LABRANCHE & CO INC
S-4, 2000-04-28
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES
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<PAGE>
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 2000
                                                      REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                              LABRANCHE & CO INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                             <C>                             <C>
           DELAWARE                          6211                     13-4064735
 (State or other jurisdiction         (Primary Standard            (I.R.S. Employer
              of                          Industrial             Identification No.)
incorporation or organization)   Classification Code Number)
</TABLE>

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

                               ONE EXCHANGE PLAZA
                         NEW YORK, NEW YORK 10006-3008
                                 (212) 425-1144
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)
                         ------------------------------

                           GEORGE M.L. LABRANCHE, IV
                              LABRANCHE & CO INC.
                               ONE EXCHANGE PLAZA
                         NEW YORK, NEW YORK 10006-3008
                                 (212) 425-1144
               (Name, address, including zip code, and telephone
               number, including area code, of agent for service)
                         ------------------------------

                                WITH COPIES TO:
                             Jeffrey M. Marks, Esq.
                             Warren J. Nimetz, Esq.
                          Fulbright & Jaworski L.L.P.
                                666 Fifth Avenue
                            New York, New York 10103
                              Tel: (212) 318-3000
                            ------------------------

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
                         ------------------------------

    If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /

    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 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 Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  / /
                         ------------------------------

                        CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
                                                                                                   PROPOSED
                                                         AMOUNT TO        PROPOSED MAXIMUM     MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED   BE REGISTERED(1)     OFFERING PER UNIT     OFFERING PRICE
<S>                                                 <C>                  <C>                  <C>
12% Senior Subordinated Notes                          $250,000,000             100%             $250,000,000

<CAPTION>

                                                         AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED  REGISTRATION FEE(1)
<S>                                                 <C>
12% Senior Subordinated Notes                           $66,000.00
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee pursuant
    to Rule 457(f)(2) 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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
                  SUBJECT TO COMPLETION, DATED APRIL 28, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
                                     [LOGO]

                               EXCHANGE OFFER FOR
                                  $250,000,000
                          12% EXCHANGE NOTES DUE 2007

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

TERMS OF EXCHANGE OFFER:

    - We are offering to exchange the notes that we sold in a private offering
      for new registered exchange notes.

    - The exchange offer expires 5:00 p.m., New York City time,             ,
      unless extended.

    - Tenders of outstanding notes may be withdrawn any time prior to the
      expiration of the exchange offer.

    - All outstanding notes that are validly tendered and not validly withdrawn
      will be exchanged.

    - We believe that the exchange of notes will not be a taxable exchange for
      U.S. federal income tax purposes.

    - We will not receive any proceeds from the exchange offer.

    - The terms of the exchange notes to be issued are identical to the
      outstanding notes, except for the transfer restrictions and registration
      rights relating to the outstanding notes. We are not making an offer to
      exchange notes in any jurisdiction where the offer is not permitted.

    THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 14.

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

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE DISTRIBUTED IN THE
EXCHANGE OFFER, NOR HAVE ANY OF THESE ORGANIZATIONS DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

                                 APRIL   , 2000
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Summary.....................................................      1
Risk Factors................................................     14
Forward-Looking Statements..................................     24
The Exchange Offer..........................................     25
Use of Proceeds.............................................     34
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     36
Business....................................................     44
Management..................................................     60
Employment Agreements and Noncompetition Agreements.........     63
Incentive Awards to Our Employees...........................     65
Principal Stockholders......................................     68
Certain Transactions........................................     69
Description of Exchange Notes...............................     72
Description of Other Indebtedness...........................    113
United States Income Tax Considerations.....................    116
Plan of Distribution........................................    116
Legal Matters...............................................    117
Experts.....................................................    117
Where You Can Find Additional Information...................    117
Index to Financial Statements...............................    F-1
</TABLE>

                                       i
<PAGE>
                                    SUMMARY

    THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. THIS
PROSPECTUS INCLUDES SPECIFIC TERMS OF THE NOTES WE ARE OFFERING, AS WELL AS
INFORMATION REGARDING OUR BUSINESS AND DETAILED FINANCIAL DATA. WE ENCOURAGE YOU
TO READ THIS PROSPECTUS IN ITS ENTIRETY.

                               THE EXCHANGE OFFER

    On March 2, 2000, we issued $250,000,000 aggregate principal amount of 12%
senior subordinated notes due 2007 to Donaldson, Lufkin & Jenrette Securities
Corporation, Salomon Smith Barney Inc. and ABN AMRO Incorporated in a private
offering. These initial purchasers placed the notes with institutional investors
in transactions exempt from the registration requirements of the Securities Act
of 1933 pursuant to Section 4(2) of, and Regulation S under, the Securities Act
and applicable state securities laws.

EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

    When we issued the initial notes, we entered into a Registration Rights
Agreement in which we agreed to file a registration statement of which this
prospectus is a part with the Securities and Exchange Commission relating to the
exchange offer for the initial notes on or prior to May 1, 2000 and to use our
best efforts to cause such registration statement to become effective as early
as possible, but not later than June 30, 2000.

THE EXCHANGE OFFER

    Under the terms of the exchange offer, you are entitled to exchange the
initial notes for registered exchange notes with substantially identical terms.
You should read the discussion under the heading "Description of the Exchange
Notes" for further information regarding the exchange notes. As of this date,
there are $250.0 million aggregate principal amount of the initial notes
outstanding. The initial notes may be tendered only in integral multiples of
$1,000.

RESALE OF EXCHANGE NOTES

    We believe that the exchange notes issued in the exchange offer may be
offered for resale, resold or otherwise transferred by you without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that:

    - you are acquiring the exchange notes in the ordinary course of your
      business;

    - you are not participating, do not intend to participate, and have no
      arrangement or understanding with any person to participate, in the
      distribution of the exchange notes; and

    - you are not an "affiliate" of ours.

    If any of the foregoing is not true and you transfer any exchange note
without delivering a prospectus meeting the requirements of the Securities Act
or without an exemption from the registration requirements of the Securities
Act, you may incur liability under the Securities Act. We do not assume or
indemnify you against that liability.

    If you are a broker-dealer and receive exchange notes for your own account
in exchange for initial notes that you acquired as a result of market making or
other trading activities, you must acknowledge that you will deliver a
prospectus meeting the requirements of the Securities Act upon any resale of the
exchange notes. A broker-dealer may use this prospectus in connection with an
offer to resell, resale or other transfer of the exchange notes. We will take
steps to ensure that the issuance of the exchange notes will comply with state
securities or "blue sky" laws.

                                       1
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE INITIAL NOTES

    If you do not exchange your initial notes for exchange notes, subject to
some exceptions, you will no longer be able to require us to register the
initial notes under the Securities Act. In addition, you will not be able to
offer or sell the initial notes unless:

    - they are registered under the Securities Act (and we will have no
      obligation to register them, except for some limited exceptions), or

    - you offer or sell them under an exemption from the requirements of, or in
      a transaction not subject to, the Securities Act.

EXPIRATION DATE

    The exchange offer will expire at 5:00 p.m., New York City time, on
            , 2000 unless we decide to extend the expiration date.

INTEREST ON THE EXCHANGE NOTES

    The exchange notes will accrue interest at 12% per year, beginning on the
last date we paid interest on the initial notes exchanged. We will pay interest
on the exchange notes on March 1 and September 1 of each year.

CONDITIONS TO THE EXCHANGE OFFER

    We will proceed with the exchange offer, so long as:

    - the exchange offer does not violate any applicable law or applicable
      interpretation of law of the staff of the Securities and Exchange
      Commission;

    - no litigation materially impairs our ability to proceed with the exchange
      offer; and

    - we obtain all governmental approvals we deem necessary for the exchange
      offer.

PROCEDURES FOR TENDERING INITIAL NOTES

    If you wish to accept the exchange offer, you must:

    - complete, sign and date the letter of transmittal, or a facsimile of it,
      and

    - send the letter of transmittal and all other documents required by it,
      including the initial notes to be exchanged, to Firstar Bank, N.A., as
      exchange agent, at the address set forth on the cover page of the letter
      of transmittal. Alternatively, you can tender your initial notes by
      following the procedures for book-entry transfer, as described in this
      document.

GUARANTEED DELIVERY PROCEDURE

    If you wish to tender your initial notes and you cannot get your required
documents to the exchange agent by the expiration date, you may tender your
initial notes according to the guaranteed delivery procedure described under the
heading "The Exchange Offer--Guaranteed Delivery Procedure."

WITHDRAWAL RIGHTS

    You may withdraw the tender of your initial notes at any time prior to
5:00 p.m., New York City time, on the expiration date of the exchange offer. To
withdraw, you must send a written or facsimile transmission notice of withdrawal
to the exchange agent at its address set forth herein under "The Exchange
Offer--Exchange Agent" by 5:00 p.m., New York City time, on the expiration date.

                                       2
<PAGE>
ACCEPTANCE OF INITIAL NOTES AND DELIVERY OF EXCHANGE NOTES

    If all the conditions to the exchange offer are satisfied or waived, we will
accept any and all initial notes that are properly tendered in the exchange
offer prior to 5:00 p.m., New York City time, on the expiration date. We will
deliver the exchange notes promptly after the expiration date.

TAX CONSIDERATIONS

    We believe that the exchange of initial notes for exchange notes will not be
a taxable exchange for federal income tax purposes. You should consult your tax
adviser about the tax consequences of the exchange as they apply to your
individual circumstances.

EXCHANGE AGENT

    Firstar Bank, N.A. is serving as exchange agent for the exchange offer.

FEES AND EXPENSES

    We will bear all expenses related to consummating the exchange offer and
complying with the Registration Rights Agreement.

USE OF PROCEEDS

    We will not receive any cash proceeds from the issuance of the exchange
notes. We used the proceeds from the sale of the initial notes to fully fund our
acquisition of Henderson Brothers Holdings, Inc. and to partially fund our
acquisition of Webco Securities, Inc., each a NYSE specialist firm, and to pay
fees and expenses related to both acquisitions.

                              LABRANCHE & CO INC.

    Founded in 1924, our specialist LaBranche & Co. is one of the oldest and
largest specialist firms on the New York Stock Exchange. In 1999, the stocks for
which we acted as specialist accounted for approximately 14.5% of the dollar
volume of common stock traded on the NYSE, constituting one of the largest
market shares among specialist firms. As of December 31, 1999, we acted as
specialist in 271 common stock listings, including 47 of the S&P 500 and five of
the 30 companies comprising the Dow Jones Industrial Average. Our five Dow
stocks are AT&T, ExxonMobil, Merck, Minnesota Mining & Manufacturing and SBC
Communications.

    All trading of securities on the NYSE is conducted through an auction
process managed by the specialist for each security. The specialist is a
broker-dealer who is granted the franchise by the NYSE to conduct the auction in
particular stocks and is assigned the role to maintain a fair and orderly market
in its specialist stocks. As of December 31, 1999, there were 25 specialist
units as compared with 36 at December 31, 1995. The substantial majority of
trades in NYSE-listed stocks takes place on the floor of the NYSE and is handled
by specialist firms. Specialist firms generate revenues by earning commissions
on trades they execute as agent and by profiting in trades they execute as
principal, in each case in their specialist stocks.

    Our business has grown considerably during the past five years. The total
annual share volume on the NYSE of stocks for which we act as specialist has
increased from approximately 4.0 billion in 1995 to nearly 25.7 billion in 1999,
representing a compound annual growth rate of 59.2%. During the same period, our
annual revenues increased from $37.1 million to $201.0 million, representing a
compound annual growth rate of 52.6%. We have accomplished our growth both
internally and through selective acquisitions. Since the March 1997
implementation of a new NYSE allocation process which allows listing companies
to make the final selection of their specialist, we have become the specialist
for 53 new common stock listings. Of this number, eleven were added since the
completion of the initial

                                       3
<PAGE>
public offering of our common stock in August 1999. In addition, we acquired
three specialist operations from 1997 through 1999, which added 131 new common
stock listings to our firm. The acquisitions of Henderson Brothers and Webco,
which we completed in March 2000, are described below. See "--Recent
Acquisitions"

    Our revenues are driven primarily by the volume of trading on the NYSE. The
NYSE is currently the largest securities market in the world. The market
capitalization of all U.S. shares listed on the NYSE at December 31, 1999 was
approximately $10.8 trillion, representing approximately 71.5% of the market
capitalization of all shares publicly traded on U.S. national markets. The
NYSE's average daily trading volume increased from approximately 346.1 million
shares in 1995 to approximately 809.2 million shares in 1999, representing a
compound annual growth rate of 23.7%. We believe that this increase in NYSE
trading volume is due to a number of factors including:

    - an increase in the amount of funds invested in equity securities;

    - an increase in the number of NYSE-listed stocks; and

    - an increase in the use of computerized trading strategies.

    The NYSE has announced that it will be prepared to trade in decimals by
June 2000. We believe that this development, together with other changes under
consideration by the NYSE, including longer trading days, will likely contribute
to additional growth in NYSE trading volume.

    We believe our success is due to our:

    - leading position in the specialist market;

    - diverse and high quality specialist stocks;

    - strong market-making skills;

    - innovative customer-oriented services; and

    - completed acquisitions.

    Our strategies for growing our revenues and profits are to:

    - aggressively pursue new listings; and

    - capitalize on pending and future acquisitions.

                              RECENT ACQUISITIONS

HENDERSON BROTHERS

    On March 2, 2000, we acquired Henderson Brothers Holdings, Inc., referred to
as Henderson Brothers, which owns Henderson Brothers, Inc., a specialist firm on
the NYSE, and Henderson Brothers Futures Corporation, an inactive subsidiary.
Under the terms of the agreement, we acquired all the outstanding capital stock
of Henderson Brothers for approximately $228.4 million in cash. The proceeds of
our offering and issuance of the initial notes were used to fully fund the
acquisition of Henderson Brothers, to partially fund the acquisition of Webco
and to pay fees and expenses related to both acquisitions. As part of the
Henderson Brothers acquisition, we entered into employment agreements with 14
specialists and an administrative officer formerly employed by Henderson
Brothers. We also entered into consulting agreements with two former Henderson
Brothers stockholders pursuant to which we are paying an aggregate of
$5.0 million over five years.

    In connection with the Henderson Brothers acquisition, we:

    - acquired an additional 19 NYSE memberships, all of which are owned by
      individual specialists but had been financed by Henderson Brothers;

                                       4
<PAGE>
    - hired an additional 84 employees, 19 of whom are specialists, 41 of whom
      are specialist trading assistants and 24 of whom are other administrative,
      financial and operational personnel; and

    - acquired an additional 8,650 feet of office space, which had a $216,726
      annual lease payment in 1999.

    In addition, as part of the acquisition, we also acquired and are continuing
the clearing operations of Henderson Brothers. As a clearing broker, we are
responsible for the clearance and settlement of transactions effected by us or
the introducing broker. We only clear and settle transactions executed by the
introducing brokers; we do not execute these transactions.

    Established in 1861, Henderson Brothers first registered as a NYSE
specialist in 1948 and was the eighth largest specialist firm on the NYSE in
terms of common stock listings at year end 1999. Henderson Brothers acted as
specialist in 113 common stock listings, including 26 of the S&P 500 and two
companies included in the Dow Jones Industrial Average. These listings include
American Express Company, Ford Motor Company, J.P. Morgan & Co., Lehman Brothers
Holdings, Inc., Morgan Stanley Dean Witter & Co. and Schering-Plough
Corporation. Henderson Brothers had $82.1 million of revenues and $29.1 million
of EBITDA in 1999.

WEBCO

    On March 9, 2000, we acquired, through a merger, Webco Securities, Inc.,
referred to as Webco, another specialist firm on the NYSE, for approximately
2.8 million shares of our common stock, $10.9 million in cash and senior
promissory notes in the aggregate principal amount of $3.0 million, each bearing
an interest rate of 10.0% per annum. As part of the acquisition, we entered into
employment agreements with three specialists employed by Webco.

    In connection with the Webco acquisition, we:

    - acquired an additional 3 NYSE memberships, each of which is owned by an
      individual specialist but had been financed by Webco;

    - hired an additional 13 employees, 5 of whom are specialists, 8 of whom are
      specialist trading assistants; and

    - acquired an additional 2,057 feet of office space, which had a $51,425
      annual lease payment in 1999.

    Established in 1981, Webco was a specialist in 34 common stock listings,
including First Union Corporation, Manor Care, Inc. and Nokia Corporation. Webco
had $13.7 million of revenues and $4.2 million of EBITDA for the year ended
October 31, 1999.

    Simultaneously with the acquisition of each of Henderson Brothers and Webco,
we transferred its specialist operations to our subsidiary LaBranche & Co. The
clearing operations of Henderson Brothers are operated by us as a separate
subsidiary.

    Following the completion of the acquisitions of Henderson Brothers and
Webco, we are the largest specialist firm on the NYSE in terms of annual dollar
and share volume traded. We are the specialist for 411 common stock listings,
including 72 of the S&P 500 and seven companies included in the Dow Jones
Industrial Average.
                            ------------------------

    On a pro forma basis, we would have generated $296.9 million of revenues and
$162.4 million of EBITDA in 1999 after giving effect to:

    - our reorganization transactions in August 1999 (more fully described
      below); and

    - our acquisitions of Henderson Brothers and Webco.

                                       5
<PAGE>
    This compares to pro forma revenues of $137.9 million and pro forma EBITDA
of $81.3 million in 1998 after giving effect to:

    - our reorganization transactions in August 1999; and

    - our acquisition of Fowler Rosenau & Geary LLC in July 1998.

                        OUR REORGANIZATION TRANSACTIONS

    In August 1999 we reorganized from partnership to corporate form.
Simultaneously with the reorganization, we consummated the following related
transactions:

    - we issued (1) $100.0 million of 9 1/2% Senior Notes due 2004 and
      (2) 10,500,000 shares of our common stock at an initial public offering
      price of $14.00 per share.

    - we issued (1) $16.0 million of 9 1/2% senior unsecured indebtedness and
      (2) $350,000 of 8.0% subordinated indebtedness in connection with the
      redemption of limited partnership interests of LaBranche & Co.

    - we granted (1) options to purchase an aggregate of 1,200,000 shares of our
      common stock to our executive officers and (2) restricted stock units for
      1,059,000 shares of our common stock to employees who were not managing
      directors at that time, in each case, under our Equity Incentive Plan.

    Our reorganization from partnership to corporate form, together with these
related transactions, are referred to as the reorganization transactions.

                                       6
<PAGE>
                         DESCRIPTION OF EXCHANGE NOTES

<TABLE>
<S>                                            <C>
Issuer.......................................  LaBranche & Co Inc., a company incorporated
                                               in the State of Delaware.

Securities Offered...........................  $250,000,000 principal amount of 12% exchange
                                               notes due 2007.

Maturity.....................................  March 2, 2007.

Interest Payment Dates.......................  March 1 and September 1 commencing on
                                               September 1, 2000; provided, however, that
                                               the final interest payment date will be the
                                               maturity date instead of March 1, 2007.

Sinking Fund.................................  None.

Redemption...................................  The exchange notes are not redeemable prior
                                               to maturity.

Ranking......................................  The exchange notes will be senior
                                               subordinated unsecured general obligations of
                                               LaBranche & Co Inc. and will rank junior in
                                               right of payment to:

                                               - all existing and future senior debt of
                                               LaBranche & Co Inc., including the 9 1/2%
                                                 Senior Notes we issued in August 1999 and
                                                 other senior indebtedness; and

                                               - all existing and future indebtedness of any
                                               and all of our subsidiaries, including the
                                                 credit facility and subordinated
                                                 indebtedness of our subsidiary, LaBranche &
                                                 Co.

                                               Subject to some limitations, we may issue
                                               additional indebtedness which may be senior
                                               to the exchange notes. As of March 31, 2000,
                                               our total consolidated indebtedness was
                                               $415.5 million, excluding subordinated
                                               liabilities relating to contributed exchange
                                               memberships. For more details, see
                                               "Description of Exchange Notes."

Excess Cash Flow Offer.......................  If we have Excess Cash Flow for any fiscal
                                               year commencing with fiscal year 2000, we
                                               will be required, subject to the restricted
                                               payments covenants contained in the indenture
                                               governing the Senior Notes and the note
                                               purchase agreements relating to LaBranche &
                                               Co.'s existing senior subordinated
                                               indebtedness and certain other exceptions and
                                               limitations, to make an offer to purchase the
                                               exchange notes in an aggregate principal
                                               amount equal to the Excess Cash Flow at a
                                               price equal to 103% of the principal amount
                                               plus accrued and unpaid interest, if any, to
                                               the
</TABLE>

                                       7
<PAGE>

<TABLE>
<S>                                            <C>
                                               date of purchase. See "Description of
                                               Exchange Notes--Excess Cash Flow Offer."

Change of Control............................  If we sell substantially all our assets or
                                               experience specific kinds of changes of
                                               control, we must offer to repurchase the
                                               exchange notes at a price in cash equal to
                                               101% of their principal amount, plus accrued
                                               and unpaid interest, if any, to the date of
                                               purchase.

Basic Covenants of the Indenture.............  The exchange notes will be issued under an
                                               Indenture (the "Indenture") with Firstar
                                               Bank, N.A. The Indenture will contain certain
                                               covenants that, among other things, will
                                               limit our ability to:

                                               - borrow money;

                                               - pay dividends on our stock or purchase our
                                                 stock;

                                               - make investments in certain subsidiaries;

                                               - engage in transactions with stockholders
                                               and affiliates;

                                               - create liens on our assets; and

                                               - sell assets or engage in mergers and
                                                 consolidations.

Use of Proceeds..............................  For more details, see "Description of
                                               Exchange Notes--Certain Covenants." We will
                                               not receive any proceeds from the issuance of
                                               the exchange notes. We used the proceeds from
                                               the sale of the initial notes to fully fund
                                               our acquisition of Henderson Brothers and to
                                               partially fund our acquisition of Webco and
                                               to pay fees and expenses related to both
                                               acquisitions.
</TABLE>

                                       8
<PAGE>
                               ABOUT RISK FACTORS

    For a discussion of some risk factors that should be considered by
prospective investors in connection with an investment in the exchange notes,
see "Risk Factors."

                 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

    The summary historical consolidated financial data set forth below for the
years ended December 31, 1997, 1998 and 1999 have been derived from our
consolidated financial statements, which have been audited by Arthur Andersen
LLP, independent public accountants, and are included elsewhere in this
prospectus. The summary historical consolidated financial data set forth below
for the years ended December 31, 1995 and 1996 have been derived from our
consolidated financial statements, audited by Arthur Andersen LLP, independent
public accountants, which are not included elsewhere in this prospectus. The
summary historical consolidated financial data set forth below should be read in
conjunction with the consolidated financial statements and related notes thereto
and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                               ----------------------------------------------------
                                                 1995       1996       1997       1998       1999
                                               --------   --------   --------   --------   --------
                                                        (IN THOUSANDS, EXCEPT OTHER DATA)
<S>                                            <C>        <C>        <C>        <C>        <C>
Statement of Operations Data:
Revenues:
  Net gain on principal transactions.........  $26,290    $37,113    $47,817    $ 95,048   $150,971
  Commissions................................    7,736     10,180     15,186      26,576     37,222
  Other......................................    3,147      2,643      4,637       4,787     12,844
                                               -------    -------    -------    --------   --------
      Total revenues.........................  $37,173    $49,936    $67,640    $126,411   $201,037
                                               -------    -------    -------    --------   --------
Income before managing directors'
  compensation, limited partners' interest in
  earnings of subsidiary and provision for
  income taxes...............................  $26,254    $32,783    $47,732    $ 91,635   $134,468
                                               =======    =======    =======    ========   ========
Other Data:
Number of our common stock listings..........      125        132        202         284        271
Total share volume on the NYSE of our
  specialist stocks (in billions)............      4.0        5.6       10.9        20.0       25.7
Total dollar volume on the NYSE of our
  specialist stocks (in billions)............  $ 133.3    $ 201.4    $ 476.7    $  950.4   $1,209.3
NYSE average daily trading share volume (in
  millions)..................................    346.1      412.0      526.9       673.6      809.2
Ratio of earnings to fixed charges (A).......    32.8x      20.0x      10.7x        9.0x      10.0x
</TABLE>

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

(A) For purposes of this ratio, earnings represent pre-tax income plus limited
    partners' interest in earnings of subsidiary and fixed charges. Fixed
    charges represent interest expensed and capitalized, as well as amortized
    premiums, discounts and capitalized expenses related to indebtedness.

                                       9
<PAGE>
    Prior to August 24, 1999, we operated as a partnership and generally
distributed all our income after unincorporated business taxes to our managing
directors as compensation and to our partners. As of August 24, 1999, we
reorganized our firm from partnership to corporate form and redeemed limited
partnership and membership interests. As a corporation, we include payments to
managing directors as part of compensation and benefits. Therefore, historical
income before managing directors' compensation, limited partners' interest in
earnings of subsidiary and unincorporated business taxes understates our
expected operating costs after August 24, 1999. See "--Certain Transactions" and
"--Summary Pro Forma Consolidated Financial Data." As a partnership, we
generally were not subject to U.S. federal, state and local income taxes, apart
from unincorporated business taxes. As a consequence of our reorganization to a
corporation, we are subject to U.S. federal, state and local income taxes.

                                       10
<PAGE>
                 SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA

    Set forth below are consolidated statements of operations data for the year
ended December 31, 1999:

    (1) on a historical basis;

    (2) on a pro forma basis to give effect to the reorganization transactions
        as if they had occurred on January 1, 1999; and

    (3) on a pro forma basis to give effect to the following transactions as if
        they had occurred on January 1, 1999:

    - the reorganization transactions and

    - our acquisitions of Henderson Brothers and Webco, including (x) the
      application of the proceeds of our issuance of the initial notes to the
      payment of the purchase price for the Henderson Brothers acquisition and a
      portion of the cash purchase price of the Webco acquisition and (y) the
      issuance of senior promissory notes and common stock and the payment of
      the remaining cash portion of the purchase price in connection with the
      acquisition of Webco (these acquisitions and related transactions are
      referred to as the acquisition transactions).

    The pro forma consolidated statement of financial condition data as of
December 31, 1999 give effect to the acquisition transactions as if they had
occurred on December 31, 1999.

    The pro forma consolidated financial information has been prepared by our
management and is not necessarily indicative of the results that would have been
achieved had the above-described transactions occurred on the dates indicated or
that may be achieved in the future.

<TABLE>
<CAPTION>
                                                               YEAR ENDED
                                                           DECEMBER 31, 1999        PRO FORMA
                                                           ------------------        FOR THE
                                                               PRO FORMA          REORGANIZATION
                                                                FOR THE            TRANSACTIONS
                                                             REORGANIZATION      AND ACQUISITION
                                              HISTORICAL      TRANSACTIONS         TRANSACTIONS
                                              ----------   ------------------   ------------------
                                                       (IN THOUSANDS, EXCEPT OTHER DATA)
<S>                                           <C>          <C>      <C>         <C>      <C>
Statement of Operations Data:
Revenues:
  Net gain on principal transactions........   $150,971    $150,971             $210,915
  Commissions...............................     37,222      37,222               66,599
  Other.....................................     12,844      12,844               19,355
                                               --------    --------             --------
        Total revenues......................    201,037     201,037              296,869
                                               --------    --------             --------
Expenses:
  Employee compensation and benefits........     34,268      59,482 (A)          104,460 (A)(F)
  Lease of exchange memberships.............      8,416       8,416                8,808
  Interest..................................      8,286      15,144 (B)           46,712 (B)(G)(H)
  Amortization of intangibles...............      4,623       6,866 (C)           18,559 (C)(I)
  Exchange, clearing and brokerage fees.....      3,709       3,709                6,083
Other operating expenses....................      7,267       7,267               16,138
                                               --------    --------             --------
Total operating expenses....................     66,569     100,884              200,760
                                               --------    --------             --------
Income before managing directors'
  compensation, limited partners interest in
  earnings of subsidiary and provision for
  income taxes..............................    134,468     100,153               96,109
Managing directors' compensation............     56,191          -- (D)               -- (D)
                                               --------    --------             --------
</TABLE>

                                       11
<PAGE>
                 SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                               YEAR ENDED
                                                           DECEMBER 31, 1999        PRO FORMA
                                                           ------------------        FOR THE
                                                               PRO FORMA          REORGANIZATION
                                                                FOR THE            TRANSACTIONS
                                                             REORGANIZATION      AND ACQUISITION
                                              HISTORICAL      TRANSACTIONS         TRANSACTIONS
                                              ----------   ------------------   ------------------
                                                       (IN THOUSANDS, EXCEPT OTHER DATA)
<S>                                           <C>          <C>      <C>         <C>      <C>
Income before limited partners' interest in
  earnings of subsidiary and provision for
  income taxes..............................     78,277     100,153               96,109
Limited partners' interest in earnings of
  subsidiary................................     25,344          -- (E)               -- (E)
                                               --------    --------             --------
Income before provision for income taxes....     52,933     100,153               96,109
                                               --------    --------             --------
Provision for income taxes..................     23,899      46,165 (J)           52,259 (J)
                                               --------    --------             --------
Net income..................................   $ 29,034    $ 53,988             $ 43,850
                                               ========    ========             ========
EBITDA(K)...................................   $ 91,911    $122,888             $162,361
                                               ========    ========             ========
</TABLE>

<TABLE>
<CAPTION>
                                                               AS OF DECEMBER 31, 1999
                                                              --------------------------
                                                                             PRO FORMA
                                                                              FOR THE
                                                                            ACQUISITION
                                                              HISTORICAL   TRANSACTIONS
                                                              ----------   -------------
                                                                    (IN THOUSANDS)
<S>                                                           <C>          <C>
Balance Sheet Data:
Cash and short-term investments.............................   $109,196        $112,974
                                                                           (L)(M)(N)(O)
Working capital.............................................    229,119         221,364
                                                                           (L)(M)(N)(O)
Total assets................................................    505,125         970,739
                                                                           (L)(M)(N)(O)
Total long-term indebtedness................................    162,330         411,023
                                                                                 (O)(P)
Stockholders' equity........................................    251,972         284,284
                                                                                    (N)
</TABLE>

<TABLE>
<CAPTION>
                                                       AS OF DECEMBER 31, 1999
                                                              PRO FORMA
                                                               FOR THE
                                                             ACQUISITION
                                                            TRANSACTIONS
                                                       -----------------------
<S>                                                    <C>
Other Data:
Ratio of total debt to EBITDA (Q)....................            2.5x
Ratio of net debt to EBITDA (Q)(R)...................            1.8
Ratio of EBITDA to total interest expense............            3.5
Ratio of earnings to fixed charges (S)...............            3.0
</TABLE>

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

(A) Employee compensation and benefits was adjusted to reflect managing
    directors' compensation based on the compensation policies which were
    implemented at the time of the reorganization transactions.

(B) Reflects pro forma repayment of $5.0 million of subordinated liabilities
    owed to a limited partner and reverses the related interest expense.
    Reflects the issuance of 9 1/2% Senior Notes of

                                       12
<PAGE>
                 SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA

    $100.0 million, the issuance of a $16.0 million note and $350,000 of
    subordinated indebtedness and the related interest expense.

(C) Reflects amortization of intangibles related to redemption of limited
    partners' interests.

(D) Managing directors' compensation was adjusted to reverse the actual amounts
    previously recorded.

(E) Reflects reversal of limited partners' interest in earnings of subsidiary.

(F) Employee compensation and benefits was adjusted to reflect the compensation
    arrangements made with Henderson Brothers and Webco based upon the new
    employment contracts which were effective upon completion of the
    acquisitions.

(G) Reflects the issuance of $250.0 million of principal amount of initial notes
    net of a discount of approximately $4.3 million, $3.0 million aggregate
    principal amount of senior promissory notes issued to Webco stockholders,
    assuming the repayment of $500,000 aggregate principal amount of such senior
    promissory notes, and the related interest expense.

(H) Reflects reversal of the interest expense related to the repayment of
    subordinated notes of Henderson Brothers.

(I) Reflects amortization of intangibles related to the acquisitions of
    Henderson Brothers and Webco.

(J) Reflects federal, state and local income taxes at an estimated tax rate of
    approximately 46%.

(K) EBITDA means net income (loss) before interest expense, taxes, depreciation
    and amortization. EBITDA is not a generally accepted accounting principles
    measure and may not be comparable to similarly titled items of other
    companies. You should not consider EBITDA as an alternative to net income
    (loss) or any other generally accepted accounting principles measure of
    performance as an indicator of our operating performance or as a measure of
    liquidity. EBITDA does not represent funds available for management's
    discretionary use because certain future cash expenditures are not reflected
    in the EBITDA presentation. Some investors use these data as an indicator of
    a company's ability to service debt.

(L) Reflects net proceeds of $238.6 million received upon completion of the
    offering and issuance of the initial notes.

(M) Reflects the acquisition of Henderson Brothers assuming cash paid of
    $230.0 million.

(N) Reflects the acquisition of Webco, assuming cash paid of $9.2 million and
    2.8 million shares of common stock issued at $11.54 per share.

(O) Reflects the repayment of $54.1 million of subordinated debt of Henderson
    Brothers.

(P) Reflects the issuance of $250.0 million of principal amount of initial notes
    net of a discount of approximately $4.3 million and $3.0 million aggregate
    principal amount of senior promissory notes issued to Webco stockholders,
    including $500,000 aggregate principal amount of such senior promissory
    notes which is current.

(Q) Calculated on an annualized basis.

(R) Net debt means total debt less cash and short-term investments.

(S) For purposes of this ratio, earnings represent pre-tax income plus fixed
    charges. Fixed charges represent interest expensed and capitalized, as well
    as amortized premiums, discounts and capitalized expenses related to
    indebtedness.

                                       13
<PAGE>
                                  RISK FACTORS

    You should consider carefully the following risks before you decide to make
an investment in the exchange notes. The risks and uncertainties described below
are some of the material risks that our company faces.

IF YOU DO NOT PARTICIPATE IN THE EXCHANGE OFFER, YOU WILL CONTINUE TO BE SUBJECT
  TO TRANSFER RESTRICTIONS.

    If you do not exchange your initial notes for exchange notes pursuant to the
exchange offer, you will continue to be subject to the restrictions on transfer
of your initial notes. We do not intend to register the initial notes under the
Securities Act. To the extent initial notes are tendered and accepted in the
exchange offer, the trading market, if any, for the initial notes would be
adversely affected. See "The Exchange Offer."

A LIQUID TRADING MARKET FOR THE EXCHANGE NOTES MAY NOT DEVELOP.

    There has not been an established trading market for the exchange notes. The
initial notes were offered and sold only to qualified institutional buyers and
to persons outside the United States and are subject to restrictions on
transfer.

    The initial notes were designated as eligible for trading in The Portal
Market. However, we did not apply for listing of the initial notes and do not
intend to apply for listing of the exchange notes, on any securities exchange or
for quotation through the National Association of Securities Dealers Automated
Quotation System.

    The liquidity of any market for the exchange notes will depend upon the
number of holders of the exchange notes, our performance, the market for similar
securities, the interest of securities dealers in making a market in the
exchange notes and other factors. A liquid trading market may not develop for
the exchange notes.

WE HAVE SIGNIFICANT INDEBTEDNESS AND INTEREST PAYMENT OBLIGATIONS.

    We have significantly increased our debt as a result of the sale of the
initial notes. As of April 27, 2000, we had approximately $415.5 million of
consolidated aggregate principal amount of outstanding debt. These calculations
of debt exclude subordinated liabilities related to contributed exchange
memberships. LaBranche & Co. also has the ability to borrow $200.0 million under
a revolving credit facility with The Bank of New York which was originally
entered into in June of 1998 and increased and extended in both June 1999 and
February 2000. We may also need to incur additional debt in the future for
working capital or to complete acquisitions, even though our principal credit
facility imposes some limits on our ability to do so. We are highly leveraged
and our high level of indebtedness could have important consequences to you,
which include the following:

    - our ability to obtain additional financing to fund our growth strategy,
      working capital, capital expenditures, debt service requirements or other
      purposes may be impaired;

    - our ability to use operating cash flow in other areas of our business will
      be limited because we must dedicate a substantial portion of these funds
      to make principal and interest payments;

    - we may not be able to compete with others who are not as highly leveraged;
      and

    - our substantial degree of leverage may limit our flexibility to adjust to
      changing market conditions, changes in our industry and economic
      downturns.

    Our ability to satisfy our debt obligations will depend upon our future
operating performance and our ability to obtain additional debt or equity
financing. Prevailing economic conditions and financial, business and other
factors, many of which are beyond our control, will affect our ability to make
these payments. If in the future we cannot generate sufficient cash from
operations to meet our debt obligations, we will need to refinance our debt
obligations, obtain additional financing or sell assets. We

                                       14
<PAGE>
cannot assure you that our business will generate cash flow or that we will be
able to obtain funding sufficient to satisfy our debt service requirements.

    Further, LaBranche & Co. is a broker-dealer and a specialist regulated by
the SEC and the NYSE. Such regulations include strict rules regarding capital
requirements and approval requirements for withdrawals of capital from, and in
some cases, other distributions by, the broker-dealer. These regulations could
prevent us from obtaining funds necessary to satisfy our obligations to pay
interest on or repay our indebtedness.

YOUR RIGHT TO RECEIVE PAYMENTS ON THE EXCHANGE NOTES WILL BE JUNIOR TO OUR
OUTSTANDING SENIOR DEBT AND EFFECTIVELY SUBORDINATED TO THE DEBT OF OUR
SUBSIDIARIES.

    The exchange notes will be subordinated in right of payment to the 9 1/2%
Senior Notes we issued in August 1999 and other senior debt of LaBranche &
Co Inc., including the senior promissory notes issued as part of the Webco
acquisition and our existing and future secured indebtedness to the extent of
the assets securing such indebtedness. In addition, because we, LaBranche &
Co Inc., are a holding company with no operations of our own, we are dependent
on distributions from LaBranche & Co. and LaB Investing Co. L.L.C. to pay
interest and principal on our debt. The notes will be effectively subordinated
to all the indebtedness of LaBranche & Co. and LaB Investing Co. L.L.C.,
including subordinated debt. This structural subordination may adversely affect
our ability to service our debt and could result in insolvency or other
circumstances that could adversely affect our ability to satisfy our payment
obligations with respect to the notes.

    Further, LaBranche & Co. is a broker-dealer and a specialist regulated by
the Securities and Exchange Commission and the NYSE. Such regulations include
strict rules regarding capital requirements and approval requirements for
withdrawals of capital from, and in some cases, other distributions by, the
broker-dealer. These regulations could prevent us from obtaining funds necessary
to satisfy our obligations to pay interest on or repay our indebtedness,
including the notes. See "--We are subject to net capital requirements" and
"Business--Operations--Regulatory Matters" for a discussion of our net capital
requirements.

OUR ABILITY TO TAKE ACTIONS MAY BE RESTRICTED BY THE TERMS OF OUR INDEBTEDNESS.

    The covenants in our existing debt agreements, including our Credit
Agreement, the note purchase agreements relating to LaBranche & Co.'s existing
senior subordinated indebtedness, the indenture governing our senior notes and
the indenture governing our exchange notes and any future financing agreements,
may adversely affect our ability to finance future operations or capital needs
or to engage in other business activities. These covenants limit or restrict our
ability and the ability of our subsidiaries to:

    - incur additional debt;

    - pay dividends and make distributions;

    - repurchase our securities;

    - make certain investments;

    - create liens on our assets;

    - transfer or sell assets;

    - enter into transactions with affiliates;

    - issue or sell stock of subsidiaries; or

    - merge or consolidate.

    In addition, the credit agreement and the note purchase agreements also
require LaBranche & Co. to comply with certain financial ratios. LaBranche &
Co.'s ability to comply with these ratios may be affected by events beyond our
or its control. If any of the covenants in our credit agreement, the note

                                       15
<PAGE>
purchase agreements, the indenture relating to our senior notes or the indenture
relating to our exchange notes is breached, or if LaBranche & Co. is unable to
comply with required financial ratios, it may be in default under the Credit
Agreement or the note purchase agreements and we may be in default under the
indenture relating to our senior notes or the indenture relating to the exchange
notes. A significant portion of our indebtedness then may become immediately due
and payable. We are not certain whether we would have, or be able to obtain,
sufficient funds to make these accelerated payments. Compliance with the
covenants is also a condition to borrowings under the credit agreement.

THE EXCHANGE NOTES MAY BE SUBJECT TO FRAUDULENT TRANSFER STATUTES.

    Under federal or state fraudulent transfer laws, a court could avoid all or
a portion of our obligations to the holders of the exchange notes, subordinate
our obligations to the holders of the exchange notes to our other existing and
future indebtedness, and take other action detrimental to the holders of the
exchange notes, including invalidating the exchange notes if it were to find
that,

    - we issued the initial notes in order to damage or defraud current or
      future creditors; or

    - we received less than fair consideration or reasonably equivalent value
      for incurring the indebtedness represented by the initial notes; and

    - we (1) were insolvent or were rendered insolvent by reason of the issuance
      of the initial notes, (2) were engaged, or about to engage, in a business
      or transaction for which our assets were unreasonably small or
      (3) intended to incur, or believed (or should have believed) we would
      incur, debts beyond our ability to pay as the debts mature.

    We cannot assure you that, in that event, any repayment on the exchange
notes would ever be recovered by the holders of the exchange notes.

    Based upon financial and other information currently available to us, our
management believes that the indebtedness evidenced by the initial notes has
been incurred for proper purposes and in good faith and that we were solvent and
continue to be solvent after issuing the initial notes, will continue to have
sufficient capital for carrying on our business and be able to pay our debts as
they mature. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity."

WE ARE REQUIRED TO TAKE ACTIONS UPON THE OCCURRENCE OF A CHANGE OF CONTROL.

    Upon the occurrence of a change of control, we will be required to offer to
repurchase all outstanding senior notes and exchange notes at a price equal to
101% of their principal amount, together with accrued and unpaid interest, if
any, to the date of repurchase. Certain important corporate events, such as
leveraged recapitalizations that would increase our level of indebtedness, would
not constitute a change of control. If a change of control were to occur, it is
possible that we would not have sufficient funds to repurchase exchange notes
owned by holders seeking to accept our offer or that restrictions in the credit
agreement, the note purchase agreements relating to LaBranche & Co.'s existing
senior subordinated indebtedness or the indenture governing our senior notes
will not allow such repurchases. Furthermore, a change of control will most
likely trigger a default under the Credit Agreement, the note purchase
agreements relating to LaBranche & Co.'s existing senior subordinated
indebtedness and the indenture governing our senior notes. To the extent we do
not have sufficient funds to meet our repurchase obligations and any other
obligations in respect of the Credit Agreement, the note purchase agreements and
the indenture relating to our senior notes, we would necessarily seek
third-party financing. However, it is possible that we will not be able to
obtain such financing.

WE MAY HAVE INSUFFICIENT CAPITAL IN THE FUTURE AND MAY BE UNABLE TO SECURE
ADDITIONAL FINANCING WHEN WE NEED IT.

    Our business depends on the availability of adequate capital. We cannot be
sure that we will have sufficient capital in the future or that additional
financing will be available on a timely basis, or on

                                       16
<PAGE>
terms favorable to us. Historically, we have satisfied these needs with
internally generated funds, our bank credit facilities and the issuance of
subordinated debt by our operating subsidiaries and the issuance by us of our
senior notes and our common stock. The proceeds of the sale of our initial notes
were used to fully fund our acquisition of Henderson Brothers and to partially
fund our acquisition of Webco and to pay fees and expenses related to both
acquisitions. We currently anticipate that our available cash resources and
credit facilities will be sufficient to meet our anticipated working capital,
regulatory capital and capital expenditure requirements through the end of 2000.

    We may, however, need to raise additional funds to:

    - increase the capital available to us for our inventory positions;

    - support more rapid expansion;

    - acquire complementary businesses; or

    - respond to unanticipated capital requirements.

    We may be required to obtain this additional financing on short notice as a
result of rapid, unanticipated developments, such as a steep market decline.

OUR REVENUES MAY DECREASE DUE TO CHANGES AFFECTING THE ECONOMY, SUCH AS
INCREASES IN INTEREST RATES OR INFLATION, OR CHANGES AFFECTING THE SECURITIES
MARKETS, SUCH AS DECREASED VOLUME OR LIQUIDITY.

    We recently experienced a substantial increase in the revenues we earn from
our specialist activities. An adverse change affecting the economy or the
securities markets could result in a decline in market volume or liquidity. This
would result in lower revenues from our specialist activities. Our recent
increase in revenues was caused primarily by significant increases in the volume
of trading on the NYSE and favorable conditions in the securities markets. The
current favorable business environment may not continue indefinitely.

SUSTAINED DECLINES IN PRICE LEVELS OF SECURITIES COULD CAUSE US TO INCUR LOSSES.

    Adverse changes in the economy and the securities markets could lead to
lower price levels of securities. Sustained declines in these price levels may
result in:

    losses from declines in the market value of securities held in our
inventory;

    the failure of buyers and sellers of securities to fulfill their settlement
obligations; and

    increases in claims and litigation.

TRADING THROUGH NYSE SPECIALISTS COULD BE REPLACED BY ALTERNATIVE TRADING
SYSTEMS WHICH COULD REDUCE OUR REVENUE.

    Alternative trading systems could reduce the levels of trading of
NYSE-listed stocks executed through specialists. This, in turn, could have an
adverse effect on our revenues. Over the past few years, a number of alternative
trading systems have developed or emerged which may compete with specialists by
increasing trading in NYSE-listed stocks off the NYSE trading floor in
over-the-counter markets. In the future, similar new systems may continue to be
developed and placed in operation.

                                       17
<PAGE>
NEW AND PROPOSED NYSE INITIATIVES MAY LOWER THE REVENUES WE EARN ON TRADES
EXECUTED IN SHARES OF OUR COMMON STOCK LISTINGS.

    The NYSE recently approved the repeal of Rule 390, which generally
prohibited member firms from trading stocks listed before April 26, 1979 other
than on a national exchange. Any stocks for which we act as specialist listed
before April 26, 1979 will now be freely tradable in over-the-counter markets.
We will not receive commissions on trades executed in over-the-counter markets
and will not participate in those trades as principal. Additionally, on
December 28, 1999, the NYSE implemented a new initiative which increased from
two minutes to five minutes the window for providing commission-free
transactions on orders. Therefore, any order we execute as agent within five
minutes of placement of the order will not generate any commissions revenue for
us. This new initiative has adversely affected commissions revenue.

COMPETITION FROM NASDAQ FOR NEW LISTINGS COULD ADVERSELY AFFECT NYSE TRADING
VOLUME AND, IN TURN, REDUCE OUR REVENUES.

    Nasdaq continues to grow and gain in popularity, attracting companies which
might otherwise have listed on the NYSE. If more companies decide to be quoted
on Nasdaq as opposed to listing their stocks on the NYSE, or if companies choose
to delist using recently relaxed delisting procedures, trading volume on the
NYSE could be adversely affected. This, in turn, could adversely affect our
trading revenue. In recent years, many high technology companies have opted to
be quoted on Nasdaq, even though many of them would have qualified for NYSE
listing. In addition, the SEC recently approved a revision to NYSE Rule 500
which makes it easier for a company to delist its shares from the NYSE. The
original rule required supermajority shareholder approval before a listed
company could delist from the NYSE. Under the recently approved amendment of
Rule 500, a company can delist from the NYSE if it obtains the approval of a
majority of the company's board of directors and the company's audit committee.
The company would then provide its 35 largest shareholders with written notice
of the proposed delisting and allow a 20-40 day waiting period to elapse.

OUR QUARTERLY RESULTS MAY FLUCTUATE SIGNIFICANTLY.

    Our revenues may fluctuate significantly based on factors relating to the
securities markets. These factors include:

    - a decrease in trading volume on the NYSE;

    - volatility in the equity securities markets; and

    - changes in the value of our securities positions.

    Many elements of our cost structure do not decline if we experience
quarterly reductions in our revenues. As a result, if market conditions cause
our revenues to decline, we may be unable to adjust our cost structure on a
timely basis and we could suffer losses.

RISKS ASSOCIATED WITH OUR TRADING TRANSACTIONS COULD RESULT IN TRADING LOSSES.

