circumstances where the
Company's broker-dealer subsidiaries have more than the minimum amount of
required capital, which, in turn, could limit the ability of the Company to pay
dividends, implement its strategies, pay interest on and repay the principal of
its debt and redeem or repurchase shares of outstanding capital stock. In
addition, a change in such Net Capital Rules or the imposition of new rules
affecting the scope, coverage, calculation or amount of such net capital
requirements, or a significant operating loss or any large charge against net
capital, could have similar adverse effects.

CONCENTRATED CONTROL OF THE COMPANY

As of June 30, 1998, THL owns approximately 25%, SCP owns approximately 3%
and current or former employees of the Company and its subsidiaries own
approximately 32% of the outstanding Common Stock of the Company. This
concentration of ownership and voting power may have the effect of accelerating,
delaying or preventing a change in control of the Company or otherwise affect
the ability of any stockholder to influence the policies of the Company. See
"Certain Relationships and Related Transactions -- Stockholders Agreement."

BUSINESS SUBJECT TO EXTENSIVE REGULATION

Each subsidiary of the Company which is registered as a broker-dealer
and/or investment advisor is, and the securities industry in general is, subject
to extensive regulation in the United States at both the federal and

13
<PAGE> 14

state level. Broker-dealers are subject to regulations covering all aspects of
the securities business, including sales methods, trade practices among
broker-dealers, use and safekeeping of customers' funds and securities, capital
structure, record keeping and the conduct of directors, officers and employees.
As a result of the Cleary Gull Acquisition, Cleary Gull was required to
re-register as a broker-dealer with the NASD and each state in which it conducts
business. Cleary Gull's membership application with the NASD and various state
registration applications are currently pending.

As registered investment advisors under the Investment Advisors Act of 1940
(the "Advisors Act"), Tucker Anthony, Sutro, Cleary Gull and Freedom Capital are
subject to regulations which cover various aspects of the Company's business,
including compensation arrangements. Under the Advisors Act, every investment
advisory agreement with the Company's clients must expressly provide that such
contract may not be assigned by the investment advisor without the consent of
the client. Under the Investment Company Act of 1940 (the "Investment Company
Act"), every investment advisor's agreement with a registered investment company
must provide for the agreement's automatic termination in the event it is
assigned. Under both the Advisors Act and the Investment Company Act, an
investment advisory agreement is deemed to have been assigned when there is a
direct or indirect transfer of the Agreement, including a direct assignment or a
transfer of a "controlling block" of the advisor's voting securities or, under
certain circumstances, upon the transfer of a "controlling block" of the voting
securities of its parent corporation. A transaction is not, however, an
assignment under the Advisors Act or the Investment Company Act if it does not
result in a change of actual control or management of the investment advisor.
Any assignment of the Company's investment advisory agreements would require, as
to any registered investment company client, the approval of a majority of its
shareholders, and as to the Company's other clients, the consent of such clients
to such assignments.

As a matter of public policy, regulatory bodies are charged with
safeguarding the integrity of the securities and other financial markets and
with protecting the interests of customers participating in those markets, not
with protecting the interests of the Company's stockholders. In addition,
self-regulatory organizations ("SROs") and other regulatory bodies in the United
States, such as the Commission, the NYSE, the NASD, the Commodities Futures
Trading Commission (the "CFTC"), the National Futures Association (the "NFA")
and the Municipal Securities Rulemaking Board (the "MSRB"), require strict
compliance with their rules and regulations. Failure to comply with any of these
laws, rules or regulations, the application of which under certain circumstances
may be unclear, could result in a variety of adverse consequences including
censure, civil penalties (including treble damages in the case of insider
trading violations), fines, the issuance of cease-and-desist orders, the
deregistration or suspension of a broker-dealer, investment adviser or futures
commission merchant, the statutory disqualification of officers or employees or
other adverse consequences which could have a material adverse effect on the
Company. Even if none of such actions is taken, such administrative or judicial
proceedings or arbitrations could have a material adverse effect on the
Company's perceived creditworthiness, reputation and competitiveness. Customers
of the Company's subsidiaries or others who allege that they have been damaged
by a violation of applicable regulations also may seek to obtain compensation
from such subsidiary, including the unwinding of any transactions with such
subsidiary. Additional legislation or regulations, or changes in the methods or
enforcement of existing regulations by governmental entities or SROs may
materially and adversely affect the Company's business, financial condition or
operating results.

The Company's businesses may be materially affected not only by regulations
applicable to its subsidiaries as financial market intermediaries, but also by
regulations of general application. For example, the volume of the Company's
underwriting, merger and acquisition and principal investment business in a
given time period could be affected by, among other things, existing and
proposed tax legislation, antitrust policy and other governmental regulations
and policies (including the interest rate policies of the Federal Reserve Board)
and changes in interpretation or enforcement of existing laws and rules that
affect the business and financial communities. From time to time, various forms
of antitakeover legislation and legislation that could affect the benefits
associated with financing leveraged transactions with high-yield securities have
been proposed that, if enacted, could adversely affect the volume of merger and
acquisition business, which in turn could adversely affect the Company's
underwriting, advisory and trading revenues related thereto. The level of
business and financing activity in each of the industries on which the Company
and its subsidiaries focus can be affected not

14
<PAGE> 15

only by such legislation or regulations of general applicability, but also by
industry-specific legislation or regulations.

The Company's subsidiaries' ability to comply with applicable laws and
rules is dependent in large part upon the establishment and maintenance of a
compliance system designed to monitor compliance with such laws and rules, as
well as the Company's ability to attract and retain qualified compliance
personnel. The Company and its subsidiaries could in the future be subject to
disciplinary or other actions due to claimed noncompliance which could have a
material adverse effect on the Company's business, financial condition and
operating results.

LIMITED OPERATING HISTORY AS STAND-ALONE COMPANY

The Company is a holding company formed in November 1996 to effect the
Acquisition. It conducts its business solely through its subsidiaries. Prior to
the Acquisition, Tucker Anthony, Sutro and the Company's other subsidiaries were
indirect wholly owned subsidiaries of Hancock and prior to May 1, 1998, Cleary
Gull was an independent company. Consequently, the Company has a limited history
as a stand-alone company. In the past, Hancock or its affiliates provided
certain services to the Company, particularly short term financing and various
employee benefit and insurance services, and also limited legal and other
support services. The Company and its subsidiaries no longer obtain such
services from Hancock or its affiliates. See "Certain Relationships and Related
Transactions -- Relationship Between the Company and Hancock."

POTENTIAL ADVERSE MARKET EFFECT OF FUTURE SALES OF COMMON STOCK

Sales of a substantial number of shares of Common Stock in the public
market, whether by public stockholders or by THL, SCP or employees of the
Company, could adversely affect the prevailing market price of the Common Stock
and could impair the Company's future ability to raise capital through an
offering of its equity securities. There will be 19,993,833 shares of Common
Stock outstanding immediately after completion of this offering, of which
9,231,324 shares will be freely tradeable. All other shares will be owned by
THL, Hancock, SCP or current or former Company employees and will be "restricted
securities" for purposes of the Securities Act of 1933, as amended (the
"Securities Act"), and, subject to the volume and other limitations set forth in
Rule 144 promulgated under the Securities Act, will be eligible for sale on or
about September 30, 1998. The Company, THL, Hancock, SCP and certain employees
of the Company are parties to an agreement which provides THL, Hancock, SCP and
such employees with certain registration rights. See "Certain Relationships and
Related Transactions" and "Shares Eligible for Future Sale."

HOLDING COMPANY STRUCTURE

Substantially all of the revenues of the Company are generated by Tucker
Anthony, Sutro, Cleary Gull and Freedom Capital, and their subsidiaries. Freedom
Securities Corporation, the issuer of the shares offered hereby, relies
exclusively on financing activities and distributions from its subsidiaries for
funds required to pay dividends, implement its strategies and redeem or
repurchase shares of outstanding capital stock. The Company's ability to receive
distributions from its subsidiaries may be limited by the Net Capital Rules,
restrictions which may be imposed by the Credit Facility or successor borrowing
arrangements of the Company's subsidiaries, or by the earnings, financial
condition and cash requirements of the Company's subsidiaries. Additionally,
there can be no assurance that the Company will be able to obtain funds through
financing activities. These factors may impose limitations on or prevent the
Company from paying dividends, implementing its strategies or repurchasing
shares of its capital stock.

INTEGRATION AND OTHER RISKS ASSOCIATED WITH ACQUISITION STRATEGY

The Company expects to continue a strategy of identifying and acquiring
companies with complementary businesses which would strengthen or expand the
firm's geographical or product offering base. There can be no assurance that the
Company will be able to identify appropriate acquisition candidates, negotiate
appropriate acquisition terms, obtain financing which may be needed to effect
such acquisitions or integrate acquisitions

15
<PAGE> 16

successfully into the Company's operations. Additionally, there can be no
assurance that any such acquisitions will contribute to the profitability of the
Company.

BOARD OF DIRECTORS' ABILITY TO DESIGNATE TERMS AND AUTHORIZE ISSUANCE OF BLANK
CHECK PREFERRED STOCK

The Company is authorized to issue "blank check" preferred stock
("Preferred Stock"), which may be issued from time to time in one or more series
upon authorization by the Company's Board of Directors. The Board of Directors,
without further approval of the stockholders, is authorized to fix the dividend
rights, conversion rights, voting rights, redemption rights, liquidation
preferences, and any other rights, preferences, privileges and restrictions
applicable to each series of the Preferred Stock. The issuance of Preferred
Stock, while providing flexibility in connection with possible acquisitions and
other corporate purposes could, among other things, adversely affect the voting
power and dividend rights of the holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company, discourage bids for the Company's Common Stock at a premium or
otherwise adversely affect the market price of the Common Stock. See
"Description of Capital Stock -- Certain Certificate of Incorporation, Bylaw and
Statutory Anti-Takeover Provisions Affecting Stockholders."

USE OF DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into derivatives transactions as part of its principal
trading activities, primarily to manage its own interest rate and price risks,
and also as an alternative to investment in the cash markets. While the use of
derivatives may allow the Company to better manage certain risks, derivatives
also have risks that are similar in type to the risks of the cash market
instruments to which their values are linked. For example, in times of market
stress, sharp price movements or reductions in liquidity in the cash markets may
be related to comparable or even greater price movements and reductions in
liquidity in the derivatives markets. Further, the risks associated with
derivatives are potentially greater than those associated with the related cash
market instruments because of the additional complexity and potential for
leverage. In addition, derivatives may create credit risk (the risk that a
counterparty on a derivative transaction will not fulfill its contractual
obligations), as well as legal, operational, reputational and other risks beyond
those associated with the underlying cash market instruments to which their
values are linked. The Company manages the risks associated with its derivative
financial instruments as part of its overall risk management policies and
procedures. There can be no assurance, however, that the Company's use of
derivatives may not have a material adverse effect on its results of operations
or financial condition in any period.

CONFLICTS OF INTEREST

Certain key employees of the Company, including the executive officers of
the Company, make investments in, or make investments together with, certain of
the Company's equity capital markets clients through various investment
vehicles. See "Certain Relationships and Related Transactions -- Other
Transactions with Management -- Investment Partnerships." Conflicts of interest
could exist in situations where the investment objectives of such employees are
not aligned with those of such clients. The Company does not believe that any
such conflict of interest will have any adverse effect on the Company's
operations or financial condition. The Company believes that no material
conflicts of interest exist between the Company or its employees, on the one
hand, and investors in this offering, on the other.

RESTRICTION ON PAYMENT OF DIVIDENDS

The Predecessor Company paid dividends on its Common Stock each year from
1991 to 1995. No dividends were paid by the Company in 1996 or 1997. The
Company's Board of Directors has declared a dividend of $0.04 per share on the
outstanding shares of Common Stock payable in the third quarter of 1998 with
respect to the second quarter of 1998 and currently intends to pay similar
dividends on a quarterly basis. The timing and amount of future dividends will
be determined by the Board and will depend, among other factors, upon the
Company's earnings, financial condition and cash requirements at the time such
payment is considered. Furthermore, the net capital rules of the various
regulatory bodies impose limitations on the payment of dividends by the Company.
See "Dividend Policy."

16
<PAGE> 17

CERTAIN CERTIFICATE OF INCORPORATION, BYLAW AND STATUTORY ANTI-TAKEOVER
PROVISIONS AFFECTING STOCKHOLDERS

The Company's Certificate of Incorporation and Bylaws and certain statutes
affecting the Company contain provisions that might diminish the likelihood that
a potential acquiror would make an offer for the Common Stock, or impede a
transaction favorable to the interests of the stockholders, or increase the
difficulty of removing the incumbent Board of Directors and management. These
provisions with respect to the Company's Certificate of Incorporation and Bylaws
include (i) the authority of the Board of Directors to issue a series of
preferred stock with such voting rights and other powers as the Board of
Directors may determine; (ii) the inability of stockholders to take any action
without a meeting or to call a special meeting of stockholders; and (iii)
certain advance notice procedures for nominating candidates for election as
directors and for submitting proposals for consideration at stockholders'
meetings. See "Description of Capital Stock -- Certain Certificate of
Incorporation, Bylaw and Statutory Anti-Takeover Provisions Affecting
Stockholders."

17
<PAGE> 18

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of shares of Common
Stock offered hereby by the Selling Stockholders. See "Principal and Selling
Stockholders."

DIVIDEND POLICY

18
<PAGE> 19

CAPITALIZATION

The following table sets forth the long-term debt and total capitalization
of the Company as of June 30, 1998.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
-------------------
(IN THOUSANDS)
<S> <C>
Long-term debt:
Credit Facility........................................... $ --
Fixed Asset Facility...................................... 19,125
--------
Total long-term borrowings........................ 19,125
Stockholders' equity:
Common Stock, $.01 par value; 60,000,000 shares
authorized; 19,993,833 shares issued and outstanding... 200
Additional paid-in capital................................ 181,645
Retained earnings......................................... 30,826
--------
Total stockholders' equity........................ 212,671
--------
Total capitalization.................. $231,796
========
</TABLE>

19
<PAGE> 20

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

The selected consolidated financial data set forth below for the six months
ended June 30, 1998 and 1997 are derived from consolidated financial statements
not included in this Prospectus and have not been audited by Ernst & Young, LLP,
independent accountants. The selected consolidated financial data set forth
below as of December 31, 1996 and 1997 and for the one month period ended
December 31, 1996 and year ended December 31, 1997 are derived from the
consolidated financial statements of the Company included elsewhere in this
Prospectus which have been audited by Ernst & Young LLP, independent
accountants. The selected consolidated financial data set forth below for the
year ended December 31, 1995 and for the eleven months ended November 29, 1996
are derived from the consolidated financial statements of the Predecessor
Company included elsewhere in this Prospectus which have been audited by Ernst &
Young LLP, independent accountants. The selected consolidated financial data as
of December 31, 1993, 1994 and 1995 and for the years ended December 31, 1993
and 1994 are derived from financial statements of the Predecessor Company, also
audited by Ernst & Young LLP, not included in this Prospectus. The historical
results are not necessarily indicative of the results of operations to be
expected in the future. The following financial data are qualified in their
entirety by, and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY COMBINED(1)
------------------------------------------ ------------
ELEVEN ONE MONTH
YEARS ENDED DECEMBER 31, MONTHS ENDED ENDED YEAR ENDED YEAR ENDED
-------------------------- NOVEMBER 29, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1996 1996 1997
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Commissions..................... $131.1 $122.9 $140.2 $139.0 $12.5 $151.5 $167.2
Principal transactions.......... 125.3 85.3 105.8 95.5 8.4 103.9 99.3
Investment banking.............. 63.0 40.1 34.8 34.0 4.1 38.1 55.2
Asset management................ 12.6 13.0 14.9 17.3 1.7 19.0 19.9
Other........................... 12.9 13.7 12.7 15.2 0.6 15.8 12.5
------ ------ ------ ------ ----- ------ ------
Total operating revenues.... 344.9 275.0 308.4 301.0 27.3 328.3 354.1
Interest income................. 40.7 52.1 60.1 46.5 3.3 49.8 44.1
------ ------ ------ ------ ----- ------ ------
Total revenues.............. 385.6 327.1 368.5 347.5 30.6 378.1 398.2
Interest expense................ 21.1 30.2 36.0 26.5 1.8 28.3 22.4
------ ------ ------ ------ ----- ------ ------
Net revenues(2)............. 364.5 296.9 332.5 321.0 28.8 349.8 375.8
Non-interest expenses:
Compensation and benefits....... 236.4 198.3 217.6 209.2 18.9 228.1 245.9(3)
Occupancy and equipment......... 26.0 25.8 26.1 31.0 2.2 33.2 24.3
Communications.................. 15.8 16.4 18.1 16.6 1.3 17.9 17.0
Brokerage and clearance......... 7.9 7.5 7.3 10.5 1.0 11.5 11.3
Promotional..................... 9.2 7.9 9.5 9.1 0.8 9.9 10.3
Other........................... 40.5 30.1 31.6 24.2 2.6 26.8 28.5
------ ------ ------ ------ ----- ------ ------
Total non-interest
expenses.................. 335.8 286.0 310.2 300.6 26.8 327.4 337.3
------ ------ ------ ------ ----- ------ ------
Acquisition interest expense...... -- -- -- -- 0.6 0.6 6.1
------ ------ ------ ------ ----- ------ ------
Income before income taxes........ 28.7 10.9 22.3 20.4 1.4 21.8 32.4
Income taxes...................... 12.0 4.5 9.2 8.8 0.7 9.5 13.7
------ ------ ------ ------ ----- ------ ------
Net income before extraordinary
item............................ 16.7 6.4 13.1 11.6 0.7 12.3 18.7
Extraordinary item (net of
applicable taxes of $0.9)(4).... -- -- -- -- -- -- --
------ ------ ------ ------ ----- ------ ------
Net income after extraordinary
item............................ $ 16.7 $ 6.4 $ 13.1 $ 11.6 $ 0.7 $ 12.3 $ 18.7
====== ====== ====== ====== ===== ====== ======
Basic earnings per share before
extraordinary item(5)........... -- -- -- -- $0.05 -- $ 1.31
===== ======
Diluted earnings per share before
extraordinary item(5)........... -- -- -- -- 0.05 -- 1.27
===== ======
Basic earnings per share after
extraordinary item(5)........... -- -- -- -- $0.05 -- $ 1.31
===== ======
Diluted earnings per share after
extraordinary item(5)........... -- -- -- -- 0.05 -- 1.27
===== ======

SIX MONTHS
ENDED
JUNE 30,
-----------------
1997 1998
(UNAUDITED)
<S> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Commissions..................... $77.7 $94.5
Principal transactions.......... 44.6 50.9
Investment banking.............. 22.0 45.8
Asset management................ 9.5 11.9
Other........................... 6.4 6.9
------- -------
Total operating revenues.... 160.2 210.0
Interest income................. 21.2 25.8
------- -------
Total revenues.............. 181.4 235.8
Interest expense................ 11.8 14.0
------- -------
Net revenues(2)............. 169.6 221.8
Non-interest expenses:
Compensation and benefits....... 109.7 146.4(3)
Occupancy and equipment......... 12.9 13.1
Communications.................. 8.6 9.0
Brokerage and clearance......... 5.6 6.2
Promotional..................... 4.5 6.5
Other........................... 14.2 17.3
------- -------
Total non-interest
expenses.................. 155.5 198.5
------- -------
Acquisition interest expense...... 3.0 1.5
------- -------
Income before income taxes........ 11.1 21.8
Income taxes...................... 4.7 9.2
------- -------
Net income before extraordinary
item............................ 6.4 12.6
Extraordinary item (net of
applicable taxes of $0.9)(4).... -- 1.2
------- -------
Net income after extraordinary
item............................ $ 6.4 $ 11.4
======= =======
Basic earnings per share before
extraordinary item(5)........... $ 0.45 $ 0.73
======= =======
Diluted earnings per share before
extraordinary item(5)........... 0.44 0.69
======= =======
Basic earnings per share after
extraordinary item(5)........... $ 0.45 $ 0.66
======= =======
Diluted earnings per share after
extraordinary item(5)........... 0.44 0.62
======= =======
</TABLE>

20
<PAGE> 21

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
---------------------------------------- COMBINED(1)
YEARS ENDED DECEMBER ELEVEN ONE MONTH
31, MONTHS ENDED ENDED YEAR ENDED YEAR ENDED
------------------------ NOVEMBER 29, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1996 1996 1997
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>

STATEMENT OF FINANCIAL
CONDITION DATA (AT END OF
PERIOD):
Total assets(6).............. $1,159.8 $1,037.9 $1,214.0 $517.0 $727.6
Long-term debt(7)............ -- -- -- 110.8 101.4
Stockholders' equity(7)...... 140.0 145.4 152.7 79.5 102.3
Book value per share of
Common Stock outstanding... -- -- -- $ 5.55 $ 6.96
OTHER FINANCIAL DATA:
After-tax return on average
equity(8).................. 12.6% 4.5% 8.8% 10.6% 20.6%
Compensation and benefits
expense as a percentage of
net revenues............... 64.9 66.8 65.4 65.2 65.5
Non-compensation and benefits
operating expense as a
percentage of net
revenues................... 27.3 29.5 27.8 28.4 24.3
Amortization of
acquisition-related
intangibles (in
millions).................. -- -- -- -- $ 0.2 $ 0.2 $ 2.5
Assets in retail brokerage
accounts (at end of period)
(in billions).............. $15.0 $17.0 $20.0 $23.0 $28.0

SIX MONTHS
ENDED
JUNE 30,
---------------
1997 1998
(UNAUDITED)
<S> <C> <C>
STATEMENT OF FINANCIAL
CONDITION DATA (AT END OF
PERIOD):
Total assets(6).............. $542.6 $655.5
Long-term debt(7)............ 108.7 19.1
Stockholders' equity(7)...... 85.6 212.7
Book value per share of
Common Stock outstanding... $ 6.03 $10.64
OTHER FINANCIAL DATA:
After-tax return on average
equity(8).................. 15.5% 15.1%
Compensation and benefits
expense as a percentage of
net revenues............... 64.7 66.0(3)
Non-compensation and benefits
operating expense as a
percentage of net
revenues................... 27.0 23.5
Amortization of
acquisition-related
intangibles (in
millions).................. $ 1.2 $ 3.5(9)
Assets in retail brokerage
accounts (at end of period)
(in billions).............. $24.6 $29.3
</TABLE>

- ------------------------------

(1) Year ended December 31, 1996 combined financial data refer to the
consolidated results of the Predecessor Company for the eleven months ended
November 29, 1996 combined with the consolidated results of the Company for
the one month ended December 31, 1996. These periods are not directly
comparable due to the effects of the Acquisition, including related purchase
accounting adjustments and the Acquisition financing.

(2) Net revenues equals total revenues less interest expense other than the
Acquisition interest expense.

(3) Includes the effect of $1.4 million and $0.5 million of non-cash
compensation expense for the year ended December 31, 1997 and for the six
months ended June 30, 1998, respectively, resulting from issuance of Common
Stock and stock options to employees.

(4) The extraordinary item is a write-off of capitalized debt issuance costs
resulting from the early retirement of $77.5 million in debt with proceeds
from the Company's second quarter initial public offering.

(5) Basic earnings per share ("Basic EPS") is calculated by dividing net income
by the weighted average number of outstanding shares. Diluted earnings per
share ("Diluted EPS") also includes the effects of the issuance of stock
options and other exercisable shares. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Earnings Per
Share" for a detailed calculation of earnings per share.

(6) The decline in total assets from December 31, 1995 to December 31, 1996 is
primarily attributable to the initiation of the Wexford clearing arrangement
pursuant to which certain customer and broker-dealer balances are no longer
included on the Company's Statements of Financial Condition.

(7) The decrease in stockholders' equity and increase in long-term debt from
December 31, 1995 to December 31, 1996 was primarily a result of the
Acquisition. The decrease in long-term debt and increase in stockholders'
equity from December 31, 1997 to June 30, 1998 was related to the early
retirement of debt with proceeds from the Company's second quarter initial
public offering.

(8) After-tax return on average equity is calculated by dividing net income
after extraordinary item by average stockholders' equity for the year or six
month period. For the six months ended June 30, 1998, after-tax return on
average equity before extraordinary item was 16.7%.

(9) Includes amortization of acquisition-related goodwill of $1.0 million,
write-off of debt issuance costs of $2.4 million and amortization of
goodwill relating to the acquisition of Cleary Gull of $0.1 million.

21
<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with "Selected
Historical Consolidated Financial and Other Data" and the Company's Consolidated
Financial Statements and Notes thereto, each appearing elsewhere in this
Prospectus. In addition to historical information, the following Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ significantly from those anticipated in
these forward-looking statements as a result of certain factors, including those
discussed in "Risk Factors" contained elsewhere in this Prospectus.

BUSINESS ENVIRONMENT

The Company's retail securities brokerage activities, as well as its
investment banking, investment advisory, institutional sales and trading and
equity research services, are highly competitive and subject to various risks
including volatile trading markets and fluctuations in the volume of market
activity. These markets are affected by general economic and market conditions,
including fluctuations in interest rates, volume and price levels of securities
and flows of investor funds into and out of mutual funds and pension plans and
by factors that apply to particular industries such as technological advances
and changes in the regulatory environment. Declining interest rates and a
favorable economic environment contributed to a significant increase in activity
in the equity markets in the United States since the latter part of 1995. The
Company's financial results have been and may continue to be subject to
fluctuations due to these and other factors. Consequently, the results of
operations for a particular period may not be indicative of results to be
expected for other periods.

EQUITY PARTICIPATION OF EMPLOYEES

In connection with the Company's April 1998 initial public offering,
employees sold no shares of the Company's Common Stock and purchased their
entire allocation of 335,000 shares. As of June 30, 1998, the Company's
employees, including senior management and investment executives, owned in
excess of 31% of the Company's outstanding Common Stock. Management believes
that significant employee ownership has resulted in progressively higher levels
of employee motivation, confidence and commitment.

Incentive equity programs have been established pursuant to which employees
have acquired or may acquire additional equity of the Company, which when added
to the shares currently owned would result in employees owning approximately 45%
of the Company's outstanding Common Stock.

THE ACQUISITION

The Acquisition of the Company occurred in November 1996. Discussions
herein with respect to 1996 refer to the consolidated results of the Predecessor
Company for the eleven months ended November 29, 1996 combined with the
consolidated results of the Company for the one month period ended December 31,
1996. As a result of purchase accounting in connection with the Acquisition, the
Company's goodwill, which is amortized over a period of 15 years, increased by
$14.7 million dollars in 1996. As part of the Acquisition, the Company increased
its level of long-term indebtedness and experienced an attendant increase in
annual interest expense. The net proceeds of the initial public offering to the
Company, together with available cash, were used to repay this indebtedness and,
as a result, the Company recorded an extraordinary item of $2.2 million ($1.2
million on an after-tax basis) for the write-off of capitalized debt issuance
costs during the period in which the initial public offering was consummated.
The effects of the Acquisition impact the comparability of the Company's
financial results with those of the Predecessor Company.

The Company believes that, especially during the months prior to the
Acquisition and to some extent immediately thereafter, uncertainty regarding a
change in ownership of the Company and the subsequent transition adversely
affected the business of the Company. In management's opinion, employee
purchases of equity of the Company in conjunction with the Acquisition and the
consummation of the Acquisition have

22
<PAGE> 23

significantly enhanced employee motivation and the Company's ability to retain
existing employees and improved its ability to recruit additional investment
professionals.

CONTRIBUTION OF PRINCIPAL SUBSIDIARIES

During 1996 and 1997, Tucker Anthony contributed 62% and 59%, respectively,
of the Company's total operating revenues while Sutro contributed 32% and 35%,
respectively, of total operating revenues and Freedom Capital contributed 6% of
total operating revenues in each of 1996 and 1997. During these periods, Tucker
Anthony and Freedom Capital contributed a significantly greater percentage of
the Company's net operating income than their respective contributions to total
operating revenues. As a result of initiatives to improve the productivity of
Sutro, its profit margins have been improving since 1995.

COMPONENTS OF REVENUES AND EXPENSES

Revenues. Commission revenues include retail and institutional commissions
received by the Company as an agent in securities transactions, including all
exchange listed, over-the-counter ("OTC") agency, mutual fund, insurance, and
annuity transactions. Principal transactions revenues include gains and losses
from the trading of securities by the Company as principal including principal
sales credits and dividends. Investment banking revenues include selling
concessions, underwriting fees and management fees received from the
underwriting of corporate or municipal securities as well as fees earned from
providing merger and acquisition and other financial advisory services. Asset
management revenues include fees generated from providing investment advisory
and portfolio management services to institutional and high net worth investors.
Other revenues primarily consist of transaction fees, retirement plan revenue
and third party correspondent clearing fees. Interest income primarily consists
of interest earned on margin loans made to customers, securities purchased under
agreements to resell and fixed income securities held in the Company's trading
accounts. Net revenues equal total revenues less interest expense. Interest
expense includes interest paid under its Wexford financing arrangement and on
bank borrowings, securities sold under agreements to repurchase, fixed asset
financing and cash balances in customer accounts.

Expenses. Compensation and benefits expense includes sales, trading and
incentive compensation, which are primarily variable based on revenue production
and/or business unit profit contribution, and salaries, payroll taxes, and
employee benefits which are relatively fixed in nature. Incentive compensation,
including bonuses for eligible employees, is accrued proratably throughout the
year based on actual or estimated annual amounts. Brokerage and clearance
expense includes the cost of securities clearance, floor brokerage and exchange
fees. Communications expense includes service charges for telecommunications,
news and market data services. Occupancy and equipment expense includes rent and
operating expenses for facilities, expenditures for repairs and maintenance, and
depreciation of furniture, fixtures, leasehold improvements, business equipment
and computer equipment. Promotional expense includes travel, entertainment and
advertising. Other expenses include general and administrative expenses,
including professional services, litigation expenses, goodwill amortization,
data processing and other miscellaneous expenses. Acquisition interest expense
represents the interest expense incurred under the Credit Facility.

23
<PAGE> 24

RESULTS OF OPERATIONS

The following table sets forth certain financial data as a percentage of
net revenues:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- --------------
1995(1) 1996(2) 1997 1997 1998
<S> <C> <C> <C> <C> <C>
Revenues:
Commissions............................ 42.1% 43.3% 44.5% 45.8% 42.6%
Principal transactions................. 31.8 29.7 26.4 26.3 23.0
Investment banking..................... 10.5 10.9 14.7 13.0 20.6
Asset management....................... 4.5 5.4 5.3 5.6 5.4
Other.................................. 3.8 4.5 3.3 3.8 3.1
----- ----- ----- ----- -----
Total operating revenues............ 92.7 93.8 94.2 94.5 94.7
Interest income........................ 18.1 14.2 11.7 12.5 11.7
----- ----- ----- ----- -----
Total revenues...................... 110.8 108.0 105.9 107.0 106.4
Interest expense....................... 10.8 8.0 5.9 7.0 6.4
----- ----- ----- ----- -----
Net revenues........................ 100.0 100.0 100.0 100.0 100.0
Non-interest expenses:
Compensation and benefits.............. 65.4 65.2 65.5(3) 64.7 66.0(3)
Occupancy and equipment................ 7.9 9.5 6.5 7.6 5.9
Communications......................... 5.4 5.1 4.5 5.0 4.1
Brokerage and clearance................ 2.2 3.3 3.0 3.3 2.8
Promotional............................ 2.9 2.8 2.7 2.6 2.9
Other.................................. 9.5 7.7 7.6 8.4 7.8
----- ----- ----- ----- -----
Total non-interest expenses......... 93.3 93.6 89.8 91.6 89.5
----- ----- ----- ----- -----
Acquisition interest expense............. -- 0.2 1.6 1.8 0.7
----- ----- ----- ----- -----
Income before income taxes............... 6.7 6.2 8.6 6.6 9.8
Income taxes............................. 2.8 2.7 3.6 2.8 4.1
----- ----- ----- ----- -----
Net income before extraordinary item..... 3.9 3.5 5.0 3.8 5.7
Extraordinary item (net of applicable
taxes)................................. -- -- -- -- 0.6
----- ----- ----- ----- -----
Net income after extraordinary item...... 3.9% 3.5% 5.0% 3.8% 5.1%
===== ===== ===== ===== =====
</TABLE>

- ------------------------------
(1) Predecessor Company.

(2) Based on the consolidated results of the Predecessor Company for the eleven
months ended November 29, 1996 combined with the consolidated results of the
Company for the one month ended December 31, 1996.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

The Company experienced strong operating results in the first six months of
1998 compared to the first six months of 1997. Revenues increased in all of the
Company's operating subsidiaries and total non-interest expenses declined as a
percentage of net revenues. Net income increased $5.0 million or 78% to $11.4
million in the first half of 1998 from net income of $6.4 million in the
comparable 1997 period, including the effect of deducting an after-tax
extraordinary item of $1.2 million in the 1998 period related to the early
retirement of $77.5 million in debt with proceeds from the Company's second
quarter initial public offering. Excluding this extraordinary item, net income
increased 97% to $12.6 million in the first half of 1998.

24
<PAGE> 25

Total operating revenues increased $49.8 million or 31% to $210.0 million
in the six months ended June 30, 1998 from $160.2 million in the same period in
1997. Net revenues increased $52.2 million or 31% to $221.8 million in the 1998
period compared with 1997.

Commission revenues increased $16.8 million or 22% to $94.5 million in the
first six months of 1998 from $77.7 million in the first six months of 1997, due
to increased volume in the Company's retail businesses, reflecting a higher
level of market activity, a greater number of investment executives and
increased average production per retail investment executive. During the first
half of 1998 the Company added 57 new investment executives averaging over
$450,000 of trailing twelve month production which is above the Company's
existing overall average retail production levels.

Principal transactions revenues increased $6.3 million or 14% to $50.9
million in the first half of 1998 from $44.6 million in the comparable 1997
period primarily due to higher risk arbitrage and fixed income trading profits
in 1998. In addition, the first half 1997 trading results were negatively
impacted by a mortgage-backed securities trading loss of $1.3 million.

The Company had strong investment banking results in the first half of 1998
evidenced by an increase in revenues of $23.8 million or 108% to $45.8 million
from $22.0 million in the first half of 1997. The improved investment banking
revenues resulted from higher public offering fees, increased fees from merger
and acquisition activities and the first time inclusion of financial results of
Cleary Gull.

Asset management revenues increased $2.4 million or 25% to $11.9 million in
the first six months of 1998 from $9.5 million in the first six months of 1997.
This revenue increase reflected an overall growth in assets under management,
which resulted from both new money added to the funds as well as asset
appreciation arising from equity market performance.

Interest income increased $4.6 million or 22% to $25.8 million in the first
six months of 1998 from $21.2 million in the first six months of 1997, due
primarily to the combination of higher interest income on customer balances and
greater stock borrow activity. Interest expense, excluding those expenses
associated with financing the Acquisition, increased $2.2 million or 19% to
$14.0 million in the first half of 1998 from $11.8 million in the comparable
1997 period primarily reflecting higher average inventory balances.

In 1998 the Company has shown considerable improvement in overall
productivity, as well as expense management, evidenced by the increased
operating pre-tax margin of 11% in the first half of 1998 from 8% in the first
half of 1997. On the expense side, total non-interest expenses increased $43.0
million or 28% to $198.5 million in the first half of 1998 from $155.5 million
in the comparable 1997 period primarily due to higher compensation expenses. The
Company experienced a lower non-compensation expense growth rate of 14% compared
to net revenue growth of 31% in 1998 versus the first six months of 1997.

Compensation and benefits expense increased $36.7 million or 33% to $146.4
million in the six months ended June 30, 1998 from $109.7 million in the same
period in 1997, primarily due to increased incentive and production-related
compensation attributable to higher revenues. Compensation and benefits as a
percentage of net revenues increased to 66% in the first six months of 1998
compared to 65% the first six months of 1997 reflecting aggressive new hiring in
the Company's retail and equity capital markets groups and provisions for
non-cash compensation related to employee stock purchases.

All other operating expenses increased an aggregate of $6.3 million or 14%
to $52.1 million for the first six months of 1998 from $45.8 million in the
first six months of 1997. In addition, all other operating expenses as a
percentage of net revenues declined to 23% in 1998 from 27% in 1997. Promotional
expenses increased $2.0 million or 45% to $6.5 million in the first half of 1998
from $4.5 million in the comparable 1997 period due to increased spending on
research conferences, advertising, business development and travel in 1998.
Other expenses increased $3.1 million or 22% to $17.3 million for the six months
ended June 30, 1998 from $14.2 million in the comparable 1997 period.

The Company's income tax provisions for the six months ended June 30, 1998
and 1997 were $9.2 million and $4.7 million, respectively, which represented a
42% effective tax rate in each six month period.

25
<PAGE> 26

1997 COMPARED TO 1996

The Company experienced strong operating results in 1997 compared to 1996.
Revenues increased in all of the Company's core businesses, with the exception
of principal transaction revenues, and expenses declined as a percentage of net
revenues. Net income increased $6.4 million or 52% to $18.7 million in 1997 from
net income of $12.3 million in 1996, even after deducting after-tax expenses of
$5.9 million in 1997 related to the Acquisition (primarily amortization of
goodwill and interest and other expenses related to the Credit Facility).

Total operating revenues increased $25.8 million or 8% to $354.1 million in
1997 from $328.3 million in 1996. During 1996 and 1997, Tucker Anthony
contributed 62% and 59%, respectively, of the Company's total operating revenues
while Sutro contributed 32% and 35%, respectively, and Freedom Capital
contributed 6% in each year. Net revenues, including the effect of interest
income and interest expense, other than the Acquisition interest expense,
increased $26.0 million or 7% to $375.8 million in 1997 versus $349.8 million in
1996.

Commission revenues increased $15.7 million or 10% to $167.2 million in
1997 from $151.5 million in 1996, due to increased business in the Company's
retail systems, reflecting the growth in listed share volume on all the major
equity exchanges and higher mutual fund commission revenue. During 1997, Tucker
Anthony and Sutro increased average production per retail investment executive
by 15% and 13%, respectively, over the prior year.

Principal transaction revenues declined $4.6 million or 4% to $99.3 million
in 1997 from $103.9 million in 1996, mainly due to the combined result of
management's decision to discontinue certain institutional fixed income business
resulting in a decline of $1.5 million, the $1.3 million net effect of a
decrease in convertible arbitrage trading profits as interest rates declined
during the period partially offset by improvement in risk arbitrage trading, a
$0.8 million improvement in the trading of equities and a mortgage-backed
securities trading loss of $2.6 million caused by a former employee.

Investment banking revenues increased $17.1 million or 45% to $55.2 million
in 1997 from $38.1 million in the prior year. The higher investment banking
revenues resulted from increased underwriting activity, similar to that
experienced in the securities industry generally, and due to the Company's
refocused and increased emphasis on the public offering business at Tucker
Anthony and Sutro. Tucker Anthony or Sutro collectively managed or co-managed 34
public equity offerings during 1997 compared to 16 during 1996 and generated an
increase in private placement, advisory and merger and acquisition fees of 17%
over 1996.

Asset management revenues increased $0.9 million or 5% to $19.9 million in
1997 from $19.0 million in 1996. This revenue increase arose primarily in the
institutional area where assets grew 14% to $1.7 billion and related revenues
increased 21% or $1.0 million in 1997, reflecting the full year effect of new
accounts at year-end 1996 and asset appreciation arising from equity market
performance which produced higher fee income. Revenues from other areas of the
asset management business were essentially unchanged from 1996 as higher money
market fee income in 1997 was largely offset by lower revenues in the taxable
advisory business which discontinued its tax preparation services at year-end
1996. Total assets under management grew to $5.6 billion at year end 1997 from
$5.1 billion at year end 1996.

Other income decreased $3.3 million or 21% to $12.5 million in 1997 from
$15.8 million in 1996. This decrease resulted primarily from the mid-1997
expiration of a five year contract with John Hancock Broker Distribution
Services under which the Company recovered mutual fund sales charges.

Interest income decreased a net of $5.7 million or 11% to $44.1 million in
1997 from $49.8 million in 1996, due primarily to the combination of $4.4
million of higher interest income on customer balances more than offset by a
$10.1 million decline in interest income mainly on lower average government bond
inventories. Interest expense, excluding those expenses associated with
financing the Acquisition, decreased $5.9 million or 21% to $22.4 million in
1997 from $28.3 million in 1996, reflecting lower average inventory balances.

Total non-interest expenses increased $9.9 million or 3% to $337.3 million
in 1997 from $327.4 million in 1996. This increase was the result of higher
production-related compensation principally attributable to higher revenues
partially offset by reduced operating expenses mainly resulting from the
Company's outsourcing of its

26
<PAGE> 27

clearing function to Wexford and other cost efficiencies. Although the Company's
income statement refers to brokerage and clearance as a specific category of
expense, the compensation, occupancy and other expense categories also included
costs associated with the Company's clearing activity, both while self clearing
and after its conversion to Wexford. The Company achieved substantial savings in
these expense categories as a result of the Wexford clearing arrangement, even
after the incurrence of $4.5 million of one-time occupancy expense in
conjunction with entering into the Wexford clearing arrangement. The Company
began to clear through Wexford in April 1996; consequently, comparisons between
1996 and 1997 do not reflect the full cost savings experienced as a result of
the new clearing arrangement.

Compensation and benefits expense increased $17.8 million or 8% to $245.9
million in 1997 from $228.1 million in 1996, primarily due to increased
incentive and production-related compensation, offset by lower fixed expenses
resulting from back office support personnel reductions associated with the
outsourcing of the Company's clearing function in 1996 and substantial
organizational changes in the fixed income area. Compensation and benefits as a
percentage of net revenues remained virtually unchanged at 65% in 1997 as
compared to 1996. During 1997, the Company incurred $1.4 million of non-cash
compensation expense resulting from issuance of Common Stock and stock options
to its employees.

Despite substantially increased clearing activity, brokerage and clearance
expenses declined slightly to $11.3 million in 1997 compared to $11.5 million in
1996, primarily as a result of the cost effective Wexford clearing arrangement.

All other operating expenses decreased an aggregate of $7.7 million or 9%
to $80.1 million for 1997 from $87.8 million in 1996, primarily due to the
realization of benefits from outsourcing and other cost efficiencies initiated
by management. All other expenses as a percentage of net revenues declined to
21% in 1997 from 25% in 1996. Specifically, communications expense decreased
$0.9 million, or 5%, and occupancy and equipment expense decreased $8.9 million,
or 27% (including a one-time charge of $4.5 million in 1996 related to entering
into the Wexford clearing arrangement). These decreases were partially offset by
an increase in promotional expense of $0.4 million or 4% and an increase in
other expenses which totaled $28.5 million in 1997 (including $1.9 million in
goodwill amortization relating to the Acquisition), as compared to 1996 when
other expenses totaled $26.8 million (including a one-time credit of $6.3
million due to an insurance recovery associated with litigation expenses
incurred during a prior period). Without giving effect to such amortization
expense and insurance recovery, other expenses decreased $6.5 million or 20%
compared to 1996, primarily as a result of the Wexford clearing arrangement.

The Company's income tax provisions in 1997 and 1996 were $13.7 million and
$9.5 million, respectively, which represented a 42% effective tax rate in 1997
and a 44% effective tax rate in 1996. The lower effective tax rate in 1997 was
due mainly to an increase in non-taxable dividend income.

1996 COMPARED TO 1995

Total operating revenues increased $19.9 million or 6% to $328.3 million in
1996 from $308.4 million in 1995. The Company, along with the rest of the
securities industry, benefited during 1996 from continued strength in the equity
markets and resultant higher trading volumes. In particular, agency commission
income, OTC principal sales credits and asset management fee income increased
substantially over the prior year. Revenues from fixed income trading and
institutional sales declined, partially offsetting these gains. Net income
decreased $0.8 million or 6% to $12.3 million in 1996 from $13.1 million in
1995.

Commission revenues increased $11.3 million or 8% to $151.5 million in 1996
from $140.2 million in 1995 reflecting higher sales of both listed and OTC
securities and increased mutual fund business.

Principal transaction revenues decreased $1.9 million or 2% to $103.9
million in 1996 from $105.8 million in 1995, primarily as a result of a $0.6
million decline in certain institutional fixed income business and a $1.4
million decline in over the counter trading activity, particularly in the
municipal bond business of Tucker Anthony. Accordingly, management took steps in
1996 to curtail further such losses by downsizing the fixed income group and
redirecting the municipal bond trading business away from institutional sales
and trading towards support of retail operations.

27
<PAGE> 28

Investment banking revenues increased $3.3 million or 9% to $38.1 million
in 1996 from $34.8 million in 1995, primarily due to an increase in underwriting
and management fees of $4.3 million partially offset by lower public finance
fees which decreased $0.9 million.

Asset management revenues increased $4.1 million or 28% to $19.0 million in
1996 from $14.9 million in 1995, due to growth in fees from the Company's asset
management subsidiary, Freedom Capital. Assets under management grew from $4.6
billion at the end of 1995 to $5.1 billion at the end of 1996, reflecting
increases of approximately $300 million in money market funds and $200 million
in institutional funds.

Other income increased $3.1 million or 24% to $15.8 million in 1996 from
$12.7 million in 1995, primarily reflecting an increase of $1.0 million in
Hancock mutual fund distribution fees and $1.5 million from the sale of
securities obtained from litigation settlements.

Interest income decreased $10.3 million or 17% to $49.8 million in 1996
from $60.1 million in 1995 reflecting the combined effects of a reduced level of
bond inventories ($5.3 million lower interest income), and decreased stock
borrowing activity ($5.0 million). Interest expense, excluding those expenses
associated with financing the Acquisition in 1996, decreased $7.7 million or 21%
to $28.3 million in 1996 from $36.0 million in 1995 due in part to reduced stock
loan activity.

Total non-interest expenses increased $17.2 million or 6% to $327.4 million
in 1996 from $310.2 million in 1995, largely as a result of increased
production-based compensation. During 1996, the Company incurred a one-time
charge of $4.5 million, included in occupancy and equipment expense, in
conjunction with entering into its Wexford clearing arrangement and the related
abandonment of certain properties previously leased for the Company's clearing
operations.

Compensation and benefits expenses increased $10.5 million or 5% to $228.1
million in 1996 from $217.6 million in 1995, primarily due to payment of higher
commissions, resulting from higher retail revenues, and increased
production-based compensation.

Brokerage and clearance expenses increased $4.2 million or 58% to $11.5
million in 1996 from $7.3 million in 1995. This increase is primarily
attributable to the costs associated with clearing through Wexford. Clearing
expenses in 1995, while the Predecessor Company was self-clearing, were also
reported in compensation, occupancy and other expense categories of the income
statement.

Occupancy and equipment expense increased $7.1 million or 27% to $33.2
million in 1996 from $26.1 million in 1995 primarily due to a $4.5 million
provision for future lease obligations pertaining to New York office space which
was previously occupied by the Company's clearing and cash management
operations, which operations are now performed by Wexford effective April 1,
1996.

All other expenses declined $4.6 million or 8% to $54.6 million in 1996
from $59.2 million in 1995. Specifically, communications expense decreased $0.2
million or 1%, promotional expense increased $0.4 million or 4%, and other
expenses decreased $4.8 million or 15%, attributable in large part to a $6.3
million insurance recovery related to litigation during a prior period.

The Company's income tax provision for 1996 and 1995 was $9.5 million and
$9.2 million, respectively, which represented a 44% effective tax rate in 1996
and a 41% effective tax rate in 1995. The higher effective tax rate for 1996 was
due primarily to decreases in tax-exempt interest income and non-taxable
dividend income.

LIQUIDITY AND CAPITAL RESOURCES

The Company receives dividends, interest on loans and other payments from
its subsidiaries which are the Company's primary source of funds to pay
expenses, service debt, and pay dividends. Distributions and interest payments
to the Company from its registered broker-dealer subsidiaries, which are
expected to be the Company's primary sources of liquidity, are restricted as to
amounts which may be paid by applicable law and regulations. The Net Capital
Rules are the primary regulatory restrictions regarding capital resources. The
Company's rights to participate in the assets of any subsidiary are also subject
to prior claims of the subsidiary's creditors, including customers of the
broker-dealer subsidiaries.

28
<PAGE> 29

On April 2, 1998, the Company completed a 7,400,000 share initial public
offering of its common stock, including 4,200,000 shares sold by the Company.

Borrowings under the Credit Facility were repaid in full with the net
proceeds of the initial public offering to the Company, leaving the Company with
$19.1 million of indebtedness under a fixed asset credit facility secured by the
Company's fixed assets.

The assets of the Company's primary operating subsidiaries, are highly
liquid with the majority consisting of securities inventories and collateralized
receivables, both of which fluctuate depending on the levels of customer
business. Collateralized receivables consist mainly of securities purchased
under agreements to resell which are secured by U.S. government and agency
securities. A relatively small percentage of total assets is fixed or held for a
period of longer than one year.

The majority of the subsidiaries' assets are financed through Wexford, by
securities sold under repurchase agreements and by securities sold, not yet
purchased. The Company's principal source of short-term financing is based on
its clearing arrangement with Wexford under which the Company can borrow on an
uncommitted collateralized basis against its proprietary inventory positions.
This financing is generally obtained from Wexford at rates based upon prevailing
market conditions. The Company monitors overall liquidity by tracking the extent
to which unencumbered marketable assets exceed short-term unsecured borrowings.

Repurchase agreements are used primarily for customer accommodation
purposes and to finance the Company's inventory positions in U.S. government and
agency securities. These positions provide products and liquidity for customers
and are not maintained for the Company's investment or market speculation. The
level of activity fluctuates depending on customer needs; however, these
fluctuations have not materially affected liquidity or capital resources. The
Company monitors the collateral position and counterparty risk on these
transactions daily.

The subsidiaries' total assets and short-term liabilities and the
individual components thereof vary significantly from period to period because
of changes relating to customer needs and economic and market conditions. The
Company's total assets at December 31, 1994, December 31, 1995, December 31,
1996, December 31, 1997 and June 30, 1998 were $1,037.9 million, $1,214.0
million, $517.0 million, $727.6 million and $655.5 million, respectively. The
decline in total assets from December 31, 1995 to December 31, 1996 is primarily
attributable to the initiation of the Wexford clearing arrangement pursuant to
which certain customer and broker-dealer balances are no longer included in the
Company's Statements of Financial Condition.