    A majority of our specialist-related revenues are derived from trading by us
as principal. We may incur trading losses relating to these activities since
each primarily involves the purchase, sale or short sale of securities for our
own account. In any period, we may incur trading losses in a significant number
of our specialist stocks for a variety of reasons, including price declines of
our specialist stocks, lack of trading volume in our specialist stocks and the
required performance of our specialist obligations. From time to time, we have
large position concentrations in securities of a single issuer or issuers
engaged in a specific industry. In general, because our inventory of securities
is marked to market on a daily basis, any downward price movement in these
securities will result in a reduction of our revenues and operating profits. We
also operate a proprietary trading desk separately from our NYSE specialist
operations, which represented 3.3% of our total revenues in 1999. We may incur
trading losses as a result of these trading activities.

                                       18
<PAGE>
    Although we have adopted risk management policies, we cannot be sure that
these policies have been formulated properly to identify or limit our risks.
Even if these policies are formulated properly, we cannot be sure that we will
successfully implement these policies. As a result, we may not be able to manage
our risks successfully or avoid trading losses.

NYSE SPECIALIST RULES MAY REQUIRE US TO MAKE UNPROFITABLE TRADES OR TO REFRAIN
  FROM MAKING PROFITABLE TRADES.

    When we trade as principal, we attempt to derive a profit from the
difference between the prices at which we buy and sell securities. Our role as a
specialist, at times, requires us to make trades that adversely affect our
profitability. In addition, as a specialist, we are at times required to refrain
from trading for our own account in circumstances in which it may be to our
advantage to trade. For example, we may be obligated to act as a principal when
buyers or sellers outnumber each other. In those instances, we may take a
position counter to the market, buying or selling shares to support an orderly
market in the affected stocks. In order to perform these obligations, we hold
varying amounts of securities in inventory. In addition, specialists generally
may not trade for their own account when public buyers are meeting public
sellers in an orderly fashion and may not compete with public orders at the same
price. By having to support an orderly market, maintain inventory positions and
refrain from trading under some favorable conditions, we are subjected to a high
degree of risk. Additionally, the NYSE periodically amends its rules and may
make the rules governing our activities as a specialist more stringent or may
implement changes which could adversely affect our trading revenues.

WE MAY HAVE DIFFICULTY SUCCESSFULLY MANAGING OUR GROWTH.

    Since 1994, we have experienced significant growth in our business
activities and the number of our employees. We cannot assure you that we will be
able to manage our growth successfully. Our inability to do so could have an
adverse effect on our business, financial condition and/or operating results.
The growth of our business has increased the demands upon our management and
operations and we expect it to continue to do so in the future. This growth has
required, and will continue to require, us to increase our investment in
management personnel, financial and management systems and controls, and
facilities. The scope of procedures for assuring compliance with applicable
rules and regulations has changed as the size and complexity of our business has
increased. In response, we have implemented formal compliance procedures which
are regularly updated. Our future operating results will depend on our ability
to continue:

    - to improve our systems for operations, financial control, and
      communication and information management;

    - to refine our compliance procedures and enhance our compliance oversight;
      and

    - to recruit, train, manage and retain our employees.

WE MAY FAIL TO SUCCESSFULLY INTEGRATE OUR RECENT ACQUISITIONS.

    We cannot assure you that we will be able to successfully integrate the
businesses of Henderson Brothers or Webco with our existing business. The
acquisitions may result in unforeseen operating difficulties and expenditures.
They may also require significant management attention that would otherwise be
available for ongoing development of our business. Moreover, we cannot assure
you that the anticipated benefits of these acquisitions will be realized. As a
result of the acquisitions, we will incur amortization expenses related to
goodwill and other intangible assets. In addition, we may incur contingent
liabilities of which we are not aware.

    As part of our acquisition of Henderson Brothers, we acquired its clearing
operations. We previously had no experience operating a clearing business and
may not be familiar with all of the risks associated with the clearing business.
We cannot assure you that we will successfully operate and manage this business.

                                       19
<PAGE>
OUR SUCCESS DEPENDS ON OUR ABILITY TO ACCURATELY PROCESS AND RECORD OUR
TRANSACTIONS, AND ANY FAILURE TO DO SO COULD SUBJECT US TO LOSSES.

    Our specialist activities require us to accurately record and process a very
large number of transactions on a daily basis. Any failure or delay in recording
or processing transactions could cause substantial losses for brokers, their
customers and/or us and could subject us to claims for losses. We rely on our
staff to operate and maintain our information and communications systems
properly, and we depend on the integrity and performance of those systems. Our
recording and processing of trades is subject to human and processing errors.
Moreover, extraordinary trading volume or other events could cause our
information and communications systems to operate at an unacceptably low speed
or even fail. Any significant degradation or failure of our information systems
or any other systems in the trading process could cause us to fail to complete
transactions or could cause brokers who place trades through us to suffer delays
in trading.

OUR MANAGEMENT INFORMATION SYSTEMS MAY FAIL AND INTERRUPT OUR BUSINESS.

    Any information or communication systems failure or decrease in information
or communications systems performance that causes interruptions in our
operations could have an adverse effect on our business, financial condition
and/or operating results. Our systems may fail as a result of:

    - hardware or software failure; or

    - power or telecommunications failure.

    Although we have established a back-up disaster recovery center in Hoboken,
New Jersey, it may not be effective in preventing an interruption of our
business.

WE DEPEND ON THE NYSE AND CLEARING AND DEPOSITORY INSTITUTIONS TO EFFECT TRADES,
AND THEIR FAILURE TO PERFORM COULD SUBJECT US TO LOSSES.

    We are dependent on the proper and timely function of complex information
and communications systems maintained and operated by or for the NYSE and
clearing and depository institutions. Failures or inadequate or slow performance
of any of those systems could adversely affect our ability to operate and
complete trades. The failure to complete trades on a timely basis could subject
us to losses and claims for losses of brokers and their customers.

OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO UPGRADE OUR INFORMATION AND
COMMUNICATIONS SYSTEMS, AND ANY FAILURE TO DO SO COULD HARM OUR BUSINESS AND
PROFITABILITY.

    The development of complex communications and new technologies, including
Internet-based technologies, may render our existing information and
communications systems outdated. In addition, our information and communications
systems must be compatible with those of the NYSE. As a result, if the NYSE
upgrades its systems, we will need to make corresponding upgrades. Our future
success will depend on our ability to respond to changing technologies on a
timely and cost-effective basis. We cannot be sure that we will be successful in
upgrading our information and communications systems on a timely or
cost-effective basis. Our failure to do so could have an adverse effect on our
business, financial condition and/or operating results.

    The NYSE's ability to develop information and communications systems and
complex computer and other technology systems has been instrumental in its
recent growth and success. We are dependent on the continuing development of
technological advances by the NYSE, a process over which we have no control. If
the NYSE for any reason is unable to continue its recent history of
computer-related and other technological developments and advances, it could
have an adverse effect on the success of the NYSE, including its ability to
grow, to manage its trading volumes or to attract new listings. Any such

                                       20
<PAGE>
developments can be expected to adversely affect our operations, financial
condition and operating results.

IF WE LOSE THE SERVICES OF OUR KEY PERSONNEL OR CANNOT HIRE ADDITIONAL QUALIFIED
PERSONNEL, OUR BUSINESS WILL BE HARMED.

    Our future success depends on the continued service of key employees,
particularly George M.L. LaBranche, IV (Michael LaBranche), our Chairman, Chief
Executive Officer and President. The loss of the services of any of our key
personnel or the inability to identify, hire, train and retain other qualified
personnel in the future could have an adverse effect on our business, financial
condition and/or operating results. We have employment agreements with
Mr. LaBranche and other key employees. We also maintain "key person" life
insurance policies on Mr. LaBranche and other key employees. Competition for key
personnel and other highly qualified management, trading, compliance and
technical personnel is intense. We cannot assure you that we will be able to
attract new or retain currently employed highly qualified personnel in the
future.

    In connection with our reorganization transactions, our managing directors
received substantial amounts of our common stock in exchange for their interests
in LaB Investing Co. L.L.C. Because the shares of common stock were received in
exchange for membership interests, ownership of the shares is not dependent upon
the continued employment of those managing directors. In addition, employees who
are not managing directors received grants of stock options and restricted stock
units. The steps we have taken to encourage the continued service of these
individuals, who include key senior personnel in our specialist activities, may
not be effective.

WE DEPEND SIGNIFICANTLY ON REVENUES FROM OUR SPECIALIST ACTIVITIES FOR A SMALL
GROUP OF LISTED COMPANIES, AND THE LOSS OF ANY OF THEM COULD REDUCE OUR
REVENUES.

    Historically, a small number of listed companies have accounted for a
significant portion of our revenues from our specialist trading activities. The
loss of any of these listed companies could have an adverse effect on our
revenues. For the years ended December 31, 1998 and 1999, transactions in our 10
most actively traded specialist stocks accounted for approximately 39.0% and
44.2% of our total revenues, respectively. We cannot assure you that we will be
able to retain these or other listed companies. We can lose these listed
companies if they cease to be traded on the NYSE as a result of being acquired
or otherwise delisted. In addition, if the NYSE were to determine that we have
failed to fulfill our obligations as specialist for a listed company, our
registration as a specialist for that listed company could be cancelled or
suspended.

WE DEPEND ALMOST ENTIRELY ON OUR SPECIALIST ACTIVITIES, AND IF THEY FAIL TO GROW
AS ANTICIPATED, IT WOULD HARM OUR REVENUES.

    We derive substantially all of our revenues from specialist activities. If
demand for our specialist services fails to grow, grows more slowly than we
currently anticipate, or declines, our revenues would be adversely affected. We
expect our specialist activities to continue to account for substantially all of
our revenues for the foreseeable future. Our future success will depend on:

    - continued growth in the volume of trading and the number of listings on
      the NYSE;

    - our ability to be chosen as specialist for additional listing companies;

    - our ability to respond to regulatory and technological changes; and

    - our ability to respond to changing demands in the marketplace.

                                       21
<PAGE>
WE ARE SUBJECT TO INTENSE COMPETITION FOR NEW LISTINGS, AND OUR PROFITABILITY
WILL SUFFER IF WE DO NOT COMPETE EFFECTIVELY.

    We cannot be sure that we will be able to compete effectively with current
or future competitors. Our failure to compete effectively would have an adverse
effect on our profitability. We obtain all of our new listings on the NYSE by
going through an allocation process. Under this process either a committee of
the NYSE or the listing company chooses the specialist. The competition for
obtaining new listing companies is intense. We expect competition to continue
and to intensify in the future. Some of our competitors may have significantly
greater financial and other resources than we have and may have greater name
recognition. These competitors may be able to respond more quickly to new or
evolving opportunities and listing company requirements. They may also be able
to undertake more extensive promotional activities to attract new listing
companies. In addition, the specialist industry has recently been consolidating.
The combined companies resulting from this consolidation may have a stronger
capital base. This trend has intensified the competition in our industry.
Finally, the NYSE retains the ability to name new specialist firms.

THE FAILURE BY US OR OUR EMPLOYEES TO COMPLY WITH APPLICABLE LAWS AND
REGULATIONS COULD RESULT IN SUBSTANTIAL FINES AND OTHER PENALTIES.

    The securities industry is subject to extensive regulation under both
federal and state laws. In addition, the SEC, the NYSE, other self-regulatory
organizations, commonly referred to as SROs, and state securities commissions
require strict compliance with their respective rules and regulations. Failure
to comply with any of these laws, rules or regulations could result in serious
adverse consequences. We and our officers and employees may be subject in the
future to claims arising from acts in contravention of these laws, rules and
regulations. An adverse ruling against us and/or our officers and other
employees as a result of any of these claims could result in us and/or our
officers and other employees being required to pay a substantial fine or
settlement. It could also result in the suspension or revocation of our
registration with the SEC as a broker-dealer or our suspension or expulsion as a
member of the NYSE. If this occurred, we would be unable to operate our
business. In connection with our acquisitions of Henderson Brothers and Webco,
we employed an additional 98 employees. As a result of the increased number of
employees and our lack of experience working with these employees, the risk that
we will not detect or deter employee misconduct will increase. In
November 1999, Henderson Brothers and one of its specialist were censured and
fined $110,000, in the aggregate, for failure to fulfill certain specialist
obligations.

THE REGULATORY ENVIRONMENT IN WHICH WE OPERATE MAY CHANGE, MAKING IT DIFFICULT
FOR US TO REMAIN IN COMPLIANCE.

    The regulatory environment in which we operate is subject to change which we
cannot predict. It may be difficult for us to comply with new or revised
legislation or regulations imposed by the SEC, other U.S. or foreign
governmental regulatory authorities and SROs, including the NYSE. Failure to
comply would have an adverse effect on our business, financial condition and/or
operating results. Changes in the interpretation or enforcement of existing laws
and rules by the SEC, these governmental authorities, SROs and the NYSE could
also have an adverse effect on our business, financial condition and/or
operating results.

WE CANNOT PREDICT THE EFFECT A PROPOSED PUBLIC OFFERING BY THE NYSE WOULD HAVE
ON OUR BUSINESS.

    The NYSE has announced that it intends to offer shares of its capital stock
to the public. We are unable to predict what effect, if any, such an offering
would have on our business and the specialist industry.

                                       22
<PAGE>
FAILURE TO COMPLY WITH NET CAPITAL AND NET LIQUID ASSET REQUIREMENTS MAY RESULT
IN THE REVOCATION OF OUR REGISTRATION WITH THE SEC OR OUR EXPULSION FROM THE
NYSE.

    The SEC, the NYSE and various other regulatory agencies have stringent rules
with respect to the maintenance of minimum levels of capital and net liquid
assets by securities brokers-dealers as well as specialist firms. Subject to SEC
approval, the NYSE recently increased its minimum net liquid asset requirements.
Currently, we are required to maintain minimum net liquid assets of
$284.3 million. Failure to maintain compliance with these required minimum
levels may subject us to suspension or revocation of registration by the SEC and
suspension or expulsion as a member of the NYSE and other regulatory bodies. If
this occurred, we would be unable to operate our business. In addition, a change
in these rules, the imposition of new rules or any unusually large requirement
or charge against our regulatory capital could limit any of our operations that
require the intensive use of capital. These rules could also restrict our
ability to withdraw capital from LaBranche & Co. Any limitation on our ability
to withdraw capital from LaBranche & Co. could limit our ability to receive
distributions from LaBranche & Co. and LaB Investing Co. L.L.C., which, in turn,
could limit our ability to pay cash dividends, repay debt and repurchase shares
of our outstanding stock. A substantial market decline, a significant operating
loss or any unusually large requirement or charge against regulatory capital
could adversely affect our ability to expand or even maintain our present levels
of business, which could have an adverse effect on our business, financial
condition and/or operating results.

EMPLOYEE MISCONDUCT IS DIFFICULT TO DETECT AND DETER AND COULD RESULT IN LOSSES.

    There have been a number of highly publicized cases involving fraud, stock
manipulation or other misconduct by employees in the financial services industry
in recent years, and we run the risk that employee misconduct could occur.
Misconduct by employees could include binding us to transactions that exceed
authorized limits or present unacceptable risks, or hiding from us unauthorized
or unsuccessful activities, which, in either case, may result in unknown and
unmanaged risks or losses. Employee misconduct could also involve the improper
use or disclosure of confidential information, which could result in regulatory
sanctions and serious reputational or financial harm. It is not always possible
to deter employee misconduct and the precautions we take to prevent and detect
this activity may not be effective in all cases.

    In connection with our recent acquisitions of Henderson Brothers and Webco,
we have employed nearly 100 additional employees. As a result of the increased
number of employees and our lack of experience working with these employees, the
risk that we will not detect or deter employee misconduct will increase.

WE ARE SUBJECT TO RISK RELATING TO LITIGATION AND POTENTIAL SECURITIES LAWS
LIABILITY.

    Many aspects of our business involve substantial risks of liability. A
specialist is exposed to substantial risks of liability under federal and state
securities laws, other federal and state laws and court decisions, as well as
rules and regulations promulgated by the SEC and the NYSE. We are also subject
to the risk of litigation and claims that may be without merit. We could incur
significant legal expenses in defending ourselves against such lawsuits or
claims. An adverse resolution of any future lawsuits or claims against us could
have an adverse effect on our business, financial condition and/or operating
results.

COUNTERPARTIES MAY FAIL TO PAY US.

    As a specialist of listed stocks, the majority of our securities
transactions are conducted as principal with broker-dealer counterparties
located in the United States. The NYSE and the clearing houses monitor the
credit standing of the counterparties with which we conduct business. However,
we

                                       23
<PAGE>
cannot assure you that any of these counterparties will not default on their
obligations. If any do, our business, financial condition and/or operating
results could be adversely affected.

SOME OF OUR EXECUTIVE OFFICERS ARE IN A POSITION TO CONTROL MATTERS REQUIRING A
STOCKHOLDER VOTE.

    Our managing directors currently own approximately 71.3% of our outstanding
common stock. These stockholders have entered into a stockholders' agreement
under which they have agreed, among other things, that their shares of our
common stock will be voted, for as long as they own their shares, as directed by
a majority vote of Michael LaBranche, our Chairman, Chief Executive Officer and
President, James G. Gallagher and Alfred O. Hayward, Jr., each an executive
officer and director. Accordingly, these individuals have the ability to control
all matters requiring approval by our stockholders. These matters include the
election and removal of directors and the approval of any merger, consolidation
or sale of all or substantially all of our assets. In addition, they are able to
dictate the management of our business and affairs. This concentration of
ownership could have the effect of delaying, deferring or preventing a change in
control, a merger or consolidation, a takeover or another business combination.

                           FORWARD-LOOKING STATEMENTS

    This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about our company and our
industry. These forward-looking statements involve risks and uncertainties. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors described in "Risk
Factors" and elsewhere in this prospectus. We undertake no obligation to update
any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.

    You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus is accurate as of any date other than the date on the front of this
prospectus.

                                       24
<PAGE>
                               THE EXCHANGE OFFER

TERMS OF THE EXCHANGE OFFER

GENERAL

    In connection with the issuance of the initial notes pursuant to a purchase
agreement dated as of February 24, 2000 by and among us and the initial
purchasers, the initial purchasers and their respective assignees became
entitled to the benefits of the Registration Rights Agreement dated as of
March 2, 2000 by and among us and the initial purchasers.

    The Registration Rights Agreement requires us to file the registration
statement of which this prospectus is a part for a registered exchange offer
relating to an issue of new notes identical in all material respects to the
initial notes but containing no restrictive legend. Under the Registration
Rights Agreement, we are required to:

    - file the registration statement not later than May 1, 2000;

    - use our best efforts to cause the registration statement to be declared
      effective by the SEC not later than June 30, 2000;

    - keep the exchange offer open for not less than 20 business days (or longer
      if required by applicable law);

    - use our best efforts to consummate the exchange offer not later than
      30 days after the registration statement relating to the exchange offer
      becomes effective; and

    - deliver to each holder of record entitled to participate in the exchange
      offer as many copies of the prospectus forming part of the exchange
      registration statement, and any amendment or supplement thereto, as such
      persons may reasonably request.

    The exchange offer being made hereby, if commenced and consummated within
the time periods described in this paragraph, will satisfy those requirements
under the Registration Rights Agreement.

    Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, all initial notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the expiration date will be
accepted for exchange. Exchange notes of the same class will be issued in
exchange for an equal principal amount of outstanding initial notes accepted in
the exchange offer. Initial notes may be tendered only in integral multiples of
$1,000. This prospectus, together with the letter of transmittal, is being sent
to all record holders of initial notes as of             , 2000. The exchange
offer is not conditioned upon any minimum principal amount of initial notes
being tendered in exchange. However, our obligation to accept initial notes for
exchange is subject to certain conditions as set forth herein under
"--Conditions."

    Initial notes will be deemed accepted when, as and if the Trustee has given
oral or written notice to the exchange agent. The exchange agent will act as
agent for the tendering holders of initial notes for the purposes of receiving
the exchange notes and delivering them to the holders.

    Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to other issuers, we believe that the exchange notes issued in
the exchange offer may be offered for resale, resold or otherwise transferred by
each holder without compliance with the registration and prospectus delivery
provisions of the Securities Act of 1933, as amended, provided that:

    - the holder is not a broker-dealer who acquires the exchange notes directly
      from us for resale pursuant to Rule 144A under the Securities Act or any
      other available exemption under the Securities Act;

    - the holder is not our "affiliate", as that term is defined in Rule 405
      under the Securities Act; and

                                       25
<PAGE>
    - the exchange notes are acquired in the ordinary course of the holder's
      business and the holder is not engaged in, and does not intend to engage
      in, a distribution of the exchange notes and has no arrangement or
      understanding with any person to participate in a distribution of the
      exchange notes.

    By tendering the initial notes in exchange for exchange notes, each holder,
other than a broker-dealer, will represent to us that:

    - any exchange notes to be received by it will be acquired in the ordinary
      course of its business;

    - it is not engaged in, and does not intend to engage in, a distribution of
      the exchange notes and has no arrangement or understanding to participate
      in a distribution, within the meaning of the Securities Act, of the
      exchange notes; and

    - it is not our affiliate, as defined in Rule 405 under the Securities Act,
      or if it is our affiliate, it will comply with the registration and
      prospectus delivery requirements of the Securities Act, to the extent
      applicable.

    If a holder of initial notes is engaged in or intends to engage in a
distribution of the exchange notes or has any arrangement or understanding with
respect to the distribution of the exchange notes to be acquired pursuant to the
exchange offer, the holder may not rely on the applicable interpretations of the
staff of the SEC and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each broker-dealer that receives exchange notes for its own account
in the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. The letter of transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.

    This prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer to satisfy its prospectus delivery obligations under
the Securities Act in connection with resales of exchange notes for its own
account. We have agreed that we will keep the registration statement of which
this prospectus is a part effective for a period of up to six months or such
earlier date as each participating broker-dealer shall have notified us in
writing that it has resold all exchange notes acquired in the exchange offer.
See "Plan of Distribution."

    As soon as practicable after the close of the exchange offer, we will:

    - accept for exchange all registrable notes validly tendered and not validly
      withdrawn as part of the exchange offer; and

    - deliver to the Trustee for cancellation all registrable notes so accepted
      for exchange and cause the Trustee to authenticate and deliver promptly to
      each holder of registrable notes, exchange notes equal in principal amount
      to the securities of such holder so accepted for exchange.

    We will file with the SEC a shelf registration statement to register for
public resale the transfer restricted securities held by any such holder who
provides us with certain information for inclusion in a shelf registration
statement if:

    (1) the exchange offer is not permitted by applicable law or SEC policy, or

    (2) any holder of initial notes which are transfer restricted securities
       notifies us prior to the 20th business day following the consummation of
       the exchange offer that

       (a) it is prohibited by law or SEC policy from participating in the
           exchange offer,

       (b) it may not resell the exchange notes acquired by it in the exchange
           offer to the public without delivering a prospectus, and the
           prospectus contained in the registration statement is not appropriate
           or available for such resales by it, or

                                       26
<PAGE>
       (c) it is a broker-dealer and holds initial notes acquired directly from
           us or any of our affiliates.

    We will, in the event that a shelf registration statement is filed, provide
to each holder of the initial notes copies of the prospectus that is a part of
the shelf registration statement, notify each holder when the shelf registration
statement has become effective and take certain other actions as are required to
permit unrestricted resales of the exchange notes. A holder that sells initial
notes pursuant to the shelf registration statement will be required to be named
as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with its sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to that holder including certain indemnification rights and obligations.

    The term "transfer restricted securities" means each initial note or
exchange note, until the earliest of the date which:

    - the initial note is exchanged in the exchange offer for a new note in the
      exchange offer which can be publicly resold by the holder without
      complying with prospectus delivery requirements of the Securities Act of
      1933;

    - the resale of the initial note is effectively registered under the
      Securities Act and disposed of in accordance with the shelf registration
      statement;

    - the initial note is publicly distributed under Rule 144; or

    - the exchange note is disposed of by a broker-dealer pursuant to the "Plan
      of Distribution."

    The following events are considered registration defaults. We will pay
liquidated damages if:

    (1) we fail to file the exchange offer registration statement, of which this
       prospectus is a part, by May 1, 2000;

    (2) the exchange offer registration statement is not declared effective by
       the SEC by June 30, 2000;

    (3) we fail to consummate the exchange offer by the 30th day after the
       registration statement relating to the exchange offer becomes effective;

    (4) we are obligated to file the shelf registration statement and we fail to
       file it with the SEC on or before the 60(th) day after our filing
       obligation arises;

    (5) we are obligated to file the shelf registration statement and it is not
       declared effective on or before the 120(th) day after our filing
       obligation arises; or

    (6) the exchange offer registration statement or the shelf registration
       statement, as the case may be, is declared effective but thereafter
       ceases to be effective or usable for its intended purpose, without being
       succeeded immediately by a post-effective amendment to the registration
       statement that cures this failure and is declared effective immediately.

    If a registration default occurs, we will be obligated to pay as liquidated
damages to each holder of transfer restricted securities an amount equal to $.05
per week per $1,000 in principal amount of transfer restricted securities held
by each holder for each week or portion of a week that the registration default
continues for the first 90 day period immediately following the occurrence of
the registration default. The amount of liquidated damages will increase by an
additional $.05 per week per $1,000 in principal amount of transfer restricted
securities with respect to each subsequent 90-day period until all registration
defaults have been cured, up to a maximum of liquidated damages of $.50 per week
per $1,000 in principal amount of transfer restricted securities. We shall not
be required to

                                       27
<PAGE>
pay liquidated damages for more than one registration default at any given time.
Liquidated damages will cease to accrue upon the cure of registration defaults.

    Upon completion of the exchange offer, subject to certain exceptions,
holders of initial notes who do not exchange their initial notes for exchange
notes in the exchange offer will no longer be entitled to registration rights
and will not be able to offer or sell their initial notes, unless the initial
notes are subsequently registered under the Securities Act (which, subject to
certain limited exceptions, we will have no obligation to do), except pursuant
to an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. See "Risk Factors--If you do not participate
in the exchange offer, you will continue to be subject to transfer
restrictions."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION

    The term "expiration date" shall mean             , 2000 which is 20
business days following the commencement of the exchange offer, unless the
exchange offer is extended if and as required by applicable law, in which case
the term "expiration date" shall mean the latest date to which the exchange
offer is extended.

    In order to extend the expiration date, we will notify the exchange agent of
any extension by oral or written notice and may notify the holders of the
initial notes by mailing an announcement or by means of a press release or other
public announcement prior to 9:00 A.M., New York City time, on the next business
day after the previously scheduled expiration date.

    We reserve the right to delay acceptance of any initial notes, to extend the
exchange offer or to terminate the exchange offer and not permit acceptance of
initial notes not previously accepted if any of the conditions set forth herein
under "--Conditions" shall have occurred and shall not have been waived by us if
permitted to be waived, by giving oral or written notice of such delay,
extension or termination to the exchange agent. We also reserve the right to
amend the terms of the exchange offer in any manner deemed by us to be
advantageous to the holders of the initial notes. If any material change is made
to terms of the exchange offer, the exchange offer shall remain open for a
minimum of an additional five business days, if the exchange offer would
otherwise expire during such period. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice of the delay to the exchange agent. If the exchange offer is
amended in a manner determined by us to constitute a material change, we will
promptly disclose the amendment in a manner reasonably calculated to inform the
holders of the initial notes of the amendment including providing public
announcement, or giving oral or written notice to the holders of the initial
notes. A material change in the terms of the exchange offer could include, among
other things, a change in the timing of the exchange offer, a change in the
exchange agent, and other similar changes in the terms of the exchange offer.

    Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the exchange
offer, we will have no obligation to publish, advertise, or otherwise
communicate any such public announcement.

INTEREST ON THE EXCHANGE NOTES

    The exchange notes will accrue interest payable in cash at 12% per annum,
from the later of:

    - the last interest payment date on which interest was paid on the initial
      notes surrendered in exchange therefor; or

    - if the initial notes are surrendered for exchange on a date subsequent to
      the record date for an interest payment date to occur on or after the date
      of such exchange and as to which interest will be paid, the date of such
      interest payment.

                                       28
<PAGE>
PROCEDURES FOR TENDERING

    To tender in the exchange offer, a holder of initial notes must complete,
sign and date the letter of transmittal, and mail or otherwise deliver the
letter of transmittal or facsimile, or an agent's message, together with the
initial notes and any other required documents, to the exchange agent prior to
5:00 p.m., New York City time, on the expiration date. In addition:

    - certificates for the initial notes must be received by the exchange agent
      along with the letter of transmittal;

    - a timely confirmation of a book-entry transfer of the initial notes, if
      such procedure is available, into the exchange agent's account at The
      Depository Trust Company, or DTC, pursuant to the procedure for book-entry
      transfer described below, must be received by the exchange agent prior to
      the expiration date; or

    - the holder must comply with the guaranteed delivery procedures described
      below.

    THE METHOD OF DELIVERY OF INITIAL NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR
HAND-DELIVERY SERVICE. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
LETTERS OF TRANSMITTAL OR INITIAL NOTES SHOULD BE SENT TO US.

    Delivery of all documents must be made to the exchange agent at its address
set forth below. Holders of initial notes may also request their respective
brokers, dealers, commercial banks, trust companies or nominees to tender
initial notes for them.

    The term "agent's message" means a message, transmitted by the DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that the DTC has received an express acknowledgment from the
participant in the DTC tendering initial notes that are the subject of the
book-entry confirmation that the participant has received and agrees to be bound
by the terms of the letter of transmittal, and that we may enforce this
agreement against the participant.

    The tender by a holder of initial notes will constitute an agreement between
such holder and us in accordance with the terms and subject to the conditions
set forth herein and in the letter of transmittal.

    Only a holder of initial notes may tender the initial notes in the exchange
offer. The term "holder" for this purpose means any person in whose name initial
notes are registered on our books or any other person who has obtained a
properly completed bond power from the registered holder.

    Any beneficial owner whose initial notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on his or her behalf. If the beneficial owner wishes
to tender on his or her own behalf, such beneficial owner must, prior to
completing and executing the letter of transmittal and delivering his or her
initial notes, either make appropriate arrangements to register ownership of the
initial notes in such owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.

    Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution, unless the initial notes
tendered pursuant thereto are tendered:

    - by a registered holder or by a participant in DTC whose name appears on a
      security position listing as the owner who has not completed the box
      entitled "Special Issuance Instructions" or "Special Delivery
      Instructions" on the letter of transmittal and the exchange notes are
      being issued directly to such registered holder or deposited into the
      participant's account at DTC; or

    - for the account of an eligible institution.

    Member firms of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., commercial bankers or trust companies
having an office or correspondent in

                                       29
<PAGE>
the United States or an "eligible guarantor" institution within the meaning of
Rule 17Ad-15 under the Exchange Act qualify as eligible institutions.

    If the letter of transmittal is signed by the recordholder(s) of the initial
notes tendered thereby, the signature must correspond with the name(s) written
on the face of the initial notes without alteration, enlargement or any change
whatsoever. If the letter of transmittal is signed by a participant in DTC, the
signature must correspond with the name as it appears on the security position
listing as the holder of the initial notes.

    If the letter of transmittal is signed by a person other than the registered
holder of any initial notes listed therein, those initial notes must be endorsed
or accompanied by bond powers and a proxy that authorize such person to tender
the initial notes on behalf of the registered holder, in each case as the name
of the registered holder or holders appear on the initial notes.

    If the letter of transmittal or any initial notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.

    A tender will be deemed to have been received as of the date when the
tendering holder's duly signed letter of transmittal accompanied by initial
notes, or a timely confirmation received of a book-entry transfer of initial
notes into the exchange agent's account at DTC with an agent's message, or a
notice of guaranteed delivery from an eligible institution is received by the
exchange agent. Issuances of exchange notes in exchange for initial notes
tendered pursuant to a notice of guaranteed delivery by an eligible institution
will be made only against delivery of the letter of transmittal and any other
required documents, and the tendered initial notes or a timely confirmation
received of a book-entry transfer of initial notes into the exchange agent's
account at DTC with the exchange agent.

    All questions as to the validity, form, eligibility, time of receipt,
acceptance and withdrawal of the tendered initial notes will be determined by us
in our sole discretion, which determination will be final and binding. We
reserve the absolute right to reject any and all initial notes not properly
tendered or any initial notes which, if accepted, would, in our opinion or that
of our counsel, be unlawful. We also reserve the absolute right to waive any
conditions of the exchange offer or irregularities or defects in tender as to
particular initial notes. Our interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of transmittal, will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of initial notes must be cured within such time as we
will determine. None of us, the exchange agent and any other person shall be
under any duty to give notification of defects or irregularities with respect to
tenders of initial notes, and none of them shall incur any liability for failure
to give such notification. Tenders of initial notes will not be deemed to have
been made until such irregularities have been cured or waived. Any initial notes
received by the exchange agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost by the exchange agent to the tendering holders of such initial
notes, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.

    In addition, we reserve the right in our sole discretion, subject to the
provision of the Indenture, to:

    - purchase or make offers for any initial notes that remain outstanding
      subsequent to the expiration date or, as set forth under "--Expiration
      Date; Extensions; Amendments; Termination," to terminate the exchange
      offer in accordance with the terms of the Registration Rights Agreement;
      and

    - to the extent permitted by applicable law, purchase initial notes in the
      open market, in privately negotiated transactions or otherwise.

    The terms of any such purchases or offers could differ from the terms of the
exchange offer.

                                       30
<PAGE>
ACCEPTANCE OF INITIAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES

    Upon satisfaction or waiver of all of the conditions to the exchange offer,
all initial notes properly tendered will be accepted, promptly after the
expiration date, and the exchange notes will be issued promptly after acceptance
of the initial notes. See "--Conditions" below. For purposes of the exchange
offer, initial notes shall be deemed to have been accepted as validly tendered
for exchange when, as and if we have given oral or written notice thereof to the
exchange agent.

    In all cases, issuance of exchange notes for initial notes that are accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the exchange agent of certificates for such initial notes or a timely
book-entry confirmation of such initial notes into the exchange agent's account
at the DTC, a properly completed and duly executed letter of transmittal and all
other required documents. If any tendered initial notes are not accepted for any
reason set forth in the terms and conditions of the exchange offer or if initial
notes are submitted for a greater principal amount than the holder desires to
exchange, such unaccepted or non-exchanged initial notes will be returned
without expense to the tendering holder as promptly as practicable after the
expiration or termination of the exchange offer. In the case of initial notes
tendered by the book-entry transfer procedures described below, the
non-exchanged initial notes will be credited to an account maintained with the
DTC.

BOOK-ENTRY TRANSFER

    The exchange agent will make a request to establish an account with respect
to the initial notes at the DTC for purposes of the exchange offer within two
business days after the date of this prospectus. Any financial institution that
is a participant in the DTC's systems may make book-entry delivery of initial
notes by causing the DTC to transfer such initial notes into the exchange
agent's account at the DTC in accordance with such DTC's procedures for
transfer. However, although delivery of initial notes may be effected through
book-entry transfer into the exchange agent's account at the DTC, an agent's
message or the letter of transmittal or facsimile thereof with any required
signature guarantees and any other required documents must, in any case, be
transmitted to and received by the exchange agent at one of the addresses set
forth below under "--Exchange Agent" on or prior to the expiration date or the
guaranteed delivery procedures described below must be complied with. DELIVERY
OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All
references in the prospectus to deposit of initial notes shall be deemed to
include the DTC's book-entry delivery method.

GUARANTEED DELIVERY PROCEDURE

    If a registered holder of the initial notes desires to tender the notes, and
the notes are not immediately available, or time will not permit the holder's
initial notes or other required documents to reach the exchange agent before the
expiration date, or the procedures for book-entry transfer cannot be completed
on a timely basis and an agent's message delivered, a tender may be effected if:

    1.  the tender is made through an eligible institution;

    2.  prior to the expiration date, the exchange agent receives from such
       eligible institution a properly completed and duly executed letter of
       transmittal or facsimile thereof and notice of guaranteed delivery,
       substantially in the form provided by us, by facsimile transmission, mail
       or hand delivery, setting forth the name and address of the holder of the
       initial notes and the amount of initial notes tendered, stating that the
       tender is being made thereby and guaranteeing that within five business
       days after the expiration date, the certificates for all physically
       tendered initial notes, in proper form for transfer, or a book-entry
       confirmation, as the case may be, and any other documents required by the
       letter of transmittal will be deposited by the eligible institution with
       the exchange agent; and

    3.  the certificates for all physically tendered initial notes, in proper
       form for transfer, or a book-entry confirmation, as the case may be, and
       all other documents required by the letter of transmittal are received by
       the exchange agent within five business days after the expiration date.

                                       31
<PAGE>
WITHDRAWAL OF TENDERS

    Except as otherwise provided herein, tenders of initial notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration
date.

    For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent prior to 5:00 p.m., New York City time on the
business day prior to the expiration date at the address set forth below under
"--Exchange Agent" and prior to acceptance for exchange thereof by us. Any such
notice of withdrawal must:

    1.  specify the name of the person having tendered or depositing the initial
       notes to be withdrawn;

    2.  identify the initial notes to be withdrawn, including, if applicable,
       the registration number or numbers and total principal amount of such
       initial notes;

    3.  be signed by the depositor in the same manner as the original signature
       on the letter of transmittal by which such initial notes were tendered,
       including any required signature guarantees, or be accompanied by
       documents of transfer sufficient to permit the Trustee with respect to
       the initial notes to register the transfer of such initial notes into the
       name of the depositor withdrawing the tender;

    4.  specify the name in which any such initial notes are to be registered,
       if different from that of the depositor; and

    5.  if the initial notes have been tendered pursuant to the book-entry
       procedures, specify the name and number of the participant's account at
       DTC to be credited, if different than that of the depositor.

    All questions as to the validity, form and eligibility, time of receipt of
such notices will be determined by us, whose determination shall be final and
binding on all parties. Any initial notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the exchange offer. Any
initial notes that have been tendered for exchange and that are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder (or, in the case of initial notes tendered by book-entry transfer, such
initial notes will be credited to an account maintained with the Book-Entry
Transfer Facility for the initial notes) as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn initial notes may be re-tendered by following one of the procedures
described under "--Procedures for Tendering" and "--Book-Entry Transfer" above
at any time on or prior to the expiration date.

CONDITIONS

    Notwithstanding any other term of the exchange offer, initial notes will not
be required to be accepted for exchange, nor will exchange notes be issued in
exchange for any initial notes, and we may terminate or amend the exchange offer
as provided herein before the acceptance of such initial notes if:

    1.  because of any change in law, or applicable interpretations thereof by
       the SEC, we determine that we are not permitted to effect the exchange
       offer;

    2.  an action or proceeding is commenced or threatened that would materially
       impair our ability to proceed with the exchange offer; or

    3.  not all government approvals that we deem necessary for the consummation
       of the exchange offer have been received.

    We have no obligation to, and will not knowingly, permit acceptance of
tenders of initial notes:

    - from our affiliates within the meaning of Rule 405 under the Securities
      Act;

    - from any other holder or holders who are not eligible to participate in
      the exchange offer under applicable law or interpretations by the SEC; or

    - if the exchange notes to be received by such holder or holders of initial
      notes in the exchange offer, upon receipt, will not be tradable by such
      holder without restriction under the Securities

                                       32
<PAGE>
      Act and the Exchange Act of 1934, as amended, and without material
      restrictions under the "blue sky" or securities laws of substantially all
      the states of the United States.

ACCOUNTING TREATMENT

    The exchange notes will be recorded at the same carrying value as the
initial notes, as reflected in our accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by us. The costs of the exchange offer and the unamortized expenses
related to the issuance of the initial notes will be amortized over the term of
the exchange notes.

EXCHANGE AGENT

    Firstar Bank, N.A. has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance and requests for additional copies
of this prospectus or of the letter of transmittal should be directed to the
exchange agent addressed as follows:

    By Mail, Overnight Mail or Courier:
    Firstar Bank, N.A.
    425 Walnut Street,
    Corporate Trust Services, 6(th) Floor
    Cincinnati, OH 45202
    ATTN: Keith Maurmeier
    Facsimile Transmission: (513) 632-5511
    Confirm by Telephone: (513) 632-4843

FEES AND EXPENSES

    We will pay the expenses of soliciting tenders under the exchange offer. The
principal solicitation for tenders pursuant to the exchange offer is being made
by mail; however, additional solicitations may be made by telegraph, telephone,
telecopy or in person by our officers and regular employees.

    We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We, however, will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket expenses in connection
therewith. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of the prospectus, letters of transmittal and related documents to the
beneficial owners of the initial notes, and in handling or forwarding tenders
for exchange.

    The expenses to be incurred in connection with the exchange offer will be
paid by us, including fees and expenses of the exchange agent and Trustee and
accounting, legal, printing and related fees and expenses.

    We will pay all transfer taxes, if any, applicable to the exchange of
initial notes pursuant to the exchange offer. If, however:

    - certificates representing exchange notes or initial notes for principal
      amounts not tendered or accepted for exchange are to be delivered to, or
      are to be registered or issued in the name of, any person other than the
      registered holder of the initial notes tendered; or

    - if tendered initial notes are registered in the name of any person other
      than the person signing the letter of transmittal; or

    - if a transfer tax is imposed for any reason other than the exchange of
      initial notes pursuant to the exchange offer,

then the amount of any such transfer taxes, whether imposed on the registered
holder or any other persons, will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of the transfer taxes will
be billed directly to the tendering holder.

                                       33
<PAGE>
                                USE OF PROCEEDS

    There will be no cash proceeds payable to us from the issuance of the
exchange notes under the exchange offer. In consideration for issuing the
exchange notes as contemplated in this prospectus, we will receive initial notes
in like principal amount, the terms of which are identical in all material
respects to the exchange notes. The initial notes surrendered in exchange for
the exchange notes will be retired and canceled and cannot be reissued.
Accordingly, the issuance of the exchange notes will not result in any increase
in our indebtedness. We used the proceeds from the sale of the initial notes to
fully fund our acquisition of Henderson Brothers and to partially fund our
acquisition of Webco, each an NYSE specialist firm, and to pay fees and expenses
related to both acquisitions.

                                       34
<PAGE>
                SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

    The selected consolidated financial data set forth below for the years ended
December 31, 1997, 1998 and 1999 and as of December 31, 1998 and 1999 have been
derived from our consolidated financial statements, which have been audited by
Arthur Andersen LLP, independent public accountants, and are included elsewhere
in this prospectus. The selected consolidated financial data set forth below for
the years ended December 31, 1995 and 1996 and as of December 31, 1995, 1996 and
1997 have been derived from our consolidated financial statements, audited by
Arthur Andersen LLP, independent public accountants, which are not included
elsewhere in this prospectus. The selected consolidated financial data set forth
below should be read in conjunction with the consolidated financial statements
and related notes thereto and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which are included elsewhere in
this prospectus.

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                              ----------------------------------------------------
                                                                1999       1998       1997       1996       1995
                                                              --------   --------   --------   --------   --------
                                                                                 (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
    Net gain on principal transactions......................  $150,971   $ 95,048   $47,817    $37,113    $26,290
    Commissions.............................................    37,222     26,576    15,186     10,180      7,736
    Other...................................................    12,844      4,787     4,637      2,643      3,147
                                                              --------   --------   -------    -------    -------
        Total revenues......................................   201,037    126,411    67,640     49,936     37,173
                                                              --------   --------   -------    -------    -------
EXPENSES:
    Employee compensation and benefits......................    34,268     13,921     8,408     11,098      5,817
    Lease of exchange memberships...........................     8,416      6,568     3,727      2,468      2,113
    Interest................................................     8,286      3,577     1,566        331        116
    Amortization of intangibles.............................     4,623      2,526       737         --         --
    Exchange, clearing and brokerage fees...................     3,709      2,898     2,042      1,514      1,557
    Legal and professional fees.............................     1,622        916       620        170        194
    Occupancy...............................................     1,411      1,121       465        435        156
    Communications..........................................     1,193        964       709        495        367
    Other...................................................     3,041      2,285     1,634        642        599
                                                              --------   --------   -------    -------    -------
    Total expenses before managing directors' compensation,
      limited partners' interest in earnings of subsidiary
      and provision for income taxes........................    66,569     34,776    19,908     17,153     10,919
                                                              --------   --------   -------    -------    -------
    Income before managing directors' compensation, limited
      partners' interest in earnings of subsidiary and
      provision for income taxes............................   134,468     91,635    47,732     32,783     26,254
    Managing directors' compensation........................    56,191     58,783    30,008     23,235     16,895
                                                              --------   --------   -------    -------    -------
    Income before limited partners' interest in earnings of
      subsidiary and provision for income taxes.............    78,277     32,852    17,724      9,548      9,359
    Limited partners' interest in earnings of subsidiary....    25,344     26,292    14,354      9,638      7,046
                                                              --------   --------   -------    -------    -------
    Income (loss) before provision for income taxes.........    52,933      6,560     3,370        (90)     2,313
    Provision for income taxes..............................    23,899      3,900     1,881      1,602      1,179
                                                              --------   --------   -------    -------    -------
    Net income (loss).......................................  $ 29,034   $  2,660   $ 1,489    $(1,692)   $ 1,134
                                                              ========   ========   =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                               AS OF DECEMBER 31,
                                                              ----------------------------------------------------
                                                                1999       1998       1997       1996       1995
                                                              --------   --------   --------   --------   --------
                                                                                 (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and short term investments.............................  $109,196   $ 25,822   $ 17,989   $16,479    $ 8,971
Working capital.............................................   229,119    104,250     62,562    27,694     32,855
Total assets................................................   505,125    272,201    157,754    78,918     65,177
Total long-term indebtedness (1)............................   162,330     48,073     31,423     2,919      1,150
Members' capital/stockholders' equity.......................   251,972     77,093     37,658    13,735     18,270
</TABLE>

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

(1) Excludes subordinated liabilities related to contributed exchange
    memberships.

                                       35
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    YOU SHOULD READ THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS TOGETHER WITH THE FINANCIAL STATEMENTS AND THE NOTES TO
SUCH STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT EXPECTATIONS, ASSUMPTIONS,
ESTIMATES AND PROJECTIONS ABOUT US AND OUR INDUSTRY. THESE FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, AS MORE FULLY DESCRIBED IN THE "RISK FACTORS" SECTION
AND ELSEWHERE IN THIS PROSPECTUS. WE UNDERTAKE NO OBLIGATION TO UPDATE PUBLICLY
ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON, EVEN IF NEW INFORMATION BECOMES
AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.

                                    OVERVIEW

    Founded in 1924, our specialist LaBranche & Co. is one of the oldest and
largest specialist firms on the New York Stock Exchange, Inc. Our business has
grown considerably during the past five years. We have accomplished this growth
both internally and through selective acquisitions. Our revenues increased from
$37.2 million in 1995 to $201.0 million in 1999, representing a compound annual
growth rate of 52.6%. During the same period, we increased the number of our
common stock listings from 125 to 271.

REVENUES

    Our revenues consist primarily of net gains earned from principal
transactions in securities for which we act as specialist, and commissions
revenue earned from specialist activities. Net gain on principal transactions
represents trading gains net of trading losses and transaction fees, and are
earned by us when we act as principal buying and selling our specialist stocks.
These revenues are primarily affected by changes in share volume and
fluctuations in price in our specialist stocks. Share volume for our specialist
stocks has historically been driven by general trends in NYSE trading volume, as
well as factors particularly affecting our listed companies, including increased
merger and acquisition activity, stock splits, greater frequency of company news
releases (i.e., earnings guidance and reports), heightened research analyst
coverage and investor sentiment. Commissions revenue consists of commissions we
earn when acting as agent to match buyers and sellers for limit orders executed
by us on behalf of brokers after a specified period of time; we do not earn
commissions when we match market orders. Commissions revenue is primarily
affected by share volume of the trades executed by us as agent. Other revenue
consists of proprietary trading revenue, an investment in a hedge fund and
short-term interest income. In 1999, net gain on principal transactions
represented 75.1% of our total revenues, commissions revenue represented 18.5%
of our total revenues, and other revenue represented 6.4% of our total revenues.

EXPENSES

    Our largest operating expense is compensation and benefits. Employee
compensation and benefits primarily consist of salaries and wages and
profitability-based compensation. Profitability-based compensation includes
compensation and benefits paid to managing directors, trading professionals and
other employees based on our profitability and the employee's overall
performance.

    Prior to our reorganization from partnership to corporate form, a large
portion of the compensation payments to our managing directors had not been
presented as part of operating expenses. The aggregate amount of these
compensation payments generally approximated LaB Investing Co. L.L.C.'s interest
in the income of LaBranche & Co., before managing directors' compensation.
Generally, these payments of compensation were allocated among our managing
directors based on their respective percentage interests in the profits of LaB
Investing Co. L.L.C. Subsequent to the reorganization transactions, we include
payments to managing directors in employee

                                       36
<PAGE>
compensation and benefits expense. Therefore, historical income before managing
directors' compensation, limited partnership interest in earnings of subsidiary
and provision for income taxes understates our operating costs.