The Company's operating activities generate cash resulting from net income
earned during the period and fluctuations in the Company's current assets and
liabilities. The most significant fluctuations have resulted from changes in the
level of customer activity and changes in proprietary arbitrage trading
strategies dictated by prevailing market conditions.

The Acquisition was funded through proceeds from the sale of Common Stock
and borrowings under the Credit Facility. The acquisition of Cleary Gull was
funded through the issuance of shares of the Company's Common Stock and with
funds generated from operating activities.

The Company has historically financed capital expenditures through internal
cash generation and through the Fixed Asset Facility, established in 1996, which
matures in 2001. For the year ended December 31, 1997 and the six months ended
June 30, 1998, the Company had capital expenditures of approximately $2 million
and $1.8 million, respectively, which were funded from operations.

In addition to normal operating requirements, capital is required to
satisfy financing and regulatory requirements on securities inventories and
investment banking commitments. The Company's overall capital needs are
continually reviewed to ensure that its capital base can appropriately support
the anticipated capital needs of the subsidiaries. Management believes that
existing capital funds provided from operations, the current credit arrangements
with Wexford and unutilized credit facilities will be sufficient to finance the
operating subsidiaries' ongoing businesses.

29
<PAGE> 30

QUARTERLY RESULTS

The information set forth below is derived from unaudited quarterly results
of operations of the Company for each quarter of 1996, 1997 and 1998. The data
have been prepared by the Company on a basis consistent with the Consolidated
Financial Statements included elsewhere in this Prospectus and includes all
adjustments, consisting principally of normal recurring accruals, that the
Company considers necessary for a fair presentation thereof. These operating
results are not necessarily indicative of the Company's future performance.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1996(1) 1997 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Commissions....................... $41,313 $38,621 $32,823 $38,783 $40,098 $37,592
Principal transactions............ 26,224 27,062 24,614 25,931 22,009 22,561
Investment banking................ 7,266 9,567 10,107 11,161 9,569 12,416
Asset management.................. 4,473 4,640 4,819 5,066 4,880 4,660
Other............................. 3,868 3,676 3,349 4,898 3,387 3,058
------- ------- ------- ------- ------- -------
Total operating revenues........ 83,144 83,566 75,712 85,839 79,943 80,287
Interest income................... 14,911 12,490 11,358 11,088 10,411 10,725
------- ------- ------- ------- ------- -------
Total revenues.................. 98,055 96,056 87,070 96,927 90,354 91,012
Interest expense.................. 8,774 7,888 6,036 5,585 5,906 5,883
------- ------- ------- ------- ------- -------
Net revenues.................... 89,281 88,168 81,034 91,342 84,448 85,129
Non-interest expenses:
Compensation and benefits......... 58,363 56,566 52,358 60,759 54,476 55,261
Occupancy and equipment........... 6,826 7,235 7,303 11,860(3) 6,519 6,321
Communications.................... 4,539 4,976 4,341 4,057 4,189 4,362
Brokerage and clearance........... 2,024 3,308 3,084 3,064 2,704 2,914
Promotional....................... 2,378 2,509 2,562 2,525 2,094 2,378
Other............................. 8,711 8,213 6,906 2,984(4) 6,929 7,314
------- ------- ------- ------- ------- -------
Total non-interest expenses..... 82,841 82,807 76,554 85,249 76,911 78,550
Acquisition interest expense...... -- -- -- 567 1,494 1,539
------- ------- ------- ------- ------- -------
Income before income taxes........ 6,440 5,361 4,480 5,526 6,043 5,040
Income taxes...................... 2,763 2,332 1,963 2,466 2,550 2,122
------- ------- ------- ------- ------- -------
Net income before extraordinary
item............................ 3,677 3,029 2,517 3,060 3,493 2,918
Extraordinary item (net of
applicable taxes of $.922)(5)... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net income after extraordinary
item............................ $ 3,677 $ 3,029 $ 2,517 $ 3,060 $ 3,493 $ 2,918
======= ======= ======= ======= ======= =======

<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1997 1997 1998 1998
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues:
Commissions....................... $45,948 $43,546 $ 46,306 $ 48,176
Principal transactions............ 28,553 26,146 25,253 25,690
Investment banking................ 15,018 18,256 13,712 32,047
Asset management.................. 5,115 5,295 5,813 6,078
Other............................. 2,952 3,068 2,681 4,222
------- ------- -------- --------
Total operating revenues........ 97,586 96,311 93,765 116,213
Interest income................... 10,989 11,931 13,267 12,603
------- ------- -------- --------
Total revenues.................. 108,575 108,242 107,032 128,816
Interest expense.................. 4,996 5,643 7,014 7,032
------- ------- -------- --------
Net revenues.................... 103,579 102,599 100,018 121,784
Non-interest expenses:
Compensation and benefits......... 68,196 68,006(2) 66,452(2) 79,885
Occupancy and equipment........... 6,378 5,113 6,187 6,942
Communications.................... 4,385 4,012 4,123 4,920
Brokerage and clearance........... 2,872 2,772 2,756 3,420
Promotional....................... 2,783 3,053 2,756 3,728
Other............................. 6,956 7,281 7,798 9,521
------- ------- -------- --------
Total non-interest expenses..... 91,570 90,237 90,072 108,416
Acquisition interest expense...... 1,545 1,474 1,350 130
------- ------- -------- --------
Income before income taxes........ 10,464 10,888 8,596 13,238
Income taxes...................... 4,497 4,568 3,567 5,603
------- ------- -------- --------
Net income before extraordinary
item............................ 5,967 6,320 5,029 7,635
Extraordinary item (net of
applicable taxes of $.922)(5)... -- -- -- 1,276
------- ------- -------- --------
Net income after extraordinary
item............................ $ 5,967 $ 6,320 $ 5,029 $ 6,359
======= ======= ======== ========
</TABLE>

- ------------------------------

(1) Represents the consolidated results of the Predecessor Company for the two
months ended November 29, 1996 combined with the consolidated results of the
Company for the one month ended December 31, 1996.

(2) Includes $1.2 million of the $1.4 million non-cash compensation expense
resulting from issuance of Common Stock and stock options to employees
during 1997. Non-cash compensation for first quarter 1998 was $0.5 million.

(3) Includes $4.5 million in provisions for lease obligations pertaining to
abandoned New York office space.

(4) Includes an insurance recovery in the amount of $6.3 million relating to
litigation expenses incurred during prior periods.

(5) The extraordinary item is a write off of capitalized debt issuance costs
resulting from the early retirement of $77.5 million in debt with proceeds
from the Company's second quarter initial public offering.

30
<PAGE> 31

The following table sets forth certain financial data as a percentage of
net revenues for the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1996 1996 1996(1) 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Commissions........................ 46.3% 43.8% 40.5% 42.5% 47.5% 44.2% 44.4%
Principal transactions............. 29.4 30.7 30.4 28.4 26.1 26.5 27.6
Investment banking................. 8.1 10.9 12.5 12.2 11.3 14.6 14.5
Asset management................... 5.0 5.3 5.9 5.5 5.8 5.5 4.9
Other.............................. 4.3 4.2 4.1 5.4 4.0 3.5 2.9
----- ----- ----- ----- ----- ----- -----
Total operating revenues......... 93.1 94.9 93.4 94.0 94.7 94.3 94.3
Interest income.................... 16.7 14.2 14.0 12.1 12.3 12.6 10.6
----- ----- ----- ----- ----- ----- -----
Total revenues................... 109.8 109.1 107.4 106.1 107.0 106.9 104.9
Interest expense................... 9.8 9.1 7.4 6.1 7.0 6.9 4.9
----- ----- ----- ----- ----- ----- -----
Net revenues..................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Non-interest expenses:
Compensation and benefits.......... 65.4 64.2 64.6 66.5 64.5 64.9 65.8
Occupancy and equipment............ 7.6 8.2 9.0 13.0(3) 7.7 7.4 6.2
Communications..................... 5.1 5.6 5.4 4.4 5.0 5.1 4.2
Brokerage and clearance............ 2.3 3.8 3.8 3.4 3.2 3.4 2.8
Promotional........................ 2.7 2.8 3.2 2.8 2.5 2.8 2.7
Other.............................. 9.7 9.3 8.5 3.3(4) 8.2 8.6 6.7
----- ----- ----- ----- ----- ----- -----
Total non-interest expenses...... 92.8 93.9 94.5 93.4 91.1 92.2 88.4
Acquisition interest expense....... -- -- -- 0.6 1.8 1.8 1.5
Income before income taxes......... 7.2 6.1 5.5 6.0 7.1 6.0 10.1
Income taxes....................... 3.1 2.6 2.4 2.7 3.0 2.5 4.3
----- ----- ----- ----- ----- ----- -----
Net income before extraordinary
item............................. 4.1 3.5 3.1 3.3 4.1 3.5 5.8
Extraordinary item (net of
applicable taxes)(5)............. -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- -----
Net income after extraordinary
item............................. 4.1% 3.5% 3.1% 3.3% 4.1% 3.5% 5.8%

<CAPTION>
THREE MONTHS ENDED
------------------------------------
DECEMBER 31, MARCH 31, JUNE 30,
1997 1998 1998
<S> <C> <C> <C>
Revenues:
Commissions........................ 42.4% 46.3% 39.6%
Principal transactions............. 25.5 25.2 21.1
Investment banking................. 17.8 13.7 26.3
Asset management................... 5.2 5.8 5.0
Other.............................. 3.0 2.7 3.5
----- ----- -----
Total operating revenues......... 93.9 93.7 95.5
Interest income.................... 11.6 13.3 10.3
----- ----- -----
Total revenues................... 105.5 107.0 105.8
Interest expense................... 5.5 7.0 5.8
----- ----- -----
Net revenues..................... 100.0 100.0 100.0
Non-interest expenses:
Compensation and benefits.......... 66.3(2) 66.4(2) 65.6
Occupancy and equipment............ 5.0 6.2 5.7
Communications..................... 3.9 4.1 4.0
Brokerage and clearance............ 2.7 2.8 2.8
Promotional........................ 3.0 2.8 3.1
Other.............................. 7.1 7.8 7.8
----- ----- -----
Total non-interest expenses...... 88.0 90.1 89.0
Acquisition interest expense....... 1.4 1.3 0.1
Income before income taxes......... 10.6 8.6 10.9
Income taxes....................... 4.5 3.6 4.6
----- ----- -----
Net income before extraordinary
item............................. 6.1 5.0 6.3
Extraordinary item (net of
applicable taxes)(5)............. -- -- 1.1
----- ----- -----
Net income after extraordinary
item............................. 6.1% 5.0% 5.2%
</TABLE>

- ---------------
(1) Based on the consolidated results of the Predecessor Company for the two
months ended November 29, 1996 combined with the consolidated results of the
Company for the one month ended December 31, 1996.

(2) Includes 1.2% of non-cash compensation expense resulting from issuance of
Common Stock and stock options to employees during the fourth quarter of
1997. Non-cash compensation for first quarter 1998 was .1%.

(3) Includes 4.9% in provisions for lease obligations pertaining to abandoned
New York office space.

(4) Includes an insurance recovery of 6.9% relating to litigation expenses
incurred during prior periods.

31
<PAGE> 32

RISK MANAGEMENT

Tucker Anthony's, Sutro's and Cleary Gull's exposure to risk includes items
that are fundamental to the securities industry, such as trading of securities,
extension of credit to counterparties and investment banking activities, as well
as other risks, such as extension of credit to retail and institutional
customers. Tucker Anthony, Sutro and Cleary Gull monitor their market and credit
risk daily through a number of control procedures designed to identify and
evaluate the various risks to which Tucker Anthony, Sutro and Cleary Gull are
exposed.

Tucker Anthony, Sutro and Cleary Gull may act as a principal to facilitate
customer-related transactions in financial instruments which expose the firm to
market risks. Tucker Anthony and Sutro make markets for dealers in certain
equity and debt securities and Tucker Anthony trades for its own account in
arbitrage trading activities. Whether acting as principal to facilitate customer
transactions or trading for their own account, Tucker Anthony, Sutro and Cleary
Gull undertake a variety of measures to manage against losses which may be
incurred through market risk.

Methods of managing exposure to market risk include: limiting firm
commitments by position levels both long and short for every product that is
traded; limiting the type of trade that can occur in each inventory account;
limiting the number of days inventory is held; using third party security
pricing services to enhance market price testing and variance analysis; and
tactically employing certain hedging techniques that reduce the amount of risk
taken by Tucker Anthony and Sutro. Management believes that the subsidiaries'
risk management and hedging practices aid in managing their market exposure and
reducing volatility of the Company's earnings. Cleary Gull utilizes similar risk
management techniques including the use of third party security pricing
services. Cleary Gull does not limit the number of days inventory is held,
however, it does impose an overall position limit which is monitored by the
over-the-counter trading manager.

At December 31, 1996, December 31, 1997 and June 30, 1998, the Company's
securities owned and securities sold, not yet purchased consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------
1996 1997 1998
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OWNED:
Obligations of the U.S. government or its
agencies................................. $ 23,650 $ 27,396 $ 27,395
State and municipal obligations............ 56,057 38,222 49,067
Arbitrage securities....................... 84,967 291,023 219,827
Other corporate obligations................ 73,127 51,709 26,357
Other corporate stocks and warrants........ 15,305 15,172 26,571
-------- -------- --------
$253,106 $423,522 $349,217
======== ======== ========
SOLD, NOT YET PURCHASED:
Obligations of the U.S. government or its
agencies................................. $ 37,663 $ 22,890 $ 23,349
State and municipal obligations............ 1,476 1,519 1,076
Arbitrage securities....................... 51,671 322,316 203,416
Other corporate obligations................ 6,055 1,356 1,661
Other corporate stocks and warrants........ 4,275 6,484 11,870
-------- -------- --------
$101,140 $354,565 $241,372
======== ======== ========
</TABLE>

Tucker Anthony and Sutro manage their daily risk exposure in their firm
inventory accounts by requiring various levels of management to participate in
review of these accounts. The primary purpose of the risk management function is
to participate in the establishment of position limits and to monitor both the
buy and sell activity in the firm's trading accounts relative to the established
position limits. Tucker Anthony's, Sutro's

32
<PAGE> 33

and Cleary Gull's trading activities result in the creation of inventory
positions. Position and exposure reports indicating both long and short exposure
are prepared, distributed and reviewed each day by Tucker Anthony's and Sutro's
risk management personnel as well as by certain members of senior management.
These reports enable Tucker Anthony and Sutro to control their inventory levels,
monitor trading results on a product-by-product basis and review inventory
aging, pricing and concentration. Cleary Gull monitors trading activity on a
monthly basis unless the overall position limit is exceeded.

In addition to position and exposure reporting, Tucker Anthony, Sutro and
Cleary Gull each produce a daily revenue report which summarizes trading,
interest and commission revenue items for each product area. Daily revenues are
reviewed independently for various risk factors that could adversely affect
certain trading decisions. The daily revenue reports are produced by their
accounting departments and distributed to various levels of management together
with the position and exposure reports. The combined use of these reports
enables senior management to monitor and control firm trading activity on a
product-by-product basis.

Tucker Anthony and Sutro deal with counterparties or other broker-dealers
in conducting business for their clients or for their own account. Credit and
trading limits extended to counterparties are controlled and managed by Tucker
Anthony's and Sutro's credit and risk management functions. Financing extended
to counterparties is provided against collateral. Tucker Anthony and Sutro
monitor their exposure to counterparty risk on a daily basis through the use of
internally generated credit exposure information and the monitoring of
collateral values. The risk management function participates in the review of
counterparties to establish appropriate exposure limits on a product-by-product
basis. Tucker Anthony and Sutro manage their daily credit exposure by monitoring
on an ongoing basis the creditworthiness of counterparties and their related
trading limits, requesting additional collateral when deemed necessary and
limiting the amount and duration of counterparty exposure.

Tucker Anthony and Sutro, through Wexford, also extend credit to their
retail customers. Amounts loaned are limited by margin regulations of the Board
of Governors of the Federal Reserve System and other regulatory authorities and
are subject to Wexford's, Tucker Anthony's and Sutro's credit review and daily
monitoring procedures.

Risks associated with investment banking activities are controlled through
committees within Tucker Anthony and Sutro. Their respective commitment
committees review every significant proposed investment banking transaction
prior to its acceptance by Tucker Anthony and Sutro. Their respective capital
committees review major proposed transactions in order to determine the effect
of such transactions on regulatory capital prior to their acceptance. Only after
acceptance by both committees within a firm will that firm's commitment to
underwrite a specific security be extended to the investment banking client.
Cleary Gull's commitment committee performs the dual function of analyzing
proposed transactions as well as assessing their impact on regulatory capital.

Tucker Anthony's and Sutro's compliance department professionals monitor
customer and employee transactions, conduct periodic and other examinations and
communicate with the various regulatory agencies that have jurisdiction over
Tucker Anthony, Sutro and Cleary Gull and their businesses. Additionally, Cleary
Gull is in the process of integrating certain risk management procedures already
in place at Tucker Anthony and Sutro and expect the process to be completed in
the near future.

YEAR 2000 COMPLIANCE

The securities industry is, to a significant extent, technologically driven
and dependent. In addition to internally utilized technological applications,
the Company's financial services businesses are materially dependent upon the
performance of exchanges, market centers, counterparties, customers and vendors
(collectively "the Company's material third parties") who, in turn, may be
heavily reliant on technological applications. In sum, the securities industry
is pervasively interdependent with each "link of the chain" strengthened or
weakened by the quality and performance of its attendant information and
embedded technology.

33
<PAGE> 34

The Company is aware that the Year 2000 provides potential problems with
the programming code in existing computer systems. The "Year 2000 problem" is
extensive and complex as virtually every computer operation will be affected to
some degree by the change of the two digit year value to 00. The issue is
whether computer systems will properly recognize date-sensitive information when
the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or fail.

The failure or faulty performance of computer systems could potentially
have a far ranging impact on the Company's businesses such as a diminution in
its ability to (a) ascertain information vital to strategic decision making by
both the Company and its customers; (b) perform interest rate and pricing
calculations; (c) execute and settle proprietary and customer transactions; (d)
undertake regulatory surveillance and risk management; (e) maintain accurate
books and records and provide timely reports; (f) maintain appropriate internal
financial operations and accounting; and (g) access credit facilities for both
the Company and its customers. Accordingly it is necessary for the Company, to
the extent reasonably practicable, to identify the internal computer systems and
software which are likely to have a critical impact on its operations, make an
assessment of its Year 2000 readiness and modify or replace information and
embedded technology as needed. In addition, the Company must make a Year 2000
readiness assessment for the Company's material third parties.

In the fourth quarter of 1995, the Company began to strategically assess
the need for renovation, replacement or retirement of all business applications.
This assessment was coincident with the conversion of the Company's principal
broker-dealer subsidiaries to clear securities transactions through Wexford, an
unaffiliated broker-dealer. During the first half of 1996, in connection with
the conversion to Wexford, a substantial portion of all application and vendor
code were modified to be Year 2000 compliant and these changes were tested and
verified in 1998 to be materially effective.

Although Wexford is the contracting party for the provision of clearing
services, it in fact delivers those services through the operations of its
guaranteeing parent company, Prudential Securities Incorporated ("Prudential"),
a leading registered broker and dealer. Consequently, it is the readiness of
Prudential that is critical when assessing the Year 2000 compliance of the
clearing and operations capacity of the Company's active broker-dealer
subsidiaries. Prudential has been assessed, by internal industry standards
established by the Securities Industry Association, to be within the top tier of
Year 2000 readiness. In recent industry-wide testing conducted by the Securities
Industry Association, in which Prudential took part, Prudential and other
participants were able to input transactions and send them to the appropriate
markets for execution, confirmation and clearance under simulated Year 2000
conditions.

Additionally, the Company has assessed the state of readiness of all known
technologically oriented service vendors and believes, based on letters of
certification, that the vast majority of these vendors are Year 2000 compliant
with the remainder expected to be compliant by December 1998. This determination
does not mean that the vast majority of the Company's material third parties
pose no Year 2000 risk to the Company. First, the Company is relying in large
measure on these parties' assessments of their readiness. Second, there are
several vendors, which account for a substantial portion of the Company's
mission critical operations, which may be partially or largely, but not fully,
Year 2000 compliant. Finally, certain critical third parties, such as exchanges,
clearing houses, depositories and other service vendors have no direct
functional contact with the Company (as they operate directly with Wexford) but
may impact the Company's operations.

At this juncture the Company is in the process of establishing a strategic
plan for the remainder of its Year 2000 remediation efforts which would include
(1) identification, modification and testing of any remaining non-compliant Year
2000 code; (2) identification, inventory, assessment and, if necessary,
modification of internal ad hoc systems or applications that may be material to
the Company's operations; (3) with the exception of counterparties and
customers, documentation of the assessment of the readiness of the Company's
material third parties; and (4) a timetable for completion of the plan. The
Company intends to complete its written plan by December 1998 while
concomitantly proceeding to assess, and taking measures to enhance, Year 2000
readiness. To date, the Company's Year 2000 costs have been minimal. The Company
believes that, going forward, it will incur Year 2000 costs of approximately
$500,000 which will be funded out

34
<PAGE> 35

of its working capital. Provided there is an absence of unanticipated critical
events, the Company does not expect Year 2000 costs to have a material effect on
its operating results, financial condition or cash flows.

Currently, the Company has not developed any Year 2000 contingency plans
because of the following reasons: (1) the Company has substantially modified, to
the extent it can ascertain the problem, most mission critical code and embedded
technology; (2) the Company's vendors have represented that they are either
currently Year 2000 compliant or will become so by the second quarter of 1999;
(3) there are no alternatives in the event the exchanges or other market centers
fail to perform; and (4) the Company believes it is highly likely that the
factors which may prevent a particular clearing firm from performing would
similarly affect all other clearing firms which would either preclude the
availability of alternative clearing service providers or overwhelm the
resources of surviving alternative clearing services providers. In other words,
the Year 2000 presents a problem which is not likely to be susceptible to
remediation at a future date if it is not fixed in advance. The Company will,
however, continue to consider the viability of a contingency plan.

The Company is cautiously optimistic about its current state of readiness
and its ability to make any further necessary modifications to internal systems
in time for the Year 2000. The Company also believes that its major third party
service provider, Prudential, has undertaken a systematic approach to the Year
2000 problem and will complete its plan which is designed to achieve a state of
readiness. However, there are factors outside the control of the Company which
make certainty impossible such as: (1) the inability to access the readiness of
market counterparties and customers; (2) the inability to achieve assurance as
to any material third parties' representations of readiness; (3) the global
exposure of the Company's material third parties to Year 2000 problems outside
the United States which have a "knock-on" effect within the domestic securities
markets and operations; and (4) the limitations in anticipating all aspects of a
problem with which there is no prior historical experience. The presence of any
or all of these and other factors may well have a material adverse effect on the
Company's businesses, operating results, financial condition and cash flows.

EARNINGS PER SHARE

The Company computes its earnings per share in accordance with Statement of
Financial Accounting Standards ("SFAS") 128 "Earnings Per Share." The following
table sets forth the computation for basic and diluted earnings per share (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------- ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NUMERATOR
- ---------
Net income before extraordinary item....................... $7,635 $2,918 $12,664 $6,411
Extraordinary item......................................... 1,276 -- 1,276 --
------ ------ ------- ------
Net income after extraordinary item........................ $6,359 $2,918 $11,388 $6,411

DENOMINATOR
- -----------
Weighted average shares outstanding........................ 19,792 14,244 17,322 14,273
Dilutive effect of:
Stock options and exercisable shares.................. 1,398 220 1,156 172
------ ------ ------- ------
Adjusted weighted average shares outstanding............... 21,190 14,464 18,478 14,445

Basic earnings per share before extraordinary item......... $ 0.39 $ 0.20 $ 0.73 $ 0.45
Less: Extraordinary item................................... 0.07 -- 0.07 --
------ ------ ------- ------
Basic earnings per share after extraordinary item.......... $ 0.32 $ 0.20 $ 0.66 $ 0.45

Diluted earnings per share before extraordinary item....... $ 0.36 $ 0.20 $ 0.69 $ 0.44
Less: Extraordinary item................................... 0.06 -- 0.07 --
------ ------ ------- ------
Diluted earnings per share after extraordinary item........ $ 0.30 $ 0.20 $ 0.62 $ 0.44
</TABLE>

35
<PAGE> 36

BUSINESS

INDUSTRY BACKGROUND

In recent years, the financial markets have grown in size and complexity,
characterized by a proliferation of investment products and services, frequent
innovations, increased globalization, strong capital flows and heavy trading
volume. These trends have increased the number and variety of choices available
to investors and the range of financing alternatives available to businesses and
other issuers of securities. Management believes these trends will continue in
the future and consequently believes that the needs of both investors and
issuers for high quality professional financial advice and services, such as
those offered by the Company, will continue to increase.

Demand for investment products has increased significantly as large numbers
of "baby boomers" have begun to invest for their children's education and for
their own retirement. In 1996, the first 3.4 million baby boomers turned 50; the
impact of this generation on the capital markets is expected to continue to
build through the year 2010, when 57 million people will be in what has
historically been their prime investing years (ages 50 through 65).
Additionally, it is estimated that these individuals will inherit over $10
trillion (adjusted for inflation) from the previous generation between 1990 and
2040, representing the largest absolute transference of wealth in history.

Changes in household investing patterns have also contributed to the
increase in demand for investment products. In 1980, households owned $1.3
trillion of marketable securities, representing 48% of their liquid financial
assets. By September 30, 1997, the household sector's ownership of marketable
securities had risen by more than 660% to $9.9 trillion, or 76% of household
liquid financial assets. Over the same period, bank deposits decreased from 52%
to 24% of household liquid financial assets.

The volume of equity securities offered to the public illustrates the
growth in supply of investment products. Initial public offerings ("IPOs")
underwritten and total common equity issued in the United States public market
grew from $1.4 billion and $12.8 billion, respectively, in 1980, to $10.2
billion and $19.2 billion, respectively, in 1990, to $43.9 billion and $118.4
billion, respectively, in 1997. California and Massachusetts (the headquarters
states of Sutro and Tucker Anthony, respectively) ranked first and eighth,
respectively, among the 50 states in dollar volume of IPOs for locally
headquartered companies in 1997 and first and seventh, respectively, in dollar
volume of public offerings of common stock. Management believes that a
significant portion of the growth in equity offerings has come from emerging and
middle-market companies and that the increase in emerging and middle-market
issuers has been facilitated by large increases in the flow of cash into equity
mutual funds and other managed funds as a result of these changes in household
investing patterns.

The combination of increasing flows of funds into the equity markets and
new issuance activity has contributed to significantly higher trading volumes.
From 1980 to 1997, average daily trading volume grew at a compound annual rate
of 15.6% on the NYSE and 20.7% on the Automated Quotation System of the NASD
(the "Nasdaq"). More recently, the combined NYSE and Nasdaq average daily
trading volumes grew at a compound annual rate of 22.2% for the five years ended
1997 and increased 22.9% in 1997 over 1996.

COMPANY OVERVIEW

Freedom, through its three brokerage subsidiaries, Tucker Anthony, Sutro
and Cleary Gull and its asset management subsidiary, Freedom Capital, is a
full-service, regionally focused retail brokerage and investment banking firm.
Tucker Anthony, headquartered in Boston and focused primarily on the
northeastern United States, and Sutro, headquartered in San Francisco and
focused primarily on the western United States, are both over 100 years old and
have well established reputations in their respective regions. Cleary Gull,
headquartered in Milwaukee, Wisconsin, was founded in 1987 and is focused
primarily on the midwestern United States. On April 16, 1998, the Company closed
into escrow and funded its previously announced acquisition of Cleary Gull. The
acquisition was completed on May 1, 1998 and was accounted for under the
purchase method of accounting. The consolidated financial and other data
included elsewhere in this Prospectus include the results of Cleary Gull's
operations from the date of acquisition. Management believes that it can best
serve the needs of these distinct regions through separate, locally managed
organizations, while

36
<PAGE> 37

avoiding cost duplication through the use of shared clearing and support
services. This approach enables the Company to capitalize on each organization's
name recognition, historical areas of expertise and close community ties while
lessening the Company's reliance on a single region's economy.

The Company believes that its primary strengths are (i) the experience and
tenure of its investment executives, which have often led to long-term
relationships with clients in their respective communities; (ii) its high level
of employee commitment, evidenced by significant employee ownership in the
Company; (iii) its personalized, service-oriented culture emphasizing
responsiveness to client and regional market demands; (iv) its focus on emerging
and middle-market companies in targeted industries in which the Company has
specialized expertise or regional presence; and (v) its ability to manage and
control operating costs through centralization of certain services and other
cost effective solutions, including its clearing and processing arrangements
with Wexford.

Retail Operations. The retail operations of Tucker Anthony and Sutro
conducted in 13 states and the District of Columbia, have together generated
between 56% and 62% of the Company's operating revenues in each of the last
three calendar years and have historically represented the Company's core
business. In its retail operations, the Company focuses on maintaining and
developing strong client relationships through a dedicated community focus while
providing the breadth and quality of services and products offered by national
brokerage firms. As of June 30, 1998, customers had over $29 billion of assets
in over 200,000 Tucker Anthony and Sutro brokerage accounts. Management believes
that the experience of its 707 investment executives and their strong ties to
their communities help differentiate the Company from its competitors and enable
the Company to more effectively access and serve its clients. Management also
believes that its strategy of providing its investment executives with a high
level of support and the flexibility to operate in an entrepreneurial manner has
allowed the Company to recruit and retain highly effective, motivated investment
executives, many of whom have significant tenure at their local branch offices.

Equity Capital Markets. Each of Tucker Anthony, Sutro and Cleary Gull has
historically demonstrated strengths in offering various investment banking
services, such as mergers and acquisition services, to clients within its
respective region. The Company's strategy is to develop equally strong
research-driven equity capital markets groups including equity research,
investment banking, institutional sales, trading and syndication services.
Tucker Anthony's, Sutro's and Cleary Gull's respective research and investment
banking departments target emerging and middle-market companies within their
respective regions and within the industries in which they specialize, such as
consumer products, healthcare, financial services and technology industries.
Equity capital markets activities have represented 16% to 17% of the Company's
operating revenues in each of the past three calendar years. For the first six
months of 1998, equity capital markets activities generated approximately 23% of
the Company's operating revenues.

Asset Management. Freedom Capital, headquartered in Boston, was formed in
1930 and as of June 30, 1998 managed approximately $6.2 billion of assets,
including approximately $3.4 billion of investments by public sector entities,
high net worth individuals and others, with the remainder comprised of money
market funds for the benefit of Tucker Anthony, Sutro and Cleary Gull clients.
Freedom Capital has developed a leading position in the management of public
funds for local Massachusetts municipalities and agencies, has also developed an
important presence in certain sectors of the union pension fund market and is
growing its corporate funds management business. Asset management revenues have
represented approximately 5% to 6% of the Company's total operating revenues in
each of the past three calendar years. Cleary Gull recently established its
Private Client Group to provide retail brokerage and investment management
services to institutional accounts and high networth individuals.

37
<PAGE> 38

BUSINESS STRATEGY

Since the Acquisition, management formulated and is implementing a strategy
to (i) enhance the services the Company offers its customers; (ii) improve the
profitability of Tucker Anthony's and Sutro's retail operations; (iii) expand
each firm's equity capital markets activities; and (iv) increase Freedom
Capital's money management business. Management also plans to supplement the
Company's internal growth with strategic acquisitions. The principal elements of
the Company's strategy are set forth below.

Enhance Personalized, High-End Service. Tucker Anthony and Sutro have
traditionally sought to attract and retain brokerage clients by offering a high
level of personal service responsive to customer needs. The Company intends to
increase its commitment to service by providing its investment executives with
advanced account information systems and flexibility in determining appropriate
fee schedules for certain services based upon the level of customer needs, and
by providing an array of one-stop investment and financial planning services.

Improve Profitability of Retail Brokerage Operations. The Company intends
to continue to improve the profitability of its retail operations primarily by
hiring additional experienced and highly productive investment executives and by
providing Tucker Anthony's and Sutro's investment executives with enhanced
training, product offerings, information systems and support. Average production
per retail investment executive increased 15% in 1997 compared to 1996 and 18%
in 1996 compared to 1995 at Tucker Anthony, while average production per retail
investment executive increased 13% in 1997 compared to 1996 and 8% in 1996
compared to 1995 at Sutro. Management believes that the implementation of this
strategy will be aided by the Company's entrepreneurial culture and strategy of
providing a high level of support for its investment executives.

Expand Regional and Specialty Equity Capital Markets Activities. Tucker
Anthony, Sutro and Cleary Gull maintain separate and independent investment
banking groups. Each investment banking group is supported by its own regionally
and industry focused research department, institutional sales group and equity
trading. The Company intends to continue to increase Tucker Anthony's, Sutro's
and Cleary Gull's investment banking business by committing greater resources
to, and by carefully focusing their research and investment banking coverage on,
geographic regions and industries which management believes offer the greatest
opportunities. Management believes that this independent and regional focus is
particularly well suited to the northeastern, western and midwestern regions
currently served by Tucker Anthony, Sutro and Cleary Gull, respectively. In
1997, for example, Massachusetts and California ranked seventh and first,
respectively, in dollar volume of public offerings of common stock of locally
headquartered companies. Management also believes that consolidations within the
investment banking industry, as a whole, will offer enhanced opportunities for
those firms which maintain their local and industry specific focus.

Increase Asset Management Business. Management intends to grow Freedom
Capital's business by extending its public funds business from Massachusetts to
other states, by improving coordination with the Tucker Anthony and Sutro retail
brokerage networks, and by increasing the assets under its management and the
number of its portfolio managers through acquisitions or recruiting. Management
also intends to continue to encourage the growth of Cleary Gull's investment
management services.

Supplement Growth with Strategic Acquisitions. Management plans to
actively pursue opportunities to acquire other firms with complementary business
which would strengthen or expand the firm's geographic or product offering base,
such as the acquisition of Cleary Gull, which has allowed the Company to expand
its geographic coverage. Management believes that attractive acquisition
opportunities exist particularly among smaller regional firms that want to
affiliate with a larger firm while still retaining their regional identity and
focus and entrepreneurial culture, as Tucker Anthony and Sutro have been able to
do. In addition, the Company believes that the consolidation trends in the
brokerage and asset management businesses will allow it to hire proven
investment professionals who prefer the culture and opportunities inherent in a
smaller, entrepreneurial and independent firm. Management believes that
acquisitions may also allow the Company to realize cost benefits by leveraging
its infrastructure.

38
<PAGE> 39

THE ACQUISITION

To finance the Acquisition of Freedom from Hancock in November 1996,
approximately 350 employees of the Company, including senior management and
investment executives, purchased an aggregate of approximately 28% of the
Company's equity (after giving effect to the Company's initial public offering),
with additional equity financing provided by THL and SCP. Incentive equity
programs have been established pursuant to which employees have acquired or may
acquire additional equity of the Company, which, when added to shares previously
owned, would result in employees owning up to approximately 45% of the shares of
Common Stock outstanding. See "Certain Relationships and Related
Transactions -- The Acquisition" for a more complete description of the
Acquisition and "Management" for a description of the Company's incentive equity
programs.

Management believes that the Company's independence and employee ownership
have resulted in progressively higher levels of employee motivation, confidence
and commitment during 1997, as compared to 1996 when the Predecessor Company was
for sale and it was uncertain whether the Acquisition would be consummated or
whether the Predecessor Company would be sold to another organization.
Management believes that uncertainty surrounding the future of the Company
adversely affected the Company's performance in 1996 and, to a lesser extent, in
early 1997 by weakening employee motivation and the Company's ability to recruit
personnel, creating uncertainty among customers and prospective customers,
consuming management's time and inhibiting the Company's ability to pursue new
initiatives. The Company believes that the Acquisition and the strategies
instituted in connection therewith have been successful. For example, during the
first six months of 1998, Tucker Anthony, Sutro and Cleary Gull managed or
co-managed 19 equity offerings compared to 17 during the first six months of
1997. During 1997, the Company managed or co-managed 34 equity offerings in 1997
compared to 16 in 1996 and 9 in 1995. In 1997, the Company reported net income
of $18.7 million, a 52% increase over net income of $12.3 million in 1996 and
43% increase over net income of $13.1 million in 1995. For the first six months
of 1998, the Company reported net income of $12.6 million, before extraordinary
item, a 98% increase over net income of $6.4 million for the first six months of
1997. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

INITIAL PUBLIC OFFERING

On April 2, 1998, the Company completed its 7.4 million shares initial
public offering, including 4.2 million shares of Common Stock sold by the
Company. The initial public offering raised approximately $76.7 million for the
Company, after deducting underwriting discounts, commissions and expenses.

CLEARY GULL ACQUISITION

On May 1, 1998, the Company completed its previously announced acquisition
of Cleary Gull, a privately held investment banking, institutional brokerage and
investment advisory firm headquartered in Milwaukee, Wisconsin. Cleary Gull was
established in 1987 as a private investment bank focusing on the equity capital
markets through institutional research, sales and trading, and investment
banking services. Cleary Gull's research analysts cover such areas as
distribution and logistics, business services, applied technology and growth
companies in the upper midwestern United States. Cleary Gull's equity capital
markets activities include a national institutional sales force and
over-the-counter and listed trading services. Cleary Gull's investment banking
activities are focused primarily on merger and acquisition advisory services and
financing assignments in both public and private equity and debt markets. Cleary
Gull recently established its Private Client Group to provide retail brokerage
and investment management services to institutional accounts and high net worth
individuals.

39
<PAGE> 40

GENERAL

A chart depicting in simplified form the corporate structure of the Company
and its primary subsidiaries is set forth below, together with a brief
description of the business undertaken by each of the entities shown:

----------------------------------------
FREEDOM SECURITIES
CORPORATION
----------------------------------------

<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------ ------------------------ ------------------------ ------------------------
TUCKER ANTHONY SUTRO & CO. CLEARY GULL REILAND FREEDOM CAPITAL
INCORPORATED INCORPORATED & MCDEVITT INC. MANAGEMENT CORPORATION
- ------------------------ ------------------------ ------------------------ ------------------------
</TABLE>

Freedom Securities Corporation: Issuer of the shares offered hereby,
Freedom Securities Corporation is a holding company formed in 1996 to acquire
Freedom Securities Holding Corporation from Hancock.

Tucker Anthony Incorporated: One of the Company's primary operating
subsidiaries, Tucker Anthony engages in the securities brokerage and investment
banking businesses and transacts business primarily in the northeastern United
States.

Sutro & Co. Incorporated: One of the Company's primary operating
subsidiaries, Sutro engages in the securities brokerage and investment banking
businesses and transacts business primarily in the western United States.

Cleary Gull Reiland & McDevitt Inc.: One of the Company's primary operating
subsidiaries, Cleary Gull engages in the securities brokerage and investment
banking businesses and transacts business primarily in the midwestern United
States.

Freedom Capital Management Corporation: One of the Company's primary
operating subsidiaries, Freedom Capital engages in the investment advisory and
asset management businesses.

The Company's business is described in more detail below.

TUCKER ANTHONY, SUTRO AND CLEARY GULL

Most of the Company's business activities are conducted through Tucker
Anthony, Sutro and Cleary Gull, and its asset management business is conducted
through Freedom Capital. Tucker Anthony's, Sutro's and Cleary Gull's principal
business activities are summarized below.

Retail Brokerage

A large portion of the Company's revenues are generated from commissions or
fees earned as a broker for individual clients in the purchase and/or sale of
equity securities, fixed income securities, mutual funds, insurance products,
options and U.S. government and municipal securities. The Company also earns
commissions or fees for services provided in the areas of managed accounts and
personal trusts. As of June 30, 1998, Tucker Anthony had 476 investment
executives located in 10 states and the District of Columbia, and Sutro had 231
investment executives located in 3 states. For the years ended December 31,
1995, 1996 and 1997, commissions and sales credits from individual investors
constituted approximately 77%, 82% and 84%, respectively, of total commissions
and sales credits and 46%, 52% and 54%, respectively, of the Company's total
revenues. Management believes that such retail services will continue to be the
Company's primary source of revenue for the foreseeable future. Tucker Anthony
and Sutro charge retail commissions on both exchange and OTC transactions in
accordance with commission rate tables which they have formulated. Discounts
from the commission rate tables are granted in certain cases and the commission
rate tables may

40
<PAGE> 41

change from time to time. Each firm also offers certain account arrangements
under which a single fee is charged based on a percentage of the assets held in
a customer's account and no commissions are charged on a transaction by
transaction basis. Tucker Anthony and Sutro have also adopted the "Beacon
Account" and "Sutro Asset Value Account" programs, respectively, through which
clients may be charged negotiated fees based upon the level of services
provided.

Tucker Anthony and Sutro provide their retail clients with a broad range of
services delivered in a personalized, service oriented manner. In addition to
recommending and effecting transactions in securities, the Company makes
available equity research reports prepared by Tucker Anthony, Sutro, Cleary Gull
and other research analysts and offers services such as financial planning and
tax, trust and estate advice to its retail clients. The Company believes that
the personalized nature and range of services it provides to its retail clients
is a key factor in the success of its retail brokerage units.

The following table sets forth the locations and number of investment
executives in the Company's retail offices as of June 30, 1998:

TUCKER ANTHONY SUTRO

<TABLE>
<S> <C> <C> <C>
MASSACHUSETTS
Andover................... 3 CALIFORNIA
Boston.................... 74 Beverly Hills............. 27
Burlington................ 7 Big Bear.................. 2
Franklin.................. 6 Fresno.................... 9
New Bedford............... 6 Hollywood................. 1
Springfield............... 12 La Jolla.................. 8
Worcester................. 5 Los Angeles............... 16
------ Newport Beach............. 20
Total................... 113 Oakland................... 17
CONNECTICUT Sacramento................ 14
Hartford.................. 27 San Francisco............. 35
New Haven................. 16 San Jose.................. 13
Stamford.................. 15 San Luis Obispo........... 4
------ Santa Maria............... 5
Total................... 58 Santa Rosa................ 15
MAINE West Los Angeles.......... 2
Bangor.................... 6 Woodland Hills............ 12
Portland.................. 16 ------
------ Total................... 200
Total................... 22 ARIZONA
RHODE ISLAND Scottsdale................ 13
Providence................ 21 Tucson.................... 8
NEW HAMPSHIRE ------
Concord................... 1 Total................... 21
Nashua.................... 4 NEVADA
Peterborough.............. 3 Las Vegas................. 10
Portsmouth................ 2 TOTAL SUTRO............... 231
------ ------
Total................... 10 TOTAL COMPANY............. 707
NEW YORK ======
Garden City............... 4
New York City
Fifth Avenue............ 34
World Financial
Center................ 61
Rochester................. 8
Rome...................... 8
Schenectady............... 6
Southampton............... 8
Syracuse.................. 9
Watertown................. 5
------
Total................... 143
NEW JERSEY
Fairhaven................. 18
Morristown................ 15
Princeton................. 17
------
Total................... 50
PENNSYLVANIA
Philadelphia.............. 21
ILLINOIS
Chicago................... 21
DISTRICT OF COLUMBIA
Washington................ 7
DELAWARE
Wilmington................ 10
------
TOTAL TUCKER ANTHONY...... 476

</TABLE>

41
<PAGE> 42

The Tucker Anthony and Sutro retail sales forces are comprised of an
experienced and productive group of investment executives. Management believes
that its strategy of providing its investment executives with a high level of
support and the flexibility to operate in an entrepreneurial manner has allowed
the Company to recruit and retain highly productive and experienced investment
executives. Tucker Anthony's and Sutro's investment executives average more than
10 and 6 1/2 years, respectively, of tenure with the Company and 19 and 17 1/2
years, respectively, of experience in the securities brokerage industry.
Management believes that Tucker Anthony and Sutro have been able to successfully
recruit and retain investment executives for a number of reasons including a
corporate culture which supports and encourages performance, employee ownership,
advanced technology, competitive payouts, no discount sharing and a
service-driven rather than a products-driven environment.

The following table illustrates the improved production of the Company's
retail investment executives.

AVERAGE PRODUCTION PER RETAIL INVESTMENT EXECUTIVE
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
TUCKER ANTHONY SUTRO
- ----------------------------------------------- ----------------------------------------------
AVERAGE AVERAGE
ANNUAL ANNUAL ANNUAL ANNUAL
YEAR PRODUCTION(1) INCREASE YEAR PRODUCTION(1) INCREASE
<S> <C> <C> <C> <C> <C>
1994................. $208 1994................ $271
1995................. 242 16.3% 1995................ 289 6.6%
1996................. 285 17.8 1996................ 312 8.0
1997................. 327 14.7 1997................ 352 12.8
1997 (first half).... 301 -- 1997 (first half)... 333 --
1998 (first half).... 357 18.6 1998 (first half)... 338 1.5
</TABLE>

- ---------------

(1) Calculated by dividing total retail commissions and managed account fees by
the average of the number of investment executives at the beginning and end
of each period (excluding non-producing managers and trainees). First half
of 1997 and 1998 is annualized.

Tucker Anthony and Sutro together had over 200,000 accounts representing
approximately $28 billion in client assets as of December 31, 1997. The Company
maintains insurance provided by the Securities Investors Protection Corporation
(the "SIPC") for up to $500,000 (coverage of cash is limited to $100,000) per
customer account, as well as excess SIPC coverage for an additional $9.5 million
per client account. Clients who have established a Freedom Asset Account are
provided protection up to a maximum of $60 million, which is included in the
Freedom Asset Account annual fee. The excess SIPC coverage of $9.5 million and
$59.5 million is provided under an insurance policy arranged through Wexford.

Institutional Equity Sales and Research

Tucker Anthony, Sutro and Cleary Gull execute securities transactions for
institutional investors such as banks, mutual funds, insurance companies and
pension and profit-sharing plans. These investors normally purchase and sell
securities in large quantities, which transactions require specialized marketing
and trading expertise. In order to service these institutional accounts, the
Company has established a network of institutional offices located in New York,
Boston, San Francisco, Los Angeles, Milwaukee, Chicago, Denver, Washington, D.C.
and Paris, France.

Institutional transactions are executed by the Company acting as broker or
principal. The Company permits discounts from its commission schedule to its
institutional customers. The size of such discounts varies with the size of
particular transactions and other factors. For the fiscal years ended December
31, 1995, 1996 and 1997, commissions and sales credits from institutional
investors constituted approximately 11%, 10% and 10%, respectively, of total
commissions and sales credits and 6% of the Company's total revenues in each
year. The Company believes that it receives a significant portion of its
institutional brokerage commissions as a consequence of its research advice and
services regarding specific corporations and industries, its principal
transactions business and its investment banking activity.

42
<PAGE> 43

Historically, Tucker Anthony and Sutro combined their institutional equity
sales and research forces under a joint venture, which was intended to create
efficiencies in institutional account coverage and research development costs.
In order to better coordinate the respective institutional sales, investment
banking, equity research and trading departments of Tucker Anthony and Sutro,
the research joint venture was disbanded following the Acquisition, and each of
Tucker Anthony and Sutro established their own targeted regional and industry
equity research and institutional equity sales programs.

Tucker Anthony, Sutro and Cleary Gull have each focused their equity
research on selected sectors of the consumer products, healthcare, financial
services and technology industries primarily concentrated in their respective
regions. Within each of these industries, Tucker Anthony, Sutro and Cleary Gull
have focused on various industry niches which each believes offers it the
greatest opportunities. Each firm focuses its equity capital markets group on
integrating its research, institutional sales, corporate finance, trading and
syndication functions. Management believes that its research will be a key
factor in growing its equity capital markets activities.

Principal Transactions and Trading

The Company conducts its principal transactions and trading business
through Tucker Anthony and Sutro, with each firm's business focused on the
activities summarized below, except for arbitrage activities which are engaged
in primarily by Tucker Anthony.

Tucker Anthony and Sutro make markets, buying and selling as principal, in
common stocks, convertible preferred stocks, warrants and other securities
traded on Nasdaq or in other OTC markets. As of June 30, 1998, the Company made
markets in equity securities of over 500 issuers. Such securities are
principally those in which there is substantial continuing client interest and
include securities which the Company has underwritten or on which it provides
research opinions. The Company also effects transactions in blocks of
securities, usually with institutional investors and generally involving 10,000
or more shares of listed stocks. Such transactions are handled on an agency
basis to the extent possible, but the Company may take a long or short position
as principal to the extent that no buyer or seller is immediately available. By
engaging in block positioning, the Company places a portion of its capital at
risk to facilitate transactions for clients.

The Company provides clients access to a range of fixed income products
including municipal securities, U.S. government and agency securities, mortgage
related securities including those issued through Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and Federal
Home Loan Mortgage Corp. ("FHLMC"), and corporate investment-grade and
high-yield bonds. The Company takes positions on a principal basis in municipal,
U.S. government, agency and corporate securities to facilitate transactions for
its clients. Profits or losses are recognized from fluctuations in the value of
securities in which it maintains positions. The Company's capital can be at risk
to the extent significant adverse price fluctuations occur. Additionally,
trading activities include the purchase of securities under agreements to resell
at future dates (resale agreements) and the sale of the same or similar
securities under agreements to repurchase at future dates (repurchase
agreements). Profits and losses on the repurchase transactions result from the
interest rate differentials. The Company actively participates on a principal
basis in the mortgage-backed securities markets through the purchase or sale of
GNMA, FNMA, FHLMC, mortgage pass-through securities, collateralized mortgage
obligations and other mortgage related securities, in order to meet client
needs. The Company finances its trading positions as part of its Wexford
clearing arrangement, by overnight borrowing and by repurchase agreements. See
"Risk Factors -- Market, Credit and Liquidity Risks Associated with Principal
Trading Arbitrage and Underwriting Activities."

Tucker Anthony and Sutro are each municipal securities dealers in both the
primary and secondary markets, buying and selling securities for their own
account and for clients. Revenues derived from these activities include
underwriting and management fees, selling concessions and trading profits.

Tucker Anthony engages in the purchase and sale of convertible and equity
securities to take advantage of price differences prevailing in separate
markets. These arbitrage activities include both convertible and risk arbitrage.
To the extent that purchase and sale transactions are not simultaneous, or the
closing of a position is

43
<PAGE> 44

subject to a subsequent event such as the successful consummation of a corporate
merger, Tucker Anthony places a portion of its capital at risk. Sutro does not
engage in significant arbitrage activities.