REORGANIZATION TRANSACTIONS

    On August 24, 1999, we reorganized from partnership to corporate form. Prior
to the reorganization, we operated as LaBranche & Co., a limited partnership and
LaB Investing Co. L.L.C., a limited liability company and the general partner of
LaBranche & Co. As part of the reorganization, we redeemed limited partnership
interests in LaBranche & Co. and redeemed or purchased all membership interests
in LaB Investing Co. L.L.C. in exchange for a combination of cash, indebtedness
and common stock of LaBranche & Co Inc. The redemption of the limited
partnership interests was accounted for as a step acquisition under the purchase
method of accounting. The excess of purchase price over the limited partners'
capital accounts of $127.4 million was allocated to intangible assets. Following
the reorganization, LaBranche & Co Inc. is a holding corporation whose assets
consist primarily of our ownership interests in LaBranche & Co. and LaB
Investing Co. L.L.C.

    Simultaneously with the reorganization, we completed an initial public
offering of 10,500,000 shares of our common stock at a price of $14.00 per
share. In addition, we incurred indebtedness of approximately $100.0 million
through our Senior Note offering and $16.0 million through the issuance of other
senior indebtedness. In addition, LaBranche & Co. incurred $350,000 of
subordinated indebtedness. As a result of this increased indebtedness, our
interest expense following the reorganization transactions has been higher than
historical levels.

INCOME TAXES

    As a partnership, we were generally not subject to U.S. federal, state and
local income taxes, apart from the 4% New York City unincorporated business tax.
As part of our restructuring to a corporation, we are subject to U.S. federal,
state and local income taxes.

COMPLETED ACQUISITIONS

    In the third quarter of 1998, we acquired substantially all the assets of
Fowler, Rosenau & Geary, LLC (or "Fowler, Rosenau"). The acquisition was
accounted for under the purchase method and the excess of cost over estimated
fair value of the net assets acquired, totaling $25.8 million, was allocated to
goodwill. The results of the specialist operations formerly conducted by Fowler,
Rosenau have been included in our consolidated financial statements since
July 1, 1998.

    In August 1997, we admitted Ernst & Company (or "Ernst") as a limited
partner in connection with our acquisition of the joint specialist operations of
Ernst, Homans & Co. (or "Homans") and Ware & Keelips, Inc. (or "Ware &
Keelips"). In connection with these transactions, we also hired as specialists
and admitted as members of LaB Investing Co. L.L.C. several individuals who had
previously worked as specialists for Ernst, Homans and Ware & Keelips. These
transactions were accounted for under the purchase method and the excess of cost
over estimated fair value of the net assets acquired, totaling $17.2 million,
was allocated to goodwill. The results of these specialist operations have been
included in our consolidated financial statements since August 1, 1997.

    In July 1997, Thomas Shanley, James Stack and Mark Soltz, formerly
specialists on behalf of Stern Bros., LLC (or "Stern"), were admitted as members
of LaB Investing Co. L.L.C. In connection with their admission,
Messrs. Shanley, Stack and Soltz contributed capital to LaB Investing Co. L.L.C.
which was, in turn, contributed to LaBranche & Co. This transaction was
accounted for under the purchase method and the excess of cost over estimated
fair value of the net assets acquired, totaling $7.8 million, was allocated to
goodwill. The results of these specialist operations have been included in our
consolidated financial statements since July 1, 1997.

                                       37
<PAGE>
ACQUISITIONS SUBSEQUENT TO YEAR END

    In March 2000, we completed the acquisition of all of the outstanding stock
of Henderson Brothers for approximately $228.4 million in cash. In addition, we
acquired Webco, through a merger where we were the sole survivor, for
2.8 million shares of our common stock, $10.9 million in cash and senior
promissory notes in the aggregate principal amount of $3.0 million, each bearing
an interest rate of 10% per annum. These acquisitions will be accounted for
under the purchase method and the excess of cost over estimated fair value of
the net assets acquired, estimated to be $207.7 million for Henderson Brothers
and $28.2 million for Webco, will be allocated to intangible assets. The results
of specialist operations of each of the acquired companies will be included in
our consolidated financial statements beginning on the date of completion of the
applicable acquisition.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

REVENUES

    Total revenues increased 59.0% to $201.0 million for 1999, from
$126.4 million for 1998, principally due to the increase in revenue from net
gain on principal transactions. Net gain on principal transactions increased
58.9% to $151.0 million for 1999, from $95.0 million for 1998. This increase was
primarily due to an increase in share volume for our specialist stocks traded on
the NYSE. This increase, in turn, was primarily due to the Fowler, Rosenau
acquisition on July 1, 1998 under which we became the specialist for 76
additional common stock listings, and to increased share volume as principal in
our existing specialist stocks traded on the NYSE. Our share volume as principal
increased 62.7% to 9.6 billion shares for 1999, from 5.9 billion shares for
1998.

    Commissions revenue increased 39.8% to $37.2 million for 1999 from
$26.6 million for 1998. This increase was due to an increase in share volume in
which we acted as agent. This increase, in turn, was primarily due to the
increase in the number of our common stock listings as a result of the Fowler,
Rosenau acquisition on July 1, 1998 and to increased share volume in our
existing specialist stocks traded on the NYSE. The share volume executed by us
as agent in our specialist stocks increased 41.4% to 4.1 billion shares for
1999, from 2.9 billion shares for 1998.

    Other revenue increased 166.7% to $12.8 million for 1999, from $4.8 million
for 1998. This increase was primarily due to net gains in proprietary trading of
non-specialist securities and realized gains from a limited partnership
investment in a hedge fund.

EXPENSES

    Total expenses before managing directors' compensation and limited partners'
interest in earnings of subsidiary and provision for income taxes increased
91.4% to $66.6 million for 1999, from $34.8 million for 1998.

    Employee compensation and related benefits increased 146.8% to
$34.3 million for 1999, from $13.9 million for 1998. This increase was due to
the Fowler, Rosenau acquisition on July 1, 1998, which resulted in our
employment of 36 additional individuals, and to the inclusion of managing
director salary, incentive-based bonus and related benefits in employee
compensation from the date of our reorganization in August 1999. As a percentage
of total revenues, employee compensation increased to 17.0% of total revenues
for 1999, from 11.0% of total revenues for 1998.

    Lease of exchange memberships expense increased 27.3% to $8.4 million for
1999, from $6.6 million for 1998. This increase was due to the increase in the
number of leased memberships from 44 to 48, primarily as a result of the hiring
of additional specialists and to an increase in the average annual leasing cost
of the memberships from approximately $180,000 to $192,000 per membership. As a
percentage of total revenues, lease of exchange memberships expense decreased to
4.2% for 1999, from 5.2% for 1998.

                                       38
<PAGE>
    Interest expense increased 130.6% to $8.3 million for 1999, from
$3.6 million for 1998. This increase was primarily due to the issuance of
$116.4 million of indebtedness which began accruing interest from August 24,
1999.

    Amortization of intangibles increased 84.0% to $4.6 million for 1999, from
$2.5 million for 1998. Amortization of intangibles increased as a result of the
Fowler, Rosenau acquisition, as well as the $127.4 million of intangible assets
recorded as a result of our acquisition of all of the limited partnership
interests in LaBranche & Co. in connection with our reorganization transactions.

    Exchange, clearing and brokerage fees consist primarily of fees paid by us
as a specialist to the NYSE and to clearing houses. Fees paid by us to the NYSE
include primarily fees based on the volume of transactions executed as principal
and as agent, as well as a flat annual fee. Exchange, clearing and brokerage
fees expense increased 27.6% to $3.7 million for 1999, from $2.9 million for
1998. This increase was primarily attributable to an increase in share volume.

    Legal and professional fees increased 74.7% to $1.6 million for 1999, from
$916,000 for 1998. This increase was primarily the result of increased legal and
accounting fees due to our reorganization transactions.

    Occupancy expense increased 27.3% to $1.4 million for 1999, from
$1.1 million for 1998. This increase was primarily the result of the leasing of
additional office space.

    Communications expense increased 20.0% to $1.2 million for 1999, from
$1.0 million for 1998. This increase was primarily the result of additional
telephone, data retrieval and informational services utilized due to the growth
of our business.

    Other expenses increased 30.4% to $3.0 million for 1999, from $2.3 million
for 1998. The increase was primarily due to an increase in advertising and
promotional expenses.

    Income before managing directors' compensation and limited partners'
interest in earnings of subsidiary and provision for income taxes increased
46.8% to $134.5 million for 1999, from $91.6 million for 1998.

    Managing directors' compensation decreased 4.4% to $56.2 million for 1999,
from $58.8 million for 1998 as a result of the inclusion of managing director
salary, incentive-based bonus and related benefits in employee compensation from
the date of our reorganization transactions.

    Limited partners' interest in earnings of subsidiary decreased 3.8% to
$25.3 million for 1999, from $26.3 million for 1998 as a result of our
reorganization, at which time we acquired all of the limited partnership
interests in LaBranche & Co.

    Provision for income taxes increased 512.8% to $23.9 million for 1999, from
$3.9 million for 1998 as a result of an increase in our profitability and the
federal, state and local income taxes to which we are subject as a result of our
reorganization from partnership to corporate form.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

    REVENUES

    Total revenues increased 87.0% to $126.4 million for 1998 from
$67.6 million for 1997, due primarily to the increase in revenue from net gain
on principal transactions. Net gain on principal transactions increased 98.8% to
$95.0 million for 1998, from $47.8 million for 1997. This increase was primarily
due to an increase in share volume. This increase in share volume, in turn, was
primarily due to increased share volume as principal in our existing specialist
stocks traded on the NYSE, and was also due to the increase in the number of our
common stock listing due to the Fowler, Rosenau acquisition. Our share volume as
principal increased 136.0% to 5.9 billion shares for 1998, from 2.5 billion
shares for 1997.

                                       39
<PAGE>
    Commissions revenue increased 75.0% to $26.6 million for 1998 from
$15.2 million for 1997. This increase was due to an increase in share volume in
which we acted as agent. This increase, in turn, was primarily due to increased
share volume in our existing specialist stocks traded on the NYSE, and was also
due to the increase in the number of our common stock listings due to the
Fowler, Rosenau acquisition. The share volume executed by us as agent in our
specialist stocks increased 70.6% to 2.9 billion shares for 1998, from
1.7 billion shares for 1997.

    Other revenue increased 4.3% to $4.8 million for the twelve months ended
December 31, 1998, from $4.6 million for the same period in 1997. This increase
was primarily due to net gains in proprietary trading of non-specialist
securities.

    EXPENSES

    Total expenses before managing directors' compensation, limited partners'
interest in earnings of subsidiary and unincorporated business taxes increased
74.9% to $34.8 million for 1998, from $19.9 million for 1997.

    Employee compensation and related expenses increased 71.6% to $13.9 million
for 1998, from $8.1 million for 1997. Our number of employees increased to 152
as of December 31, 1998, from 95 as of December 31, 1997, primarily due to the
Fowler, Rosenau acquisition. As a percentage of total revenues, employee
compensation decreased to 11.0% of total revenues for 1998, from 12.4% of total
revenues for 1997.

    Lease of exchange membership expense increased 78.4% to $6.6 million for
1998, from $3.7 million for 1997. This increase was due to the increase in the
number of leased memberships from 32 to 44, resulting from the Fowler, Rosenau
acquisition, and due to an increase in the average annual leasing cost of the
memberships from approximately $150,000 to $180,000 per membership. As a
percentage of total revenues, lease of exchange memberships expense decreased to
5.2% for 1998, from 5.5% for 1997.

    Interest expense increased 125.0% to $3.6 million for 1998, from
$1.6 million for 1997. This increase was primarily due to an increase in
outstanding subordinated indebtedness to $48.1 million at December 31, 1998 from
$31.4 million at December 31, 1997.

    Amortization of intangibles increased 239.2% to $2.5 million for 1998, from
$737,000 for 1997. Amortization of intangibles increased due to the Fowler,
Rosenau acquisition. In addition, amortization of intangibles arising from the
Ernst and Stern acquisitions was incurred for the full year of 1998 and was only
incurred during the second half of 1997.

    Exchange, clearing and brokerage fees expense increased 45.0% to
$2.9 million for 1998, from $2.0 million for 1997. This increase was primarily
attributable to an increase in share volume.

    Legal and professional fees increased 47.7% to $916,000 for 1998, from
$620,000 for 1997. This increase was primarily the result of increased legal and
accounting fees due to the Fowler, Rosenau acquisition and consulting services
we obtained to comply with data processing testing required by the NYSE in
anticipation of the acquisition.

    Occupancy expense increased 136.6% to $1.1 million for 1998, from $465,000
for 1997. This increase was primarily the result of the leasing of additional
office space.

    Communications expense increased 36.0% to $964,000 for 1998, from $709,000
for 1997. This increase was the result of additional telephone, data retrieval
and informational services utilized due to the growth of our business.

    Other expenses increased 43.8% to $2.3 million for 1998, from $1.6 million
for 1997. This was the result of payments made to Fowler, Rosenau in 1998 under
a profit sharing arrangement for trading in a specialist stock. This contractual
arrangement was terminated when we acquired Fowler, Rosenau in July 1998.

                                       40
<PAGE>
    Income before managing directors' compensation, limited partners' interest
in earnings of subsidiary and unincorporated business taxes increased 92.0% to
$91.6 million for 1998, from $47.7 million for 1997.

    Managing directors' compensation increased 96.0% to $58.8 million for 1998,
from $30.0 million for 1997 as a result of the increased profitability of the
firm.

    Unincorporated business tax expense increased 105.3% to $3.9 million in
1998, from $1.9 million for 1997 as a result of the increased profitability of
the firm.

LIQUIDITY

    Prior to our initial public offering of common stock and our 9 1/2% Senior
Notes offering, we had financed our business primarily through members' capital
and the issuance of subordinated indebtedness. As of December 31, 1999, we had
$505.1 million in assets, $109.2 million of which consisted of cash and
short-term investments, which primarily consist of commercial paper maturing
within seven days. As of December 31, 1998, we had $272.2 million in assets,
$25.8 million of which consisted of cash and short-term investments.

    In February 2000, we increased and extended our line-of-credit with The Bank
of New York to $200.0 million. Amounts outstanding under The Bank of New York
credit facility are secured by our inventory of specialist stocks and bear
interest at The Bank of New York's broker loan rate. To date, we have not
utilized this facility. The credit facility matures on February 2, 2001.

    As of December 31, 1999, the subordinated debt of LaBranche & Co. totaled
$46.5 million (excluding subordinated liabilities related to contributed
exchange memberships). Of this amount, $35.0 million represented senior
subordinated debt privately placed pursuant to several note purchase agreements.
Of this $35.0 million, $20.0 million matures on September 15, 2002 and bears
interest at an annual rate of 8.17%, payable on a quarterly basis, and
$15.0 million matures on June 3, 2008 and bears interest at an annual rate of
7.69%, payable on a quarterly basis. These notes are senior to all other
subordinated notes of LaBranche & Co. Subordinated debt totaling $11.5 million
represents junior subordinated debt of LaBranche & Co. placed with former
limited partners, their family members and our employees. This debt has
maturities ranging from the second half of 2000 through the first half of 2001,
and bears interest at an annual rate between 8.0% and 10.0%, payable on a
quarterly basis. The agreements relating to the junior subordinated debt
generally have automatic rollover provisions which extend the maturities for an
additional year, unless the lender provides notice at least seven months prior
to maturity.

    Concurrently with the initial public offering of our common stock and our
9 1/2% Senior Notes offering and as part of the reorganization of our firm from
partnership to corporate form, we acquired all the limited partnership interests
in LaBranche & Co. and the entire membership interest in LaB Investing Co.
L.L.C. for shares of our common stock, cash in the aggregate amount of
$149.2 million and subordinated debt.

    On August 24, 1999 we issued $100.0 million aggregate principal amount of
Senior Notes. The Senior Notes bear interest at a rate of 9 1/2% annually and
mature in August 2004. The indenture covering the Senior Notes includes certain
covenants that, among other things, limit our ability to borrow money; pay
dividends on our stock or purchase our stock; make investments; engage in
transactions with stockholders and affiliates; create liens on our assets; and
sell assets or engage in mergers and consolidations.

    At approximately the same time as our 9 1/2% Senior Note offering and the
initial public offering of our common stock, we issued a $16.0 million senior
note as partial payment for the acquisition of a certain limited partnership
interest in LaBranche & Co. The note is payable in three installments of
$6.0 million on the first anniversary of issuance, $5.0 million on the second
anniversary of issuance and $5.0 million on the third anniversary of issuance,
and bears interest at the annual rate of 9 1/2%.

                                       41
<PAGE>
LaBranche & Co. also entered into a $350,000 cash subordinated loan agreement,
bearing interest at an annual rate of 8.0%, in connection with the acquisition
of a certain limited partner interest. In addition, on September 30, 1999, we
repaid $1.1 million in indebtedness owed in connection with our retirement
plans, which amount had been reflected in our historical consolidated statement
of financial condition.

    In connection with the Webco acquisition, we issued $3.0 million in
aggregate principal amount of unsecured senior promissory notes to former
stockholders of Webco. The senior promissory notes bear interest at an annual
rate of 10%. Of the aggregate principal amount, $500,000 has already been
repaid. The remaining $2.5 million will be due September 9, 2001 and will be
subject to set-off for any amounts for which the former stockholders of Webco
may be obligated to indemnify us for any breaches of their or Webco's
representations, warranties and covenants under the acquisition agreement.

    Additionally, approximately $100,000, as an adjustment to the purchase price
based upon the working capital of Webco at the closing of the transaction, will
also be paid to former Webco stockholders.

    On March 2, 2000, we issued $250.0 million aggregate principal amount of
Senior Subordinated Notes. These notes, which are the same notes which we refer
to throughout the prospectus as the "initial notes," bear interest at a rate of
12% annually and mature in March 2007. The indenture covering these notes
includes certain covenants that, among other things, limit our ability to borrow
money, pay dividends on our stock or purchase our stock; make investments,
engage in transactions with stockholders and affiliates; create liens on our
assets; and sell assets or engage in mergers and consolidations.

    As a broker-dealer, LaBranche & Co. is subject to regulatory requirements
intended to ensure the general financial soundness and liquidity of
broker-dealers and requiring the maintenance of minimum levels of net capital,
as defined in SEC Rule 15c3-1. LaBranche & Co. is required to maintain minimum
net capital, as defined, equivalent to the greater of $100,000 or 1/15 of
aggregate indebtedness, as defined. NYSE Rule 326(c) also prohibits a
broker-dealer from repaying subordinated borrowings, paying cash dividends,
making loans to any parent, affiliates or employees, or otherwise entering into
transactions which would result in a reduction of its total net capital to less
than 150% of its required minimum capital. Moreover, broker-dealers are required
to notify the SEC prior to repaying subordinated borrowings, paying dividends
and making loans to any parent, affiliates or employees, or otherwise entering
into transactions which, if executed, would result in a reduction of 30% or more
of their excess net capital (net capital less minimum requirement). The SEC has
the ability to prohibit or restrict such transactions if the result is
detrimental to the financial integrity of the broker-dealer.

    At December 31, 1999, LaBranche & Co. had net capital of $161.4 million,
which was $159.9 million in excess of its required net capital of $1.4 million.

    The NYSE generally requires members registered as specialists to maintain a
minimum dollar regulatory capital amount in order to establish that they can
meet, with their own net liquid assets, their position requirement. During
November 1999, subject to SEC approval, the NYSE approved changes to Rule 104,
its minimum net liquid asset requirements. These changes require specialist
units that currently exceed five percent in any of the NYSE's four concentration
measures to maintain minimum net liquid assets based upon the securities for
which they act as the specialist. The requirements state that the net liquid
assets must be equivalent to $4.0 million for each stock in the Dow Jones
Industrial Average, $2.0 million for each stock in the S&P 100 Stock Price
Index, excluding stocks included in the previous classification, $1.0 million
for each stock in the S&P 500 Stock Price Index, excluding stock included in the
previous classifications, $500,000 for each common stock, excluding bond funds
and stocks included in the previous classifications, and $100,000 for each
stock, not included in any of the above classifications. In addition, the NYSE
has proposed to require any

                                       42
<PAGE>
new specialist entities that result from a merger, acquisition, consolidation or
other combination of specialist assets, to maintain net liquid assets equivalent
to the greater of either: (1) the aggregate net liquid assets of the specialist
entities prior to their combination or (2) the new capital requirements
prescribed under Rule 104. Subsequent to the completion of our acquisitions of
Henderson and Webco, the net liquid asset requirement for the combined entity is
$284.3 million, which represents the previous combined net liquid assets of the
three firms as separate entities. "Net liquid assets" for a specialist who also
engages in transactions other than specialist activities is based upon its
excess net capital as determined in accordance with SEC Rule 15c3-1. As of
December 31, 1999, our NYSE minimum required dollar amount of net liquid assets
was $93.6 million compared to actual net liquid assets of approximately
$175.9 million.

    Failure to maintain the required net capital and net liquid assets may
subject us to suspension or revocation of SEC registration or suspension or
expulsion by the NYSE.

    During the fourth quarter of 1999, we contributed additional capital to
LaBranche & Co. in a net aggregate amount of approximately $30.1 million.

    We currently anticipate that our available cash resources and credit
facilities will be sufficient to meet our anticipated working capital,
regulatory capital and capital expenditure requirements through the end of 2000.

    Following our acquisition of Henderson Brothers, the clearing operations of
Henderson Brothers are operated as a separate subsidiary. As a clearing broker,
pursuant to SEC Rule 15c3-1, Henderson Brothers is required to maintain minimum
net capital of $250,000.

MARKET RISK

    A majority of our specialist related revenues are derived from trading by us
as principal. These activities involve primarily the purchase, sale or short
sale of securities for our own account. These activities are subject to a number
of risks, including risks of price fluctuations and rapid changes in the
liquidity of markets. In any period, we may incur trading losses in our
specialist stocks for a variety of reasons, including price declines of our
specialist stocks, lack of trading volume in our specialist stocks and the
performance of our specialist obligations. From time to time, we have large
position concentrations in securities of a single issuer or issuers engaged in a
specific industry. In general, because our inventory of securities is marked to
market on a daily basis, any downward price movement in these securities will
result in a reduction of our revenues and operating profits. We also operate a
proprietary trading desk separately from our NYSE specialist operations, which
represented 3.3% of our total revenues in 1999. We may incur trading losses as a
result of these trading activities.

    We have developed a risk management process which is intended to balance our
ability to profit from our specialist activities with our exposure to potential
losses. In addition, we have trading limits relating to our proprietary trading
desk. For a full description of our risk management procedures and the limits
placed on our proprietary trading desk, please see "Business--Risk Management"
and "--Our Proprietary Trading."

    Although we have adopted risk management policies, we cannot be sure that
these policies have been formulated properly to identify or limit our risks.
Even if these policies are formulated properly, we cannot be sure that we will
successfully implement these policies. As a result, we may not be able to manage
our risks successfully or avoid trading losses.

                                       43
<PAGE>
                                    BUSINESS

    THE FOLLOWING DESCRIPTION OF OUR BUSINESS CONTAINS FORWARD-LOOKING
STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. OUR RESULTS COULD DIFFER
MATERIALLY FOR THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT
OF SOME FACTORS. SEE "RISK FACTORS."

OVERVIEW

    Founded in 1924, our specialist LaBranche & Co. is one of the oldest and
largest specialist firms on the New York Stock Exchange, or the NYSE ("NYSE").
As a NYSE specialist, our role is to maintain, as far as practicable, a fair and
orderly market in our specialist stocks. In doing so, we provide a service to
our listed companies, and to the brokers, traders and their respective customers
who trade in our specialist stocks. We believe that, as a result of our
commitment to providing high quality specialist services, we have developed a
strong reputation among our constituencies, including investors, members of the
Wall Street community and our listed companies.

    Our business has grown considerably during the past five years. Our revenues
increased from approximately $37.1 million in 1995 to $201.0 million in 1999,
representing a compound annual growth rate of 52.6%. We have accomplished our
growth both internally and through selective acquisitions. For example, since
the NYSE implemented its new specialist allocation process in March 1997, as
described in "Industry Background-The Specialist", we were selected by 53 new
listed companies, resulting from 83 listing interviews. In addition we have
acquired five specialist operations from 1997 through March, 2000, adding 278
new common stock listings to our firm. During the past five years, we have also
increased the scope of our business, as illustrated by the following data
obtained from the NYSE:

    - the annual dollar volume on the NYSE of stocks for which we acted as
      specialist increased to $1.2 trillion in 1999, as compared to
      $133.3 billion in 1995. Based on these dollar volumes, we were the second
      largest specialist firm in 1999 as compared to the eighth largest in 1995;

    - the annual share volume on the NYSE of stocks for which we act as
      specialist increased to 25.7 billion in 1999, as compared to 4.0 billion
      in 1995. Based on these share volumes, we were the second largest
      specialist firm in 1999 as compared to the sixth largest in 1995; and

    - the total number of our common stock listings increased to 271 as of
      December 31, 1999, as compared to 125 as of December 31, 1995. Based on
      the number of our common stock listings, we were the third largest
      specialist firm as of December 31, 1999 as compared to the fifth largest
      as of December 31, 1995. In addition, we acted as specialist for 89 other
      listed securities.

    On March 2, 2000 we completed our acquisition of Henderson Brothers, a
specialist on the NYSE. Established in 1861, Henderson Brothers first registered
as a NYSE specialist in 1948 and was the eighth largest specialist firm on the
NYSE in terms of common stock listings at year end 1999. Henderson Brothers
acted as specialist in 113 common stock listings, including 26 companies in the
S&P 500 and two companies included in the Dow Jones Industrial Average. These
listings include American Express Company, Ford Motor Company, J.P. Morgan &
Co., Lehman Brothers Holdings, Inc., Morgan Stanley Dean Witter & Co. and
Schering-Plough Corporation. Henderson Brothers had $82.1 million of revenues
and $29.1 million of EBITDA for the year ended 1999.

    On March 9, 2000 we acquired Webco, another specialist firm on the NYSE,
through a merger. Established in 1981, Webco acted as specialist in 34 common
stock listings, including First Union Corporation, Manor Care, Inc. and Nokia
Corporation. Webco had $13.7 million of revenues and $4.2 million of EBITDA for
the year ended October 31, 1999.

                                       44
<PAGE>
    As of April 27, 2000, our listed companies include:

    - 72 of the S&P 500 companies; and

    - seven of the 30 companies comprising the Dow Jones Industrial Average. Our
      seven Dow stocks are American Express, AT&T, ExxonMobil, JP Morgan, Merck,
      Minnesota Mining & Manufacturing and SBC Communications.

INDUSTRY BACKGROUND

THE NYSE

    The NYSE is currently the largest securities market in the world. The market
capitalization of all U.S. shares listed on the NYSE increased from
approximately $6.0 trillion at December 31, 1995 to approximately $10.1 trillion
at December 31, 1999, representing a compound annual growth rate of 13.9%. The
number of companies listed on the NYSE increased from 2,675 at the end of 1995
to 3,025 at the end of 1999.

    The NYSE's average daily trading volume increased from 91.2 million shares
in 1984 to 809.2 million shares in 1999, as illustrated by the following graph:

              NYSE AVERAGE DAILY TRADING VOLUME FROM 1984 TO 1999

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

(Share volume in millions)

<TABLE>
<CAPTION>
1984  92.2
<S>   <C>
1985  109.2
1986    141
1987  188.9
1988  161.5
1989  165.5
1990  156.8
1991  178.9
1992  202.3
1993  264.5
1994  291.4
1995  346.1
1996    412
1997  526.9
1998  673.6
1999  809.2
</TABLE>

CAGR=15.7%

    Trading on the NYSE takes place through open bids to buy and open offers to
sell made by NYSE members, acting as principal or as agent for institutions or
individual investors. Buy and sell orders meet directly on the trading floor
through an auction process, and prices are determined by the interplay of supply
and demand in that auction. In order to buy and sell securities on the NYSE, a
person must first be accepted for membership in the NYSE. The number of
memberships, or seats, is presently limited to 1,366, and the price of a
membership depends on supply and demand. Based on recent transfers of
memberships, the market price of a membership on the NYSE is approximately
$2.0 million. To become a member, each prospective applicant must also pass an
examination covering NYSE rules and regulations.

                                       45
<PAGE>
    NYSE members are generally categorized based upon the activities in which
they engage on the trading floor, such as specialists or brokers. The largest
single membership group is floor brokers, which consists of both commission
brokers and independent brokers. Commission brokers are employed by
broker-dealer firms that are members of the NYSE and earn salaries and
commission. Independent floor brokers are brokers who independently handle
orders for other broker-dealers and financial institutions.

THE SPECIALIST

    All trading of securities on the NYSE is conducted through an auction
process. The auction process for each security is managed by the specialist for
that security. The specialist is a broker-dealer who applies for and, if
accepted, is assigned the role to maintain a fair and orderly market in its
specialist stocks. The number of specialist units on the NYSE, many of which are
organized as private partnerships, has decreased from 36 at December 31, 1995 to
25 at December 31, 1999. Of these, the three largest specialist units as ranked
by their number of specialist stocks were responsible for approximately 47.4% of
the average daily trading volume in 1999, as measured by dollar volume.

    A specialist firm is granted the franchise by the NYSE in a particular stock
to conduct the auction in that security. Specialist firms conduct their auctions
at specific trading posts located on the floor of the NYSE. Because the
specialist firm runs the auction in its specialist stocks, it knows of all bids
and offers in those stocks and gathers orders to price its stocks appropriately.

    Specialist firms compete for the original listing of stocks through an
allocation process organized by the NYSE. As part of this allocation process,
companies seeking a listing may select a specialist firm in one of two ways.
Under the first method, the NYSE's allocation committee selects the specialist
firm based on specific criteria. Under the second method, available since
March 1997, the listing company requests that the allocation committee select
three to five potential specialist firms suitable for the stock, based on
criteria specified by the listing company. The listing company then has the
opportunity to meet with each specialist firm identified by the allocation
committee. Within one week after meeting the competing specialist firms, the
listing company must select a specialist firm. Currently, substantially all of
the companies seeking a listing on the NYSE are opting to make the final choice
of their own specialist firm under the second allocation method.

    When assigned a particular stock, the specialist firm agrees to specific
obligations. The specialist firm's role is to maintain, as far as practicable,
trading in the stock that will be fair and orderly. This implies that the
trading will have reasonable depth and price continuity, so that, under normal
circumstances, a customer may buy or sell stock in a manner consistent with
market conditions. A specialist firm helps market participants achieve price
improvement in their trades because the best bids and offers are discovered
through the auction process. In performing its obligations, the specialist firm
is exposed to all transactions that occur in each of its specialist stocks on
the NYSE floor. In any given transaction, the specialist firm may act as:

    - an auctioneer by setting opening prices for its specialist stocks and by
      matching the highest bids with the lowest offers, permitting buyers and
      sellers to trade directly;

    - a facilitator bringing together buyers and sellers who do not know of each
      other in order to execute a trade which would not otherwise occur;

    - an agent for broker-dealers who wish to execute transactions as instructed
      by their customers. Typically, these orders are limit orders entrusted to
      the specialist at prices above or below the current market price; or

    - a principal using its own capital to buy or sell stocks for its own
      account.

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    The specialist firm's decision to buy or sell shares of its specialist
stocks as principal for its own account may be based on obligation or
inclination. For example, the specialist firm may be obligated to buy or sell
its specialist stock to counter short-term imbalances in the prevailing market,
thus helping to maintain a fair and orderly market in that stock. At other
times, the specialist firm may be inclined to buy or sell the stock as principal
based on attractive opportunities. The specialist firm may trade at its election
so long as the trade will contribute to a fair and orderly market. In
actively-traded stocks, the specialist firm continually buys and sells its
specialist stocks at varying prices throughout each trading day. The specialist
firm's goal and expectation is to profit from differences between the prices at
which it buys and sells these stocks. In fulfilling its specialist obligations,
however, the specialist firm may, at times, be obligated to trade against the
market, adversely impacting the profitability of the trade. In addition, the
specialist firm's trading practices are subject to a number of restrictions, as
described in "Operations-NYSE Rules Governing Our Specialist Activities."

RECENT TRENDS IN NYSE TRADING AND THE SPECIALIST'S ROLE

    - Specialist firms generate revenues by executing trades, either as agent or
      principal, in their specialist stocks. Accordingly, the specialist firms'
      revenues are primarily driven by the volume of trading on the NYSE. This
      volume has increased significantly in recent years. The increase in
      trading volume has resulted from a number of factors, including:

    - an increase in the number of households investing in stocks;

    - an increase in the amount of assets managed through retirement plans,
      mutual funds, annuity and insurance products, index funds and other
      institutional investment vehicles;

    - the increased popularity and use of computerized trading, hedging and
      other derivative strategies;

    - an increase in NYSE-listed stocks due to:

    - IPOs and spin-offs;

    - transfers from Nasdaq and the American Stock Exchange; and

    - an increase in listings of foreign companies;

    - higher equity portfolio turnover by individuals and institutional
      investors as a result of lower commission rates and other transaction
      costs;

    - an increase in on-line trading;

    - trading in smaller price increments;

    - an increase in the market capitalization of growth stocks; and

    - an increase in the amount of shares traded due to stock splits and stock
      dividends.

    These factors have, in turn, been influenced by a strong U.S. economy, low
interest rates and low levels of inflation.

    The NYSE has announced that it will implement a pilot program for trading in
decimals in July 2000 and has increased the window for providing commission-free
execution of a trade to five minutes from the current two minutes. The NYSE is
also considering the following additional changes:

    - longer trading days; and

    - trading of foreign stocks in ordinary form side by side with their
      American depository receipts.

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    These additional changes are being considered for implementation within the
next 18 months. We believe that trading in decimals and, if instituted, these
additional changes will likely contribute to additional growth in NYSE trading
volume.

    The majority of trades in NYSE-listed stocks take place through NYSE
specialist firms. In 1999, specialist firms handled approximately 82.5% of
trades in NYSE-listed stocks. Trades in NYSE-listed stocks are also generally
effected as follows:

    - some stocks are listed on multiple exchanges, such as regional exchanges,
      and trades take place on those exchanges;

    - NYSE members may trade NYSE-listed stocks off the NYSE in the
      over-the-counter market; and

    - non-NYSE members may trade NYSE-listed stocks off the NYSE in
      over-the-counter markets.

    Technological advances have contributed to the increased trading through
alternative trading systems, ATSs, such as electronic communications networks,
ECNs, and crossing systems. While the first ECN was created in 1969, most of the
others currently in operation were started in the past few years. These systems
electronically facilitate the matching of buy and sell orders that are entered
by their network members. If a match does not occur, some ATSs will forward
unfilled orders to other ATSs or to exchanges such as the NYSE. Some of these
networks also allow limited negotiation between members to facilitate a match.
These ATSs generally limit trades over their systems to their members, who are
typically large financial institutions, well-capitalized traders or brokerage
firms. Additionally, some ATSs are being developed to facilitate trading by
retail investors. In April 1999, the SEC ruled that these networks are allowed,
and in specified cases are required, to register and become subject to
regulation as stock exchanges.

    The percentage of annual trading of NYSE listed stocks on the NYSE has
ranged from 82.1% to 84.1% for the past five years. It is unclear, however, how
the alternative trading methods and new technologies just described or that may
be developed will affect the percentage of trading in listed stocks conducted on
the NYSE. The NYSE has indicated that it is studying the possibility of
embracing electronic communications network technology to expand trading. ATSs
may be developed, organized and operated by large brokerage houses and
investment banks with greater capital, better access to technology and direct
access to investors. As a result, these parties may be well positioned to direct
trading to these networks. These alternative trading methods may account for a
growing percentage of the trading volume of NYSE-listed stocks.

    The accelerating growth of trading volume and the increase in stock prices
on the NYSE in the 1990s has increased the demands upon specialists. In order to
fulfill their obligations, specialists are required to execute a greater number
of trades in a shorter period of time with greater price volatility. In
addition, specialists are called upon to take larger positions in their
specialist stocks. These factors have led to a consolidation of specialist units
in the past five years. We believe that the specialist market is becoming
increasingly dominated by a number of large, better-capitalized specialist firms
which are able to provide an enhanced level of service.

LABRANCHE'S COMPETITIVE POSITION

    We are committed to providing the highest quality service to our various
constituencies. We believe our success is based on the following factors:

    - LEADING POSITION IN THE SPECIALIST MARKET. We have a long-standing
      reputation as one of the leading specialist firms on the NYSE. We have
      successfully grown our business and improved our services through widely
      varying market conditions. As of December 31, 1999 trading in the stocks
      for which we acted as specialist during 1999 accounted for 14.5% of the
      dollar volume on

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      the NYSE and 13.5% of the share volume. Based on these percentages, we
      were the second largest specialist firm on the NYSE. We are continuing to
      develop our relationships with ATSs and to embrace new technologies in
      trading platforms.

    - DIVERSE AND HIGH QUALITY SPECIALIST STOCKS. Our listed companies operate
      in a variety of industries including financial services, media, oil and
      gas, retail, technology and telecommunications. Many of our listed
      companies are leaders in their respective fields. We believe that acting
      as specialist in the stocks of industry leaders will benefit us as these
      leading companies continue to expand their businesses through internal
      growth and acquisitions.

    - STRONG MARKET-MAKING SKILLS. We utilize our strong market-making skills to
      actively trade as principal in our specialist stocks. We believe that we
      significantly improve liquidity in our specialist stocks, particularly
      during periods of market volatility. In 1999, approximately 32.0% of our
      trades were as principal as compared to an average of approximately 26.4%
      for all NYSE specialists.

    - INNOVATIVE CUSTOMER-ORIENTED SERVICES. We are committed to providing our
      listed companies with a high level of service, in addition to our
      specialist functions on the trading floor. We provide our listed companies
      with detailed reports on the trading activity of their stocks. We also
      maintain frequent contact with a majority of our listed companies to
      discuss the trading in their stock. In addition, we were the first
      specialist firm to:

     - host an annual listed company conference;

     - publish a company newsletter; and

     - commission customer satisfaction surveys from our listed companies.

    - COMPLETED ACQUISITIONS. Since 1997, we have acquired the following five
      specialist operations, solidifying our position as one of the leading NYSE
      specialist firms:

     - a portion of the specialist operations of Stern Bros., LLC (July 1997);

     - Ernst, Homans, Ware & Keelips (August 1997);

     - Fowler, Rosenau & Geary, LLC (July 1998);

     - Henderson Brothers, Inc. (March 2000); and

     - Webco Securities, Inc. (March 2000).

    Through 1999, we effectively employed our capital resources and skilled
personnel to maximize the synergies created through consolidation. We believe
this experience will assist us in integrating the businesses of our recent
acquisitions, Henderson Brothers and Webco.

    Our objective is to continue the growth in our revenues and profits by
pursuing the following strategies:

    - AGGRESSIVELY PURSUE NEW LISTINGS. We have been and will continue to be
      aggressive in positioning ourselves in the NYSE allocation process.
      Between March 1997, when the NYSE adopted the new allocation procedure,
      and December 31, 1999, we participated in 80 selection pools for listed
      companies and were chosen by management of the listed companies in 50 of
      them. We were recently selected as specialist by Qwest Communications
      International when it transferred its listing from Nasdaq to the NYSE.
      This transfer constituted one of the largest transfers to the NYSE as
      measured by market capitalization. We were also selected as specialist by
      Agilent Technologies, Inc., which was spun-off from Hewlett-Packard into a
      separate, fully independent company. In addition, Viacom chose us as
      specialist in 1999 when it transferred its listing to the NYSE, the
      largest transfer to the NYSE measured by market capitalization.

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<PAGE>
    - CAPITALIZE ON PENDING AND FUTURE ACQUISITIONS. We used the proceeds of the
      offering and issuance of the initial notes to fully fund the acquisition
      of Henderson Brothers, to partially fund the acquisition of Webco and to
      pay fees and expenses related to both acquisitions. In connection with the
      acquisitions of Henderson Brothers and Webco, we added 147 additional
      common stock listings, 28 of which are included in the S&P 500 and two of
      which are included in the Dow Jones Industrial Average. As a result of
      these acquisitions, we are the largest specialist on the NYSE based on
      annual dollar and share volume traded. As of March 31, 2000, we are the
      specialist for 411 listed companies, including 72 of the S&P 500 and seven
      of the companies included in the Dow Jones Industrial Average. We
      currently are focusing management attention and resources to integrating
      the businesses of Henderson Brothers and Webco. We also intend to continue
      to take advantage of the consolidation trend in the specialist industry by
      selectively pursuing acquisitions of other specialist operations.

RECENT ACQUISITIONS

HENDERSON BROTHERS

    On March 2, 2000, we acquired Henderson Brothers, which owns Henderson
Brothers, Inc., a specialist firm on the NYSE, and Henderson Brothers Futures
Corporation, an inactive subsidiary. Under the terms of the agreement, we
acquired all the outstanding capital stock of Henderson Brothers for
approximately $228.4 million in cash. The proceeds of our initial note offering
were used to fully fund the acquisition of Henderson Brothers, to partially fund
the acquisition of Webco and to pay fees and expenses related to both
acquisitions. As part of the Henderson Brothers acquisition, we entered into
employment agreements with 14 specialists and an additional employee formerly
employed by Henderson Brothers. We also entered into consulting agreements with
two former Henderson Brothers stockholders pursuant to which we are paying an
aggregate of $5.0 million over five years.

    In connection with the Henderson Brothers acquisition, we:

    - acquired an additional 19 NYSE memberships, all of which are owned by the
      individual specialists but are financed by LaBranche & Co.;

    - hired an additional 84 employees, 19 of which are specialists, 41 of which
      are specialist trading assistants and 24 of which are other
      administrative, financial and operational personnel; and

    - acquired an additional 8,650 feet of office space, which had a $216,726
      annual lease payment in 1999.

    In addition, as part of the acquisition, we also acquired and are continuing
the clearing operations of Henderson Brothers. As a clearing broker, we are
responsible for the clearance and settlement of transactions effected by us or
the introducing broker. We only clear and settle transactions executed by the
introducing brokers; we do not execute these transactions.

WEBCO

    On March 9, 2000, we acquired, through a merger, Webco, another specialist
firm on the NYSE, for approximately 2.8 million shares of our common stock,
$10.9 million in cash and senior promissory notes in the aggregate principal
amount of $3.0 million, each bearing an interest rate of 10.0% per annum. As
part of the acquisition, we entered into employment agreements with three
specialists employed by Webco.

    In connection with the Webco acquisition, we:

    - acquired an additional 3 NYSE memberships;

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    - hired an additional 13 employees, 5 of which are specialists and 8 of
      which are specialist trading assistants; and

    - acquired an additional 2,057 feet of office space, which had a $51,425
      annual lease payment in 1999.

    Following the completion of the acquisitions of Henderson Brothers and
Webco, we are the largest specialist firm on the NYSE in terms of the annual
dollar and share volume traded. We are the specialist for 411 common stock
listings, including 72 of the S&P 500 and seven companies included in the Dow
Jones Industrial Average.

    Simultaneously with the acquisitions of Henderson Brothers and Webco, we
transferred the specialist operations of each of Henderson Brothers and Webco to
our subsidiary LaBranche & Co. The clearing operations of Henderson Brothers are
operated by us as a separate subsidiary.

OPERATIONS

NYSE RULES GOVERNING OUR SPECIALIST ACTIVITIES

    Under the NYSE rules, a specialist has a duty to maintain, as far as
practicable, a fair and orderly market in its specialist stocks. In order to
fulfill its obligations, the specialist must at times trade for its own account,
even when it may adversely affect the specialist's profitability. In addition,
under some circumstances, the specialist is prohibited from making trades as
principal in its specialist stocks. The specialist's obligations are briefly
described below.

    REQUIREMENT TO TRADE AS PRINCIPAL. A specialist must buy and sell securities
as principal when necessary to minimize an actual or reasonably anticipated
short-term imbalance between supply and demand in the auction market. The
specialist must effect these transactions when their absence could result in an
unreasonable lack of continuity and/or depth in their specialist stocks. The
specialist is not expected to act as a barrier in a rising market or a support
in a falling market, but must use its own judgment to try to keep such price
increases and declines equitable and consistent with market conditions.

    A specialist must make firm and continuous two-sided quotations that are
timely and that accurately reflect market conditions. In making these
quotations, the specialist's transactions are calculated to contribute to the
maintenance of price continuity with reasonable depth. Following is an
illustration of how a specialist acts as principal to maintain price continuity:

    The most recent sale in a listed stock was $50, the best public bid (to buy)
    on the specialist's book is $49 3/4, and the best public offer (to sell) on
    the book is $50 1/4. A broker who wants to buy 100 shares at the market in
    this instance without a specialist would purchase at $50 1/4, the offer
    price. Similarly, a broker seeking to sell 100 shares without a specialist
    would receive $49 3/4, the bid price. The specialist, who is expected to
    provide reasonable price continuity, in this case might narrow the quote
    spread by offering or bidding for stock for its own account. In this
    instance, the broker who wants to buy 100 shares might buy at $50 1/16 from
    the specialist, as opposed to buying the same amount of shares from the best
    offer of $50 1/4, thereby offering price improvement to the customer. In the
    next trade, a broker willing to sell 100 shares might sell to the specialist
    at $50, as opposed to selling to the best available bid of $49 3/4, again
    achieving price improvement for the customer.

    TRADING RESTRICTIONS.  In trading for its own account, the specialist must
avoid initiating a market-destabilizing transaction. All purchases and sales
must be reasonably necessary to permit the specialist to maintain, as far as
practicable, a fair and orderly market in its specialist stocks. In addition,
the specialist must comply with the following trading requirements:

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<PAGE>
    - A specialist must first satisfy a customer's market buy order (an order to
      buy at the prevailing market price) before buying any stock for its own
      account. Similarly, a specialist must first satisfy a customer's market
      sell order (an order to sell at the prevailing market price) before
      selling any stock for its own account.

    - A specialist must first satisfy a customer's limit order held by it before
      buying or selling at the same price for its own account. A limit order is
      an order either to buy only at or below a specified price, or to sell only
      at or above a specified price. A specialist may not have priority over any
      customer's limit order. A specialist, however, may buy or sell at the same
      price as a customer limit order as long as that limit order is executed
      first.

    - If a public buyer wants to buy at a particular price and a seller wants to
      sell at the same price, the buyer and seller trade directly with each
      other, and the specialist should not interfere in the transaction.

    - The specialist does not charge commissions for trades in which it acts as
      a principal.

    - Except in some circumstances in less active markets, the specialist may
      not, without permission from an NYSE official, initiate destabilizing
      trades for its own account which cause the stock price to rise or fall.

    - Any transactions by the specialist for its own account must be effected in
      a reasonable and orderly manner in relation to the condition of the
      general market, the market in the particular stock and the adequacy of the
      specialist's position to the immediate and reasonably anticipated needs of
      the market.

    In addition, the specialist cannot be in a control relationship with any of
its listed companies. This means a specialist may not acquire more than 5% of
any common or preferred issue of its specialist stocks and may not own 10% or
more of any common or preferred stock. A specialist may not hold any position as
an officer or director or receive payments or loans or engage in business
transactions with any of its listed companies.

RISK MANAGEMENT

    Because our specialist activities expose our capital to significant risks,
managing these risks is a constant priority for us. Our central role in the
auction process helps us to reduce risks by enabling us to incorporate
up-to-date market information in the management of our inventory, subject to our
specialist obligations. In addition, we have developed a risk management process
which is designed to balance our ability to profit from our specialist
activities with our exposure to potential losses. Our risk management process
includes as participants our executive operating committee, our floor management
committee, our floor team captains and our specialists. These parties' roles are
described as follows:

    EXECUTIVE OPERATING COMMITTEE.  Our executive operating committee is
composed of Michael LaBranche, Vincent J. Flaherty, Alfred O. Hayward, Jr.,
Michael J. Naughton, James G. Gallagher, Harvey S. Traison and John O. Pickett.
This committee is responsible for approving all risk management policies and
trading guidelines for particular specialist stocks, after receiving input and
proposals by the floor management committee. In addition, our executive
operating committee reviews all unusual situations reported to it by our floor
management committee.