Underwriting Activities and Investment Banking

The Company's investment banking and underwriting activities are performed
by Tucker Anthony's, Sutro's and Cleary Gull's corporate finance, public finance
and syndicate departments. The corporate finance groups manage and underwrite
public offerings of equity and, to a significantly lesser extent, debt
securities, arrange private placements of equity and debt securities and provide
financial advice in connection with mergers and acquisitions, divestitures and
other corporate reorganizations and restructurings. Tucker Anthony's, Sutro's
and Cleary Gull's managed public equity offerings and merger and acquisition
transactions are typically undertaken for emerging or middle-market companies in
the consumer products, healthcare, financial services, technology, distribution
and logistics, applied technology and business services sectors or companies
located in each firm's respective geographic region.

Historically, the Company's merger and acquisition advisory business has
been responsible for a majority of the Company's investment banking revenues.
The Company believes that it has a well established merger and acquisition
advisory business and plans to capitalize on this strength in further building
upon Tucker Anthony's, Sutro's and Cleary Gull's equity capital markets groups.

Through the Company's renewed focus on its equity capital markets groups,
Tucker Anthony's, Sutro's and Cleary Gull's corporate finance and syndicate
departments coordinate closely with their respective research and institutional
sales departments in order to enhance marketing and provide integrated services
to emerging and middle-market companies and institutional clients. As the
following chart indicates, the Company has been successful in increasing the
underwriting activities of Tucker Anthony.

PUBLIC EQUITY OFFERINGS LED OR CO-MANAGED(1)
(DOLLARS IN MILLIONS)(2)

<TABLE>
<CAPTION>
FIRST HALF
---------------------------------
1995 1996 1997 1997 1998
--------------- --------------- --------------- --------------- ---------------
NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issues managed by
Tucker Anthony..... 5 $171 10 $229 10 $ 419 7 $274 11 $ 499
Issues managed by
Sutro.............. 3 118 5 251 20 1,124 8 419 3 205
Issues managed by
Cleary Gull(3)..... N/A N/A N/A N/A N/A N/A N/A N/A 4 331
Issues managed by
Tucker Anthony and
Sutro jointly...... 1 24 1 50 4 200 2 68 1 148
--- ---- --- ---- --- ------ --- ---- -- ------
Total................ 9 $313 16 $530 34 $1,743 17 $761 19 $1,183
=== ==== === ==== === ====== === ==== == ======
</TABLE>

- ------------------------------
(1) Including public common or preferred stock issues and rights offerings;
excluding closed-end funds.

(2) Shares offered by entire syndicate (excluding over-allotment shares)
multiplied by offering price.

(3) Includes only those offerings completed after the acquisition of Cleary Gull
by the Company.

The public finance departments of Tucker Anthony and Sutro provide
financial consulting, advisory and underwriting services to cities and public
service districts. The Company's subsidiaries manage and underwrite offerings of
municipal securities to finance the construction and maintenance of a broad
range of public-related facilities, including healthcare, housing, education,
public power, water and sewer, airports, highways and other infrastructure
needs. Over the last several years, the public finance sector has generally
experienced diminishing spreads and a lower level of publicly financed projects.
Nevertheless, both firms have experienced increasing profitability in this
sector in 1997 by concentrating on smaller local community projects.

The syndicate departments coordinate the distribution of managed and
co-managed corporate securities offerings and accept invitations to participate
in underwritings managed by other investment banking firms.

44
<PAGE> 45

The Company, through certain subsidiaries, has from time to time in the
past and may from time to time in the future participate as an equity investor
in connection with specific transactions.

Other Activities

Tucker Anthony and Sutro hold memberships in major securities exchanges in
the United States (including the NYSE) in order to provide services to their
brokerage clients in the purchase and sale of listed securities.

Additionally, the Company's wholly owned subsidiary, Freedom Specialist
Inc. ("FSI"), has a 25% interest in the profits and losses of a joint specialist
account in which it participates with two other NYSE specialist firms, RPM
Specialist Corp. and R. Adrian & Co. Specialists are responsible for executing
transactions and maintaining a fair and orderly market in securities under NYSE
rules and regulations. In this function, the specialist firm acts as an agent in
executing orders entrusted to it and/or acts as a dealer on the opposite side of
public orders in the security executed on the floor of the NYSE. As of June 30,
1998, the specialist firm acted as a specialist in 36 equity issues. FSI's
specialist stock settlement and clearing activities are provided by RPM Clearing
Corporation.

Retail client securities transactions are executed on either a cash or
margin basis. Under the current clearing arrangement with Wexford, in a retail
margin transaction, credit is extended to a client through Wexford for the
purchase of securities, using the securities purchased and/or other securities
in the client's account as collateral for amounts loaned. The Company receives
income from interest charged on such extensions of credit. The financing of
margin purchases can be an important source of revenue to the Company, since the
interest rate paid by the client on funds loaned through Wexford exceeds the
Company's interest costs for net customer debit balances paid to Wexford. The
amount of the Company's gross interest revenues is affected not only by
prevailing interest rates, but also by the volume of business conducted on a
margin basis. By permitting a client to purchase on margin, the Company takes
the risk that market declines could reduce the value of the collateral below the
principal amount loaned, plus accrued interest, before the collateral can be
sold. Amounts loaned are limited by margin regulations of the Board of Governors
of the Federal Reserve System and other regulatory authorities and are subject
to Wexford's, Tucker Anthony's and Sutro's credit review and daily monitoring
procedures.

FREEDOM CAPITAL

The Company's asset management activities are conducted principally by
Freedom Capital. Freedom Capital is a Massachusetts corporation, formerly named
Tucker Anthony Management Corp. organized in 1930. As of June 30, 1998, Freedom
Capital had 58 employees located in Massachusetts and New York. Freedom Capital
provides investment advisory and portfolio management services to individuals,
corporations, public funds, professional firms, endowments and pension funds,
and money market funds. As of June 30, 1998, total assets under management were
approximately $6.2 billion, comprised of approximately $3.4 billion of
investments by public sector entities, high net worth individuals and others,
with the remainder in money market funds for the benefit of Tucker Anthony,
Sutro and Cleary Gull clients.

The Company intends to enhance the profitability of Freedom Capital by
acquiring other money management businesses to increase both assets under
management and the number of investment professionals providing services and by
creating products to be marketed by Freedom Capital. Freedom Capital had offered
proprietary mutual funds to its clients until 1992, when the Company assigned
its investment advisory contracts to Hancock. The Company also intends to
increase the productivity and profitability of Freedom Capital through improved
coordination with the Tucker Anthony and Sutro retail brokerage networks and
other initiatives intended to allow Freedom Capital to manage a larger
percentage of funds held by Tucker Anthony and Sutro clients.

As with other aspects of the Company's business, Freedom Capital is focused
on service and client communication. To foster active and attentive management,
Freedom Capital limits the number of client relationships of each portfolio
manager. This policy is intended to provide each portfolio manager with the time
necessary to foster ongoing client relationships and the opportunity to discuss
portfolio strategies with the

45
<PAGE> 46

client. Freedom Capital offers comprehensive client statements which include
portfolio appraisals, performance analyses and statements of transactions. In
addition, Freedom Capital provides its clients with economic commentary and
investment letters on a regular basis. Freedom Capital believes that its many
strong, long-term client relationships attest to its attention to service and
client communication.

Freedom Trust Company, a New Hampshire chartered trust company and a
subsidiary of Freedom Capital, commenced operations in early 1996 to provide
clients the opportunity to place their assets in trust so that the Company may
continue to provide asset management services to such trusts after the client's
death. Freedom Trust Company had assets under custody of $699 million, of which
$22 million was under management, as of June 30, 1998.

RELATIONSHIP WITH WEXFORD

The Company clears all transactions, and carries accounts for customers and
proprietary accounts, with Wexford. Wexford furnishes the Company with
information necessary to run the Company's business, including commission runs,
transaction summaries, data feeds for various reports including compliance and
risk management, execution reports, trade confirmations, monthly account
statements, cashiering functions and the handling of margin accounts. As a
result of its arrangement with Wexford, the Company has achieved substantial
savings in its clearing and related operations. Under the Wexford arrangement,
management believes that the Company's cost of clearing its transactions is very
competitive with the industry's costs. The Company is entitled to pay a set fee
per trade, subject to an aggregate annual minimum payment for clearing trades
through Wexford. The Company's current trading volume allows the Company to
realize substantially all of the benefit of the per trade price, although the
Company believes that the Wexford arrangement provides substantial cost
advantages to the Company even during periods with reduced trading volumes.

Consistent with its strategy of providing its investment executives with a
high level of support, following the April 1996 conversion to the Wexford
clearing arrangement, the Company retained approximately 50 of its clearing
operation employees to serve as an interface between Wexford and the Company's
investment executives. The Company's retention of these employees allows its
investment executives to deal exclusively with Company employees in connection
with any client inquiries or problems. In addition to providing the Company and
its investment executives with access to advanced technology without substantial
capital investment by the Company, the Company's relationship with Wexford will
allow the Company to provide its clients with benefits resulting from this
technology. The Company allows clients, for a fee, to access information
concerning their accounts and other market information from their own personal
computers and has acquired technology that will enable its investment executives
to communicate with its customers through electronic mail, subject to rules and
procedures in compliance with Commission and SRO guidelines. The agreement
between the Company and Wexford has a fixed term of five years, with provisions
for negotiated extensions. See "Risk Factors -- Dependence on Certain
Relationships" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

The Company currently has an uncommitted financing arrangement with Wexford
pursuant to which the Company finances its customer accounts, certain
broker-dealer balances and firm trading positions through Wexford. Although the
customer accounts and such broker-dealer balances are not reflected on the
Company's Statements of Financial Condition for financial accounting reporting
purposes, the Company has agreed to indemnify Wexford for losses it may sustain
in connection with accounts of the Company's customers and therefore retains
risk with respect thereto. The Company seeks to control the risks associated
with these activities by requiring customers to maintain margin collateral in
compliance with various regulatory and internal guidelines. The Company and
Wexford monitor required margin levels daily and, pursuant to such guidelines,
request customers to deposit additional collateral or reduce securities
positions when necessary.

See "Risk Factors -- Dependence on Certain Relationships and Technology"
for a discussion of certain risks associated with the Company's Wexford
relationship.

46
<PAGE> 47

PROPERTIES

The principal executive offices of the Company are located at One Beacon
Street, Boston, Massachusetts under a lease expiring December 31, 2005. The
Company is currently leasing approximately 104,000 square feet at that location.
The Company also leases approximately 88,000 square feet (of which 18,000 square
feet has been sublet) at One World Financial Center, 200 Liberty Street, New
York, New York, under a lease expiring in January 2005; 64,000 square feet (of
which 8,000 square feet has been sublet) at 201 California Street, San
Francisco, California under a lease expiring July 31, 2003; 25,000 square feet
at 555 South Flower Street, Los Angeles, California under a lease expiring July
31, 2002; and 24,000 square feet at 100 East Wisconsin Avenue, Milwaukee,
Wisconsin under a lease expiring January 31, 2006. For the year ended December
31, 1997, the Company's total expenses for operating leases were $15.9 million.
The Company believes that its existing facilities will be adequate for the
foreseeable future.

EMPLOYEES

As of June 30, 1998, the Company had a total of 2,003 employees, of whom
1,192 were engaged in retail brokerage, 86 in institutional sales, 70 in
research, 163 in trading, 118 in investment banking, 28 in asset management and
346 in accounting, administration and operations. Of these employees, 1,257 were
classified as professionals and 746 were classified in support positions. None
of the Company's employees are subject to a collective bargaining agreement. The
Company believes that its relations with its employees generally are good. See
"Risk Factors -- Dependence on Personnel."

EFFECTS OF INTEREST RATES

The Company's business is affected by general economic conditions,
including movements of interest rates. The Company's inventory of fixed income
securities may fluctuate as interest rates change, and the Company's interest
income and interest expense may likewise change as interest rates change.
However, interest rates have indirect effects on other aspects of the Company's
business as well.

As interest rates increase, the prices of equity securities may decline,
partially reflecting the increased competition posed by more attractive rates on
fixed income securities and partially reflecting the fact that interest rate
increases may tend to dampen economic activity by increasing the cost of capital
for investment and expansion, thereby reducing corporate profits and the value
of equity securities. As interest rates decline, equity securities may tend to
rise in value. The impact of these changes may affect the Company's inventory of
equity securities, which may change in value, and may also affect the
profitability of the Company's investment banking activities. Retail commission
revenue may also be affected by changes in interest rates and any resulting
indirect impact on the value of equity securities.

The Company's asset management revenues are derived from fees which are
generally based on the market value of assets under management. Consequently,
significant fluctuations in the values of securities, which can occur as a
result of changes in interest rates or changes in other economic factors, may
materially affect the amount of assets under management and thus the Company's
revenues and profitability.

COMPETITION

All aspects of the Company's business and of the securities business in
general are highly competitive. The principal competitive factors influencing
the Company's business are its professional staff, its reputation in the
marketplace, its existing client relationships, the ability to commit capital to
client transactions and its mix of market capabilities. The Company's ability to
compete effectively in securities brokerage and investment banking activities
will also be influenced by the adequacy of its capital levels and by its ability
to raise additional capital. See "Risk Factors -- Significant Competition."

REGULATION

The securities and commodities industry is one of the nation's most
extensively regulated industries. The Commission is responsible for carrying out
the federal securities laws and serves as a supervisory body over all

47
<PAGE> 48

national securities exchanges and associations. The regulation of broker-dealers
has to a large extent been delegated by the federal securities laws to SROs.
These SROs include all the national securities and commodities exchanges, the
NASD and the MSRB. Subject to approval by the Commission and the CFTC, these
SROs adopt rules that govern the industry and conduct periodic examinations of
the operations of certain subsidiaries of the Company. The NYSE has been
designated as the primary regulator of certain of the Company's subsidiaries
including Tucker Anthony and Sutro. The NASD has been designated as the primary
regulator of Cleary Gull. In addition, these subsidiaries are subject to
regulation under the laws of the 50 states, the District of Columbia, Puerto
Rico and certain foreign countries in which they are registered to conduct
securities, investment banking, insurance or commodities business.
Broker-dealers are subject to regulations which cover all aspects of the
securities business, including sales methods, trade practices among
broker-dealers, use and safekeeping of customers' funds and securities, capital
structure of securities firms, record-keeping and the conduct of directors,
officers and employees. Violation of applicable regulations can result in the
revocation of broker-dealer licenses, the imposition of censures or fines and
the suspension or expulsion of a firm, its officers or employees.

As registered broker-dealers and member firms of the NYSE or the NASD,
Tucker Anthony, Sutro, Cleary Gull and FSI are subject to certain net capital
requirements set forth in Rule 15c3-1 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and NYSE Rule 325. Freedom Distributors
Corporation, a subsidiary of Freedom Capital, is also subject to Rule 15c3-1.
The Net Capital Rules, which specifies minimum net capital requirements for
registered broker-dealers, is designed to measure the financial soundness and
liquidity of broker-dealers. The Net Capital Rules also (i) require that broker-
dealers notify the Commission, in writing, two business days prior to making
withdrawals or other distributions of equity capital or lending money to certain
related persons if those withdrawals would exceed, in any 30-day period, 30% of
the broker-dealer's excess net capital, and that they provide such notice within
two business days after any such withdrawal or loan that would exceed, in any
30-day period, 20% of the broker-dealer's excess net capital; (ii) prohibit a
broker-dealer from withdrawing or otherwise distributing equity capital or
making related party loans if after such distribution or loan, the broker-dealer
has net capital of less than $300,000 or if the aggregate indebtedness of the
broker-dealer's consolidated entities would exceed 1,000% of the broker-dealer's
net capital and in certain other circumstances; and (iii) provide that the SEC
may, by order, prohibit withdrawals from capital from a broker-dealer for a
period of up to 20 business days, if the withdrawals would exceed, in any 30-day
period, 30% of the broker-dealer's excess net capital and if the SEC believes
such withdrawals would be detrimental to the financial integrity of the firm or
would unduly jeopardize the broker-dealer's ability to pay its customer claims
or other liabilities. Under NYSE Rule 326, a broker-dealer that is an NYSE
member is required to reduce its business if its net capital (after giving
effect to scheduled maturities of subordinated indebtedness or other planned
withdrawals of regulatory capital during the following six months) is less than
$312,500 or 4% of aggregate debit items (or 6% of the funds required to be
segregated pursuant to the Commodity Exchange Act) for fifteen consecutive days.
NYSE Rule 326 also prohibits the expansion of a member's business if its net
capital (after giving effect to scheduled maturities of subordinated
indebtedness or other planned withdrawals of regulatory capital during the
following six months) is less than $375,000 or 5% of aggregate debit items (or
7% of the funds required to be segregated pursuant to the Commodity Exchange
Act) for fifteen consecutive days.

The Company also is subject to "Risk Assessment Rules" imposed by the
Commission which require, among other things, that certain broker-dealers
maintain and preserve certain information, describe risk management policies and
procedures and report on the financial condition of certain affiliates whose
financial and securities activities are reasonably likely to have material
impact on the financial and operational condition of the broker-dealers. Certain
"Material Associated Persons" (as defined in the Risk Assessment Rules) of the
broker-dealers and the activities conducted by such Material Associated Persons
may also be subject to regulation by the Commission. In addition, the
possibility exists that, on the basis of the information it obtains under the
Risk Assessment Rules, the Commission could seek authority over the Company's
unregulated subsidiaries either directly or through its existing authority over
the Company's regulated subsidiaries.

48
<PAGE> 49

Tucker Anthony, Sutro, Cleary Gull, Freedom Capital and other subsidiaries
are registered with the Commission as investment advisors under the Investment
Advisors Act of 1940 (the "Advisors Act") and are subject to the requirements of
regulation pursuant to both the Advisors Act and certain state securities laws
and regulations. Such requirements relate to, among other things, limitations on
the ability of investment advisors to charge performance-based or non-refundable
fees to clients, record-keeping and reporting requirements, disclosure
requirements, limitations on principal transactions between an advisor or its
affiliates and advisory clients, as well as general anti-fraud prohibitions. The
state securities law requirements applicable to registered investment advisors
are in certain cases more comprehensive than those imposed under federal
securities laws.

As registered investment advisors under the Advisors Act, Tucker Anthony,
Sutro, Cleary Gull, Freedom Capital and certain other subsidiaries of the
Company are subject to regulations which cover various aspects of the Company's
business, including compensation arrangements. Under the Advisors Act, every
investment advisory agreement with the Company's clients must expressly provide
that such contract may not be assigned by the investment advisor without the
consent of the client. Under the Investment Company Act of 1940 (the "Investment
Company Act"), every investment advisor's agreement with a registered investment
company must provide for the agreement's automatic termination in the event it
is assigned. Under both the Advisors Act and the Investment Company Act, an
investment advisory agreement is deemed to have been assigned when there is a
direct or indirect transfer of the Agreement, including a direct assignment or a
transfer of a "controlling block" of the firm's voting securities or, under
certain circumstances, upon the transfer of a "controlling block" of the voting
securities of its parent corporation. A transaction is not, however, an
assignment under the Advisors Act or the Investment Company Act if it does not
result in a change of actual control or management of the investment advisor.
Any assignment of the Company's investment advisory agreements would require, as
to any registered investment company client, the prior approval of a majority of
its shareholders, and as to the Company's other clients, the prior consent of
such clients to such assignments. See "Risk Factors -- Business Subject to
Extensive Regulation; Constraints Imposed by Net Capital Requirements."

In October 1996, during an annual review of the Company's former clearing
subsidiary by the NYSE, it was discovered that for the period of April 4, 1996
through July 1, 1996, such subsidiary had a net capital deficiency on certain
days in violation of the net capital requirements of the Commission and the
NYSE. These net capital deficiencies resulted from a misclassification on the
books of such subsidiary related to the continuation by such subsidiary of a
lending arrangement for overnight and short-term loans on an unsecured basis
with a lending institution during the winding down of its clearing operation
following the commencement of the Company's financing arrangement with Wexford.
While no net capital deficiencies occurred between July 1, 1996 and the
Company's voluntary withdrawal of such subsidiary's broker-dealer license in
March 1997, the Company has reached a settlement with the NYSE in which the
Company was censured and charged a fine of $60,000.

LITIGATION

The Company and its subsidiaries are parties to various legal proceedings
which are of an ordinary or routine nature incidental to the operations of the
Company and its subsidiaries. As of July 31, 1998, there were approximately 36
lawsuits and arbitrations pending against the Company and its subsidiaries. The
defense of such lawsuits or arbitrations may divert the efforts and attention of
the Company's management and staff, and the Company may incur significant legal
expense in defending such litigation or arbitration. This may be the case even
with respect to frivolous claims or litigation. The amount of time that
management and other employees may be required to devote in connection with the
defense of litigation could be substantial and might divert their attention from
other responsibilities within the Company. The Company believes that it has
adequately reserved for such litigation matters and that they will not have a
material adverse effect on the Company's financial condition or results of
operations.

49
<PAGE> 50

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The directors and executive officers of the Company and their respective
ages and positions are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>

John H. Goldsmith......... 56 Chairman, Director and Chief Executive Officer as well as
Chief Executive Officer of Tucker Anthony, Chairman of Sutro
and a Director of Cleary Gull
Robert H. Yevich.......... 48 Director and President of Tucker Anthony
John F. Luikart........... 48 Director and President and Chief Executive Officer of Sutro
Henry Greenleaf........... 55 President and Chief Executive Officer of Freedom Capital
William C. Dennis, Jr..... 54 Executive Vice President and Chief Financial Officer
Kevin J. McKay............ 49 General Counsel and Secretary
Gregory N. Thomas......... 51 Director and Vice Chairman
David P. Prokupek......... 36 Director and President and Chief Executive Officer of Cleary
Gull
David V. Harkins.......... 56 Director
C. Hunter Boll............ 42 Director
Thomas M. Hagerty......... 35 Director
Seth W. Lawry............. 33 Director
Winston J. Churchill...... 57 Director
Hugh R. Harris............ 47 Director

</TABLE>

John H. Goldsmith. Mr. Goldsmith joined the Predecessor Company in 1988
and has served as Chairman, Director and Chief Executive Officer of the
Predecessor Company, Chief Executive Officer of Tucker Anthony, Chairman of
Sutro since that time and a director of Cleary Gull since the acquisition. Mr.
Goldsmith has served as Chairman, Director and Chief Executive Officer of the
Company since the Acquisition in 1996. Prior to joining the Predecessor Company,
Mr. Goldsmith served in various capacities at Prescott, Ball & Turben in
Cleveland, Ohio, including as managing partner and Chief Executive Officer from
1978 to 1982 and as President and Chief Executive Officer from 1982 to 1988. Mr.
Goldsmith worked in the institutional sales department of L.F. Rothschild from
1963 to 1971.

Robert H. Yevich. Mr. Yevich joined Tucker Anthony in 1985 and served as
National Sales Manager until being elected to the Board of Directors of the
Predecessor Company and promoted to President of Tucker Anthony in 1995. Mr.
Yevich has served as Director of the Company since the Acquisition in 1996. Mr.
Yevich has 24 years of varied experience in the retail brokerage business as a
stockbroker, branch manager and research associate. Prior to joining Tucker
Anthony, Mr. Yevich served as branch manager with Paine Webber.

John F. Luikart. Mr. Luikart joined Sutro in 1988 as President and was
responsible for directing all of the firm's capital markets activities. Mr.
Luikart was subsequently elected to the Board of Directors of the Predecessor
Company and appointed Chief Executive Officer of Sutro in October 1995. Mr.
Luikart has served as Director of the Company since the Acquisition in 1996.
Prior to joining Sutro, Mr. Luikart served as General Partner and Executive Vice
President at Prescott, Ball & Turben in Cleveland, Ohio. Mr. Luikart is a former
Chairman of the NASD District Business Conduct Committee and is a member of the
NYSE Regional Firm Advisory Committee.

Henry Greenleaf. Mr. Greenleaf is the President and Chief Executive
Officer of Freedom Capital Management. Prior to joining Freedom in 1997, he was
Vice President and Senior Portfolio Manager with The Glenmede Trust Company.
From 1995 to 1997, he was a Principal and Chief Investment Officer with the
investment counseling firm of Resources Management Corporation/Asset Management
Partners of Farmington, Connecticut. Earlier, he was President and Chief
Investment Officer of HT Investors, Inc. and Senior Vice President of Rhode
Island Hospital Trust National Bank. Mr. Greenleaf also served as portfolio
manager for the Phoenix Mutual Life Insurance Company and The Aetna Life and
Casualty Company. Mr. Greenleaf is a member of the Board of Directors of Cambric
Graphics.

50
<PAGE> 51

William C. Dennis, Jr. Mr. Dennis was elected Executive Vice President and
Chief Financial Officer of the Company in May, 1997. Prior to joining the
Company, he was a Director and Chief Financial Officer of Rodman & Renshaw
Capital Group, Inc., a financial services firm, from 1996 to 1997. Previously,
Mr. Dennis was a managing director of MIS, Inc., a database management company,
and prior to joining MIS, Inc. he was Chief Financial Officer of the Capital
Markets Sector of Merrill Lynch & Co., Inc. Earlier in his career, Mr. Dennis
was a senior financial executive of Exxon Corporation.

Kevin J. McKay. Mr. McKay joined the Predecessor Company in 1994 and has
served as General Counsel and Secretary of the Predecessor Company since that
time. Mr. McKay has served as General Counsel and Secretary of the Company since
the Acquisition in 1996. Prior to joining the Predecessor Company, Mr. McKay was
General Counsel of Prudential Securities, Inc. from 1990 to 1994. Mr. McKay has
over 19 years of experience in the legal and compliance field of the securities
industry. Mr. McKay is a past President of the Compliance & Legal Division of
the Securities Industry Association.

Gregory N. Thomas. Mr. Thomas joined the Company as Executive Vice
President in December 1997; was elected to the Board of Directors in January
1998 and was elected Vice Chairman of the Board of Directors in June, 1998. Mr.
Thomas also serves as a Director of Cleary Gull. Prior to joining the Company,
Mr. Thomas served as President of ShadowWood Corporation, a private real estate
investment company. In 1997, Mr. Thomas also served as an Adjunct Professor in
the School of Business and Economics at the College of Charleston. Previously,
Mr. Thomas was a general partner of William Blair & Company. Mr. Thomas is
currently a director of Obermeyer Asset Management Company.

David P. Prokupek. Mr. Prokupek was elected to the Board of Directors in
May, 1998, following the acquisition of Cleary Gull. He joined Cleary Gull as
Managing Director of the Investment Banking Department in 1992, was elected a
director in 1994, and was named Chief Executive Officer in 1996. Prior to
joining Cleary Gull, Mr. Prokupek was a Managing Director of American Asset
Management, a New York-based investment counselor and merchant bank, and from
1987 to 1989, he was a member of Bankers Trust Company's Merchant Banking Group.

David V. Harkins. Mr. Harkins was elected to the Board of Directors of the
Company in 1996. He has been affiliated with THL since its founding in 1974 and
joined THL as a full time employee in 1986. Mr. Harkins is Chairman of the Board
of National Dentex Corporation and is a director of First Security Services,
Inc., Fisher Scientific International, Inc., Stanley Furniture Company, Inc. and
Syratech Corporation. Mr. Harkins also serves as Senior Vice President and
Trustee of Thomas H. Lee Advisors I, and T.H. Lee Mezzanine II, affiliates of
ML-Lee Acquisition Fund, L.P., and the ML-Lee Acquisition Fund II, L.P.,
respectively.

C. Hunter Boll. Mr. Boll was elected to the Board of Directors of the
Company in 1996. He joined THL in 1986. From 1984 through 1986, Mr. Boll was
with The Boston Consulting Group. From 1977 through 1982, he served as an
Assistant Vice President, Energy and Minerals Division of Chemical Bank. Mr.
Boll is a Director of Big V Supermarkets, Inc., New York Restaurant Group, and
TransWestern Publishing, L.P. Mr. Boll is also a Vice President of Thomas H. Lee
Advisors I, T.H. Lee Mezzanine II, and the Administrative General Partner of
Thomas H. Lee Advisors II, L.P., which is also affiliated with the ML-Lee
Acquisition Fund II, L.P.

Thomas M. Hagerty. Mr. Hagerty was elected to the Board of Directors of
the Company in 1996. He joined THL in 1988. Prior to joining THL, Mr. Hagerty
was in the Mergers and Acquisitions Department of Morgan Stanley & Co.
Incorporated. Mr. Hagerty is a director of Syratech Corporation and Cott
Corporation. Mr. Hagerty is also a Vice President of Thomas H. Lee Advisors I,
T.H. Lee Mezzanine II, and the Administrative General Partner of Thomas H. Lee
Advisors II, L.P., which is also affiliated with the ML-Lee Acquisition Fund II,
L.P.

Seth W. Lawry. Mr. Lawry was elected to the Board of Directors of the
Company in 1996. He worked at THL from 1989 to 1990 and rejoined in 1994. From
1987 to 1989 and 1992 to 1994, Mr. Lawry worked at Morgan Stanley & Co.
Incorporated in the Mergers and Acquisitions, Corporate Finance and Equity
Capital Markets Departments. Mr. Lawry is a director of Safelite Glass Corp. and
Syratech Corporation.

Winston J. Churchill. Mr. Churchill was elected to the Board of Directors
in 1996. Mr. Churchill joined SCP at its founding in 1996 as a Managing General
Partner. Prior to joining SCP, Mr. Churchill formed CIP
51
<PAGE> 52

Capital, Inc., in 1990 and Churchill Investment Partners, Inc., in 1989. Mr.
Churchill serves as Chairman of the Board of Central Sprinkler Corporation, and
as a director of Geotek Communications, Inc., IBAH Inc., Millenium Multimedia,
Tescorp, Inc., Cinema Star Luxury Theatres, Inc., and Griffin Land and
Nurseries, Inc. Mr. Churchill also serves as a director of Fordham University,
Georgetown University, and several other institutions.

Hugh R. Harris. Mr. Harris was elected to the Board of Directors in June,
1998. From 1988 until 1997, Mr. Harris was the President and Chief Operating
Officer of BancBoston Mortgage Corporation, until it was sold to HomeSide
Lending, Inc. HomeSide Lending, Inc. was sold to National Australia Bank in
February 1998 and is now a wholly-owned subsidiary thereof. Mr. Harris remains
as the President and Chief Operating Officer of HomeSide Lending, Inc.

BOARD COMMITTEES

The Compensation Committee of the Board of Directors of the Company is
comprised of David V. Harkins, Thomas M. Hagerty, Hugh R. Harris and Winston J.
Churchill. The Audit Committee of the Board of Directors of the Company is
comprised of C. Hunter Boll, Seth W. Lawry, Hugh R. Harris and Winston J.
Churchill.

ELECTION AND COMPENSATION OF DIRECTORS

Each director of the Company holds office until his successor has been duly
elected and qualified. Directors of the Company are elected annually by the
stockholders of the Company. Officers of the Company are elected by the Board of
Directors of the Company at each annual meeting of the Board of Directors and
serve at its discretion. Other than Hugh Harris, current directors of the
Company receive no compensation for serving as directors; Mr. Harris receives
$1,000 per board meeting and $750 per committee meeting. Additionally, Mr.
Harris receives an annual retainer of $15,000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Harkins, Boll, Hagerty and Lawry are employed by THL, Mr. Churchill
is employed by SCP Mr. Harris is employed by HomeSide Lending, Inc. and the
other directors of the Company are employed by the Company or its subsidiaries.
THL, SCP and those directors who are employed by the Company have each been
involved in transactions with the Company. See "Certain Relationships and
Related Transactions."

52
<PAGE> 53

EXECUTIVE COMPENSATION

The following table sets forth the compensation earned by the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (collectively, the "Named Executive Officers")
during the year ended December 31, 1997:

SUMMARY COMPENSATION TABLE(1)

<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
1997 COMPENSATION COMPEN-
ANNUAL COMPENSATION AWARDS SATION
--------------------------- ------------ ---------
OTHER
ANNUAL SECURITIES
COMPEN- UNDERLYING
SALARY BONUS SATION OPTIONS
NAME AND PRINCIPAL POSITION ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
John H. Goldsmith.............................. 400,000 850,000 (2) 54,540 41,595(3)
Chairman, Director and Chief Executive Officer
William C. Dennis, Jr. (4)..................... 350,000 400,000 -- 36,360 --
Chief Financial Officer
Kevin J. McKay................................. 300,000 400,000 (2) 29,088 3,200(3)
General Counsel and Secretary
Robert H. Yevich............................... 300,000 700,000 (2) 44,541 3,200(3)
Director and President of Tucker Anthony
John F. Luikart................................ 250,000 800,000 (2) 44,541 3,000(3)
Director and Chief Executive Officer of Sutro
</TABLE>

- ------------------------------

(1) Amounts shown reflect compensation earned in the period presented, although
payments earned in prior periods may have been paid in the period presented
and compensation earned in the period presented may have been paid in a
subsequent period.

(2) Amount does not exceed lesser of $50,000 or 10% of compensation.

(3) Represents contribution to 401(k) plan and, in the case of Mr. Goldsmith,
$38,395 of insurance premiums.

(4) The amount presented in the table above includes a $250,000 loan which was
forgiven by the Company. Mr. Dennis' employment began May 12, 1997 and his
effective annual base salary rate is $400,000.

53
<PAGE> 54

The following table sets forth certain information regarding the option
grants made during Fiscal 1997 to each of the Company's named executive officers
in the Summary Compensation Table above. The Company issued no stock
appreciation rights in 1997.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------------- VALUE
PERCENT OF AT ASSUMED ANNUAL
TOTAL RATES
OPTIONS OF STOCK PRICE
NUMBER OF GRANTED TO MARKET APPRECIATION FOR
SECURITIES EMPLOYEES VALUE ON OPTION
UNDERLYING IN EXERCISE OR DATE OF TERM(1)(2)
OPTIONS FISCAL YEAR BASE PRICE GRANT EXPIRATION --------------------
NAME GRANTED (#) (%) ($/SHARE) ($/SHARE) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
John H. Goldsmith.... 17,998 5.50 5.50 01/31/07 62,261 157,781
36,542 5.50 5.50 05/31/06 116,014 288,746
------
54,540 2.56
------
William C. Dennis,
Jr................. 11,999 5.50 6.31 05/01/07 41,507 105,186
24,361 5.50 6.31 05/31/06 74,744 184,598
------
36,360 1.70
------
Kevin J. McKay....... 9,599 5.50 5.50 01/31/07 33,206 84,150
19,489 5.50 5.50 05/31/06 61,874 153,998
------
29,088 1.36
------
Robert H. Yevich..... 14,699 5.50 5.50 01/31/07 50,846 128,854
29,842 5.50 5.50 05/31/06 94,745 235,809
------
44,541 2.09
------
John F. Luikart...... 14,699 5.50 5.50 01/31/07 50,846 128,854
29,842 5.50 5.50 05/31/06 94,745 235,809
------
44,541 2.09
------
</TABLE>

- ------------------------------
(1) In accordance with the rules of the Commission, shown are the gains or
"option spreads" that would exist for the respective options granted. These
gains are based on the assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the option was granted over the
full option term. These assumed annual compound rates of stock price
appreciation are mandated by the rules of the Commission and do not
represent the Company's estimate or projection of future Common Stock
prices.

(2) Options issued to Mr. Dennis were issued below fair market value on the date
of grant resulting in gains or "option spreads" of $9,719 and $19,732. These
gains are based on the assumed rate of annual compound stock price
appreciation of 0% from the dates options were granted over the full option
term.

54
<PAGE> 55

Year End Option Table. The following table sets forth information
regarding exercise of options and the number and value of options held at
December 31, 1997, by each of the Company's named executive officers in the
Summary Compensation Table above:

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT MONEY OPTIONS AT
ACQUIRED FISCAL YEAR END FISCAL YEAR-END(1)
ON VALUE ---------------------------- -------------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
John H. Goldsmith........ -- -- 10,908 43,632 158,166 632,664
William C. Dennis, Jr.... -- -- 7,272 29,088 105,444 421,776
Kevin J. McKay........... -- -- 5,818 23,270 84,361 337,415
Robert H. Yevich......... -- -- 8,908 35,633 129,166 516,679
John F. Luikart.......... -- -- 8,908 35,633 129,166 516,679
</TABLE>

- ------------------------------
(1) Value is based on the difference between the option exercise price and the
initial public offering price of the Common Stock multiplied by the number
of shares of Common Stock underlying the option. No market existed for the
Common Stock prior to the initial public offering.

STOCK OPTION AND STOCK PURCHASE PLANS

1996 Stock Option Plan. The 1996 Stock Option Plan (the "1996 Plan")
provides for the granting of incentive stock options and non-qualified options
as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to employees of the Company. The 1996 Plan is administered by either
the Company's Board of Directors ("the Board") or a committee (the "Committee")
comprised of members of the Board to which the Board may delegate its
administrative duties and authority. The Committee (i) interprets and applies
the 1996 Plan; (ii) determines the eligibility of an individual to participate
in the 1996 Plan; (iii) approves the assignment of options immediately prior to
the registration of the Company's stock pursuant to the 1934 Act if such
assignment would increase the number of Common Stock holders; and (iv)
determines and allocates the cancellation or exchange of outstanding options in
the case of a recapitalization, acquisition, merger or Change in Control. No
director or officer of the Company is eligible for such options unless such
director or officer is also an employee. No options may be granted to an
employee that, at the time of the grant, owns more than 10% of the voting power
or greater than 10% of each class of the Company's outstanding stock, unless the
purchase price for the purchase of the stock is not less than 110% of the
stock's fair market value on the date of the grant and the option, by its terms,
shall not be exercisable more than five years from the date it is granted.

The Company has authorized the issuance of options for up to 2,181,600
shares of the Company's Common Stock under the 1996 Plan. Matured options may be
exercised in full at one time or in part from time to time and the payment of
the exercise price may be made by delivery of (i) cash or a check payable to the
order of the Company in an amount equal to the exercise price of such options;
(ii) shares of Common Stock of the Company owned by the optionee having a fair
market value equal in amount to the exercise price of the options being
exercised; (iii) the cancellation of shares covered by this Option which are
then vested and exercisable having a fair market value equal in amount to the
purchase price of the shares being purchased; (iv) at the sole discretion of the
Committee, a promissory note; or (v) any combination of (i), (ii), (iii) and
(iv); provided, however, that payment of the exercise price by delivery of
shares of Common Stock of the Company owned by such optionee or cancellation of
shares covered by the option may be made only with the consent of the Committee
if such payment results in a charge to earnings for financial accounting
purposes as determined by the Committee. The Company may delay the issuance of
shares covered by the exercise of an option until (a) the shares for which such
option has been exercised have been registered or qualified under the applicable
federal or state securities laws or (b) counsel for the Company has opined that
such shares are exempt from the registration requirements of such federal or
state securities laws.

55
<PAGE> 56

The term of any option granted under the 1996 Plan shall be limited to ten
years. Upon the termination of an optionholder's employment with the Company,
such options shall terminate between 30 and 180 days after that optionholder
leaves the employ of the Company. All options under the 1996 Plan may only be
assigned to the spouse and children of the optionholder or by will or law of
descent.

As of December 31, 1997, options to purchase 2,133,888 shares were granted
under the 1996 Plan of which options to purchase 455,840 shares vest based on
time at the rate of 20% per year for five years following the date of grant and
options to purchase 1,678,048 shares vest on the sixth anniversary of the date
of grant, of which options to purchase 925,396 shares are subject to accelerated
vesting, based on certain performance thresholds tied to the Company's
operations and options to purchase 752,652 shares are subject to accelerated
vesting based on individual performance (none of which have been granted to the
Company's executive officers). All of the outstanding options have an exercise
price of $5.50 per share. The following options under the 1996 Plan have been
granted to the executive officers of the Company:

<TABLE>
<CAPTION>
TIME-VESTED COMPANY PERFORMANCE
OPTIONS OPTIONS
<S> <C> <C>
John H. Goldsmith.......................... 17,998 36,542
William C. Dennis, Jr. .................... 11,999 24,361
Kevin J. McKay............................. 9,599 19,489
Robert H. Yevich........................... 14,699 29,842
John F. Luikart............................ 14,699 29,842
Henry Greenleaf............................ 4,500 9,135
</TABLE>

1998 Long-Term Incentive Plan. The Company's 1998 Long-Term Incentive Plan
(the "1998 Plan") provides for the granting of stock options, SARs, restricted
stock and long-term performance awards, in each case on such terms and to such
officers and other key employees as the administrators of the 1998 Plan may
select. The 1998 Plan shall be administered by a committee (the "Committee") of
the Board of Directors comprised of directors who qualify as "non-employee
directors" within the meaning of Rule 16(b)

promulgated under Section 16 of the Exchange Act and as "outside directors"
within the meaning of Code Section 162(m) and the regulations promulgated
thereunder. The failure of a Committee member to qualify under these
requirements shall not invalidate any award otherwise made under the Bonus Plan.
A total of 2,288,911 shares of the Common Stock have been reserved for issuance
under the 1998 Plan.

The maximum number of stock options, SARs or shares of restricted stock
that can be granted at any time shall equal 2,288,911 shares reduced by the sum
(without duplication) of: the number of shares of Common Stock subject to
outstanding awards under the 1998 Plan, the number of shares of Common Stock in
respect of which awards have been exercised, and the number of shares of Common
Stock issued without forfeiture or similar restrictions or issued with
forfeiture or similar restrictions which have lapsed, and increased by the
number of shares of stock delivered or withheld in payment of the exercise
price, purchase price or tax withholding requirements of an award granted under
the 1998 Plan. Unless specifically consented to by the administrators of the
1998 Plan, shares may not be delivered or withheld in payment of the exercise
price, purchase price or tax withholding requirements of an award granted under
the 1998 Plan if such payment would result in a charge to earnings for financial
accounting purposes. The maximum number of stock options, SARs or shares of
restricted stock that can be granted to any one participant in any one plan year
is 250,000. Stock options awarded under the 1998 Plan may either be "incentive
stock options" as defined in Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code") or non-qualified stock options. The term of each stock
option shall be fixed by the administrators of the 1998 Plan, but no incentive
stock option shall be exercisable for a period of more than ten years from the
date the option is granted and any option granted to any optionee who, at the
time the option is granted, owns more than 10% of the voting power of all
classes of capital stock of the Company or of a subsidiary may not have a term
of more than five years from the date of grant. Upon receipt of written notice
to exercise a stock option, the Company may, in the administrators' sole
discretion, elect to cash out all or part of the option to be exercised by
paying the optionee an amount, in cash or Common Stock, equal to the excess of
the fair market value of the Common Stock over the option price on the effective
date of such cashout. Restricted stock under the 1998 Plan shall be awarded for
nominal or no consideration on behalf of the recipient.

56
<PAGE> 57

The 1998 Plan contains provisions intended to comply with Section 162(m) of
the Code. During such time Section 162(m) of the Code or any successor provision
is in effect, the maximum value any participant subject to the provisions of
Section 162(m) may receive in any calendar year under the 1998 Plan will be $2
million multiplied by the number of years in the relevant measuring period, but
in no event more than $5 million, and the maximum annual amount that may be paid
to a participant under the 1998 Plan for (i) the year in which the 1998 Plan is
implemented shall equal no more than $2 million, and (ii) each subsequent year
shall equal 110% of such maximum amount for the preceding year; provided that
the maximum annual amount determined under this provision shall be determined
without regard to the value of any stock options granted to a participant under
the 1998 Plan.

The 1998 Plan provides that in the event of a Change in Control of the
Company (i) SARs and stock options awarded under the 1998 Plan not previously
exercisable and vested which have been held for at least six months from the
date of grant shall become fully vested and exercisable; (ii) the restrictions
applicable to any restricted stock awards under the 1998 Plan shall lapse and
such shares and awards shall be deemed fully vested and (iii) any outstanding
long-term performance awards shall be vested and paid out based on the pro rated
target results for the performance period relating to such awards, unless the
administrators of the 1998 Plan provide at or after grant and prior to the
Change in Control for a different payment. The value of outstanding stock
options, SARs and restricted stock awards shall, unless otherwise determined by
the administrator of the 1998 Plan at or after grant, be cashed out on the basis
of the Change in Control Price. "Change in Control" is defined as the happening
of any of the following: (i) when any "person" as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than the Company or a subsidiary or
employee benefit plan of the Company) who is not the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's outstanding securities on the effective date of the 1998 Plan
is or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
outstanding securities without the consent of the Board of Directors of the
Company; (ii) the occurrence of any transaction or event relating to the Company
required to be described pursuant to the requirements of item 6(e) of Schedule
14A of the Exchange Act; (iii) when, during any period of two consecutive years
during the existence of the 1998 Plan, the individuals who, at the beginning of
such period, constitute the Board of Directors of the Company cease for any
reason other than death to constitute a majority thereof, provided, however,
that a director who is not a director at the beginning of such period shall be
deemed to have satisfied the two-year requirement if such director was elected
by, or on the recommendation of, at least a majority of the directors who were
directors at the beginning of such period (either actually or by prior operation
of this clause (iii)); or (iv) the occurrence of a transaction requiring
stockholder approval for the acquisition of the Company by an entity other than
the Company through purchase of assets, or by merger or otherwise. The "Change
in Control Price" is defined as the highest sales price per share of Common
Stock paid or offered in any bona fide transaction relating to a Change in
Control of the Company, as determined by the administrators of the 1998 Plan.
The 1998 Plan provides that no payment shall be made in connection with a Change
in Control which, when aggregated with other payments made to the employee
would, as determined by such persons as the administrators of the 1998 Plan
shall irrevocably designate at or prior to a Change in Control, result in an
"excess parachute payment" for which the Company would not receive a federal
income tax deduction by reason of Section 280G of the Code.

The administrators of the 1998 Plan may amend, alter or discontinue the
1998 Plan at any time and from time to time, but no alteration or
discontinuation shall be made which would impair the rights of an optionee or
participant with respect to an award which has been granted under the 1998 Plan
without the optionee's or participant's consent. In addition, without the
approval of the Company's stockholders, the administrators of the 1998 Plan may
not make any such amendment which would, except in connection with stock splits,
dividends or similar recapitalizations of the Company, increase the total number
of shares reserved for purposes of the 1998 Plan, change the employees or class
of employees eligible to participate in the 1998 Plan or extend the maximum
option period applicable to incentive stock options granted under the 1998 Plan.

The other terms and conditions of awards under the 1998 Plan, including
vesting provisions, term and exercisability of the awards, shall be as
determined by the administrators of the 1998 Plan. Upon closing of this
offering, options to purchase 545,400 shares with an exercise price equal to the
initial public offering price

57
<PAGE> 58

will be granted under the 1998 Plan to employees of the Company. Such options
will vest in three equal annual installments commencing on the third anniversary
of the grant date. Options to purchase 236,500 shares with an exercise price
equal to the initial public offering price have been granted under the 1998 Plan
to employees of Cleary Gull. Such options will vest on the third anniversary of
the grant date. Additionally, options to purchase an aggregate of 183,405 shares
with an exercise price between $4.95 to $5.70 per share have been granted under
the 1998 Plan to employees of Cleary Gull. Such options are immediately
exercisable.

1998 STOCK PURCHASE PLAN

The Company's 1998 Employee Stock Purchase Plan (the "1998 Purchase Plan")
authorizes the issuance of a maximum of 500,000 shares of Common Stock pursuant
to the exercise of nontransferable options granted to participating employees.

The 1998 Purchase Plan is administered by the Compensation Committee. All
employees of the Company whose customary employment is 20 hours or more per week
and five months or more per year and have been employed by the Company for at
least six months are eligible to participate in the 1998 Purchase Plan.
Employees who own 5% or more of the Company's stock, directors who are not
employees of the Company and persons subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934 may not participate in the
1998 Purchase Plan. To participate in the 1998 Purchase Plan an employee must
authorize the Company in writing to deduct an amount (not less than 1% nor more
than 10% of a participant's base compensation and not more than $25,000 in any
year) from his or her pay commencing on January 1, April 1, July 1 and October 1
of each year (each a "Purchase Period"), commencing October 1, 1998. On the
first day of each Purchase Period, the Company grants to each participating
employee an option to purchase up to that number of shares of Common Stock they
are entitled to purchase under the 1998 Purchase Plan. The exercise price for
the option for each Purchase Period is 85% of the fair market value of the
Common Stock. The fair market value will be the average of the closing selling
price of the Common Stock on the NYSE for the last five days of any Purchase
Period. If an employee is not a participant on the last day of the Purchase
Period, such employee is not entitled to exercise his or her option, and the
amount of his or her accumulated payroll deduction will be refunded to the
employee. An employee's rights under the 1998 Purchase Plan terminate upon his
or her voluntary withdrawal from the Plan at any time or upon termination of
employment.

Common Stock for the 1998 Purchase Plan will be made available either from
authorized but unissued shares of Common Stock or from shares of Common Stock
reacquired by the Company, including shares repurchased in the open market.

1998 EXECUTIVE PERFORMANCE BONUS PLAN

Certain of the Company's executive officers and other key employees are
entitled to participate in the Company's 1998 Executive Performance Bonus Plan
(the "Bonus Plan"). The Bonus Plan shall be administered by a committee (the
"Committee") of the Board of Directors comprised of directors who qualify as
"non-employee directors" within the meaning of Rule 16(b) promulgated under
Section 16 of the Exchange Act and as "outside directors" within the meaning of
Code Section 162(m) and the regulations promulgated thereunder. The failure of a
Committee member to qualify under these requirements shall not invalidate any
award otherwise made under the Bonus Plan. Amounts paid pursuant to the Bonus
Plan are intended to qualify as performance-based compensation within the
meaning of Section 162(m) of the Code. The Bonus Plan provides that the
Committee will establish an award pool from which awards may be paid to eligible
employees in accordance with the Bonus Plan. The amount included in the award
pool for any particular performance period shall be equal to a percentage of
pre-tax operating income of the Company (as defined) for the performance period
before provision for incentive compensation and extraordinary items, which
percentage shall be determined by the Committee and shall not exceed 15%. Within
ninety days following the commencement of each performance period, the Committee
shall allocate in writing, on behalf of each participant, a portion of the award
pool, if any, to be paid for such performance period; provided in no event shall
the percentage portion of the award pool allocated to any participant exceed 50%
of the award pool. The Committee may establish other criteria which it deems
appropriate for awards under the Bonus Plan, which may or may not be tied to
pre-tax operating income of the Company, so long as the amounts of the
58
<PAGE> 59

awards fall within the maximum amounts described above. The Committee is
authorized at any time during or after a performance period, in its sole
discretion, to reduce or eliminate (but not increase) the award pool or a
portion of the award pool allocated to any participant for any reason, including
changes in the position or duties of any participant with the Company during the
performance period, whether due to termination of employment or otherwise.
Participants are entitled to receive payment under the Bonus Plan in cash as
soon as practicable after the total amount of the award pool and the awards
payable to each participant are determined. In the discretion of the Committee,
partial payments may be made to participants during the course of a performance
period; provided that the aggregate of such partial payments may not exceed the
amount of the award that a participant would otherwise receive pursuant to the
Bonus Plan. The Board of Directors of the Company may at any time terminate,
suspend or modify the Bonus Plan and the terms and conditions of any award
thereunder that has not been paid. No award may be granted under the Bonus Plan
during any period of suspension or after its termination. Amendments of the
Bonus Plan are subject to the approval of the stockholders of the Company only
if such approval is necessary to maintain the Bonus Plan in compliance with the
requirements of Section 162(m) of the Code, or any other applicable law or
regulation. No awards have yet been made under the Bonus Plan.

LIMITATION OF LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by the Delaware General Corporation Law, the Company has
included in its Charter a provision to eliminate the personal liability of its
directors for monetary damages for breach or alleged breach of their fiduciary
duties as directors, subject to certain exceptions. In addition, the Bylaws of
the Company provide that the Company is required to indemnify its officers and
directors under certain circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and the Company is required to
advance expenses to its officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. The Company has also
agreed to indemnify its directors and certain officers to the maximum extent
permitted by Delaware law pursuant to agreements with such directors and
officers. At present, the Company is not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of the
Company in which indemnification would be required or permitted. The Company
believes that its charter provisions and indemnification agreements are
necessary to attract and retain qualified persons as directors and officers.

59
<PAGE> 60

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of June 30, 1998, and as adjusted to
reflect the sale of the Common Stock offered hereby by: (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock; (ii) each of the Company's directors; (iii) each of the Selling
Stockholders for which the date as of which stock ownership information is
provided is September 25, 1998; (iv) each named executive officer, and (v) all
directors and executive officers as a group. Except as otherwise specified
below, the persons named in the table below have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them.

<TABLE>
<CAPTION>
BENEFICIAL NUMBER OF BENEFICIAL OWNERSHIP
OWNERSHIP PRIOR SHARES WHICH AFTER
TO THIS OFFERING(1) MAY BE SOLD THIS OFFERING(1)(3)
--------------------- PURSUANT TO ---------------------
NUMBER OF THIS NUMBER OF
SHARES(40) PERCENT PROSPECTUS(2)(41) SHARES(40) PERCENT
NAME OF BENEFICIAL OWNER(1) ---------- ------- ----------------- ---------- -------
<S> <C> <C> <C> <C> <C>
Thomas H. Lee Equity Fund III, L.P.(4)... 4,305,212 21.5% -- 4,305,212 22.3%
John H. Goldsmith(5)..................... 122,388 * -- 122,388 *
William C. Dennis, Jr.(6) ............... 98,172 * -- 98,172 *
Kevin J. McKay(7)........................ 78,538 * -- 78,538 *
Robert H. Yevich(8)...................... 104,808 * -- 104,808 *
John F. Luikart(9)....................... 109,808 * -- 109,808 *
Gregory N. Thomas........................ 90,900 * -- 90,900 *
David V. Harkins(10)..................... 5,018,197 25.0 -- 5,018,197 26.0
C. Hunter Boll(11)....................... 5,018,197 25.0 -- 5,018,197 26.0
Thomas M. Hagerty(12).................... 5,018,197 25.0 -- 5,018,197 26.0
Seth W. Lawry(13)........................ 5,018,197 25.0 -- 5,018,197 26.0
Winston J. Churchill(14)................. 494,748 2.5 -- 494,748 2.6
Hugh R. Harris(15)....................... -- -- -- -- --
Michael J. Cleary(16).................... 122,194 * 107,094 15,100 *
David P. Prokupek(17).................... 143,156 * 103,656 39,500 *
Timothy P. Reiland....................... 120,121 * 95,121 25,000 *
T. Ferguson Locke(18).................... 114,108 * 97,135 16,973 *
John F. Syburg........................... 56,866 * 46,866 10,000 *
John R. Peterson(19)..................... 44,954 * 26,009 18,945 *
Richard C. Eastman(20)................... 35,032 * 862 34,170 *
Cheryl L. Gehl(21)....................... 33,832 * 21,332 12,500 *
Owen L. Hill(22)......................... 25,294 * 22,427 2,867 *
Gerald L. Gerndt......................... 7,437 * 7,012 425 *
Michael G. Klein......................... 12,622 * 12,197 425 *
J. Scott Barraclough(23)................. 23,914 * 15,664 8,250 *
Anne Mategrano(24)....................... 25,914 * 15,664 10,250 *
Ajoy Kumer Bose.......................... 19,416 * 14,416 5,000 *
Joseph F. Hickey Jr.(25)................. 21,319 * 6,329 14,990 *
Robert H. Neugebauer(26)................. 17,813 * 10,913 6,900 *
Martin G. Pembroke(27)................... 18,622 * 17,622 1,000 *
Christopher S. Barnes(28)................ 16,092 * 3,202 12,890 *
Robert Butendorf(29)..................... 16,592 * 8,202 8,390 *
Judith S. Neugebauer(30)................. 14,258 * 11,158 3,100 *
Robert C. Damron......................... 13,315 * 9,065 4,250 *
</TABLE>

60
<PAGE> 61

- ------------------------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with rules of the
Commission and includes general voting power or investment power with
respect to securities. Shares of Common Stock subject to options and
warrants currently exercisable or exercisable within sixty (60) days of
June 30, 1998 are deemed outstanding for computing the percentage of the
person holding such options, but are not deemed outstanding for computing
the percentage of any other person. Unless otherwise indicated, the address
of each of the beneficial owners identified is One Beacon Street, Boston,
MA 02108.

(2) Unless otherwise noted, each Selling Stockholder maintains a principal
place of business at Cleary Gull Reiland & McDevitt Inc., 100 E. Wisconsin
Avenue, Milwaukee, Wisconsin 53202.

(3) Assumes that each Selling Stockholder will sell all of the Shares set forth
above under "Shares Which May Be Sold Pursuant to This Prospectus". There
can be no assurance that the Selling Stockholders will sell all or any of
the Shares offered hereunder.

(4) Each of THL Equity Advisors III, L.P. ("Advisors III"), the general partner
of Thomas H. Lee Equity Fund III, L.P. and Thomas H. Lee Foreign Fund III,
L.P., and THL Equity Trust III, the general partner of Advisors III, also
may be deemed to be beneficial owners of the 4,305,212 shares of Common
Stock held by Thomas H. Lee Equity Fund III, L.P. and the 266,394 shares of
Common Stock held by Thomas H. Lee Foreign Fund III, L.P. Each of Advisors
III and THL Equity Trust III disclaim beneficial ownership of such shares.
Each of Advisors III and THL Equity Trust III maintains a principal
business address c/o Thomas H. Lee Company, 75 State Street, Boston, MA
02109.

(5) Includes 10,908 shares of Common Stock which Mr. Goldsmith has the right to
acquire pursuant to the 1996 Stock Option Plan.

61
<PAGE> 62

(6) Includes 7,272 shares of Common Stock which Mr. Dennis has the right to
acquire pursuant to the 1996 Option Plan.

(7) Includes 5,818 shares of Common Stock which Mr. McKay has the right to
acquire pursuant to the 1996 Option Plan.

(8) Includes 8,908 shares of Common Stock which Mr. Yevich has the right to
acquire pursuant to the 1996 Option Plan.

(9) Includes 8,908 shares of Common Stock which Mr. Luikart has the right to
acquire pursuant to the 1996 Option Plan.

(10) Includes the shares of Common Stock held by Thomas H. Lee Equity Fund III,
L.P., Thomas H. Lee Foreign Fund III, L.P. and THL-CCI, L.P. ("THL-CCI"),
which Mr. Harkins may be deemed to beneficially own by virtue of his
position as a Trustee of THL Equity Trust III and officer of THL Investment
Management Corp., the general partner of THL-CCI. Mr. Harkins disclaims
beneficial ownership of such additional shares. Mr. Harkins maintains his
principal business address c/o Thomas H. Lee Company, 75 State Street,
Boston, MA, 02109.

(11) Includes the shares of Common Stock held by Thomas H. Lee Equity Fund III,
Thomas H. Lee Foreign Fund III, L.P. and THL-CCI, which Mr. Boll may be
deemed to beneficially own by virtue of his position as officer of each of
THL Equity Trust III and THL Investment Management Corp. Mr. Boll disclaims
beneficial ownership of such additional shares. Mr. Boll maintains his
principal business address c/o Thomas H. Lee Company, 75 State Street,
Boston, MA 02109.

(12) Includes the shares of Common Stock held by Thomas H. Lee Equity Fund III,
L.P., Thomas H. Lee Foreign Fund III, L.P. and THL-CCI, which Mr. Hagerty
may be deemed to beneficially own by virtue of his position as officer of
each of THL Equity Trust III and THL Investment Management Corp. Mr.
Hagerty disclaims beneficial ownership of such additional shares. Mr.
Hagerty maintains his principal business address c/o Thomas H. Lee Company,
75 State Street, Boston, MA, 02109.

(13) Includes the shares of Common Stock held by Thomas H. Lee Equity Fund III,
L.P., Thomas H. Lee Foreign Fund III, L.P. and THL-CCI, which Mr. Lawry may
be deemed to beneficially own by virtue of his position as officer of each
of THL Equity Trust III and THL Investment Management Corp. Mr. Lawry
disclaims beneficial ownership of such additional shares. Mr. Lawry
maintains his principal business address c/o Thomas H. Lee Company, 75
State Street, Boston, MA, 02109.

(14) Mr. Churchill also may be deemed to be the beneficial owner the shares of
Common Stock held by SCP Private Equity L.P. by virtue of his position as
officer of the general partner of SCP Private Equity, L.P. Mr. Churchill
disclaims beneficial ownership of such additional shares. Mr. Churchill
maintains his principal business address c/o SCP Private Equity, L.P., 800
The Safeguard Building, 435 Devon Park Drive, Wayne, PA, 19087.

(15) Mr. Harris maintains a principal business address c/o HomeSide Lending,
Inc., 7301 Bay Meadows Way, Jacksonville, FL 32256.

(16) Includes 100 shares of Common Stock held by Mr. Cleary for the benefit of
his children and as to which Mr. Cleary disclaims beneficial ownership.

(17) Includes 4,000 shares of Common Stock held in a retirement account for the
benefit of Mr. Prokupek and 8,000 shares of Common Stock owned by Mr.
Prokupek and his wife as joint tenants.

(18) Includes 1,973 shares of Common Stock which Mr. Locke has the right to
acquire pursuant to the 1998 Plan.

(19) Includes 3,945 shares of Common Stock which Mr. Peterson has the right to
acquire pursuant to the 1998 Plan.

(20) Includes 23,670 shares of Common Stock which Mr. Eastman has the right to
acquire pursuant to the 1998 Plan.

(21) Includes 1,000 shares of Common Stock held in a retirement account for the
benefit of Ms. Gehl.

(22) Includes 2,367 shares of Common Stock which Mr. Hill has the right to
acquire pursuant to the 1998 Plan.

(23) Includes 2,000 shares of Common Stock held in a retirement account for the
benefit of Mr. Barraclough.

(24) Includes 4,000 shares of Common Stock held in a retirement account for the
benefit of Ms. Mategrano.

(25) Includes 7,890 shares of Common Stock which Mr. Hickey has the right to
acquire pursuant to the 1998 Plan.

(26) Includes 10,784 shares of Common Stock held in Mr. Neugebauer's individual
retirement account, for which Tucker Anthony acts as custodian.

(27) Includes 17,622 shares of Common Stock held in a retirement account for the
benefit of Mr. Pembroke and 1,000 shares of Common Stock owned by Mr.
Pembroke and his wife as joint tenants.

62
<PAGE> 63

(28) Includes 7,890 shares of Common Stock which Mr. Barnes has the right to
acquire pursuant to the 1998 Plan.

(29) Includes 8,111 shares of Common Stock held in a retirement account for the
benefit of Mr. Butendorf and 7,890 shares of Common Stock which Mr.
Butendorf has the right to acquire pursuant to the 1998 Plan.

(30) Includes 5,652 shares of Common Stock held in Ms. Neugebauer's individual
retirement account, for which Tucker Anthony acts as custodian.

(31) Includes 2,367 shares of Common Stock which Mr. Miller has the right to
acquire pursuant to the 1988 Plan.

(32) Includes 1,922 shares of Common Stock held in Mr. Armstrong's individual
retirement account, for which Tucker Anthony acts as custodian.

(33) Includes 3,945 shares of Common Stock which Mr. Gerlach has the right to
acquire pursuant to the 1998 Plan.

(34) Includes 900 shares of Common Stock held in a retirement account for the
benefit of Mr. Schultz. Also includes 250 shares of Common Stock held in a
retirement account for the benefit of Mr. Shultz's wife as to which Mr.
Schultz disclaims beneficial ownership.

(35) Includes 789 shares of Common Stock which Ms. Pegelow has the right to
acquire pursuant to the 1998 Plan.

(36) Includes 500 shares of Common Stock held in a retirement account for the
benefit of Mr. Gessl.

(37) Mr. Geurink's address is 4313 West River Willows Court, Mequon, WI 53092.

(38) Mr. White's address is 3465 North Lake Drive, Milwaukee, WI 53211. Includes
500 shares of Common Stock held in a retirement account for the benefit of
Mr. White.

(39) Mr. Marcon's address is 11500 MacApline Court, No. 736, Glen Allen, VA.

(40) Includes shares which certain of the Selling Stockholders have the
immediate right to acquire pursuant to options granted under the 1998 Plan
in exchange for fully-vested options previously outstanding under a Cleary
Gull stock option plan.

(41) Includes shares which have been acquired upon the exercise of options under
the 1998 Plan.

63
<PAGE> 64

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE ACQUISITION

On November 29, 1996, the Acquisition was completed pursuant to the terms
of the Contribution Agreement, dated October 4, 1996 (the "Contribution
Agreement").

Under the terms of the Contribution Agreement, THL, SCP and approximately
350 employee investors (the "Employee Investors") contributed to the Company an
aggregate of $75,000,000 in exchange for shares representing approximately 95%
of the then outstanding shares of the Company. THL contributed $39,931,200 in
exchange for approximately 51%. SCP contributed $9,982,800 in exchange for
approximately 13%, and the Employee Investors contributed an aggregate of
$25,086,000 in exchange for approximately 31%. Hancock contributed 100% of the
outstanding capital stock of the Predecessor Company to the Company in exchange
for $180,000,000 in cash and 4.999% of the Company's outstanding capital stock.
The consideration paid to Hancock was financed with the $75,000,000 equity
contribution of THL, SCP and the Employee Investors, $85,000,000 of bank
financing under the Credit Facility and $20,000,000 of excess cash of the
Company. In connection with the Acquisition, the Company also repaid its
existing debt to Hancock totaling approximately $32,500,000. Approximately
$25,800,000 of the debt was paid with bank financing and approximately
$6,700,000 was paid from excess cash of the Company.

Under the terms of the Contribution Agreement and a Tax Matters Agreement
(the "Tax Matters Agreement") entered into at the closing of the Acquisition,
each of the Company and Hancock agreed to indemnify the other party for breaches
of representations, warranties and covenants contained in the Contribution
Agreement, and Hancock has agreed to indemnify the Company for certain specified
matters. Each party's right to indemnification for breaches of any
representations and warranties contained in the Contribution Agreement survives
the closing until April 1, 1998, with the exception of certain representations
and warranties relating to authorization, validity and title to shares which
continue beyond such date. In addition, indemnification for breaches of certain
covenants contained in the Contribution Agreement, such as confidentiality and
non-competition, survive beyond April, 1998. With respect to most other claims,
if any, based on breaches of representations or warranties, a party providing
indemnification is liable for all of the other party's losses in excess of $1.75
million. Hancock's liability for all indemnification obligations under the
Contribution Agreement is limited to $30 million, except with respect to
representations regarding capitalization and share ownership and certain
covenants. In addition, the Chief Executive Officer of the Company agreed in a
separate agreement to contribute towards Hancock's indemnification obligations
for breaches of certain representations one-third of any amounts paid by Hancock
up to a maximum of $250,000.

The Contribution Agreement provides that following the closing of the
Acquisition, the Company and its affiliates have the exclusive right to use all
names incorporating "Freedom", "Tucker Anthony" or "Sutro" or to use the
Freedom, Tucker Anthony or Sutro logos. Hancock agreed to cause the mutual funds
managed by its affiliates to change their names to exclude the words "Freedom,"
"Tucker Anthony" or "Sutro" from their names and to no longer use any such names
or confusingly similar names, subject to the continuation of the use of the
"Freedom" name by Hancock for a period ending April 30, 1998 for certain
purposes relating to mutual funds advised by its affiliates. In addition, the
Company agreed that after the closing date of the Acquisition the Company and
its affiliates would not have any right to use names incorporating "John
Hancock" or use any John Hancock logo, and the Company agreed to discontinue the
use of any such names and logos, provided that the Company has no liability to
Hancock for any incidental or accidental use of such names for a twelve month
period following the closing date if it is attempting in good faith to
discontinue such use and does so when it becomes aware of such use.

In connection with the Acquisition, the Company and certain of its
stockholders entered into certain agreements described below affecting the
rights and obligations of the Company and its affiliates.

Tax Matters Agreement. Pursuant to the Tax Matters Agreement, the Company
assumed responsibility for all federal, state and local taxes of the Company
beginning in 1996, exclusive of (i) 50% of any sales or transfer taxes triggered
by the Acquisition and (ii) certain taxes for which Hancock has agreed to
indemnify the Company. Amounts paid by the Company in respect of its obligations
under the Tax Matters Agreement

64
<PAGE> 65

were treated by Hancock and the Company as an adjustment to the amount received
by Hancock pursuant to the Contribution Agreement.

Transition Services Agreement. At the closing of the Acquisition, the
Company and Hancock entered into a Transition Services Agreement (the
"Transition Services Agreement") pursuant to which, among other things, the
parties have provided for the continuation for specified periods of time of
certain services historically provided by Hancock to the Company and its
subsidiaries at market rates. These services included certain employee benefits
and insurance coverage, which are no longer provided, and access to telephone
service rates which is expected to continue until August 2000. The Company paid
Hancock $6.1 million under the Transition Services Agreement during 1997.

Additional Share Agreement. Upon consummation of the Acquisition, the
Company entered into an Additional Share Agreement (the "Additional Share
Agreement") with Hancock pursuant to which Hancock is entitled to receive, for
no additional consideration, five percent of the number of shares issued
pursuant to any incentive stock plan adopted by the Company prior to November
29, 1998, up to a maximum of 88,609 shares of Common Stock.

STOCKHOLDERS AGREEMENT

The Stockholders Agreement among certain of the existing stockholders of
the Company (the "Stockholders Agreement") provides that THL may require the
Company to effect the registration of shares of Common Stock held by THL for
sale to the public on two occasions, subject to certain limitations. The
Stockholders Agreement further provides that, at any time following the first
offering of the Common Stock of the Company to the public, SCP may require the
Company to effect the registration of shares of Common Stock held by SCP for
sale to the public and after the second offering, the employees party to such
agreements may require the Company to effect two such registrations. In
addition, under the terms of the Stockholders Agreement, if the Company proposes
to register any of its shares under the Securities Act, whether for its own
account or otherwise, any holders of the Company's registrable shares party to
the Stockholders Agreement are entitled to notice of such registration and are
entitled to include their shares therein, subject to certain conditions and
limitations. All fees, costs, and expenses (other than underwriting discounts
and commissions transfer taxes and attorneys' fees) of any registration effected
pursuant to the Stockholders Agreement, will be paid by the Company. The
Stockholders Agreement also grants certain "tag-along" rights to the parties in
the event THL enters into a single transaction to sell more than 50% of the
stock acquired by it in the Acquisition.

EMPLOYMENT AGREEMENTS

Mr. Goldsmith is employed pursuant to a three year employment agreement
expiring on December 31, 1999 renewable annually thereafter. Mr. Goldsmith is
entitled to receive such annual base salary and bonus compensation as is agreed
to by Mr. Goldsmith and the Company from time to time, provided that he is
entitled to receive minimum cash compensation in any calendar year of at least
$750,000. Mr. Goldsmith is also entitled to participate in the employee benefit
and incentive compensation plans that the Company makes available to its key
executives. If Mr. Goldsmith's employment is terminated by the Company without
cause or if he resigns for certain enumerated reasons, such as a reduction in
executive duties, a decrease in compensation or benefits or default by the
Company ("Good Reason"), Mr. Goldsmith is entitled to receive cash compensation
at his then current rate of pay and benefits through the end of the
twenty-fourth month following such date of termination. Such amount shall be
payable in a lump sum amount equal to $500,000 at the time of termination with
the remaining amounts paid in equal monthly installments, plus interest. In
addition, in the event of any such termination, any unvested stock options
granted to Mr. Goldsmith shall become fully vested. If Mr. Goldsmith's
employment is terminated for cause or if he resigns other than for Good Reason,
he shall be entitled to receive only that compensation accrued through the date
of termination. Mr. Goldsmith's employment agreement contains a covenant not to
solicit any of the Company's clients, officers, senior managers or senior
investment executives for a period of two years following termination by the
Company without cause or by Mr. Goldsmith for Good Reason, or for a period of
six months following termination by Mr. Goldsmith for any other reason.

65
<PAGE> 66

Mr. Thomas is employed pursuant to a two year employment agreement expiring
on December 3, 1999. Mr. Thomas is entitled to receive such annual base salary
and bonus compensation as is agreed to by Mr. Thomas and the Company from time
to time, provided that he is entitled to receive minimum cash compensation in
any calendar year of at least $700,000. Mr. Thomas is also entitled to
participate in the employee benefit and incentive compensation plans that the
Company makes available to its key executives. If Mr. Thomas' employment is
terminated by the Company without cause or if he resigns for Good Reason, Mr.
Thomas is entitled to receive cash compensation at his then current rate of pay
and benefits through the end of the twenty-fourth month following such date of
termination. Such amount shall be payable in a lump sum amount equal to $500,000
at the time of termination with the remaining amounts paid in equal monthly
installments, plus interest. In addition, in the event of any such termination,
any unvested stock options granted to Mr. Thomas shall become fully vested and
immediately exercisable. If Mr. Thomas' employment is terminated for cause or if
he resigns other than for Good Reason, he shall be entitled to receive only that
compensation accrued through the date of termination. Mr. Thomas' employment
agreement contains a covenant not to solicit any of the Company's clients,
officers, senior managers or senior investment executives for a period of two
years following termination by the Company without cause or by Mr. Thomas for
Good Reason, or for a period of six months following termination by Mr. Thomas
for any other reason.

Mr. Dennis is employed pursuant to a two year employment agreement with the
Company which expires May 11, 1999. Mr. Dennis was entitled to base salary of
$150,000 during the first year of employment and $400,000 during the second year
of employment. In addition, the Company loaned Mr. Dennis $250,000 upon
commencement of his employment which was forgiven on May 12, 1998. He is
entitled to a minimum annualized bonus of $200,000 for 1998, plus an additional
$400,000 in the aggregate if the Company attains certain performance targets in
each of the first two twelve month periods of his employment with the Company.
Mr. Dennis is eligible to receive additional merit bonuses as determined by the
Board of Directors of the Company. If, prior to May 12, 2001, Mr. Dennis'
employment is terminated by the Company without cause or if he resigns for Good
Reason, he shall be entitled to receive the greater of his salary and bonus
compensation through the end of his initial two year term of employment, if any,
or $600,000. If he is terminated for cause or resigns other than for Good
Reason, Mr. Dennis shall only be entitled to receive the compensation accrued up
to the date of termination or resignation. Mr. Dennis is also entitled to
participate in the Company's benefit and incentive plans to the same extent as
any senior management executive of the Company.

OTHER TRANSACTIONS WITH MANAGEMENT

Compensation and Benefits. The executive officers of the Company receive
compensation, bonuses and other benefits under various employee benefit plan
arrangements maintained by the Company and its subsidiaries. The executive
officers participated in such benefit plans under the same terms generally made
available to other similarly situated employees of the Company or its
subsidiaries with similar responsibilities and levels of compensation.

Outstanding Indebtedness. Certain executive officers and directors borrow
from time to time under margin accounts maintained at Wexford. All such
borrowings on margin are made in the ordinary course of business, are made on
substantially the same terms, including interest rates and collateral, as those
prevailing for margin transactions with other persons at the time made and do
not involve more than the normal risk of collectibility or other unfavorable
features.

Investment Partnerships. Certain executive officers of the Company are
among the limited partners of certain investment vehicles organized to allow
these employees to invest in funds and other investment vehicles sponsored by
certain of the Company's clients and on a co-investment basis in transactions in
which the Company's clients also invest (collectively, the "Employee Investment
Partnerships"). In certain instances, the Company lends to the limited partners
the amounts used by them to invest in the Employee Investment Partnerships.
Limited partnership interests owned by employees are subject to redemption by
the applicable Employee Investment Partnership if the employee terminates
employment with the Company for any reason during a three or, in certain
instances, four year period following his or her initial investment in the
Employee Investment Partnership at the lesser of (i) his or her paid-in capital
contribution, less distributions

66
<PAGE> 67

paid prior to such redemption, or (ii) the value of the limited partnership
interest. Such redemptions are made at the option of the applicable Employee
Investment Partnership. Any outstanding loans are also callable by the Company
at the time the limited partner ceases to be an employee of the Company. Through
June 30, 1998, the Employee Investment Partnerships have invested $27.2 million
in 45 investments and $25.4 million has been contributed to date by the limited
partners. The limited partners have received distributions totaling $57.3
million through June 30, 1998, including $7.1 million, $23.1 million, $4.7
million and $2.1 million during 1995, 1996, 1997 and 1998, respectively. Amounts
contributed to the Employee Investment Partnerships by each of the Company's
executive officers and distributions made during 1995, 1996, 1997 and 1998, and
the outstanding balances of related loans made to them by the Company as of June
30, 1998 are set forth below:

<TABLE>
<CAPTION>
AMOUNT DISTRIBUTIONS LOAN
NAME CONTRIBUTED MADE BALANCE
<S> <C> <C> <C>
John H. Goldsmith.................................. $139,466 $359,763 $ 22,123
Gregory N. Thomas.................................. -- -- --
William C. Dennis, Jr. ............................ -- -- --
Kevin J. McKay..................................... 172,083 71,812 92,568
Robert H. Yevich................................... 113,065 254,700 22,123
John F. Luikart.................................... 180,188 13,944 70,668
Henry Greenleaf.................................... -- -- --
David P. Prokupek.................................. -- -- --
</TABLE>

TRANSACTIONS WITH HANCOCK PRIOR TO THE ACQUISITION

Prior to the Acquisition the Predecessor Company, Hancock and their
respective affiliates engaged in a variety of transactions in the ordinary
course of business. As a general rule, the Predecessor Company did not retain
independent third parties to evaluate transactions with Hancock and there was no
independent committee of the Board of Directors of the Predecessor Company to
evaluate such transactions. Notwithstanding this fact, the Company believes that
each of the arrangements described below was made on an arms-length basis. All
of the transactions or relationships described below were completed or
terminated at or prior to the time of the Acquisition. The Company anticipates
that future transactions with Hancock, if any, will be made on an arms-length
basis.

Loans, Advances and Dividends. The aggregate outstanding amount of
payables, primarily inter-company tax allocations and working capital financing,
between the Predecessor Company and Hancock and its affiliates was $233.7
million as of December 31, 1995 and $32.5 million as of November 29, 1996, which
was repaid in full in connection with the Acquisition. In addition, the
Predecessor Company paid dividends to Hancock in the amount of $5.8 million and
none, respectively, during 1995 and 1996.

Other Transactions with Hancock. As a wholly-owned subsidiary of Hancock,
the Predecessor Company participated in group insurance arrangements arranged
through Hancock. In addition, the Predecessor Company participated in certain
shared services provided by Hancock to certain of its affiliates, including
limited legal and other support functions. The Predecessor Company paid Hancock
its allocable share of the cost of such insurance and other items, which
amounted to $11.6 million and $11.1 million during 1995 and 1996, respectively.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 60,000,000 shares
of Common Stock, $.01 par value per share, of which 19,993,833 shares are
outstanding, and 1,000,000 shares of Preferred Stock, $.01 par value per share,
none of which are outstanding. The following description of the capital stock of
the Company and certain provisions of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") and Bylaws is a summary and
is qualified in its entirety by the provisions of the Certificate of
Incorporation and Bylaws, copies of which have been filed as exhibits to the
Company's Registration Statement of which this Prospectus is a part.

67
<PAGE> 68

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders, including the election of
directors. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election if they choose to do so. The Certificate of Incorporation
does not provide for cumulative voting for the election of directors. Holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, and shall be entitled to receive, pro rata, all assets of
the Company available for distribution to such holders upon liquidation. Holders
of Common Stock have no preemptive, subscription or redemption rights.

PREFERRED STOCK

The Company is authorized to issue "blank check" preferred stock
("Preferred Stock"), which may be issued from time to time in one or more series
upon authorization by the Company's Board of Directors. The Board of Directors,
without further approval of the stockholders, is authorized to fix the dividend
rights and terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges and
restrictions applicable to each series of the Preferred Stock. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes could, among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company, discourage bids for the Company's Common Stock at a premium or
otherwise adversely affect the market price of the Common Stock. The Company
currently has no plans to issue any Preferred Stock.

CERTAIN CERTIFICATE OF INCORPORATION, BYLAW AND STATUTORY ANTI-TAKEOVER
PROVISIONS AFFECTING STOCKHOLDERS

Section 203 of Delaware Law. The Company is subject to the "business
combination" statute of the Delaware General Corporation Law. In general, such
statute prohibits a publicly held Delaware corporation from engaging in various
"business combination" transactions with any "interested shareholder" for a
period of three years after the date of the transaction in which the person
became an "interested shareholder," unless (i) the transaction is approved by
the Board of Directors prior to the date the interested shareholder obtained
such status, (ii) upon consummation of the transaction which resulted in the
shareholder becoming an "interested shareholder," the "interested shareholder"
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of determining the number
of shares outstanding those shares owned by (a) persons who are directors and
also officers and (b) employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer, or (iii) on or subsequent
to such date the "business combination" is approved by the Board of Directors
and authorized at an annual or special meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the "interested shareholder." A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
a shareholder. An "interested shareholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
a corporation's voting stock. By virtue of the Company's decision not to elect
out of the statute's provisions, the statute applies to the Company. No current
stockholders of the Company are "interested stockholders" because their
acquisition of shares was approved by the Board of Directors of the Company. The
statute could prohibit or delay the accomplishment of mergers or other takeover
or change in control attempts with respect to the Company and, accordingly, may
discourage attempts to acquire the Company.

Directors Liability. The Certificate of Incorporation provides that no
director shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director notwithstanding any
provision of law imposing such liability, provided that, to the extent provided
by applicable law, the Certificate of Incorporation shall not eliminate the
liability of a director for (i) any breach of the director's duty of loyalty to
the Company or its stockholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) acts
or omissions in respect of certain unlawful dividend payments or stock
redemptions or repurchases; or (iv) any transaction from which such

68
<PAGE> 69

director derives improper personal benefit. The effect of this provision is to
eliminate the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (iv) above. The limitations
summarized above, however, do not affect the ability of the Company or its
stockholders to seek non-monetary based remedies, such as an injunction or
rescission, against a director for breach of his fiduciary duty nor would such
limitations limit liability under the Federal securities laws. The Company's
Bylaws provide that the Company shall, to the extent permitted by Delaware Law,
as amended from time to time, indemnify and advance expenses to the currently
acting and former directors, officers, employees and agents of the Company or of
another corporation, partnership, joint venture, trust or other enterprise if
serving at the request of the Company arising in connection with their acting in
such capacities.

REGISTRATION RIGHTS OF CERTAIN HOLDERS

Under the terms of the Stockholders' Agreement, if the Company proposes to
register any of its securities under the Securities Act, whether for its own
account or otherwise, holders of approximately 10,762,509 shares (the
"Registrable Shares") of Common Stock are entitled to notice of such
registration and are entitled to include their shares therein, subject to
certain conditions and limitations. The holders of Registrable Shares also may
require the Company to effect the registration of their Registrable Shares for
sale to the public, subject to certain conditions and limitations. None of the
holders of Registrable Shares has elected to register their Registrable Shares
for sale to the public in connection with this offering. See "Certain
Relationships and Related Transactions -- Stockholders Agreement".

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, of New York.

69
<PAGE> 70

SHARES ELIGIBLE FOR FUTURE SALE

The Company has outstanding 19,993,833 shares of Common Stock assuming no
exercise of options after June 30, 1998. Of these shares, 9,231,324 shares are
freely tradeable without restriction or further registration under the
Securities Act, unless purchased by "affiliates" of the Company as that term is
defined in Rule 144 described below. The remaining 10,762,509 shares of Common
Stock outstanding upon closing of the offering are "restricted securities" as
that term is defined in Rule 144.

On September 29, 1998, an aggregate of 10,762,509 shares will become
immediately eligible for sale subject to the timing, volume, and manner of sale
restrictions of Rule 144. Commencing December 1998, all outstanding shares not
owned by affiliates of the Company (currently 4,674,785 shares) will be eligible
for sale pursuant to Rule 144(k). In addition, 449,900 additional shares of
Common Stock subject to outstanding vested stock options could also be sold as
of June 30, 1998, subject in some cases to compliance with certain volume
limitations as described below. On various dates through May 1, 2002, 183,750
shares of Common Stock deposited in escrow pursuant to the Agreement will be
released to the extent no claims have been made against such shares. Commencing
on May 1, 1999, such shares will be eligible for sale pursuant to Rule 144.

In general, under Rule 144, as amended, a person (or persons whose shares
are aggregated) who has beneficially owned shares for at least one year
(including the holding period of any prior owner except an affiliate from whom
such shares were purchased) is entitled to sell in "brokers' transactions" or to
market makers, within any three-month period commencing 90 days after the date
of this Prospectus, a number of shares that does not exceed the greater of (i)
one percent of the number of shares of Common Stock then outstanding
(approximately 199,938 shares) or (ii) generally, the average weekly trading
volume in the Common Stock during the four calendar weeks preceding the required
filing of a Form 144 with respect to such sale. Sales under Rule 144 are
generally subject to the availability of current public information about the
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner other than an affiliate from
whom such shares were purchased), is entitled to sell such shares without having
to comply with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. Under Rule 701, persons who purchase shares upon
exercise of options granted prior to the effective date of the initial public
offering are entitled to sell such shares 90 days after the effective date of
the initial public offering in reliance on Rule 144, without having to comply
with the holding period requirements of Rule 144 and, in the case of
non-affiliates, without having to comply with the public information, volume
limitation or notice provisions of Rule 144.

The holders of an aggregate of 10,762,509 shares of Common Stock or their
transferees are entitled to certain rights with respect to the registration of
such shares under the Securities Act. See "Description of Capital
Stock-Registration Rights of Certain Holders."

PLAN OF DISTRIBUTION

The Shares covered by this Prospectus may be offered and sold from time to
time by the Selling Stockholders. The Selling Stockholders received their Shares
in connection with the Cleary Gull Acquisition pursuant to the Agreement. The
Agreement required the Company to file the Registration Statement of which this
Prospectus is a part with the Commission and have it declared effective within
181 days after the closing date of the Company's initial public offering. The
Selling Stockholders will act independently of the Company in making decisions
with respect to the timing, manner and size of each sale. The Selling
Stockholders may sell the Shares being offered hereby on the New York Stock
Exchange, or otherwise, at prices and under terms then prevailing or at prices
related to the then current market price or at negotiated prices. The Shares may
be sold by one or more of the following means of distribution: (a) a block trade
in which the broker-dealer so engaged will attempt to sell Shares as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this Prospectus; (c) an
over-the-counter distribution in accordance with the rules of the New York Stock
Exchange; (d) ordinary brokerage transactions and transactions in which the
broker

70
<PAGE> 71

solicits purchasers; and (e) in privately negotiated transactions. To the extent
required, this Prospectus may be amended and supplemented from time to time to
describe a specific plan of distribution. In connection with distributions of
the Shares or otherwise, the Selling Stockholders may enter into hedging
transactions with broker-dealers or other financial institutions. In connection
with such transactions, broker-dealers or other financial institutions may
engage in short sales of the Company's Common Stock in the course of hedging the
positions they assume with Selling Stockholders. The Selling Stockholders may
also sell the Company's Common Stock short and redeliver the Shares to close out
such short positions. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions which
require the delivery to such broker-dealer or other financial institution of
Shares offered hereby, which Shares such broker-dealer or other financial
institution may resell pursuant to this Prospectus (as supplemented or amended
to reflect such transaction). The Selling Stockholders may also pledge Shares to
a broker-dealer or other financial institution, and upon a default, such
broker-dealer or other financial institution, may effect sales of the pledged
Shares pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). In addition, any Shares that qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this Prospectus.

In effecting sales, brokers, dealers or agents engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commissions, discounts or concessions may be deemed to be
underwriting discounts or commissions under the Securities Act. The Company will
pay all expenses incident to the offering and sale of the Shares to the public
other than any commissions and discounts of underwriters, dealers or agents and
any transfer taxes.

In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

The Company has advised the Selling Stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of Shares in the
market and to the activities of the Selling Stockholders and their affiliates.
In addition, the Company will make copies of this Prospectus available to the
Selling Stockholders and has informed them of the need for delivery of copies of
this Prospectus to purchasers at or prior to the time of any sale of the Shares
offered hereby. The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.

At the time a particular offer of Shares is made, if required, a Prospectus
Supplement will be distributed that will set forth the number of Shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public. There can be no assurance that the Selling Stockholders
will sell all or any of the Shares.

The Company has agreed with the Selling Stockholders to keep the
Registration Statement of which this Prospectus constitutes a part effective for
up to 185 days following the effectiveness of the Registration Statement. The
Company intends to de-register any of the Shares not sold by the Selling
Stockholders at the end of such period; however, it is anticipated that at such
time any unsold shares may be freely tradeable subject to compliance with Rule
144 of the Securities Act.

71
<PAGE> 72

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Selling Stockholders by Hutchins, Wheeler & Dittmar, A Professional
Corporation, Boston, Massachusetts. Certain stockholders of Hutchins, Wheeler &
Dittmar are limited partners in THL-CCI, L.P. and, as a result, may be deemed to
have a beneficial interest in 6,363 shares of Common Stock.

EXPERTS

The consolidated statements of financial condition of the Company as of
December 31, 1996 and 1997 and the related consolidated statements of income,
changes in stockholders' equity and cash flows for the one month period ended
December 31, 1996 and the year ended December 31, 1997 and the consolidated
statements of income, changes in stockholders' equity and cash flows of the
Predecessor Company for the period from January 1, 1996 to November 29, 1996 and
for the year ended December 31, 1995, included in this Prospectus, have been
included herein in reliance on the report of Ernst & Young LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is
hereby made to such Registration Statement and to the exhibits and schedules
filed therewith. Statements contained in this Prospectus as to the contents of
any contract or any other document referred to are not necessarily complete, and
in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference. A copy of the Registration
Statement may be inspected by anyone without charge at the Commission's
principal office in Washington, D.C., and copies of all or any part of the
Registration Statement may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
certain fees prescribed by the Commission. The Commission maintains a World Wide
Website that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the website is http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by the Company's independent public
accountants and quarterly reports for the first three fiscal quarters of each
fiscal year containing unaudited interim financial information.

72
<PAGE> 73

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors.............................. F-2
Consolidated Statements of Financial Condition -- December
31, 1996 and 1997......................................... F-3
Consolidated Statements of Income -- For the year ended
December 31, 1995, eleven months ended November 29, 1996,
one month ended December 31, 1996 and year ended December
31, 1997.................................................. F-4
Consolidated Statements of Changes in Stockholders'
Equity -- For the year ended December 31, 1995, eleven
months ended November 29, 1996, one month ended December
31, 1996 and year ended December 31, 1997................. F-5
Consolidated Statements of Cash Flows -- For the year ended
December 31, 1995, eleven months ended November 29, 1996,
one month ended December 31, 1996 and year ended December
31, 1997.................................................. F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 74

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of
Freedom Securities Corporation

We have audited the accompanying consolidated statements of financial
condition of Freedom Securities Corporation ("Company") as of December 31, 1996
and 1997 and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the one month period ended December 31,
1996 and the year ended December 31, 1997, and the accompanying consolidated
statements of income, changes in stockholders' equity and cash flows of Freedom
Securities Holding Corporation ("Predecessor Company") for the year ended
December 31, 1995 and for the period January 1, 1996 to November 29, 1996. These
financial statements are the responsibility of the management of the Company and
the Predecessor Company. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly
in all material respects, the consolidated financial position of Freedom
Securities Corporation at December 31, 1996 and 1997 and the consolidated
results of its operations and its cash flows for the one month period ended
December 31, 1996 and for the year ended December 31, 1997, and the consolidated
results of operations and cash flows of the Predecessor Company for the year
ended December 31, 1995 and for the period January 1, 1996 to November 29, 1996
in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG, LLP

New York, New York
March 10, 1998

F-2
<PAGE> 75

FREEDOM SECURITIES CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 7,248 $ 12,936
Receivables from brokers, dealers and others................ 65,404 74,314
Securities purchased under agreements to resell............. 84,211 113,335
Securities owned, at market................................. 253,106 423,522
Fixed assets, net of accumulated depreciation and
amortization.............................................. 25,929 20,464
Goodwill, net of accumulated amortization................... 28,075 24,861
Other assets................................................ 52,979 58,155
-------- --------
Total assets................................................ $516,952 $727,587
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payables to brokers, dealers and others................... $ 74,131 $ 59,062
Securities sold under agreements to repurchase............ 44,976 --
Securities sold, not yet purchased, at market............. 101,140 354,565
Accrued compensation and benefits......................... 55,503 65,653
Accounts payable and accrued expenses..................... 50,915 44,535
Notes payable to banks.................................... 110,819 101,446
-------- --------
Total liabilities................................. 437,484 625,261
-------- --------
Stockholders' equity:
Common stock (21,816,000 shares authorized, 14,352,479 and
14,840,627 shares issued in 1996 and 1997,
respectively, $.01 par value).......................... 143 147
Additional paid-in capital................................ 78,804 83,654
Retained earnings......................................... 740 19,438
Subscribed stock (136,532 shares in 1997)................. -- (913)
Treasury stock (39,723 shares in 1996, at cost)........... (219) --
-------- --------
Total stockholders' equity............................. 79,468 102,326
-------- --------
Total liabilities and stockholders' equity........ $516,952 $727,587
======== ========
</TABLE>

See Notes to Consolidated Financial Statements

F-3
<PAGE> 76

FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
----------------------------------
YEAR ENDED ELEVEN MONTHS ENDED ONE MONTH ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 29, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
<S> <C> <C> <C> <C>
Revenues
Commissions........................ $140,180 $139,018 $12,522 $167,184
Principal transactions............. 105,789 95,481 8,350 99,269
Investment banking................. 34,773 33,964 4,137 55,259
Asset management................... 14,901 17,316 1,682 19,950
Other.............................. 12,766 15,218 573 12,465
-------- -------- ------- --------
Total operating revenues... 308,409 300,997 27,264 354,127
Interest income.................... 60,116 46,486 3,361 44,056
-------- -------- ------- --------
Total revenues............. 368,525 347,483 30,625 398,183
Interest expense................... 36,000 26,454 1,829 22,428
-------- -------- ------- --------
Net revenues............... 332,525 321,029 28,796 375,755
-------- -------- ------- --------
Non-interest expenses
Compensation and benefits.......... 217,589 209,187 18,859 245,939
Occupancy and equipment............ 26,050 30,993 2,231 24,331
Communications..................... 18,129 16,596 1,317 16,948
Brokerage and clearance............ 7,322 10,473 1,007 11,262
Promotional........................ 9,455 9,156 818 10,308
Other.............................. 31,696 24,237 2,577 28,480
-------- -------- ------- --------
Total non-interest
expenses................. 310,241 300,642 26,809 337,268
Acquisition interest expense......... -- -- 567 6,052
-------- -------- ------- --------
Income before income taxes........... 22,284 20,387 1,420 32,435
Income taxes......................... 9,220 8,844 680 13,737
-------- -------- ------- --------
Net income........................... $ 13,064 $ 11,543 $ 740 $ 18,698
======== ======== ======= ========
Basic earnings per share............. -- -- $ 0.05 $ 1.31
======= ========
Diluted earnings per share........... -- -- $ 0.05 $ 1.27
======= ========
</TABLE>

See Notes to Consolidated Financial Statements

F-4
<PAGE> 77

FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS AND SHARES IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK
------------------ ADDITIONAL RETAINED SUBSCRIBED TREASURY
SHARES PAR VALUE PAID-IN-CAPITAL EARNINGS STOCK STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR COMPANY:
Balance at December 31,
1994..................... 1 $ 1 $109,748 $35,719 $ -- $ -- $145,468
Net income................. 13,064 13,064
Non-cash dividend to
Hancock.................. (5,751) (5,751)
------ ---- -------- ------- ----- ----- --------
Balance at December 31,
1995..................... 1 1 109,748 43,032 -- -- 152,781
------ ---- -------- ------- ----- ----- --------
Net income................. 11,543 11,543
------ ---- -------- ------- ----- ----- --------
Balance at November 29,
1996..................... 1 $ 1 $109,748 $54,575 $ -- $ -- $164,324
====== ==== ======== ======= ===== ===== ========
FREEDOM SECURITIES
CORPORATION(a):
Sale of Common Stock at
November 29, 1996
(including $3,947 of non-
cash capital contributed
by Hancock).............. 14,313 $143 $ 78,804 $ -- $ -- $(219) $ 78,728
Net income................. 740 740
------ ---- -------- ------- ----- ----- --------
Balance at December 31,
1996..................... 14,313 143 78,804 740 -- (219) 79,468
------ ---- -------- ------- ----- ----- --------
Sale of Common Stock....... 488 4 4,693 4,697
Net income................. 18,698 18,698
Acquisition of treasury
stock.................... (97) (537) (537)
Reissuance of treasury
stock.................... -- 157 (913) 756 --
------ ---- -------- ------- ----- ----- --------
Balance at December 31,
1997..................... 14,704 $147 $ 83,654 $19,438 $(913) $ -- $102,326
====== ==== ======== ======= ===== ===== ========
</TABLE>

- ---------------

(a) Reflects effect of 1.818 for 1 stock split. See Note 17.

See Notes to Consolidated Financial Statements.

F-5
<PAGE> 78

FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------
YEAR ENDED ELEVEN MONTHS ENDED ONE MONTH ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 29, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................ $ 13,064 $ 11,543 $ 740 $ 18,698
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation............................ 4,274 4,632 304 5,128
Amortization............................ 6,403 7,807 685 5,714
Non-cash compensation................... -- -- -- 1,432
Changes in assets and liabilities
(Increase) decrease in operating assets:
Receivables from brokers, dealers and
others.............................. (28,855) 105,303 19,304 (8,910)
Receivables from customers............ (24,408) 333,252 -- --
Securities purchased under agreements
to resell........................... (26,490) 92,052 31,212 (29,124)
Securities owned, at market........... (73,825) 57,720 37,698 (170,416)
Other assets.......................... (11,163) (7,628) 3,876 (6,056)
Increase (decrease) in operating
liabilities:
Short-term loans from a Hancock
affiliate........................... 10,000 (200,000) -- --
Short-term loans...................... 61,535 (107,745) -- --
Payables to brokers, dealers and
others.............................. 19,443 (39,937) (33,027) (15,069)
Payables to customers................. 23,125 (186,206) -- --
Securities sold under agreements to
repurchase.......................... 28,710 (91,795) (5,061) (44,976)
Securities sold, not yet purchased, at
market.............................. 4,523 7,517 (47,088) 253,425
Accrued compensation and benefits..... 13,066 364 2,230 10,150
Accounts payable and accrued
expenses............................ 4,663 11,060 (7,930) (6,380)
-------- --------- --------- ---------
Net cash from operating activities........ 24,065 (2,061) 2,943 13,616

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets................. (10,883) (8,417) (112) (1,994)
Proceeds from sale of fixed assets........ -- -- -- 711
Purchase of Predecessor Company........... -- -- (180,000) --
Acquisition related expenditures.......... -- -- (5,740) --
-------- --------- --------- ---------
Net cash used in investing activities..... (10,883) (8,417) (185,852) (1,283)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net... -- -- 74,781 2,728
Proceeds from notes payable to banks...... -- 25,819 110,819 --
Repayment of notes payable to banks....... -- -- -- (9,373)
Proceeds from notes payable to a Hancock
affiliate............................... 6,105 -- -- --
Repayment of notes payable to a Hancock
affiliate............................... (2,400) (33,736) -- --
-------- --------- --------- ---------
Net cash from financing activities........ 3,705 (7,917) 185,600 (6,645)
Increase (decrease) in cash and cash
equivalents............................. 16,887 (18,395) 2,691 5,688
Cash and cash equivalents, beginning of
period.................................. 6,065 22,952 4,557 7,248
-------- --------- --------- ---------
Cash and cash equivalents, end of
period.................................. $ 22,952 $ 4,557 $ 7,248 $ 12,936
======== ========= ========= =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for:
Income taxes............................ $ 9,086 $ 10,453 $ 1,421 $ 14,859
Interest................................ $ 33,432 $ 22,912 $ 1,246 $ 28,338
</TABLE>

See Notes to Consolidated Financial Statements

F-6
<PAGE> 79

FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Basis of Presentation

Freedom Securities Corporation (formerly JHFSC Acquisition Corp.) is a
holding company which together with its wholly owned subsidiaries (collectively,
the "Company") is a full-service, regionally focused retail brokerage and
investment banking firm. The Company is engaged primarily in the retail and
institutional brokerage business including corporate finance and underwriting
services. The consolidated financial statements include the accounts of the
Company including its primary operating subsidiaries Tucker Anthony Incorporated
("Tucker Anthony"), Sutro & Co. Incorporated ("Sutro") and Freedom Capital
Management Corporation ("Freedom Capital").