    FLOOR MANAGEMENT COMMITTEE.  Our floor management committee is composed of
Messrs. Flaherty, Hayward, Naughton, Gallagher and Pickett. This committee is
responsible for formulating and overseeing our overall risk management policies
and risk guidelines for each of our specialist stocks. In arriving at these
policies and guidelines, our floor management committee considers the advice and
input of our floor team captains. Our floor management committee meets with all
floor team captains no less than once a month to review and, if necessary,
revise the risk management

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policies for our company as a whole and/or for particular specialist stocks. In
addition, a member of our floor management committee is always available on the
trading floor to review and assist with any unusual situations reported by a
captain. Our floor management committee reports to our executive operating
committee about each of these situations.

    FLOOR TEAM CAPTAINS.  We have ten floor team captains who monitor the
activities of our specialists throughout the trading day from various positions
at our trading posts. The captains observe trades and constantly review trading
positions in real-time through our information systems. In addition, the
captains are readily available to assist our specialists in determining when to
deviate from our policies and guidelines to react to any unusual situations or
market conditions. The captains must report these unusual situations to
management, including any deviations from our policies and guidelines. Captains
meet with each specialist at least once a week to evaluate the specialist's
adherence to our risk management policies and guidelines. Captains also meet
among themselves at least twice weekly to review risk policies and guidelines
and, if appropriate, make new recommendations to the floor management committee.

    SPECIALISTS.  Our specialists conduct auctions based upon the conditions of
the marketplace. In doing so, specialists should observe our risk management
policies and guidelines as much as practicable. Specialists must immediately
notify a captain of any unusual situations or market conditions requiring a
deviation from our policies and guidelines.

    We rely heavily on our information systems in conducting our risk
management. Management members and captains must constantly monitor our
positions and transactions in order to mitigate our risks and identify
troublesome trends as they occur. We have invested substantial capital in
real-time, on-line systems which give management instant access to specific
trading information at any time during the trading day, including:

    - our aggregate long and short positions;

    - the various positions of any one of our trading professionals;

    - our overall position in a particular stock;

    - capital and profit-and-loss information on an aggregate, per specialist or
      per issue basis; and

    - average position size.

    CIRCUIT BREAKER RULES.  The NYSE has instituted certain circuit breaker
rules intended to halt trading in all NYSE-listed stocks in the event of a
severe market decline. The circuit breaker rules impose temporary halts in
trading when the Dow Jones Industrial Average drops a certain number of points.
Circuit breaker levels are set quarterly at 10, 20 and 30 percent of the Dow
Jones Industrial Average closing values of the previous month, rounded to the
nearest 50 points.

LISTED COMPANY SERVICES

    We are committed to providing our listed companies with a high level of
service, in addition to our specialist functions on the trading floor. We have a
Corporate Relations Department, consisting of seven full-time employees and one
independent consultant devoted to serving our listed companies. The most
important function of the Corporate Relations Department is to provide current
information to the listed companies. Upon request, our Corporate Relations
Department provides our listed companies with the following reports:

    - daily reports on the trading results of their stock;

    - real-time data regarding intra-day trading activity in their stock; and

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<PAGE>
    - weekly, monthly and yearly reports which analyze short and long term
      trading trends in their stock.

    In addition to providing trading information, we help to educate our listed
companies on general market trends. We organize annual educational conferences
that review trends in the securities industry and NYSE trading. We also publish
for and distribute to our listed companies a periodic newsletter that reviews
market trends. Finally, we survey our specialist companies annually on the
quality of our services, and use the information obtained in these surveys to
continually improve our services.

NYSE MEMBERSHIPS

    NYSE memberships are granted only to individuals, and each individual
specialist must own or lease a NYSE membership. As of December 31, 1999, we had
48 specialists. As of April 27, 2000, we had 71 specialists, each of whom owned
or leased a membership under the following arrangements:

    - 10 memberships were owned directly by 10 of our specialists;

    - 26 were owned by specialists and 1 was owned by our subsidiary Henderson
      Brothers in order to operate as a clearing organization, all of which are
      financed by LaBranche & Co.; and

    - 35 were leased by 35 of our specialists from other individual members and
      2 seat leases are in the process of being transferred to new specialists,
      and we pay and guarantee the lease payments.

OUR INFORMATION AND COMMUNICATIONS SYSTEMS AND THE NYSE'S SUPER-DOT SYSTEM

    As a self-clearing broker-dealer, we have made significant investments in
our trade processing systems. Our use of and dependence on technology have
allowed us to maintain our significant growth over the past several years. In
addition to using consultants who primarily service the specialist industry, we
have an in-house information technology staff. We currently clear an average of
approximately 60,000 principal trades per day. We have continued the clearing
operations of Henderson Brothers, which included limited clearing of trades for
third parties. Our information systems send and receive data from the NYSE
through a dedicated data feed.

    Our systems enable us to monitor, on a real-time basis, our profits and
losses along with our trading positions. The NYSE supplies us with specialist
position reporting system terminals both on the trading floor and in our
offices. These terminals allow us to monitor our trading profits and losses as
well as our positions. We have also developed software that allows us to monitor
these items in the event that the NYSE-provided systems fail.

    We have a back-up disaster recovery center in Hoboken, NJ. The back-up
system operates as a mirror image of our primary computer system in New York
City as we have a direct connection between the two sites which we utilize to
back-up all data on an hourly basis. On a regular basis, we test both systems to
assure that they are fully operational.

    In executing trades on the NYSE, we receive electronic orders from the
Super-DOT system, an order routing system operated by the NYSE. The Super-DOT
System is designed to handle individual orders of up to 100,000 shares and is
essentially an electronic broker. Orders that originate through the Super-DOT
system are routed directly to us through our computer system at the NYSE. When
we receive an order from the Super-DOT system, we conduct the same auction
process and we are subject to the same obligations as with any other order.

    Our information technology staff has developed software which enables our
corporate relations staff and our specialists to share information with each
other regarding upcoming company and industry conferences. In addition, we
monitor each of our specialist stocks intra-day to see if there are

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any significant price and/or volume variances of which we should alert the
listed company. This has proven to be a valuable customer service tool.

OUR PROPRIETARY TRADING

    In 1995, we initiated a proprietary trading program, seeking to leverage our
trading and market experience. Our strategy is short-term oriented, and most of
our positions are intra-day and not held overnight. Four of our traders focus
primarily on stocks listed on the NYSE. A fifth trader focuses entirely on
listed futures and options on both United States Treasury obligations and
Eurodollars. In 1999, we derived 3.3% of our revenues from our proprietary
trading. Our proprietary trading desk utilizes a Windows NT based trade
reporting system which captures all trades executed by the trading desk and
marks all positions to market. We are not permitted to trade in stocks for which
we act as specialist.

    We have taken the following actions to manage the risks associated with our
proprietary trading:

    - for 2000, we have limited our capital commitment for our proprietary
      trading to an aggregate maximum of $19.5 million intra-day and overnight
      positions of up to $12.0 million per day;

    - each of our proprietary traders have specific trading limits, which may
      not be exceeded without the approval of executive management. Our most
      experienced trader may invest up to $12.0 million per day and may hold
      overnight positions up to $7.5 million. Each of our other traders have
      daily investment limits of $5.0 million or less and overnight investment
      limits of $3.0 million or less, depending on their experience;

    - the positions of our futures and options traders are monitored by an
      in-house model that measures potential intra-day risk as well as actual
      dollar exposure; and

    - one of our managing directors oversees all of our proprietary trading and
      has the authority to instruct the proprietary trading desk to liquidate
      positions or otherwise reduce risk. He reports directly to Michael
      LaBranche, our Chairman, Chief Executive Officer and President.

SPECIALIST COMPANIES

    As of December 31, 1999, we acted as specialist for 271 common stocks listed
on the NYSE. As of April 27, 2000, subsequent to our recent acquisitions, we
acted as specialist for 411 common stock listings. Our listed companies operate
in a variety of industries, including financial services, media, oil and gas,
retail, technology and telecommunications. They ranged in market capitalization
from some of the smallest on the NYSE to some of its largest and well-known
corporations. We also represented 42 foreign listings on the NYSE as of
December 31, 1999 and 60 foreign listings as of April 27, 2000. The following is
a list of our top 50 listed companies in terms of market capitalization as of
April 27, 2000

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in order of their respective global market capitalization (read in descending
order from top to bottom, left to right):

Lucent Technologies Inc.
Exxon Mobil Corporation
Toyota Motor Corporation
AT&T Corp.
Nokia Corporation
SBC Communications Inc.
TOTAL Fina Elf S.A.
Berkshire Hathaway, Inc.
Glaxo Wellcome, plc
Medtronic, Inc.
Merck & Co., Inc.
Schering-Plough Corp.
American Express Company
Smithkline Beecham plc
Chevron Corporation
MediaOne Group, Inc.
Royal PTT Nederland, NV - SP
Tyco International Ltd.
Schlumberger Limited
U.S. West Inc.
HSBC Holdings plc
Agilent Technologies, Inc.
Minnesota Mining & Manfacturing Company
The Gap, Inc.
ABN Amro Holding N.V.
Cable and Wireless PLC
Viacom Inc.
Koninklijke Philips Electronics N.V.
San Paolo IMI S.p.A.
Cable and Wireless Communications, PLC
J.P. Morgan & Co., Inc.
First Data Corp.
Morgan Stanley Dean Witter & Co.
Enel S.p.A.
UPM-Kymmene Corporation
CVS Corporation
Kroger Co.
Compaq Computer Corporation
Associates First Capital Corporation
ING Groep N.V.
Adecco SA
Equant N.V.
Taiwan Semiconductor Manufacturing Company Ltd.
Computer Sciences Corporation
Alstom, S.A.
TNT Post Group
Portugal Telecom SA
Federal Home Loan Morgage Corp.
Lehman Brothers Holdings, Inc.
Comerica Incorporated

MARKETING

    It is a priority for our management to proactively identify potential
listing companies before the allocation process begins. We contact these
companies and commence our marketing efforts upon determining that they are
considering listing on the NYSE. Our marketing efforts typically consist of
members of our management group visiting with the companies that are considering
listing on the NYSE and describing our services. We also provide written
literature describing our operations, our listed companies, our 75-year history
as a specialist firm and our industry in general.

REGULATORY MATTERS

GENERAL

    The securities industry in the United States, including all broker-dealers,
is subject to extensive regulation under both federal and state laws. In
addition, the SEC and the NYSE require strict compliance with their rules and
regulations. 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 investors participating in those markets.

    As a broker-dealer, we are subject to regulations concerning operational and
financial aspects of our business. We are subject to extensive registration
requirements with various government entities and self-regulatory organizations,
commonly referred to as SROs, with which we must comply before we can conduct
our business. We are also subject to laws, rules and regulations forcing us to
comply with financial reporting requirements, trade practices, capital structure
requirements, and record

                                       56
<PAGE>
retention requirements governing the conduct of our directors, officers and
employees. Failure to comply with any of these laws, rules or regulations could
result in censure, fine, the issuance of cease-and-desist orders or the
suspension or disqualification of our directors, officers or employees, and
other adverse consequences, which could have an adverse effect on our business.

    As a NYSE specialist firm, we are under constant review by the NYSE on all
aspects of our operations and financial condition. As part of the price
discovery mechanism implemented by the NYSE, every specialist transaction is
published immediately on the tape and is broadcast worldwide. The NYSE also
employs sophisticated monitoring and stringent rules approved by the SEC. The
NYSE's Market Surveillance Division examines specialists' trading in all stocks,
every trading day, including specialists' decisions to trade or to not trade as
principal.

CAPITAL REQUIREMENTS

    As a broker-dealer, we are subject to SEC Rule 15c3-1, which requires
minimum net regulatory capital. We are required to maintain minimum net capital,
as defined, equivalent to the greater of $100,000 or 1/15 of our aggregate
indebtedness, as defined. At December 31, 1999, our net capital, as defined by
this rule, was approximately $161.4 million and exceeded minimum requirements by
approximately $159.9 million.

    The NYSE also requires members registered as specialists to maintain a
minimum regulatory capital dollar amount to establish that they can meet, with
their own net liquid assets, their position requirement. During November 1999,
subject to SEC approval, the NYSE approved changes to Rule 104, its minimum net
liquid asset requirements. These changes required specialist units that
currently exceed five percent in any of the NYSE's four concentration measures
to maintain minimum net liquid assets based upon the securities for which they
act as the specialist. The requirements state that the net liquid assets must be
equivalent to $4.0 million for each stock in the Dow Jones Industrial Average,
$2.0 million for each stock in the S&P 100 Stock Price Index, excluding stocks
included in the previous classification, $1.0 million for each stock in the S&P
500 Stock Price Index, excluding stocks included in the previous classification,
$500,000 for each common stock, excluding bond funds and stocks included in the
previous classifications, and $100,000 for each stock not included in any of the
above classifications. In addition, the NYSE has proposed to require any new
specialist entities that result from a merger, acquisition, consolidation or
other combination of specialist assets to maintain net liquid assets equivalent
to the greater of either (1) the aggregate net liquid assets of the specialist
entities prior to their combination or (2) the new capital requirements
prescribed under Rule 104. Effective after the completion of our recent
acquisitions of Henderson Brothers and Webco, the net liquid asset requirement
for our combined entity is $284.3 million, which represents the combined net
liquid assets of the three firms as separate entities. "Net liquid assets" for a
specialist firm that also engages in transactions other than specialist
activities is based upon its excess net capital as determined in accordance with
SEC Rule 15c3-1. As of December 31, 1999, our NYSE minimum required dollar
amount of net liquid assets was $93.6 million compared to actual net liquid
assets of approximately $175.9 million.

    Failure to maintain the required net capital and net liquid assets may
subject us to suspension or revocation of SEC registration or suspension or
expulsion by the NYSE.

COMPETITION

    We obtain each of our new listings on the NYSE by participating in an
allocation process. As part of this process, either the allocation committee of
the NYSE or the listing company chooses the specialist firm. We compete with
other specialist firms based on a number of factors, including:

    - the strength of our capital base;

                                       57
<PAGE>
    - our willingness to commit our own capital and trade for our own account
      while conducting our specialist operations; and

    - the ancillary services we offer our specialist companies, such as
      providing information on the trading activities in their stocks.

    The following is a list of the top ten specialist units as of December 31,
1999, based on their number of common stock listings:

    - Spear, Leeds & Kellogg

    - LaBranche & Co.

    - Fleet Specialists, Inc.

    - Wagner, Stott, Mercator LLC

    - Van Der Moolen Specialists USA, LLC

    - Robb Peck McCooey Specialist Corp.

    - Bear/Hunter Specialists, LLC

    - MJ Meehan & Co., LLC

    - Susquehanna Specialists, Inc.

    - Jacobson (Benjamin) & Sons, LLC

    The competition for obtaining new listed companies is intense. We expect
competition to continue and intensify in the future. Some of our competitors may
have significantly greater financial resources than we have and may also have
greater name recognition. These competitors may be able to respond more quickly
to new or evolving opportunities and listed company requirements. They may also
be able to undertake more extensive promotional activities to attract new
listing companies. In addition, the specialist industry has recently been
consolidating. The combined companies resulting from the consolidation may have
a stronger capital position. This trend has intensified the competition in our
industry. We cannot be sure that we will be able to compete effectively with our
current or future competitors. We also cannot be sure that the competitive
pressures we face will not have an adverse effect on our business, financial
condition and/or operating results.

    NYSE-listed stocks may be traded:

    - by NYSE members over-the-counter; and

    - by non-NYSE members over-the-counter.

    Technological advances have also contributed to the recent emergence of
trading through alternative trading systems, such as electronic communication
networks and crossing systems. In April 1999, the SEC ruled that alternative
trading systems can apply and, in specified cases, are required to register as
stock exchanges, subject to regulation as a stock exchange. This would enable
NYSE members to trade all NYSE-listed stocks on these networks, regardless of
when the stocks were originally listed. These networks may be developed,
organized and operated by large brokerage houses and investment banks with
greater capital, better access to technology and direct access to investors. As
a result, these parties may be well-positioned to direct trading to these
networks. These alternative trading systems may adversely affect the trading of
NYSE-listed stock through specialists on the NYSE. That, in turn, would have an
adverse effect on our business.

    The NYSE faces competition from Nasdaq for new listings. Nasdaq continues to
grow and gain in popularity, attracting companies which might otherwise have
listed on the NYSE. In recent years in particular, many high technology
companies have opted to be quoted on Nasdaq, even though many of

                                       58
<PAGE>
them would have qualified for NYSE listing. If more companies decide to be
quoted on Nasdaq as opposed to listing their stocks on the NYSE, trading volume
on the NYSE could be adversely affected.

EMPLOYEES

    As of December 31, 1999, we had 166 full-time employees, including 34
managing directors. As of April 15, 2000 we have 256 full-time employees,
including 43 managing directors with:

    - 71 specialists, including managing directors;

    - 6 traders in our proprietary trading department;

    - 143 trading assistants;

    - 7 Corporate Relations Department employees; and

    - 29 management, administration and finance staff, including 2 managing
      directors.

    Our employees are not covered by a collective bargaining agreement. We have
never experienced an employment-related work stoppage. We consider our employee
relations to be good.

PROPERTIES

    Our offices are located at One Exchange Plaza, New York, New York. We lease
approximately 35,000 square feet under three separate leases, expiring in
October 2001, December 2002 and January 2008. In addition, we lease three
trading posts on the floor of the NYSE. We believe that our current leased space
is suitable and adequate for the operation of our business as presently
conducted and as contemplated to be conducted in the immediate future.

LEGAL PROCEEDINGS

    We are not a party to any material legal proceeding.

                                       59
<PAGE>
                                   MANAGEMENT

    OUR DIRECTORS AND EXECUTIVE OFFICERS ARE AS FOLLOWS:

<TABLE>
<CAPTION>
NAME                                AGE                                    POSITION
- ----                        --------------------   ---------------------------------------------------------
<S>                         <C>                    <C>
Michael LaBranche.........                    44   Chairman, Chief Executive Officer and President
James G. Gallagher........                    53   Executive Vice President and Director
Alfred O. Hayward, Jr.....                    52   Executive Vice President and Director
S. Lawrence Prendergast...                    59   Executive Vice President, Finance and Director
E. Margie Filter..........                    59   Director
Thomas E. Dooley..........                    43   Director
Harvey S. Traison.........                         Senior Vice President, Chief Financial Officer and
                                              60   Director
Vincent J. Flaherty.......                    55   Senior Vice President, Floor Operations
Michael J. Naughton.......                    54   Senior Vice President, Specialist Operations
</TABLE>

    MICHAEL LABRANCHE has been our Chairman, Chief Executive Officer and
President since our initial public offering in August 1999. Mr. LaBranche has
served as Chairman of the Managing Committee of LaBranche & Co. since 1996, as a
member of the Managing Committee of LaBranche & Co. since 1988 and as a
specialist with LaBranche & Co. since 1977. He currently is a Governor of the
NYSE and is a member of the NYSE's Market Performance Committee.

    JAMES G. GALLAGHER has been our Executive Vice President and a director
since our initial public offering in August 1999. Mr. Gallagher has served as a
member of the Managing Committee of LaBranche & Co. since 1998. From 1980 to
July 1998, Mr. Gallagher was a specialist and managing partner with Fowler,
Rosenau & Geary, LLC. Mr. Gallagher is currently a NYSE Senior Floor Official.
Mr. Gallagher has also served for six years as a NYSE Floor Governor.

    ALFRED O. HAYWARD, JR.  has been our Executive Vice President and a director
since our initial public offering in August 1999. Mr. Hayward has been a
specialist with LaBranche & Co. since 1983 and has served as a member of the
Managing Committee of LaBranche & Co. since 1994. He currently sits on the NYSE
Arbitration Panel and is involved with NYSE education programs. Mr. Hayward has
served as a NYSE Floor Official and has also served as the Chairman of the
Allocation Committee.

    S. LAWRENCE PRENDERGAST has been our Executive Vice President, Finance and a
director since our initial public offering in August 1999. From May 1997 to
August 1999, Mr. Prendergast was the Chairman and CEO of AT&T Investment
Management Corp. Prior to 1997, Mr. Prendergast was the Vice President and
Treasurer of AT&T for 14 years. Mr. Prendergast currently is a director of AT&T
Investment Management Corp., a money management subsidiary of AT&T.

    E. MARGIE FILTER has been a director of LaBranche since October 1999.
Ms. Filter joined Xerox Corporation in 1973 and is currently Vice President,
Treasurer and Secretary of Xerox Corporation and President and Chief Executive
Officer of Xerox Credit Corporation. Ms. Filter is also a director of Baker
Hughes Inc. and Briggs and Stratton Corporation.

    THOMAS E. DOOLEY has been a director of LaBranche since March 2000.
Mr. Dooley is Deputy Chairman and Executive Vice President of Viacom Inc. and a
member of its Board of Directors. Since 1980, Mr. Dooley has held various
divisional and corporate finance positions, most recently serving as Executive
Vice President, Finance, Corporate Development and Communications. Mr. Dooley
currently is a director of the International Radio & Television Society.

    HARVEY S. TRAISON has been our Senior Vice President and Chief Financial
Officer and a director since March 2000. As of December 31, 1999, Mr. Traison
retired from the position of Vice President, Treasurer and Member of the Board
of Directors of DaimlerChrysler North America Holding Corporation and
DaimlerChrysler Canada Finance Inc. Mr. Traison joined Daimler-Benz (a
predecessor of DaimlerChrysler) in 1984.

                                       60
<PAGE>
    VINCENT J. FLAHERTY has been our Senior Vice President, Floor Operations
since our initial public offering in August 1999. Mr. Flaherty has been a
specialist with LaBranche & Co. since 1997. Prior to joining our specialist
firm, Mr. Flaherty was the managing partner of Homans & Co., an NYSE specialist
firm, which he joined in 1963.

    MICHAEL J. NAUGHTON has been our Senior Vice President, Specialist
Operations since our initial public offering in August 1999. Mr. Naughton has
been a specialist with LaBranche & Co. since 1979 and was appointed to the
Managing Committee of LaBranche & Co. in 1990.

    There are no family relationships among any of our directors and executive
officers.

BOARD COMMITTEES

    Our Board of Directors has an audit committee and a compensation committee.

    The audit committee of our Board of Directors was established on March 17,
2000 and is composed of E. Margie Filter and Thomas E. Dooley. The audit
committee reviews, acts on and reports to our Board of Directors with respect to
various auditing and accounting matters, including the recommendation of our
auditors, the scope of our annual audits, fees to be paid to our auditors, the
performance of our independent auditors and our accounting practices. The audit
committee is comprised solely of independent directors.

    The compensation committee of our Board of Directors was established on
March 17, 2000 and is composed of E. Margie Filter, Thomas E. Dooley and Michael
LaBranche. The compensation committee recommends, reviews and oversees salaries,
bonuses, benefits and equity incentives for our employees, consultants and
directors. The compensation committee also administers our incentive
compensation plans. The compensation committee is comprised of a majority of
independent directors.

    Prior to March 17, 2000, the duties described above were fulfilled by our
Board of Directors.

DIRECTOR COMPENSATION

    We have appointed two non-employee directors. Each of our non-employee
directors currently receives an annual retainer of $28,000 and attendance fees
of $1,500 per board meeting and $1,000 per committee meeting attended. The
attendance fees are paid after the end of each year in shares of our common
stock under our Equity Incentive Plan. Our employee directors do not receive any
additional compensation for serving on our Board of Directors or any committee
of our board.

EXECUTIVE COMPENSATION

    Prior to our reorganization transactions in August 1999, many of our
managing directors were members of LaB Investing Co. L.L.C., the general partner
of LaBranche & Co. The aggregate amount of compensation received by all our
managing directors generally approximated LaB Investing Co. L.L.C.'s interest in
LaBranche & Co.'s income before managing directors' compensation. These payments
of compensation were allocated among our managing directors based on the
managing directors' respective percentage interests in the profits of LaB
Investing Co. L.L.C. Since our reorganization from partnership to corporate
form, our managing directors, including our executive officers, receive
compensation in the form of salary plus participation in our Equity Incentive
Plan and our Annual Incentive Plan.

    The following table sets forth the annual compensation we paid during fiscal
1999 to our Chief Executive Officer and our four other highest paid executive
officers (the "Named Executive Officers") whose total salary for fiscal 1999
exceeded $100,000 for services rendered to LaBranche and its subsidiaries in all
capacities. Such amounts reflect the amounts paid to these individuals under the
compensation arrangements in effect prior to our reorganization in August 1999,
plus amounts paid under the restructured compensation plan following our
reorganization. As a result, these amounts may not be indicative of amounts to
be paid to the Named Executive Officers in future years. No executive who would
otherwise have been includable in such table on the basis of salary and bonus
earned for fiscal 1999 resigned or otherwise terminated employment during fiscal
1999.

                                       61
<PAGE>
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                        POST-REORGANIZATION                         PRE-REORGANIZATION
                                   --------------------------------------------------------------   ------------------
                                                                                      LONG TERM
                                                                                    COMPENSATION
                                                      ANNUAL COMPENSATION           -------------
                                              -----------------------------------    SECURITIES
                                                                     OTHER ANNUAL    UNDERLYING         ALL OTHER
NAME AND PRINCIPAL POSITION          YEAR      SALARY    BONUS (1)   COMPENSATION   STOCK OPTIONS    COMPENSATION(2)
- ---------------------------------  --------   --------   ---------   ------------   -------------   ------------------
<S>                                <C>        <C>        <C>         <C>            <C>             <C>
Michael LaBranche................    1999     $93,750    $815,460            --         500,000         $4,226,312
  Chairman, Chief Executive
  Officer and President
James G. Gallagher...............    1999      93,750     375,625            --         250,000          2,826,863
  Executive Vice President
Alfred O. Hayward, Jr............    1999      93,750     500,460            --         100,000          2,831,843
  Executive Vice President
Vincent J. Flaherty..............    1999      93,750     300,460            --          50,000          4,010,514
  Senior Vice President, Floor
  Operations
Michael J. Naughton..............    1999      93,750     250,460            --         100,000          2,831,843
  Senior Vice President,
  Specialist Operations
</TABLE>

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

(1) Reflects bonus amount earned in 1999.

(2) Reflects managing directors' compensation from our partnership paid to our
    Named Executive Officers prior to our reorganization.

    The following table sets forth certain summary information concerning
individual grants of stock options made during the year ended December 31, 1999
to each of our Named Executive Officers.

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                     POTENTIAL REALIZABLE VALUE
                                             % OF TOTAL                              AT ASSUMED ANNUAL RATES OF
                                              OPTIONS      EXERCISE                   STOCK PRICE APPRECIATION
                                 SHARES       GRANTED       OR BASE                       FOR OPTION TERM
                               UNDERLYING   TO EMPLOYEES   PRICE PER   EXPIRATION   ----------------------------
                                OPTIONS       IN 1999        SHARE        DATE          5%               10%
                               ----------   ------------   ---------   ----------   ----------       -----------
<S>                            <C>          <C>            <C>         <C>          <C>              <C>
Michael LaBranche............    500,000        41.7%       $14.00     08/19/2009   $4,402,262       $11,156,197
James G. Gallagher...........    250,000        20.8%        14.00     08/19/2009    2,201,131         5,578,099
Alfred O. Hayward, Jr........    100,000         8.3%        14.00     08/19/2009      880,452         2,231,239
Vincent J. Flaherty..........     50,000         4.2%        14.00     08/19/2009      440,226         1,115,620
Michael J. Naughton..........    100,000         8.3%        14.00     08/19/2009      880,452         2,231,239
</TABLE>

    The following table sets forth the number of options and value of
unexercised options held by each of our Named Executive Officers at
December 31, 1999.

                                       62
<PAGE>
                         AGGREGATED OPTION EXERCISES IN
                        LAST FISCAL YEAR AND FISCAL YEAR
                               END OPTION VALUES

<TABLE>
<CAPTION>
                                                    NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED IN-THE-
                                                     OPTIONS AT YEAR END         MONEY OPTIONS AT YEAR END
                                                 ---------------------------   -----------------------------
                                                 EXERCISABLE   UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE
                                                 -----------   -------------   ------------   --------------
<S>                                              <C>           <C>             <C>            <C>
Michael LaBranche..............................        --         500,000             --              --
James G. Gallagher.............................        --         250,000             --              --
Alfred O. Hayward, Jr..........................        --         100,000             --              --
Vincent J. Flaherty............................        --          50,000             --              --
Michael J. Naughton............................        --         100,000             --              --
</TABLE>

              EMPLOYMENT AGREEMENTS AND NONCOMPETITION AGREEMENTS

    As part of the reorganization of our firm from partnership to corporate
form, our managing directors, all of whom are members of LaB Investing Co.
L.L.C., exchanged their membership interests in LaB Investing Co. L.L.C. for
shares of our common stock. We have entered into employment agreements, pledge
agreements and agreements regarding noncompetition and other covenants with all
members who continued as managing directors after our initial public offering,
including each managing director who is a member of our board of directors or is
an executive officer. We have also entered into an employment agreement and
noncompetition agreement with our Executive Vice President, Finance. Our Senior
Vice President/Chief Financial Officer has entered into an employment agreement
which contains comparable provisions regarding noncompetition. The material
terms of the employment, noncompetition and pledge agreements are described
below. You should refer to the exhibits that are a part of the registration
statement for copies of the forms of these agreements. See "Available
Information."

THE EMPLOYMENT AGREEMENTS

    Each employment agreement, other than the employment agreements with our
Executive Vice President, Finance and our Senior Vice President and Chief
Financial Officer, has an initial term of at least one but not more than five
years, requires the managing director to devote his entire working time to our
business and affairs, contains various restrictive covenants and is terminable
on 90 days' notice by either party. The employment agreement with our Executive
Vice President, Finance, has an initial term of one year, requires him to devote
his time as is reasonably necessary for him to perform his duties and
responsibilities and is terminable on 30 days' notice by either party. The
employment agreement with our Senior Vice President and Chief Financial Officer
has an initial term of three years, requires him to devote substantially all of
his business time to the performance of his duties and responsibilities, is
terminable on 90 days' notice by either party and provides for automatic
one-year renewals, subject to notice of termination.

THE NONCOMPETITION AGREEMENTS

    Each noncompetition agreement contains the following provisions:

    CONFIDENTIALITY.  Each managing director and each executive officer is
required to protect and use "confidential information" in accordance with the
restrictions which we place on its use and disclosure.

    NONCOMPETITION.  During employment and until the later of 12 months
following termination of employment with us or the fifth anniversary of our
common stock offering, a managing director or executive officer may not:

                                       63
<PAGE>
    - form, or acquire a 5% or greater ownership, voting or profit participation
      interest in, any competitive enterprise; or

    - associate with any competitive enterprise and in connection with such
      association engage in, or directly or indirectly manage or supervise
      personnel engaged in, any business activity that is related to his or her
      activities with us.

    For this purpose, a "competitive enterprise" is any business enterprise that
engages in activity, or owns or controls a significant interest in an entity
that engages in activity that competes, directly or indirectly, with any
activity in which we are engaged. These activities include, without limitation,
specialist services and/or securities brokerage, sales, lending, custody,
clearance, settlement or trading.

    NONSOLICITATION.  During employment and until the later of 12 months
following termination of employment with us or the fifth anniversary of our
common stock offering, a managing director or executive officer may not,
directly or indirectly:

    - solicit any of our listed companies;

    - interfere with or damage any relationship between us and any of our listed
      companies or prospective allocated companies; or

    - solicit any of our employees to apply for, or accept employment with, any
      competitive enterprise.

    TRANSITION ASSISTANCE.  The noncompetition agreements also provide that each
managing director and each executive officer will take all actions and do all
things reasonably requested by us during a 90-day transition period following
termination of employment to maintain the business, goodwill and business
relationships in which or with which he or she was previously involved on our
behalf.

    LIQUIDATED DAMAGES.  If a managing director breaches the noncompetition or
nonsolicitation provisions of the noncompetition agreement before the later of
12 months following termination of employment with us or the fifth anniversary
of the date of the completion of our common stock offering, then he or she will
be liable for liquidated damages in an amount equal to 75% of the aggregate
value of the common stock and cash received by that managing director from us in
exchange for his or her membership interest in LaB Investing Co. L.L.C. The
noncompetition agreement with our Executive Vice President, Finance does not
provide for the payment of liquidated damages. The noncompetition provisions of
the employment agreement with our Senior Vice President/Chief Financial Officer
does not provide for the payment of liquidated damages.

THE PLEDGE AGREEMENTS

    Under each managing director's pledge agreement, the liquidated damages
obligations under each noncompetition agreement are secured by a pledge of
common stock with an initial value equal to 100% of the liquidated damages
amount. The pledge agreement will terminate with respect to a managing director
on the earliest to occur of:

    - the death of the managing director;

    - the fifth anniversary of the date of the completion of our initial public
      offering; or

    - payment in cash or other satisfaction by the managing director of all
      liquidated damages incurred.

NONEXCLUSIVITY AND ARBITRATION

    The liquidated damages and pledge arrangements discussed above are not
exclusive of any injunctive relief to which we may be entitled for a breach of a
covenant against competition or solicitation. Prior to and after the expiration
of the pledge agreements, we will be entitled to all available remedies for a
breach of the noncompetition agreements. The employment and noncompetition
agreements generally provide that any disputes thereunder will be resolved by
binding arbitration.

                                       64
<PAGE>
                       INCENTIVE AWARDS TO OUR EMPLOYEES

THE EQUITY INCENTIVE PLAN

    Currently, under the Equity Incentive Plan, there are outstanding,
(1) options to purchase an aggregate of 1,200,000 shares of our common stock
granted at $14.00 to our executive officers, (2) restricted stock units for
1,064,655 shares of common stock granted to our employees who are not managing
directors and (3) 368 shares of unrestricted stock issued to one of our
independent directors as compensation for her attendance at board meetings in
1999. Subject to continuing service with the firm and certain other conditions,
the options already granted will generally become exercisable in three equal
annual installments commencing on the first anniversary of the date of the grant
and restricted stock units will generally vest in three equal annual
installments commencing on the third anniversary of the grant date.

    TYPES OF AWARDS.  The Equity Incentive Plan provides for grants of options
to purchase shares of common stock, including options intended to qualify as
incentive stock options ("ISOs") (within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended), and options which do not qualify as
ISOs ("NQSOs"), restricted shares of our common stock, restricted stock units,
the value of which is tied to shares of our common stock, and other equity-based
awards related to our common stock.

    AVAILABLE SHARES. A maximum of 4,687,500 shares of our common stock has been
reserved for issuance under the Equity Incentive Plan. The number, class and
exercise price per share will be adjusted proportionately or as otherwise
appropriate to reflect any increase in, decrease in, or exchange of the
outstanding shares of our common stock through merger, consolidation,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend or similar corporate transaction. These shares may be authorized but
unissued shares of our common stock or issued shares of our common stock held in
our treasury or otherwise acquired for the purposes of the Equity Incentive
Plan. New awards may be granted under the Equity Incentive Plan with respect to
shares of our common stock covered by any award that terminates or expires by
its terms (by cancellation or otherwise) or with respect to shares of our common
stock that are withheld or surrendered to satisfy a recipient's income tax or
other withholding obligations or tendered to pay the purchase price of any
award. There are currently available 2,422,477 shares of our common stock with
respect to which awards may be granted under the Equity Incentive Plan.

    The maximum number of shares of our common stock with respect to which
options, restricted stock, restricted stock units or other equity-based awards
may be granted under the Equity Incentive Plan during any calendar year to any
employee may not exceed 500,000 shares, subject to adjustment upon certain
corporate transactions (as described above).

    ELIGIBILITY.  Awards under the Equity Incentive Plan may be granted to any
of our directors, officers, managing directors or other employees, including any
prospective employee, and to any of our advisors or consultants selected by the
compensation committee of our Board of Directors.

    ADMINISTRATION.  The Equity Incentive Plan, which had been administered by
our Board of Directors until March 17, 2000, is currently administered by our
compensation committee. The compensation committee will have full discretion and
authority to make awards under the Equity Incentive Plan, to apply and interpret
the provisions of the Equity Incentive Plan and to take such other actions as
may be necessary or desirable in order to carry out the provisions of the Equity
Incentive Plan. The determinations of the compensation committee on all matters
relating to the Equity Incentive Plan and the options, restricted stock,
restricted stock units and other equity-based awards granted thereunder will be
final, binding and conclusive.

    STOCK OPTIONS.  The compensation committee may authorize the grant of ISOs
and NQSOs in such amounts and subject to such terms and conditions as it may
determine. The exercise price of an

                                       65
<PAGE>
option granted under the Equity Incentive Plan may not be less than the fair
market value of our common stock on the date of grant (as determined under the
plan). Unless sooner terminated or exercised, options will generally expire ten
years from the date of grant. Payment for shares acquired upon the exercise of
an option may be made (as determined by the compensation committee) in cash
and/or such other form of payment as may be permitted from time to time, which
may include previously-owned shares of our common stock or pursuant to a
broker's cashless exercise procedure. Except as otherwise permitted by the
compensation committee, no option may be exercised more than 30 days after
termination of the optionee's service (or, if the optionee's service is
terminated by reason of disability or death, one year thereafter). If an
optionee's employment is terminated for cause, options held by such optionee
immediately terminate. An optionee will not have any of the rights of a
stockholder with respect to shares subject to an option until the issuance of
such shares.

    RESTRICTED STOCK.  The compensation committee may grant restricted shares of
our common stock in amounts, and subject to terms and conditions (such as time
vesting and/or performance-based vesting criteria), as it may determine.
Generally, prior to vesting, the recipient will have the rights of a stockholder
with respect to the restricted stock, subject to any restrictions and conditions
as the compensation committee may include in the award agreement.

    RESTRICTED STOCK UNITS.  The compensation committee may grant restricted
stock units, the value of which is tied to shares of our common stock, in
amounts, and subject to terms and conditions, as the compensation committee may
determine. Recipients of restricted stock units have only the rights of our
general unsecured creditors and no rights as a stockholder until the common
stock referenced by the restricted stock units is delivered to the recipient.

    OTHER EQUITY-BASED AWARDS.  The compensation committee may grant other types
of equity-based awards related to our common stock under the Equity Incentive
Plan, including the grant of unrestricted shares of our common stock and stock
appreciation rights, in amounts and subject to terms and conditions as the
compensation committee may determine. These awards may involve the transfer of
actual shares of common stock or the payment in cash or otherwise of amounts
based on the value of shares of our common stock.

    CHANGE IN CONTROL.  The compensation committee may provide, in any award
agreement, for provisions relating to a "change in control" of us or any of our
subsidiaries or affiliates, including, without limitation, the acceleration of
the exercisability of, or the lapse of restrictions with respect to, the award.

    NONASSIGNABILITY.  Except to the extent otherwise provided in an award
agreement or approved by the compensation committee with respect to NQSOs, no
award granted under the Equity Incentive Plan will be assignable or transferable
other than by will or by the laws of descent and distribution and all awards
will be exercisable during the life of a recipient only by the recipient or his
or her legal representative.

    AMENDMENT AND TERMINATION.  The Equity Incentive Plan may be amended or
terminated at any time by our Board of Directors, subject, however, to
stockholder approval in the case of certain material amendments, such as an
increase in the number of shares available under the Equity Incentive Plan or a
change in the class of individuals eligible to participate in the Equity
Incentive Plan.

    U.S. FEDERAL INCOME TAX CONSEQUENCES.  The following is a brief description
of the material U.S. federal income tax consequences generally arising with
respect to awards granted under the Equity Incentive Plan.

    The grant of an option will have no income tax consequences to the recipient
or to us. Upon the exercise of an option, other than an ISO, the recipient
generally will recognize ordinary income equal to the excess of the fair market
value of the shares of common stock subject to the option on the date

                                       66
<PAGE>
of exercise over the exercise price for such shares (i.e., the option spread),
and we generally will be entitled to a corresponding tax deduction in the same
amount. Upon the sale of the shares of our common stock acquired pursuant to the
exercise of an option, the recipient will recognize capital gain or loss equal
to the difference between the selling price and the sum of the exercise price
plus the amount of ordinary income recognized on the exercise.

    A recipient generally will not recognize ordinary income upon the exercise
of an ISO (although, on exercise, the option spread is an item of tax preference
potentially subject to the alternative minimum tax), and we will not receive any
deduction. If the stock acquired upon exercise of an ISO is sold or otherwise
disposed of within two years from the grant date or within one year from the
exercise date, then gain realized on the sale generally is treated as ordinary
income to the extent of the ordinary income that would have been realized upon
exercise if the option had not been an ISO, and we generally will be entitled to
a corresponding deduction in the same amount. Any remaining gain is treated as
capital gain.

    If the shares acquired upon the exercise of an ISO are held for at least two
years from the grant date and one year from the exercise date and the recipient
is employed by us at all times beginning on the grant date and ending on the
date three months prior to the exercise date, then all gain or loss realized
upon the sale will be capital gain or loss and we will not receive any
deduction.

    In general, an individual who receives an award of restricted stock will
recognize ordinary income at the time such award vests in an amount equal to the
difference between the value of the vested shares and the purchase price for
such shares, if any, and we generally will be entitled to a deduction in an
amount equal to the ordinary income recognized by the recipient at such time.

    The recipient of an award of restricted stock units generally will recognize
ordinary income upon the issuance of the shares of common stock underlying such
restricted stock units in an amount equal to the difference between the value of
such shares and the purchase price for such units and/or shares, if any, and we
generally will be entitled to a deduction in an amount equal to the ordinary
income recognized by the recipient at such time.

    With respect to other equity based awards, upon the payment of cash or the
issuance of shares or other property that is either not restricted as to
transferability or not subject to a substantial risk of forfeiture, the
participant generally will recognize ordinary income equal to the cash or the
fair market value of shares or other property delivered, less any amount paid by
the participant for such award. Generally, we will be entitled to a deduction in
an amount equal to the ordinary income recognized by the participant.

THE ANNUAL INCENTIVE PLAN

    We adopted the LaBranche & Co Inc. Annual Incentive Plan at the time of our
initial public offering in August 1999. Our managing directors and other
employees selected by the compensation committee of our Board of Directors are
eligible to participate in the Annual Incentive Plan. Under this plan, a
compensation pool of up to 30% of our pre-tax income, or such lesser percentage
determined by the compensation committee, is set aside for our managing
directors and other employees selected by the compensation committee to
participate in this plan. In determining the 30% compensation pool, the
compensation expenses relating to the awards under our Equity Incentive Plan
will be deducted. Under the plan, no individual participant may receive more
than 25% of the compensation pool for any fiscal year. The amounts payable under
the Annual Incentive Plan to our plan participants are reviewed on an annual
basis and are based on such factors and considerations as the compensation
committee deems appropriate in individual cases and on our operating results and
the overall performance of these participants. An award made by the compensation
committee to our managing directors and other employees is completely
discretionary. The Annual Incentive Plan may be amended or terminated at any
time by our Board of Directors.

                                       67
<PAGE>
                             PRINCIPAL STOCKHOLDERS

    The following table presents information as of April 27, 2000 regarding the
beneficial ownership of our common stock by:

    - each person known to beneficially own more than 5.0% of the outstanding
      shares of common stock;

    - each of our directors;

    - each named executive officer;

    - and all executive officers and directors as a group.

    All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated. Unless otherwise indicated, the address
of the beneficial owners is: c/o One Exchange Plaza, New York, New York, 10006.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock issuable to options, to
the extent such options are currently exercisable or convertible within 60 days
of April 27, 2000, are treated as outstanding for computing the percentage of
the person holding such securities but are not treated as outstanding for
computing the percentage of any other person.

<TABLE>
<CAPTION>
NAME AND ADDRESS                                             SHARES BENEFICIALLY   PERCENTAGE OF SHARES
OF BENEFICIAL OWNER (1)                                             OWNED           BENEFICIALLY OWNED
- -----------------------                                      -------------------   --------------------
<S>                                                          <C>                   <C>
George M. L. (Michael) LaBranche, IV.......................       3,501,094        7.2         %
James G. Gallagher.........................................       2,287,100        4.7
Alfred O. Hayward, Jr......................................       1,908,068        3.9
S. Lawrence Prendergast....................................           7,000        *
E. Margie Filter...........................................           1,368        *
Thomas E. Dooley...........................................               0        -
Harvey S. Traison..........................................           1,000        *
Vincent J. Flaherty........................................       2,087,926        4.3
Michael J. Naughton........................................       1,958,066        4.0
All executive officers and directors as a group............      11,751,622        24.1
</TABLE>

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

*   Less than 1%

(1) Each of our managing directors has entered into a stockholders' agreement
    pursuant to which he or she has agreed to vote his or her shares as
    determined by a majority of Messrs. LaBranche, Gallagher and Hayward.
    Messrs. LaBranche, Gallagher and Hayward individually beneficially own an
    aggregate of 7,696,262 shares of common stock, constituting approximately
    15.8% of the outstanding shares of our common stock. As a result of the
    stockholders' agreement, Messrs. LaBranche, Gallagher and Hayward, acting
    together as a group, may be deemed to beneficially own an aggregate of
    34,686,443 shares of common stock (including the 7,696,262 shares
    beneficially owned by them individually), constituting approximately 71.3%
    of the outstanding shares of our common stock. Each of Messrs. LaBranche,
    Gallagher and Hayward disclaims beneficial ownership of any and all shares
    of common stock held by any person or entity other than him.

                                       68
<PAGE>
                              CERTAIN TRANSACTIONS

REORGANIZATION AND RELATED TRANSACTIONS

REORGANIZATION

    Concurrently with our August 1999 senior note offering and our initial
public offering of common stock, we completed a number of transactions in order
to effect the reorganization of our firm from partnership to corporate form.
These transactions are summarized below:

                                     [LOGO]

    - The 36 members of LaB Investing Co. L.L.C. exchanged their membership
      interests in LaB Investing Co. L.L.C. which represented a 69.8% interest
      in the profit of LaBranche & Co. for an aggregate of 34,816,334 shares of
      our common stock. In addition to receiving a portion of those shares,
      three members of LaB Investing Co. L.L.C. also received an aggregate of
      $9.0 million in cash as part of their exchange. All members who have
      remained employed by us following our common stock offering only received
      shares of our common stock, and no cash, in the reorganization. We thus
      became the sole member of LaB Investing Co. L.L.C., and LaB Investing Co.
      L.L.C. continues to be the general partner of LaBranche & Co. Our common
      stock received by the members of LaB Investing Co. L.L.C. is subject to
      certain restrictions, as described below under "--Stockholders'
      Agreement." Set forth below is the percentage interest in the profits of
      LaBranche & Co. owned by each of our Named Executive Officers, as members
      of LaB Investing Co. L.L.C., before giving effect to the reorganization
      and the number of shares

                                       69
<PAGE>
      of our common stock that each of our Named Executive Officers received
      upon the closing of our initial public offering of common stock:

<TABLE>
<CAPTION>
                                                                                  NUMBER OF SHARES OF
                                                      PERCENTAGE INTEREST IN              OUR
NAMED EXECUTIVE OFFICER                             PROFITS OF LABRANCHE & CO.   COMMON STOCK RECEIVED
- -----------------------                             --------------------------   ---------------------
<S>                                                 <C>                          <C>
Michael LaBranche.................................               5.3%                  3,500,994
James G. Gallagher................................               3.6                   2,287,100
Alfred O. Hayward, Jr.............................               3.6                   1,908,068
Vincent J. Flaherty...............................               5.0                   2,087,926
Michael J. Naughton...............................               3.6                   1,958,066
</TABLE>

    - The 19 limited partners of LaBranche & Co., other than Mill Bridge, Inc.,
      exchanged their limited partnership interests in LaBranche & Co which
      represented a 16.0% interest in the profits of LaBranche & Co. to us in
      exchange for an aggregate of $66.2 million in cash, 558,666 shares of our
      common stock and subordinated indebtedness of $350,000 issued to a family
      member of Mr. Gallagher. The shares of our common stock received by
      limited partners are subject to lock-up restrictions which prohibits the
      transfer of 50% of those shares for a period of one year and the remaining
      50% for a period of two years following our common stock offering.

    - Mill Bridge, Inc., a subsidiary of Van der Moolen Holding NV, received
      $90.0 million from us, including $74.0 million in cash and our note for
      $16.0 million, in exchange for its limited partnership interest in
      LaBranche & Co., which represented a 14.2% interest in the profit of
      LaBranche & Co. In addition, we repaid $5.0 million of subordinated debt
      to an affiliate of Van der Moolen.