Tucker Anthony, headquartered in Boston and focused on the northeastern
United States, and Sutro, headquartered in San Francisco and focused on the
western United States, are full service regionally focused retail brokerage and
investment banking firms. Freedom Capital is the Company's investment advisory
and asset management subsidiary which is focused on public sector entities and
high net worth individuals.

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated
in consolidation. The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from these
estimates. Certain prior year amounts have been reclassified to conform with the
current period's financial statement presentation.

The Acquisition

The Company was established to facilitate a buyout of Freedom Securities
Holding Corporation (the "Predecessor Company" and formerly John Hancock Freedom
Securities Corporation). Until November 29, 1996, the Predecessor Company was a
wholly-owned subsidiary of John Hancock Mutual Life Insurance Company
("Hancock").

Under terms of a Contribution Agreement dated October 4, 1996 and
consummated on November 29, 1996 among Hancock, the Company, two private
investor groups and selected employee investors, Hancock contributed 100% of the
issued and outstanding capital stock of the Predecessor Company to the Company
in exchange for 4.999% of the issued and outstanding capital stock of the
Company and an aggregate consideration of $180 million. With the consummation of
the transactions under the Contribution Agreement, the Predecessor Company
became a wholly owned subsidiary of the Company as of the close of business
November 29, 1996. Through November 29, 1996, the consolidated financial
statements present the financial condition, results of operations and cash flows
of the Predecessor Company and its subsidiaries.

The Acquisition has been accounted for as a purchase and, accordingly, the
purchase price was allocated to the assets and liabilities acquired based upon
their fair values at the date of the Acquisition. The purchase price, including
acquisition costs, exceeded the fair value of net assets acquired by $28.2
million and the excess was recorded as goodwill.

Wexford Arrangement

Tucker Anthony and Sutro clear their securities transactions on a fully
disclosed basis through Wexford Clearing Services Corporation ("Wexford" or the
"clearing broker"), a guaranteed wholly owned subsidiary of Prudential
Securities, Inc. ("Prudential"). Prior to April 3, 1996, Tucker Anthony and
Sutro cleared their securities transactions through a wholly owned subsidiary of
the Predecessor Company. This subsidiary

F-7
<PAGE> 80
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
subsequently withdrew its broker-dealer registration but continues to perform
certain liaison functions and provides data processing and communications
support to its affiliates.

Securities

Securities transactions and related revenues and expenses are recorded on a
trade date basis. Securities owned and securities sold, not yet purchased are
stated at market value with related changes in unrealized appreciation or
depreciation reflected in principal transactions revenues. Securities sold, not
yet purchased, represent obligations to deliver specified securities at
predetermined prices. The Company is obligated to acquire the securities sold
short at prevailing market prices in the future to satisfy these obligations.
Arbitrage positions included in securities owned and securities sold, not yet
purchased result from buying or selling a security subject to exchange,
conversion or reorganization and selling or buying the security or securities to
be received upon completion of the exchange, conversion or reorganization. The
Company may from time to time enter into futures and options on futures
contracts. These contracts are valued at market with related changes in
unrealized appreciation or depreciation reflected in principal transactions
revenues.

Investment Banking

Investment banking revenues are recorded as follows: management fees as of
the offering date; sales commissions on trade date and underwriting fees at the
time the underwriting is completed and the income is reasonably determinable.

Asset Management Fees

The Company earns investment advisory fees for services rendered to its
clients based on either a percentage of the average net assets managed or on a
percentage of quarter-end market value of assets managed, depending upon the
type of client account. These fees are recorded as earned and billed monthly or
quarterly.

Fixed Assets

Furniture and fixtures are depreciated on a straight-line basis over their
estimated useful lives, generally three to ten years. Leasehold improvements are
amortized on a straight-line basis over the lesser of the economic useful life
of the improvements or the terms of the respective leases. Fixed assets are
stated at cost net of accumulated depreciation and amortization of $0.6 million
and $2.4 million at December 31, 1996 and 1997, respectively.

Intangibles

Intangibles related to the Acquisition include debt issuance costs ($2.9
million and $2.4 million at December 31, 1996 and 1997, respectively) which are
reported in other assets, and goodwill. Goodwill and debt issuance costs are
stated at cost net of accumulated amortization and are amortized on a
straight-line basis over fifteen and five years, respectively.

The accumulated amortization of intangibles totaled $0.2 million and $2.7
million at December 31, 1996 and 1997, respectively.

Income Taxes

Through November 29, 1996, the Predecessor Company was included in the
consolidated U.S. Federal income tax return of Hancock. Pursuant to an agreement
with Hancock, the Predecessor Company's share of

F-8
<PAGE> 81
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
combined Federal income taxes was equivalent to the total provision or benefit
the Predecessor Company would have recorded for such taxes had they been
determined on a stand-alone basis. Pursuant to an agreement relating to the
Acquisition, Hancock assumed responsibility for all Federal, state and local
taxes of the Predecessor Company through 1995.

Subsequent to the Acquisition, the Company and its subsidiaries file a
consolidated U. S. Federal income tax return. State and local taxes are computed
on a separate company basis. The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes". Under this method, the Company recognizes taxes payable or
refundable for the current year and deferred tax liabilities and assets for
future consequences of events that have been recognized in the Company's
financial statements or tax returns.

Cash Flows

For purposes of reporting cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be cash
equivalents. Cash flows for the one month ended December 31, 1996 are shown net
of the effects of the purchase of the Predecessor Company.

Accounting Pronouncements

In June 1996, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." SFAS No. 125 introduced the
financial-components approach which focuses on the recognition of financial
assets that an entity controls and the derecognition of financial assets for
which control has been transferred. The FASB, under SFAS No. 127 "Deferral of
the Effective Date of Certain Provisions of SFAS No. 125," has deferred the
effective date of accounting for other types of transfers of financial assets,
including repurchase agreements and securities lending transactions, until
January 1, 1998. The Company does not expect the adoption of this statement to
have a material impact on the Company's consolidated financial statements.

2. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND OTHERS

Included in the receivables from brokers, dealers and others are unsettled
proprietary trades and certain overnight funds with a Wexford affiliate.
Included in payables to brokers, dealers and others are the amounts due to
Wexford for collateralized financing of proprietary positions and to Freedom
Capital's transfer agent for money market funds. The Company's principal source
of short-term financing is provided by Wexford, from which the Company can
borrow on an uncommitted basis against its proprietary inventory positions,
subject to collateral maintenance requirements.

The Company conducts business with brokers and dealers that are members of
the major securities exchanges. The Company monitors the credit standing of such
brokers and dealers, monitors the market value of collateral and requests
additional collateral as deemed appropriate.

F-9
<PAGE> 82
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND OTHERS (CONTINUED)

Amounts receivable from and payable to brokers, dealers and others at
December 31, consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
RECEIVABLES FROM BROKERS, DEALERS AND OTHERS
Receivable from Prudential................................ $47,230 $46,129
Unsettled proprietary trades, net......................... 18,104 24,189
Receivables from other brokers and dealers................ 70 3,996
------- -------
$65,404 $74,314
======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
PAYABLES TO BROKERS, DEALERS AND OTHERS
Payable to Wexford........................................ $32,599 $16,633
Payable to transfer agent................................. 40,947 42,088
Payables to other brokers and dealers..................... 585 341
------- -------
$74,131 $59,062
======= =======
</TABLE>

3. TRANSACTIONS WITH CUSTOMERS

For transactions in which the Company, through Wexford, extends credit to
customers, the Company seeks to control the risks associated with these
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines. The Company and Wexford monitor
required margin levels daily and, pursuant to such guidelines, request customers
to deposit additional collateral or reduce securities positions when necessary.

The Company has agreed to indemnify Wexford for losses that it may sustain
in connection with customer accounts introduced by the Company. At December 31,
1996 and 1997, there were no amounts to be indemnified to Wexford for these
accounts since the customers were able to fulfill their obligations.

4. SHORT-TERM LOANS

In periods prior to 1997, short-term loans with banks and a Hancock
affiliate were used to finance securities purchased by customers on margin and
proprietary inventory positions. Borrowings from the Hancock affiliate were on
an uncollateralized basis and bore interest at a rate approximating the
commercial paper rate of such affiliate. Interest expense related to these loans
was $7.7 million for the year ended December 31, 1995 and $12.1 million for the
eleven months ended November 29, 1996.

5. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE

Securities purchased under agreements to resell and securities sold under
agreements to repurchase are treated as collateralized financing transactions,
and are carried at amounts at which the securities will be subsequently resold
or reacquired plus accrued interest. At December 31, 1996 and 1997 these
agreements matured within 13 days. Securities sold under agreements to
repurchase had a weighted-average interest rate of 6.0% at December 31, 1996. It
is the Company's policy to take possession or control of securities purchased
under agreements to resell. The Company is required to provide securities to
counterparties in order to collateralize repurchase agreements. The Company
minimizes credit risk associated with these activities by

F-10
<PAGE> 83
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE (CONTINUED)

monitoring credit exposure and collateral values on a daily basis and requiring
additional collateral to be deposited or returned when deemed appropriate.

6. TRANSACTIONS WITH AFFILIATES

During 1995, the Predecessor Company distributed its $5.8 million ownership
interest in JHM Capital Management Corp. to Hancock as a dividend. The earnings
prior to such distribution were not significant.

Prior to November 29, 1996, the Predecessor Company had outstanding notes
payable to a Hancock affiliate which incurred interest at rates approximating
such affiliate's average cost of borrowing and were payable on demand. These
notes were repaid on November 29, 1996. Interest expense incurred relating to
these notes was $1.8 million for the year ended December 31, 1995 and $1.7
million for the eleven months ended November 29, 1996.

The Predecessor Company participated in group insurance arrangements
arranged through Hancock and also received certain shared services. The
Predecessor Company paid Hancock its allocable share of the cost of such
insurance and other items, which amounted to $11.6 million and $11.1 million
during the year ended December 31, 1995 and the eleven months ended November 29,
1996, respectively. Subsequent to the Acquisition, the Company continued to
participate in the group insurance arrangements through Hancock until June 30,
1997 when the Company obtained its own insurance arrangements. The Company paid
its allocable share of the cost of such insurance which amounted to $0.8 million
and $6.1 million for the one month period ended December 31, 1996 and the six
month period ended June 30, 1997, respectively.

Effective with the Acquisition, the Company entered into management
agreements, with certain shareholders, and has agreed to pay annual management
fees totaling $0.3 million. These agreements terminate by the mutual consent of
the parties or upon an initial public offering of the Company's common stock.

F-11
<PAGE> 84
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. SECURITIES

Securities owned and securities sold, not yet purchased are recorded at
market value and consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
<S> <C> <C>
OWNED:
Obligations of the U.S. government or its agencies.......... $ 23,650 $ 27,396
State and municipal obligations............................. 56,057 38,222
Arbitrage securities........................................ 84,967 291,023
Other corporate obligations................................. 73,127 51,709
Other corporate stocks and warrants......................... 15,305 15,172
-------- --------
$253,106 $423,522
======== ========
SOLD, NOT YET PURCHASED:
Obligations of the U.S. government or its agencies.......... $ 37,663 $ 22,890
State and municipal obligations............................. 1,476 1,519
Arbitrage securities........................................ 51,671 322,316
Other corporate obligations................................. 6,055 1,356
Other corporate stocks and warrants......................... 4,275 6,484
-------- --------
$101,140 $354,565
======== ========
</TABLE>

8. NOTES PAYABLE TO BANKS

Included in notes payable to banks is the Company's borrowing for fixed
asset financing of approximately $25.8 million and $21.4 million at December 31,
1996 and 1997, respectively, which bears interest at 8.02% annually and is
payable in equal monthly installments through December 2001. This note is
collateralized by furniture, fixtures and leasehold improvements.

The Company entered into a Revolving Credit Agreement (the "credit
agreement") with certain participating banks. Borrowings under the credit
agreement equaled $85 million and $80 million at December 31, 1996 and 1997,
respectively. These borrowings bear interest, approximately 7.06% and 6.97% at
December 31, 1996 and 1997, respectively, at the current Eurodollar Rate plus
applicable margin, as defined, ranging from 0.75% to 2.00% based on a calculated
leverage ratio in accordance with the credit agreement. Interest expense related
to the credit agreement is shown in the consolidated statements of income as
acquisition interest expense. Subject to the terms and conditions as set forth
in this credit agreement, the Company may borrow, repay and reborrow from time
to time up to the maturity date, December 31, 2001, of this credit agreement.
The credit agreement also includes certain financial covenants (see note 10) and
a mandatory reduction of the participating banks' commitment at the end of
various calendar quarters.

The aggregate amount of principal repayment requirements on notes payable
is as follows by year (in thousands):

<TABLE>
<CAPTION>
FIXED ASSET BORROWINGS UNDER THE
YEAR FINANCING CREDIT AGREEMENT
<S> <C> <C>
1998........................................... $4,737 $10,000
1999........................................... 5,131 12,500
2000........................................... 5,558 25,000
2001........................................... 6,020 32,500
</TABLE>

F-12
<PAGE> 85
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. INCOME TAXES

The components of income tax expense (benefit) are (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED ELEVEN MONTHS ONE MONTH ENDED YEAR ENDED
DECEMBER 31, ENDED NOVEMBER 29, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
<S> <C> <C> <C> <C>
Federal:
Current............... $ 6,969 $ 9,422 $ 581 $ 7,693
Deferred.............. (1,456) (3,930) (148) 1,482

State:
Current............... 4,116 4,784 300 4,501
Deferred.............. (409) (1,432) (53) 61
------- ------- ----- -------
$ 9,220 $ 8,844 $ 680 $13,737
======= ======= ===== =======
</TABLE>

The effective income tax differs from the amount computed by applying the
Federal statutory income tax rate as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED ELEVEN MONTHS ENDED ONE MONTH ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 29, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
<S> <C> <C> <C> <C>
Federal statutory income tax.......... $7,799 $7,136 $497 $11,352
State and local incomes taxes, net of
federal tax benefit................. 2,410 2,179 160 2,965
Tax exempt interest, net.............. (840) (570) (53) (770)
Other, net............................ (149) 99 76 190
------ ------ ---- -------
Effective income tax.................. $9,220 $8,844 $680 $13,737
====== ====== ==== =======
</TABLE>

The temporary differences which created deferred tax assets and liabilities
are included as a net amount in other assets at December 31, 1996 and 1997 as
follows (in thousands):

<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Deferred Tax Assets:
Deferred compensation..................................... $ 6,122 $ 5,990
Reserves.................................................. 2,759 2,042
Other..................................................... 3,240 2,118
Less valuation allowance.................................. (1,131) --
------- -------
Total deferred tax assets.............................. 10,990 10,150
------- -------
Deferred Tax Liabilities:
Net unrealized appreciation on investments and other...... 185 887
------- -------
Total deferred tax liabilities......................... 185 887
------- -------
Net deferred tax asset...................................... $10,805 $ 9,263
======= =======
</TABLE>

At December 31, 1996, the Company had net operating loss carryforwards
("NOLs") related to the original acquisition of Sutro of $3.2 million for which
it had recorded a valuation allowance against the full amount of the deferred
tax asset. These NOLs were fully utilized in 1997 resulting in a reduction to
taxes payable but without a reduction to reported income tax expense as the
offset was reported as an adjustment to goodwill.

F-13
<PAGE> 86
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. NET CAPITAL REQUIREMENTS

Certain subsidiaries of the Company are subject to the net capital
requirements of the New York Stock Exchange ("Exchange") and the Uniform Net
Capital requirements of the Securities and Exchange Commission ("Commission")
under Rule 15c3-1. The Exchange and the Commission also provide that equity
capital may not be withdrawn or cash dividends paid if certain minimum net
capital requirements are not met. The Company's principal regulated subsidiaries
are discussed below.

Tucker Anthony is a registered broker and dealer. At December 31, 1997,
Tucker Anthony had net capital of approximately $47.0 million which was $46.0
million in excess of the $1 million amount required to be maintained at that
date.

Sutro is a registered broker and dealer. At December 31, 1997, Sutro had
net capital of approximately $10.8 million which was $9.8 million in excess of
the $1.0 million amount required to be maintained at that date.

Freedom Trust Company ("FTC") is a subsidiary of Freedom Capital and is a
limited purpose trust company. Pursuant to state regulations, FTC is required to
meet and maintain certain capital minimums and ratios. At December 31, 1997,
FTC's regulatory capital, as defined, was $1.1 million and FTC was in compliance
with all such requirements.

Under the clearing arrangement with Wexford, Tucker Anthony and Sutro are
required to maintain certain minimum levels of net capital and comply with other
financial ratio requirements. At December 31, 1997, Tucker Anthony and Sutro
were in compliance with all such requirements.

In accordance with the provisions of the credit agreement (see note 8), the
Company and its principal subsidiaries have executed agreements to guarantee the
borrowings to the benefit of the participating banks. The stock of the Company's
subsidiaries currently is pledged as security under the terms of the credit
agreement. Under the financial covenants of this credit agreement, the maturity
of amounts borrowed may be accelerated if the Company breaches certain
provisions of the credit agreement, among which are requirements for the Company
and its principal subsidiaries to maintain minimum levels, as defined, including
leverage ratio and net capital. The Company was in compliance with these
covenants at December 31, 1997.

11. COMMITMENTS AND CONTINGENCIES

The Company leases office space and various types of equipment under
noncancelable leases generally varying from one to ten years, with certain
renewal options for like terms. Rent expense was $18.1 million for the year
ended December 31, 1995, $22.5 million for the eleven month period ended
November 29, 1996, $1.5 million for the one month period ended December 31, 1996
and $15.9 million for the year ended 1997. Included in rent expense for the
eleven month period ended November 29, 1996 is $4.7 million of expense related
to the present value of future rent costs for space no longer required due
primarily to the outsourcing of clearing services.

F-14
<PAGE> 87
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)

At December 31, 1997, the Company's future minimum rental commitments based
upon original terms (including escalation costs) under noncancelable leases
which have an initial or remaining term of one year or more are as follows (in
thousands):

<TABLE>
<S> <C>
1998.............................................. $ 17,204
1999.............................................. 16,915
2000.............................................. 15,025
2001.............................................. 14,350
2002.............................................. 13,586
Thereafter........................................ 26,184
--------
Sub-total....................................... 103,264
Less aggregate sublease income.................... (3,847)
--------
$ 99,417
========
</TABLE>

The Company is a defendant or co-defendant in legal actions primarily
relating to its broker-dealer activities. It is the opinion of management, after
consultation with counsel, that the resolution of these actions will not have a
material adverse effect on the consolidated financial position and results of
operations of the Company. Included in other operating expenses, for the eleven
month period ended November 29, 1996, is $6.3 million of insurance recoveries
relating to certain litigation costs that were incurred in prior years.

The Company has outstanding underwriting agreements and when-issued
contracts which commit it to purchase securities at specified future dates and
prices. The Company presells such issues to manage risk exposure related to
these off-balance sheet commitments. Subsequent to December 31, 1997, such
transactions settled at no loss.

12. BENEFITS

Certain subsidiaries of the Company have qualified profit-sharing plans
which cover substantially all their full-time employees. Each plan includes a
salary reduction agreement and a matching contribution subject to certain
limitations. In addition, a subsidiary may contribute additional amounts to its
plan, at its discretion, based upon its profits for the year.

The aggregate contributions to these plans for the year ended December 31,
1995, the eleven month period ended November 29, 1996, the one month period
ended December 31, 1996 and the year ended December 31, 1997 were $6.4 million,
$5.5 million, $0.5 million and $7.1 million, respectively.

Freedom Capital has a noncontributory defined benefit pension plan covering
substantially all of its employees. Effective August 1, 1997, the plan was
amended to provide that no new pension benefits will accrue and no new
participants will be admitted after August 1, 1997. Amounts related to the plan
are not material to the consolidated financial statements.

Compensation cost recognized for Common Stock and stock options issued to
employees during 1997 was $1.4 million.

13. FINANCIAL INSTRUMENTS

Substantially all of the Company's financial instruments are carried at
fair value or amounts approximating fair value. Assets, including cash and cash
equivalents, securities owned, securities purchased under agreements to resell
and certain receivables are carried at fair value or contracted amounts which
approximate fair value. Similarly, liabilities including securities sold, not
yet purchased, securities sold under agreements to repurchase and certain
payables are carried at fair value or contracted amounts approximating fair
value.

F-15
<PAGE> 88
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. FINANCIAL INSTRUMENTS (CONTINUED)

The fair value of the fixed asset financing estimated using the Company's
incremental borrowing rate, approximated its carrying value at December 31, 1997
and 1996. The carrying value of the Company's debt under the variable rate
credit agreement approximates its fair value.

In the normal course of business, the Company may enter into transactions
in financial instruments to manage its exposure to market risks. There were no
open contracts outstanding at December 31, 1996. At December 31, 1997, the
Company had open options on futures contracts outstanding approximating $34.5
million (notional amount). The notional amounts are not reflected on the
Consolidated Statements of Financial Condition and are indicative only of the
volume of activity at December 31, 1997. They do not represent amounts subject
to market risks, and in many cases, limit the Company's overall exposure to
market losses by hedging other on-balance sheet and off-balance sheet
transactions. The volume of activity in these contracts was not significant
during the years ended December 31, 1995, 1996 and 1997.

The following table summarizes the Company's principal transactions
revenues by business activity for the applicable periods reflected.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, ELEVEN MONTHS ENDED ONE MONTH ENDED DECEMBER 31,
1995 NOVEMBER 29, 1996 DECEMBER 31, 1996 1997
------------ ------------------- ----------------- ------------
<S> <C> <C> <C> <C>
Equities............................. $ 39,814 $35,545 $2,831 $39,181
Fixed Income......................... 52,289 47,731 3,990 47,641
Arbitrage............................ 13,686 12,205 1,529 12,447
-------- ------- ------ -------
$105,789 $95,481 $8,350 $99,269
======== ======= ====== =======
</TABLE>

14. EARNINGS PER COMMON SHARE

The Company computes its earnings per share in accordance with SFAS 128
"Earnings Per Share." The following table sets forth the computation for basic
and diluted earnings per share (in thousands except per share amounts):

<TABLE>
<CAPTION>
ONE MONTH ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
------------------ ------------------
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
NUMERATOR:

Net income........................................ $ 740 $ 740 $18,698 $18,698
------- ------- ------- -------
DENOMINATOR:

Weighted average shares outstanding............... 14,313 14,313 14,287 14,287
Dilutive effect of:
Stock options and other exercisable shares..... -- -- -- 446
------- ------- ------- -------
Adjusted weighted average shares outstanding...... 14,313 14,313 14,287 14,733
------- ------- ------- -------
Earnings per share.................................. $ 0.05 $ 0.05 $ 1.31 $ 1.27
======= ======= ======= =======
</TABLE>

15. STOCK OPTIONS

The Company's 1996 Stock Option Plan ("the Plan") provides for granting
officers and other key employees options to purchase shares of common stock at
the fair market value of the stock on the date of grant or such other prices as
provided by the Plan, and expire within either nine and one half years of
November 29, 1996, or ten years from the date of grant. The options vest over
periods from five to six years

F-16
<PAGE> 89
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. STOCK OPTIONS (CONTINUED)

from November 29, 1996. Certain options issued under performance-based
agreements may be exercisable earlier, vesting over three years for individual
performance-based options and five years for Company performance-based options,
if certain individual and Company performance-based goals are met. Regardless of
whether these performance based targets are attained, the options will vest no
later than six years from November 29, 1996. During 1997, the Company granted
options on 2,336,652 shares, no options were exercised, and options on 202,764
shares were forfeited. All options have an exercise price of $5.50. At December
31, 1997, 2,181,600 shares were authorized for issuance under options and
options on 2,133,888 shares were outstanding, with a weighted-average remaining
contractual life of 8.6 years. At December 31, 1997, options on 276,247 shares
were exercisable, with a weighted-average remaining contractual life of 8.6
years.

The Company accounts for stock option grants in accordance with the
provisions of Accounting Principles Board Opinion ("APB") No. 25 "Accounting for
Stock Issued to Employees." Had compensation expense for the Company's stock
options been determined on the fair value at the date of grant for awards under
the Plan, consistent with the method of SFAS 123 "Accounting for Stock Based
Compensation," the Company's net income and earnings per share would have been
reduced to pro forma amounts presented below (in thousands except per share
amounts):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
<S> <C> <C>
Net income........................................ As reported $18,698
Pro forma $18,318
Basic earnings per share.......................... As reported $ 1.31
Pro forma $ 1.28
Diluted earnings per share........................ As reported $ 1.27
Pro forma $ 1.26
</TABLE>

The pro forma information presented is not representative of the effect
stock options will have on net income or earnings per share for future years.

The fair value of each option granted during the year ended December 31,
1997 is the estimated present value at grant date using the minimum value model
with the following assumptions: (i) dividend yield of 0.8%, (ii) expected life
of 6 years, and (iii) risk free interest rate of 5.4%. The weighted-average fair
value of the options on 2,127,696 shares granted January 31, 1997 whose exercise
price equals the fair market value of the Company's stock on grant date was
$1.30. The weighted-average fair value of the options on 208,956 shares granted
subsequent to January 31, 1997 whose exercise price is less than the fair market
value of the Company's stock on grant date was $4.37.

F-17
<PAGE> 90
FREEDOM SECURITIES CORPORATION AND
FREEDOM SECURITIES HOLDING CORPORATION ("PREDECESSOR COMPANY")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. QUARTERLY INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------------------
THREE MONTHS ENDED TWO ONE
-------------------------------------- MONTHS ENDED MONTH ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, NOVEMBER 29, DECEMBER 31,
1996 1996 1996 1996 1996
<S> <C> <C> <C> <C> <C>
Net revenues................... $89,281 $88,168 $ 81,034 $ 62,546 $ 28,796
Income before income taxes..... 6,440 5,361 4,480 4,106 1,420
Net income..................... 3,677 3,029 2,517 2,320 740
Basic earnings per share....... -- -- -- -- $ 0.05
Diluted earnings per share..... -- -- -- -- $ 0.05
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997
<S> <C> <C> <C> <C> <C>
Net revenues................... $84,448 $85,129 $103,579 $102,599
Income before income taxes..... 6,043 5,040 10,464 10,888
Net income..................... 3,493 2,918 5,967 6,320
Basic earnings per share....... $ 0.24 $ 0.20 $ 0.42 $ 0.45
Diluted earnings per share..... $ 0.24 $ 0.20 $ 0.41 $ 0.42
</TABLE>

17. SUBSEQUENT EVENTS

On March 10, 1998, the Company's Board of Directors approved an increase in
the authorized Capital Stock of the Company to 60,000,000 shares of Common
Stock, $.01 par value per share, and 1,000,000 shares of Preferred Stock, $.01
par value per share, of which none of the preferred stock has been issued. In
addition, the Company's Board of Directors approved a 1.818-for-1 Common Stock
split to be distributed in the form of a stock dividend payable to existing
stockholders immediately prior to the consummation of the Company's public
offering of Common Stock. All references throughout the financial statements to
number of shares, per share amounts and stock options data of the Company's
Common Stock reflect the stock split.

The Company has agreed to acquire, through a merger with a wholly owned
subsidiary of the Company, the regional brokerage firm of Cleary Gull Reiland &
McDevitt Inc. ("Cleary Gull") pursuant to an Agreement and Plan of Merger dated
March 9, 1998. The following is a summary of certain financial information of
Cleary Gull at and for the year ended December 31, 1997 (in thousands):

<TABLE>
<S> <C> <C>
Total assets................................................ $20,698
Stockholders' equity........................................ 7,198

Total revenues.............................................. $26,414
Net income.................................................. 1,251
</TABLE>

F-18
<PAGE> 91

================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY
OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

PAGE

Prospectus Summary................... 3
Risk Factors......................... 8
Use of Proceeds...................... 18
Dividend Policy...................... 18
Capitalization....................... 19
Selected Historical Consolidated
Financial and Other Data........... 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 22
Business............................. 36
Management........................... 50
Principal and Selling Stockholders... 60
Certain Relationships and Related
Transactions....................... 64
Description of Capital Stock......... 67
Shares Eligible for Future Sale...... 70
Plan of Distribution................. 70
Legal Matters........................ 72
Experts.............................. 72
Additional Information............... 72
Index to Financial Statements........ F-1

------------------------

UNTIL OCTOBER 26, 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENT OR SUBSCRIPTIONS.

================================================================================

776,555 SHARES

[FREEDOM SECURITIES(SM) CORPORATION LOGO]
COMMON STOCK

-------------------------
P R O S P E C T U S
-------------------------

SEPTEMBER 29, 1998

================================================================================
<PAGE> 92

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses payable in connection with the sale of the Common Stock
offered hereby are as follows, all of which will be paid by the Company:

<TABLE>
<CAPTION>
AMOUNT
<S> <C>
Commission registration fee................................. $ 3,877
Printing expenses........................................... 50,000
Legal fees and expenses..................................... 50,000
Accounting fees and expenses................................ 25,000
Blue sky fees and expenses (including legal fees and
expenses)................................................. 10,000
Transfer agent and registrar fees and expenses.............. 10,000
Miscellaneous............................................... 51,123
-----------
Total.................................................. 200,000
===========
</TABLE>

- ------------------------------
* All amounts are estimated, except Commission registration fee.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware provides as
follows:

A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

II-1
<PAGE> 93

In addition, pursuant to its Articles of Organization and Bylaws, the
Company shall indemnify its directors and officers against expenses (including
judgments or amounts paid in settlement) incurred in any action, civil or
criminal, to which any such person is a party by reason of any alleged act or
failure to act in his capacity as such, except as to a matter as to which such
director or officer shall have been finally adjudged not to have acted in good
faith in the reasonable belief that his action was in the best interest of the
corporation.

The Company maintains directors and officers liability insurance for the
benefit of its directors and certain of its officers and has entered into
indemnification agreements with its directors and certain of its officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the Company has issued the following
securities, none of which have been registered under the Securities Act:

(a) On November 29, 1996, the Company sold an aggregate of 826,281
shares of Common Stock for an aggregate consideration of $4,545,000 in
transactions exempt from registration pursuant to Rule 701 under the
Securities Act.

(b) On November 29, 1996, in transactions exempt from registration
pursuant to Section 4(2) of the Securities Act, the Company sold an
aggregate of 13,526,200 shares of Common Stock to accredited investors for
an aggregate consideration of $74,401,540.

(c) During 1997 the Company granted options to purchase 2,336,652
shares of Common Stock to certain employees of the Company, each with an
exercise price of $5.50, in transactions exempt from registration pursuant
to Section 4(2) and Rule 701 under the Securities Act.

(d) During 1997, in transactions exempt from registration pursuant to
Section 4(2) of the Securities Act, the Company sold an aggregate of
488,148 shares of Common Stock for aggregate consideration of $3,265,061 to
employees of the Company and its subsidiaries who were accredited
investors. In addition, Hancock exercised its pre-emptive right to purchase
an aggregate of 31,099 shares of Common Stock for aggregate consideration
of $208,006.

(e) During 1998, in transactions exempt from registration pursuant to
section 4(2) of the Securities Act, the Company has sold an aggregate of
56,776 shares of Common Stock for aggregate consideration of $390,700 to
employees of the Company's Subsidiaries.

(f) On May 1, 1998, the Company issued, in a transaction exempt from
registration pursuant to Section 4(2) of the Securities Act, an aggregate
of 889,878 shares of Common Stock to the former stockholders of Cleary Gull
in connection with the Company's acquisition of Cleary Gull.

II-2
<PAGE> 94

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS
NO. DESCRIPTION OF DOCUMENTS
- -------- ------------------------
<C> <S>
+3.1 Restated Certificate of Incorporation of the Registrant
+3.2 Bylaws of the Registrant to be effective prior to
effectiveness of the Registration Statement
5.1 Form of Opinion of Hutchins, Wheeler & Dittmar, A
Professional Corporation
+10.1 Contribution Agreement by and among the Registrant, Hancock,
THL and SCP, dated as of October 4, 1996
+10.2 Stockholders Agreement by and among the Registrant and the
persons listed on the signature pages thereof as the Initial
Investors, SCP Initial Investor, Employee Investors and
Seller Initial Investor dated as of November 30, 1996
+10.3 Revolving Credit Agreement by and among the Registrant and
The First National Bank of Boston, as agent for the lenders
listed on Schedule 1 thereto, dated as of November 29, 1996
+10.4 Additional Share Agreement by and between the Registrant and
Hancock, dated as of November 29, 1996
+10.5 Tax Matters Agreement by and between the Registrant and
Hancock, dated as of November 29, 1996
+10.6 Contribution and Indemnity Agreement by and between the
Registrant and John H. Goldsmith, dated as of November 29,
1996
+10.7 Management Agreement by and between the Registrant and THL,
dated as of November 29, 1996
+10.8 Management Agreement by and between the Registrant and SCP,
dated as of November 29, 1996
+10.9 1996 Stock Option Plan
+10.10 Employment Agreement by and between the Registrant and John
H. Goldsmith, dated as of November 29, 1996
+10.11 Employment Agreement by and between the Registrant and
Gregory N. Thomas, dated as of December 3, 1997
+10.12 Letter Agreement by and between the Registrant and William
C. Dennis, Jr., dated as of April 2, 1997
+10.13 Agreement, by and among Prudential Securities Incorporated,
John Hancock Clearing Corporation, Tucker Anthony
Incorporated and Sutro & Co. Incorporated
+10.14 Form of TAMP Incentive Plan Limited Partnership Limited
Partnership Agreement, dated as of July 1, 1989
+10.15 Form of TAMP II Incentive Plan Limited Partnership Limited
Partnership Agreement, dated as of February 28, 1995
+10.16 Form of TAMM II Incentive Plan Limited Partnership Limited
Partnership Agreement, dated April 8, 1984
+10.17 Form of Sutro Venture Partners I, L.P. Limited Partnership
Agreement, dated as of March 21, 1996
+10.18 Form of Sutro Venture Partners II, L.P. Limited Partnership
Agreement, dated as of March 21, 1996
+10.19 Form of Operating Agreement for Sutro Investment Partners
IV, LLC dated as of June 30, 1997
+10.20 Agreement and Plan of Merger, by and among the Registrant,
CGRM Merger Corp. and Cleary Gull Reiland & McDevitt Inc.,
dated March 9, 1998.
+10.21 Cleary Gull Registration Rights Agreement.
+10.22 Chattel Leasing Security Agreement by and between T.A.
Leasing, Inc. and BancBoston Leasing, Inc., dated November
29, 1996.
</TABLE>

II-3
<PAGE> 95

EXHIBITS
NO. DESCRIPTION OF DOCUMENTS
- -------- ------------------------

+10.23 Amended and Restated Chattel Leasing Promissory Note, by and
between T.A. Leasing, Inc. and BancBoston Leasing, Inc., dated
February 28, 1997.

+10.24 Chattel Leasing Security Agreement by and between Sutro Leasing
Inc. and BancBoston Leasing, Inc., dated February 28, 1997.

+10.25 Chattel Leasing Promissory Note by and between Sutro Leasing Inc.
and BancBoston Leasing, Inc., dated February 28, 1997.

+10.26 1998 Long Term Incentive Plan.

+10.27 1998 Executive Performance Bonus Plan.

+10.28 Amendment No. 1 to the Stockholders Agreement.

+10.29 Amendment No. 2 to the Stockholders Agreement, as of March 10, 1998.

+10.30 Amendment No. 3 to the Stockholders Agreement, dated as of March 25,
1998.

10.31 David P. Prokupek Employment Agreement.

10.32 Revolving Credit Agreement, by and among the Registrant, BankBoston,
N.A., and the other banks party thereto, dated as of August 21,
1998.

10.33 John F. Luikart -- Employment Agreement

10.34 Kevin J. McKay -- Employment Agreement

+21.1 Subsidiaries of the Registrant

23.1 Consent of Ernst & Young LLP

+23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation
(included in Exhibit 5.1)

+27.1 Financial Data Schedule

- ---------------

+ Previously filed with the Commission on Form S-1 (File No. 333-44931).

Schedules and exhibits to certain exhibits have been omitted, which
schedules shall be furnished to the Commission upon request.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

II-4
<PAGE> 96

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.

(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by sec.210.3-19 of this chapter at the start
of any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Act need not be furnished, provided that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act of sec.210.3-19 of
this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.

II-5
<PAGE> 97

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amended registration statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in Boston,
Massachusetts, on September 29, 1998.

FREEDOM SECURITIES CORPORATION

By: /s/ JOHN H. GOLDSMITH
------------------------------------
Name: John H. Goldsmith
Title: Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>

/s/ JOHN H. GOLDSMITH Chairman, Director and Chief September 29, 1998
- --------------------------------------------------- Executive Officer as well as
John H. Goldsmith Chief Executive Officer of
Tucker Anthony and Chairman of
Sutro

/s/ WILLIAM C. DENNIS, JR. Chief Financial Officer September 29, 1998
- ---------------------------------------------------
William C. Dennis, Jr.

* Director September 29, 1998
- ---------------------------------------------------
David V. Harkins

* Director September 29, 1998
- ---------------------------------------------------
C. Hunter Boll

* Director September 29, 1998
- ---------------------------------------------------
Thomas M. Hagerty

* Director September 29, 1998
- ---------------------------------------------------
Seth W. Lawry

* Director September 29, 1998
- ---------------------------------------------------
Winston J. Churchill

* Director September 29, 1998
- ---------------------------------------------------
John F. Luikart

* Director September 29, 1998
- ---------------------------------------------------
Robert H. Yevich

* Director September 29, 1998
- ---------------------------------------------------
Gregory N. Thomas

* Director September 29, 1998
- ---------------------------------------------------
David P. Prokupek

* Director September 29, 1998
- ---------------------------------------------------
Hugh R. Harris
</TABLE>

*By: /s/ JOHN H. GOLDSMITH

------------------------------

Attorney-In-Fact

II-6
<PAGE> 98

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS
NO. DESCRIPTION OF DOCUMENTS PAGE
- -------- ------------------------ ----
<C> <S> <C>
+3.1 Restated Certificate of Incorporation of the Registrant
+3.2 Bylaws of the Registrant to be effective prior to
effectiveness of the Registration Statement
5.1 Form of Opinion of Hutchins, Wheeler & Dittmar, A
Professional Corporation
+10.1 Contribution Agreement by and among the Registrant, Hancock,
THL and SCP, dated as of October 4, 1996
+10.2 Stockholders Agreement by and among the Registrant and the
persons listed on the signature pages thereof as the Initial
Investors, SCP Initial Investor, Employee Investors and
Seller Initial Investor dated as of November 30, 1996
+10.3 Revolving Credit Agreement by and among the Registrant and
The First National Bank of Boston, as agent for the lenders
listed on Schedule 1 thereto, dated as of November 29, 1996
+10.4 Additional Share Agreement by and between the Registrant and
Hancock, dated as of November 29, 1996
+10.5 Tax Matters Agreement by and between the Registrant and
Hancock, dated as of November 29, 1996
+10.6 Contribution and Indemnity Agreement by and between the
Registrant and John H. Goldsmith, dated as of November 29,
1996
+10.7 Management Agreement by and between the Registrant and THL,
dated as of November 29, 1996
+10.8 Management Agreement by and between the Registrant and SCP,
dated as of November 29, 1996
+10.9 1996 Stock Option Plan
+10.10 Employment Agreement by and between the Registrant and John
H. Goldsmith, dated as of November 29, 1996
+10.11 Employment Agreement by and between the Registrant and
Gregory N. Thomas, dated as of December 3, 1997
+10.12 Letter Agreement by and between the Registrant and William
C. Dennis, Jr., dated as of April 2, 1997
+10.13 Agreement, by and among Prudential Securities Incorporated,
John Hancock Clearing Corporation, Tucker Anthony
Incorporated and Sutro & Co. Incorporated
+10.14 Form of TAMP Incentive Plan Limited Partnership Limited
Partnership Agreement, dated as of July 1, 1989
+10.15 Form of TAMP II Incentive Plan Limited Partnership Limited
Partnership Agreement, dated as of February 28, 1995
+10.16 Form of TAMM II Incentive Plan Limited Partnership Limited
Partnership Agreement, dated April 8, 1984
+10.17 Form of Sutro Venture Partners I, L.P. Limited Partnership
Agreement, dated as of March 21, 1996
+10.18 Form of Sutro Venture Partners II, L.P. Limited Partnership
Agreement, dated as of March 21, 1996
+10.19 Form of Operating Agreement for Sutro Investment Partners
IV, LLC dated as of June 30, 1997
+10.20 Agreement and Plan of Merger, by and among the Registrant,
CGRM Merger Corp. and Cleary Gull Reiland & McDevitt Inc.,
dated March 9, 1998.
+10.21 Cleary Gull Registration Rights Agreement
+10.22 Chattel Leasing Security Agreement by and between T.A.
Leasing, Inc. and BancBoston Leasing, Inc., dated November
29, 1996.
</TABLE>

<PAGE> 99

EXHIBITS
NO. DESCRIPTION OF DOCUMENTS PAGE
- -------- ------------------------ ----

+10.23 Amended and Restated Chattel Leasing Promissory Note, by and
between T.A. Leasing, Inc. and BancBoston Leasing, Inc.,
dated February 28, 1997.

+10.24 Chattel Leasing Security Agreement by and between Sutro
Leasing Inc. and BancBoston Leasing, Inc., dated February
28, 1997.

+10.25 Chattel Leasing Promissory Note by and between Sutro Leasing
Inc. and BancBoston Leasing, Inc., dated February 28, 1997.

+10.26 1998 Long Term Incentive Plan.

+10.27 1998 Executive Performance Bonus Plan.

+10.28 Amendment No. 1 to the Stockholders Agreement dated January
30, 1998.

+10.29 Form of Amendment No. 2 to the Stockholders Agreement.

+10.30 Form of Amendment No. 3 to the Stockholders Agreement.

10.31 David P. Prokupek Employment Agreement.

10.32 Revolving Credit Agreement, by and among the Registrant,
BankBoston, N.A., and the other banks party thereto, dated
as of August 21, 1998.

10.33 John F. Luikert Employment Agreement

10.34 Kevin J. McKay Employment Agreement

+21.1 Subsidiaries of the Registrant

23.1 Consent of Ernst & Young LLP

+23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1)

+27.1 Financial Data Schedule

- ---------------

+ Previously filed with the Commission on Form S-1 (File No. 333-44938).

Schedules and exhibits to certain exhibits to this Registration Statement
have been omitted, which schedules shall be furnished to the Commission upon
request.

<PAGE> 1
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of this 9th day of
March, 1998 is entered into between Freedom Securities Corporation, a Delaware
corporation with its principal place of business at One Beacon Street, Boston,
Massachusetts (the "Company"), and David P. Prokupek ("the Executive").

The Executive is currently an employee of Cleary Gull Reiland & McDevitt
Inc. ("CGRM"). As of the date hereof, the Company will acquire by merger (the
"Merger") all of the outstanding capital stock of CGRM pursuant to a certain
Agreement and Plan of Merger by and among the Company, CGRM Merger Corp. and
CGRM dated as of the date hereof (the "Merger Agreement"), and in connection
with such acquisition, the Company desires to employ the Executive on the terms
provided herein.

In consideration of the mutual covenants and promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, the parties agree as follows:

1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to serve the Company, upon the terms set forth
in this Agreement, for the period commencing on the effective date of the Merger
and ending on the third anniversary of such effective date (the "Expiration
Date"), unless extended or sooner terminated in accordance with the provisions
of this Agreement. In the event that the Merger is abandoned, this Agreement
shall be void and of no force or effect.

2. POSITION AND PERFORMANCE.

2.1 OFFICE. The Executive shall serve as the President and Chief
Executive Officer of CGRM.

2.2 PERFORMANCE. During the term hereof, the Executive shall be
employed by CGRM on a full-time basis and shall perform and discharge
(faithfully, diligently and to the best of his ability) his duties and
responsibilities hereunder and shall be accountable to CGRM's Board of
Directors; PROVIDED, HOWEVER, that Executive may pursue community and charitable
activities and hold positions in connection therewith, serve on Boards of
Directors of for-profit companies provided such service does not materially
interfere with the performance of the Executive's duties hereunder and such
other activities as may be approved in advance by CGRM's Board of Directors,
such approval not to be unreasonably withheld.

3. COMPENSATION AND BENEFITS.

3.1 SALARY. During the term hereof, CGRM shall pay the Executive an
annual base salary of not less than $350,000, or such other amount as the
Executive and CGRM's Board of Directors may agree upon from time to time and the
Executive shall participate in the 1998 Cleary Gull Partners Profit Sharing
Bonus and Deferred Compensation Plan and the 1998 Cleary

<PAGE> 2

Gull Reiland & McDevitt Inc. Bonus Plan (collectively, the "Cleary Gull Bonus
Plans"). The Executive's base salary shall be payable in accordance with the
payroll practices of the Company. In addition, the Employee shall be entitled to
receive other bonus compensation, if any, in such amount or pursuant to such
formula as the Executive and CGRM's Board of Directors may agree upon from time
to time. Notwithstanding the foregoing, during the term of this Agreement, the
Employee shall be entitled to receive minimum cash compensation under this
Agreement, whether as salary, bonus or otherwise in any calendar year of at
least $700,000, less such amounts or deductions required to be withheld by
applicable law. For purposes of the Cleary Gull Bonus Plans, the Executive's
minimum total guaranteed cash compensation shall be allocated as follows: (a)
$375,000 shall be charged against CGRM's Banking Department and (b) $325,000
shall be charged against Corporate/Administration.

3.2 OTHER FRINGE BENEFITS. The Executive shall be entitled to
participate in all benefit programs (including, without limitation, all life and
disability insurance, health and accident plans, retirement plans, stock
incentive plans, and retention plans and other arrangements) (collectively,
"Benefits") that the Company or CGRM (or its subsidiaries) makes available to
employees or key executives at a level consistent with the Executive's position
with CGRM.

3.3 REIMBURSEMENT OF EXPENSES. CGRM shall promptly reimburse the
Executive for reasonable travel, entertainment and other expenses incurred or
paid by the Executive in connection with, or related to, the performance of the
Executive's duties, responsibilities or services under this Agreement and
incurred or paid consistent with past practices, upon presentation by the
Executive of documentation, expense statements, vouchers and/or such other
supporting information as CGRM may request, PROVIDED, HOWEVER, that the amount
available for such travel, entertainment and other expenses may be fixed in
advance by CGRM's Board of Directors.

4. EMPLOYMENT TERMINATION.

4.1 DATE OF TERMINATION; TERM OF EMPLOYMENT. The term "Date of
Termination" shall mean the earlier of (i) the Expiration Date or (ii) if the
Executive's employment is sooner terminated hereunder, the date on which such
termination is to be effective pursuant to the terms hereof. For all purposes of
this Agreement, references to the "term" of the Executive's employment hereunder
shall mean the period commencing on the date hereof and ending on the Date of
Termination.

4.2 UPON DEATH OR DISABILITY. This Agreement shall terminate on the
date of the death or disability of the Executive. As used in this Agreement, the
term "disability" shall mean the inability of the Executive, due to a physical
or mental disability, for a period of 180 consecutive days to perform the
essential functions of the Executive's position which are contemplated under
this Agreement. A determination of disability shall be made by a physician
satisfactory to both the Executive and the Company, PROVIDED THAT if the
Executive and the

<PAGE> 3

Company do not agree on a physician, the Executive and the Company shall each
select a physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties. The reasonable
fees and expenses of any and all such physicians shall be borne by the Company.

4.3 BY THE COMPANY FOR CAUSE. This Agreement may be terminated by
the Company for cause immediately upon written notice by the Company to the
Executive setting forth the basis for such termination. For the purposes of this
Section 4.3, "cause" for termination shall mean (i) a material failure of the
Executive to use his best efforts to perform the Executive's assigned duties
(which are consistent with the position set forth in Section 2.1) for the
Company or gross negligence or willful misconduct of the Executive in the
performance of the Executive's assigned duties for the Company or any breach of
any covenant contained in Section 6 or 7 hereof, in each case after notice and a
reasonable opportunity to cure (if such act or failure shall be susceptible to
cure) of not less than 30 days, and (ii) the indictment or conviction of the
Executive of, or the entry of a pleading of guilty or nolo contendere by the
Executive to, any crime involving moral turpitude or any felony.

4.4 BY THE EXECUTIVE FOR GOOD REASON. This Agreement may be
terminated by the Executive upon 30 days' prior written notice to the Company
for good reason. For purposes of this Section 4.4, "good reason" shall mean (i)
any removal by the Company of the Executive from any of the positions indicated
in Section 2.1 hereof, except in connection with termination of the Executive's
employment for cause or termination or suspension of employment due to the
Executive's incapacity or disability, (ii) a reduction in the Executive's
compensation below the minimum amount provided for in Section 3.1 hereof or
Benefits (except to the extent that any such reduction is the result of a change
to or termination of a compensation plan or benefit program in which the
Executive participates which applies equally to all other participants therein),
(iii) the relocation of the Executive's principal place of business to another
city without the Executive's consent to such relocation or (iv) any material
breach by the Company of its obligations under this Agreement or the Merger
Agreement or any other willful action by the Company that is materially
inconsistent with the terms of this Agreement after written notice and a
reasonable opportunity to cure, if such breach is susceptible to cure, of not
less than 30 days.

4.5 AT THE ELECTION OF EITHER PARTY. This Agreement may be
terminated by either the Company or the Executive at any time upon at least 30
days' prior written notice.

5. EFFECT OF TERMINATION.

5.1 TERMINATION BY THE COMPANY FOR CAUSE OR TERMINATION BY EXECUTIVE
PURSUANT TO SECTION 4.5. In the event that the Executive's employment is
terminated for cause pursuant to section 4.3 or the Executive shall terminate
this Agreement pursuant to Section 4.5, the Company shall pay to the Executive
salary, bonus and other cash compensation at his then current rate of pay and
Benefits through the Date of Termination.

<PAGE> 4

5.2 TERMINATION BY THE COMPANY WITHOUT CAUSE OR TERMINATION BY THE
EXECUTIVE PURSUANT TO SECTION 4.4. In the event that the Executive's employment
is terminated by the Company pursuant to Section 4.5 or the Executive terminates
his employment pursuant to Section 4.4, the Company shall pay to the Executive
an amount equal to the average of the total cash compensation (as reflected on
the Executive's W-2 Form) for each of the past three years (or, if less, the
number of full calendar years the Executive has been employed by the Company) in
equal monthly installments through the end of the twelve (12) months following
such Date of Termination.

5.3 TERMINATION FOR DEATH OR DISABILITY. If the Executive's
employment is terminated by death or because of disability pursuant to Section
4.2, the Company shall pay to the estate of the Executive or to the Executive,
as the case may be, salary, bonus and other cash compensation at his then
current rate of pay and Benefits up to the end of the month in which the
termination of the Executive's employment because of death or disability occurs.
In addition, the Executive shall be entitled to receive any compensation and
benefits payable under any bonus, profit sharing, retirement, welfare plan or
agreement then in effect and in which the Executive participates.

5.4 LIQUIDATED DAMAGES. Any payments paid to the Executive by the
Company under this Section 5 shall be deemed liquidated damages and shall be in
lieu of any other rights to which the Executive may be entitled.

5.5 SURVIVAL. The provisions of Sections 5, 6 and 7 shall survive
the termination of this Agreement.

6. NON-SOLICIT.

(a) During the Non-solicit Period, the Executive will not:

(i) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the brokerage or
investment banking clients, customers or accounts of the Company or
its subsidiaries with whom the Executive has had contact during the
term of his employment with CGRM or during the Non-solicit Period.

(ii) solicit any officer, senior manager or senior broker who
was an employee of the Company or its subsidiaries at any time during
the term of this Agreement to leave such employment.

(b) For purposes of this Section 6, the term "Non-solicit Period"
shall mean the period commencing on the date hereof and ending three years after
the date of this Agreement.

(c) If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or

<PAGE> 5

over too great a range of activities or in too broad a geographic area, it shall
be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.

(d) The restrictions contained in this Section 6 are necessary for
the protection of the business and goodwill of the Company and its affiliates
and are considered by the Executive to be reasonable for such purpose. The
Executive agrees that any breach of this Section 6 could cause the Company and
its affiliates substantial and irrevocable damage and therefore, in the event of
any such breach, in addition to such other remedies which may be available, the
Company and its affiliates shall have the right to seek specific performance and
injunctive relief.

7. UNAUTHORIZED DISCLOSURE OF CONFIDENTIAL INFORMATION.

(a) CONFIDENTIALITY. The Executive acknowledges that the Company,
its subsidiaries and its affiliates continually develop Confidential
Information, that the Executive may develop Confidential Information for the
Company or its affiliates and that the Executive may learn of Confidential
Information during the course of his employment. The Executive will comply with
the policies and procedures of the Company for protecting Confidential
Information and, for the term hereof and thereafter, will not disclose to any
person (except as required by any statutory or regulatory requirement or
mandatory court order, subpoena or other legal process, and except to any person
required for the proper performance of his duties and responsibilities to the
Company and its affiliates), or use for his own benefit or gain or otherwise use
in a manner adverse to the interests of the Company and its affiliates, any
Confidential Information obtained by the Executive incident to his employment or
other association with the Company or any of its affiliates.

(b) RETURN OF DOCUMENTS. All documents, records, tapes and other
media of every kind and description relating to the business, present or
otherwise, of the Company, its subsidiaries or its affiliates and any copies, in
whole or in part, thereof that contains Confidential Information (the
"Documents"), whether or not prepared by the Executive, shall be the sole and
exclusive property of the Company and its affiliates. The Executive shall
safeguard all Documents and shall surrender to the Company at the time his
employment terminates, or at such earlier time or times as the Board of
Directors or its designee may specify, all Documents then in the Executive's
possession or control.

(c) ASSIGNMENT OF RIGHTS TO INTELLECTUAL PROPERTY. The Executive
shall promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns to the Company (or as otherwise directed by the
Company) the Executive's full right, title and interest in and to all
Intellectual Property now owned or hereafter acquired herein. The Executive
agrees to execute any and all applications for domestic and foreign patents,
copyrights or other proprietary rights and to do such other acts (including
without limitation the execution and delivery of instruments of further
assurance or confirmation) requested by the Company to assign the Intellectual
Property to the Company and to permit the Company to enforce any patents,
copyrights or other proprietary rights to the Intellectual Property. The
Executive will not

<PAGE> 6

charge the Company for time spent in complying with these obligations. All
copyrightable works that the Executive creates shall be considered "work made
for hire".

(d) DEFINED TERMS. "Confidential Information" as used herein means
any and all information of the Company and its subsidiaries that is not
generally known by others with whom they compete or do business, or with whom
they plan to compete or do business and any and all information, not publicly
known, which, if disclosed, would assist in competition against the Company and
its subsidiaries, or the disclosure of which would otherwise be adverse to the
interests of the Company or any of its subsidiaries. Confidential Information
also includes comparable information that the Company or any of its subsidiaries
have received belonging to others or which was received by the Company or any of
its subsidiaries with any understanding that it would not be disclosed;
PROVIDED, HOWEVER, that Confidential Information shall not include anything (i)
that has been disclosed to the public (other than in connection with a breach by
the Executive of his obligations hereunder), (ii) that has been obtained by the
Executive from a third party otherwise than in violation of a confidentiality
agreement to which such third party is bound, or (iii) that has otherwise
lawfully entered the public domain. "Intellectual Property" as used herein means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) relating to the business of the Company, its Subsidiaries and its
affiliates conceived, made, created, developed or reduced to practice by the
Executive (whether alone or with others, whether or not during normal business
hours or on or off Company premises) during the Executive's employment.

8. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States mail, by registered or certified mail, postage
prepaid, or via a reputable nationwide overnight courier service addressed to
the other party at such address or addresses as either party shall designate to
the other in accordance with this Section 8.

9. INDEMNITY. The Company hereby agrees, to the maximum extent permitted
from time to time under the law of the State of Delaware, to indemnify the
Executive, and upon request shall advance expenses to the Executive if he shall
become a party or is threatened to be made a party to, any threatened, pending
or completed action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to be a director, officer or agent of the Company or any subsidiary
thereof or hold any of such offices, against expenses (including attorneys' fees
and expenses), judgments, fines, penalties and amounts paid in settlement
incurred in connection with the investigation, preparation to defend or defense
of such action, suit, proceeding or claim; PROVIDED, HOWEVER, that the foregoing
shall not require the Company to indemnify the Executive against, or advance
expenses to the Executive in connection with, any action, suit, proceeding or
claim resulting from any breach of the Executive's duties hereunder that would
permit the Company to terminate this Agreement for cause. Such indemnification
shall not be exclusive of other indemnification rights arising under any by-law,
agreement, vote of directors or stockholders or otherwise.

<PAGE> 7

10. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.

11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.

12. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by each of the Company and the Executive.

13. REMEDIES. Any claim or controversy arising out of or relating to this
Agreement, or the interpretation thereof, or the employment or termination of
employment of the Executive shall be settled by arbitration under the then
prevailing Constitution and Rules of the New York Stock Exchange, Inc. or the
National Association of Securities Dealers, Inc. as the initial complaint may
elect. Judgment based upon the decision of the arbitrators may be entered in any
court having jurisdiction thereof.

14. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Wisconsin.

15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefits of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business, provided, however, that the
obligations of the Executive are personal and shall not be assigned by him.

16. MISCELLANEOUS.

16.1 No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.

16.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.

16.3 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.

FREEDOM SECURITIES CORPORATION

<PAGE> 8

By: /s/ John H. Goldsmith
------------------------------
Name: John H. Goldsmith
Title:

EXECUTIVE:

/s/ David P. Prokupek
------------------------------
Name: David P. Prokupek

<PAGE> 1

- --------------------------------------------------------------------------------

REVOLVING CREDIT AGREEMENT

DATED as of August 21, 1998

among

FREEDOM SECURITIES CORPORATION,

BANKBOSTON, N.A., AND THE OTHER LENDING
INSTITUTIONS LISTED ON SCHEDULE 1 ATTACHED HERETO,

BANKBOSTON, N.A., AS ADMINISTRATIVE AND DOCUMENTATION AGENT,

and

THE BANK OF NEW YORK, AS SYNDICATION AGENT

- --------------------------------------------------------------------------------
<PAGE> 2

TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION..................................... 1
1.1. Definitions. .................................................... 1
1.2. Rules of Interpretation. ........................................ 16
2. THE REVOLVING CREDIT FACILITY. ............................................ 18
2.1. Commitment to Lend. ............................................. 18
2.2. Commitment Fee. ................................................. 18
2.3. Reduction of Total Commitment. .................................. 18
2.3.1. Mandatory Reduction. ................................... 18
2.3.2. Optional Reduction. .................................... 19
2.4. The Revolving Credit Notes. ..................................... 19
2.5. Interest on Revolving Credit Loans. ............................. 19
2.6. Requests for Revolving Credit Loans. ............................ 20
2.7. Conversion Options. ............................................. 20
2.7.1. Conversion to Different Type of Revolving Credit
Loan. .................................................. 20
2.7.2. Continuation of Type of Revolving Credit Loan. ......... 21
2.7.3. Eurodollar Rate Loans. ................................. 21
2.8. Funds for Revolving Credit Loans. ............................... 21
2.8.1. Funding Procedures. .................................... 21
2.8.2. Advances by Agent. ..................................... 22
3. REPAYMENT OF THE REVOLVING CREDIT LOANS. .................................. 22
3.1. Maturity. ....................................................... 22
3.2. Mandatory Repayments of Revolving Credit Loans. ................. 23
3.3. Optional Repayments of Revolving Credit Loans. .................. 23
4. CERTAIN GENERAL PROVISIONS. ............................................... 23
4.1. Syndication Fee................................................... 23
4.2. Agent's Fee. .................................................... 23
4.3. Funds for Payments. ............................................. 23
4.3.1. Payments to Agent. ..................................... 23
4.3.2. No Offset, etc. ........................................ 24
4.4. Computations. ................................................... 24
4.5. Inability to Determine Eurodollar Rate. ......................... 24
4.6. Illegality. ..................................................... 25
4.7. Additional Costs, etc. .......................................... 25
4.8. Capital Adequacy. ............................................... 26
4.9. Certificate. .................................................... 27
4.10. Indemnity. ..................................................... 27
4.11. Interest After Default. ........................................ 28
4.11.1. Overdue Amounts. ...................................... 28
4.11.2. Amounts Not Overdue. .................................. 28
5. GUARANTIES. ............................................................... 28
6. REPRESENTATIONS AND WARRANTIES. ........................................... 28
6.1. Corporate Authority. ............................................ 28
6.1.1. Incorporation; Good Standing. .......................... 28
6.1.2. Authorization. ......................................... 28
6.1.3. Enforceability. ........................................ 29

</TABLE>
<PAGE> 3
-ii-

<TABLE>
<S> <C> <C>
6.2. Capitalization; Subsidiaries, Etc. .............................. 29
6.2.1. Capitalization. ........................................ 29
6.2.2. Subsidiaries. .......................................... 29
6.3. Governmental Approvals. ......................................... 29
6.4. Title to Properties; Leases. .................................... 30
6.5. Financial Statements. ........................................... 30
6.5.1. Fiscal Year. ........................................... 30
6.5.2. Financial Statements. .................................. 30
6.5.3. Solvency. .............................................. 30
6.6. No Material Changes, etc. ....................................... 30
6.7. Franchises, Patents, Copyrights, etc. ........................... 31
6.8. Litigation. ..................................................... 31
6.9. No Materially Adverse Contracts, etc. ........................... 31
6.10. Compliance with Other Instruments, Laws, etc. .................. 31
6.11. Tax Status. .................................................... 32
6.12. No Event of Default. ........................................... 32
6.13. Absence of Financing Statements, etc. .......................... 32
6.14. Certain Transactions. .......................................... 32
6.15. Employee Benefit Plans. ........................................ 32
6.15.1. In General. ........................................... 32
6.15.2. Terminability of Welfare Plans. ....................... 33
6.15.3. Guaranteed Pension Plans. ............................. 33
6.15.4. Multiemployer Plans. .................................. 33
6.16. Use of Proceeds. ............................................... 34
6.16.1. General. .............................................. 34
6.16.2. Regulations U and X. .................................. 34
6.16.3. Ineligible Securities. ................................ 34
6.17. Environmental Compliance. ...................................... 34
6.18. Broker-Dealer Subsidiaries ..................................... 36
6.19. Advisory Subsidiaries .......................................... 36
6.20. Investment Fund Clients ........................................ 37
6.21. Holding Company and Investment Company Acts .................... 37
6.22. Disclosure. .................................................... 38
6.23. Capitalization Documents. ...................................... 38
6.24. Chief Executive Office. ........................................ 38
7. AFFIRMATIVE COVENANTS OF THE BORROWER. .................................... 38
7.1. Punctual Payment. ............................................... 38
7.2. Maintenance of Office. .......................................... 38
7.3. Records and Accounts. ........................................... 38
7.4. Financial Statements, Certificates and Information. ............. 39
7.5. Notices. ........................................................ 40
7.5.1. Defaults. .............................................. 40
7.5.2. Environmental Events. .................................. 40
7.5.3. Notice of Litigation and Judgments. .................... 41
7.6. Corporate Existence; Maintenance of Properties. ................. 41
7.7. Insurance. ...................................................... 41
7.8. Taxes. .......................................................... 42
7.9. Inspection of Properties and Books, etc. ........................ 42
7.9.1. General. ............................................... 42

</TABLE>
<PAGE> 4
-iii-
<TABLE>
<S> <C> <C>
7.9.2. Communications with Accountants. ....................... 42
7.10. Compliance with Laws, Contracts, Licenses, and Permits. ........ 43
7.11. Employee Benefit Plans. ........................................ 44
7.12. Use of Proceeds. ............................................... 44
7.13. Additional Subsidiaries. ....................................... 44
7.14. Guarantors. .................................................... 44
7.14.1. Subsidiaries Other Than Broker-Dealer Subsidiaries. ... 44
7.14.2. Broker-Dealer Subsidiaries. ........................... 44
7.15. Year 2000 Problem. ............................................. 45
7.16. Further Assurances. ............................................ 45
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. ............................... 45
8.1. Restrictions on Indebtedness. ................................... 45
8.2. Restrictions on Liens. .......................................... 45
8.3. Restrictions on Investments. .................................... 47
8.4. Restricted Payments. ............................................ 48
8.5. Merger, Consolidation and Disposition of Assets. ................ 48
8.5.1. Mergers and Acquisitions. .............................. 48
8.5.2. Disposition of Assets. ................................. 48
8.6. Sale and Leaseback. ............................................. 49
8.7. Compliance with Environmental Laws. ............................. 49
8.8. Employee Benefit Plans. ......................................... 49
8.9. Business Activities. ............................................ 50
8.10. Change in Terms of Equity Securities; Issuance of Equity
Securities by Subsidiaries. .................................... 50
8.11. Fiscal Year. ................................................... 50
8.12. Transactions with Affiliates. .................................. 50
8.13. Inconsistent Agreements. ....................................... 50
9. FINANCIAL COVENANTS OF THE BORROWER. ...................................... 51
9.1. Funded Debt to Consolidated Net Worth. .......................... 51
9.2. Net Worth. ...................................................... 51
10. CLOSING CONDITIONS. ...................................................... 51
10.1. Loan Documents. ................................................ 51
10.2. Certified Copies of Charter Documents. ......................... 51
10.3. Corporate Action. .............................................. 51
10.4. Incumbency Certificate. ........................................ 51
10.5. UCC Search Results. ............................................ 52
10.6. Certificates of Insurance. ..................................... 52
10.7. Solvency Certificate. .......................................... 52
10.8. Opinions of Counsel. ........................................... 52
10.9. Payment of Fees. ............................................... 52
10.10. Financial Statements and Focus Reports. ....................... 52
10.11. Federal Reserve Forms U-1. .................................... 52
10.12. Representations and Warranties. ............................... 52
10.13. Proceedings and Documents. .................................... 52
10.14. UCC Terminations. ............................................. 53
11. CONDITIONS TO ALL BORROWINGS. ............................................ 53
11.1. Representations True; No Event of Default. ..................... 53

</TABLE>

<PAGE> 5
-iv-

11.2. No Legal Impediment. ........................................... 53
11.3. Governmental Regulation. ....................................... 53
11.4. Proceedings and Documents. ..................................... 53
12. EVENTS OF DEFAULT; ACCELERATION; ETC. .................................... 54
12.1. Events of Default and Acceleration. ............................ 54
12.2. Termination of Commitments. .................................... 57
12.3. Remedies. ...................................................... 57
13. SETOFF. .................................................................. 58
14. THE AGENT. ............................................................... 58
14.1. Authorization. ................................................. 58
14.2. Employees and Agents. .......................................... 59
14.3. No Liability. .................................................. 59
14.4. No Representations. ............................................ 59
14.4.1. General. .............................................. 59
14.4.2. Closing Documentation, etc. ........................... 60
14.5. Payments. ...................................................... 60
14.5.1. Payments to Agent. .................................... 60
14.5.2. Distribution by Agent. ................................ 60
14.5.3. Delinquent Banks. ..................................... 61
14.6. Holders of Notes. .............................................. 61
14.7. Indemnity. ..................................................... 61
14.8. Agent as Bank. ................................................. 62
14.9. Resignation. ................................................... 62
14.10. Notification of Defaults and Events of Default. ............... 62

15. EXPENSES ................................................................. 62
16. INDEMNIFICATION .......................................................... 63
17. SURVIVAL OF COVENANTS, ETC. .............................................. 63
18. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. ........................... 64
18.1. Sharing of Information with Section 20 Subsidiary. ............. 64
18.2. Confidentiality. ............................................... 64
18.3. Prior Notification. ............................................ 65
18.4. Other. ......................................................... 65
19. ASSIGNMENT AND PARTICIPATION. ............................................ 65
19.1. Conditions to Assignment by Banks. ............................. 65
19.2. Certain Representations and Warranties; Limitations; Covenants... 66
19.3. Register. ...................................................... 67
19.4. New Notes. ..................................................... 67
19.5. Participations. ................................................ 68
19.6. Disclosure. .................................................... 68
19.7. Assignee or Participant Affiliated with the Borrower. .......... 68
19.8. Miscellaneous Assignment Provisions. ........................... 69
19.9. Assignment by Borrower. ........................................ 69
20. NOTICES, ETC. ............................................................ 69
21. GOVERNING LAW. ........................................................... 70
22. HEADINGS. ................................................................ 70
23. COUNTERPARTS. ............................................................ 70
24. ENTIRE AGREEMENT, ETC. ................................................... 71
25. WAIVER OF JURY TRIAL. .................................................... 71

</TABLE>

<PAGE> 6

-v-
<TABLE>
<S> <C> <C>
26. CONSENTS, AMENDMENTS, WAIVERS, ETC. ...................................... 71
27. SEVERABILITY. ............................................................ 72

</TABLE>

<PAGE> 7

REVOLVING CREDIT AGREEMENT

This REVOLVING CREDIT AGREEMENT is made as of August 21, 1998, by and
among FREEDOM SECURITIES CORPORATION (formerly known as JHFSC Acquisition Corp.)
(the "Borrower"), a Delaware corporation, and BANKBOSTON, N.A. and the other
lending institutions listed on SCHEDULE 1, BANKBOSTON, N.A., as administrative
and documentation agent for itself and such other lending institutions, and THE
BANK OF NEW YORK as syndication agent for itself and such other lending
institutions.

1. DEFINITIONS AND RULES OF INTERPRETATION.

1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:

ACTIVE SUBSIDIARIES. The Advisory Subsidiaries, the Broker-Dealer
Subsidiaries and all other Subsidiaries of the Borrower that are not Inactive
Subsidiaries.

ADJUSTMENT DATE. The first day of the month immediately following the
month in which a Compliance Certificate is to be delivered by the Borrower
pursuant to ss.7.4(c) hereof.

ADVISERS ACT. The Investment Advisers Act of 1940 (or any successor
statute) and the rules and regulations thereunder, all as from time to time in
effect.

ADVISORY AGREEMENTS. The binding written contractual agreements under
which the Borrower or any of its Subsidiaries provides investment advisory
services.

ADVISORY SUBSIDIARIES. Those Subsidiaries of the Borrower that provide
investment advisory services.

AFFILIATE. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.

AGENT'S FEE LETTER. The fee letter dated on or prior to the Closing Date
between the Borrower and the Agent, as the same may be amended, modified or
supplemented from time to time.

<PAGE> 8
-2-

AGENT'S HEAD OFFICE. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.

AGENT. BankBoston, N.A. (formerly known as The First National Bank of
Boston) acting as administrative and documentation agent for the Banks.

AGENT'S SPECIAL COUNSEL. Bingham Dana LLP or such other counsel as may
be approved by the Agent.

APPLICABLE MARGIN. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Borrower's Leverage Ratio, as determined for the
period ending on the fiscal quarter ended immediately preceding the applicable
Rate Adjustment Period.

- --------------------------------------------------------------------------------
APPLICABLE APPLICABLE APPLICABLE
MARGIN FOR BASE MARGIN FOR MARGIN FOR
RATE LOANS EURODOLLAR FEDERAL FUNDS COMMITMENT
TIER LEVERAGE LOANS RATE LOANS RATE FEE RATE
RATIO
- --------------------------------------------------------------------------------
Greater
1 than or 0.00% 0.75% 0.75% 0.15%
equal to
0.25:1.00
- --------------------------------------------------------------------------------
Less than
2 0.25:1.00 0.00% 0.625% 0.625% 0.15%
but
greater
than or
equal to
0.15:1.00
- --------------------------------------------------------------------------------
3 Less than 0.00% 0.50% 0.50% 0.15%
0.15:1.00
- --------------------------------------------------------------------------------

Notwithstanding the foregoing, (a) for Revolving Credit Loans
outstanding and the Commitment Fee Rate during the period commencing on the
Closing Date through the date immediately preceding the first Adjustment Date to
occur after the fiscal quarter ending September 30, 1998, the Applicable Margin
shall be set at Tier 3, and (b) if the Borrower fails to deliver any Compliance
Certificate pursuant to ss.7.4(c) hereof then, for the period commencing on the
next Adjustment Date to occur subsequent to such failure through the date
immediately following the date on which such Compliance Certificate is
delivered, the Applicable Margin shall be the highest Applicable Margin set
forth above.

ASSET SALE. Any one or series of related transactions in which any
applicable Person conveys, sells, transfers or otherwise disposes of, directly

<PAGE> 9
-3-

or indirectly, any of its properties, business or assets (including the sale or
issuance of capital stock of a Subsidiary), whether owned on the Closing Date or
thereafter acquired.

ASSET SALE TRIGGER. Any Asset Sale that constitutes five percent (5%) or
more of the Consolidated Total Assets of the Borrower and its Subsidiaries on
the first day of such fiscal year, other than sales by any Broker-Dealer
Subsidiary of Investments permitted by ss.8.3(g) hereof.

ASSIGNMENT AND ACCEPTANCE. See ss.19.1 hereof.

BALANCE SHEET DATE. December 31, 1997.

BANKS. BKB and the other lending institutions listed on SCHEDULE 1
hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to ss.19 hereof.

BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (b) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.

BASE RATE LOANS. Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.

BKB. BankBoston, N.A. (formerly known as The First National Bank of
Boston), a national banking association, in its individual capacity.

BORROWER. As defined in the preamble hereto.

BROKER-DEALER AGREEMENTS. See ss.6.18 hereof.

BROKER-DEALER SUBSIDIARIES. Those Subsidiaries of the Borrower that (a)
provide broker/dealer services, (b) act as a broker or dealer or (c) are
required to comply with net capital requirements under the Exchange Act.

BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts and New York, New York, are open for the transaction of banking
business and, in the case of Eurodollar Rate Loans, also a day which is a
Eurodollar Business Day.

<PAGE> 10
-4-

CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); PROVIDED that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.

CAPITALIZATION DOCUMENTS. Collectively, the Stockholders Agreement
(including the agreement, instruments and documents that are exhibits thereto)
and the articles of incorporation and by-laws of the Borrower and its Active
Subsidiaries.

CAPITALIZED LEASES. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.

CERCLA. See ss.6.17(a) hereof.

CLOSING DATE. The first date on which the conditions set forth in ss.10
hereof have been satisfied and any Revolving Credit Loans are to be made.

CODE. The Internal Revenue Code of 1986.

COMMITMENT. The agreement of each Bank, subject to the terms and
conditions of this Credit Agreement, to make Revolving Credit Loans to the
Borrower.

COMMITMENT AMOUNT. With respect to each Bank, the amount set forth on
SCHEDULE 1 attached hereto as the amount of such Bank's Commitment as the same
may be reduced from time to time in accordance with the terms hereof; or if such
Commitment is terminated pursuant to the provisions hereof, zero.

COMMITMENT FEE RATE. As referred to as such in the table contained in
the definition of "Applicable Margin".

COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set
forth on SCHEDULE 1 hereto as such Bank's percentage of the Total Commitment.

COMMODITIES ACT. The Commodities Exchange Act (or any successor
statute), the rules and regulations thereunder, the rules and regulations of the
Commodities Futures Trading Commission (or any successor), all as from time to
time in effect.

COMPLIANCE CERTIFICATE. See ss.7.4(c) hereof.

<PAGE> 11
-5-

CONSOLIDATED OR CONSOLIDATED. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.

CONSOLIDATED NET WORTH. The excess of Consolidated Total Assets over
Consolidated Total Liabilities, LESS, to the extent otherwise includable in the
computations of Consolidated Net Worth, any subscriptions receivable.

CONSOLIDATED REVENUE. For any period, the total revenues of the Borrower
and its Subsidiaries determined in accordance with generally accepted accounting
principles.

CONSOLIDATED TOTAL ASSETS. The sum of (a) all assets ("consolidated
balance sheet assets") of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles,
PLUS (b) without duplication, all assets leased by the Borrower or any
Subsidiary as lessee under any Synthetic Lease to the extent that such assets
would have been consolidated balance sheet assets had the synthetic lease been
treated for accounting purposes as a Capitalized Lease, PLUS (c) without
duplication, all sold receivables referred to in clause (g) of the definition of
the term "Indebtedness" to the extent that such receivables would have been
consolidated balance sheet assets had they not been sold.

CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and classified as such on the consolidated
balance sheet of the Borrower and its Subsidiaries and all other Indebtedness of
the Borrower and its Subsidiaries, whether or not so classified.

CONVERSION REQUEST. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Loan in accordance with ss.2.7
hereof.

CREDIT AGREEMENT. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.

DEFAULT. See ss.12.1 hereof.

DELINQUENT BANK. See ss.14.5.3 hereof.

DERIVATIVES. See paragraph (i) of the definition of Indebtedness
hereunder.

DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of

<PAGE> 12
-6-

capital stock of the Borrower, directly or indirectly through a Subsidiary of
the Borrower or otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in respect of any shares
of any class of capital stock of the Borrower.

DOLLARS or $. Dollars in lawful currency of the United States of
America.

DOMESTIC LENDING OFFICE. Initially, the office of each Bank designated
as such in SCHEDULE 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans and Federal Funds Rate Loans.

DRAWDOWN DATE. The date on which any Revolving Credit Loan is made or is
to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with ss.2.7 hereof.

ELIGIBLE ASSIGNEE. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, PROVIDED that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; and (e) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld.

EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained of contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.

EMPLOYEE GROUP. Collectively, as at any date of determination, the
employees of the Borrower and its Subsidiaries.

ENVIRONMENTAL LAWS. See ss.6.17(a) hereof.

EPA. See ss.6.17(b) hereof.

EQUITY ISSUANCE. The sale or issuance by the Borrower or any of its
Subsidiaries of any of its Equity Securities.

<PAGE> 13
-7-

EQUITY SECURITIES. With respect to any corporation, partnership, trust,
unincorporated association, joint venture, limited liability company, or other
legal or business entity, all equity securities of such entity, including any
(a) common or preferred stock, (b) limited or general partnership interests, (c)
options, warrants, or other legal rights to purchase or acquire any capital
stock or equity interests, or (d) securities convertible into any equity
securities.

ERISA. The Employee Retirement Income Security Act of 1974.

ERISA AFFILIATE. Any Person which is treated as a single employer with
the Borrower under ss.414 of the Code.

ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder.

EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.

EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.

EURODOLLAR LENDING OFFICE. Initially, the office of each Bank designated
as such in SCHEDULE 1 hereto; thereafter, such other office of such Bank, if
any, that shall be making or maintaining Eurodollar Rate Loans.

EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to (a) the arithmetic average of the rates
per annum for each Reference Bank (rounded upwards to the nearest 1/16 of one
percent) of the rate at which such Reference Bank's Eurodollar Lending Office is
offered Dollar deposits two (2) Eurodollar Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where the eurodollar
and foreign currency and exchange operations of such Eurodollar Lending Office
are customarily conducted, for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of the Eurodollar Rate Loan of such Reference Bank to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate, if applicable.

<PAGE> 14
-8-

EURODOLLAR RATE LOANS. Revolving Credit Loans bearing interest
calculated by reference to the Eurodollar Rate.

EVENT OF DEFAULT. See ss.12.1 hereof.

EXCHANGE ACT. The Securities Exchange Act of 1934 (or any successor
statute) and the rules and regulations thereunder, all as from time to time in
effect.

FEDERAL FUNDS RATE. As of any date of determination with respect to a
Federal Funds Rate Loan, for such date an interest rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by the
Agent in its sole discretion.

FEDERAL FUNDS RATE LOANS. Revolving Credit Loans bearing interest
calculated by reference to the Federal Funds Rate.

FOCUS REPORT. The Financial and Operational Combined Uniform Single
Report, in the form of EXHIBIT E attached hereto, used by a Broker-Dealer
Subsidiary to evidence compliance with applicable net capital requirements under
the Exchange Act, as such report and the defined terms used therein are in
effect on the date hereof.

FUND. With respect to any Trust that has more than one portfolio, the
individual portfolio for which the Borrower or any of its Subsidiaries provides
investment advisory services pursuant to an Advisory Contract.

FUND AGREEMENTS. As defined in ss.6.20 hereof.

FUNDED DEBT. All Indebtedness of the Borrower and its Subsidiaries for
borrowed money (including without limitation, and without duplication, all
guarantees by such Person of Indebtedness of others for borrowed money),
purchase money Indebtedness, and with respect to Capitalized Leases and
Synthetic Leases and Derivatives determined on a consolidated basis and in
accordance with generally accepted accounting principles; PROVIDED, HOWEVER,
that Funded Debt shall not include (a) Indebtedness of the Subsidiaries in
respect of securities repurchase agreements and (b) Indebtedness otherwise
included pertaining to the fixed asset financing arrangement between certain
Subsidiaries of the Borrower and BancBoston Leasing Inc. pursuant to those
certain Chattel Leasing Promissory Notes dated as of February 28, 1997 and in
the aggregate original principal amount of $25,818,941.00, or any refinancing or
extension thereof, so long as any refinancing does not increase the principal
amount thereof.

<PAGE> 15
-9-

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (a) When used in ss.9 hereof,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(ii) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (b) when used in general, other than as provided above,
means principles that are (i) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (ii) consistently applied with past financial
statements of the Borrower adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.

GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.

GUARANTOR. Each Subsidiary of the Borrower other than the Broker-Dealer
Subsidiaries existing on the Closing Date and each other Subsidiary of the
Borrower which is required to be or become a guarantor from time to time
pursuant to ss.7.14 hereof.

GUARANTY. The Guaranty, dated as of the date hereof, made by certain of
the Subsidiaries of the Borrower in favor of the Banks and Agent pursuant to
which such Subsidiaries guaranty to the Banks and the Agent the payment and
performance of the Obligations, substantially in the form of EXHIBIT F attached
hereto.

HAZARDOUS SUBSTANCES. See ss.6.17(b) hereof.

INACTIVE SUBSIDIARIES. Those Subsidiaries of the Borrower that carry on
insignificant business activities and whose revenue for the most recently ended
fiscal year of the Borrower, on a combined basis, constituted no more than 3% of
the Consolidated Revenue of the Borrower and its Subsidiaries for such fiscal
year.

INDEBTEDNESS. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:

(a) every obligation of such Person for money borrowed,

<PAGE> 16
-10-

(b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,

(c) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances, payment and performance bonds,
surety bonds, or similar facilities issued for the account of such
Person,

(d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),

(e) every obligation of such Person under any Capitalized Lease,

(f) every obligation of such Person under any lease (a "Synthetic
Lease") treated as an operating lease under generally accepted
accounting principles and as a loan or financing for U.S. income tax
purposes,

(g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (iii) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and not
as a financing arrangement, and together with any obligation of such
Person to pay any discount, interest, fees, indemnities, penalties,
recourse, expenses or other amounts in connection therewith,

(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value
any shares of capital stock of any class issued by such Person, any
warrants, options or other rights to acquire any such shares, or any
rights measured by the value of such shares, warrants, options or other
rights,

(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing or derivative
agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreements), the value of which is dependent upon
interest rates, currency exchange rates, commodities or other indices or
measures (collectively, "Derivatives"),

<PAGE> 17
-11-

(j) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness provide
that such Person is not liable therefor and such terms are enforceable
under applicable law,

(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (a) through (j) (the "primary obligation") of another Person
(the "primary obligor"), in any manner, whether directly or indirectly,
and including, without limitation, any obligation of such Person (i) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (ii) to purchase
property, securities or services for the purpose of assuring the payment
of such primary obligation, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such primary
obligation.

The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (v) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (w) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (x) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (y) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent amount and (z) any
equity related purchase obligation shall be the maximum fixed redemption or
purchase price thereof inclusive of any accrued and unpaid dividends to be
comprised in such redemption or purchase price.

INELIGIBLE SECURITIES. Securities which may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1993 (12 U.S.C. ss.24, Seventh), as amended.

INTEREST PAYMENT DATE. (a) as to any Base Rate Loan or Federal Funds
Rate Loan, the last day of the calendar quarter with respect to interest accrued
during such calendar quarter, including, without limitation, the calendar
quarter which includes the Drawdown Date of such Base Rate Loan or Federal Funds
Rate Loan, as the case may be, and (b) as to any Eurodollar Rate Loan in respect
of which the Interest Period is (i)

<PAGE> 18
-12-

three (3) months or less, the last day of such Interest Period, and (ii) more
than three (3) months, the date that is three (3) months from the first day of
such Interest Period and, in addition, the last day of such Interest Period.

INTEREST PERIOD. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Revolving Credit
Loan and ending on the last day of one of the periods set forth below, as
selected by the Borrower in a Loan Request or as otherwise required by the terms
of this Credit Agreement: (i) for any Base Rate Loan, the last day of the
calendar quarter; (ii) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months; and
(iii) for any Federal Funds Rate Loan, the last day of the calendar quarter, and
(b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Revolving Credit Loan and ending on the last
day of one of the periods set forth above, as selected by the Borrower in a
Conversion Request; PROVIDED that all of the foregoing provisions relating to
Interest Periods are subject to the following:

(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Eurodollar
Business Day;

(b) if any Interest Period with respect to a Base Rate Loan or
Federal Funds Rate Loan would end on a day that is not a Business Day,
that Interest Period shall end on the next succeeding Business Day;

(c) if the Borrower shall fail to give notice as provided in
ss.2.7 hereof, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan or Federal Funds Rate
Loan to a Base Rate Loan and the continuance of all Base Rate Loans as
Base Rate Loans on the last day of the then current Interest Period with
respect thereto;

(d) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Eurodollar Business Day of a calendar month; and

(e) any Interest Period that would otherwise extend beyond the
Revolving Credit Loan Maturity Date shall end on the Revolving Credit
Loan Maturity Date.

INVESTMENT COMPANY ACT. The Investment Company Act of 1940 (or any
successor statute) and the rules and regulations thereunder, all as from time to
time in effect.

<PAGE> 19

-13-

INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.

INVESTORS. Collectively, Lee, SCP and the Employee Group.

LEE. Collectively, Thomas H. Lee Equity Fund III, L.P., a Delaware
limited partnership, Thomas H. Lee Foreign Fund III, L.P., a Delaware limited
partnership, THL-CCI Limited Partnership and their respective Affiliates.

LEVERAGE RATIO. As at any date of determination, the ratio of (a) Funded
Debt of the Borrower and its Subsidiaries outstanding on such date to (b) the
Consolidated Net Worth of the Borrower and its Subsidiaries on such date.

LOAN DOCUMENTS. Collectively, this Credit Agreement, the Notes, the
Agent's Fee Letter, the Syndication Fee Letter, the Guaranty, and any and all
other documents and instruments required to be delivered pursuant to this Credit
Agreement, in each case as amended and in effect from time to time.

LOAN REQUEST. See ss.2.6 hereof.

MAJORITY BANKS. As of any date, the Banks holding at least fifty-one
percent (51%) of the outstanding principal amount of the Notes on such date; and
if no such principal is outstanding, the Banks whose aggregate Commitments
constitute at least fifty-one percent (51%) of the Total Commitment.

MATERIAL ADVERSE EFFECT. Any material adverse effect on (a) the
business, properties, condition (financial or otherwise) and operations of the
Borrower and its Subsidiaries on a consolidated basis; or (b) the legality,

<PAGE> 20
-14-

validity, binding effect or enforceability of this Credit Agreement or any of
the other Loan Documents.

MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.

NASD. The National Association of Securities Dealers, Inc. (or any
successor self-regulatory organization).

NET CASH PROCEEDS. With respect to any Equity Issuance, the excess of
the gross cash proceeds received by such Person from such Equity Issuance after
deduction of reasonable and customary transaction expenses (including without
limitation underwriting discounts and commissions) actually incurred with the
Equity Issuance.

NET CASH SALE PROCEEDS. The gross cash proceeds received by the Borrower
and any of its Subsidiaries in respect of any Asset Sale Trigger, less the sum
of (a) all reasonable out-of-pocket fees, commissions and other expenses
incurred in connection with such Asset Sale Trigger, including the amount
(estimated in good faith by such Person) of income, franchise, sales and other
applicable taxes required to be paid by such Person in connection with such
Asset Sale Trigger and (b) the aggregate amount of cash so received by such
Person which is used to retire (in whole or in part) any Indebtedness (other
than under the Loan Documents) of such Person permitted by this Credit Agreement
that was secured by a lien or security interest (if any) permitted by this
Credit Agreement having priority over the liens and security interests (if any)
of the Agent, for the benefit of the Banks, with respect to such assets
transferred, and which is required to be repaid in whole or in part (which
repayment, in the case of any other revolving credit arrangements or multiple
advance arrangements, reduces the commitments thereunder) in connection with
such Asset Sale Trigger.

NET PROCEEDS. Collectively, Net Cash Proceeds and Net Cash Sale
Proceeds.

NOTES. See ss.2.4 hereof.

OBLIGATIONS. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to any of the Banks and the Agent, individually or
collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Revolving Credit Loans made or any of the Notes or other instruments at any time
evidencing any thereof.

ORIGINAL CREDIT AGREEMENT. That certain Revolving Credit Agreement dated
as of November 29, 1996 by and among the Borrower, the lending

<PAGE> 21
-15-

institutions party thereto, the Agent and The Bank of New York as co-agent, as
the same has been amended to date.

OUTSTANDING. With respect to the Revolving Credit Loans, the aggregate
unpaid principal thereof as of any date of determination.

PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.

PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by ss.8.2 hereof.

PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.

RATE ADJUSTMENT PERIOD. See the definition of Applicable Margin.

RCRA. See ss.6.17(a).

REAL ESTATE. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.

RECORD. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any Bank
with respect to any Revolving Credit Loan referred to in such Note.

REFERENCE BANK. BKB.

RESTRICTED PAYMENT. In relation to the Borrower and its Subsidiaries,
any (a) Distribution or (b) payment or prepayment by the Borrower or its
Subsidiaries to any Investor or to any Affiliate of the Borrower, any Subsidiary
or any Investor; PROVIDED, HOWEVER, Restricted Payments shall not include any
payments among the Borrower and its Subsidiaries.

REVOLVING CREDIT LOAN MATURITY DATE. August 21, 2001.

REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to ss.2 hereof.

SARA. See ss.6.17(a) hereof.

SCP. SCP Private Equity Partners, L.P., a Delaware limited partnership.

SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the

<PAGE> 22
-16-

Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

SECURITIES ACT. The Securities Act of 1933 (or any successor statute)
and the rules and regulations thereunder, all as from time to time in effect.

STOCKHOLDERS AGREEMENT. That certain Stockholders Agreement, dated as of
November 29, 1996, by and among the Borrower, Lee, SCP, the Employee Group, and
John Hancock Subsidiaries, Inc..

SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.

SYNDICATION AGENT. The Bank of New York acting as syndication agent for
the Banks.

SYNDICATION FEE LETTER. The fee letter dated on or prior to the Closing
Date between the Borrower and the Syndication Agent, as the same may be amended,
modified or supplemented from time to time.

SYNTHETIC LEASE. As defined in paragraph (f) of the definition of
"Indebtedness" hereunder.

TOTAL COMMITMENT. The sum of the Commitment Amounts, as in effect from
time to time.

TRUST. Each registered investment company under the Investment Company
Act for which any of the Advisory Subsidiaries provides investment advisory
services pursuant to an Advisory Agreement.

TYPE. As to any Revolving Credit Loan, its nature as a Base Rate Loan, a
Eurodollar Rate Loan or a Federal Funds Rate Loan.

VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.

1.2. RULES OF INTERPRETATION.

(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit
Agreement.

<PAGE> 23
-17-

(b) The singular includes the plural and the plural includes the
singular.

(d) A reference to any Person includes its permitted successors
and permitted assigns.

(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.

(f) The words "include", "includes" and "including" are not
limiting.

(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.

(h) Reference to a particular "ss." refers to that section of
this Credit Agreement unless otherwise indicated.

(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.

(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."

(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.

(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to, among
others, the Agent and the Borrower and are the product of discussions
and negotiations among all parties. Accordingly, this Credit Agreement
and the other Loan Documents are not intended to be construed against
the Agent or any of the Banks merely on

<PAGE> 24
-18-

account of the Agent's or any Bank's involvement in the preparation of
such documents.

2. THE REVOLVING CREDIT FACILITY.

2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Revolving Credit Loan Maturity Date
upon notice by the Borrower to the Agent given in accordance with ss.2.6, such
sums as are requested by the Borrower up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one time equal
to such Bank's Commitment, PROVIDED that the sum of the outstanding amount of
the Revolving Credit Loans (after giving effect to all amounts requested) shall
not at any time exceed the Total Commitment. The Revolving Credit Loans shall be
made PRO RATA in accordance with each Bank's Commitment Percentage. Each request
for a Revolving Credit Loan hereunder shall constitute a representation and
warranty by the Borrower that the conditions set forth in ss.10 and ss.11, in
the case of the initial Revolving Credit Loans to be made on the Closing Date,
and ss.11, in the case of all other Revolving Credit Loans, have been satisfied
on the date of such request.

2.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at a rate per annum equal to the Commitment Fee Rate
on the average daily amount during each calendar quarter or portion thereof from
the date hereof to the Revolving Credit Loan Maturity Date by which the Total
Commitment exceeds the outstanding amount of Revolving Credit Loans during such
calendar quarter. The commitment fee shall be payable quarterly in arrears on
the first day of each calendar quarter for the immediately preceding calendar
quarter commencing on the first such date following the date hereof, with a
final payment on the Revolving Credit Maturity Date or any earlier date on which
the Commitments shall terminate.

2.3. REDUCTION OF TOTAL COMMITMENT.

2.3.1. MANDATORY REDUCTION.

(a) If, at any time after the Closing Date, the Borrower or any
of its Subsidiaries receives any Net Cash Sale Proceeds from the sale or
disposition of Freedom Capital Management Corporation, Sutro & Co.
Incorporated, Tucker Anthony Incorporated, or Cleary Gull Reiland &
McDevitt Inc., the Total Commitment shall automatically and irrevocably
be reduced 180 days after receipt of such Net Cash Sale Proceeds by the
Borrower or such Subsidiary by an amount equal to 100% of such Net Cash
Sale Proceeds which are not used by the Borrower or such Subsidiary
prior to such date to replace the assets sold in such Asset Sale.

<PAGE> 25
-19-

(b) On the date of each mandatory reduction in the Total
Commitment pursuant to this ss.2.3.1, each Bank's Commitment shall be
reduced PRO RATA in accordance with its respective Commitment Percentage
of the amount so reduced.

2.3.2. OPTIONAL REDUCTION. The Borrower shall have the right, at
any time and from time to time upon three (3) Business Days written
notice to the Agent, to reduce by $1,000,000 or an integral multiple
thereof or terminate entirely the Total Commitment, whereupon the
Commitments of the Banks shall be reduced PRO RATA in accordance with
their respective Commitment Percentages of the amount specified in such
notice, or as the case may be, terminated. Promptly after receiving any
notice of the Borrower delivered pursuant to this ss.2.3.2, the Agent
will notify the Banks of the substance thereof.

2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the form
of EXHIBIT A hereto (each a "Note"), dated as of the Closing Date and completed
with appropriate insertions. One Note shall be payable to the order of each Bank
in a principal amount equal to such Bank's Commitment or, if less, the
outstanding amount of all Revolving Credit Loans made by such Bank, plus
interest accrued thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make or cause to be made, at or about the time of the
Drawdown Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal on such Bank's Note, an appropriate notation on such Bank's
Note Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Revolving
Credit Loans set forth on such Bank's Note Record shall be PRIMA FACIE evidence
of the principal amount thereof owing and unpaid to such Bank, but the failure
to record, or any error in so recording, any such amount on such Bank's Note
Record shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any Note to make payments of principal of or interest on any
Note when due.

2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided in
ss.4.11,

(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the rate per annum equal to
the Base Rate, PLUS the Applicable Margin with respect to the Base Rate
Loans as in effect from time to time.

(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the rate per

<PAGE> 26
-20-

annum equal to the Eurodollar Rate, PLUS the Applicable Margin with
respect to the Eurodollar Rate Loans as in effect from time to time.

(c) Each Federal Funds Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per annum
equal to the Federal Funds Rate, PLUS the Applicable Margin with respect
to the Federal Funds Rate Loans as in effect from time to time.

(d) The Borrower promises to pay interest on each Revolving
Credit Loan in arrears on each Interest Payment Date with respect
thereto.

2.6. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrower shall give to the
Agent written notice in the form of EXHIBIT B hereto (or telephonic notice
confirmed in a writing in the form of EXHIBIT B hereto) of each Revolving Credit
Loan requested hereunder (a "Loan Request") (a) no later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Base Rate Loan or Federal Funds Rate
Loan and (b) no less than three (3) Eurodollar Business Days prior to the
proposed Drawdown Date of any Eurodollar Rate Loan. Each such notice shall
specify (i) the principal amount of the Revolving Credit Loan requested, (ii)
the proposed Drawdown Date of such Revolving Credit Loan, (iii) the Interest
Period for such Revolving Credit Loan and (iv) the Type of such Revolving Credit
Loan. Promptly upon receipt of any such notice, the Agent shall notify each of
the Banks thereof. Each Loan Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept the Revolving Credit Loan
requested from the Banks on the proposed Drawdown Date. Each Loan Request shall
be in a minimum aggregate amount of $500,000 or an integral multiple thereof.

2.7. CONVERSION OPTIONS.

2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The
Borrower may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
PROVIDED that (a) with respect to any such conversion of a Revolving
Credit Loan to a Base Rate Loan or to a Federal Funds Rate Loan, the
Borrower shall give the Agent at least three (3) Business Days prior
written notice of such election; (b) with respect to any such conversion
of a Base Rate Loan or a Federal Funds Rate Loan to a Eurodollar Rate
Loan, the Borrower shall give the Agent at least four (4) Eurodollar
Business Days prior written notice of such election; (c) with respect to
any such conversion of a Eurodollar Rate Loan into a Revolving Credit
Loan of another Type, such conversion shall only be made on the last day
of the Interest Period with respect thereto; and (d) no Revolving Credit
Loan may be converted into a Eurodollar Rate Loan or a Federal Funds
Rate Loan when any Default

<PAGE> 27
-21-

or Event of Default has occurred and is continuing. On the date on which
such conversion is being made each Bank shall take such action as is
necessary to transfer its Commitment Percentage of such Revolving Credit
Loans to its Domestic Lending Office or its Eurodollar Lending Office,
as the case may be. All or any part of outstanding Revolving Credit
Loans of any Type may be converted into a Revolving Credit Loan of
another Type as provided herein, PROVIDED that any partial conversion
shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof. Each Conversion Request relating to the conversion of
a Revolving Credit Loan to a Eurodollar Rate Loan or a Federal Funds
Rate Loan shall be irrevocable by the Borrower.

2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
Revolving Credit Loan of any Type (other than Base Rate Loans) may be
continued as a Revolving Credit Loan of the same Type upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in ss.2.7.1; PROVIDED
that no Eurodollar Rate Loan or Federal Funds Rate Loan may be continued
as such when any Default or Event of Default has occurred and is
continuing, but shall be automatically converted to a Base Rate Loan on
the last day of the first Interest Period relating thereto ending during
the continuance of any Default or Event of Default of which officers of
the Agent active upon the Borrower's account have actual knowledge. In
the event that the Borrower fails to provide any such notice with
respect to the continuation of any Eurodollar Rate Loan or Federal Funds
Rate Loan as such, then such Eurodollar Rate Loan or Federal Funds Rate
Loan, as the case may be, shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period relating thereto.
The Agent shall notify the Banks promptly when any such automatic
conversion contemplated by this ss.2.7.2 is scheduled to occur.

2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from Eurodollar
Rate Loans shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal
amount of all Eurodollar Rate Loans having the same Interest Period
shall not be less than $1,000,000 or a whole multiple of $1,000,000 in
excess thereof.

2.8. FUNDS FOR REVOLVING CREDIT LOANS.

2.8.1. FUNDING PROCEDURES. Not later than 1:00 p.m. (Boston time)
on the proposed Drawdown Date of any Revolving Credit Loans, each of the
Banks will make available to the Agent, at the Agent's Head Office, in
immediately available funds, the amount of such Bank's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon
receipt from each Bank of such amount, and upon receipt of the documents
required by secs.10 and 11

<PAGE> 28
-22-

hereof and the satisfaction of the other conditions set forth therein,
to the extent applicable, the Agent will make available to the Borrower
the aggregate amount of such Revolving Credit Loans made available to
the Agent by the Banks. The failure or refusal of any Bank to make
available to the Agent at the aforesaid time and place on any Drawdown
Date the amount of its Commitment Percentage of the requested Revolving
Credit Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Revolving Credit
Loans.