    - As a result of the above transactions, we became the sole limited partner
      of LaBranche & Co., which will continue to be a broker-dealer and a NYSE
      specialist firm.

    - Immediately prior to the closing of our initial public offering of common
      stock, we granted options under the Equity Incentive Plan to purchase an
      aggregate of 1,200,000 shares of our common stock to our executive
      officers. The options have an exercise price of $14, the initial public
      offering price of our common stock, and are not currently exercisable.

    - Immediately prior to the closing of our initial public offering of common
      stock, we granted restricted stock units under the Equity Incentive Plan
      for 1,059,000 shares of our common stock to employees who are not managing
      directors. The restricted stock units are not yet vested.

    - Prior to the closing of our initial public offering of common stock, we
      completely discharged our remaining obligations under all outstanding
      loans received from the LaBranche & Co. Retirement Plan by making a single
      lump sum payment in the amount of $1.1 million to the plan. Since certain
      of our executive officers directed the plan to lend to us a portion of the
      amounts credited to their individual accounts under the plan, part of the
      proceeds of our payment were allocated to those individual accounts in
      accordance with the terms of the plan.

    The consideration paid to the members and limited partners in connection
with the reorganization was arrived at through negotiation.

STOCKHOLDERS' AGREEMENT

    We entered into a stockholders' agreement with all 36 members of LaB
Investing Co. L.L.C. who received our common stock in the reorganization, 29 of
whom remain managing directors, and with the employees who received options and
restricted stock or restricted stock unit awards in connection with the
reorganization. This stockholders' agreement contains various restrictions on
the transfer of our stock by the parties to such agreement and a voting
agreement.

                                       70
<PAGE>
    TRANSFER RESTRICTIONS.  The stockholders' agreement prohibits the transfer
of our shares by the former members of LaB Investing Co. L.L.C. who remain
managing directors following our initial public offering of common stock for a
period of three years. Beginning on the third anniversary of our initial public
offering of common stock, up to one-third of these shares may be transferred.
Beginning on the fourth anniversary, up to an additional one-third of these
shares may be transferred, and beginning on the fifth anniversary, all of these
shares may be transferred. In addition, the former members of LaB Investing Co.
L.L.C. who did not continue as managing directors after our common stock
offering are restricted from transferring shares as follows:

    - 50% of the shares will be transferable after the first anniversary of our
      common stock offering; and

    - all of the shares will be transferable after the second anniversary of our
      common stock offering.

    Notwithstanding this,

    - if the stockholder is employed by us, at all times during the course of
      his or her employment, he or she must retain at least 25% of the aggregate
      of the shares of our common stock received in the reorganization and other
      shares received under the Equity Incentive Plan or similar plans; and

    - an employee may not sell shares of our common stock which are subject to a
      pledge agreement, unless the requirements of the pledge agreement are
      waived by us.

    VOTING AGREEMENT.  The shares owned by each party to the stockholders'
agreement will be voted at the general stockholder vote as directed by
Messrs. LaBranche, Gallagher and Hayward, as determined by a majority of those
individuals. These individuals will name alternates to replace them in the event
of their death or disability.

INTEREST ON CAPITAL

    The members of LaB Investing Co. L.L.C. historically contributed capital to
LaB Investing Co. L.L.C., which was, in turn, contributed to LaBranche & Co. For
1999, the Named Executive Officers listed below earned interest income on their
capital account balance in the amounts set forth opposite their names:

<TABLE>
<CAPTION>
                                                              CAPITAL INTEREST
NAME                                                               INCOME
- ----                                                          ----------------
<S>                                                           <C>
Michael LaBranche...........................................      $364,404
James G. Gallagher..........................................       277,852
Alfred O. Hayward, Jr.......................................       236,491
Vincent J. Flaherty.........................................       196,047
Michael J. Naughton.........................................       254,985
</TABLE>

LEASE PAYMENT ON MEMBERSHIPS

    Some of our Named Executive Officers have contributed the use of their NYSE
memberships to LaBranche & Co. and receive lease payments from LaBranche & Co.
based on the market value of the memberships. For 1999, the Named Executive
Officers listed below received payments from LaBranche & Co. in the amounts set
forth opposite their names:

<TABLE>
<CAPTION>
NAME                                                          LEASE INCOME
- ----                                                          ------------
<S>                                                           <C>
Michael LaBranche...........................................    $192,000
James G. Gallagher..........................................     192,000
Michael J. Naughton.........................................     192,000
</TABLE>

                                       71
<PAGE>
INTEREST ON INDEBTEDNESS

    A family member of Mr. Flaherty holds $600,000 of subordinated indebtedness
due August 31, 2000, which currently bears interest at an annual rate of 10.0%
payable on a quarterly basis. Mr. LaBranche's spouse holds $1.3 million of
secured subordinated indebtedness due March 2, 2001, which currently bears
interest at an annual rate of 8.0% payable on a quarterly basis. The agreements
relating to this debt have automatic rollover provisions which extend the
maturities for an additional year, unless the lender provides notice at least
seven months prior to maturity. The interest income in 1999 for Mr. Flaherty's
family member was $60,000 and the interest income in 1999 for Mr. LaBranche's
spouse was $123,333.

                         DESCRIPTION OF EXCHANGE NOTES

    The initial notes were, and the exchange notes will be, issued under an
indenture (the "Indenture") dated as of March 2, 2000 by and among the Company
and Firstar Bank, NA., as Trustee (the "Trustee"). The following is a summary of
the material provisions of the Indenture. It does not include all of the
provisions of the Indenture. We urge you to read the Indenture because it
defines your rights. The terms of the exchange notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "TIA"). A copy of the Indenture may be
obtained from the Company.

    You can find definitions of certain capitalized terms used in this
description under "--Certain Definitions." When we refer to the "Company" in
this section, we mean only LaBranche & Co Inc. and not its Subsidiaries.

OVERVIEW OF THE EXCHANGE NOTES

    The exchange notes will:

    - be general unsecured subordinated obligations of the Company,

    - rank junior in right of payment to all existing and future senior
      unsecured obligations of the Company,

    - rank equal in right of payment to all existing and future subordinated
      indebtedness of the Company, if any,

    - be effectively subordinated to all existing and future secured
      indebtedness of the Company, and

    - not be guaranteed by any Subsidiary of the Company and therefore will be
      effectively subordinated to all existing and future indebtedness of any
      Subsidiary of the Company.

    As of April 27, 2000:

    - the Company and its Subsidiaries had $415.5 million consolidated aggregate
      principal amount of indebtedness (excluding subordinated liabilities
      related to contributed exchange memberships),

    - the Company had $369.0 million aggregate principal amount of indebtedness,
      of which $119.0 million was senior to the Senior Subordinated Notes, and

    - Subsidiaries of the Company had long-term indebtedness of $46.5 million,
      excluding any intercompany indebtedness.

                                       72
<PAGE>
PRINCIPAL, MATURITY AND INTEREST

    The exchange notes will be limited to $250.0 million aggregate principal
amount. The exchange notes will mature on March 2, 2007 (the "Maturity Date").
Interest on the exchange notes will accrue at the rate of 12% per annum and will
be payable semi-annually in cash on each March 1 and September 1 commencing on
September 1, 2000, to the persons who are registered holders of the exchange
notes (the "note holders") at the close of business on the February 15 and
August 15 immediately preceding the applicable interest payment date; provided,
however, that the final interest payment date will be the Maturity Date instead
of March 1, 2007. Interest on the exchange notes will accrue from and including
the most recent date to which interest has been paid or, if no interest has been
paid, from and including the date of issuance.

    The exchange notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the Trustee will act as paying agent and registrar for the exchange notes. The
exchange notes may be presented for registration or transfer and exchange at the
offices of the registrar, which initially will be the Trustee's corporate trust
office. The Company may change any paying agent and registrar without notice to
the note holders.

    The Company will pay principal (and premium, if any) on the exchange notes
at the Trustee's corporate office in New York, New York. At the Company's
option, interest may be paid at the Trustee's corporate trust office or by check
mailed to the respective registered addresses of the note holders.

    The exchange notes will not be entitled to the benefit of any mandatory
sinking fund.

OPTIONAL REDEMPTION

    The Indenture does not contain any provisions that permit the Company to
redeem the exchange notes at its option prior to the Maturity Date.

EXCESS CASH FLOW OFFER

    If the Company has Excess Cash Flow for any fiscal year (commencing with
fiscal year 2000), the Company shall make an offer to purchase (the "Excess Cash
Flow Offer"), on a business day (the "Excess Cash Flow Payment Date") not later
than 150 days following the end of such fiscal year, from all holders of
exchange notes, up to a maximum principal amount (expressed as a multiple of
$1,000) of exchange notes equal to the note holder's Pro Rata Share of such
Excess Cash Flow in such fiscal year. The purchase price of exchange notes to be
purchased pursuant to the Excess Cash Flow Offer shall be equal to 103% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Excess Cash Flow Payment Date. Notice of an Excess Cash Flow Offer shall be
given to note holders not less than 30 business days before the Excess Cash Flow
Payment Date. The Excess Cash Flow Offer is required to remain open for 20
business days and payment pursuant to the Excess Cash Flow Offer will be made on
the Excess Cash Flow Payment Date.

    Notwithstanding the foregoing:

        (1) the amount of Excess Cash Flow included in any Excess Cash Flow
    Offer shall not exceed:

           (a) the amount that the Company is permitted to use to repurchase
       exchange notes in such Excess Cash Flow Offer pursuant to the indenture
       relating to the Senior Notes (the "Senior Note Indenture") as in effect
       on the Issue Date; or

           (b) the amount that LaBranche is permitted to distribute to the
       Company pursuant to the note purchase agreement relating to LaBranche's
       outstanding unsecured exchange notes in the aggregate principal amount of
       $20.0 million (the "$20 million Note Purchase Agreement") and the note
       purchase agreement relating to LaBranche & Co.'s outstanding unsecured

                                       73
<PAGE>
       exchange notes in the aggregate principal amount of $15.0 million (the
       "$15 million Note Purchase Agreement," together with the $20 million Note
       Purchase Agreement, the "Note Purchase Agreements"); and

        (2) the Company will not be required to make an Excess Cash Flow Offer
    for any fiscal year if the amount of such Excess Cash Flow Offer would be
    less than $5.0 million;

provided that any amounts excluded from an Excess Cash Flow Offer pursuant to
clause (1) or (2) above shall be carried forward for purposes of determining
whether an Excess Cash Flow Offer is required with respect to subsequent fiscal
years and the amount thereof.

    To the extent an Excess Cash Flow Offer is not fully subscribed to by
holders of the exchange notes, the unsubscribed portion of such Excess Cash Flow
may be retained by the Company and/or used for any purpose, subject to the
covenants contained in the Indenture, and shall be excluded from the calculation
of Excess Cash Flow for any subsequent period.

    The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and other applicable laws or regulations in
connection with the purchase of the exchange notes pursuant to this covenant. To
the extent that the provisions of any applicable laws or regulations conflict
with the provisions of the Indenture, the Company will comply with the
applicable laws and regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.

    The Company's ability to make an Excess Cash Flow Offer is subject to
compliance with the restricted payments covenants in the Senior Note Indenture
and the Note Purchase Agreements, and no Default will occur on the exchange
notes if the Company fails to make an Excess Cash Flow Offer in order to comply
with these covenants. In order to comply with these restricted payment covenants
in connection with an Excess Cash Flow Offer, the Company must satisfy a 2.75 to
1 Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Note
Indenture). In addition, the amount included in the Excess Cash Flow Offer
cannot exceed an amount calculated pursuant to the Senior Note Indenture or a
Note Purchase Agreement, as the case may be, and based, among other things, on
the Company's income and the amount of certain equity capital contributed to the
Company, less certain other payments made pursuant to the restricted payments
covenant, including dividends and payments on the Company's Capital Stock,
payments made pursuant to previous Excess Cash Flow Offers and certain
investments. Under the Senior Note Indenture, calculations with respect to
Restricted Payments operate on a cumulative basis starting on October 1, 1999.

CHANGE OF CONTROL

    Upon the occurrence of a Change of Control, each note holder will have the
right to require that the Company purchase all or a portion of such note
holder's exchange notes pursuant to the offer described below (the "Change of
Control Offer"), at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, thereon to the date of
purchase.

    Within 30 days following the date upon which the Change of Control occurs,
the Company must send, by first class mail, a notice to each note holder, with a
copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 60 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). A note holder electing to have an exchange note purchased
pursuant to a Change of Control Offer will be required to surrender the exchange
note, with the form entitled "Option of Note Holder to Elect Purchase" on the
reverse of the exchange note completed, to the paying agent for the exchange
notes at the address specified in the notice prior to the close of business on
the third business day prior to the Change of Control Payment Date.

                                       74
<PAGE>
    If a Change of Control Offer is required to be made, there can be no
assurance that the Company will be permitted by the terms of the Credit
Agreement, the note purchase agreements relating to LaBranche & Co.'s existing
senior indebtedness or the indenture governing the Senior Notes to make such a
Change of Control Offer or that it will have available funds sufficient to pay
the Change of Control purchase price for all the exchange notes that might be
delivered by note holders seeking to accept the Change of Control Offer. A
Change of Control may be a default under the Credit Agreement. In the event the
Company is required to purchase outstanding exchange notes pursuant to a Change
of Control Offer, the Company expects that it would seek third party financing
to the extent it does not have available funds to meet its purchase obligations.
However, there can be no assurance that the Company would be able to obtain such
financing.

    Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a note holder's right to require the purchase of exchange
notes upon a Change of Control. Restrictions in the Indenture on the ability of
the Company and the Restricted Subsidiaries to incur additional Indebtedness, to
grant liens on its property, to make Restricted Payments and to make Asset Sales
may also make more difficult or discourage a takeover of the Company, whether
favored or opposed by the management of the Company. Consummation of any such
transaction in certain circumstances may require the purchase of the exchange
notes, and there can be no assurance that the Company or the acquiring party
will have sufficient financial resources to effect such purchase. Such
restrictions and the restrictions on transactions with Affiliates may, in
certain circumstances, make more difficult or discourage any leveraged buyout of
the Company or any of its Subsidiaries by the management of the Company. While
such restrictions cover a wide variety of arrangements which have traditionally
been used to effect highly leveraged transactions, the Indenture may not afford
the note holders protection in all circumstances from the adverse aspects of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction.

    The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with a Change of
Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the "Change of Control" provisions of the Indenture,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the "Change of
Control" provisions of the Indenture by virtue thereof.

SUBORDINATION

    The payment of principal, premium, if any, and interest on the exchange
notes is subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full in cash of all Senior Debt of the Company, whether
outstanding on the Issue Date or thereafter incurred.

    The holders of Senior Debt will be entitled to receive payment in full in
cash of all Obligations due in respect of Senior Debt (including interest after
the commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt, whether or not allowed as a claim in such proceeding)
before the note holders will be entitled to receive any payment with respect to
the exchange notes (except that the note holders may receive and retain
Permitted Junior Securities and payments made from the trust described under
"--Legal Defeasance and Covenant Defeasance"), in the event of any distribution
to creditors of the Company:

       (a) in a liquidation or dissolution of the Company;

       (b) in a bankruptcy, reorganization, insolvency, receivership or similar
           proceeding relating to the Company or its property;

       (c) in an assignment for the benefit of creditors; or

       (d) in any marshalling of the Company's assets and liabilities.

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    The Company also may not make any payment in respect of the exchange notes
(except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance") if:

       (a) a payment default on Designated Senior Debt occurs and is continuing;
           or

       (b) any other default occurs and is continuing on Designated Senior Debt
           that permits holders of the Designated Senior Debt to accelerate its
           maturity and the Trustee receives a notice of such default (a
           "Payment Blockage Notice") from the Company or the holders of any
           Designated Senior Debt.

        Payments on the exchange notes may and shall be resumed:

       (a) in the case of a payment default, upon the date on which such default
           is cured or waived; and

       (b) in case of a nonpayment default, the earlier of the date on which
           such nonpayment default is cured or waived or 179 days after the date
           on which the applicable Payment Blockage Notice is received, unless
           the maturity of any Designated Senior Debt has been accelerated.

    No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 180 days.

    The Company must promptly notify holders of Senior Debt if payment of the
exchange notes is accelerated because of an Event of Default. Payments received
by the note holders in violation of the subordination provisions must be repaid
to the holders of the relevant Senior Debt. As a result of the subordination
provisions described above, in the event of a bankruptcy, liquidation or
reorganization of the Company, the note holders may recover less ratably than
creditors of the Company who are holders of Senior Debt. See "Risk Factors--Your
rights to receive payments on the exchange notes will be junior to our
outstanding senior debt and effectively subordinated to the debt of our
subsidiaries."

CERTAIN COVENANTS

    The Indenture will contain, among others, the following covenants:

LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS

    The Company will not, and will not permit any of the Restricted Subsidiaries
to, directly or indirectly, Incur any Indebtedness, other than Permitted
Indebtedness; provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
Incurrence of any such Indebtedness, the Company may Incur Indebtedness and the
Restricted Subsidiaries may Incur Acquired Indebtedness, in each case if on the
date of the Incurrence of such Indebtedness, after giving effect to the
Incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is greater than 2.75 to 1.

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LIMITATION ON RESTRICTED PAYMENTS

    The Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly:

    (a) declare or pay any dividend or make any distribution, other than
       dividends or distributions payable in Qualified Capital Stock of the
       Company, on or in respect of shares of the Company's Capital Stock;

    (b) purchase, redeem or otherwise acquire or retire for value any Capital
       Stock of the Company or any warrants, rights or options to purchase or
       acquire shares of any class of such Capital Stock;

    (c) make any payment on or with respect to, or purchase, redeem, defease or
       otherwise acquire or retire for value any Indebtedness which is
       subordinated in right of payment to the exchange notes, except a payment
       of interest or any principal payment at the Stated Maturity thereof;

    (d) make any Investment, other than a Permitted Investment; or

    (e) make compensation or consulting payments in excess of base salaries
       limited to $350,000 to managing directors and other executive officers
       (as defined in Rule 3b-7 under the Exchange Act) of the Company or any of
       its Restricted Subsidiaries, except to the extent authorized under the
       Annual Incentive Plan or the Equity Incentive Plan or otherwise approved
       by a majority of the disinterested members of the Board of Directors of
       the Company or a duly authorized committee thereof who are not managing
       directors or other executive officers of the Company or any of its
       Affiliates;

(each of the foregoing actions set forth in clauses (a), (b), (c), (d) and
(e) being referred to as a "Restricted Payment"), if at the time of such
Restricted Payment or immediately after giving effect thereto:

       (1) a Default or an Event of Default shall have occurred and be
           continuing; or

       (2) the Company is not able to incur at least $1.00 of additional
           Indebtedness (other than Permitted Indebtedness) in compliance with
           the covenant described under "Limitation on Incurrence of Additional
           Indebtedness"; or

       (3) the aggregate amount of Restricted Payments, including the proposed
           Restricted Payment, made subsequent to the Issue Date (the amount
           expended for such purpose, if other than in cash, being the fair
           market value of such property as determined reasonably and in good
           faith by the Board of Directors of the Company) shall exceed the sum
           of:

           (A) 50% of the cumulative Consolidated Net Income (or if cumulative
               Consolidated Net Income shall be a loss, minus 100% of such loss)
               of the Company earned from the beginning of the first full fiscal
               quarter following the Issue Date and through the end of the most
               recent fiscal quarter for which financial statements are
               available prior to the date such Restricted Payment occurs (the
               "Reference Date"), treating such period as a single accounting
               period; plus

           (B) 100% of the aggregate net cash proceeds received by the Company
               from any Person, other than a Subsidiary of the Company, from the
               issuance and sale subsequent to the Issue Date and on or prior to
               the Reference Date of Qualified Capital Stock of the Company or
               of other securities that have been converted into Qualified
               Capital Stock of the Company; plus

           (C) without duplication of any amounts included in clause (3)(B)
               above, 100% of the aggregate net cash proceeds of any
               contribution to the common equity capital of the

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               Company received by the Company from a holder of the Company's
               Qualified Capital Stock,

    excluding, in the case of clauses (3)(B) and (C), any net proceeds from a
    sale of Qualified Capital Stock received from a Subsidiary of the Company or
    applied in accordance with clause (2)(b) of the immediately following
    paragraph; plus

           (D) an amount equal to the lesser of:

               - the sum of the fair market value of the Capital Stock of an
                 Unrestricted Subsidiary owned by the Company and/or the
                 Restricted Subsidiaries and the aggregate amount of all
                 Indebtedness of such Unrestricted Subsidiary owed to the
                 Company and each Restricted Subsidiary on the date of
                 Revocation of such Unrestricted Subsidiary as an Unrestricted
                 Subsidiary in accordance with the covenant described under
                 "Limitation on Designations of Unrestricted Subsidiaries"; and

               - the Designation Amount treated as a Restricted Payment pursuant
                 to clause (d) above with respect to such Unrestricted
                 Subsidiary on the date of the Designation of such Subsidiary as
                 an Unrestricted Subsidiary in accordance with the covenant
                 described under "--Limitation on Designations of Unrestricted
                 Subsidiaries"; plus

           (E) in the case of the disposition of an Investment treated as a
               Restricted Payment pursuant to clause (d) above to a Person other
               than the Company or one of its Subsidiaries, an amount equal to
               the lesser of:

               - the amount of such Investment treated as a Restricted Payment
                 pursuant to clause (d) above, and

               - the amount in cash received by the Company or any Restricted
                 Subsidiary upon such disposition; plus

           (F) $15.0 million.

The provisions set forth in the immediately preceding paragraph do not prohibit:

       (1) the payment of any dividend within 60 days after the date of
           declaration of such dividend if the dividend would have been
           permitted on the date of declaration;

       (2) the redemption, repurchase, retirement, defeasance or other
           acquisition of Indebtedness of the Company or any Restricted
           Subsidiary or of Capital Stock of the Company, in each case to the
           extent constituting a Restricted Payment pursuant to clause (b) or
           (c) of the first paragraph of this covenant either:

    (a) solely in exchange for shares of Qualified Capital Stock of the Company,
       or

    (b) through the application of net proceeds of a substantially concurrent
       sale for cash (other than to a Subsidiary of the Company) of shares of
       Qualified Capital Stock of the Company or of any contribution to the
       common equity capital of the Company received by the Company from a
       holder of the Company's Qualified Capital Stock;

       (3) the defeasance, redemption, repurchase or other acquisition of
           Indebtedness of the Company or any Restricted Subsidiary with the net
           cash proceeds from an Incurrence of Permitted Refinancing
           Indebtedness therefor; and

       (4) so long as no Default or Event of Default shall have occurred and be
           continuing, repurchases of Capital Stock (or options therefor) of the
           Company from officers, directors, employees, consultants or former
           officers, directors, employees or consultants of

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           the Company (or any of its Subsidiaries) pursuant to equity ownership
           or compensation plans or stockholders agreements not to exceed
           $5.0 million in any year.

    In determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date in accordance with clause (3) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1) and (4) of this paragraph
shall be included in the calculation.

LIMITATION ON ASSET SALES

    The Company will not, and will not permit any of the Restricted Subsidiaries
to, consummate an Asset Sale unless:

       (1) the Company or the applicable Restricted Subsidiary, as the case may
           be, receives consideration at the time of the Asset Sale at least
           equal to the fair market value of the assets sold or otherwise
           disposed of as determined in good faith by the Board of Directors of
           the Company;

       (2) at least 75% of the consideration received by the Company or the
           Restricted Subsidiary, as the case may be, from the Asset Sale shall
           be in the form of cash or Cash Equivalents and is received at the
           time of such Asset Sale; and

       (3) upon the consummation of the Asset Sale, the Company may apply, or
           cause such Restricted Subsidiary to apply, the Net Cash Proceeds
           relating to such Asset Sale within 360 days of receipt thereof
           either:

    (a) to repay Senior Debt of the Company or Indebtedness of any Restricted
       Subsidiary, in each case for borrowed money or constituting a Capitalized
       Lease Obligation and permanently reduce the commitments with respect
       thereto without Refinancing;

    (b) to repay any Indebtedness of a Wholly Owned Restricted Subsidiary owed
       to any Person other than the Company or any of its Affiliates and effect
       a permanent reduction in any availability in respect of the Indebtedness
       (without refinancing the Indebtedness);

    (c) to acquire Replacement Assets; or

    (d) a combination of prepayment and investment permitted by the preceding
       clauses (3)(a), (b) and (c).

The assumption by the transferee in an Asset Sale (and release of the Company
and its Restricted Subsidiaries of further liability) of Indebtedness for
borrowed money of the Company or any Restricted Subsidiary other than
Disqualified Capital Stock or Indebtedness subordinated in right of payment to
the exchange notes shall be deemed to be cash applied in accordance with this
covenant. The receipt by the Company or the applicable Restricted Subsidiary of
marketable securities of a company subject to and then current in its
obligations as a reporting company under Section 13 or 15 under the Exchange
Act, which are resold for cash or Cash Equivalents by the Company or the
Restricted Subsidiary within 120 days of the relevant Asset Sale and applied in
accordance with this covenant, shall be deemed to be cash received pursuant to
clause (2) above.

    On the 361st day after an Asset Sale or such earlier date, if any, as the
Board of Directors of the Company or of such Restricted Subsidiary determines
not to apply the Net Cash Proceeds relating to the Asset Sale as set forth in
clause (3) of the immediately preceding paragraph (each, a "Net Proceeds Offer
Trigger Date"), the aggregate amount of Net Cash Proceeds that have not been
applied on or before the Net Proceeds Offer Trigger Date as permitted in that
clause (3) (a "Net Proceeds Offer Amount") shall be applied by the Company to
make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net
Proceeds Offer Payment Date") not less than 30 nor more than 60 days following
the Net Proceeds Offer Trigger Date, from all note holders on a pro rata basis,
that principal amount

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of exchange notes equal to the Net Proceeds Offer Amount at a price equal to
100% of the principal amount of the exchange notes to be purchased, plus accrued
and unpaid interest, if any, thereon to the date of purchase; provided that the
Company may make a concurrent offer to repurchase on a pro rata basis
Indebtedness of a Wholly Owned Restricted Subsidiary or Indebtedness of the
Company ranking PARI PASSU with the exchange notes.

    If at any time any non-cash consideration received by the Company or any
Restricted Subsidiary, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any such non-cash consideration) or Cash Equivalents,
then such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof shall be applied in accordance with
this covenant. Pending application in accordance with this covenant, Net Cash
Proceeds may be used to repay revolving credit borrowings without reducing
commitments thereunder.

    The Company may defer the Net Proceeds Offer until there is an aggregate
unutilized Net Proceeds Offer Amount equal to or in excess of $5.0 million
resulting from one or more Asset Sales or deemed Asset Sales (at which time, the
entire unutilized Net Proceeds Offer Amount, and not just the amount in excess
of $5.0 million, shall be applied as required pursuant to this paragraph).

    In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and the Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "--Merger, Consolidation
and Sale of Assets," the successor corporation shall be deemed to have sold the
properties and assets of the Company and the Restricted Subsidiaries not
transferred for purposes of this covenant and shall comply with the provisions
of this covenant with respect to such deemed sale as if it were an Asset Sale.
In addition, the fair market value (as determined in good faith by the Board of
Directors of the Company) of such properties and assets of the Company or the
Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this covenant.

    Each Net Proceeds Offer will be mailed to the record note holders as shown
on the register of note holders within 30 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
note holders may elect to tender their exchange notes in whole or in part in
integral multiples of $1,000 in exchange for cash. To the extent note holders
properly tender exchange notes in an amount exceeding the Net Proceeds Offer
Amount, exchange notes of tendering note holders will be purchased on a pro rata
basis based on the principal amount of exchange notes (and other Indebtedness
for which a concurrent offer is being made as permitted by this covenant)
tendered. A Net Proceeds Offer shall remain open for a period of 20 business
days or such longer period as may be required by law.

    The Company will comply with the requirements of Rule 14e-l under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of exchange notes pursuant to a Net Proceeds Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
"Asset Sale" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Asset Sale" provisions of the Indenture by
virtue thereof.

LIMITATION ON DISTRIBUTIONS AND OTHER PAYMENT RESTRICTIONS AFFECTING
  SUBSIDIARIES

    The Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:

    (a) pay dividends or make any other distributions on or in respect of its
       Capital Stock;

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    (b) make loans or advances or pay any Indebtedness or other obligation owed
       to the Company or any other Restricted Subsidiary; or

    (c) transfer any of its property or assets to the Company or any other
       Restricted Subsidiary,

    except for such encumbrances or restrictions existing under or by reasons
of:

       (1) applicable law or regulation or NYSE regulations;

       (2) the Indenture;

       (3) customary non-assignment provisions of any contract or any lease
           governing a leasehold interest of any Restricted Subsidiary;

       (4) any instrument governing Acquired Indebtedness, which encumbrance or
           restriction is not applicable to any Person, or the properties or
           assets of any Person, other than the Person or the properties or
           assets of the Person so acquired;

       (5) agreements existing on the Issue Date to the extent and in the manner
           such agreements are in effect on the Issue Date;

       (6) any other agreement entered into after the Issue Date that contains
           encumbrances and restrictions that are not materially more
           restrictive with respect to any Restricted Subsidiary than those in
           effect with respect to such Restricted Subsidiary pursuant to
           agreements as in effect on the Issue Date so long as any such
           restrictions expressly permit scheduled payments on the exchange
           notes;

       (7) customary restrictions on the transfer of any property or assets
           arising under a security agreement governing a Lien permitted under
           the Indenture; and

       (8) any agreement governing Refinancing Indebtedness incurred to
           Refinance the Indebtedness issued, assumed or incurred pursuant to an
           agreement referred to in clause (2), (4) or (5) above; provided,
           however, that the provisions relating to such encumbrance or
           restriction contained in any such Refinancing Indebtedness are not
           materially more restrictive than the provisions relating to such
           encumbrance or restriction contained in agreements referred to in
           such clause (2), (4) or (5) and expressly permit dividends and other
           distributions for scheduled payments on the exchange notes.

LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES

    The Company will not permit:

    (a) any Restricted Subsidiary to issue any Capital Stock other than to the
       Company or a Restricted Subsidiary;

    (b) any Person (other than the Company or a Restricted Subsidiary) to own or
       control any Capital Stock of any Restricted Subsidiary (other than
       directors' qualifying shares or as may be required by law);

    provided that clauses (a) and (b) will not prohibit:

       (1) any sale of 100% of the shares of the Capital Stock of any Restricted
           Subsidiary owned by the Company or any Restricted Subsidiary effected
           in accordance with "--Limitation on Asset Sales," or

       (2) any sale of 100% of the shares of the Capital Stock of any Restricted
           Subsidiary owned by the Company or any Restricted Subsidiary effected
           in accordance with "--Merger, Consolidation and Sale of Assets."

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LIMITATION ON LAYERED INDEBTEDNESS

    The Company will not, directly or indirectly, incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to any Senior Debt of the Company and senior in any
respect in right of payment to the exchange notes.

LIMITATION ON LIENS

    The Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind (except for Liens securing Senior Debt and
Permitted Liens) against or upon, or enter into or otherwise become liable in
respect of, a Sale and Leaseback Transaction with respect to, any property or
assets of the Company or any of the Restricted Subsidiaries, whether owned on
the Issue Date or acquired after the Issue Date, or any proceeds therefrom or
assign or otherwise convey any right to receive income or profit therefrom
unless:

       (1) in the case of Liens securing Indebtedness that is expressly
           subordinate or junior in right of payment to the exchange notes, the
           exchange notes are secured by a Lien on such property, assets or
           proceeds that is senior in priority to such Liens; and

       (2) in all other cases, the exchange notes are equally and ratably
           secured,

    except for:

           (a) Liens existing as of the Issue Date to the extent and in the
               manner such Liens are in effect on the Issue Date;

           (b) Liens on Investment Securities securing Indebtedness incurred
               pursuant to clause (b) of the definition of "Permitted
               Indebtedness" and Interest Swap Obligations and Currency
               Agreements related thereto;

           (c) Liens securing Purchase Money Indebtedness (or Refinancing
               Indebtedness in respect thereof) or Sale and Leaseback
               Transactions involving Capitalized Lease Obligations, in each
               case Incurred pursuant to clause (l) of the definition of
               "Permitted Indebtedness"; provided, however, that:

               (1) the Purchase Money Indebtedness (or Refinancing Indebtedness)
                   or Capitalized Lease Obligation shall not exceed the cost of
                   the property or assets to be acquired or which is the subject
                   of the Sale and Leaseback Transaction, and shall not be
                   secured by any property or assets of the Company or any
                   Restricted Subsidiary other than the property and assets to
                   be acquired or which is the subject of the Sale and Leaseback
                   Transaction, and

               (2) the Lien securing any Purchase Money Indebtedness shall be
                   created within 90 days of such acquisition;

           (d) Liens securing Acquired Indebtedness (and any Refinancing
               Indebtedness in respect thereof); provided that:

               (1) the Liens secured the Acquired Indebtedness at the time of
                   and prior to the Incurrence of the Acquired Indebtedness by
                   the Company or a Restricted Subsidiary and were not granted
                   in connection with, or in anticipation of, the Incurrence of
                   the Acquired Indebtedness by the Company or a Restricted
                   Subsidiary, and

               (2) the Liens do not extend to or cover any property or assets of
                   the Company or of any of the Restricted Subsidiaries other
                   than the property or assets that secured

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                   the Acquired Indebtedness prior to the time the Indebtedness
                   became Acquired Indebtedness of the Company or a Restricted
                   Subsidiary;

           (e) Liens securing the exchange notes;

           (f) Liens in favor of the Company; and

           (g) Liens securing Refinancing Indebtedness incurred to Refinance any
               Indebtedness, which Refinanced Indebtedness had been secured by a
               Lien permitted under the Indenture; PROVIDED, HOWEVER, that such
               Liens do not extend to or cover any property or assets of the
               Company or any of the Restricted Subsidiaries not securing the
               Indebtedness so Refinanced.

MERGER, CONSOLIDATION AND SALE OF ASSETS

    The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and the Restricted Subsidiaries) whether as
an entirety or substantially as an entirety to any Person unless:

    (1) either:

       (a) the Company shall be the surviving or continuing corporation; or

       (b) the Person (if other than the Company) formed by such consolidation
           or into which the Company is merged or the Person which acquires by
           sale, assignment, transfer, lease, conveyance or other disposition
           the properties and assets of the Company and the Restricted
           Subsidiaries substantially as an entirety (the "Surviving Entity"):

            (x) shall be a corporation organized and validly existing under the
                laws of the United States or any State thereof or the District
                of Columbia; and

            (y) shall expressly assume, by supplemental indenture (in form and
                substance reasonably satisfactory to the Trustee), executed and
                delivered to the Trustee, the due and punctual payment of the
                principal of, and premium, if any, and interest on all of the
                exchange notes and the performance of every covenant of the
                exchange notes, the Indenture and the Registration Rights
                Agreement on the part of the Company to be performed or
                observed;

    (2) immediately after giving effect to such transaction and the assumption
       contemplated by clause (1)(b)(y) above (including giving effect to any
       Indebtedness and Acquired Indebtedness Incurred or anticipated to be
       Incurred in connection with or in respect of such transaction), the
       Company or such Surviving Entity, as the case may be, shall be able to
       incur at least $1.00 of additional Indebtedness (other than Permitted
       Indebtedness) pursuant to the covenant described under "-Limitation on
       Incurrence of Additional Indebtedness";

    (3) immediately before and immediately after giving effect to such
       transaction and the assumption contemplated by clause (1)(b)(y) above
       (including, without limitation, giving effect to any Indebtedness and
       Acquired Indebtedness incurred or anticipated to be incurred and any Lien
       granted in connection with or in respect of the transaction), no Default
       or Event of Default shall have occurred or be continuing; and

    (4) the Company or the Surviving Entity shall have delivered to the Trustee
       an officers' certificate and an opinion of counsel, each stating that
       such consolidation, merger, sale, assignment, transfer, lease, conveyance
       or other disposition and, if a supplemental indenture is required in
       connection with such transaction, such supplemental indenture comply with
       the applicable

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       provisions of the Indenture and that all conditions precedent in the
       Indenture relating to such transaction have been satisfied.

    The above paragraph will not apply to a merger or consolidation between the
Company and a Restricted Subsidiary in which the Company is the Surviving Entity
or between one or more Restricted Subsidiaries to the extent that a Person that
is a Restricted Subsidiary immediately before and after the transaction is the
Surviving Entity, or to the sale of substantially all of the assets of a
Restricted Subsidiary to the Company or to a Person that is a Restricted
Subsidiary immediately before and after the transaction. For purposes of this
covenant, the transfer by lease, assignment, sale or otherwise, in a single
transaction or series of transactions, of all or substantially all of the
properties or assets of one or more Restricted Subsidiaries, the Capital Stock
of which constitutes all or substantially all of the properties and assets of
the Company, shall be deemed to be the transfer of all or substantially all of
the properties and assets of the Company.

    The Indenture will provide that upon any consolidation, combination or
merger or any transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, in which the Company is not the Surviving
Entity, the successor Person formed by such consolidation or into which the
Company is merged, or to which such conveyance, lease or transfer is made, shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture and the exchange notes with the same effect as
if such Surviving Entity had been named as such.

LIMITATIONS ON TRANSACTIONS WITH AFFILIATES

    (a) The Company will not, and will not permit any of the Restricted
       Subsidiaries to, directly or indirectly, enter into or permit to exist
       any transaction or series of related transactions (including, without
       limitation, the purchase, sale, lease or exchange of any property or the
       rendering of any service) with, or for the benefit of, any of its
       Affiliates (each an "Affiliate Transaction") unless the Affiliate
       Transaction is on terms that are not materially less favorable than those
       that would have reasonably been expected in a comparable transaction at
       such time on an arm's-length basis from a Person that is not an Affiliate
       of the Company or such Restricted Subsidiary. Prior to the consummation
       by the Company or any Restricted Subsidiary of any Affiliate Transactions
       (or series of related Affiliate Transactions which are similar or part of
       a common plan) involving aggregate payments or other property with a fair
       market value in excess of:

       (1) $5.0 million, the Company or such Restricted Subsidiary, as the case
           may be, shall obtain the approval of its Board of Directors
           (including a majority of the independent directors) of such
           transaction or series of related transactions evidenced by a Board
           Resolution stating that such Board of Directors (including a majority
           of the independent directors) has determined that such transaction
           complies with the foregoing provisions, and

       (2) $10.0 million, the Company or such Restricted Subsidiary, as the case
           may be, shall obtain a favorable opinion as to the fairness of such
           transaction or series of related transactions to the Company or the
           relevant Restricted Subsidiary, as the case may be, from a financial
           point of view, from an Independent Financial Advisor, and file it
           with the Trustee.

       (b) The restrictions set forth in paragraph (a) above shall not apply to:

       (1) employment, stock option, consulting, agency or other compensation or
           benefit plans, arrangements and agreements of the Company or any
           Restricted Subsidiary in accordance with the Annual Incentive Plan or
           the Equity Incentive Plan or as approved by a majority of the
           disinterested members of the Board of Directors (or a majority of the
           disinterested members of a committee thereof);

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       (2) reasonable fees and compensation paid to directors, and reasonable
           indemnity provided on behalf of officers, directors, employees,
           consultants or agents, of the Company or any Restricted Subsidiary as
           determined in good faith by the Company's Board of Directors or
           senior management;

       (3) transactions exclusively between or among the Company and any
           Restricted Subsidiaries or exclusively between or among Restricted
           Subsidiaries, provided such transactions are not otherwise prohibited
           by the Indenture; and

       (4) Restricted Payments permitted to be made pursuant to the
           "--Limitation on Restricted Payments" covenant.

LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES

    The Company may designate after the Issue Date any Subsidiary of the
Company, other than LaBranche or a Person holding Capital Stock of LaBranche, as
an "Unrestricted Subsidiary" under the Indenture (a "Designation") only if:

    (a) no Default shall have occurred and be continuing at the time of or after
       giving effect to such Designation; and

    (b) the Company would be permitted under the Indenture to make an Investment
       at the time of Designation assuming the effectiveness of the Designation
       in an amount (the "Designation Amount") equal to the sum of:

       (1) the fair market value of the Capital Stock of the Subsidiary owned by
           the Company and/or any of the Restricted Subsidiaries on such date,
           and

       (2) the aggregate amount of Indebtedness of the Subsidiary owed to the
           Company and the Restricted Subsidiaries on that date; and

    (c) the Company would be permitted to incur $1.00 of additional Indebtedness
       (other than Permitted Indebtedness) pursuant to the covenant described
       under "--Limitation on Incurrence of Additional Indebtedness" at the time
       of Designation assuming the effectiveness of the Designation.

    In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment in the Designation Amount
pursuant to the covenant described under "--Limitation on Restricted Payments"
for all purposes of the Indenture. The Indenture will further provide that the
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time:

       (1) provide direct or indirect credit support for or a guarantee of any
           Indebtedness of any Unrestricted Subsidiary (including any
           undertaking, agreement or instrument evidencing such Indebtedness),

       (2) be directly or indirectly liable for any Indebtedness of any
           Unrestricted Subsidiary or

       (3) be directly or indirectly liable for any Indebtedness that provides
           that the holder thereof may (upon notice, lapse of time or both)
           declare a default thereon or cause the payment thereof to be
           accelerated or payable prior to its final scheduled maturity upon the
           occurrence of a default with respect to any Indebtedness of any
           Unrestricted Subsidiary (including any right to take enforcement
           action against the Unrestricted Subsidiary).

    The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary ("Revocation"), whereupon such Subsidiary shall then constitute a
Restricted Subsidiary, if:

    (a) no Default shall have occurred and be continuing at the time and after
       giving effect to such Revocation; and

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    (b) all Liens and Indebtedness of such Unrestricted Subsidiaries outstanding
       immediately following such Revocation would, if incurred at such time,
       have been permitted to be incurred for all purposes of the Indenture.

    All Designations and Revocations must be evidenced by an officers'
certificate of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.

REPORTS TO NOTE HOLDERS

    The Indenture will provide that the Company will deliver to the Trustee
within 15 days after the filing of the same with the Commission, copies of the
quarterly and annual reports and of the information, documents and other
reports, if any, that the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Company may not be subject to the
reporting requirements of Sections 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide the Trustee
and note holders with such annual and quarterly reports and such information,
document and other reports specified in Section 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of TIA 314(a).

EVENTS OF DEFAULT

    The following events are defined in the Indenture as "Events of Default":

    (a) the failure to pay interest (including any additional interest payable
       under the Registration Rights Agreement) on any exchange notes when the
       same becomes due and payable and the default continues for a period of
       30 days, whether or not such payment shall be prohibited by the
       subordination provision of the Indenture;

    (b) the failure to pay the principal on any exchange notes, when such
       principal becomes due and payable, at maturity or otherwise (including
       the failure to make a payment to purchase exchange notes tendered
       pursuant to a Change of Control Offer or a Net Proceeds Offer), whether
       or not such payment shall be prohibited by the subordination provision of
       the Indenture;

    (c) a default in the observance or performance of the covenant described
       under "--Certain Covenants--Merger, Consolidation and Sale of Assets";

    (d) a default in the observance or performance of any other covenant or
       agreement contained in the Indenture, which default continues for a
       period of 45 days after the Company receives written notice specifying
       the default from the Trustee or the holders of at least 25% of the
       outstanding principal amount of the exchange notes;

    (e) a default under any mortgage, indenture or instrument under which there
       may be issued or by which there may be secured or evidenced any
       Indebtedness of the Company or of any Restricted Subsidiary (or the
       payment of which is guaranteed by the Company or any Restricted
       Subsidiary), whether such Indebtedness now exists or is created after the
       Issue Date, which default:

       (1) is caused by failure to pay principal of such Indebtedness after any
           applicable grace period provided in such Indebtedness on the date of
           such default (a "payment default") or

       (2) results in the acceleration of such Indebtedness prior to its express
           maturity,

       and the aggregate principal amount of any Indebtedness to which
       clause (1) or (2) applies at the relevant time, exceeds $10.0 million;

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<PAGE>
    (f) one or more judgments in an aggregate amount in excess of $10.0 million
       shall have been rendered against the Company or any of the Restricted
       Subsidiaries and such judgments remain undischarged, unpaid or unstayed
       for a period of 45 days after such judgment or judgments become final and
       nonappealable;

    (g) certain events of bankruptcy affecting the Company or any of the
       Significant Subsidiaries (or any group of Subsidiaries which, taken
       together, would constitute a Significant Subsidiary) pursuant to SIPA or
       bankruptcy laws;

    (h) LaBranche is not a specialist broker in good standing with the NYSE;

    (i) the Commission revokes the registration of LaBranche as a broker-dealer
       under the Exchange Act or LaBranche fails to maintain such registration;
       or

    (j) the Examining Authority (as defined in Rule 15c3-1) for the Company
       shall suspend (and not reinstate within 10 days) or revoke LaBranche's
       status as a member organization thereof.

    If an Event of Default (other than an Event of Default specified in
clause (g) above) shall occur and be continuing, the Trustee or the holders of
at least 25% in principal amount of outstanding exchange notes may declare the
principal of, and accrued interest on, all the exchange notes to be due and
payable by notice in writing to the Company and (if given by the note holders)
the Trustee specifying the Event of Default and that it is a "notice of
acceleration," and the same shall become immediately due and payable. If an
Event of Default specified in clause (g) above occurs and is continuing, then
all unpaid principal of, and accrued and unpaid interest on, all of the
outstanding exchange notes shall become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any note
holder.

    The Indenture will provide that, at any time after a declaration of
acceleration with respect to the exchange notes as described in the preceding
paragraph, the holders of a majority in principal amount of the then outstanding
exchange notes may rescind and cancel such declaration and its consequences:

       (1) if the rescission would not conflict with any judgment or decree;

       (2) if all existing Events of Default have been cured or waived except
           nonpayment of principal or interest that has become due solely
           because of the acceleration;

       (3) to the extent payment of such interest is lawful, if interest on
           overdue installments of interest and overdue principal, which has
           become due otherwise than by such declaration of acceleration, has
           been paid;

       (4) if the Company has paid the Trustee its reasonable compensation and
           reimbursed the Trustee for its expenses, disbursements and advances;
           and

       (5) in the event of the cure or waiver of an Event of Default of the type
           described in clause (g) of the description above of Events of
           Default, the Trustee shall have received an officers' certificate of
           the Company and an opinion of counsel that such Event of Default has
           been cured or waived.

    No such rescission shall affect any subsequent Default or impair any right
consequent thereto.

    The holders of a majority in principal amount of the then outstanding
exchange notes may waive any existing Default or Event of Default under the
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any exchange notes.

    Note holders may not enforce the Indenture or the exchange notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the note holders, unless such note holders
have offered to

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the Trustee reasonable indemnity. Subject to all provisions of the Indenture and
applicable law, the holders of a majority in aggregate principal amount of the
then outstanding exchange notes have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.

    The Company is required to provide an officers' certificate to the Trustee
promptly upon the Company obtaining knowledge of any Default or Event of Default
(provided that the Company shall provide such certification at least annually
whether or not it knows of any Default or Event of Default) that has occurred
and, if applicable, describe such Default or Event of Default and the status
thereof.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

    The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding exchange notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
exchange notes, except for:

       (1) the rights of note holders to receive payments in respect of the
           principal of, premium, if any, and interest on the exchange notes
           when such payments are due solely from the trust described below;

       (2) the Company's obligations with respect to the exchange notes
           concerning issuing temporary exchange notes, registration of exchange
           notes, mutilated, destroyed, lost or stolen exchange notes and the
           maintenance of an office or agency for payments;

       (3) the rights, powers, trust, duties and immunities of the Trustee and
           the Company's obligations in connection therewith; and

       (4) the Legal Defeasance provisions of the Indenture.

    In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission or failure to comply with such obligations shall not constitute a
Default or Event of Default with respect to the exchange notes. In the event
Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, reorganization and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the exchange notes.