2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount of such
Bank's Commitment Percentage of the Revolving Credit Loans to be made on
such Drawdown Date, and the Agent may (but it shall not be required to),
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such
amount on a date after such Drawdown Date, such Bank shall pay to the
Agent on demand an amount equal to the product of (a) the average
computed for the period referred to in clause (c) below, of the weighted
average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, TIMES (b) the amount
of such Bank's Commitment Percentage of such Revolving Credit Loans,
TIMES (c) a fraction, the numerator of which is the number of days that
elapse from and including such Drawdown Date to the date on which the
amount of such Bank's Commitment Percentage of such Revolving Credit
Loans shall become immediately available to the Agent, and the
denominator of which is 365. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph shall be
PRIMA FACIE evidence of the amount due and owing to the Agent by such
Bank. If the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans is not made available to the Agent by such Bank
within three (3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Borrower on demand,
with interest thereon at the rate per annum applicable to the Revolving
Credit Loans made on such Drawdown Date.

3. REPAYMENT OF THE REVOLVING CREDIT LOANS.

3.1. MATURITY. The Borrower promises to pay on the Revolving Credit Loan
Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.

<PAGE> 29
-23-

3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the
sum of the outstanding amount of the Revolving Credit Loans exceeds the Total
Commitment, then the Borrower shall immediately pay the amount of such excess to
the Agent for application to the Revolving Credit Loans. Each prepayment of
Revolving Credit Loans shall be allocable among the Banks, in proportion, as
nearly as practicable, to the respective unpaid principal amount of each Bank's
Note, with adjustment to the extent practicable to equalize any prior payments
or prepayments not exactly in proportion.

3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower shall
have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, PROVIDED that any full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans pursuant to this ss.3.3 may be made only on the
last day of the Interest Period relating thereto unless the Borrower indemnifies
the Banks as provided in ss.4.10(c). The Borrower shall give the Agent, no later
than 10:00 a.m., Boston time, at least three (3) Business Days prior written
notice of any proposed prepayment pursuant to this ss.3.3 of Base Rate Loans and
Federal Funds Rate Loans and four (4) Eurodollar Business Days notice of any
proposed prepayment pursuant to this ss.3.3 of Eurodollar Rate Loans, in each
case specifying the proposed date of prepayment of Revolving Credit Loans and
the principal amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in an integral multiple of $1,000,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to the
date of prepayment and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Federal Funds Rate Loans, second to the
principal of Base Rate Loans and then to the principal of Eurodollar Rate Loans.
Each partial prepayment shall be allocated among the Banks, in proportion, as
nearly as practicable, to the respective unpaid principal amount of each Bank's
Note, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion.

4. CERTAIN GENERAL PROVISIONS.

4.1. SYNDICATION FEE. The Borrower agrees to pay to the Syndication
Agent on the Closing Date the syndication fee as set forth in the Syndication
Fee Letter.

4.2. AGENT'S FEE. The Borrower shall pay to the Agent a nonrefundable
agent's fee at the times and in the amounts set forth in the Agent's Fee Letter.

4.3. FUNDS FOR PAYMENTS.

4.3.1. PAYMENTS TO AGENT. All payments of principal, interest,
commitment fees, and any other amounts due hereunder or under any of the
other Loan Documents (other than the syndication

<PAGE> 30
-24-

fee which shall be paid directly to the Syndication Agent pursuant to
the terms of the Syndication Fee Letter) shall be made to the Agent, for
the respective accounts of the Banks and the Agent, at the Agent's Head
Office or at such other location in the Boston, Massachusetts, area that
the Agent may from time to time designate, in each case in Dollars and
in immediately available funds.

4.3.2. NO OFFSET, ETC. All payments by the Borrower hereunder and
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the
Borrower is compelled by law to make such deduction or withholding. If
any such obligation is imposed upon the Borrower with respect to any
amount payable by it hereunder or under any of the other Loan Documents,
the Borrower will pay to the Agent, for the account of the Banks or (as
the case may be) the Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the Banks or the Agent
to receive the same net amount which the Banks or the Agent would have
received on such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Agent certificates
or other valid vouchers for all taxes or other charges deducted from or
paid with respect to payments made by the Borrower hereunder or under
such other Loan Document.

4.4. COMPUTATIONS. All computations of interest on the Revolving Credit
Loans and of commitment fees or other fees shall be based on a 360-day year and
paid for the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurodollar Rate Loans,
whenever a payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension. The outstanding amount of the Revolving Credit Loans as
reflected on the Records from time to time shall be considered correct and
binding on the Borrower unless within five (5) Business Days after receipt of
any notice by the Agent or any of the Banks of such outstanding amount, Borrower
shall notify the Agent or such Bank to the contrary.

4.5. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Agent shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan

<PAGE> 31

-25-

during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and, unless a Federal Funds Rate Loan is elected by the Borrower
pursuant to ss.2.6, shall be deemed a request for Base Rate Loans, (b) each
Eurodollar Rate Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan, and (c) the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended until
the Agent or the Majority Banks determines that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent, or, as the case may be,
the Agent upon the instruction of the Majority Banks, shall so notify the
Borrower and the Banks.

4.6. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (b) such
Bank's Revolving Credit Loans then outstanding as Eurodollar Rate Loans, if any,
shall be converted automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law. The Borrower hereby agrees promptly to pay the
Agent for the account of such Bank, upon demand by such Bank, any additional
amounts necessary to compensate such Bank for any costs incurred by such Bank in
making any conversion in accordance with this ss.4.6, including any interest or
fees payable by such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder.

4.7. ADDITIONAL COSTS, ETC. If any change in any present applicable law
or future applicable law, which expression, as used herein, includes statutes,
rules and regulations thereunder and interpretations thereof by any competent
court or by any governmental or other regulatory body or official charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:

(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, such Bank's Commitment or
the Revolving Credit Loans (other than taxes based upon or measured by
the income or profits of such Bank or the Agent), or

<PAGE> 32
-26-

(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to any Bank of the principal
of or the interest on any Revolving Credit Loans or any other amounts
payable to any Bank or the Agent under this Credit Agreement or any of
the other Loan Documents, or

(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or

(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, the Revolving Credit Loans, such Bank's Commitment, or any
class of loans, letters of credit, or commitments of which any of the
Revolving Credit Loans or such Bank's Commitment forms a part,

and the result of any of the foregoing is

(i) to increase the cost to any Bank by an amount which
such Bank deems to be material of making, funding, issuing,
renewing, extending or maintaining any of the Revolving Credit
Loans or such Bank's Commitment, or

(ii) to reduce the amount of principal, interest or other
amount payable to such Bank or the Agent hereunder on account of
such Bank's Commitment or any of the Revolving Credit Loans, or

(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder,
the amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable
or deemed received by such Bank or the Agent from the Borrower
hereunder,

then, and in each such case, the Borrower will, upon receipt of the certificate
referred to in ss.4.9 from such Bank or, as the case may be, the Agent, at any
time and from time to time and as often as the occasion thereof may arise, pay
to such Bank or the Agent such additional amounts as will be sufficient to
compensate such Bank or the Agent for such additional cost, reduction, payment
or foregone interest or other sum.

4.8. CAPITAL ADEQUACY. If after the date hereof any Bank or the Agent
determines in good faith and acting reasonably that (a) the adoption of or
change in any law, governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) regarding capital

<PAGE> 33
-27-

requirements for banks or bank holding companies or any change in the
interpretation or application thereof by a court or governmental authority with
appropriate jurisdiction, or (b) compliance by such Bank or the Agent or any
corporation controlling such Bank or the Agent with any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) of any such entity regarding capital adequacy, has the effect of reducing
the return on such Bank's or the Agent's commitment with respect to any
Revolving Credit Loans to a level below that which such Bank or the Agent could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or the Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) the Agent to be material,
then such Bank or the Agent may notify the Borrower of such fact. To the extent
that the amount of such reduction in the return on capital is not reflected in
the Base Rate, the Borrower and such Bank shall thereafter attempt to negotiate
in good faith, within thirty (30) days of the day on which the Borrower receives
such notice, an adjustment payable hereunder that will adequately compensate
such Bank in light of these circumstances. If the Borrower and such Bank are
unable to agree to such adjustment within thirty (30) days of the date on which
the Borrower receives such notice, then commencing on the date of such notice
(but not earlier than the effective date of any such increased capital
requirement), the fees payable hereunder shall increase by an amount that will,
in such Bank's reasonable determination, provide adequate compensation. Each
Bank shall allocate such cost increases among its customers in good faith and on
an equitable basis.

4.9. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to secs.4.7 or 4.8 and a brief explanation in reasonable
detail of the basis for calculating the additional amounts which are due shall
be promptly submitted by any Bank or the Agent to the Borrower, and such
certificate shall be conclusive, absent manifest error, that such amounts are
due and owing.

4.10. INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (excluding loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (b) default
by the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request or a Conversion Request relating
thereto in accordance with ss.2.6 or ss.2.7 or (c) the making of any payment of
a Eurodollar Rate Loan or the making of any conversion of any such Eurodollar
Rate Loan to a Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or

<PAGE> 34

-28-

fees payable by such Bank to lenders of funds obtained by it in order to
maintain any such Revolving Credit Loans.

4.11. INTEREST AFTER DEFAULT.

4.11.1. OVERDUE AMOUNTS. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other
Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to two percent (2%) above the rate of
interest otherwise applicable to Base Rate Loans until such amount shall
be paid in full (after as well as before judgment).

4.11.2. AMOUNTS NOT OVERDUE. During the continuance of any Event
of Default arising pursuant to ss.12.1(c) as it relates to ss.9 and so
long as the Banks have not accelerated the entire outstanding principal
amount of the Revolving Credit Loans, the principal of the Revolving
Credit Loans not overdue shall, until such Event of Default has been
cured or waived by the Majority Banks pursuant to ss.26, bear interest
(payable on demand) at a rate per annum equal to one and one-half
percent (1 1/2%) above the rate of interest otherwise applicable to such
Revolving Credit Loans pursuant to ss.2.5.

5. GUARANTIES.

The Obligations shall be guaranteed by the Guarantors pursuant to the
terms of the Guaranty.

6. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Banks and the Agent as
follows:

6.1. CORPORATE AUTHORITY.

6.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower and its
Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation, (b) has
all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (c) is in
good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a Material
Adverse Effect.

6.1.2. AUTHORIZATION. The execution, delivery and performance of
this Credit Agreement and the other Loan Documents to which the Borrower
or any of its Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (a) are

<PAGE> 35
-29-

within the corporate authority of such Person, (b) have been duly
authorized by all necessary corporate proceedings, (c) do not conflict
with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or any of its
Subsidiaries is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or any of its Subsidiaries
and (d) do not conflict with any provision of the corporate charter or
bylaws of, or any agreement or other instrument binding upon, the
Borrower or any of its Subsidiaries.

6.1.3. ENFORCEABILITY. The execution and delivery of this Credit
Agreement and the other Loan Documents to which the Borrower or any of
its Subsidiaries is or is to become a party will result in valid and
legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.

6.2. CAPITALIZATION; SUBSIDIARIES, ETC.

6.2.1. CAPITALIZATION. The Borrower's Equity Securities consist
solely of 60,000,000 shares of authorized common stock, $0.01 par value.
All of the outstanding Equity Securities of the Borrower are validly
issued, fully paid and non-assessable.

6.2.2. SUBSIDIARIES. SCHEDULE 6.2.2 attached hereto sets forth a
list of (a) each Subsidiary, Active Subsidiary, Advisory Subsidiary and
Broker-Dealer Subsidiary of the Borrower, (b) the number of authorized
and outstanding Equity Securities of each class of each Subsidiary of
the Borrower and the number and percentage thereof owned, directly or
indirectly, by the Borrower, and (c) any partnership or joint venture in
which the Borrower or any of its Subsidiaries is engaged with any other
Person. Except as set forth on SCHEDULE 6.2.2 hereto, neither the
Borrower nor any Subsidiary is engaged in any joint venture or
partnership with any other Person. All of the outstanding Equity
Securities of each Subsidiary of the Borrower are validly issued, fully
paid and non-assessable.

6.3. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
the Borrower and any of its Subsidiaries of this Credit Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained.

<PAGE> 36
-30-

6.4. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 6.4
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.

6.5. FINANCIAL STATEMENTS.

6.5.1. FISCAL YEAR. The Borrower and each of its Subsidiaries has
a fiscal year which is the twelve months ending on December 31 of each
calendar year.

6.5.2. FINANCIAL STATEMENTS. There has been furnished to each of
the Banks a consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of the Borrower and its Subsidiaries for the fiscal year then
ended, certified by Ernst & Young LLP. Such balance sheet and statement
of income have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of the
Borrower as at the close of business on the date thereof and the results
of operations for the fiscal year then ended. There are no contingent or
Derivatives liabilities of the Borrower or any of its Subsidiaries as of
such date involving material amounts, known to the officers of the
Borrower, which were not disclosed in such balance sheet and the notes
related thereto.

6.5.3. SOLVENCY. The Borrower and its Subsidiaries, on a
consolidated and consolidating basis, both before and after giving
effect to the transactions contemplated by this Credit Agreement and the
other Loan Documents (a) are solvent; (b) have assets having a fair
value in excess of their liabilities; (c) have assets having a fair
value in excess of the amount required to pay their liabilities on
existing debts as such debts become due and payable; and (d) have, and
expect to continue to have, access to adequate capital in the conduct of
their business and the ability to pay their debts from time to time
incurred in connection with the operation of their business as such
debts mature.

6.6. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date there has
occurred no materially adverse change in the financial condition or business of
the Borrower and its Subsidiaries as shown on or reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date,
or the consolidated statement of income for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any Material
Adverse Effect. Since the Balance

<PAGE> 37

-31-

Sheet Date, the Borrower has not made any Distributions except as set forth on
SCHEDULE 6.6 hereto or permitted by ss.8.4 hereof.

6.7. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Except as disclosed on
SCHEDULE 6.7 hereto, each of the Borrower and its Subsidiaries owns or possesses
the right to use all patents, patent applications, patent rights, service marks,
service mark rights, trademarks, trademark rights, trade names, trade name
rights, copyrights, licenses, franchises, permits, leases, authorizations,
including authorizations under state securities laws, and rights in respect of
the foregoing, adequate for the conduct of its business substantially as now
conducted without known conflict with any rights of others. All of the foregoing
are in full force and effect, and each of the Borrower and its Subsidiaries is
in material compliance with the foregoing without any known conflict with
others. No event has occurred which permits, or after notice or lapse of time or
both would permit, the revocation or termination of any such license, franchise,
lease or other right or affects the rights of any of the Borrower or its
Subsidiaries thereunder which event would have a Material Adverse Effect. There
is no litigation or other proceeding or dispute with respect to the validity or,
where applicable, the extension or renewal, of any of the foregoing.

6.8. LITIGATION. Except as set forth in SCHEDULE 6.8 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries before any court,
tribunal or administrative agency or board which (a) if adversely determined,
are reasonably likely, either in any case or in the aggregate, to have a
Material Adverse Effect or materially impair the right of the Borrower and its
Subsidiaries, considered as a whole, to carry on business substantially as now
conducted by them, or result in any substantial liability not adequately covered
by insurance or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries; or (b) which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.

6.9. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries is a party to any contract or agreement that has or
is expected to have, in the judgment of the Borrower's officers, a Material
Adverse Effect.

6.10. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the

<PAGE> 38

-32-

foregoing cases in a manner that is reasonably likely to result in the
imposition of substantial penalties or have a Material Adverse Effect.

6.11. TAX STATUS. The Borrower and its Subsidiaries (a) have made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject, (b)
have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings and (c) have set
aside on their books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.

6.12. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.

6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.

6.14. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 6.14
attached hereto and except for arm's length transactions pursuant to which the
Borrower or any of its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Borrower or such Subsidiary could
obtain from third parties, none of the officers, directors, or employees of the
Borrower or any of its Subsidiaries is presently a party to any transaction with
the Borrower or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

6.15. EMPLOYEE BENEFIT PLANS.

6.15.1. IN GENERAL. Except as set forth on SCHEDULE 6.15 attached
hereto, each Employee Benefit Plan and each Guaranteed Pension Plan has
been maintained and operated in compliance in all material respects with
the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions

<PAGE> 39

-33-

thereunder respecting prohibited transactions and the bonding of
fiduciaries and other persons handling plan funds as required by ss.412
of ERISA. The Borrower has heretofore delivered to the Agent the most
recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
ss.103(d) of ERISA, with respect to each Guaranteed Pension Plan.

6.15.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan,
which is an employee welfare benefit plan within the meaning of ss.3(1)
or ss.3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title I, Part 6 of
ERISA or the applicable state insurance laws. The Borrower may terminate
each such Plan at any time (or at any time subsequent to the expiration
of any applicable bargaining agreement) in the discretion of the
Borrower without liability to any Person other than for claims arising
prior to termination.

6.15.3. GUARANTEED PENSION PLANS. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid
the incurrence of an accumulated funding deficiency, the notice or lien
provisions of ss.302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan,
and neither the Borrower nor any ERISA Affiliate is obligated to or has
posted security in connection with an amendment to a Guaranteed Pension
Plan pursuant to ss.307 of ERISA or ss.401(a)(29) of the Code. No
liability to the PBGC (other than required insurance premiums, all of
which have been paid) has been incurred by the Borrower or any ERISA
Affiliate with respect to any Guaranteed Pension Plan and there has not
been any ERISA Reportable Event (other than an ERISA Reportable Event as
to which the requirement of 30 days notice has been waived), or any
other event or condition which presents a material risk of termination
of any Guaranteed Pension Plan by the PBGC. Based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of ss.4001 of ERISA did not exceed the aggregate
value of the assets of all such Guaranteed Pension Plans, disregarding
for this purpose the benefit liabilities and assets of any Guaranteed
Pension Plan with assets in excess of benefit liabilities.

6.15.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan under

<PAGE> 40
-34-

ss.4201 of ERISA or as a result of a sale of assets described in ss.4204
of ERISA. Neither the Borrower nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization or insolvent under and
within the meaning of ss.4241 or ss.4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any Multiemployer
Plan intends to terminate or has been terminated under ss.4041A of
ERISA.

6.16. USE OF PROCEEDS.

6.16.1. GENERAL. The proceeds of the Revolving Credit Loans shall
be used to refinance existing Indebtedness outstanding under the
Original Credit Agreement, to make acquisitions permitted pursuant to
ss.8.5.1, and for working capital and other general corporate purposes.

6.16.2. REGULATIONS U AND X. No portion of any Revolving Credit
Loan is to be used for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R.
Parts 221 and 224.

6.16.3. INELIGIBLE SECURITIES. No portion of the proceeds of any
Revolving Credit Loan is to be used for the purpose of (a) knowingly
purchasing, or providing credit support for the purchase of, Ineligible
Securities from a Section 20 Subsidiary during any period in which such
Section 20 Subsidiary makes a market in such Ineligible Securities, (b)
knowingly purchasing, or providing credit support for the purchase of,
during the underwriting or placement period, any Ineligible Securities
being underwritten or privately placed by a Section 20 Subsidiary, or
(c) making, or providing credit support for the making of, payments of
principal or interest on Ineligible Securities underwritten or privately
placed by a Section 20 Subsidiary and issued by or for the benefit of
the Borrower or any Subsidiary or other Affiliate of the Borrower.

6.17. ENVIRONMENTAL COMPLIANCE. The Borrower has reasonable knowledge of
the past and present condition and usage of the Real Estate and the operations
conducted thereon and, based upon such knowledge, has determined that:

(a) none of the Borrower, its Subsidiaries or any operator of the
Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1950 as amended ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1956 ("SARA"), the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic

<PAGE> 41
-35-

Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the environment
(hereinafter "Environmental Laws"), which violation would have a
Material Adverse Effect;

(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation, any federal,
state or local governmental authority, (i) that any one of them has been
identified by the United States Environmental Protection Agency ("EPA")
as a potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B;
(ii) that any hazardous waste, as defined by 42 U.S.C. ss.6903(5), any
hazardous substances as defined by 42 U.S.C. ss.9601(14), any pollutant
or contaminant as defined by 42 U.S.C. ss.9601(33) and any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous Substances") which any
one of them has generated, transported or disposed of has been found at
any site at which a federal, state or local agency or other third party
has conducted or has ordered that any Borrower or any of its
Subsidiaries conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall
be a named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding (in each case, contingent or
otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances;

(c) except as set forth on SCHEDULE 6.17 attached hereto: (i) no
portion of the Real Estate has been used for the handling, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on
any portion of the Real Estate; (ii) in the course of any activities
conducted by the Borrower, its Subsidiaries or operators of its
properties, no Hazardous Substances have been generated or are being
used on the Real Estate except in accordance with applicable
Environmental Laws; (iii) there have been no releases (i.e. any past or
present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or its Subsidiaries, which releases would
have a material adverse effect on the value of any of the Real Estate or
adjacent properties or the environment; (iv) to the best of the
Borrower's knowledge, there have been no releases on, upon, from or into
any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, the
Real Estate; and (v) in addition, any Hazardous

<PAGE> 42

-36-

Substances that have been generated on any of the Real Estate have been
transported offsite only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have been and are,
to the best of the Borrower's knowledge, operating in compliance with
such permits and applicable Environmental Laws; and

(d) None of the Borrower and its Subsidiaries or any of the Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a condition
to the effectiveness of any other transactions contemplated hereby.

6.18. BROKER-DEALER SUBSIDIARIES. Each of the Broker-Dealer Subsidiaries
is duly registered as a broker-dealer with the Securities Exchange Commission
under the Exchange Act, is a member in good standing of the NASD and the
securities exchanges listed on SCHEDULE 6.18(a) attached hereto and is duly
registered, licensed or qualified as a broker or dealer under the laws of each
jurisdiction listed on SCHEDULE 6.18(a) attached hereto. Each Broker-Dealer
Subsidiary is in compliance with the Exchange Act and the rules and regulations
thereunder applicable to it, the rules and regulations of the NASD applicable to
it (including the NASD's rules of fair practice), the rules and regulations of
the securities exchanges of which it is a member, and the laws of each
jurisdiction where it is registered as a broker or dealer, except for such
instances of non-compliance (a) that relate to a matter set forth on SCHEDULE
6.18(b) attached hereto or (b) the correction of which would not interfere
significantly with the ability of such Broker-Dealer Subsidiary to conduct its
business substantially as currently conducted or significantly diminish the
value of the Borrower and its Subsidiaries, taken as a whole. Each of the
Broker-Dealer Subsidiaries acts pursuant to written agreements and related
documentation (collectively, the "Broker-Dealer Agreements") with parties to
whom it provides broker dealer services. The Broker-Dealer Agreements have not
been modified by any terms that are not included in the Broker-Dealer
Subsidiary's files, and none of the Broker-Dealer Subsidiaries has violated or
is in default under, any Broker-Dealer Agreement, except for such violations or
defaults which could not reasonably be expected to have a Material Adverse
Effect.

6.19. ADVISORY SUBSIDIARIES. Each of the Advisory Subsidiaries is duly
registered as an investment adviser with the Securities and Exchange Commission
under the Advisers Act and is duly registered, licensed or qualified as an
investment adviser under the laws of each jurisdiction listed

<PAGE> 43
-37-

on SCHEDULE 6.19(a) attached hereto. Each of the Advisory Subsidiaries is in
compliance with the Advisers Act and the laws of each jurisdiction where it is
registered as an investment adviser, except for such instances of non-compliance
(a) that related to a matter set forth on SCHEDULE 6.19(b) attached hereto, or
(b) the correction of which would not interfere significantly with the ability
of such Advisory Subsidiary to conduct its business substantially as currently
conducted or significantly diminish the value of the Borrower and its
Subsidiaries, taken as a whole. Each of the Advisory Subsidiaries acts pursuant
to an Advisory Agreement with parties to whom they provide investment advisory
services. Each Advisory Agreement complies as to form with the requirements of
the Advisers Act. The Advisory Agreements have not been modified by any terms,
oral or otherwise, that are not included in the Advisory Subsidiaries' files,
and none of the Advisory Subsidiaries has violated, or is in default under, any
Advisory Agreement, except for such violations or defaults which could not
reasonably be expected to have a Material Adverse Effect.

6.20. INVESTMENT FUND CLIENTS. SCHEDULE 6.20 (as such schedule may be
supplemented from time to time by the Borrower) sets forth a list of all
agreements (the "Fund Agreements") pursuant to which the Borrower or any of its
Subsidiaries performs investment advisory, administration or distribution
services for the benefit of any Fund or Trust. Each Trust is registered as an
investment company under the Investment Company Act. All outstanding shares of
each Trust that are required to be registered under the Securities Act have been
sold pursuant to an effective registration statement filed thereunder or qualify
for an exemption from registration thereunder and have been sold only in states
where all applicable filings have been made. No such registration statement
contained, as of its effective date, and no prospectus or other offering
material used in connection with the sale of shares of any Trust contained, as
of any date on which it was used, any untrue statement of a material fact or
omitted to state a material fact required to be stated therein in order to make
the statements therein not misleading. Each Fund Agreement complies as to form
with the requirements of the Investment Company Act and, to the knowledge of the
Borrower, has been adopted in compliance with the requirements of such Act. To
the knowledge of the Borrower, the Fund Agreements have not been modified by any
terms, oral or otherwise, that are not included in the Borrower's and the
Subsidiaries' files and none of the Borrower or its Subsidiaries has any
liability under any Fund Agreement, except for such violations or defaults which
could not reasonably be expected to have a Material Adverse Effect.

6.21. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or, except as disclosed on SCHEDULE 6.21, an "affiliated
company" or a "principal underwriter" of an

<PAGE> 44
-38-

"investment company", as such terms are defined in the Investment Company Act.

6.22. DISCLOSURE. None of this Credit Agreement or any of the other Loan
Documents contains any untrue statement of a material fact or omits to state a
material fact (known to the Borrower or any of its Subsidiaries in the case of
any document or information not furnished by it or any of its Subsidiaries)
necessary in order to make the statements herein or therein not misleading.

6.23. CAPITALIZATION DOCUMENTS. The Borrower has delivered to the Agent
true and complete copies of all of the Capitalization Documents, and the
Borrower and such Subsidiaries have not amended any of such documents in any
material respect. Each of the representations and warranties made by the
Borrower and such Subsidiaries in any of the Capitalization Documents was true
and correct in all material respects when made and continues to be true and
correct in all material respects on the Closing Date, except to the extent that
any of such representations and warranties relate, by the express terms thereof,
solely to a date falling prior to the Closing Date, and except to the extent
that any of such representations and warranties may have been affected by the
consummation of the transactions contemplated and permitted or required by the
Loan Documents.

6.24. CHIEF EXECUTIVE OFFICE. The Borrower's chief executive office is
at One Beacon Street, Boston, Massachusetts 02108-3106, at which location its
books and records are kept.

7. AFFIRMATIVE COVENANTS OF THE BORROWER.

The Borrower covenants and agrees that, so long as any Revolving Credit
Loan or Note is outstanding or any Bank has any obligation to make any Revolving
Credit Loans:

7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Revolving Credit Loans, the
commitment fees, the Agent's fee and all other amounts provided for in this
Credit Agreement and the other Loan Documents to which the Borrower or any of
its Subsidiaries is a party, all in accordance with the terms of this Credit
Agreement and such other Loan Documents.

7.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
executive office at One Beacon Street, Boston, Massachusetts 02108-3106, or at
such other place in the United States of America as the Borrower shall designate
upon written notice to the Agent, where notices, presentations and demands to or
upon the Borrower in respect of the Loan Documents to which the Borrower is a
party may be given or made.

7.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each of
its Subsidiaries to keep, true and accurate records and books of

<PAGE> 45
-39-

account in which full, true and correct entries will be made in accordance with
generally accepted accounting principles, (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves, and (c) at all times engage
nationally recognized independent certified public accountants satisfactory to
the Agent (it being acknowledged that any of the so-called "Big 6" accounting
firms are satisfactory to the Agent) as the independent certified public
accountants of the Borrower and its Subsidiaries and will not permit more than
thirty (30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public accountants of
the Borrower and its Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Agent.

7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
will deliver to each of the Banks:

(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries and the
consolidating balance sheet of the Borrower and its Subsidiaries, each
as at the end of such year, and the related consolidated statement of
income and consolidated statement of cash flow and consolidating
statement of income and consolidating statement of cash flow for such
year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated and consolidating
statements to be in reasonable detail, prepared in accordance with
generally accepted accounting principles, and certified without
qualification by nationally recognized independent certified public
accountants satisfactory to the Agent, together with a written statement
from such accountants to the effect that they have read a copy of this
Credit Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event
of Default under ss.9 hereof, or, if such accountants shall have
obtained knowledge of any then existing Default or Event of Default
under ss.9 hereof they shall disclose in such statement any such Default
or Event of Default; PROVIDED that such accountants shall not be liable
to the Banks for failure to obtain knowledge of any Default or Event of
Default;

(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of the
Borrower, copies of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries and the unaudited consolidating balance
sheet of the Borrower and its Subsidiaries, each as at the end of such
quarter, and the related consolidated statement of income and
consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for the

<PAGE> 46

-40-

portion of the Borrower's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in
such financial statements fairly presents the financial position of the
Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments and the absence of footnotes);

(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by
the principal financial or accounting officer of the Borrower in
substantially the form of EXHIBIT C hereto (a "Compliance Certificate")
and setting forth in reasonable detail computations evidencing
compliance with the covenants contained in ss.9 and (if applicable)
reconciliations to reflect changes in generally accepted accounting
principles since the Balance Sheet Date;

(d) contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of the Borrower;

(e) contemporaneously with the filing thereof with the New York
Stock Exchange, copies of all quarterly Focus Reports of the
Broker-Dealer Subsidiaries; and

(f) from time to time such other financial data and information
(including accountants' management letters) as the Agent or any Bank may
reasonably request.

7.5. NOTICES.

7.5.1. DEFAULTS. The Borrower will promptly notify the Agent and
each of the Banks in writing of the occurrence of any Default or Event
of Default. If any Person shall give any notice or take any other action
in respect of a claimed default (whether or not constituting an Event of
Default) under this Credit Agreement or any other note, evidence of
indebtedness, indenture or other obligations, in each case in excess of
$1,000,000, to which or with respect to which the Borrower or any of its
Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, the Borrower shall forthwith give written notice
thereof to the Agent and each of the Banks, describing the notice or
action and the nature of the claimed default.

7.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give
notice to the Agent and each of the Banks (a) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports
in writing or is reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to

<PAGE> 47

-41-

any federal, state or local environmental agency and (b) upon becoming
aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or board,
that has the potential to have a Material Adverse Effect.

7.5.3. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and
will cause each of its Subsidiaries to, give notice to the Agent and
each of the Banks in writing within fifteen (15) days of becoming aware
of any litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or any
of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of its Subsidiaries
to, give notice to the Agent and each of the Banks, in writing, in form
and detail satisfactory to the Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against the
Borrower or any of its Subsidiaries in an amount in excess of
$2,000,000.

7.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company. It (a) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(b) will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Borrower may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (c) will, and will cause
each of its Subsidiaries to, continue to engage primarily in the businesses now
conducted by them and in related businesses; PROVIDED that nothing in this
ss.7.6 shall prevent the Borrower from discontinuing the operation and
maintenance of any of its properties or any of those of its Subsidiaries if such
discontinuance is, in the judgment of the Borrower, desirable in the conduct of
its or their business and that do not in the aggregate have a Material Adverse
Effect.

7.7. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic

<PAGE> 48
-42-

areas and in amounts, containing such terms, in such forms and for such periods
as may be reasonable and prudent.

7.8. TAXES. The Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges imposed by foreign
jurisdictions that do not have a Material Adverse Effect) imposed upon it and
its real properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon any of its
property; PROVIDED that any such tax, assessment, charge, levy or claim need not
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower or such Subsidiary shall
have set aside on its books adequate reserves with respect thereto; and PROVIDED
FURTHER that the Borrower and each Subsidiary of the Borrower will pay all such
taxes, assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.

7.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.

7.9.1. GENERAL. The Borrower shall permit the Banks, through the
Agent or any of the Banks' other designated representatives, to visit
and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to
discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Agent or any
Bank may reasonably request, PROVIDED that, unless an Event of Default
has occurred and is continuing, all such inspections shall be upon
reasonable notice and at reasonable times and the Banks shall only be
entitled to make one such inspection in any calendar quarter.

7.9.2. COMMUNICATIONS WITH ACCOUNTANTS. The Borrower authorizes
the Agent and, if accompanied by the Agent, the Banks to communicate
directly with the Borrower's independent certified public accountants
and authorizes such accountants to disclose to the Agent and the Banks
any and all financial statements and other supporting financial
documents and schedules including copies of any management letter with
respect to the business, financial condition and other affairs of the
Borrower or any of its Subsidiaries, PROVIDED, however, that if no Event
of Default has occurred and is continuing, any communication with the
Borrower's accountants shall be coordinated through the Borrower and
will not be conducted without the Borrower's participation. At the
request of the Agent, the

<PAGE> 49

-43-

Borrower shall deliver a letter addressed to such accountants
instructing them to comply with the provisions of this ss.7.9.2.

7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. (a) The
Borrower will, and will cause each of its Subsidiaries to, comply with (i) the
applicable laws and regulations wherever its business is conducted, including
Environmental Laws; (ii) the provisions of its charter documents and by-laws,
(iii) all agreements and instruments by which it or any of its properties may be
bound and (iv) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or under any of the other Loan Documents to which the Borrower or such
Subsidiary is a party, the Borrower will or, as the case may be, will cause such
Subsidiary to, immediately take or cause to be taken all steps within the power
of the Borrower or such Subsidiary to obtain such authorization, consent,
approval, permit or license and furnish the Agent and the Banks with evidence
thereof.

(b) The Borrower will cause each of its Advisory Subsidiaries to
maintain its registration as an investment adviser under the Advisers Act and
each of its Broker-Dealer Subsidiaries to maintain its registration as a broker
or a dealer under the Exchange Act, PROVIDED that nothing in this sentence shall
prevent any such Subsidiary from discontinuing such registration if such
discontinuation is, in the judgment of the Borrower, desirable for the conduct
of their business and such discontinuations, in the aggregate, do not have a
Material Adverse Effect. Each of the Borrower and its Subsidiaries will comply,
and will use reasonable efforts to cause each Fund and Trust to comply to the
extent applicable (subject to the discretion of its trustees or directors), with
the Investment Company Act, the Advisers Act, the Exchange Act, the Securities
Act (including the continued registration of the shares representing beneficial
interests of, or common stock in, each Fund or Trust), the rules and regulations
of the NASD, subchapter M of the Code (to the extent of each Fund's or Trust's
continued qualification as a regulated investment company thereunder and subject
to the Borrower's or the applicable Advisory Subsidiary's reasonable business
judgment that such compliance is not in the interests of such Fund or Trust),
the Commodities Act, any other law, statue, rule or regulation governing
investment advisers, investment companies, broker-dealers, underwriters,
custodians or transfer agents, including capital requirements, and all other
valid and applicable statutes, ordinances, zoning and building codes and other
rules and regulations of the United States of America, of the states and
territories thereof and their counties, municipalities and other subdivisions
and of any foreign country or other jurisdictions applicable to such Person,
except where compliance therewith shall at the time be contested in good faith
by appropriate proceedings.

<PAGE> 50

-44-

7.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) promptly upon
request of the Agent furnish to the Agent a copy of the most recent actuarial
statement required to be submitted under ss.103(d) of ERISA and Annual Report,
Form 5500, with all required attachments, in respect of each Guaranteed Pension
Plan and (b) promptly upon receipt or dispatch, furnish to the Agent any notice,
report or demand sent or received in respect of a Guaranteed Pension Plan under
secs.302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect
of a Multiemployer Plan, under secs.4041A, 4202, 4219, 4242, or 4245 of ERISA.

7.12. USE OF PROCEEDS. The Borrower will use the proceeds of the
Revolving Credit Loans solely to refinance existing Indebtedness outstanding
under the Original Credit Agreement, to make acquisitions permitted by ss.8.5.1,
and for working capital and other general corporate purposes.

7.13. ADDITIONAL SUBSIDIARIES. If, after the Closing Date, the Borrower
or any of its Subsidiaries creates or acquires, either directly or indirectly,
any Subsidiary, it will notify the Banks within three (3) Business Days of such
creation or acquisition, as the case may be, provide the Banks with an updated
SCHEDULE 6.2, and take all other actions required by ss.7.14 and ss.8.5.1.

7.14. GUARANTORS.

7.14.1. SUBSIDIARIES OTHER THAN BROKER-DEALER SUBSIDIARIES.
The Borrower will cause each Active Subsidiary, other than
Broker-Dealer Subsidiaries, created, acquired or existing on or
after the Closing Date to become a Guarantor immediately and
shall cause such Subsidiary to execute and deliver to the Agent
for the benefit of the Agent and the Banks a Guaranty (or an
Instrument of Adherence to any Guaranty executed after the
Closing Date), together with legal opinions in form and substance
satisfactory to the Agent and the Banks to be delivered to the
Agent and the Banks opining as to the authorization, validity and
enforceability of such Guaranty or Instrument of Adherence.

7.14.2. BROKER-DEALER SUBSIDIARIES. The Borrower shall
cause each Broker-Dealer Subsidiary that is an Active Subsidiary
to execute and deliver to the Bank an Instrument of Adherence to
the Guaranty, together with such supporting documentation,
including legal opinions and corporate authority documents as the
Banks may reasonably request, on the date which is five (5)
Business Days after the later of (i) the date on which such
Person becomes a Subsidiary of the Borrower and (ii) the date on
which the net capital requirements under the Exchange Act are no
longer applicable

<PAGE> 51
-45-

to such Broker-Dealer Subsidiary or permit the execution and
delivery of such Instrument of Adherence by such Broker-Dealer
Subsidiary.

7.15. YEAR 2000 PROBLEM. The Borrower and its Subsidiaries shall, in a
timely manner, but in no event later than October 31, 1999, review the areas
within their businesses and operations which could be adversely affected by, and
shall develop a program to address on a timely basis, the "Year 2000 Problem"
(i.e., the risk that computer applications used by the Borrower or any
Subsidiaries may be unable to recognize or perform properly date sensitive
functions involving certain dates prior to, and any date after, December 31,
1999).

7.16. FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the Banks or the Agent shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.

8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.

The Borrower covenants and agrees that, so long as any Revolving Credit
Loan or Note is outstanding or any Bank has any obligation to make any Revolving
Credit Loans:

8.1. RESTRICTIONS ON INDEBTEDNESS. If any Default or Event of Default
has occurred and is continuing or would exist as a result thereof, the Borrower
will not, and will not permit any of its Subsidiaries to, create, incur, assume,
or guarantee any Indebtedness. In addition, neither the Borrower nor any
Subsidiary shall be permitted to create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness which
in any manner ranks senior to the Obligations.

8.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit
any of its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general

<PAGE> 52
-46-

intangibles, chattel paper or instruments, with or without recourse, except that
the Borrower and its Subsidiaries may sell assets to the extent permitted under
ss.8.5.2 hereof; or (f) enter into, or permit to remain in effect, any agreement
or arrangement by which such Person agrees not to encumber, mortgage, pledge,
restrict or grant a security interest in any of its assets; PROVIDED that the
Borrower and any Subsidiary of the Borrower may create or incur or suffer to be
created or incurred or to exist:

(a) liens in favor of the Borrower on all or part of the assets
of Subsidiaries of the Borrower securing Indebtedness owing by
Subsidiaries of the Borrower to the Borrower;

(b) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties to
secure claims for labor, material or supplies in respect of obligations
not overdue;

(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;

(d) liens on properties in respect of judgments or awards that
have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of
which the Borrower or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceeding for review and in respect of which a
stay of execution shall have been obtained pending such appeal or
review;

(e) liens of carriers, warehousemen, mechanics and materialmen,
and other like liens on, in existence less than 120 days from the date
of creation thereof in respect of obligations not overdue;

(f) encumbrances on Real Estate consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property
and defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Borrower or a Subsidiary of the
Borrower is a party, and other minor liens or encumbrances none of which
in the opinion of the Borrower interferes materially with the use of the
property affected in the ordinary conduct of the business of the
Borrower and its Subsidiaries, which defects do not individually or in
the aggregate have a Material Adverse Effect;

(g) presently outstanding liens listed on SCHEDULE 8.2 attached
hereto and other liens securing renewals, extensions or refinancings of
Indebtedness such liens currently secure to the extent such refinancing
Indebtedness is permitted to be incurred under ss.8.1;

(h) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof

<PAGE> 53
-47-

to secure purchase money Indebtedness permitted to be incurred pursuant
to ss.8.1 and incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired;

(i) liens in respect of Indebtedness of Broker-Dealer
Subsidiaries permitted by ss.8.1 hereof;

(j) liens in respect of securities repurchase agreements of a
Broker-Dealer Subsidiary; and

(k) involuntary liens which do not secure any obligation which is
otherwise prohibited by this Agreement and which are removed or
discharged within thirty (30) days so long as (i) the Borrower
immediately (and in any event within ten days of imposition of the lien)
gives the Banks written notice of the lien, (ii) the Borrower in the
Banks' reasonable judgment is taking all reasonable steps to remove the
lien, (iii) in the Banks' reasonable judgment there is a reasonable
likelihood the lien will be removed and (iv) no foreclosure proceedings
are instituted or execution levied.

8.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except:

(a) in marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase by the Borrower;

(b) in demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total assets
in excess of $1,000,000,000;

(c) in securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United States
of America or any state thereof that at the time of purchase have been
rated and the ratings for which are not less than "P 1" if rated by
Moody's Investors Service, Inc., and not less than "A 1" if rated by
Standard and Poor's;

(d) Investments existing on the date hereof and listed on
SCHEDULE 8.3 attached hereto;

(e) Investments in investment companies sponsored by the Borrower
or any of its Subsidiaries for which any Advisory Subsidiary is or will
become an investment adviser;

(f) Investments consisting of the Guaranty and any Instruments of
Adherence and Investments by the Borrower in Subsidiaries of the
Borrower (including Persons which immediately

<PAGE> 54
-48-

become Subsidiaries as a result of an acquisition permitted by ss.8.5.1)
so long as such entities remain Subsidiaries of the Borrower;

(g) Investments by the Broker-Dealer Subsidiaries; and

(h) Investments by the Borrower and Subsidiaries of the Borrower
(other than the Broker-Dealer Subsidiaries), PROVIDED that the aggregate
amount of such Investments does not exceed $20,000,000.

8.4. RESTRICTED PAYMENTS. (a) The Borrower will not make any Restricted
Payments; PROVIDED, HOWEVER, so long as no Default or Event of Default has
occurred and is continuing or would exist as a result thereof, the Borrower
shall be permitted to make Distributions.

(b) Except pursuant to applicable net capital requirements under the
Exchange Act and agreements with securities exchanges, neither the Borrower nor
any Subsidiary of the Borrower will enter into or be bound by any agreement
(including covenants requiring the maintenance of specified amounts of net worth
or working capital) restricting the right of any Subsidiary of the Borrower to
make Distributions (in cash or in kind) or extensions of credit or other
payments of whatsoever nature or to make transfers or distributions of all or
any part of its assets to the Borrower (directly or indirectly through another
Subsidiary) unless such agreements are reasonably acceptable to the Majority
Banks.

8.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.

8.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary course
of business consistent with past practices) except the merger or
consolidation of one or more of the Subsidiaries of the Borrower with
and into the Borrower, or the merger or consolidation of two or more
Subsidiaries of the Borrower, UNLESS (a) no Default or Event of Default
has occurred and is continuing at the time of any such merger,
consolidation or acquisition or would result therefrom and (b) if the
Borrower or any Guarantor is a party to any such merger or
consolidation, the Borrower or such Guarantor, as the case may be, is
the surviving entity.

8.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to or agree to or
effect any Asset Sale, whether in one transaction or a series of
transactions (other than the disposition of assets in the ordinary
course of business, consistent with past practices), other than sales by
any Broker-Dealer Subsidiary of Investments permitted under ss.8.3(g),
if in any fiscal year such assets constitute 10% or more of the

<PAGE> 55
-49-

Consolidated Total Assets of the Borrower and its Subsidiaries as of the
first day of such fiscal year.

8.6. SALE AND LEASEBACK. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred, other than any such arrangement which is permitted under ss.8.1
hereof.

8.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and will
not permit any of its Subsidiaries to, (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law.

8.8. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will

(a) engage in any "prohibited transaction" within the meaning of
ss.406 of ERISA or ss.4975 of the Code which could result in a material
liability for the Borrower or any of its Subsidiaries; or

(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in ss.302 of ERISA, whether
or not such deficiency is or may be waived; or

(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrower or any of its Subsidiaries pursuant to ss.302(f)
or ss.4068 of ERISA; or

(d) amend any Guaranteed Pension Plan in circumstances requiring
the posting of security pursuant to ss.307 of ERISA or ss.401(a)(29) of
the Code; or

(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of ss.4001 of ERISA) of

<PAGE> 56
-50-

all Guaranteed Pension Plans exceeding the value of the aggregate assets
of such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities by
more than $5,000,000.

8.9. BUSINESS ACTIVITIES. The Borrower will not, and will not permit any
of its Subsidiaries to, engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business other than the businesses
conducted by them on the Closing Date and in related businesses.

8.10. CHANGE IN TERMS OF EQUITY SECURITIES; ISSUANCE OF EQUITY
SECURITIES BY SUBSIDIARIES. (a) The Borrower will not permit any of its
Subsidiaries to effect or permit any change in or amendment to any of the
Capitalization Documents or any other document or instrument pertaining to the
terms of such Person's Equity Securities without the prior written consent of
the Banks.

(b) The Borrower will not permit any of its Subsidiaries to issue or
sell any Equity Securities to any Person other than the Borrower or any
wholly-owned Subsidiary of the Borrower.

8.11. FISCAL YEAR. The Borrower will not, and will not permit any of it
Subsidiaries to, change the date of the end of its fiscal year from that set
forth in ss.6.5.1.

8.12. TRANSACTIONS WITH AFFILIATES. Except for activities listed on
SCHEDULE 6.14 hereto, the Borrower will not, and will not permit any of its
Subsidiaries to, engage in any transaction with any Affiliate (other than for
services as employees, officers and directors and other than intercompany
transactions among the Borrower and its Subsidiaries), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such Affiliate or, to the knowledge of the
Borrower, any corporation, partnership, trust or other entity in which any such
Affiliate has a substantial interest or is an officer, director, trustee or
partner, on terms more favorable to such Person than would have been obtainable
on an arm's-length basis in the ordinary course of business.

8.13. INCONSISTENT AGREEMENTS. Neither the Borrower nor any of its
Subsidiaries will, nor will they permit their Subsidiaries to, enter into any
agreement containing any provision which would be violated or breached by the
performance by the Borrower or such Subsidiary of its obligations hereunder or
under any of the Loan Documents.

<PAGE> 57

-51-

9. FINANCIAL COVENANTS OF THE BORROWER.

The Borrower covenants and agrees that, so long as any Revolving Credit
Loan or Note is outstanding or any Bank has any obligation to make any Revolving
Credit Loans:

9.1. FUNDED DEBT TO NET WORTH. The Borrower will not at any time permit
the ratio of Funded Debt to Consolidated Net Worth to exceed 0.35 to 1.

9.2. NET WORTH. The Borrower will not permit, at any time, the
Consolidated Net Worth of the Borrower and its Subsidiaries to be less than (a)
$150,000,000, PLUS, on a cumulative basis (b) 50% of positive Consolidated Net
Income of the Borrower and its Subsidiaries earned during each fiscal quarter of
the Borrower commencing with the fiscal quarter ending September 30, 1998, PLUS
(c) 75% of the Net Cash Proceeds of any Equity Issuance.

10. CLOSING CONDITIONS.

The obligations of the Banks to make the initial Revolving Credit Loans
shall be subject to the satisfaction of the following conditions precedent on or
before August 21, 1998:

10.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.

10.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks shall
have received from the Borrower and each of its Active Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (a) its charter or other incorporation documents as
in effect on such date of certification, and (b) its by-laws as in effect on
such date.

10.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.

10.4. INCUMBENCY CERTIFICATE. Each of the Banks shall have received from
the Borrower and each of its Subsidiaries party to any of the Loan Documents an
incumbency certificate, dated as of the Closing Date, signed by a duly
authorized officer of the Borrower or such Subsidiary, and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a) to
sign, in the name and on behalf of each of the

<PAGE> 58
-52-

Borrower of such Subsidiary, each of the Loan Documents to which the Borrower or
such Subsidiary is or is to become a party; (b) in the case of the Borrower, to
make Loan Requests and Conversion Requests; and (c) to give notices and to take
other action on its behalf under the Loan Documents.

10.5. UCC SEARCH RESULTS. The Agent shall have received from each of the
Borrower and its Active Subsidiaries the results of UCC searches, indicating no
liens other than Permitted Liens.

10.6. CERTIFICATES OF INSURANCE. The Agent shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits and
policy terms.

10.7. SOLVENCY CERTIFICATE. Each of the Banks shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.

10.8. OPINIONS OF COUNSEL. Each of the Banks and the Agent shall have
received a favorable opinion addressed to the Banks and the Agent, dated as of
the Closing Date, in form and substance satisfactory to the Banks and the Agent
from each of Hutchins, Wheeler & Dittmar, a Professional Corporation, counsel to
the Borrower and its Subsidiaries party to the Loan Documents.

10.9. PAYMENT OF FEES. The Borrower shall have paid to the Banks or the
Agent, as appropriate, the fees required to be paid pursuant to the Fee Letter.

10.10. FINANCIAL STATEMENTS AND FOCUS REPORTS. The Borrower shall have
delivered to the Banks (a) the information specified in ss.7.4(a) for the most
recently ended Fiscal Year and (b) a copy of the most recently filed Focus
Reports of the Broker-Dealer Subsidiaries.

10.11. FEDERAL RESERVE FORMS U-1. The Borrower shall have completed,
executed and delivered to each Bank a Federal Reserve Form U-1 with respect to
the transactions contemplated herein.

10.12. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Borrower in the Loan Documents or otherwise made by or on
behalf of the Borrower in connection therewith or after the date thereof shall
have been true and correct in all material respects.

10.13. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement and the other Loan Documents
shall be satisfactory to the Agent and the Agent's Special Counsel in form and
substance, and the Agent shall have received all information and such
counterpart originals or certified copies of such

<PAGE> 59

-53-

documents and such other certificates, opinions or documents as the Agent and
the Agent's Special Counsel may reasonably require.

10.14. UCC TERMINATIONS. The Agent shall have received evidence that all
of the Borrower's obligations under the Original Credit Agreement have been
repaid in full, that all commitments thereunder have been terminated and that
all UCC-3 terminations and other discharges as are necessary to release the
security interests granted pursuant to the Original Credit Agreement have been
received.

11. CONDITIONS TO ALL BORROWINGS.

The obligations of the Banks to make any Revolving Credit Loan, whether
on or after the Closing Date, shall also be subject to the satisfaction of the
following conditions precedent:

11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement and the other Loan Documents shall be true as
of the date as of which they were made and shall also be true at and as of the
time of the making of such Revolving Credit Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate will not have a Material Adverse Effect, and to the
extent that such representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and be continuing.

11.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Revolving Credit
Loan.

11.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.

11.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.

<PAGE> 60
-54-

12. EVENTS OF DEFAULT; ACCELERATION; ETC.

12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:

(a) the Borrower shall fail to pay any principal of the Revolving
Credit Loans when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment;

(b) the Borrower or any of its Subsidiaries shall fail to pay any
interest on the Revolving Credit Loans, the commitment fee, the Agent's
fee, or other sums due hereunder or under any of the other Loan
Documents, within three (3) days of the date when the same shall become
due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;

(c) the Borrower shall fail to comply with any of its covenants
contained in secs.7 (other than secs.7.5.2, 7.7, 7.11 or 7.13), 8 or 9
hereof, or any of the covenants contained in the Guaranty;

(d) the Borrower or any of its Subsidiaries shall fail to perform
any term, covenant or agreement contained herein or in any of the other
Loan Documents (other than those specified elsewhere in this ss.12) for
twenty (20) days after written notice of such failure has been given to
the Borrower by the Agent;

(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents
or in any other document or instrument delivered pursuant to or in
connection with this Credit Agreement shall prove to have been false in
any material respect upon the date when made or deemed to have been made
or repeated;

(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized
Leases in excess of $5,000,000, or fail to observe or perform any
material term, covenant or agreement contained in any agreement by which
it is bound, evidencing or securing borrowed money or credit received or
in respect of any Capitalized Leases in excess of $5,000,000 for such
period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof;

<PAGE> 61
-55-

(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Borrower or any of its
Subsidiaries or of any substantial part of the assets of the Borrower or
any of its Subsidiaries or shall commence any case or other proceeding
relating to the Borrower or any of its Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now
or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein or such petition or application
shall not have been dismissed within sixty (60) days following the
filing thereof;

(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for relief is
entered in respect of the Borrower or any Subsidiary of the Borrower in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted;

(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final, nonappealable judgment against the Borrower or any of its
Subsidiaries that, with other outstanding final, nonappealable
judgments, undischarged, against the Borrower or any of its Subsidiaries
exceeds in the aggregate $3,000,000;

(j) any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof
or with the express prior written agreement, consent or approval of the
Banks, or any action at law, suit or in equity or other legal proceeding
to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of the Borrower or any of its Subsidiaries
party thereto or any of their respective stockholders, or any court or
any other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;

(k) the Borrower or any ERISA Affiliate incurs any liability upon
the termination of a Guaranteed Pension Plan to the PBGC or a

<PAGE> 62
-56-

Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate
amount exceeding $1,000,000 (provided that nothing in this clause shall
preclude the Borrower or any ERISA Affiliate from making contributions
in contemplation of any standard termination), the Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of ERISA
by a Multiemployer Plan requiring aggregate annual payments exceeding
$1,000,000, or any of the following occurs with respect to a Guaranteed
Pension Plan: (i) an ERISA Reportable Event, or a failure to make a
required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), provided the Agent determines in its reasonable
discretion that such event (A) is likely to result in liability of the
Borrower to the PBGC or the Plan in an aggregate amount exceeding
$1,000,000, and (B) could constitute grounds for the termination of such
Plan by the PBGC, for the appointment by the appropriate United States
District Court of a trustee to administer such Plan or for the
imposition of a lien in favor of the Guaranteed Pension Plan; (ii) the
appointment by a United States District Court of a trustee to administer
such Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Plan;

(l) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any part of its
business and such order shall have a Material Adverse Effect;

(m) there shall occur the loss, suspension or revocation of, or
failure to renew, any registration, license or permit now held or
hereafter acquired by the Borrower or any of its Subsidiaries if such
loss, suspension, revocation or failure to renew would have a Material
Adverse Effect;

(n) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) other than
Lee or the Employee Group shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of twenty percent (20%) or more of
the outstanding shares of common stock of the Borrower;

(o) the Borrower shall at any time legally or beneficially own
less than 100% of the capital stock of any Guarantor; or

(p) any Guarantor denies that it has any liability or obligations
under the Loan Documents to which it is a party, or shall notify the
Agent or any Bank of the Guarantor's intention to attempt to cancel or
terminate the Guaranty to which it is a party or shall fail to observe
any term, covenant, condition or agreement under any Loan Document to
which it is a party;

<PAGE> 63
-57-

then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Borrower; PROVIDED that in the event of any Event of Default specified in
secs.12.1(g) or 12.1(h) hereof, all such amounts shall become immediately due
and payable automatically and without any requirement of notice from the Agent
or any Bank.

12.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in secs.12.1(g) or 12.1(h) hereof shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the Banks
shall be relieved of all obligations to make Revolving Credit Loans to the
Borrower. If any other Event of Default shall have occurred and be continuing,
or if on any Drawdown Date the conditions precedent to the making of the
Revolving Credit Loans to be made on such Drawdown Date are not satisfied, the
Agent may and, upon the request of the Majority Banks, shall, by notice to the
Borrower, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall terminate
immediately and each of the Banks shall be relieved of all further obligations
to make Revolving Credit Loans. If any such notice is given to the Borrower the
Agent will forthwith furnish a copy thereof to each of the Banks. No termination
of the credit hereunder shall relieve the Borrower of any of the Obligations or
any of its existing obligations to any of the Banks arising under other
agreements or instruments.

12.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to ss.12.1
hereof, each Bank, if owed any amount with respect to the Revolving Credit
Loans, may, with the consent of the Majority Banks but not otherwise, proceed to
protect and enforce its rights by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the EX PARTE
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Note is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.

<PAGE> 64

-58-

13. SETOFF.

Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank, such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness evidenced by all such Notes held by such
Bank, and (b) if such Bank shall receive from the Borrower, whether by voluntary
payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by such Bank by proceedings
against the Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of the Note or Notes held by such Bank
any amount in excess of its ratable portion of the payments received by all of
the Banks with respect to the Notes held by all of the Banks, such Bank will
make such disposition and arrangements with the other Banks with respect to such
excess, either by way of distribution, PRO TANTO assignment of claims,
subrogation or otherwise as shall result in each Bank receiving in respect of
the Notes held by it its proportionate payment as contemplated by this Credit
Agreement; PROVIDED that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be rescinded
and the amount restored to the extent of such recovery, but without interest.

14. THE AGENT.

14.1. AUTHORIZATION.

(a) The Agent is authorized to take such action on behalf of each
of the Banks and to exercise all such powers as are hereunder and under
any of the other Loan Documents and any related documents delegated to
the Agent, together with such powers as are reasonably incident thereto,
PROVIDED that no duties or responsibilities not expressly assumed herein
or therein shall be implied to have been assumed by the Agent.

(b) The relationship between the Agent and each of the Banks is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the
Banks. Nothing contained in this Credit Agreement nor the other Loan
Documents shall be construed to create an agency, trust

<PAGE> 65
-59-

or other fiduciary relationship between the Agent and any of the Banks.

(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless
a "representative" of the Banks, as that term is defined in Article 1 of
the Uniform Commercial Code, for purposes of actions for the benefit of
the Banks and the Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Agent as "secured party", "mortgagee" or the like on
all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust in
collateral security intended to secure the payment or performance of any
of the Obligations, all for the benefit of the Banks and the Agent.

14.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.

14.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.

14.4. NO REPRESENTATIONS.

14.4.1. GENERAL. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the
Notes, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the
Notes, or for the value of any such collateral security or for the
validity, enforceability or collectability of any such amounts owing
with respect to the Notes, or for any recitals or statements, warranties
or representations made herein or in any of the other Loan Documents or
in any certificate or instrument hereafter furnished to it by or on
behalf of the Borrower or any of its Subsidiaries, or be

<PAGE> 66

-60-

bound to ascertain or inquire as to the performance or observance of any
of the terms, conditions, covenants or agreements herein or in any
instrument at any time constituting, or intended to constitute,
collateral security for the Notes or to inspect any of the properties,
books or records of the Borrower or any of its Subsidiaries. The Agent
shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrower or any holder of any of the
Notes shall have been duly authorized or is true, accurate and complete.
The Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the
Banks, with respect to the credit worthiness or financial conditions of
the Borrower or any of its Subsidiaries. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other
Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Credit Agreement.

14.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining
compliance with the conditions set forth in ss.10, each Bank that has
executed this Credit Agreement shall be deemed to have consented to,
approved or accepted, or to be satisfied with, each document and matter
either sent, or made available, by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Bank,
unless an officer of the Agent active upon the Borrower's account shall
have received notice from such Bank not less than five (5) days prior to
the Closing Date specifying such Bank's objection thereto and such
objection shall not have been withdrawn by notice to the Agent to such
effect on or prior to the Closing Date.

14.5. PAYMENTS.

14.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the Agent
hereunder or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to
distribute to each Bank such Bank's PRO RATA share of payments received
by the Agent for the account of the Banks except as otherwise expressly
provided herein or in any of the other Loan Documents.

14.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan Documents might involve
it in liability, it may refrain from making such distribution until its
right to make such distribution shall have been adjudicated by a court
of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be
repaid, each Person to whom any

<PAGE> 67

-61-

such distribution shall have been made shall either repay to the Agent
its proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be
determined by such court.

14.5.3. DELINQUENT BANKS. Notwithstanding anything to the contrary
contained in this Credit Agreement or any of the other Loan Documents,
any Bank that fails (a) to make available to the Agent its PRO RATA
share of any Revolving Credit Loan or (b) to comply with the provisions
of ss.13 with respect to making dispositions and arrangements with the
other Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its PRO RATA share of such payments
due and payable to all of the Banks, in each case as, when and to the
full extent required by the provisions of this Credit Agreement, shall
be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments
due to it from the Borrower, whether on account of outstanding Revolving
Credit Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their
respective PRO RATA shares of all outstanding Revolving Credit Loans.
The Delinquent Bank hereby authorizes the Agent to distribute such
payments to the nondelinquent Banks in proportion to their respective
PRO RATA shares of all outstanding Revolving Credit Loans. A Delinquent
Bank shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all
outstanding Revolving Credit Loans of the nondelinquent Banks, the
Banks' respective PRO RATA shares of all outstanding Loans have returned
to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.

14.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note as the absolute owner thereof for all purposes hereof until it shall have
been furnished in writing with a different name by such payee or by a subsequent
holder.

14.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such affiliate has not
been reimbursed by the Borrower as required by ss.15), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated or
evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by the Agent's willful misconduct or gross negligence.

<PAGE> 68

-62-

14.8. AGENT AS BANK. In its individual capacity, BKB shall have the same
obligations and the same rights, powers and privileges in respect to its
Commitment and the Revolving Credit Loans made by it, and as the holder of any
of the Notes, as it would have were it not also the Agent.

14.9. RESIGNATION. The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.

14.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this ss.14.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.

15. EXPENSES.

The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) the reasonable fees, expenses
and disbursements of the Agent's Special Counsel or any local counsel to the
Agent incurred in connection with the preparation, syndication, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
each closing hereunder, any amendments, modifications, approvals, consents or
waivers hereto or hereunder, or the cancellation of any Loan Document upon
payment in full in cash of all of the Obligations or pursuant to any terms of
such Loan Document for providing for such cancellation, (c) the fees, expenses
and disbursements of the Agent or any of its affiliates incurred by the Agent or
such affiliate in connection with the preparation, syndication, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all title insurance premiums and surveyor, engineering and appraisal
charges, (d) all reasonable out-of-pocket expenses (including without limitation
reasonable attorneys' fees

<PAGE> 69
-63-

and costs, which attorneys may be employees of any Bank or the Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or the Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in any
way related to any Bank's or the Agent's relationship with the Borrower or any
of its Subsidiaries and (e) all reasonable fees, expenses and disbursements of
any Bank or the Agent incurred in connection with UCC searches. The covenants
contained in this ss.15 shall survive payment or satisfaction in full of amounts
owing with respect to the Notes.

16. INDEMNIFICATION.

The Borrower agrees to indemnify and hold harmless the Agent, its
affiliates and the Banks from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby including, without limitation, (a) any actual or proposed
use by the Borrower or any of its Subsidiaries of the proceeds of any of the
Revolving Credit Loans, (b) the Borrower or any of its Subsidiaries entering
into or performing this Credit Agreement or any of the other Loan Documents or
(c) with respect to the Borrower and its Subsidiaries and their respective
properties and assets, the violation of any Environmental Law, the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release or
threatened release of any Hazardous Substances or any action, suit, proceeding
or investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Banks and the Agent
and its affiliates shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrower under this ss.16 are unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable law. The
covenants contained in this ss.16 shall survive payment or satisfaction in full
of all other obligations.

17. SURVIVAL OF COVENANTS, ETC.

All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any

<PAGE> 70

-64-

of its Subsidiaries pursuant hereto shall be deemed to have been relied upon by
the Banks and the Agent, notwithstanding any investigation heretofore or
hereafter made by any of them, and shall survive the making by the Banks of any
of the Revolving Credit Loans, as herein contemplated, and shall continue in
full force and effect so long as any amount due under this Credit Agreement or
the Notes or any of the other Loan Documents remains outstanding or any Bank has
any obligation to make any Revolving Credit Loans, and for such further time as
may be otherwise expressly specified in this Credit Agreement. All statements
contained in any certificate or other paper delivered to any Bank or the Agent
at any time by or on behalf of the Borrower or any of its Subsidiaries pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such Subsidiary
hereunder.

18. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.

18.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its
Subsidiaries, in connection with this Credit Agreement or otherwise, by a
Section 20 Subsidiary. The Borrower, for itself and each of its Subsidiaries,
hereby authorizes (a) such Section 20 Subsidiary to share with the Agent and
each Bank any information delivered to such Section 20 Subsidiary by the
Borrower or any of its Subsidiaries, and (b) the Agent and each Bank to share
with such Section 20 Subsidiary any information delivered to the Agent or such
Bank by the Borrower or any of its Subsidiaries pursuant to this Credit
Agreement, or in connection with the decision of such Bank to enter into this
Credit Agreement; it being understood, in each case, that any such Section 20
Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit Agreement. Such authorization shall survive the
payment or satisfaction of payment of amounts owing with respect to the Notes.

18.2. CONFIDENTIALITY. Each of the Banks and the Agent agrees, on behalf
of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Credit Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks or the Agent,
PROVIDED that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this ss.18, (b) to the extent required by statute, rule, regulation
or judicial process, (c) to counsel for any of the Banks or the Agent, (d) to
bank examiners or any other regulatory authority having jurisdiction over any
Bank or the Agent, or to

<PAGE> 71
-65-

auditors or accountants, (e) to the Agent, any Bank or any Section 20
Subsidiary, (f) in connection with any litigation to which any one or more of
the Banks, the Agent or any Section 20 Subsidiary is a party, or in connection
with the enforcement of rights or remedies hereunder or under any other Loan
Document, (g) to a Subsidiary or affiliate of such Bank as provided in ss.18.1
or (h) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant agrees to be bound by the provisions of
ss.19.6.

18.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable
law or court order, each of the Banks and the Agent shall, prior to disclosure
thereof, notify the Borrower of any request for disclosure of any such
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.

18.4. OTHER. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any Section 20 Subsidiary by
the Borrower or any of its Subsidiaries. The obligations of each Bank under this
ss.18 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of any interest in any of the Loans from any Bank.

19. ASSIGNMENT AND PARTICIPATION.

19.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it) and the Notes held by it;
PROVIDED that (a) each of the Agent and, unless a Default or Event of Default
shall have occurred and be continuing, the Borrower shall have given its prior
written consent to such assignment, which consent, in each case, will not be
unreasonably withheld, (b) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Bank's rights and obligations under
this Credit Agreement, (c) each assignment shall be in a minimum amount of
$5,000,000 (or such smaller amount if representing the entire Commitment being
assigned); (d) so long as no Default or Event of Default has occurred, (i) BKB
and its Affiliates shall at all times maintain a Commitment Percentage of at
least 11.7647%; and (ii) The Bank of New York and its Affiliates shall at all
times maintain a Commitment Percentage of at least 11.7647%; and (e) the parties
to such assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of EXHIBIT D attached hereto (an "Assignment and Acceptance"),
together with any Notes subject to such assignment. Upon

<PAGE> 72

-66-

such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five (5) Business Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (ii) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in ss.19.3, be
released from its obligations under this Credit Agreement.

19.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:

(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest;

(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrower and its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or
any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;

(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in ss.ss.6.5 and 7.4 hereof and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;

(d) such assignee will, independently and without reliance upon
the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Credit Agreement;

<PAGE> 73
-67-

(e) such assignee represents and warrants that it is an Eligible
Assignee;

(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto;

(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank; and

(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.

19.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time to
time upon reasonable prior notice. Upon each such recordation, the assigning
Bank agrees to pay to the Agent a registration fee in the sum of $3,500.

19.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such in Assignment and Acceptance and shall otherwise be substantially the form
of the assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this ss.18.4, the Borrower shall deliver an opinion of counsel,
addressed to the Banks and the Agent, relating to the due authorization,
execution and delivery of such new Notes and the legality, validity and

<PAGE> 74

-68-

binding effect thereof, in form and substance satisfactory to the Banks. The
surrendered Notes shall be cancelled and returned to the Borrower.

19.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (a) each such participation shall be in an amount of not less than
$1,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Revolving Credit Loans, extend the term
or increase the amount of the Commitment Amount of such Bank as it relates to
such participant, reduce the amount of any commitment fees to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest.

19.6. DISCLOSURE. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
PROVIDED that such assignees or participants or potential assignees or
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation.

19.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to ss.12.1 or ss.12.2, and
the determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Revolving Credit Loans. If any Bank sells a
participating interest in any of the Revolving Credit Loans to a participant,
and such participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank hereunder
or under any of the other Loan Documents for purposes of granting consents or
waivers or for purposes of agreeing to amendments or modifications to any of the
Loan Documents or for purposes of making requests to the Agent pursuant to
ss.12.1 or ss.12.2 to the extent that such participation is beneficially owned
by the Borrower or any Affiliate of the Borrower, and the determination of the

<PAGE> 75
-69-

Majority Banks shall for all purposes of this Credit Agreement and the other
Loan Documents be made without regard to the interest of such transferor Bank in
the Revolving Credit Loans to the extent of such participation.

19.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.16 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. If any Reference Bank
transfers all of its interest, rights and obligations under this Credit
Agreement, the Agent shall, in consultation with the Borrower and with the
consent of the Borrower and the Majority Banks, appoint another Bank to act as a
Reference Bank hereunder. Anything contained in this ss.19 to the contrary
notwithstanding, any Bank may at any time pledge all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Notes) to any of the twelve Federal Reserve Banks organized under ss.4 of
the Federal Reserve Act, 12 U.S.C. ss.341. No such pledge or the enforcement
thereof shall release the pledgor Bank from its obligations hereunder or under
any of the other Loan Documents.

19.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.

20. NOTICES, ETC.

Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph, telecopy, telefax or
telex and confirmed by delivery via courier or postal service, addressed as
follows:

(a) if to the Borrower, Freedom Securities Corporation, One World
Financial Center, 200 Liberty Street, New York, New York 10281,
Attention: Kevin McKay, or at such other address for notice as the
Borrower shall last have furnished in writing to the Person giving the
notice, with copies to (i) Thomas H. Lee Company, 75 State Street,
Boston, Massachusetts 02109, Attention: Thomas M. Hagerty and (ii)
Hutchins, Wheeler & Dittmar, 101 Federal Street, Boston, Massachusetts
02110, Attention: James Westra, Esq.;

(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Carol Clark, Managing Director or such other
address for notice as the Agent shall last have

<PAGE> 76
-70-

furnished in writing to the Person giving the notice, with a copy to
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110
Attention: Lea Anne Copenhefer, Esq.; and

(c) if to any Bank, at such Bank's address set forth on SCHEDULE
1 attached hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.

Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.

21. GOVERNING LAW.

THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SS.19. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.

22. HEADINGS.

The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.

23. COUNTERPARTS.

This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.

<PAGE> 77
-71-

24. ENTIRE AGREEMENT, ETC.

The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.25.

25. WAIVER OF JURY TRIAL.

The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (a)
certifies that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.

26. CONSENTS, AMENDMENTS, WAIVERS, ETC.

Except as otherwise expressly provided in this Credit Agreement, any
consent or approval required or permitted by this Credit Agreement to be given
by the Banks may be given, and any term of this Credit Agreement, the other Loan
Documents or any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrower or any of its
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the written consent of the Majority Banks. Notwithstanding the foregoing, there
shall be no decrease in the rate of interest on the Notes (other than interest
accruing pursuant to ss.4.11 following the effective date of any waiver by the
Majority Banks of the Default or Event of Default relating thereto), any change
to ss.2.3.1 (including, without limitation, any amendmenT to the definitions of
Net Cash Proceeds, Net Cash Sale Proceeds, Asset Sales or Equity Issuances), any
release of any Guarantor (except if the release of such Guarantor is as a result
of the sale of capital stock of such Guarantor and such sale is permitted
pursuant to ss.8.5.2 hereof), or any change in the maturity of the Notes, the
Commitment Amount or the Commitment Percentages of the Banks, without the
written

<PAGE> 78

-72-

consent of the Borrower and the written consent of each Bank affected thereby;
this ss.26 and the definition of Majority BankS may not be amended without the
written consent of all of the Banks; and the amount of the Agent's Fee and ss.14
may not be amended without the written consent of the Agent. No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon. No course of dealing or delay or omission on the part of the
Agent or any Bank in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances.

27. SEVERABILITY.

The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.

[signature page follows]

<PAGE> 79
-73-

IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.

FREEDOM SECURITIES CORPORATION

/s/ John H. Goldsmith
By: _________________________________
Name: John H. Goldsmith
Title: President

BANKBOSTON, N.A., individually and
as Administrative and Documentation
Agent

/s/ Carol A. Clark
By: _________________________________
Name:
Title:

THE BANK OF NEW YORK,
individually and as Syndication Agent

/s/ Mark T. Rodgers
By: _________________________________
Name:
Title:

CREDIT LYONNAIS

/s/ Renaud d'Herbes
By: _________________________________
Name:
Title:

<PAGE> 1
EXHIBIT 5.1

September 29, 1998

Freedom Securities Corporation
One Beacon Street
Boston, MA 02108

Ladies and Gentlemen:

We have acted as counsel to Freedom Securities Corporation, a Delaware
corporation (the "Company"), in connection with proceedings being taken to
register under the Securities Act of 1933, as amended, 776,555 shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock") pursuant
to a Registration Statement on Form S-1 (File No. 333-62857) (the "Registration
Statement").

As such counsel, we have examined (i) certain corporate records of the
Company, including its Amended and Restated Certificate of Incorporation, its
Amended and Restated Bylaws, stock records and Minutes of Meetings of its Board
of Directors; (ii) a Certificate of the Secretary of State of the State of
Delaware as to the legal existence of the Company; and (iii) such other
documents as we have deemed necessary as a basis for the opinions hereinafter
expressed.

Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:

1. The Company is a validly existing corporation under the laws of the
State of Delaware.

2. The Company is authorized to issue 60,000,000 shares of Common Stock
par value $.01 per share, and 1,000,000 shares of Preferred stock,
par value $.01 per share.

3. When issued and sold under the circumstances contemplated in the
Registration Statement, the 776,555 shares of Common Stock offered by
the Company will be duly authorized, validly issued, fully paid and
nonassessable.
<PAGE> 2
Freedom Securities Corporation
September 29, 1998
Page 2

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement.

Very truly yours,

/s/ HUTCHINS, WHEELER & DITTMAR
----------------------------------
Hutchins, Wheeler & Dittmar
A Professional Corporation

HUTCHINS, WHEELER & DITTMAR
A Professional Corporation

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Historical Consolidated Financial and Other Data" and "Experts" and to the use
of our report dated March 10, 1998, in the Registration Statement (Form S-1 No.
333-62857) and related Prospectus of Freedom Securities dated September 29,
1998.

/s/ Ernst & Young LLP

New York, New York
September 29, 1998

<PAGE> 1
EXHIBIT 10.33

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of this 15th day of
September, 1998 is entered into between Freedom Securities Corporation, a
Delaware corporation with its principal place of business at One Beacon Street,
Boston, Massachusetts (the "Company"), and John F. Luikart, (the "Executive").

In consideration of the mutual covenants and promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:

1. Term of Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company, upon the terms
set forth in this Agreement, for the period commencing on the date of this
Agreement and ending on September 15, 2000 (the "Expiration Date"), unless
sooner terminated in accordance with the provisions of this Agreement.

2. Position and Performance.

2.1 Offices. The Executive shall serve as Chief Executive Officer of
Sutro & Co., Incorporated. The Executive shall be subject to the supervision of
the Chief Executive officer (the "CEO") of the Company and shall also have such
other powers, duties and responsibilities commensurate with such office or
offices as may from time to time reasonably be prescribed by the CEO. In
addition, the Executive agrees to serve during the term of his employment
hereunder, if elected or appointed thereto, in one or more positions as an
officer or director of the Company or any one or more of its present or future
Subsidiaries. Service in such additional offices will be without additional
compensation except for reimbursement of reasonably related business expenses
on the same terms as provided elsewhere in this Agreement. The Company shall
not cause the Executive to relocate his residence in connection with the
fulfillment of his duties and responsibilities hereunder without the
Executive's prior consent.

2.2 Performance. During the term hereof, the Executive shall be
employed by the Company on a full-time basis and shall perform and discharge
(faithfully, diligently and to the best of his ability) his duties and
responsibilities hereunder and shall be accountable to the CEO; provided,
however, that Executive may pursue community and charitable activities and hold
positions in connection therewith and such other activities as may be approved
in advance by the CEO, such approval not to be unreasonably withheld.

<PAGE> 2
3. Compensation and Benefits.

3.1 Salary. The Company shall pay the Executive such annual base
salary as the Executive and the CEO agree upon from time to time. In addition,
the Executive shall be entitled to receive bonus compensation, if any, in such
amount or pursuant to such formula as the Executive and the CEO agree upon from
time to time. Notwithstanding the foregoing, the Executive shall be entitled to
receive minimum cash compensation under this Agreement, whether as salary,
bonus, or otherwise (not including any gain on the purchase of Company stock)
in any calendar year of at least $700,000 less such amounts or deductions
required to be withheld by applicable law. Base salary shall be payable in
accordance with the payroll practices of the Company.

3.2 Other Fringe Benefits. The Executive shall be entitled to
participate in all benefit programs (including, without limitation, all life
and disability insurance, health and accident plans, retirement plans, stock
incentive plans, and retention plans and other arrangements) that the Company
(or its subsidiaries) makes available to employees or key executives of the
Company (or any such subsidiary), with the Executive's participation to be at a
level consistent with the Executive's position with the Company. The Executive
shall be entitled to 6 weeks paid vacation per calendar year, to be taken at
such times as he deems appropriate. The Executive shall be entitled to carry
forward unused vacation pay and to cash out any unused vacation pay upon the
termination of the Executive's employment. The benefits described in this
Section 3.2 are hereinafter referred to as the "Benefits."

3.3 Reimbursement of Expenses. The Company shall promptly reimburse
the Executive for reasonable travel, entertainment and other expenses incurred
or paid by the Executive in connection with, or related to, the performance of
the Executive's duties, responsibilities or services under this Agreement upon
presentation by the Executive of documentation, expense statements, vouchers
and/or other supporting information as the Company may request, provided,
however, that the amount available for such travel, entertainment and other
expenses may be fixed in advance by the CEO.

4. Employment Termination.

4.1 Date of Termination; Term of Employment. The term "Date of
Termination" shall mean the earlier of (i) the Expiration Date or (ii) if the
Executive's employment is sooner terminated hereunder, the date on which such
termination is to be effective pursuant to the terms hereof. For all purposes
of this Agreement, references to the "term" of the Executive's employment
hereunder shall mean the period commencing on the date hereof and ending on the
Date of Termination.

4.2 Upon Death or Disability. This Agreement shall terminate on the
date of the death or disability of the Executive. As used in this Agreement,
the term "disability" shall mean the inability of the Executive, due to a
physical or mental disability, or a period of 180 consecutive days to perform
the essential functions of the
<PAGE> 3
Executive's position which are contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to both
the Executive and the Company, provided that if the Executive and the Company do
not agree on a physician, the Executive and the Company shall each select a
physician and those two together shall select a third physician, whose
determination as to disability shall be binding on all parties. The reasonable
fees and expenses of any and all such physicians shall be borne by the Company.

4.3 By the Company for Cause. This Agreement may be terminated by the
Company for cause immediately upon written notice by the Company to the
Executive setting forth the basis for such termination with particularity. For
the purposes of this Section 4.3, "cause" for termination shall mean (i) a
material failure of the Executive to perform the Executive's assigned duties
for the Company or gross negligence or willful misconduct of the Executive in
the performance of the Executive's assigned duties for the Company or any
breach of any covenant contained in Section 6 or 7 hereof, in each case after
notice and a reasonable opportunity to cure (if such act or failure shall be
susceptible to cure) of not less than 30 days, and (ii) the conviction of the
Executive of, or the entry of a pleading of guilty or nolo contendere by the
Executive to, any crime involving moral turpitude or any felony.

4.4 By the Executive for Good Reason. This Agreement may be
terminated by the Executive upon 30 days' prior written notice to the Company
for good reason. For purposes of this Section 4.4, "good reason" shall mean (i)
any removal by the Company of the Executive from the position indicated in
Section 2 hereof, except in connection with termination of the Executive's
employment for cause or termination or suspension of employment due to the
Executive's incapacity, (ii) a reduction in the Executive's compensation below
the minimum amount provided for in Section 3.1 hereof or Benefits (except to the
extent that any such reduction is the result of a change to or termination of a
benefit program in which the Executive participates which applies equally to all
other participants therein), or (iii) any breach by the Company of its
obligations under this Agreement or any other willful action by the Company that
is materially inconsistent with the terms of this Agreement after written notice
and a reasonable opportunity to cure of not less than 30 days.

4.5 At the Election of either Party. This Agreement may be terminated
by either the Company or the Executive at any time upon at least 30 days' prior
written notice.

5. Effect of Termination.

5.1 Termination by the Company for Cause or Termination by Executive
Pursuant to Section 4.5. In the event that the Executive's employment is
terminated for cause pursuant to section 4.3 or the Executive shall terminate
this Agreement pursuant to Section 4.5, the Company shall pay to the Executive
salary, bonus
<PAGE> 4
and other cash compensation at his then current rate of pay (which shall be not
less than the amount of salary, bonus and other cash compensation earned per
day for the fiscal year ended immediately prior to such Date of Termination and
in no event less than the $700,000 per annum rate of pay) and Benefits through
the Date of Termination, provided, however, that in the event of any
termination of the Executive's employment for cause, the foregoing compensation
amount shall be the minimum compensation set forth in Section 3.1 hereof.

5.2 Termination by the Company without Cause or Termination by the
Executive pursuant to Section 4.4. In the event that the Executive's employment
is terminated by the Company pursuant to Section 4.5 or the Executive
terminates his employment pursuant to Section 4.4, the Company shall pay to the
Executive an amount equal to his salary, bonus and other cash compensation at
his then current rate of pay (which shall be not less than the amount of
salary, bonus and other cash compensation earned per day for the fiscal year
ended immediately prior to such Date of Termination and in no event less than
the $700,000 per annum rate of pay) and benefits (or the cash value thereof)
through the end of the twenty-fourth (24th) month following such Date of
Termination (the "Severance Period"). The compensation payable during the
Severance Period shall be paid in a lump sum amount equal to $500,000 within
five business days after the Date of Termination and the remaining compensation
shall be paid to the Executive in equal monthly installments on the first day
of each month during the Severance Period, plus accrued interest on such
installment amounts at a rate equal to LIBOR. In addition, any unvested stock
options, restricted stock or other equity or partnership interests of the
Company or any of its Subsidiaries held by the Executive on the Date of
Termination shall become fully vested, and in the case of stock options
immediately exercisable, to the extent not prohibited by applicable law.

5.3 Termination for Death or Disability. If the Executive's
employment is terminated by death or because of disability pursuant to Section
4.2, the Company shall pay to the estate of the Executive or to the Executive,
as the case may be, salary, bonus and other cash compensation at his then
current rate of pay (which shall be not less than the amount of salary, bonus
and other cash compensation earned per day for the fiscal year ended
immediately prior to such Date of Termination and in no event less than the
$700,000 per annum rate of pay) and Benefits up to the end of the month in
which the termination of the Executive's employment because of death or
disability occurs.

5.4 Liquidated Damages. Any payments paid to the Executive by the
Company under this Section 5 shall be deemed liquidated damages and shall be in
lieu of any other rights to which the Executive may be entitled.

5.5 Survival. The provisions of Sections 5, 6 and 7 shall survive the
termination of this Agreement.
<PAGE> 5
6. Non-Solicit.

(a) During the Non-solicit Period, the Executive will not:

(i) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the brokerage or
investment banking clients, customers or accounts of the Company or
its subsidiaries.
(ii) solicit any officer, senior manager or senior broker who
was an employee of the Company at any time during the term of this
Agreement to leave such employment.

(b) For purposes of this Section 6, the term "Non-solicit Period"
shall mean the period commencing on the date hereof and (i) ending two years
after the date the Executive's employment is terminated by the Company pursuant
to Section 4.5 or by the Executive pursuant to Section 4.4, or (ii) ending six
months after the date the Executive terminates his employment pursuant to
Section 4.5.

(c) If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

(d) The restrictions contained in this Section 6 are necessary for
the protection of the business and goodwill of the Company and its affiliates
and are considered by the Executive to be reasonable for such purpose. The
Executive agrees that any breach of this Section 6 could cause the Company and
its affiliates substantial and irrevocable damage and therefore, in the event
of any such breach, in addition to such other remedies which may be available,
the Company and its affiliates shall have the right to seek specific
performance and injunctive relief.

7. Unauthorized Disclosure of Confidential Information.

(a) Confidentiality. The Executive acknowledges that the Company,
its subsidiaries and its affiliates continually develop Confidential
Information, that the Executive may develop Confidential Information for the
Company or its affiliates and that the Executive may learn of Confidential
Information during the course of his employment. The Executive will comply with
the written policies and procedures of the Company for protecting Confidential
Information which will be provided to him and, for the term hereof and
thereafter, will not disclose to any person (except as required by any statutory
or regulatory requirement or mandatory court order, subpoena or other legal
process, and except to any person required for the proper performance of his
duties and responsibilities to the Company and its affiliates), or use for his
own benefit or gain or otherwise use in a manner adverse to the interests of
the Company and its affiliates, any
<PAGE> 6
Confidential Information obtained by the Executive incident to his employment
or other association with the Company or any of its affiliates.

(b) Return of Documents. All documents, records, tapes and other media of
every kind and description relating to the business, present or otherwise, of
the Company, its subsidiaries or its affiliates and any copies, in whole or in
part, thereof (the "Documents"), whether or not prepared by the Executive,
shall be the sole and exclusive property of the Company and its affiliates. The
Executive shall safeguard all Documents and shall surrender to the Company at
the time his employment terminates, or at such earlier time or times as the CEO
or his designee may specify, all Documents then in the Executive's possession or
control.

(c) Assignment of Rights to Intellectual Property. The Executive shall
promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns to the Company (or as otherwise directed by the
Company) the Executive's full right, title and interest in and to all
Intellectual Property as defined herein. The Executive agrees to execute any
and all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation the
execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to the Company and
to permit the Company to enforce any patents, copyrights or other proprietary
rights to the Intellectual Property. The Executive will no charge the Company
for time spent in complying with these obligations. All copyrightable works
that the Executive creates shall be considered "work made for hire".

(d) Defined Terms. "Confidential Information" as used herein means any and
all information of the Company and its subsidiaries that is not generally known
by others with whom they compete or do business, or with whom they plan to
compete or do business and any and all information, not publicly know, which, if
disclosed, would assist in competition against the Company and its subsidiaries,
or the disclosure of which would otherwise be adverse to the interest of the
Company or any of its subsidiaries. Confidential Information also includes
comparable information that the Company or any of its subsidiaries have received
belonging to others or which was received by the Company or any of its
subsidiaries with any understanding that it would not be disclosed; provided,
however, that Confidential Information shall not include anything (i) that has
been disclosed to the public (other than in connection with a breach by the
Executive of his obligations hereunder), (ii) that has been obtained by the
Executive from a third party otherwise than in violation of a confidentiality
agreement to which such third party is bound, or (iii) that has otherwise
lawfully entered the public domain. "Intellectual Property" as used herein means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) relating to the business of the Company, its Subsidiaries and its
affiliates conceived, made, created, developed or reduced to practice
<PAGE> 7
by the Executive (whether alone or with others, whether or not during normal
business hours or on or off Company premises) during the Executive's employment.

8. Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States mail, by registered or certified mail, postage
prepaid, or via a reputable nationwide overnight courier service addressed to
the other party at such address or addresses as either party shall designate to
the other in accordance with this Section 8.

9. Indemnity. The Company hereby agrees, to the maximum extent permitted
from time to time under Delaware law, to indemnify the Executive, and upon
request shall advance expenses to the Executive if he shall become a party or
is threatened to be made a party to, any threatened, pending or completed
action, suit, proceeding or claim, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was or has agreed to be a
director or hold any of such offices, against expenses (including attorneys'
fees and expenses), judgments, fines, penalties and amounts paid in settlement
incurred in connection with the investigation, preparation to defend or defense
of such action, suit, proceeding or claim; provided, however, that the
foregoing shall not require the Company to indemnify the Executive against, or
advance expenses to the Executive in connection with, any action, suit,
proceeding or claim resulting from any breach of the Executive's duties
hereunder that would permit the Company to terminate this Agreement for cause.
Such indemnification shall not be exclusive of other indemnification rights
arising under any by-laws, agreement, vote of directors or stockholders or
otherwise.

10. Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.

11. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.

12. Amendment. This Agreement may be amended or modified only by a
written instrument executed by each of the Company and the Executive.

13. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of California without regard to conflict
of law principles.

14. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may
<PAGE> 8
succeed to its assets or business, provided, however, that the obligations of
the Executive are personal and shall not be assigned by him.

15. Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in San
Francisco, California, in accordance with the Rules of the national Association
of Securities Dealers, Inc. or of the New York Stock Exchange, Inc. Judgment
may be entered on an arbitrator's award relating this Agreement in any
court having jurisdiction.

16. Miscellaneous.

16.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope
or substance of any section of this Agreement.

16.3 In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.

FREEDOM SECURITIES CORPORATION

By: /s/ JOHN GOLDSMITH
-------------------------
John Goldsmith

Title:
-------------------------

EXECUTIVE: /s/ JOHN LUIKART
----------------------
John Luikart

<PAGE> 1
EXHIBIT 10.34

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of this 15th day of
September, 1998 is entered into between Freedom Securities Corporation, a
Massachusetts corporation with its principal place of business at One Beacon
Street, Boston, Massachusetts (the "Company"), and Kevin J. McKay, ("the
Executive").

In consideration of the mutual covenants and promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:

2. Position and Performance.

2.1 Offices. The Executive shall serve as General Counsel, Executive
Vice President of the Company. The Executive shall be subject to the
supervision of the Chief Executive Officer (the "CEO") of the Company and shall
also have such other powers, duties and responsibilities commensurate with such
office or offices as may from time to time reasonably be prescribed by the CEO.
In addition, the Executive agrees to serve during the term of his employment
hereunder, if elected or appointed thereto, in one or more positions as an
officer or director of the Company or any one or more of its present or future
Subsidiaries. Service in such additional offices will be without additional
compensation except for reimbursement of reasonably related business expenses
on the same terms as provided elsewhere in this Agreement. The Company shall
not cause the Executive to relocate his residence in connection with the
fulfillment of his duties and responsibilities hereunder without the
Executive's prior consent.

3. Compensation and Benefits.

3.1 Salary. The Company shall pay the Executive such annual base
salary as the employee and the CEO agree upon from time to time. In addition,
the Employee shall be entitled to receive bonus compensation, if any, in such
amount or

<PAGE> 2
pursuant to such formula as the Executive and the CEO agree upon from
time to time. Notwithstanding the foregoing, the Executive shall be entitled to
receive minimum cash compensation under this Agreement, whether as salary,
bonus, or otherwise (not including any gain on the purchase of Company stock)
in any calendar year of at least $650,000 less such amounts or deductions
required to be withheld by applicable law. Base salary shall be payable in
accordance with the payroll practices of the Company.

4. Employment Termination.

4.2 Upon Death or Disability. This Agreement shall terminate on the
date of the death or disability of the Executive. As used in this Agreement, the
term "disability" shall mean the inability of the Executive, due to a physical
or mental disability, for a period of 180 consecutive days to perform the
essential functions of the Executive's position which are contemplated under
this Agreement. A determination of disability shall be made by a physician
satisfactory to both the Executive and the Company, provided that if the
Executive and the Company do not agree on a physician, the Executive and the
Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on all

2
<PAGE> 3
parties. The reasonable fees and expenses of any and all such physicians shall
be borne by the Company.

4.4 By the Executive for Good Reason. This Agreement may be
terminated by the Executive upon 30 days' prior written notice to the Company
for good reason. For purposes of this Section 4.4, "good reason" shall mean
(i) any removal by the Company of the Executive from the position indicated in
Section 2 hereof, except in connection with termination of the Executive's
employment for cause or termination or suspension of employment due to the
Executive's incapacity, (ii) a reduction in the Executive's compensation below
the minimum amount provided for in Section 3.1 hereof or Benefits (except to the
extent that any such reduction is the result of a change to or termination of a
benefit program in which the Executive participates which applies equally to all
other participants therein), or (iii) any breach by the Company of its
obligations under this Agreement or any other willful action by the Company that
is materially inconsistent with the terms of this Agreement after written notice
and a reasonable opportunity to cure of not less than 30 days.

4.5 At the Election of either Party. This Agreement may be terminated
by either the Company or the Executive at any time upon at least 30 days' prior
written notice.

5. Effect of Termination.

5.1 Termination by the Company for Cause or Termination by Executive
Pursuant to Section 4.5. In the event that the Executive's employment is
terminated for cause pursuant to section 4.3 or the Executive shall terminate
this Agreement pursuant to Section 4.5, the Company shall pay to the Executive
salary, bonus and other cash compensation at his then current rate of pay
(which shall be not less than the amount of salary, bonus and other cash
compensation earned per day for the fiscal year ended immediately prior to such
Date of Termination and in no event less than the $650,000 per annum rate of
pay) and Benefits through the Date of Termination, provided, however, that in
the event of any termination of the Executive's employment

3
<PAGE> 4
for cause, the foregoing compensation amount shall be the minimum compensation
set forth in Section 3.1 hereof.

5.2 Termination by the Company without Cause or Termination by the
Executive pursuant to Section 4.4. In the event that the Executive's employment
is terminated by the Company pursuant to Section 4.5 or the Executive terminates
his employment pursuant to Section 4.4, the Company shall pay the Executive an
amount equal to his salary, bonus and other cash compensation at his then
current rate of pay (which shall be not less than the amount of salary, bonus
and other cash compensation earned per day for the fiscal year ended immediately
prior to such Date of Termination and in no event less than the $650,000 per
annum rate of pay) and benefits (or the cash value thereof) through the end of
the twenty-fourth (24th) month following such Date of Termination (the
"Severance Period"). The compensation payable during the Severance Period shall
be paid in a lump sum amount equal to $500,000 within five business days after
the Date of Termination and the remaining compensation shall be paid to the
Executive in equal monthly installments on the first day of each month during
the Severance Period, plus accrued interest on such installment amounts at a
rate equal to LIBOR. In addition, any unvested stock options, restricted stock
or other equity or partnership interests of the Company or any of its
Subsidiaries held by the Executive on the Date of Termination shall become fully
vested, and in the case of stock options immediately exercisable, to the extent
not prohibited by applicable law.

5.3 Termination for Death or Disability. If the Executive's
employment is terminated by death or because of disability pursuant to Section
4.2, the Company shall pay to the estate of the Executive or to the Executive,
as the case may be, salary, bonus and other cash compensation at his then
current rate of pay (which shall be not less than the amount of salary, bonus
and other cash compensation earned per day for the fiscal year ended immediately
prior to such Date of Termination and in no event less than the $650,000 per
annum rate of pay) and Benefits up to the end of the month in which the
termination of the Executive's employment because of death or disability occurs.

5.5 Survival. The provisions of Sections 5, 6 and 7 shall survive the
termination of this Agreement.

6. Non-Solicit.

(a) During the Non-solicit Period, the Executive will not:

<PAGE> 5
(i) solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of any of the brokerage or investment
banking clients, customers or accounts of the Company or its
subsidiaries.

(ii) solicit any officer, senior manager or senior broker who was
an employee of the Company at any time during the term of this
Agreement to leave such employment.

(c) If any restriction set forth in this Section 6 is found by
any court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic areas as to which it may be
enforceable.

(d) The restrictions contained in this Section 6 are necessary
for the protection of the business and goodwill of the Company and its
affiliates and are considered by the Executive to be reasonable for such
purpose. The Executive agrees that any breach of this Section 6 could cause the
Company and its affiliates substantial and irrevocable damage and therefore, in
the event of any such breach, in addition to such other remedies which may be
available, the Company and its affiliates shall have the right to seek specific
performance and injunctive relief.

7. Unauthorized Disclosure of Confidential Information.

(a) Confidentiality. The Executive acknowledges that the Company, its
subsidiaries and its affiliates continually develop Confidential Information,
that the Executive may develop Confidential Information for the Company or its
affiliates and that the Executive may learn of Confidential Information during
the course of his employment. The Executive will comply with the written
policies and procedures of the Company for protecting Confidential Information
which will be provided to him and, for the term hereof and thereafter, will not
disclose to any person (except as required by any statutory or regulatory
requirement or mandatory court order, subpoena or other legal process, and
except to any person required for the proper performance of his duties and
responsibilities to the Company and its affiliates), or use for his own benefit
or gain or otherwise use in a manner adverse to the interests of the Company
and its affiliates, any Confidential Information obtained by the Executive
incident to his employment or other association with the Company or any of its
affiliates.

(b) Return of Documents. All documents, records, tapes and other
media of every kind and description relating to the business, present or
otherwise, of the

5
<PAGE> 6
Company, its subsidiaries or its affiliates and any copies, in whole or in part,
thereof (the "Documents"), whether or not prepared by the Executive, shall be
the sole and exclusive property of the Company and its affiliates. The Executive
shall safeguard all Documents and shall surrender to the Company at the time his
employment terminates, or at such earlier time or times as the CEO or his
designee may specify, all Documents then in the Executive's possession or
control.

(c) Assignment of Rights to Intellectual Property. The Executive
shall promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns to the Company (or as otherwise directed by the
Company) the Executive's full right, title and interest in and to all
Intellectual Property as defined herein. The Executive agrees to execute any and
all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation the
execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to the Company and
to permit the Company to enforce any patents, copyrights or other proprietary
rights to the Intellectual Property. The Executive will not charge the Company
for time spent in complying with these obligations. All copyrightable works that
the Executive creates shall be considered "work made for hire".

(d) Defined Terms. "Confidential Information" as used herein means
any and all information of the Company and its subsidiaries that is not
generally known by others with whom they compete or do business, or with whom
they plan to compete or do business and any and all information, not publicly
know, which, if disclosed, would assist in competition against the Company and
its subsidiaries, or the disclosure of which would otherwise be adverse to the
interest of the Company or any of its subsidiaries. Confidential Information
also includes comparable information that the Company or any of its subsidiaries
have received belonging to others or which was received by the Company or any of
its subsidiaries with any understanding that it would not be disclosed;
provided, however, that Confidential Information shall not include anything (i)
that has been disclosed to the public (other than in connection with a breach by
the Executive of his obligations hereunder), (ii) that has been obtained by the
Executive from a third party otherwise than in violation of a confidentiality
agreement to which such third party is bound, or (iii) that has otherwise
lawfully entered the public domain. "Intellectual Property" as used herein means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) relating to the business of the Company, its Subsidiaries and its
affiliates conceived, made, created, developed or reduced to practice by the
Executive (whether alone or with others, whether or not during normal business
hours or on or off Company premises) during the Executive's employment.

6
<PAGE> 7
nationwide overnight courier service addressed to the other party at such
address or addresses as either party shall designate to the other in accordance
with this Section 8.

9. Indemnity. The company hereby agrees, to the maximum extent permitted
from time to time under the law of the State of Massachusetts, to indemnify the
Executive, and upon request shall advance expenses to the Executive if he shall
become a party or is threatened to be made a party to, any threatened, pending
or completed action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to be a director or hold any of such offices, against expenses
(including attorneys' fees and expenses), judgments, fines, penalties and
amounts paid in settlement incurred in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim;
provided, however, that the foregoing shall not require the Company to
indemnify the Executive against, or advance expenses to the Executive in
connection with, any action, suit, proceeding or claim resulting from any
breach of the Executive's duties hereunder that would permit the Company to
terminate this Agreement for cause. Such indemnification shall not be exclusive
of other indemnification rights arising under any by-law, agreement, vote of
directors or stockholders or otherwise.

12. Amendment. This Agreement may be amended or modified only by a
written instrument executed by each of the Company and the Executive.

13. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of The Commonwealth of Massachusetts
without regard to conflict of law principles.

14. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the company may be
merged or which may succeed to its assets or business, provided, however, that
the obligations of the Executive are personal and shall not be assigned by him.

15. Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the Rules of the National Association of
Securities Dealers, Inc. or of the New York Stock Exchange, Inc. Judgment may
be entered on an arbitrator's award relating to this Agreement in any court
having jurisdiction.

7
<PAGE> 8
16. Miscellaneous.

16.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope
or substance of any section of this Agreement.

16.3 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.

FREEDOM SECURITIES CORPORATION

By: [SIG] - John Goldsmith
--------------------------------

Title:
-----------------------------

EXECUTIVE: [SIG] - Kevin Mckay
-------------------------