    In order to exercise Legal Defeasance or Covenant Defeasance:

    (a) the Company must irrevocably deposit with the Trustee, in trust, for the
       benefit of the note holders cash in U.S. dollars, non-callable U.S.
       government obligations, or a combination thereof, in such amounts as will
       be sufficient, in the opinion of a nationally recognized firm of
       independent public accounts, to pay the principal of, premium, if any,
       and interest on the exchange notes on the stated date of payment thereof;

    (b) in the case of Legal Defeasance, the company shall have delivered to the
       Trustee an opinion of counsel in the United States reasonably acceptable
       to the Trustee confirming that:

       (1) the Company has received from, or there has been published by, the
           Internal Revenue Service a ruling; or

       (2) since the date of the Indenture,

there has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel shall confirm
that, the note holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to

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federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;

    (c) in the case of Covenant Defeasance, the Company shall have delivered to
       the Trustee an opinion of counsel in the United States reasonably
       acceptable to the Trustee confirming that the note holders will not
       recognize income, gain or loss for federal income tax purposes as a
       result of such Covenant Defeasance and will be subject to federal income
       tax on the same amounts, in the same manner and at the same times as
       would have been the case if such Covenant Defeasance had not occurred;

    (d) no Default or Event of Default shall have occurred and be continuing on
       the date of such deposit or insofar as Events of Default from bankruptcy
       or insolvency events are concerned, at any time in the period ending on
       the 91st day after the date of deposit;

    (e) such Legal Defeasance or Covenant Defeasance shall not result in a
       breach or violation of, or constitute a default under any material
       agreement or instrument to which the Company or any of its Subsidiaries
       is a party or by which the Company or any of its Subsidiaries is bound;

    (f) the Company shall have delivered to the Trustee an officers' certificate
       stating that the deposit was not made by the Company with the intent of
       preferring the note holders over any other creditors of the Company or
       with the intent of defeating, hindering, delaying or defrauding other
       creditors of the Company or others;

    (g) the Company shall have delivered to the Trustee an officers' certificate
       and an opinion of counsel, each stating that all conditions precedent
       provided for or relating to the Legal Defeasance or the Covenant
       Defeasance have been complied with;

    (h) the Company shall have delivered to the Trustee an opinion of counsel to
       the effect that after the 91st day following the deposit, the trust funds
       will not be subject to the effect of any applicable bankruptcy,
       insolvency, reorganization or similar laws affecting creditors' rights
       generally; and

    (i) certain other customary conditions precedent are satisfied.

SATISFACTION AND DISCHARGE

    The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
exchange notes, as expressly provided for in the Indenture) as to all
outstanding exchange notes when:

    (a) either:

       (1) all the exchange notes theretofor authenticated and delivered (except
           lost, stolen or destroyed exchange notes which have been replaced or
           paid and exchange notes for which payment money has theretofor been
           deposited in trust or segregated and held in trust by the Company and
           thereafter repaid to the Company or discharged from such trust) have
           been delivered to the Trustee for cancellation; or

       (2) all exchange notes not theretofor delivered to the Trustee for
           cancellation have become due and payable and the Company has
           irrevocably deposited or caused to be deposited with the Trustee
           funds in an amount sufficient to pay and discharge the entire
           Indebtedness on the exchange notes not theretofor delivered to the
           Trustee for cancellation, for principal of, and premium, if any, and
           interest on, the exchange notes to the date of deposit together with
           irrevocable instructions from the Company directing the Trustee to
           apply such funds to the payment thereof at maturity;

    (b) the Company has paid all other sums payable under the Indenture by the
       Company; and

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    (c) the Company has delivered to the Trustee an officers' certificate and an
       opinion of counsel stating that all conditions precedent under the
       Indenture relating to the satisfaction and discharge of the Indenture
       have been complied with.

MODIFICATION OF THE INDENTURE

    From time to time, the Company and the Trustee, without the consent of the
note holders, may amend the Indenture for certain specified purposes, including
curing ambiguities, doubts or inconsistencies, so long as such change does not,
in the opinion of the Trustee, adversely affect the rights of any of the note
holders in any material respect. In formulating its opinion on such matters, the
Trustee will be entitled to rely on such evidence as it deems appropriate,
including, without limitation, solely on an opinion of counsel. Other
modifications and amendments of the Indenture may be made with the consent of
the holders of a majority in principal amount of the then outstanding exchange
notes issued under the Indenture, except that, without the consent of each note
holder affected thereby, no amendment may:

    (a) reduce the amount of exchange notes whose holders must consent to an
       amendment;

    (b) reduce the rate of or change or have the effect of changing the time for
       payment of interest, including defaulted interest, on any exchange notes;

    (c) reduce the principal of or change or have the effect of changing the
       Maturity Date of any exchange notes, or change the date on which any
       exchange notes may be subject to repurchase, or reduce the repurchase
       price therefor;

    (d) make any exchange notes payable in money other than that stated in the
       exchange notes;

    (e) make any change in provisions of the Indenture protecting the right of
       each note holder to receive payment of principal of and interest on such
       exchange notes on or after the stated due date thereof or to bring suit
       to enforce such payment, or permitting holders of a majority in principal
       amount of the then outstanding exchange notes to waive Defaults or Events
       of Default;

    (f) amend, change or modify in any material respect the obligation of the
       Company to make and consummate a Change of Control Offer after the
       occurrence of a Change of Control or make and consummate a Net Proceeds
       Offer with respect to any Asset Sale that has been consummated or modify
       any of the provisions or definitions with respect thereto; or

    (g) modify or change any provision of the Indenture or the related
       definitions affecting the ranking of the exchange notes in a manner which
       adversely affects the note holders.

GOVERNING LAW

    The Indenture will provide that it and the exchange notes will be governed
by, and construed in accordance with, the laws of the State of New York but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the law of another jurisdiction would be required
thereby.

THE TRUSTEE

    The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the Trustee
will exercise such rights and powers vested in it by the Indenture, and use the
same degree of care and skill in its exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.

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    The Indenture and the provisions of the Trust Indenture Act contain certain
limitations on the rights of the Trustee, should it become a creditor of the
Company, to obtain payments of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise. Subject
to the Trust Indenture Act, the Trustee will be permitted to engage in other
transactions; provided that if the Trustee acquires any conflicting interest as
described in the Trust Indenture Act, it must eliminate such conflict or resign.

NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS OR
  EMPLOYEES

    The Indenture provides that no recourse for the payment of the principal of,
premium, if any, or interest on any of the exchange notes or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture, or in any of
the exchange notes or because of the creation of any Indebtedness represented
thereby shall be had against any Person solely as a result of their capacity as
incorporator, stockholder, officer, director, employee or controlling person of
the Company or of any successor Person thereof. Each note holder, by accepting
the exchange notes, waives and releases all such liability.

CERTAIN DEFINITIONS

    Set forth below is a summary of certain of the defined terms used in the
Indenture. The Indenture includes the full definition of all these terms, as
well as any other terms used below for which no definition is provided.

    "Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of the Restricted
Subsidiaries or assumed by the Company or any Restricted Subsidiary in
connection with the acquisition of assets from such Person and in each case
whether or not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, merger or consolidation.

    "Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.

    "Affiliate Transaction" has the meaning set forth under "--Certain
Covenants--Limitation on Transactions with Affiliates."

    "Annual Incentive Plan" means the LaBranche & Co Inc. Annual Incentive Plan
as in effect on the Issue Date or as amended from time to time as approved by a
majority of the disinterested members of the Board of Directors (or a majority
of the disinterested members of a committee thereof).

    "Asset Acquisition" means:

    (a) an Investment by the Company or any Restricted Subsidiary in any other
       Person pursuant to which such Person shall become a Restricted Subsidiary
       or shall be merged with or into the Company or any Restricted Subsidiary;
       or

    (b) the acquisition by the Company or any Restricted Subsidiary of the
       assets of any Person (other than a Restricted Subsidiary) that constitute
       all or substantially all of the assets of such Person or comprises any
       division or line of business of such Person or any other properties or
       assets of such Person other than in the ordinary course of business.

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    "Asset Sale" means any direct or indirect sale, issuance, conveyance, lease,
assignment or other transfer (other than the granting of a Lien in accordance
with the Indenture) for value by the Company or any of the Restricted
Subsidiaries (including any Sale and Leaseback Transaction) to any Person other
than the Company or a Restricted Subsidiary of:

    (a) any Capital Stock of any Restricted Subsidiary; or

    (b) any other property or assets (excluding Capital Stock) of the Company or
       any Restricted Subsidiary;

    provided, however, that "Asset Sale" shall not include:

       (1) a transaction or series of related transactions for which the Company
           or the Restricted Subsidiaries receive aggregate consideration of
           less than $2.0 million;

       (2) the sale, lease, conveyance, disposition or other transfer of all or
           substantially all of the assets of the Company as permitted by the
           covenant described under "--Certain Covenants--Merger, Consolidation
           and Sale of Assets";

       (3) any Restricted Payment made in accordance with the covenant described
           under "--Certain Covenants--Limitation on Restricted Payments";

       (4) the sale or lending of Investment Securities in the ordinary course
           of business of the Company and its Restricted Subsidiaries;

       (5) Sale and Leaseback Transactions involving up to $15.0 million in the
           aggregate after the Issue Date; or

       (6) the disposition of obsolete or worn-out equipment or entering into
           operating leases for real property or equipment or subleases in
           respect thereof, in each case in the ordinary course of business.

    "Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.

    "Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the secretary or an assistant secretary of such Person to have been
duly adopted by the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to the Trustee.

    "Capital Expenditures" means, for any period, the aggregate of all
expenditures made by the Company and its Restricted Subsidiaries during such
period on a consolidated basis which, as determined in accordance with GAAP, are
required to be included in property, plant or equipment or a similar fixed
asset.

    "Capital Stock" means:

    (a) with respect to any Person that is a corporation, any and all shares,
       interests, participations or other equivalents (however designated and
       whether or not voting) of corporate stock, including each class of Common
       Stock and Preferred Stock of such Person; and

    (b) with respect to any Person that is not a corporation, any and all
       partnership, limited liability company interests or other equity
       interests of such Person.

    "Cash Equivalents" means:

    (a) marketable direct obligations issued by, or unconditionally guaranteed
       by, the United States Government or issued by any agency thereof and
       backed by the full faith and credit of the United States, in each case
       maturing within one year from the date of acquisition thereof;

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    (b) marketable direct obligations issued by any state of the United States
       of America or any political subdivision of any such state or any public
       instrumentality thereof maturing within twelve months from the date of
       acquisition thereof and, at the time of acquisition, having one of the
       two highest ratings obtainable from either Standard & Poor's Corporation
       ("S&P") or Moody's Investors Service, Inc. ("Moody's");

    (c) commercial paper maturing no more than one year from the date of
       creation thereof and, at the time of acquisition, having a rating of at
       least A-1 from S&P or at least P-l from Moody's;

    (d) certificates of deposit or bankers' acceptances maturing within one year
       from the date of acquisition thereof issued by any bank organized under
       the laws of the United States of America or any state thereof or the
       District of Columbia or any U.S. branch of a foreign bank having at the
       date of acquisition thereof combined capital and surplus of not less than
       $500,000,000;

    (e) repurchase obligations with a term of not more than seven days for
       underlying securities of the types described in clause (a) entered into
       with any bank meeting the qualifications specified in clause (d) above;
       and

    (f) investments in money market funds that invest substantially all their
       assets in securities of the types described in clauses (a) through
       (e) above.

    "Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.

    "Change of Control" means the occurrence of one or more of the following
events:

    (a) any sale, lease, exchange or other transfer (in one transaction or a
       series of related transactions) of all or substantially all of the assets
       of the Company (determined on a consolidated basis) to any Person or
       group of related Persons for purposes of Section 13(d) of the Exchange
       Act (a "Group"), (whether or not otherwise in compliance with the
       provisions of the Indenture);

    (b) the approval by the holders of Capital Stock of the Company of any plan
       or proposal for the liquidation or dissolution of the Company (whether or
       not otherwise in compliance with the provisions of the Indenture);

    (c) any Person or Group, other than the Permitted Holders, becomes the
       beneficial owner (as defined by Section 13(d) of the Exchange Act)
       directly or indirectly, of more than 35% of the total voting power of the
       Capital Stock of the Company, and the Permitted Holders beneficially own,
       directly or indirectly in the aggregate, a lesser percentage of the total
       voting power of the Capital Stock of the Company than such Person or
       Group and do not have the right or ability by voting power, contract, or
       otherwise to elect or designate for election a majority of the Board of
       Directors (or any analogous governing body) of the Company; or

    (d) the replacement of a majority of the Board of Directors of the Company
       over a consecutive 24-month period from the directors who constituted the
       Board of Directors of the Company at the beginning of such period, and
       such replacement shall not have been approved by a vote of at least a
       majority of the Board of Directors of the Company, then still in office
       who either were members of such Board of Directors at the beginning of
       such period or whose election as a member of such Board of Directors was
       previously so approved.

    "Change of Control Offer" has the meaning set forth under "--Change of
Control."

    "Change of Control Payment Date" has the meaning set forth under "--Change
of Control."

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    "Commission" means the Securities and Exchange Commission, as from time to
time constituted, or if at any time after the execution of the Indenture such
Commission is not existing and performing the applicable duties now assigned to
it, then the body or bodies performing such duties at such time.

    "Commission Net Capital" means, at any time, the "net capital" of LaBranche
computed in accordance with Rule 15c3-1.

    "Commission Required Net Capital" means, at any time, the minimum amount to
which Commission Net Capital must be equal pursuant to Rule 15c3-1 in order to
remain in compliance with all provisions thereof.

    "Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

    "Consolidated EBITDA" means, with respect to the Company, for any period,
the sum (without duplication) of:

    (a) Consolidated Net Income; and

    (b) to the extent Consolidated Net Income has been reduced thereby,

       (1) all income taxes of the Company and the Restricted Subsidiaries paid
           or accrued in accordance with GAAP for such period (other than income
           taxes attributable to extraordinary or nonrecurring gains or taxes
           attributable to Asset Sales outside the ordinary course of business);

       (2) Consolidated Interest Expense; and

       (3) Consolidated Non-cash Charges,

    less any non-cash items increasing Consolidated Net Income for such period,
all as determined on a consolidated basis for the Company and the Restricted
Subsidiaries in accordance with GAAP.

    "Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company, the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") of the Company for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:

    (a) the Incurrence or repayment of any Indebtedness of the Company or any of
       the Restricted Subsidiaries (and the application of the proceeds thereof)
       giving rise to the need to make such calculation and any Incurrence or
       repayment of other Indebtedness (and the application of the proceeds
       thereof), other than the Incurrence or repayment of Indebtedness in the
       ordinary course of business for working capital purposes pursuant to
       working capital facilities, occurring during the Four Quarter Period or
       at any time subsequent to the last day of the Four Quarter Period and on
       or prior to the Transaction Date, as if such Incurrence or repayment, as
       the case may be (and the application of the proceeds thereof), occurred
       on the first day of the Four Quarter Period; and

    (b) any Asset Sales, any disposition of assets excluded from the definition
       of Asset Sale pursuant to clause (3) thereof or any Asset Acquisitions
       (including, without limitation, any Asset Acquisition giving rise to the
       need to make such calculation as a result of the Company or one of the
       Restricted Subsidiaries (including any Person that becomes a Restricted
       Subsidiary

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       as a result of the Asset Acquisition) incurring, assuming or otherwise
       being liable for Acquired Indebtedness and also including any
       Consolidated EBITDA attributable to the assets which are the subject of
       the Asset Acquisition or Asset Sale or other disposition during the Four
       Quarter Period, provided that such Consolidated EBITDA shall be included
       only to the extent includable pursuant to the definition of "Consolidated
       Net Income") occurring during the Four Quarter Period or at any time
       subsequent to the last day of the Four Quarter Period and on or prior to
       the Transaction Date as if such Asset Sale, other disposition or Asset
       Acquisition (including the Incurrence, assumption or liability for any
       such Acquired Indebtedness) occurred on the first day of the Four Quarter
       Period. If the Company or any of the Restricted Subsidiaries directly or
       indirectly guarantees Indebtedness of a third Person, the preceding
       sentence shall give effect to the Incurrence of such guaranteed
       Indebtedness as if the Company or any Restricted Subsidiary had directly
       incurred or otherwise assumed such guaranteed Indebtedness.

    Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of the "Consolidated Fixed
Charge Coverage Ratio":

       (1) interest on outstanding Indebtedness determined on a fluctuating
           basis as of the Transaction Date and which will continue to be so
           determined thereafter shall be deemed to have accrued at a fixed rate
           per annum equal to the rate of interest on such Indebtedness in
           effect on the Transaction Date;

       (2) if interest on any Indebtedness actually incurred on the Transaction
           Date may optionally be determined at an interest rate based upon a
           factor of a prime or similar rate, a eurocurrency interbank offered
           rate, or other rates, then the interest rate in effect on the
           Transaction Date will be deemed to have been in effect during the
           Four Quarter Period; and

       (3) notwithstanding clause (1) above, interest on Indebtedness determined
           on a fluctuating basis, to the extent such interest is covered by
           agreements relating to Interest Swap Obligations, shall be deemed to
           accrue at the rate per annum resulting after giving effect to the
           operation of such agreements.

    "Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of:

    (a) Consolidated Interest Expense; plus

    (b) the product of:

       (1) the amount of all dividend payments on any series of Preferred Stock
           of the Company (other than dividends paid in Qualified Capital Stock)
           paid, accrued or scheduled to be paid or accrued during such period
           times; and

       (2) a fraction, the numerator of which is one and the denominator of
           which is one minus the then current effective consolidated federal,
           state and local income tax rate of the Company, expressed as a
           decimal.

    "Consolidated Interest Expense" means, with respect to the Company for any
period, the sum of, without duplication:

    (a) the aggregate of the interest expense of the Company and the Restricted
       Subsidiaries for such period determined on a consolidated basis in
       accordance with GAAP, including without limitation, whether or not
       constituting interest expense in accordance with GAAP:

       (1) any amortization of debt discount,

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<PAGE>
       (2) the net costs under Interest Swap Obligations,

       (3) all capitalized interest, and

       (4) the interest portion of any deferred payment obligation; and

    (b) the interest component of Capitalized Lease Obligations paid, accrued
       and/or scheduled to be paid or accrued by the Company and the Restricted
       Subsidiaries during such period as determined on a consolidated basis in
       accordance with GAAP.

    "Consolidated Net Income" means, with respect to the Company, for any
period, the aggregate net income (or loss) of the Company and the Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom:

    (a) after-tax gains (but not losses) from Asset Sales or reserves relating
       thereto;

    (b) extraordinary gains or losses;

    (c) for purposes of calculating Consolidated Net Income pursuant to
       clause (3) of the first paragraph of "--Certain Covenants--Limitation on
       Restricted Payments" only, the net income of any Person acquired in a
       "pooling of interests" transaction accrued prior to the date it becomes a
       Restricted Subsidiary or is merged or consolidated with the Company or
       any Restricted Subsidiary;

    (d) the net income (but not loss) of any Restricted Subsidiary to the extent
       that the declaration of dividends or similar distributions by that
       Restricted Subsidiary of that income is not at the relevant time
       permitted by a contract, operation of law or otherwise;

    (e) any increase (but not decrease) in net income attributable to minority
       interests in Restricted Subsidiaries;

    (f) the net income of any Person, other than a Restricted Subsidiary, except
       to the extent of cash dividends or distributions paid to the Company or
       to a Restricted Subsidiary by such Person;

    (g) any restoration to income of any contingency reserve, except to the
       extent that provision for such reserve was made out of Consolidated Net
       Income accrued at any time following the Issue Date;

    (h) in the case of a successor to the Company by consolidation or merger or
       as a transferee of the Company's assets, for purposes of calculating
       Consolidated Net Income pursuant to clause (3) of the first paragraph of
       "--Certain Covenants--Limitation on Restricted Payments" only, any
       earnings of the successor corporation prior to such consolidation, merger
       or transfer of assets; and

    (i) the cumulative effect of changes in accounting principles.

    "Consolidated Non-cash Charges" means, with respect to the Company, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
the Company and the Restricted Subsidiaries reducing Consolidated Net Income of
the Company for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charge that requires an accrual of or a reserve
for cash charges for any future period).

    "Covenant Defeasance" has the meaning set forth under "--Legal Defeasance
and Covenant Defeasance."

    "Credit Agreement" means the Credit Agreement between LaBranche and The Bank
of New York, dated June 26, 1998, as amended.

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    "Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.

    "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.

    "Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice of both would be, an Event of Default.

    "Designated Senior Debt" means (1) Obligations under the Credit Agreement
and (2) any other Senior Debt permitted under the Indenture the principal amount
of which is $25.0 million or more and that has been designated by the Company as
"Designated Senior Debt."

    "Designation" has the meaning set forth under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries."

    "Designation Amount" has the meaning set forth under "--Certain
Covenants--Limitations on Designations of Unrestricted Subsidiaries."

    "Disqualified Capital Stock" means that portion of any Capital Stock that,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is mandatorily exchangeable for Indebtedness, or is redeemable, or exchangeable
for Indebtedness, at the sole option of the holder thereof on or prior to the
91st day after the final maturity date of the exchange notes.

    "Equity Incentive Plan" means the LaBranche & Co Inc. Equity Incentive Plan
as in effect on the Issue Date or as amended from time to time as approved by a
majority of the disinterested members of the Board of Directors (or a majority
of the disinterested members of a committee thereof).

    "Equity Interests" means Capital Stock and all warrants, options or other
right to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

    "Excess Cash Flow" means, with respect to the Company, for any fiscal year,
forty percent (40%) of the amount by which Consolidated EBITDA exceeds the sum
of:

       (1) Consolidated Interest Expense, plus

       (2) all taxes of the Company and the Restricted Subsidiaries paid or
           accrued in accordance with GAAP for such fiscal year, plus

       (3) the amount of any increases in Commission Required Net Capital, NYSE
           Required Net Capital and/or NYSE Required Regulatory Capital funded
           by the Company with retained earnings in such fiscal year, plus

       (4) Capital Expenditures of the Company and its Restricted Subsidiaries
           in such fiscal year, plus

       (5) all cash amounts (excluding any cash generated or otherwise derived
           from any debt or equity financing or refinancing transaction) paid or
           committed to be paid (as evidenced by an executed definitive
           agreement with a third party seller) by the Company or any of its
           Restricted Subsidiaries in connection with an Asset Acquisition
           relating to a NYSE

                                       97
<PAGE>
           specialist in such fiscal year; provided, however, that the aggregate
           amount of such cash amounts shall not exceed $40.0 million, plus

       (6) all cash amounts (excluding any cash generated or otherwise derived
           from any debt or equity financing or refinancing transaction) paid in
           such fiscal year by the Company or any of its Restricted Subsidiaries
           in respect of principal made on the scheduled maturity (including any
           mandatory redemption) of any (i) Indebtedness existing on the Issue
           Date, (ii) Senior Debt or (iii) Indebtedness the documentation for
           which expressly provides that (a) it is on parity with Senior Debt or
           (b) senior in right of payment to the exchange notes, other than the
           Indebtedness under the $20.0 million Note Purchase Agreement,

and, to the extent applicable, "Excess Cash Flow" shall also include any amounts
excluded from an Excess Cash Flow Offer in previous fiscal years pursuant to the
second paragraph of "--Excess Cash Flow Offer."

    "Excess Cash Flow Offer" has the meaning set forth under "--Excess Cash Flow
Offer."

    "Excess Cash Flow Payment Date" has the meaning set forth under "--Excess
Cash Flow Offer."

    "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto, and the rules and regulations of the
Commission promulgated thereunder.

    "Event of Default" has the meaning set forth under "--Events of Default."

    "Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Trustee.

    "Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio."

    "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accounts and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
of the United States, which are in effect as of the Issue Date.

    "note holders" has the meaning set forth under "--Principal, Maturity and
Interest."

    "Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable, contingently or
otherwise, in respect of such Indebtedness or other obligation on the balance
sheet of such Person. Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Restricted
Subsidiary (or is merged into or consolidated with the Company or any Restricted
Subsidiary), whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Acquired Person becoming a
Restricted Subsidiary (or being merged into or consolidated with the Company or
any Restricted Subsidiary), shall be deemed Incurred at the time any such
Acquired Person becomes a Restricted Subsidiary or merges into or consolidates
with the Company or any Restricted Subsidiary.

    "Indebtedness" means, with respect to any Person, without duplication:

    (a) all Obligations of such Person for borrowed money;

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    (b) all Obligations of such Person evidenced by bonds, debentures, notes or
       other similar instruments;

    (c) all Capitalized Lease Obligations of such Person;

    (d) all Obligations of such Person issued or assumed as the deferred
       purchase price of property, all conditional sale obligations and all
       Obligations under any title retention agreement (but excluding trade
       accounts payable and other accrued liabilities arising in the ordinary
       course of business that are not overdue by 90 days or more or are being
       contested in good faith by appropriate proceedings promptly instituted
       and diligently conducted);

    (e) all letters of credit, banker's acceptances or similar credit
       transactions (including any Obligations for reimbursement in respect
       thereof);

    (f) guarantees and other contingent obligations in respect of Indebtedness
       of any other Person referred to in clauses (a) through (e) above and
       clause (h) below;

    (g) all Obligations of any other Person of the type referred to in clauses
       (a) through (e) that are secured by any Lien on any property or asset of
       such Person, the amount of such Obligation being deemed to be the lesser
       of the fair market value of such property or asset or the amount of the
       Obligation so secured;

    (h) all Obligations under Currency Agreements and Interest Swap Obligations
       of such Person; and

    (i) all Disqualified Capital Stock issued by such Person with the amount of
       Indebtedness represented by such Disqualified Capital Stock being equal
       to the greater of its voluntary or involuntary liquidation preference and
       its maximum fixed repurchase price, but excluding accrued dividends, if
       any.

    Notwithstanding anything to the contrary herein, "Indebtedness" shall not
include any overnight borrowings by the Company or any Restricted Subsidiary
Incurred in connection with the lending of Investment Securities which does not
constitute indebtedness under GAAP.

    For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock.

    "Independent Financial Advisor" means a qualified accounting, appraisal or
investment banking firm of national standing that does not, and whose directors,
officers and employees and Affiliates do not, have a direct or indirect
financial interest in the Company.

    "Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.

    "Investment" means, with respect to any Person:

    (a) any direct or indirect advance, loan or other extension of credit
       (including, without limitation, a guarantee) or capital contribution to
       any other Person (by means of any transfer of cash or

                                       99
<PAGE>
       other property to others or any payment for property or services for the
       account or use of others); or

    (b) any purchase or acquisition by such Person of any Capital Stock (or
       warrants, rights or options to purchase Capital Stock), bonds, notes,
       debentures or other securities or evidences of Indebtedness issued by,
       any other Person.

    "Investment" shall exclude extensions of trade credit by the Company and the
Restricted Subsidiaries on commercially reasonable terms in accordance with
normal trade practices of the Company or such Restricted Subsidiary, as the case
may be. If the Company or any Restricted Subsidiary sells or otherwise disposes
of any Capital Stock of any Restricted Subsidiary (the "Referent Subsidiary")
such that, after giving effect to any such sale or disposition the Referent
Subsidiary shall cease to be a Restricted Subsidiary, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Capital Stock of the Referent Subsidiary
not sold or disposed of.

    "Investment Securities" means marketable securities of a Person (other than
an Affiliate or joint venture of the Company or any Restricted Subsidiary)
acquired by the Company or any of its Restricted Subsidiaries in the ordinary
course of its specialist or related businesses.

    "Issue Date" means the first date of issuance of the initial notes.

    "LaBranche" means LaBranche & Co., a New York limited partnership, or any
other Wholly-Owned Subsidiary registered as a broker-dealer under the Exchange
Act which succeeds to the business of LaBranche & Co.

    "Legal Defeasance" has the meaning set forth under "--Legal Defeasance and
Covenant Defeasance."

    "Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).

    "Maturity Date" has the meaning set forth under "--Principal, Maturity and
Interest."

    "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest), received
by the Company or any of the Restricted Subsidiaries from such Asset Sale net
of:

    (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale
       (including, without limitation, legal, accounting and investment banking
       fees, sales commissions and relocation expenses);

    (b) taxes paid or payable after taking into account any reduction in
       consolidated tax liability due to available tax credits or deductions and
       any tax sharing arrangements;

    (c) repayments of Indebtedness secured by the property or assets subject to
       such Asset Sale that is required to be repaid in connection with such
       Asset Sale; and

    (d) appropriate amounts to be determined by the Company or any Restricted
       Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
       against any liabilities associated with such Asset Sale and retained by
       the Company or any Restricted Subsidiary, as the case may be, after such
       Asset Sale, including, without limitation, pension and other
       post-employment benefit liabilities, liabilities related to environmental
       matters and liabilities under any indemnification obligations associated
       with such Asset Sale.

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    "Net Proceeds Offer" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales."

    "Net Proceeds Offer Amount" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales."

    "Net Proceeds Offer Payment Date" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales."

    "Net Proceeds Offer Trigger Date" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales."

    "Note Purchase Agreements" has the meaning set forth under "--Excess Cash
Flow Offer."

    "NYSE" means the New York Stock Exchange, Inc. or any successor operator of
the New York Stock Exchange.

    "NYSE Net Capital" means, at any time, the "net capital" of LaBranche
computed in accordance with Rule 326(a) of the NYSE (or any successor
provision).

    "NYSE Required Net Capital" means, at any time, the minimum amount of NYSE
Net Capital necessary at such time in order to permit LaBranche to "expand its
business" pursuant to Rule 326(a) of the NYSE (or any successor provision).

    "NYSE Required Regulatory Capital" means, at any time, the minimum net
capital requirements prescribed under Rule 104 of the NYSE (or any successor
provision).

    "Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any indebtedness.

    "Payment Blockage Notice" has the meaning set forth under "--Subordination."

    "Permitted Holders" means:

    (a) individually or a combination of any of the following individuals:
       George M.L. LaBranche, IV, James G. Gallagher, Alfred O. Hayward, Jr.,
       Vincent J. Flaherty or Michael J. Naughton;

    (b) a spouse of any of the Person, referred to in clause (a) or any of his
       or her lineal descendants;

    (c) the trustee(s) of any trust established solely for any of the Persons
       referred to in clause (a) or (b);

    (d) any organization to which contributions by any of the Persons referred
       to in clause (a), (b) or (c) are deductible for federal income, estate or
       gift tax purposes or any split-interest trust described in Section 4947
       of the Internal Revenue Code of 1986, as amended, provided that, in each
       case, such Person is a trustee or a member of the board of directors,
       trustees or other governing body or group having the ultimate authority,
       inter alia, to vote, dispose or direct the voting or disposition of
       Capital Stock of the Company held by such Person; and

    (e) a corporation of which a majority of the voting power of its outstanding
       Capital Stock is beneficially owned by, or a partnership or limited
       liability company of which a majority of the partnership or limited
       liability company interests entitled to vote and participate in the
       management of the partnership or limited liability company are
       beneficially owned by, a Person described in clause (a), (b), (c) or (d).

    "Permitted Indebtedness" means, without duplication, each of the following:

    (a) Indebtedness under the initial notes (including exchange notes issued
       therefor);

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    (b) Indebtedness of the Company and the Restricted Subsidiaries Incurred
       pursuant to working capital facilities (including, without limitation,
       the Credit Agreement) in an amount not to exceed 70% of the market value
       of the Investment Securities securing such facilities constituting equity
       securities listed on the NYSE or the NASDAQ National Market System, less
       the amount of any permanent prepayments or reductions of commitments in
       respect of any such Indebtedness made pursuant to "--Certain
       Covenants--Limitation on Asset Sales";

    (c) Indebtedness of the Company and the Restricted Subsidiaries outstanding
       on the Issue Date (excluding Indebtedness under the Credit Agreement)
       reduced by the amount of any scheduled amortization payments or mandatory
       prepayments when actually paid or permanent reductions thereon;

    (d) Permitted Subordinated Indebtedness Incurred after the Issue Date not to
       exceed $50.0 million at any one time outstanding;

    (e) Interest Swap Obligations of the Company covering Indebtedness of the
       Company and Interest Swap Obligations of any Restricted Subsidiary
       covering Indebtedness of such Restricted Subsidiary; provided, however,
       that such Interest Swap Obligations are entered into to protect the
       Company and the Restricted Subsidiaries from fluctuations in interest
       rates on Indebtedness incurred in accordance with the Indenture to the
       extent the notional principal amount of such Interest Swap Obligations
       does not exceed the principal amount of the indebtedness to which such
       Interest Swap Obligations relates;

    (f) Indebtedness under Currency Agreements; provided that in the case of
       Currency Agreements which relate to Indebtedness, such Currency
       Agreements do not increase the Indebtedness of the Company and the
       Restricted Subsidiaries outstanding other than as a result of
       fluctuations in foreign currency exchange rates or by reason of fees,
       indemnities and compensation payable thereunder;

    (g) Indebtedness of a Restricted Subsidiary to the Company or another
       Restricted Subsidiary for so long as the Indebtedness is held by the
       Company or a Restricted Subsidiary, in each case subject to no Lien held
       by a Person other than the Company or a Restricted Subsidiary; provided
       that if as of any date any Person other than the Company or a Restricted
       Subsidiary owns or holds any such Indebtedness or holds a Lien in respect
       of such Indebtedness, such Indebtedness shall be deemed to be Incurred on
       such date and not constitute Permitted Indebtedness under this
       clause (g);

    (h) Indebtedness of the Company to a Restricted Subsidiary, provided that:

       (1) any Indebtedness of the Company to any Restricted Subsidiary is
           subordinate in right of payment to the exchange notes, and

       (2) if as of any date any Person other than a Restricted Subsidiary owns
           or holds any such Indebtedness or any Person holds a Lien in respect
           of such Indebtedness, such date shall be deemed the date of
           Incurrence of Indebtedness not constituting Permitted Indebtedness by
           the Company;

    (i) Indebtedness arising from the honoring by a bank or other financial
       institution of a check, draft or similar installment inadvertently
       (except in the case of daylight overdrafts) drawn against insufficient
       funds in the ordinary course of business; provided, however, that such
       indebtedness is extinguished within five business days of Incurrence;

    (j) Indebtedness of the Company or any of the Restricted Subsidiaries
       represented by letters of credit for the account of the Company or such
       Restricted Subsidiary, as the case may be, in order to provide security
       for workers' compensation clams, payment obligations in connection with
       self-insurance or similar requirements in the ordinary course of
       business;

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    (k) Refinancing Indebtedness;

    (l) Purchase Money Indebtedness and Capitalized Lease Obligations (and any
       Indebtedness incurred to Refinance such Purchase Money Indebtedness or
       Capitalized Lease Obligations) of the Company or any Restricted
       Subsidiary not to exceed $20.0 million at any one time outstanding;

    (m) additional Indebtedness of the Company or any Restricted Subsidiary in
       an aggregate principal amount not to exceed $25.0 million at any one time
       outstanding; and

    (n) the promissory notes issued to the stockholders of Webco
       Securities, Inc. ("Webco") as part of the consideration in the
       acquisition of Webco by the Company pursuant to the Agreement and Plan of
       Merger, dated as of January 26, 2000 by and between LaBranche & Co Inc.
       and Webco (not including any amendments thereto).

    "Permitted Investments" means:

    (a) Investments by the Company or any Restricted Subsidiary in any Person
       that is or will become immediately after such Investment a Restricted
       Subsidiary or that will merge or consolidate into the Company or a
       Restricted Subsidiary;

    (b) Investments in the Company by any Restricted Subsidiary; provided that
       any Indebtedness evidencing such Investment is unsecured and subordinate
       to the exchange notes;

    (c) Investments in cash and Cash Equivalents;

    (d) loans and advances to employees, officers and directors of the Company
       and the Restricted Subsidiaries in the ordinary course of business for
       bona fide business purposes not in excess of $5.0 million at any time
       outstanding in the aggregate;

    (e) Currency Agreements and Interest Swap Obligations entered into in the
       ordinary course of the Company's or a Restricted Subsidiary's businesses
       and otherwise in compliance with the Indenture;

    (f) Investments in securities of trade creditors or customers received
       pursuant to any plan of reorganization or similar arrangement upon the
       bankruptcy or insolvency of such trade creditors or customers;

    (g) Investments made by the Company or the Restricted Subsidiaries as a
       result of noncash consideration received in connection with an Asset Sale
       made in compliance with the covenant described under "--Certain
       Covenants--Limitation on Asset Sales";

    (h) Investments in Investment Securities (including borrowings or loans of
       Investment Securities) in the ordinary course of business of the Company
       and its Restricted Subsidiaries; or

    (i) additional Investments not to exceed $10.0 million at any one time
       outstanding in the aggregate.

    "Permitted Junior Securities" means:

    (a) Equity Interests in the Company; or

    (b) debt securities that are subordinated to all Senior Debt and any debt
       securities issued in exchange for Senior Debt to substantially the same
       extent, as, or to a greater extent than, the exchange notes are
       subordinated to Senior Debt under the Indenture.

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    "Permitted Liens" means the following types of Liens:

    (a) Liens for taxes, assessments or governmental charges or claims either:

       (1) not delinquent; or

       (2) contested in good faith by appropriate proceedings and as to which
           the Company or any Restricted Subsidiary shall have set aside on its
           books such reserves as may be required pursuant to GAAP;

    (b) statutory Liens of landlords and Liens of carriers, warehousemen,
       mechanics, suppliers, materialmen, repairmen and other Liens imposed by
       law or pursuant to customary reservations or retentions of title, in each
       case arising in the ordinary course of business for sums not yet
       delinquent or being contested in good faith, if such reserve or other
       appropriate provision, if any, as shall be required by GAAP shall have
       been made in respect thereof;

    (c) Liens incurred or deposits made in the ordinary course of business in
       connection with workers' compensation, unemployment insurance and other
       types of social security, including any Lien securing letters of credit
       issued in the ordinary course of business consistent with past practice
       in connection therewith, or to secure the performance of tenders,
       statutory obligations, surety and appeal bonds, bids, leases, government
       contracts, performance and return-of-money bonds and other similar
       obligations (exclusive of obligations for the payment of borrowed money);

    (d) judgment Liens not giving rise to an Event of Default so long as such
       Lien is adequately bonded and any appropriate legal proceedings which may
       have been duly initiated for the review of such judgment shall not have
       been finally terminated or the period within which such proceedings may
       be initiated shall not have expired;

    (e) easements, rights-of-way, zoning restrictions, minor defects or
       irregularities in title and other similar charges or encumbrances in
       respect of real property not impairing in any material respect the
       ordinary conduct of the business of the Company or any Restricted
       Subsidiary;

    (f) any interest or title of a lessor under any Capitalized Lease
       Obligation; provided that such Liens do not extend to any property or
       assets which is not leased property subject to such Capitalized Lease
       Obligation;

    (g) Liens upon specific items of inventory or other goods and proceeds of
       any Person securing such Person's obligations in respect of bankers'
       acceptances issued or created for the account of such Person to
       facilitate the purchase, shipment or storage of such inventory or other
       goods;

    (h) Liens securing reimbursement obligations with respect to commercial
       letters of credit which encumber documents and other property relating to
       such letters of credit and products and proceeds thereof;

    (i) Liens encumbering deposits made to secure obligations arising from
       statutory, regulatory, contractual or warranty requirements of the
       Company or any of the Restricted Subsidiaries, including rights of offset
       and set-off;

    (j) leases or subleases in respect of real property or equipment granted to
       others not interfering in any material respect with the ordinary conduct
       of the business of the Company or any Restricted Subsidiary;

    (k) Liens in favor of customs and revenue authorities arising as a matter of
       law to secure payment of customs duties in connection with the
       importation of goods; and

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    (l) normal and customary rights of setoff upon deposits of cash in favor of
       banks or other depositary institutions.

    "Permitted Subordinated Indebtedness" means Indebtedness of the Company
Incurred at a time when no Default or Event of Default has occurred and is
continuing:

    (a) which matures at least 91 days after the final maturity date for the
       exchange notes and is not prior to that time:

       (1) mandatorily redeemable, or

       (2) exchangeable for Indebtedness other than Permitted Subordinated
           Indebtedness pursuant to a sinking fund obligation or otherwise or
           upon the occurrence of any event,

    (b) which has a Weighted Average Life greater than that of the exchange
       notes;

    (c) which is subordinate in right of payment to the exchange notes with
       payment blockage rights in favor of the note holders equivalent to those
       set forth in the Indenture for Senior Debt; and

    (d) the proceeds of which are loaned by the Company to LaBranche pursuant to
       clause (g) of the definition of Permitted Indebtedness and a subordinated
       loan agreement (as defined in Appendix D to Rule 15c3-1) for use by
       LaBranche for net capital purposes and properly accounted for by
       LaBranche as Commission Net Capital and NYSE Net Capital; provided that
       any subordination of the loan by the Company will apply only to the
       extent required to permit the loan to qualify as Commission Net Capital
       and NYSE Net Capital.

    "Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.

    "Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.

    "Pro Rata Share" means, with respect to a note holder, a fraction equal to
the quotient of (x) the aggregate principal amount of initial notes or exchange
notes then held by such note holder divided by (y) the aggregate principal
amount of initial notes and exchange notes then outstanding.

    "Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed such purchase price or cost.

    "Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

    "Reference Date" has the meaning set forth under "--Certain
Covenants--Limitation on Restricted Payments."

    "Refinance" means in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.

    "Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of Indebtedness incurred in accordance with "--Certain
Covenants--Limitation on the Incurrence of

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Additional Indebtedness" (other than Permitted Indebtedness) or clause (a) or
(c) of the definition of "Permitted Indebtedness," in each case that does not:

    (a) result in an increase in the aggregate principal amount of any
       Indebtedness of such Person as of the date of such proposed Refinancing
       (plus the amount of any premium reasonably necessary to Refinance such
       Indebtedness and plus the amount of reasonable expenses incurred by the
       Company in connection with such Refinancing); or

    (b) create Indebtedness with:

       (1) a Weighted Average Life to Maturity that is less than the Weighted
           Average Life to Maturity of the Indebtedness being Refinanced or

       (2) a final maturity earlier than the final maturity of the Indebtedness
           being Refinanced; provided that if such Indebtedness being Refinanced
           is Indebtedness of the Company, then such Refinancing Indebtedness
           shall be Indebtedness solely of the Company.

    "Registration Rights Agreement" means the Registration Rights Agreement
dated the Issue Date by and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Smith Barney Inc. and ABN AMRO Incorporated, as
Initial Purchasers.

    "Replacement Assets" means assets and property that will be used in the
business of the Company and/or its Restricted Subsidiaries as such business is
then being conducted (including Capital Stock of a Person that becomes a Wholly
Owned Restricted Subsidiary).

    "Restricted Payment" has the meaning set forth under "--Certain
Covenants--Limitations on Restricted Payments."

    "Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under "--Certain Covenants--Limitation on
Designations of Unrestricted Subsidiaries." Any such Designation may be revoked
by a Board Resolution of the Company delivered to the Trustee, subject to the
provisions of such covenant.

    "Revocation" has the meaning set forth under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries."

    "Rule 15c3-1" means Rule 15c3-1 under the Exchange Act (or any successor
provision).

    "Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.

    "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute or statutes thereto, and the rules and regulations of the
Commission promulgated thereunder.

    "Senior Debt" means:

    (a) all Indebtedness outstanding under Credit Facilities and all Interest
       Swap Obligations with respect thereto;

    (b) any other Indebtedness permitted to be incurred by the Company under the
       terms of the Indenture, unless the instrument under which such
       Indebtedness is incurred expressly provides that it is on a parity with
       or subordinated in right of payment to the exchange notes; and

    (c) all Obligations with respect to the items listed in the preceding
       clauses (a) and (b).

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    Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:

       (1) any liability for federal, state, local or other taxes owed or owing
           by the Company or any of its Subsidiaries;

       (2) any Indebtedness of the Company to any of its Subsidiaries or other
           Affiliates;

       (3) any trade payables;

       (4) any Indebtedness that is incurred in violation of the Indenture;

       (5) Disqualified Capital Stock; or

       (6) any Indebtedness that, when Incurred and without respect to any
           election under Section 1111(b) of Title 11, United States Code, is
           without recourse to the Company.

    "SIPA" means the Securities Investor Protection Act of 1970, as amended, or
any successor statute or statutes thereto, and the rules and regulations of
promulgated thereunder.

    "Significant Subsidiary" means, with respect to any Person, any Restricted
Subsidiary of such Person that satisfies the criteria for a "significant
subsidiary" set forth in Section 1.02(w) of Regulation S-X under the Securities
Act as in effect on the Issue Date, except that all references to 10% in
Section 1.02(w) shall be changed to 5%.

    "Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).

    "Subsidiary" with respect to any Person, means:

    (a) any corporation of which the outstanding Capital Stock having at least a
       majority of the votes entitled to be cast in the election of directors
       under ordinary circumstances shall at the time be owned, directly or
       indirectly, by such Person; or

    (b) any other Person of which at least a majority of the voting interest
       under ordinary circumstances is at the time, directly or indirectly,
       owned by such Person.

    "Surviving Entity" has the meaning set forth under "--Certain
Covenants--Merger, Consolidation and Sale of Assets."

    "Transaction Date" has the meaning set forth in the definition of
"--Consolidated Fixed Charge Coverage Ratio."

    "Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to and in compliance with the covenant described under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries." Any such
designation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such covenant.

    "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:

    (a) the then outstanding aggregate principal amount of such Indebtedness
       into

    (b) the sum of the total of the products obtained by multiplying:

       (1) the amount of each then remaining installment, sinking fund, serial
           maturity or other required payment of principal, including payment at
           final maturity, in respect thereof, by

       (2) the number of years (calculated to the nearest one-twelfth) which
           will elapse between such date and the making of such payment.

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<PAGE>
    "Wholly Owned Restricted Subsidiary" of the Company means any Restricted
Subsidiary of which all the outstanding voting securities (other than in the
case of a Subsidiary not organized under the laws of a State of the United
States, directors' qualifying shares or an immaterial amount of shares required
to be owned by other Persons pursuant to applicable law) are owned directly or
indirectly by the Company or any Wholly Owned Restricted Subsidiary.

BOOK-ENTRY, DELIVERY AND FORM

    The exchange notes will be issued in the form of a global note (the "Global
Note"). The Global Note will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and registered in the name of DTC or its nominee. Except
as set forth below, the Global Note may be transferred in whole and not in part,
only to DTC or another nominee of DTC. Investors may hold their beneficial
interests in the Global Note directly through DTC if they have an account with
DTC or indirectly through Euroclear System ("Euroclear") or Cedel Bank, N.A.
("Cedel Bank"), organizations which have accounts with DTC.

    Exchange notes that are issued as described below under "Certificated
Exchange Notes" will be issued in definitive form. Upon the transfer of an
exchange note in definitive form, such exchange note will, unless the Global
Note has previously been exchanged for exchange notes in definitive form, be
exchanged for an interest in the Global Note representing the principal amount
of exchange notes being transferred.

CERTAIN BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTE

    The descriptions of the operations and procedures of DTC, Euroclear and
Cedel Bank set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. The
Company takes no responsibility for these operations or procedures, and
investors are urged to contact the relevant system or its participants directly
to discuss these matters.

    DTC has advised the Company that it is:

    - a limited purpose trust company organized under the laws of the State of
      New York,

    - a "banking organization" within the meaning of the New York Banking Law,

    - a member of the Federal Reserve System,

    - a "clearing corporation" within the meaning of the Uniform Commercial
      Code, as amended and

    - a "clearing agency" registered pursuant to Section 17A of the Exchange
      Act.

    DTC was created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of Participants, thereby eliminating the need for physical transfer and
delivery of certificates. DTC Participants include securities brokers and
dealers (including the initial purchasers), banks and trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants") that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. Investors who are not Participants may beneficially own securities
held by or on behalf of DTC only through Participants or Indirect Participants.

    The Company expects that pursuant to procedures established by DTC

    - upon deposit of the Global Note, DTC will credit the accounts of
      Participants with an interest in the Global Note, and

                                      108
<PAGE>
    - ownership of the exchange notes will be shown on, and the transfer of
      ownership thereof will be effected only through, records maintained by DTC
      (with respect to the interests of Participants) and the records of
      Participants and the Indirect Participants (with respect to the interests
      of persons other than Participants).

    The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the exchange notes represented
by a Global Note to such persons may be limited. In addition, because DTC can
act only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an interest
in exchange notes represented by a Global Note to pledge or transfer such
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of such interest, may be affected by the lack
of a physical definitive security in respect of such interest.

    So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the exchange notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests in
the Global Note will not be entitled to have exchange notes represented by such
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes, and will not be considered the
owners or holders thereof under the Indenture for any purpose, including with
respect to the giving of any direction, instruction or approval to the Trustee
thereunder. Accordingly, each holder owning a beneficial interest in the Global
Note must rely on the procedures of DTC and, if such holder is not a Participant
or an Indirect Participant, on the procedures of the Participant through which
such holder owns its interest, to exercise any rights of a holder of exchange
notes under the Indenture of such Global Note. The Company understands that
under existing industry practice, in the event that the Company requests any
action of holders of exchange notes, or a holder that is an owner of a
beneficial interest in the Global Note desires to take any action that DTC, as
the holder of such Global Note, is entitled to take, DTC could authorize the
Participants to take such action and the Participants would authorize holders
owning through such Participants to take such action or would otherwise act upon
the instruction of such holders. Neither the Company nor the Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of exchange notes by DTC, or for maintaining,
supervising or reviewing any records of DTC relating to such exchange notes.

    The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest on the Global Note, will credit Participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the Global Note as shown on the records of DTC or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in the Global Note held through such Participants will be
governed by standing instructions and customary practices and will be the
responsibility of such Participants. The Company will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Global Note
for any exchange note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between DTC and Participants or the relationship between such
Participants and the owners of beneficial interests in the Global Note owning
through such Participants.

    Transfers between Participants will be effected in accordance with DTC's
procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel Bank will be effected in the ordinary way in
accordance with their respective rules and operating procedures.

    Cross-market transfers between Participants, on the one hand, and Euroclear
or Cedel Bank participants, on the other hand, will be effected through DTC in
accordance with DTC's rules on behalf of Euroclear or Cedel Bank, as the case
may be, by its respective depositary; however, such

                                      109
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cross-market transactions will require delivery of instructions to Euroclear or
Cedel Bank, as the case may be, by the counterparty in such system in accordance
with the rules and procedures and within the established deadlines (Brussels
time) of such system. Euroclear or Cedel Bank, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedel Bank
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedel Bank.

    Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in a Global Note from a
Participant will be credited, and any such crediting will be reported to the
relevant Euroclear or Cedel Bank participant, during the securities settlement
processing day (which must be a business day for Euroclear and Cedel Bank)
immediately following the settlement date of DTC. Cash received in Euroclear or
Cedel Bank as a result of sales of interests in the Global Note by or through a
Euroclear or Cedel Bank participant to a Participant will be received with value
on the settlement date of DTC but will be available in the relevant Euroclear or
Cedel Bank cash account only as of the business day for Euroclear or Cedel Bank
following DTC's settlement date.

    Although DTC, Euroclear and Cedel Bank have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Note among
participants in DTC, Euroclear and Cedel Bank, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel Bank or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.

CERTIFICATED EXCHANGE NOTES

    If:

    - DTC (1) notifies the Company that it is no longer willing or able to act
      as a depositary and the Company fails to appoint a successor depositary or
      (2) ceases to be registered as a clearing agency under the Exchange Act;

    - the Company, at its option, notifies the Trustee in writing that it elects
      to cause the issuance of exchange notes in certificated form; or

    - at the request of DTC, if there shall have occurred and be continuing an
      event of default with respect to the exchange notes,

then, upon surrender by DTC of the Global Note, certificated exchange notes in
definitive form in denominations of U.S. $1,000 and integral multiples thereof
will be issued to each person that DTC identifies as the beneficial owner of the
exchange notes represented by the Global Note. Upon any such issuance, the
Trustee is required to register such certificated exchange notes in the name of
such person or persons (or the nominee of any thereof) and cause the same to be
delivered thereto. Subject to the foregoing, the Global Note is not
exchangeable, except for a Global Note of the same aggregate denomination to be
registered in the name of DTC or its nominee.

    Neither the Company nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners of
the related exchange notes and each such person may conclusively rely on, and
shall be protected in relying on, instructions from DTC for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the exchange notes to be issued.

                                      110
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REGISTRATION RIGHTS; LIQUIDATED DAMAGES

    We entered into a Registration Rights Agreement with the initial purchasers
concurrently with the issuance of the initial notes. You may obtain a copy of
the agreement by calling or writing to us at One Exchange Plaza, New York, New
York 10006; (212) 425-1144. Under the agreement, we also agreed to file a
registration statement relating to the exchange offer of which this prospectus
is a part with the SEC by May 1, 2000 and use our best efforts to have it
declared effective at the earliest possible time. We also agreed to use our best
efforts to cause the registration statement to be effective continuously, to
keep the exchange offer open for a period of not less than 20 business days and
to cause the exchange offer to be consummated no later than the 30th business
day after it is declared effective by the SEC. Pursuant to the exchange offer,
certain holders of the initial notes which constitute "transfer restricted
securities" may exchange their transfer restricted securities for registered
exchange notes. To participate in the exchange offer, each holder must represent
that it is not our affiliate, that it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the exchange notes that are issued in the
exchange offer, and that it is acquiring the exchange notes in the exchange
offer in its ordinary course of business.

    We will file with the SEC a shelf registration statement to register for
public resale the transfer restricted securities held by any such holder who
provides us with certain information for inclusion in the Shelf Registration
Statement if:

    (1) the exchange offer is not permitted by applicable law or SEC policy, or

    (2) any holder of initial notes which are transfer restricted securities
       notifies us prior to the 20th business day following the consummation of
       the exchange offer that

       (a) it is prohibited by law or SEC policy from participating in the
           exchange offer,

       (b) it may not resell the exchange notes acquired by it in the exchange
           offer to the public without delivering a prospectus, and the
           prospectus contained in the registration statement is not appropriate
           or available for such resales by it, or

       (c) it is a broker-dealer and holds initial notes acquired directly from
           us or any of our affiliates.

    The term "transfer restricted securities" means each initial note or
exchange note, until the earliest of the date which:

    - the initial note is exchanged in the exchange offer for a new note in the
      exchange offer which can be publicly resold by the holder without
      complying with prospectus delivery requirements of the Securities Act of
      1933;

    - the resale of the initial note is effectively registered under the
      Securities Act and disposed of in accordance with the shelf registration
      statement;

    - the initial note is publicly distributed under Rule 144; or

    - the exchange note is disposed of by a broker-dealer pursuant to the "Plan
      of Distribution."

    The following events are considered registration defaults. We will pay
liquidated damages if:

    (1) we fail to file the exchange offer registration statement, of which this
       prospectus is a part, by May 1, 2000;

    (2) the exchange offer registration statement is not declared effective by
       the SEC by June 30, 2000;

    (3) we fail to consummate the exchange offer by the 30th day after the
       registration statement relating to the exchange offer becomes effective;

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<PAGE>
    (4) we are obligated to file the shelf registration statement and we fail to
       file it with the SEC on or before the 60(th) day after our filing
       obligation arises;

    (5) we are obligated to file the shelf registration statement and it is not
       declared effective on or before the 120(th) day after our filing
       obligation arises; or

    (6) the exchange offer registration statement or the shelf registration
       statement, as the case may be, is declared effective but thereafter
       ceases to be effective or usable for its intended purpose, without being
       succeeded immediately by a post-effective amendment to the registration
       statement that cures this failure and is declared effective immediately.

    If a registration default occurs, we will be obligated to pay as liquidated
damages to each holder of transfer restricted securities an amount equal to $.05
per week per $1,000 in principal amount of transfer restricted securities held
by each holder for each week or portion of a week that the registration default
continues for the first 90 day period immediately following the occurrence of
the registration default. The amount of liquidated damages will increase by an
additional $.05 per week per $1,000 in principal amount of transfer restricted
securities with respect to each subsequent 90-day period until all registration
defaults have been cured, up to a maximum of liquidated damages of $.50 per week
per $1,000 in principal amount of transfer restricted securities. We be shall
not be required to pay liquidated damages for more than one registration default
at any given time. Liquidated damages will cease to accrue upon the cure of
registration defaults.

    Upon completion of the exchange offer, subject to certain exceptions,
holders of initial notes who do not exchange their initial notes for exchange
notes in the exchange offer will no longer be entitled to registration rights
and will not be able to offer or sell their initial notes, unless the initial
notes are subsequently registered under the Securities Act (which, subject to
certain limited exceptions, we will have no obligation to do), except pursuant
to an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. See "Risk Factors--If you do not participate
in the exchange offer, you will continue to be subject to transfer
restrictions."

                                      112
<PAGE>
                       DESCRIPTION OF OTHER INDEBTEDNESS

    The following summarizes the principal terms of the other indebtedness of
LaBranche & Co Inc., LaBranche & Co. and LaB Investing Co. L.L.C. Copies of the
material agreements relating to the other existing indebtedness have been filed
with the SEC and the description below is qualified in its entirety by reference
to the agreements. See "Available Information."

LABRANCHE'S SENIOR NOTES

    On August 24, 1999, we issued $100.0 million aggregate principal amount of
9 1/2% Senior Notes due 2004 in an offering exempt from registration pursuant to
Rule 144A and Regulation S under the Securities Act and applicable state
securities laws. Salomon Smith Barney Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation acted as initial purchasers.

    In December 1999, all the holders of Senior Notes exchanged the Senior Notes
for registered Exchange Senior Notes in an exchange offer. The Exchange Senior
Notes are identical to the Senior Notes in all respects except that the Exchange
Senior Notes are registered under the Securities Exchange Act of 1934, as
amended.

    The Exchange Senior Notes accrue interest at 9 1/2% per year. We pay
interest on the Exchange Senior Notes on February 15 and August 15 of each year.
The Exchange Senior Notes are senior obligations of LaBranche & Co Inc. and rank
equally with our existing and future other unsecured senior indebtedness. They
rank senior in right of payment to all of our current and future subordinated
indebtedness for borrowed money, except existing and future secured indebtedness
to the extent of the assets securing such indebtedness. The Exchange Senior
Notes are effectively subordinated to the outstanding indebtedness of our
existing subsidiaries.

    The Exchange Senior Notes are redeemable, at our option at any time, in
whole or in part, at a price equal to 100% of the principal amount plus accrued
and unpaid interest, if any, to the date of redemption plus a make-whole
premium.

    If we sell substantially all our assets or experience specific kinds of
changes of control, we must offer to repurchase the Exchange Senior Notes at a
price in cash equal to 101% of their principal amount, plus accrued and unpaid
interest, if any, to the date of purchase.

    The Exchange Senior Notes were issued under an indenture with Firstar Bank,
N.A. The indenture contains certain covenants that, among other things, limits
our ability to:

    - borrow money;

    - pay dividends on our stock or purchase our stock;

    - make investments in certain subsidiaries;

    - engage in transactions with stockholders and affiliates;

    - create liens on our assets; and

    - sell assets or engage in mergers and consolidations.

LABRANCHE & CO.'S CREDIT AGREEMENT

    In February 2000, the credit agreement between LaBranche & Co. and The Bank
of New York was extended until February 2, 2001 and amended in order to increase
the credit facility available thereunder from $100.0 million to $200.0 million.
Borrowings under the Credit Agreement are secured by a pledge of the investment
securities of LaBranche & Co. identified in the Credit Agreement. Loans under
the Credit Agreement will bear interest at The Bank of New York's broker loan
rate.

                                      113
<PAGE>
    The credit agreement contains covenants that require LaBranche & Co., among
other things, to

    - maintain net capital of not less than $150.0 million, and

    - maintain a net worth of not less than $300.0 million.

    The credit agreement also restricts LaBranche & Co.'s ability to incur
additional indebtedness, including guarantee liabilities, and certain mortgages
or other encumbrances on the assets pledged under the credit agreement.

    LABRANCHE & CO.'S SUBORDINATED DEBT

    LaBranche & Co. has two series of outstanding unsecured senior subordinated
notes in the aggregate principal amounts of $20.0 million and $15.0 million,
respectively. These notes mature on September 15, 2002 and June 3, 2008,
respectively, and bear interest payable quarterly at respective annual rates of
8.17% and 7.69%.

    LaBranche & Co. may prepay, at a premium, all or any part of the senior
subordinated notes at any time, provided that the amount prepaid is not less
than 5% of the aggregate principal amount of the senior subordinated notes then
outstanding.

    Upon the occurrence of a change of control, LaBranche & Co. may, but is not
required to, make one irrevocable separate offer to each holder of the senior
subordinated notes to prepay all of the senior subordinated notes then held by
that holder. The occurrence of a change of control also constitutes an event of
acceleration under each of the series of senior subordinated notes.

    Among other things, the agreements relating to the senior subordinated
notes, as amended, require that LaBranche & Co. comply with certain covenants,
including covenants that

    - restrict the type of businesses in which it may engage;

    - require its net capital to be at least 150% of the net capital required by
      the NYSE or the SEC and its adjusted partners' capital to be at least
      $94.0 million; and

    - prohibit it from making certain cash distributions and other restricted
      payments.

    A failure to make timely payments of principal and/or interest on the senior
subordinated notes or the occurrence of certain other events may result in a
default under, or an acceleration of, the senior subordinated notes. These
events include:

    - the Securities Investor Protection Corporation makes an application
      stating that the customers of LaBranche & Co. are in need of protection
      under the Securities Investor Protection Act, and the application is not
      dismissed within 30 days;

    - the SEC revokes the registration of LaBranche & Co. as a broker-dealer;

    - the NYSE suspends the status of LaBranche & Co. as a member organization;
      and

    - LaBranche & Co. fails to meet its net capital requirements.

CASH SUBORDINATED LOAN AGREEMENTS

    LaBranche & Co. is a party to a number of separate cash subordinated loan
agreements with current employees, former partners and family members or
affiliates of current and former partners of the firm. These cash subordinated
loan agreements represent junior subordinated debt of LaBranche & Co. The
current aggregate principal amount of such subordinated indebtedness is
approximately $11.5 million. Approximately $9.4 million of this debt currently
bears interest payable quarterly at an annual rate of 10.0%, while two cash
subordinated loan agreements representing an aggregate of $2.1 million bear
interest payable quarterly at an annual rate of 8.0%. LaBranche & Co. has the
option

                                      114
<PAGE>
to prepay all or a portion of this debt, subject to the approval of the NYSE and
the satisfaction of applicable regulatory net capital requirements. The
indebtedness represented by these cash subordinated loan agreements generally
matures one year from the date of issuance, subject to automatic rollover for
additional one-year terms, unless notice is given by either party not to renew
the term at least seven months prior to the scheduled maturity date.

    As part of the reorganization of our firm from partnership to corporate
form, LaBranche & Co. repaid $5.0 million in satisfaction of one of these cash
subordinated loan agreements and incurred $350,000 of subordinated indebtedness
pursuant to a new cash subordinated loan agreement in connection with the
redemption of a limited partnership interest which bears interest at an annual
rate of 8.0%.

NOTE ISSUED TO MILL BRIDGE

    In connection with the reorganization of our firm from partnership to
corporate form, we acquired the limited partnership interest in LaBranche & Co.
held by Mill Bridge, Inc. for $90.0 million, of which $74.0 million was paid in
cash upon the consummation of our Senior Note offering and the initial public
offering of our common stock and $16.0 million was satisfied by our issuance of
a note payable over three years. This $16.0 million obligation is a senior
unsecured obligation of LaBranche & Co Inc. of which $6.0 million is payable on
August 24, 2000, $5.0 million is payable on August 24, 2001 and $5.0 million is
payable on August 24, 2002, and bears interest at an annual rate of 9.5%. This
obligation ranks pari passu with the Exchange Senior Notes.

NOTES ISSUED TO STOCKHOLDERS OF WEBCO

    Under the terms of our agreement to acquire Webco, we issued senior
promissory notes in the aggregate principal amount of $3.0 million, each bearing
interest at a rate of 10.0% per annum which will rank pari passu with the
exchange notes. Of that amount, $500,000 was used to secure Webco's obligation
to deliver working capital, as defined, of $18.0 million at the closing. This
promissory note has been paid in full upon the final determination of Webco's
working capital as of the closing date. The remaining $2.5 million of the
aggregate principal amount secures the Webco stockholders' obligation to
indemnify us for any breach of their or Webco's representations, warranties and
covenants under the agreement, and is due November 9, 2001.

                                      115
<PAGE>
                    UNITED STATES INCOME TAX CONSIDERATIONS

    The following summary describes the material U.S. federal income tax
consequences of the exchange of the initial notes for exchange notes that may be
relevant to a beneficial owner of initial notes that is a citizen or resident of
the United States or a U.S. domestic corporation or that otherwise is subject to
United States federal income taxation on a net income basis in respect of such
initial notes. This summary is based on laws, regulations, rulings and judicial
and administrative decisions now in effect, all of which are subject to change.
This summary deals only with investors that hold the initial notes as capital
assets, and does not address tax considerations applicable to investors that may
be subject to special tax rules, such as, but not limited to, banks, tax-exempt
entities, insurance companies or dealers in securities or currencies, traders in
securities electing to mark to market, persons that hold the initial notes as a
position in a "straddle" or conversion transaction, or as part of a "synthetic
security" or other integrated financial transaction or persons that have a
"functional currency" other than the U.S. dollar.

    The exchange of initial notes for exchange notes pursuant to the exchange
offer will not be a taxable event for U.S. federal income tax purposes. As a
result, a U.S. holder of an initial note whose initial note is accepted in the
exchange offer will not recognize gain or loss on the exchange for U.S. federal
income tax purposes. Such holder's tax basis in the exchange notes will be equal
to such holder's tax basis in the initial notes exchanged therefor, and the
holding period for the exchange notes received pursuant to the exchange offer
will include the holder's holding period for the initial notes surrendered
therefor.

    Investors should consult their own tax advisors in determining the tax
consequences to them, as a result of their individual circumstances, of the
exchange of initial notes for exchange notes and of the ownership and
disposition of exchange notes received in the exchange offer, including the
application of state, local, foreign or other tax laws.

                              PLAN OF DISTRIBUTION

    Each broker-dealer that receives exchange notes for its own account in
exchange for initial notes pursuant to the exchange offer, where such initial
notes were acquired by such broker-dealer as a result of market making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for initial notes where such initial notes were acquired as a result of
market-making activities or other trading activities. We have agreed that, for a
period of up to one year, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until             , 2000, all dealers effecting
transactions in the exchange notes may be required to deliver a prospectus.

    We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own account
pursuant to the exchange offer and that participates in a distribution of such
exchange notes may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended, and any profit on any such resale of
exchange notes and any commission or concessions received by any such persons
may be deemed to be

                                      116
<PAGE>
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

    For a period of up to six-months, we will promptly send additional copies of
this prospectus and any amendment or supplement to this prospectus to any
broker-dealer that requests such documents in the letter of transmittal. We have
agreed to pay all expenses incident to the exchange offer, including the
expenses of one special counsel for all of the holders of the initial notes,
other than commissions or concessions of any broker-dealers. We will indemnify
the holders of the initial notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act.

                                 LEGAL MATTERS

    The validity of issuance of the exchange notes offered hereby will be passed
upon for LaBranche & Co Inc. by Fulbright & Jaworski L.L.P., New York, New York.

                                    EXPERTS

    The audited financial statements and schedules of LaBranche & Co Inc. and
Subsidiaries included in this prospectus have been audited by Arthur Andersen
LLP, independent auditors, as stated in their reports appearing herein.

    The 1997 audited financial statements of Henderson Brothers Holdings, Inc.
and subsidiary included in this prospectus have been audited by Goldstein Golub
Kessler & Company, P.C., independent auditors, as stated in their report
appearing herein.

    The audited financial statements and schedule of Henderson Brothers
Holdings, Inc. and subsidiary included in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein.

    The audited financial statements of Webco Securities, Inc. included in this
prospectus have been audited by Glasser & Haims, P.C., independent auditors, as
stated in their report appearing herein.

                   WHERE YOU CAN FIND ADDITIONAL INFORMATION

    We have filed with the SEC a registration statement under the Securities Act
on Form S-4 with respect to the exchange notes (together with all amendments and
exhibits thereto, the "Registration Statement") and are subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will file reports, proxy statements and other information with the SEC. For
further information with respect to LaBranche & Co Inc., please refer to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement. Statements contained in this prospectus as to the
contents of any contract, agreement of any other document referred to are not
necessarily complete; reference is made in each instance to the copy of such
contract or document filed as an exhibit to the Registration Statement. Each
such statement is qualified in all respects by such reference to such exhibit. A
copy of the Registration Statement, including exhibits and schedules thereto,
may be inspected without charge and obtained at prescribed rates at the Public
Reference Section of the SEC at its principal offices, located at 450 Fifth
Street, N.W., Washington, D.C. 20549, and may be inspected without charge at the
regional offices of the SEC located at Seven World Trade Center, 13th Floor, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Registration Statement, including the exhibits and
schedules thereto, is also available at the SEC's site on the World Wide Web at
http://www.sec.gov.

                                      117
<PAGE>
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
LABRANCHE & CO INC. AND SUBSIDIARIES PRO FORMA CONDENSED
  CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
  Pro Forma Condensed Consolidated Financial Information
    (unaudited) Overview....................................  F-3
  Pro Forma Condensed Consolidated Statement of Financial
    Condition as of December 31, 1999 (unaudited)...........  F-6
  Pro Forma Condensed Consolidated Statement of Operations
    for the Year Ended December 31, 1999 (unaudited)........  F-7
  Notes to Pro Forma Condensed Consolidated Financial
    Information (unaudited).................................  F-8
LABRANCHE & CO INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL
  STATEMENTS
  Report of Independent Public Accountants..................  F-10
  Consolidated Statements of Financial Condition as of
    December 31, 1999 and 1998..............................  F-11
  Consolidated Statements of Operations for the Years Ended
    December 31, 1999, 1998 and 1997........................  F-12
  Consolidated Statements of Changes in Stockholders'
    Equity/Members' Capital for the Years Ended December 31,
    1999, 1998 and 1997.....................................  F-13
  Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1999, 1998 and 1997........................  F-14
  Notes to Consolidated Financial Statements................  F-15
LABRANCHE & CO INC. (PARENT COMPANY ONLY) CONDENSED
  FINANCIAL STATEMENTS
  Condensed Statements of Financial Condition as of December
    31, 1999 and 1998.......................................  F-25
  Condensed Statements of Operations for the Years Ended
    December 31, 1999, 1998 and 1997........................  F-26
  Condensed Statements of Changes in Stockholders'
    Equity/Members' Capital for the Years Ended December 31,
    1999, 1998 and 1997.....................................  F-27
  Condensed Statements of Cash Flow for the Years Ended
    December 31, 1999, 1998 and 1997........................  F-28
  Note to Condensed Financial Statements....................  F-29
HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
  CONSOLIDATED FINANCIAL STATEMENTS
  Independent Auditors' Report..............................  F-30
  Report of Independent Public Accountants..................  F-31
  Consolidated Statements of Financial Condition as of
    December 31, 1999 and 1998..............................  F-32
  Consolidated Statements of Income for the years ended
    December 31, 1999, 1998 and 1997........................  F-33
  Consolidated Statements of Cash Flows for the years ended
    December 31, 1999, 1998 and 1997........................  F-34
  Consolidated Statements of Changes in Stockholders' Equity
    for the years ended December 31, 1999, 1998 and 1997....  F-35
  Notes to Consolidated Financial Statements................  F-36
HENDERSON BROTHERS HOLDINGS, INC. FINANCIAL STATEMENTS
  SCHEDULE--PARENT COMPANY ONLY CONDENSED FINANCIAL
  STATEMENTS
  Independent Auditors' Report..............................  F-41
  Condensed Statements of Financial Condition as of December
    31, 1999 and 1998.......................................  F-42
  Condensed Statements of Income for the Years Ended
    December 31, 1999 and 1998..............................  F-43
  Condensed Statements of Cash Flows for the Years Ended
    December 31, 1999 and 1998..............................  F-44
  Condensed Statements of Changes in Stockholders' Equity
    for the Years Ended December 31, 1999 and 1998..........  F-45
  Notes to Condensed Financial Statements...................  F-46
</TABLE>

                                      F-1
<PAGE>

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
HENDERSON BROTHERS HOLDINGS, INC. (PARENT COMPANY ONLY)
  CONDENSED FINANCIAL STATEMENTS
  Condensed Statement of Income for the Year Ended December
    31, 1997................................................  F-47
  Condensed Statement of Cash Flows for the Year Ended
    December 31, 1997.......................................  F-48
  Condensed Statement of Changes in Stockholders' Equity for
    the Year Ended December 31, 1997........................  F-49
  Note to Condensed Financial Statements....................  F-50
WEBCO SECURITIES, INC. FINANCIAL STATEMENTS
  Report of Independent Public Accountants..................  F-51
  Balance Sheet as of October 31, 1999 and 1998.............  F-52
  Statements of Revenue and Expenses and Retained Earnings
    for the Years Ended October 31, 1999, 1998 and 1997.....  F-53
  Statements of Cash Flows for the Years Ended
    October 31, 1999, 1998 and 1997.........................  F-54
  Statements of Changes in Stockholders' Equity for the
    Years Ended October 31, 1999, 1998 and 1997.............  F-55
  Notes to Financial Statements.............................  F-56
</TABLE>

                                      F-2
<PAGE>
             PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                  (UNAUDITED)
                                    OVERVIEW

GENERAL

    The following pro forma condensed consolidated financial information is
based on the historical consolidated financial statements of LaBranche &
Co Inc. and Subsidiaries (together the "Company") after giving effect to the
reorganization and related transactions to convert from a partnership to
corporate form (the "Reorganization Transactions"), the pending acquisitions of
Henderson Brothers Holdings, Inc. ("Henderson Brothers") and Webco
Securities, Inc. ("Webco") including (i) the application of proceeds of the
offering of the senior subordinated notes as payment for the Henderson Brothers
acquisition and a portion of the cash purchase price for the Webco acquisition
and (ii) the issuance of senior promissory notes and common stock and the
payment of the remaining cash purchase price in connection with the purchase of
Webco (the "Acquisition Transactions"). The Reorganization Transactions and the
Acquisition Transactions are described in greater detail below. The pro forma
condensed consolidated statement of financial condition presents the Acquisition
Transactions as if they occurred on December 31, 1999. The pro forma condensed
consolidated statement of operations for the year ended December 31, 1999
presents the results of the Company as if the Reorganization Transactions and
the Acquisition Transactions occurred on January 1, 1999.

    The pro forma condensed consolidated financial information has been prepared
by the Company's management and is not necessarily indicative of the results
that would have been achieved had the Reorganization Transactions and the
Acquisition Transactions occurred on the dates indicated or that may be achieved
in the future. The unaudited pro forma financial information should be read in
conjunction with the audited historical financial statements of the Company,
Henderson Brothers and Webco included elsewhere in this prospectus.

REORGANIZATION TRANSACTIONS

    On August 24, 1999, the Company completed an initial public offering of
common stock and concurrently completed the following Reorganization
Transactions:

    - The limited partners of LaBranche & Co. redeemed their interests for
      $140.2 million in cash, a $16.0 million note, $350,000 of subordinated
      indebtedness and 558,666 shares of common stock of LaBranche & Co Inc.
      with a value of $7.8 million, for a total purchase price of
      $164.4 million.

    - The members of LaB Investing Co. L.L.C. exchanged their membership
      interests in LaB Investing Co. L.L.C. for $9.0 million in cash and
      34,816,334 shares of common stock of LaBranche & Co Inc.

    - $5.0 million of subordinated debt at an interest rate of 10.0% was repaid.

    In addition, simultaneously with the initial public offering, LaBranche &
Co Inc. incurred indebtedness with a principal amount of $100.0 million.

    Prior to the reorganization, as a limited liability company, LaB Investing
Co. L.L.C. was not subject to federal or state income taxes, but was subject to
New York City unincorporated business tax. Subsequent to the reorganization, the
Company is subject to federal, state and local income taxes.

                                      F-3
<PAGE>
       PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
                                  (UNAUDITED)
                                    OVERVIEW

    The redemption of limited partnership interests was accounted for as a step
acquisition under the purchase method of accounting. The excess of purchase
price over the limited partners' capital accounts was allocated to intangible
assets with corresponding respective lives as follows:

<TABLE>
<CAPTION>
INTANGIBLE ASSET                                             AMOUNT      LIFE
- ----------------                                            --------   --------
<S>                                                         <C>        <C>
Specialist Stock Listing..................................   $ 93.6    40 years
Trade Name................................................     26.6    40 years
Goodwill..................................................      7.2    15 years
                                                             ------
                                                             $127.4
                                                             ======
</TABLE>

ACQUISITIONS SUBSEQUENT TO YEAR END

    The Company will account for the acquisitions of Henderson Brothers and
Webco under the purchase method of accounting. Accordingly, the Company will
establish a new basis of accounting for Henderson Brothers and Webco's assets
and liabilities based upon their fair values and the purchase price including
the costs associated with the acquisitions. The purchase accounting adjustments
made in connection with the development of pro forma condensed consolidated
financial statements are preliminary and have been made solely for purposes of
developing such pro forma consolidated financial information. The Company
expects to finalize the purchase accounting in its financial statements for the
quarter ended March 31, 2000. The pro forma adjustments do not reflect any
operating efficiencies or cost savings that may be achieved with respect to the
combined company.

    Actual compensation expense for Henderson Brothers and Webco has been
adjusted for eighteen employees who were extended employment contracts. No other
compensation adjustments have been made in connection with the development of
the pro forma condensed consolidated results of operations. Additionally,
compensation expense includes $8.2 million for three employees of Henderson
Brothers and five employees of Webco who retired upon the completion of the
acquisitions. Accordingly, management believes the pro forma compensation
expense may not reflect future cost savings once comprehensive compensation
policies are implemented for the combined companies.

    Under the terms of the Henderson Brothers agreement, the Company acquired
the outstanding capital stock of Henderson Brothers for approximately
$230.0 million in cash. Pursuant to the agreement, Henderson Brothers was
required to deliver at the closing, a minimum working capital, as defined in the
agreement, of $49.0 million and 19 NYSE memberships. The excess of the purchase
price over fair value of approximately $207.7 million will be allocated to
intangible assets with the corresponding respective lives as follows:

<TABLE>
<CAPTION>
INTANGIBLE ASSET                                             AMOUNT      LIFE
- ----------------                                            --------   --------
<S>                                                         <C>        <C>
Specialist Stock Listing..................................   $ 87.7    40 years
Goodwill..................................................    120.0    15 years
                                                             ------
                                                             $207.7
                                                             ======
</TABLE>

    Under the terms of the Webco agreement, the Company acquired Webco for
2.8 million shares of the Company's common stock, approximately $9.2 million in
cash and senior promissory notes in the aggregate of $3.0 million, each bearing
interest at 10% per annum. Pursuant to the agreement, Webco was obligated to
deliver a minimum working capital, as defined, of $18.0 million. The excess of
the

                                      F-4
<PAGE>
       PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
                                  (UNAUDITED)
                                    OVERVIEW

purchase price over fair value of approximately $28.2 million will be allocated
to intangible assets with the corresponding respective lives as follows:

<TABLE>
<CAPTION>
INTANGIBLE ASSET                                             AMOUNT      LIFE
- ----------------                                            --------   --------
<S>                                                         <C>        <C>
Specialist Stock Listing..................................   $  9.8    36 years
Goodwill..................................................     18.4    15 years
                                                             ------
                                                             $ 28.2
                                                             ======
</TABLE>

    With respect to both of the acquisitions, the allocation of purchase price
and determination of useful lives was based upon an independent appraisal as of
a preliminary date. The useful life of the specialist stock list was determined
based upon analysis of historical turnover characteristics of the specialist
stocks.

    The Company incurred indebtedness with a principal amount of
$250.0 million. The proceeds of the indebtedness, net of a discount of
approximately $4.3 million and estimated issuance costs of approximately
$7.1 million, were used for the acquisition of Henderson Brothers and partially
for the acquisition of Webco and to pay related transaction costs of both
acquisitions.

                                      F-5
<PAGE>
                              LABRANCHE & CO INC.
       PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                               DECEMBER 31, 1999
                                  (UNAUDITED)
                                (000'S OMITTED)

<TABLE>
<CAPTION>
                                                                                            PRO FORMA           PRO FORMA
                                                                 (A)          (B)      ADJUSTMENTS FOR THE   ADJUSTED FOR THE
                                                                WEBCO      HENDERSON       ACQUISITION         ACQUISITION
                                                 HISTORICAL   SECURITIES   BROTHERS       TRANSACTIONS         TRANSACTIONS
                                                 ----------   ----------   ---------   -------------------   ----------------
<S>                                              <C>          <C>          <C>         <C>                   <C>
ASSETS
CASH AND CASH EQUIVALENTS......................     83,774        1,574       9,738           238,638 (c)          87,552
                                                                                             (230,000)(d)
                                                                                               (9,200)(d)
                                                                                               (3,396)(e)
                                                                                               (3,576)(c)
SECURITIES PURCHASED UNDER AGREEMENTS TO
  RESELL.......................................     25,422                   19,500           (19,500)(e)          25,422
RECEIVABLE FROM BROKERS AND DEALERS............     33,662       11,848      96,234                               141,744
RECEIVABLE CUSTOMERS...........................                               1,173                                 1,173
SECURITIES OWNED, at market value:
  Corporate equities...........................    148,563        3,222      29,720                               181,505
  U.S. Government Obligations..................      1,471        7,207      46,138           (31,173)(e)          23,643
  Other........................................      2,515                                                          2,515
COMMISSIONS RECEIVABLE.........................      3,835                                                          3,835
INCOME TAXES RECEIVABLE........................                               1,557                                 1,557
EXCHANGE MEMBERSHIPS CONTRIBUTED FOR USE, at
  market value.................................     20,700        2,550       4,600                                27,850
EXCHANGE MEMBERSHIPS OWNED, at cost (market
  value of)....................................      6,300        1,301       8,836            33,863 (f)          50,300
OFFICE EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
  net..........................................      1,355                                                          1,355
INTANGIBLE ASSETS..............................    170,341                                    235,964 (g)         406,305
OTHER ASSETS...................................      7,187           15       1,727             7,054 (c)          15,983
                                                  --------     --------    --------        ----------           ---------
Total assets...................................   $505,125     $ 27,717    $219,223        $  218,674           $ 970,739
                                                  ========     ========    ========        ==========           =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
  Payable to brokers and dealers...............      7,726                   68,702                                76,428
  Securities sold, but not yet purchased, at
    market value...............................     36,900        1,377      20,805                                59,082
  Accrued compensation.........................     12,016                                      5,000 (h)          17,016
  Accounts payable and other accrued
    expenses...................................      5,522        4,031       8,777                                18,330
  Payable to customers.........................                               6,552                                 6,552
  Payable to correspondents....................                               1,016                                 1,016
  Income tax liabilities.......................      7,959                      741                                 8,700
  Deferred tax liabilities.....................                                                60,458 (g)          60,458
                                                  --------     --------    --------        ----------           ---------
                                                    70,123        5,408     106,593            65,458             247,582
                                                  --------     --------    --------        ----------           ---------

LONG TERM DEBT.................................    115,822                                    245,693 (i)         361,515
                                                                                                3,000 (j)           3,000
                                                  --------     --------    --------        ----------           ---------
                                                   115,822                                    248,693             364,515
                                                  --------                                 ----------           ---------
SUBORDINATED LIABITIIES
  Exchange memberships, at market value........     20,700        2,550       4,600                                27,850
  Other subordinated indebtedness..............     46,508                   54,069           (54,069)(e)          46,508
                                                  --------     --------    --------        ----------           ---------
                                                    67,208        2,550      58,669           (54,069)             74,358
                                                  --------     --------    --------        ----------           ---------
                                                                                               32,312 (d)
STOCKHOLDERS' EQUITY...........................    251,972       19,759      53,961           (73,720)(k)         284,284
                                                  --------     --------    --------        ----------           ---------
Total liabilities and stockholders' equity.....   $505,125     $ 27,717    $219,223        $  218,674           $ 970,739
                                                  ========     ========    ========        ==========           =========
</TABLE>

                                      F-6
<PAGE>
                              LABRANCHE & CO INC.
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                  (UNAUDITED)
                     (000'S OMITTED, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                PRO FORMA        PRO FORMA
                                                               ADJUSTMENTS        ADJUSTED
                                                                 FOR THE          FOR THE          (T)          (U)
                                                              REORGANIZATION   REORGANIZATION     WEBCO      HENDERSON
                                                 HISTORICAL    TRANSACTIONS     TRANSACTIONS    SECURITIES    BROTHERS
                                                 ----------   --------------   --------------   ----------   ----------
<S>                                              <C>          <C>              <C>              <C>          <C>
REVENUES:
  Net gain on principal transactions...........    150,971                         150,971         7,474       52,470
  Commissions..................................     37,222                          37,222         5,714       23,663
  Other........................................     12,844                          12,844           555        5,956
                                                  --------       -------          --------       -------      -------
    Total revenues.............................    201,037            --           201,037        13,743       82,089
                                                  --------       -------          --------       -------      -------
EXPENSES:
  Employee compensation and related benefits...     34,268        25,214 (l)        59,482         7,912       43,263
  Lease of exchange memberships................      8,416                           8,416           392
  Interest.....................................      8,286         6,160 (m)        15,144                      4,178
                                                                   1,002 (n)
                                                                      18 (o)
                                                                    (322)(p)
  Amortization of intangibles..................      4,623         2,243 (q)         6,866
  Exchange, clearing and brokerage fees........      3,709                           3,709           609        1,765
  Occupancy....................................      1,411                           1,411           119          217
  Communications...............................      1,193                           1,193                        137
  Legal and professional fees..................      1,622                           1,622                        887
  Other........................................      3,041                           3,041           537        6,974
                                                  --------       -------          --------       -------      -------
    Total expenses before Managing Directors'
      compensation, Limited Partners' interest
      in earnings of subsidiary and taxes......     66,569        34,315           100,884         9,569       57,421
                                                  --------       -------          --------       -------      -------
    Income before Managing Directors'
      compensation, Limited Partners' interest
      in earnings of subsidiary and taxes......    134,468       (34,315)          100,153         4,174       24,668
MANAGING DIRECTORS' COMPENSATION...............     56,191       (56,191)(r)            --            --           --
                                                  --------       -------          --------       -------      -------
    Income before limited partners' interest in
      earnings of sub and provision for
      taxes....................................     78,277        21,876           100,153         4,174       24,668
LIMITED PARTNERS' INTEREST IN EARNINGS OF
  SUBSIDIARY...................................     25,344       (25,344)(s)            --            --           --
                                                  --------       -------          --------       -------      -------
    Income before provision for income taxes...     52,933        47,220           100,153         4,174       24,668
PROVISION FOR INCOME TAXES.....................     23,899        22,266            46,165         1,914       12,317
                                                  --------       -------          --------       -------      -------
    Net income.................................   $ 29,034       $24,954          $ 53,988       $ 2,260      $12,351
                                                  ========       =======          ========       =======      =======
    Pro forma weighted average shares
      outstanding..............................     40,443
                                                  ========
    Pro forma basic and diluted net earnings
      per share................................   $   0.72
                                                  ========

<CAPTION>
                                                                     PRO FORMA
                                                   PRO FORMA         ADJUSTED
                                                  ADJUSTMENTS         FOR THE
                                                    FOR THE       REORGANIZATION
                                                  ACQUISITION     AND ACQUISITION
                                                  TRANSACTIONS     TRANSACTIONS
                                                 --------------   ---------------
<S>                                              <C>              <C>
REVENUES:
  Net gain on principal transactions...........                       210,915
  Commissions..................................                        66,599
  Other........................................                        19,355
                                                    --------          -------
    Total revenues.............................           --          296,869
                                                    --------          -------
EXPENSES:
  Employee compensation and related benefits...       (6,197)(v)      104,460
  Lease of exchange memberships................                         8,808
  Interest.....................................       31,078 (w)       46,712
                                                         250 (x)
                                                      (3,938)(y)

  Amortization of intangibles..................       11,693 (z)       18,559
  Exchange, clearing and brokerage fees........                         6,083
  Occupancy....................................                         1,747
  Communications...............................                         1,330
  Legal and professional fees..................                         2,509
  Other........................................                        10,552
                                                    --------          -------
    Total expenses before Managing Directors'
      compensation, Limited Partners' interest
      in earnings of subsidiary and taxes......       32,886          200,760
                                                    --------          -------
    Income before Managing Directors'
      compensation, Limited Partners' interest
      in earnings of subsidiary and taxes......      (32,886)          96,109
MANAGING DIRECTORS' COMPENSATION...............                            --
                                                    --------          -------
    Income before limited partners' interest in
      earnings of sub and provision for
      taxes....................................      (32,886)          96,109
LIMITED PARTNERS' INTEREST IN EARNINGS OF
  SUBSIDIARY...................................           --               --
                                                    --------          -------
    Income before provision for income taxes...      (32,886)          96,109
PROVISION FOR INCOME TAXES.....................       (8,137)(aa)      52,259
                                                    --------          -------
    Net income.................................     $(24,749)         $43,850
                                                    ========          =======
    Pro forma weighted average shares
      outstanding..............................                        48,675
                                                                      =======
    Pro forma basic and diluted net earnings
      per share................................                       $  0.90
                                                                      =======
</TABLE>

                                      F-7
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

        NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

                                  (UNAUDITED)

    a.  Reflects the historical balance sheet of Webco as of October 31, 1999.

    b.  Reflects the historical statement of financial condition of Henderson
       Brothers as of December 31, 1999.

    c.  Reflects the proceeds received of $238.6 million from the issuance of
       the senior subordinated notes at a discount of approximately
       $4.3 million, net of the debt issuance costs of approximately
       $7.1 million.

    d.  Reflects the acquisition of Henderson Brothers assuming cash paid of
       $230.0 million and the acquisition of Webco assuming cash paid of
       $9.2 million and issuance of $32.3 million in common stock. For purposes
       of determining consideration paid, the measurement date is used for
       valuing the shares to be issued. The measurement date, for accounting
       purposes, will be the last date the number of shares becomes fixed
       without subsequent revision, pursuant to the merger agreement. For
       purposes of determining the consideration paid for the pro forma
       financial statements, 2.8 million shares of common stock were assumed to
       be issued at a market price of $11.54 per share. The market price was
       calculated using an average of the closing price of the stock for the
       5 days before and the 5 days after December 27, 1999, the announcement in
       the acquisition.

    e.  Reflects the repayment of approximately $54.1 million of subordinated
       debt of Henderson Brothers prior to the completion of the acquisition.
       Repayment is assumed to be applied first to reduce available cash, second
       to reduce securities purchased under agreements to resell and the
       remainder to reduce securities owned.

    f.  Reflects the write-up of the exchange memberships acquired in the
       Henderson Brothers and Webco acquisitions to fair market value from
       historical cost, as of the acquisition dates.

    g.  Reflects a total of approximately $236.0 million of purchase price
       allocated to intangibles for the acquisitions of Henderson Brothers and
       Webco, adjusted to record deferred tax liabilities at an estimated rate
       of 46% related to the excess of purchase price allocated to exchange
       memberships and intangible assets, other than goodwill.

    h.  Reflects the accrural related to consulting agreements entered into with
       two former Henderson Brothers stockholders which stipulate for future
       payments in the aggregate of $5.0 million.

    i.  Reflects the issuance of $250.0 million of principal amount of senior
       subordinated notes net of a discount of approximately $4.3 million. The
       net proceeds are assumed to be used for the acquisitions of Henderson
       Brothers and Webco and the related transaction costs.

    j.  Reflects the issuance of $3.0 million aggregate amount of senior
       promissory notes issued to Webco stockholders.

    k.  Reflects the elimination of the stockholders' equity of Henderson
       Brothers and Webco.

    l.  Employee compensation and benefits was adjusted to reflect managing
       directors' compensation based on the revised compensation policies which
       were implemented at the time of the reorganization. Under this policy, a
       compensation pool of up to 30% of pre-tax income is set aside for
       managing directors and other employees. The pro forma compensation
       adjustment reflects managing directors' compensation, which is comprised
       of an annual base salary of approximately $8.5 million (34 managing
       directors at $250,000), and the remaining balance as bonus. The pro forma
       adjustment also includes compensation expenses related to employee
       restricted stock awards of $14.8 million which vest over 5 years and
       result in an

                                      F-8
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

        NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

                                  (UNAUDITED)

       annual expense of approximately $3.0 million. The pro forma adjustment
       does not include any other compensation expenses related to employees who
       are not managing directors.

    m. Reflects the annual interest expense for the $100.0 million of senior
       notes, issued on August 24, 1999, based upon an interest rate of 9.5%.

    n.  Reflects the annual interest expense for the $16.0 million senior note,
       issued on August 24, 1999, based on an interest rate of 9.5%.

    o.  Reflects the annual interest expense for the $350,000 of subordinated
       indebtedness, issued on August 24, 1999, based on an interest rate of
       8.0%.

    p.  Reflects the reversal of the actual interest expense, incurred prior to
       the reorganization, related to the $5.0 million of subordinated
       indebtedness repaid, based on an interest rate of 10.0%.

    q.  Reflects the annual amortization of intangibles, on a straight line
       basis, related to the redemption of limited partners' interest.

    r.  Managing directors' compensation was adjusted to reverse the actual
       amounts recorded prior to the reorganization.

    s.  Reflects reversal of actual limited partners' interest in earnings of
       subsidiary prior to the reorganization.

    t.  Reflects the historical results of operations of Webco for the year
       ended October 31, 1999.

    u.  Reflects the historical results of operations of Henderson Brothers for
       the year ended December 31, 1999.

    v.  Employee compensation and benefits was adjusted to reverse actual
       compensation paid to Henderson Brothers and Webco employees based upon
       new compensation arrangements which were implemented at the time of the
       closing. Eighteen Henderson Brothers and Webco employees will be added to
       the LaBranche & Co Inc. Annual Incentive Plan and were paid a base annual
       compensation and bonus as described in Note l above.

    w.  Reflects the annual interest expense for the $250.0 million of principal
       amount of senior subordinated notes, including the accretion of
       approximately $4.3 million of discount and the amortization of
       $7.1 million of debt issuance costs based on an effective interest rate
       of approximately 13.0%. This excludes any payment made pursuant to an
       Excess Cash Flow Offer.

    x.  Reflects the annual interest expense for $2.5 million of the
       $3.0 million senior promissory notes, assuming that $500,000 aggregate
       amount of such promissory notes is paid within less than one year, at an
       interest rate of 10.0%.

    y.  Reflects the reversal of the actual interest expense incurred for the
       repayment of Henderson Brothers' subordinated debt.

    z.  Reflects the annual amortization of intangibles, on a straight line
       basis, related to the acquisitions of Henderson Brothers and Webco.

    aa. Reflects the consolidated federal, state and local taxes for the
        combined company at an estimated tax rate of approximately 46%,
        including the deferred tax benefit related to the amortization of the
        deferred tax liability established in connection with the recording of
        the specialist stock listings at the respective estimated life of the
        intangible assets.

                                      F-9
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

    To the Stockholders of

    LaBranche & Co Inc. and Subsidiaries:

    We have audited the accompanying consolidated statements of financial
condition of LaBranche & Co Inc. and Subsidiaries (collectively, the "Company")
as of December 31, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' equity/members' capital and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements and the condensed financial statements referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 financial position of LaBranche & Co Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.

    Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The parent company only condensed
financial statements appearing on pages F-25 through F-29 are presented for the
purpose of complying with the Securities and Exchange Commission's rules and are
not part of the basic financial statements. Such statements have been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

    /s/ Arthur Andersen LLP

    New York, New York

    January 24, 2000

                                      F-10
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       (000'S OMITTED, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                           ASSETS
CASH AND CASH EQUIVALENTS...................................  $ 83,774   $  4,722
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL.............    25,422     21,100
RECEIVABLE FROM BROKERS, DEALERS AND CLEARING
  ORGANIZATIONS.............................................    33,662     54,808
SECURITIES OWNED, at market value:
  Corporate equities........................................   148,563    114,994
  United States Government obligations......................     1,471      1,468
  Other.....................................................     2,515      1,360
COMMISSIONS RECEIVABLE......................................     3,835      3,009
EXCHANGE MEMBERSHIPS CONTRIBUTED FOR USE, at market value...    20,700     12,250
EXCHANGE MEMBERSHIPS OWNED, at cost (market value of $9,200
  and $4,900, respectively).................................     6,300      6,300

OFFICE EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost, less
  accumulated depreciation and amortization of $1,250 and
  $729, respectively........................................     1,355      1,647
INTANGIBLE ASSETS, net of accumulated amortization:
  Specialist Stock List.....................................    92,789         --
  Trade Name................................................    26,340         --
  Goodwill..................................................    51,212     47,532

OTHER ASSETS................................................     7,187      3,011
                                                              --------   --------
    Total assets............................................  $505,125   $272,201
                                                              ========   ========
   LIABILITIES AND STOCKHOLDERS' EQUITY/MEMBERS' CAPITAL

LIABILITIES:
  Payable to brokers and dealers............................  $  7,726   $  3,892
  Securities sold, but not yet purchased, at market value...    36,900     67,896
  Accrued compensation......................................    12,016     17,735
  Accounts payable and other accrued expenses...............     5,522      6,347
  Other liabilities.........................................     7,959      1,341
                                                              --------   --------
                                                                70,123     97,211
                                                              --------   --------
LONG TERM DEBT..............................................   115,822         --
                                                              --------   --------
COMMITMENTS.................................................        --         --
SUBORDINATED LIABILITIES:
  Exchange memberships, at market value.....................    20,700     12,250
  Other subordinated indebtedness...........................    46,508     48,073
                                                              --------   --------
                                                                67,208     60,323
                                                              --------   --------
LIMITED PARTNERS' INTEREST IN SUBSIDIARY....................        --     37,574
                                                              --------   --------
STOCKHOLDERS' EQUITY/MEMBERS' CAPITAL:
Preferred Stock ($.01 par value, 10,000,000 shares
  authorized; none issued and outstanding)..................        --         --
Common stock (par value $.01 per share; 200,000,000 shares
  authorized, 45,875,000 shares issued and outstanding)            459         --
Additional paid-in-capital..................................   228,771         --
Retained earnings...........................................    22,742         --
                                                              --------   --------
Stockholders' equity/members' capital.......................   251,972     77,093
                                                              --------   --------
  Total liabilities and stockholders' equity/members'
    capital.................................................  $505,125   $272,201
                                                              ========   ========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-11
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (000'S OMITTED, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                1999        1998        1997
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
REVENUES:
  Net gain on principal transactions........................  $150,971     $95,048     $47,817
  Commissions...............................................    37,222      26,576      15,186
  Other.....................................................    12,844       4,787       4,637
                                                              --------     -------     -------
    Total revenues..........................................   201,037     126,411      67,640
                                                              --------     -------     -------
EXPENSES:
  Employee compensation and benefits........................    34,268      13,921       8,108
  Lease of exchange memberships.............................     8,416       6,568       3,727
  Interest..................................................     8,286       3,577       1,566
  Amortization of intangibles...............................     4,623       2,526         737
  Exchange, clearing and brokerage fees.....................     3,709       2,898       2,042
  Legal and professional fees...............................     1,622         916         620
  Occupancy.................................................     1,411       1,121         465
  Communications............................................     1,193         964         709
  Other.....................................................     3,041       2,285       1,934
                                                              --------     -------     -------
  Total expenses before managing directors' compensation,
    limited partners' interest in earnings of subsidiary and
    provision for income taxes..............................    66,569      34,776      19,908
                                                              --------     -------     -------
  Income before managing directors' compensation, limited
    partners' interest in earnings of subsidiary and
    provision for income taxes..............................   134,468      91,635      47,732
MANAGING DIRECTORS' COMPENSATION............................    56,191      58,783      30,008
                                                              --------     -------     -------
  Income before limited partners' interest in earnings of
    subsidiary and provision for income taxes...............    78,277      32,852      17,724
LIMITED PARTNERS' INTEREST IN EARNINGS OF SUBSIDIARY........    25,344      26,292      14,354
                                                              --------     -------     -------
  Income before provision for income taxes..................    52,933       6,560       3,370
PROVISION FOR INCOME TAXES..................................    23,899       3,900       1,881
                                                              --------     -------     -------
  Net income................................................  $ 29,034     $ 2,660     $ 1,489
                                                              ========     =======     =======
  Weighted average shares outstanding.......................    40,443      24,318      10,329
                                                              ========     =======     =======
  Basic and diluted earnings per share......................  $   0.72     $  0.11     $  0.14
                                                              ========     =======     =======
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-12
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
                            EQUITY/MEMBERS' CAPITAL
                                (000'S OMITTED)

<TABLE>
<CAPTION>
                                                         COMMON STOCK       ADDITIONAL
                                                      -------------------    PAID-IN     RETAINED   MEMBERS'
                                                       SHARES     AMOUNT     CAPITAL     EARNINGS   CAPITAL     TOTAL
                                                      --------   --------   ----------   --------   --------   --------
<S>                                                   <C>        <C>        <C>          <C>        <C>        <C>
BALANCE, December 31, 1996..........................       --    $    --     $     --    $    --    $13,735    $ 13,735
  Net income........................................       --         --           --         --      1,489       1,489
  Contributions to capital..........................       --         --           --         --     28,574      28,574
  Distributions of capital..........................       --         --           --         --     (6,140)     (6,140)
                                                       ------    -------     --------    -------    -------    --------
BALANCE, December 31, 1997..........................       --         --           --         --     37,658      37,658
  Net income........................................       --         --           --         --      2,660       2,660
  Contributions to capital..........................       --         --           --         --     66,563      66,563
  Distributions of capital..........................       --         --           --         --    (29,788)    (29,788)
                                                       ------    -------     --------    -------    -------    --------
BALANCE, December 31, 1998..........................       --         --           --         --     77,093      77,093
  Net income through August 23, 1999................       --         --           --         --      6,292       6,292
  Contributions to capital..........................       --         --           --         --     18,096      18,096
  Distributions of capital..........................       --         --           --         --     (8,095)     (8,095)
                                                       ------    -------     --------    -------    -------    --------
BALANCE, pre-reorganization.........................       --         --           --         --     93,386      93,386
  Exchange of membership interests for shares of
    common stock....................................   35,375        354       93,032         --    (93,386)         --
  Initial public offering of common stock...........   10,500        105      134,689         --         --     134,794
                                                       ------    -------     --------    -------    -------    --------
BALANCE, post-reorganization and initial public
offering............................................   45,875        459      227,721         --         --     228,180
  Net income (August 24, 1999 through December 31,
    1999)...........................................       --         --           --     22,742         --      22,742
  Compensation related to restricted stock units
    granted.........................................       --         --        1,050         --         --       1,050
                                                       ------    -------     --------    -------    -------    --------
  BALANCE, DECEMBER 31, 1999........................   45,875    $   459     $228,771    $22,742    $    --    $251,972
                                                       ======    =======     ========    =======    =======    ========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-13
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (000'S OMITTED)

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                              ----------------------------------
                                                                 1999        1998        1997
                                                              ----------   ---------   ---------
<S>                                                           <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................  $  29,034     $ 2,660     $ 1,489
  Adjustments to reconcile net income to net cash (used in)
    operating activities-
    Depreciation and amortization...........................      5,348       3,020         909
    Undistributed limited partners interest in earnings of
      subsidiary............................................         --       3,646       1,241
  Compensation related to the restricted stock units........      1,050          --          --
    Deferred tax provision..................................        335          --          --
  Changes in assets and liabilities
    Securities purchased under agreements to resell.........     (4,322)     (6,100)     (8,500)
    Receivable from brokers, dealers and clearing
      organizations.........................................     21,146       3,366     (40,188)
    Corporate equities......................................    (33,569)    (77,967)     (6,338)
    United States government obligations....................         (3)        998           1
    Other securities owned..................................     (1,155)         --          --
    Commissions receivable..................................       (826)         --          --
    Other assets............................................     (4,161)     (1,970)     (2,047)
    Payable to brokers and dealers..........................      3,834       2,231      (2,731)
    Securities sold, but not yet purchased..................    (30,996)     28,569      20,591
    Accrued compensation....................................     (5,719)      8,891      (5,322)
    Accounts payable and other accrued expenses.............     (2,166)      2,379       1,371
    Income taxes payables...................................      7,624          --          --
                                                              ---------     -------     -------
    Net cash (used in) operating activities.................    (14,546)    (30,277)    (39,524)
                                                              ---------     -------     -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Payments for purchases of office equipment and leasehold
    improvements............................................       (228)     (1,550)       (278)
  Payments to limited partners for redemption of
    interests...............................................   (140,186)         --          --
                                                              ---------     -------     -------
    Net cash (used in) investing activities.................   (140,414)     (1,550)       (278)
                                                              ---------     -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the issuance of subordinated debt...........      3,435      16,750      28,900
  Repayment of subordinated debt............................     (5,000)         --        (896)
  Net proceeds from the initial public offering.............    134,794          --          --
  Proceeds from the issuance of long term debt..............     99,807          --          --
  Payments to members upon reorganization...................     (9,025)         --          --
  Proceeds from contributions of capital....................     18,096      46,598      10,948
  Payments for distributions of capital.....................     (8,095)    (29,788)     (6,140)
                                                              ---------     -------     -------
    Net cash provided by financing activities...............    234,012      33,560      32,812
                                                              ---------     -------     -------
    Increase (decrease) in cash and cash equivalents........     79,052       1,733      (6,990)
CASH AND CASH EQUIVALENTS, beginning of year................      4,722       2,989       9,979
                                                              ---------     -------     -------
CASH AND CASH EQUIVALENTS, end of year......................  $  83,774     $ 4,722     $ 2,989
                                                              =========     =======     =======
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR:
  Interest..................................................  $   4,557     $ 8,788     $ 4,360
  Income taxes..............................................  $  17,989     $ 2,244     $ 2,161
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES
  Excess of purchase price over fair value of assets
    acquired for issuance of membership interest and limited
    partnership interests in subsidiary.....................  $      --     $25,815     $24,980
  Exchange of membership interests for shares of common
    stock...................................................  $  93,386     $    --     $    --
  Issuance of subordinated debt and shares of common stock
    for redemption of limited partner interests upon
    reorganization..........................................  $  23,821     $    --     $    --
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-14
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

    The consolidated financial statements include the accounts of LaBranche &
Co Inc., a Delaware corporation (the "Holding Company"), and its subsidiaries,
LaB Investing Co. L.L.C., a New York limited liability company ("LaB
Investing"), and LaBranche & Co., a New York limited partnership (collectively,
the "Company"). LaB Investing is the sole general partner of LaBranche & Co. and
has a partnership interest in LaBranche & Co. of 84.1%. The Holding Company is
the sole limited partner of LaBranche & Co. and owns the remaining partnership
interest of 15.9%. The Holding Company is also the sole member of LaB Investing,
thereby providing the Holding Company with 100.0% ownership in LaBranche & Co.
LaBranche & Co. operates primarily as a specialist in certain equity securities
listed on the New York Stock Exchange, Inc. ("NYSE").

2. INITIAL PUBLIC OFFERING AND DEBT ISSUANCE

    On August 24, 1999, the Company reorganized from partnership to corporate
form, upon the members of LaB Investing exchanging their membership interests
for common stock in the Holding Company, and completed its initial public
offering. In that offering, the Company sold 10,500,000 shares of common stock
and received net proceeds of $134.8 million. Concurrently with the offering, the
Company issued $100.0 million aggregate principal amount of senior notes. See
Note 12 for further information regarding the long term debt.

3. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

    The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Management does not believe
that actual results will differ materially from these estimates.

INTANGIBLE ASSETS

    Intangible assets are comprised of the Company's specialist stock list,
trade name, and goodwill from acquisitions and the limited partner buyout that
occurred in concurrence with our reorganization to corporate form. The
specialist stock list and trade name are being amortized on a straight-line
basis over 40 years and the goodwill is being amortized on a straight-line basis
over 15 years. The allocation of purchase price and determination of useful
lives were based upon an independent appraisal. The useful life of the
specialist stock list was determined based upon analysis of historical turnover
characteristics of the specialist stocks.

    The Company continually evaluates whether later events and circumstances
have occurred that indicate the remaining estimated useful life may warrant
revision or that the remaining balance may not be recoverable. When factors
indicate that intangible assets should be evaluated for possible impairment, the
Company uses an estimate of undiscounted net income over the remaining life in
measuring whether the assets are recoverable.

EXCHANGE MEMBERSHIPS

    Exchange memberships owned by the Company are carried at cost.

                                      F-15
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    Certain members of the Company have contributed the use of 9 memberships on
the NYSE to the Company. These memberships are subordinated to claims of general
creditors and are carried at market value with a corresponding amount recorded
in subordinated liabilities. Lease payments are paid by the Company to its
members for the use of the exchange memberships at a rate that is commensurate
with the rent paid to nonaffiliated parties for the use of their exchange
memberships.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents consist of cash and highly liquid investments with
maturities of less than three months.

SECURITIES TRANSACTIONS

    Securities transactions and the related revenues and expenses are recorded
on a trade date basis. Securities owned and securities sold, but not yet
purchased are reflected at market value and unrealized gains and losses are
reflected in net gain on principal transactions. Dividends and Securities and
Exchange Commission ("SEC") fees are also included in net gain on principal
transactions. Dividend income and expense are recognized on the payable date,
which does not differ materially from the ex-date.

DEPRECIATION AND AMORTIZATION

    Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of office equipment and leasehold improvements.

COLLATERALIZED FINANCING TRANSACTIONS

    Securities purchased and sold under agreements to resell and repurchase, as
well as securities borrowed and loaned for which cash is deposited or received,
are treated as collateralized financing transactions and are recorded at
contract amount.

COLLATERAL

    The Company continues to report assets as owned when they are pledged as
collateral in secured financing arrangements and the secured party cannot sell
or repledge the assets or the Company can substitute collateral or otherwise
redeem it on short notice. The Company continues not to report securities
received as collateral in secured financing arrangements because the debtor
typically has the right to substitute or redeem the collateral on short notice.

REPORTABLE OPERATING SEGMENT

    The Company considers its present operations to be one reportable segment
for purposes of presenting consolidated financial information and for evaluating
its performance. The financial statement information presented in the
accompanying consolidated financial statements is consistent with the
preparation of financial information for the purpose of internal use.

                                      F-16
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MANAGING DIRECTORS' COMPENSATION

    Prior to the reorganization on August 24, 1999 the managing directors of
LaBranche & Co. were the members of LaB Investing. LaBranche & Co. paid out
substantially all of its earnings as compensation expense to its managing
directors. Subsequent to August 24, 1999, the managing directors of the Company
are compensated based on an annual salary as well as an incentive based
compensation pool which is determined based upon a certain percentage of pre-tax
income.

NEW ACCOUNTING PRONOUNCEMENT

    The Financial Accounting Standard Board has issued Statement of Financial
Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative
Instruments and Hedging Activities," which is effective for periods beginning
after June 15, 2000. Management does not believe the impact of the adoption of
SFAS No. 133 on the Company's financial position or results of operations, will
be material.

4. RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS

       The balances presented as receivables from and payables to brokers,
   dealers and clearing organizations consists of the following at December 31,
   1999 and December 31, 1998:

<TABLE>
<CAPTION>
                                                                 FOR THE YEARS
                                                                     ENDED
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Receivable from brokers, dealers and clearing organizations:
  Pending trades, net.......................................  $    --    $34,390
  Securities borrowed.......................................   26,230     17,386
  Receivable from clearing organizations....................    3,373      1,813
  Securities failed to deliver..............................      827      1,219
  Other receivables from brokers and dealers................    3,232         --
                                                              -------    -------
                                                              $33,662    $54,808
                                                              =======    =======
Payable to brokers and dealers:
Pending trades, net.........................................  $ 6,435    $    --
Securities failed to receive................................    1,264      3,892
Other payables to brokers and dealers.......................       27         --
                                                              -------    -------
                                                              $ 7,726    $ 3,892
                                                              =======    =======
</TABLE>

5. INCOME TAXES

    Prior to its conversion to corporate form, LaBranche & Co. operated as a
partnership and generally was not subject to U.S. federal and state income
taxes. The earnings of LaBranche & Co., however, were subject to local
unincorporated business taxes. The members were taxed on their proportionate
share of the partnership's taxable income or loss. Effective with its conversion
from partnership to corporate form on August 24, 1999, the Company became
subject to U.S. federal, state

                                      F-17
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)
and local corporate income taxes. The Company accounts for taxes in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes", which requires the recognition of tax benefits or expenses on
temporary differences between the financial reporting and tax bases of its
assets and liabilities. Deferred tax assets and liabilities relate to
stock-based compensation and amortization of certain intangibles. As a result of
its conversion to corporate form, the Company recognized the tax effect of the
change in its income tax rate on the earnings attributable to the period from
August 24, 1999 to December 31, 1999. The Company's effective tax rate differs
from the federal statutory rate primarily due to its conversion to corporate
form and non-deductible amortization of intangibles. The components of provision
for income taxes reflected on the consolidated statements of operations are set
forth below:

<TABLE>
<CAPTION>
                                                                         YEARS ENDED
                                                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                              1999           1998           1997
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
Current federal, state and local taxes..................     $18,346        $   --         $   --
Unincorporated business tax.............................       5,218         3,900          1,881
Deferred tax provision..................................         335            --             --
                                                             -------        ------         ------
      Total provision for income taxes..................     $23,899        $3,900         $1,881
                                                             =======        ======         ======
</TABLE>

6. CAPITAL AND NET LIQUID ASSET REQUIREMENTS

    LaBranche & Co., as a specialist and member of the NYSE, is subject to SEC
Rule 15c3-1 as adopted and administered by the NYSE and the SEC. LaBranche & Co.
is required to maintain minimum net capital, as defined, equivalent to the
greater of $100,000 or 1/15 of aggregate indebtedness, as defined.

    As of December 31, 1999 and 1998, LaBranche & Co.'s net capital, as defined
under SEC Rule 15c3-1, was $161.4 million and $86.5 million, respectively, and
exceeded minimum requirements by $159.9 million and $85.2 million, respectively.
LaBranche & Co.'s aggregate indebtedness to net capital ratio was .13 to 1 and
 .24 to 1, respectively.

    The NYSE also requires members registered as regular specialists to
establish that they can meet, with their own net liquid assets, a minimum dollar
amount which shall be the greater of $1.0 million or 25% of their position
requirement ("Rule 104.2"). In 1998, due to the concentration of LaBranche &
Co.'s specialist book, the NYSE required LaBranche & Co. to maintain minimum net
liquid assets of the greater of 120% of LaBranche & Co.'s Rule 104.2 position
requirement, or $90.0 million, adjusted by the amount of the position
requirement for any new stock allocations. The position requirement is the
ability to assume positions in stocks in which they are registered of 30,000
shares of each S&P 500 common stock, 22,500 shares in all other common stocks,
4,500 shares in each convertible preferred stock and 1,800 shares in each
nonconvertible preferred stock. The term "net liquid assets" for a specialist
who also engages in transactions other than specialist activities is based on
its excess net capital determined in accordance with SEC Rule 15c3-1.

    As of December 31, 1999 and 1998, LaBranche & Co.'s NYSE minimum required
dollar amount of net liquid assets, as defined, was $93.6 million and
$90.6 million, respectively, compared to actual net liquid assets, as defined,
of $175.9 million and $103.1 million, respectively.

                                      F-18
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. ACQUISITIONS

    Effective July 1, 1997, LaBranche & Co. acquired a portion of the specialist
operations of Stern Bros., LLC for an aggregate purchase price of approximately
$9.3 million, representing an 8.3% total general partners' interest in
LaBranche & Co. The goodwill associated with the acquisition was approximately
$7.8 million.

    Effective August 1, 1997, LaBranche & Co. acquired the specialist operations
of Ernst, Homans, Ware & Keelips for an aggregate purchase price of
approximately $18.5 million, representing general and limited partnership
interests totaling 16.4%. The excess purchase price over fair value of net
assets acquired was approximately $17.2 million.

    Effective July 1, 1998, LaBranche & Co. acquired the specialist operations
of Fowler, Rosenau & Geary, L.L.C. ("Fowler") for an aggregate purchase price of
approximately $45.0 million, representing a 22.4% total general and limited
partners' interest in LaBranche & Co. The excess purchase price over fair value
of net assets acquired was approximately $25.8 million.

    Effective August 24, 1999, the limited partnership interests of
$37.1 million in LaBranche & Co. were acquired at an excess purchase price of
$127.4 million over the limited partners' capital balances. The redemption of
the limited partners' interests is accounted for as a step acquisition under the
purchase method of accounting. The excess of purchase price over the limited
partners' capital balances was allocated to intangible assets and assigned lives
as follows:

<TABLE>
<CAPTION>
                                                        ORIGINAL AMOUNT       LIFE
                                                      -------------------   --------
<S>                                                   <C>        <C>        <C>
Specialist Stock List...............................    $ 93.6   million    40 years
Trade Name..........................................      26.6   million    40 years
Goodwill............................................       7.2   million    15 years
                                                      --------
                                                        $127.4   million
                                                      ========
</TABLE>

8. COMMITMENTS

    During 1998, LaBranche & Co. secured a $75.0 million committed line of
credit with a U.S. commercial bank. The agreement matured on June 25, 1999. In
June 1999, the Company amended and extended the committed line of credit to
$100.0 million through June 23, 2000.

    Minimum rental commitments under existing noncancellable leases for office
space and equipment are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- ------------------------
<S>                                                      <C>         <C>
2000...................................................  $ 673,006
2001...................................................    771,750
2002...................................................    801,750
2003...................................................    807,750
2004...................................................    807,750
Thereafter.............................................  3,372,000
</TABLE>

    These leases contain escalation clauses providing for increased rentals
based upon maintenance and tax increases.

                                      F-19
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. SUBORDINATED LIABILITIES

    LaBranche & Co. is a party to subordinated loan agreements under which it
has indebtedness approved by the NYSE for inclusion as net capital, as defined.
Interest is payable quarterly at various annual rates. Eleven of the agreements
representing $6,823,000 mature within the last six months of 2000 and seven
agreements representing $3,385,000 mature within the first six months of 2001.
These agreements all have automatic rollover provisions, and each scheduled
maturity date will be extended an additional year, unless the lender gives
LaBranche & Co. seven months' advance notice that the maturity date will not be
extended. Interest expense incurred for the years ended December 31, 1999, 1998
and 1997 on these agreements was approximately $1.1 million, $1.3 million and
$1.2 million, respectively. Two of the holders representing $850,000 of
subordinated loan agreements maturing in November 2000 have notified
LaBranche & Co. that the scheduled maturity date will not be extended.

    LaBranche & Co. also issued seven notes representing aggregate indebtedness
of $20,000,000 which mature on September 15, 2002 and bear interest at an annual
rate of 8.17% payable on a quarterly basis. LaBranche & Co. also issued five
notes representing aggregate indebtedness of $15,000,000 which mature on
June 3, 2008 and bear interest at an annual rate of 7.69% payable on a quarterly
basis. These notes are senior to all other subordinated notes of LaBranche & Co.
Interest expense incurred for the years ended December 31, 1999, 1998 and 1997
on these notes was approximately $2.8 million, $2.3 million and $340,000,
respectively. The agreements covering these subordinated notes require the
Company to comply with certain covenants that, among other things, restrict the
type of business in which the Company may engage, sets certain net capital
levels and prohibits restricted payments.

    LaBranche & Co. also issued a subordinated note for $1,300,000 due March 2,
2001 with an annual rate of 10.0%, payable on a quarterly basis. Interest
expense incurred for the year ended December 31, 1999 on the note was
approximately $123,333. This agreement has an automatic rollover provision, and
the scheduled maturity date will be extended an additional year, unless the
lender gives LaBranche & Co. seven months' advance notice that the maturity date
will not be extended.

    Exchange memberships contributed pursuant to subordination agreements in the
amount of $20,700,000 comprise the remaining subordinated liabilities.

10. EARNINGS PER SHARE

    Earnings per share ("EPS") are computed in accordance with SFAS No. 128,
"Earnings Per Share". Basic EPS is calculated by dividing net income by the
weighted-average number of common shares outstanding. For purposes of
determining weighted average shares outstanding for periods prior to the
Company's reorganization from partnership to corporate form, the outstanding
shares were determined based on the conversion ratio of members' capital to
common stock issued to the members upon reorganization.

                                      F-20
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. EARNINGS PER SHARE (CONTINUED)
    The computations of basic and diluted EPS are set forth below (000's
omitted, except per share data):

<TABLE>
<CAPTION>
                                                          YEAR ENDED        YEAR ENDED        YEAR ENDED
                                                         DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                                             1999              1998              1997
                                                         ------------      ------------      ------------
<S>                                                      <C>               <C>               <C>
Numerator for basic and diluted earnings per share-
  net income.......................................         $29,034           $ 2,660           $ 1,489
Denominator for basic and diluted earnings per
  share-weighted-average number of common shares...          40,443            24,318            10,329
Basic and diluted earnings per share...............         $  0.72           $  0.11           $  0.14
</TABLE>

    Under the treasury stock method of accounting, restricted stock units
representing 1,062,600 shares of common stock and options to purchase an
aggregate of 1,200,000 shares of common stock were not included in the
calculation of diluted earnings per share due to their antidilutive effect.

11. EMPLOYEE INCENTIVE PLANS

EQUITY INCENTIVE PLAN

    The Company has elected to account for stock-based employee compensation
plans in accordance with Accounting Principles Board Opinion ("APB") No. 25 as
permitted by SFAS No. 123, "Accounting for Stock-Based Compensation". In
accordance with APB No. 25, compensation expense is not recognized for stock
options that have no intrinsic value on the date of grant.

    The Company sponsors an Equity Incentive Plan which provides for grants of
incentive stock options, nonqualified stock options, restricted shares of common
stock, restricted stock units, unrestricted shares and stock appreciation
rights.

    A maximum of 4,687,500 shares of common stock has been reserved for issuance
under the Equity Incentive Plan. The maximum number of shares of common stock
with respect to which options, restricted stock, restricted stock units or other
equity-based awards may be granted under the Equity Incentive Plan during any
calendar year to any employee may not exceed 500,000 shares, subject to
adjustment upon certain corporate transactions.

    On August 18, 1999, restricted stock units with respect to 1,059,000 shares
of common stock were granted to employees who were not managing directors with
an issue cost of $0 to the employees and a fair market value of $14 per share.
In October 1999, restricted stock units for an additional 3,600 shares of common
stock were issued to an employee with an issue cost of $0. The restricted stock
units, which are subject to continuing service with the Company and other
restrictions, will generally vest in three annual installments commencing on the
third anniversary of the grant date. Compensation expense is being recognized
over the five-year vesting period on a straight-line basis. For the year ended
December 31, 1999, the Company recorded compensation expense and a credit to
additional paid-in capital of approximately $1.1 million related to these
restricted stock units.

STOCK OPTIONS

    On August 18, 1999, options to purchase an aggregate of 1,200,000 shares of
common stock were granted to executive officers of the Company at market value.
Of these options, options to purchase

                                      F-21
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. EMPLOYEE INCENTIVE PLANS (CONTINUED)
1,000,000 shares, which are subject to continuing service with the Company and
other restrictions, will become exercisable in three equal annual installments
commencing on the first anniversary of the date of grant. The options to
purchase the remaining 200,000 shares vested on January 7, 2000 and 100,000
shares become exercisable on July 7, 2000 and 100,000 shares on July 7, 2001. As
of December 31, 1999, there were no options exercisable. These options will
generally expire ten years from the date of grant, unless sooner terminated or
exercised. Pursuant to APB No. 25, no compensation expense was recognized since,
on the date of grant, these options had no intrinsic value. As of December 31,
1999, the outstanding options had an exercise price of $14 and a remaining life
of approximately 10 years.

    The estimated fair value of options granted was $4.97 per option. Fair value
is estimated as of the grant date based on a binomial option pricing model using
the following assumptions:

<TABLE>
<S>                                                           <C>
Risk-free interest rate.....................................     5.25%
Expected life...............................................   7 years
Expected volatility.........................................       40%
Dividend yield..............................................        0%
</TABLE>

    In accordance with SFAS No. 123, compensation expense was not recognized on
the date of the grant of the options since these options had no intrinsic value.
If the Company were to recognize compensation expense under the fair-value based
method of SFAS No. 123, the net income would have decreased by approximately
$843,000 resulting in pro forma net income and earnings per share as follows:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                              DECEMBER 31, 1999
                                                              -----------------
                                                            (000S OMITTED, EXCEPT
                                                               PER SHARE DATA)
<S>                                                         <C>
Net income, as reported...................................         $29,034
Pro forma net income......................................          28,191
EPS, as reported..........................................         $  0.72
Pro forma EPS.............................................            0.70
</TABLE>

    The effect of applying SFAS No. 123 in the pro forma disclosure above may
not be representative of the potential pro forma effect on net income in future
periods.

ANNUAL INCENTIVE PLAN

    The Company also sponsors an Annual Incentive Plan. Managing directors and
other employees designated by management will be eligible to participate. Under
this plan, a compensation pool of up to 30% of the Company's pre-tax income, or
such lesser percentage determined by the compensation committee, will be set
aside for managing directors and other employees selected by the compensation
committee to participate in this plan. In determining the compensation pool, the
compensation expense relating to the grant of restricted stock units at the time
of the reorganization of the Company to corporate form is deducted. Under the
plan, no individual participant may receive more than 25% of the compensation
pool for any fiscal year.

                                      F-22
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. LONG TERM DEBT

    Effective August 24, 1999, the Holding Company issued $100.0 million
aggregate principal amount of senior notes. The notes bear interest at a rate of
9.5% annually and mature on August 15, 2004. The carrying value of the senior
notes as of December 31, 1999 was $99.8 million. The discount on the bond is
being amortized as an adjustment to interest expense over the life of the senior
notes. Debt issuance costs incurred as a result of the senior note offering are
approximately $2.5 million, which are being amortized as on a straight line
basis over the life of the senior notes. Interest expense incurred for the year
ended December 31, 1999 was approximately $3.3 million. The indenture covering
the senior notes includes certain covenants that, among other things, limits the
Company's ability to: borrow money; pay dividends or repurchase stock; make
investments; engage in transactions with stockholders and affiliates; create
liens on assets; and sell assets or engage in mergers and consolidations except
in accordance with certain specified conditions, as defined.

    In addition, in connection with the reorganization of the Company from
partnership to corporate form on August 24, 1999, the Holding Company issued a
note in an aggregate principal amount of $16.0 million as partial payment for
the acquisition of a limited partner interest. Of the $16.0 million total,
$6.0 million is payable on the first anniversary of issuance, $5.0 million is
payable on the second anniversary of issuance and $5.0 million is payable on the
third anniversary of issuance. The note bears interest at the annual rate of
9.5%. Interest expense incurred for the year ended December 31, 1999 was
approximately $538,000.

13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

    Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," requires companies to report the fair value of
financial instruments for certain assets and liabilities. Substantially all of
the Company's financial instruments are short-term in nature or carry market
interest rates and, accordingly, approximate fair value.

    The fair value of the fixed rate debt at December 31, 1999, in millions, is
as follows:

<TABLE>
<CAPTION>
                                                       CARRYING VALUE   FAIR VALUE
                                                       --------------   ----------
<S>                                                    <C>              <C>
Senior Debt..........................................      $99.8           $97.0
Fixed Rate Note......................................      $16.0           $15.9
</TABLE>

    The fair value of the senior notes was determined based upon its market
value as of December 31, 1999. The fair value of the fixed rate note was
determined using current market rates to discount its cash flows.

14. FINANCIAL INSTRUMENTS WITH CONCENTRATION OF CREDIT AND OFF-BALANCE SHEET
    RISK

    As a specialist on the NYSE, LaBranche & Co. is engaged in various
securities trading and lending activities. In connection with its activities as
a specialist, LaBranche & Co. assumes positions in stocks for which it is
responsible. LaBranche & Co. is exposed to credit risk associated with the
nonperformance of counterparties in fulfilling their contractual obligations
pursuant to these securities transactions. LaBranche & Co. is exposed to market
risk associated with the sale of securities not yet purchased, which can be
directly impacted by volatile trading on the NYSE. Additionally, in the event of
nonperformance and unfavorable market price movements, LaBranche & Co. may be
required to purchase or sell financial instruments, which may result in a loss
to LaBranche & Co.

                                      F-23
<PAGE>
                      LABRANCHE & CO INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. FINANCIAL INSTRUMENTS WITH CONCENTRATION OF CREDIT AND OFF-BALANCE SHEET
    RISK (CONTINUED)
    LaBranche & Co. enters into collateralized financing agreements in which it
extends short-term credit to major financial institutions. LaBranche & Co.
controls access to the collateral pledged by the counterparties, which generally
consists of U.S. equity and government securities. The value and adequacy of the
collateral are continually monitored. Consequently, the risk of credit loss from
counterparties' failure to perform in connection with collateralized lending
activities is minimal.

15. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

    The 1998 pro forma consolidated results give effect to LaBranche & Co.'s
July 1998 acquisition of Fowler and its reorganization from partnership to
corporate form and related transactions, which include the acquisition of
LaBranche & Co's limited partnership interests, and the application of the net
proceeds from the Company's August 1999 initial public offering and senior note
offering (the "Reorganization Transactions") as if the Reorganization
Transactions occurred as of January 1, 1998. The 1999 pro forma consolidated
results give effect to the Reorganization Transactions as if they occurred as of
January 1, 1999. The pro forma impact on revenues, pre-tax income and earnings
are as follows (000's omitted, except per share data):

<TABLE>
<CAPTION>
                                                               YEARS ENDED
                                                              DECEMBER 31,
                                                        -------------------------
                                                           1999          1998
                                                        -----------   -----------
                                                        (PRO FORMA)   (PRO FORMA)
<S>                                                     <C>           <C>
Revenues..............................................    $201,037      $137,850
Pre-Tax Income........................................     100,153        59,429
Net Income............................................      53,988        31,791
EPS...................................................    $   1.18      $   0.69
</TABLE>

16. SUBSEQUENT EVENTS (UNAUDITED)

    Subsequent to year-end the Company acquired Henderson Brothers
Holdings, Inc. ("Henderson"), a specialist firm on the NYSE. Under the terms of
the acquisition, the Company will acquire all of the outstanding capital stock
of Henderson for approximately $230 million in cash. In addition, the Company
has acquired Webco Securities Inc. ("Webco"), another specialist firm on the
NYSE. Under the terms of the acquisition, the Company acquired Webco for
$10.9 million in cash, an aggregate of approximately $3 million in senior
promissory notes and approximately 2.8 million shares of the Company's common
stock. Both of these acquisitions will be accounted for under the purchase
method.

    During February 2000, a U.S. commercial bank increased and extended its
committed line of credit to LaBranche & Co. from $100.0 million to
$200.0 million through February 2, 2001.

                                      F-24
<PAGE>
                              LABRANCHE & CO INC.
                             (PARENT COMPANY ONLY)
                  CONDENSED STATEMENTS OF FINANCIAL CONDITION
                       (000'S OMITTED, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                           ASSETS
CASH AND CASH EQUIVALENTS...................................  $ 46,872   $    21
SECURITIES PURCHASED UNDER AGREEMENT TO RESELL..............     1,422        --
INVESTMENT IN SUBSIDIARIES, AT EQUITY VALUE.................   321,370    77,072
OTHER.......................................................    14,041        --
                                                              --------   -------
    Total Assets............................................  $383,705   $77,093
                                                              ========   =======
   LIABILITIES AND STOCKHOLDERS' EQUITY/MEMBERS' CAPITAL
LIABILITIES:
    Income taxes payable....................................  $  7,960   $    --
    Accounts payable and other liabilities..................     7,951        --
                                                              --------   -------
                                                                15,911        --
                                                              --------   -------
LONG TERM DEBT..............................................   115,822        --
                                                              --------   -------
STOCKHOLDERS' EQUITY/MEMBERS' CAPITAL:
Preferred stock ($.01 par value, 10,000,000 shares
  authorized; none issued and outstanding)..................        --        --
Common stock (par value $.01 per share; 200,000,000 shares
  authorized, 45,875,000 shares issued and outstanding).....       459        --
Additional paid-in-capital..................................   228,771        --
Retained earnings...........................................    22,742        --
                                                              --------   -------
Stockholders' equity/members' capital.......................   251,972    77,093
                                                              --------   -------
Total liabilities and stockholders' equity/members'
  capital...................................................  $383,705   $77,093
                                                              ========   =======
</TABLE>

            See accompanying note to condensed financial statements.

                                      F-25
<PAGE>
                              LABRANCHE & CO INC.
                             (PARENT COMPANY ONLY)
                       CONDENSED STATEMENTS OF OPERATIONS
                                (000'S OMITTED)

<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED
                                                                        DECEMBER 31,
                                                              --------------------------------
                                                                1999        1998        1997
                                                              --------   ----------   --------
<S>                                                           <C>        <C>          <C>
REVENUE:
  Equity earnings from investment in subsidiaries...........  $31,476      $2,663      $1,480
  Investment income.........................................      910          --          --
                                                              -------      ------      ------
    Total revenue...........................................   32,386       2,663       1,480
                                                              -------      ------      ------
EXPENSES:
  Interest..................................................    3,879          --          --
  Employee compensation and related benefits................    1,050          --          --
  Other expenses............................................      504           3           1
                                                              -------      ------      ------
    Total expenses..........................................    5,433           3           1
                                                              -------      ------      ------
  Income before income tax benefit..........................   26,953       2,660       1,479
                                                              -------      ------      ------
INCOME TAX BENEFIT..........................................   (2,081)         --         (10)
  Net income................................................  $29,034      $2,660      $1,489
                                                              =======      ======      ======
</TABLE>

            See accompanying note to condensed financial statements.

                                      F-26
<PAGE>
                              LABRANCHE & CO INC.
                             (PARENT COMPANY ONLY)

                CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS'

                            EQUITY/MEMBERS' CAPITAL
                                (000'S OMITTED)

<TABLE>
<CAPTION>
                                                  COMMON STOCK       ADDITIONAL
                                               -------------------    PAID-IN     RETAINED   MEMBERS'
                                                SHARES     AMOUNT     CAPITAL     EARNINGS   CAPITAL     TOTAL
                                               --------   --------   ----------   --------   --------   --------
<S>                                            <C>        <C>        <C>          <C>        <C>        <C>
BALANCE, December 31, 1996...................       --     $   --     $     --    $    --    $13,735    $ 13,735
Net income...................................       --         --           --         --      1,489       1,489
Contributions to capital.....................       --         --           --         --     28,574      28,574
Distributions of capital.....................       --         --           --         --     (6,140)     (6,140)
                                                ------     ------     --------    -------    -------    --------
BALANCE, December 31, 1997...................       --         --           --         --     37,658      37,658
Net income...................................       --         --           --         --      2,660       2,660
Contributions to capital.....................       --         --           --         --     66,563      66,563
Distributions of capital.....................       --         --           --         --    (29,788)    (29,788)
                                                ------     ------     --------    -------    -------    --------
BALANCE, December 31, 1998...................       --         --           --         --     77,093      77,093
Net income through August 23, 1999...........       --         --           --         --      6,292       6,292
Contributions to capital.....................       --         --           --         --     18,096      18,096
Distributions of capital.....................       --         --           --         --     (8,095)     (8,095)
                                                ------     ------     --------    -------    -------    --------
BALANCE, pre-reorganization..................       --         --           --         --     93,386      93,386
Exchange of membership interest for shares of
  common stock...............................   35,375        354       93,032         --    (93,386)         --
Initial public offering of common stock......   10,500        105      134,689         --         --     134,794
                                                ------     ------     --------    -------    -------    --------
BALANCE post-reorganization and initial
  public offering............................   45,875        459      227,721         --         --     228,180
Net income (August 24, 1999 through
  December 31, 1999).........................       --         --           --     22,742         --      22,742
Compensation related to restricted stock
  units granted..............................       --         --        1,050         --         --       1,050
                                                ------     ------     --------    -------    -------    --------
BALANCE, December 31, 1999...................   45,875     $  459     $228,771    $22,742    $    --    $251,972
                                                ======     ======     ========    =======    =======    ========
</TABLE>

            See accompanying note to condensed financial statements.

                                      F-27
<PAGE>
                              LABRANCHE & CO INC.
                             (PARENT COMPANY ONLY)

                       CONDENSED STATEMENTS OF CASH FLOW
                                (000'S OMITTED)

<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED
                                                                        DECEMBER 31,
                                                              --------------------------------
                                                                1999        1998        1997
                                                              --------   ----------   --------
<S>                                                           <C>        <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $ 29,034    $ 2,660     $ 1,489
  Adjustments to reconcile net income to net cash used in
    operating activities
    Amortization of debt issuance costs and bond discount...       203         --          --
    Compensation expense related to restricted stock
      units.................................................     1,050         --          --
    Equity earnings from investment in subsidiaries.........   (31,476)   (19,477)     (6,343)
    Deferred tax benefit....................................    (2,081)        --          --
Changes in assets and liabilities--
    Securities purchased under agreements to resell.........    (1,422)        --          --
    Other assets............................................   (11,559)        13          26
    Accounts payable and other liabilities..................    13,911         --         (10)
                                                              --------    -------     -------
Net cash used in operating activities.......................    (2,340)   (16,804)     (4,838)
                                                              --------    -------     -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from contributions of capital....................    20,000     46,598      10,948
  Payments for distributions of capital.....................   (51,199)   (29,788)     (6,140)
  Payments to limited partners for redemption of interests
    and repayment of subordinated debt upon
    reorganization..........................................  (145,186)        --          --
                                                              --------    -------     -------
  Net cash provided by (used in) investing activities.......  (176,385)    16,810       4,808
                                                              --------    -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the issuance of long term debt..............    99,807         --          --
  Net proceeds from the initial public offering.............   134,794         --          --
  Payments to members upon reorganization...................    (9,025)        --          --
                                                              --------    -------     -------
  Net cash provided by financing activities.................   225,576         --          --
                                                              --------    -------     -------
Net change in cash..........................................    46,851          6         (30)
CASH AND CASH EQUIVALENTS, beginning of year................        21         15          45
                                                              --------    -------     -------
CASH AND CASH EQUIVALENTS, end of year......................  $ 46,872    $    21     $    15
                                                              ========    =======     =======
SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
  Income taxes..............................................  $ 11,750    $     3     $    11
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES:
  Membership interests issued for acquisitions..............  $     --    $19,965     $17,626
  Exchange of membership interests for shares of common
    stock...................................................  $ 93,386    $    --     $    --
  Issuance of subordinated debt and shares of common stock
    for redemption of limited partner interests upon
    reorganization..........................................  $ 23,821    $    --     $    --
</TABLE>

            See accompanying note to condensed financial statements.

                                      F-28
<PAGE>
                              LABRANCHE & CO INC.
                             (PARENT COMPANY ONLY)
                     NOTE TO CONDENSED FINANCIAL STATEMENTS

1.  NOTE TO CONDENSED FINANCIAL STATEMENTS

    The condensed financial statements of LaBranche & Co Inc. (Parent Company
Only) should be read in conjunction with the consolidated financial statements
of LaBranche & Co Inc. and Subsidiaries and the notes thereto contained
elsewhere in this prospectus.

                                      F-29
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Henderson Brothers Holdings, Inc. and Subsidiary

    We have audited the accompanying consolidated statements of financial
condition of Henderson Brothers Holdings, Inc. and Subsidiary (the "Company") as
of December 31, 1999 and 1998, and the related consolidated statements of
income, cash flows and changes in stockholders' equity for the years then ended.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The consolidated financial statements
of the Company for the year ended December 31, 1997 were audited by other
auditors whose report, dated February 16, 1998, expressed an unqualified opinion
on those statements.

    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, such 1999 and 1998 consolidated financial statements present
fairly, in all material respects, the financial position of Henderson Brothers
Holdings, Inc. and Subsidiary at December 31, 1999 and 1998, and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.

    As discussed in Note 11, on December 23, 1999 the stockholders of the
Company executed an agreement to sell all the outstanding capital stock of the
Company to LaBranche & Co Inc.

/s/ Deloitte & Touche LLP

New York, New York
January 28, 2000

                                      F-30
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Henderson Brothers Holdings, Inc.

    We have audited the accompanying consolidated statements of income, cash
flows and changes in stockholders' equity of Henderson Brothers Holdings, Inc.
and Subsidiary for the year ended December 31, 1997. These financial statements
and the condensed financial statements referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

    We conducted our audit 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 audit provides a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Henderson Brothers Holdings, Inc. and Subsidiary for the year ended
December 31, 1997 in conformity with generally accepted accounting principles.

    Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The condensed financial statements
(Parent Company Only) appearing on pages F-47 through F-50 are presented for the
purpose of complying with the Securities and Exchange Commission's rules and are
not part of the basic financial statements. Such statements have been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

/s/ GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.

New York, New York
February 16, 1998

                                      F-31
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                  1999           1998
                                                              ------------   ------------
<S>                                                           <C>            <C>
                           ASSETS
Cash........................................................  $  3,396,238   $ 10,670,335
Cash deposited with clearing organizations or segregated in
  compliance with federal regulations.......................     6,342,123      4,935,397
Securities purchased under agreement to resell..............    19,500,000             --
Financial instruments owned--at fair value:
    U.S. government obligations.............................    46,138,239     41,914,281
    Equities................................................    29,720,166     37,913,511
Receivables:
    Brokers, dealers and clearing organizations.............    96,233,541     97,188,681
    Customers...............................................     1,172,860      1,268,070
    Income taxes............................................     1,557,209        279,231
    Exchange memberships:
    Owned by the Company, at cost (market value, $43,700,000
     and $23,275,000, respectively).........................     8,835,620      8,835,620
    Contributed by stockholders for the use of the Company,
     at market value........................................     4,600,000      2,450,000
Other assets................................................     1,726,878      4,902,876
                                                              ------------   ------------
TOTAL ASSETS................................................  $219,222,874   $210,358,002
                                                              ============   ============
            LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Bank loan...................................................  $      1,000   $      1,000
Financial instruments (equities) sold, but not yet
  purchased--at fair value..................................    20,804,633     15,483,439
Payables:
    Brokers, dealers and clearing organizations.............    68,702,105     78,364,047
    Customers...............................................     6,551,799      4,567,875
    Correspondents..........................................     1,016,462        579,556
    Deferred income taxes...................................       740,934      1,402,871
    Former stockholders.....................................            --      6,442,368
    Dividends...............................................       943,341        745,402
Accounts payable and accrued expenses.......................     7,832,593      6,508,734
                                                              ------------   ------------
                                                               106,592,867    114,095,292
                                                              ------------   ------------
Subordinated liabilities....................................    58,669,100     56,252,100
                                                              ------------   ------------
Commitments (Note 6)
STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $1 par value (stated value of
  $1,000) 175.5 shares authorized, no shares outstanding....            --             --
Preferred stock, Series B, $1 par value (stated value of
  $917.18) 84 shares authorized, no shares outstanding......            --             --
Preferred stock, $1 par value, 100,744 shares authorized, no
  shares issued.............................................            --             --
Preferred stock, Series C, $1 par value (stated value of
  $137) 99,995 shares authorized, 68,857 shares outstanding
  in 1999 and 1998..........................................     9,433,409      9,433,409
Common stock, non-voting, $1 par value, 40,000 shares
  authorized 4,260 shares outstanding in 1999 and 1998......         4,260          4,260
Common stock, voting, $1 par value, 20,000 shares authorized
  4,238 shares outstanding in 1999 and 1998.................         4,238          4,238
Additional paid-in-capital..................................    11,964,776     11,964,776
Retained earnings...........................................    36,577,520     25,169,854
Notes receivable--stockholders..............................    (4,023,296)    (6,565,927)
                                                              ------------   ------------
Total stockholders' equity..................................    53,960,907     40,010,610
                                                              ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................  $219,222,874   $210,358,002
                                                              ------------   ------------
</TABLE>

                See notes to consolidated financial statements.

                                      F-32
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                           1999          1998          1997
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
REVENUES:
    Principal transactions as a specialist............  $52,469,688   $36,863,958   $37,978,596
    Commissions.......................................   23,663,386    21,697,106    19,069,990
    Dividends and interest............................    5,012,169     4,614,675     3,393,502
    Net gain from investment accounts.................      334,509       451,907       618,176
    Other.............................................      609,190       716,903       543,577
                                                        -----------   -----------   -----------
        Total revenues................................   82,088,942    64,344,549    61,603,841
                                                        -----------   -----------   -----------
EXPENSES:
    Employee compensation and benefits................   43,263,227    38,261,765    36,422,258
    Stock exchange fees and clearance charges.........    1,765,338     1,230,554     1,159,328
    Professional fees.................................      887,042       949,100     1,170,087
    Contributions.....................................      463,695       346,530       322,036
    Rent..............................................      216,726       216,515       198,432
    Interest expense..................................    4,177,998     4,403,833     3,369,011
    Travel and entertainment..........................      864,458       781,458       711,422
    Communications....................................      137,430       137,101       121,528
    Insurance.........................................      511,921       668,479       444,519
    Other.............................................    5,132,947     2,226,495     2,430,278
                                                        -----------   -----------   -----------
        Total expenses................................   57,420,782    49,221,830    46,348,899
                                                        -----------   -----------   -----------
INCOME BEFORE PROVISION FOR INCOME TAXES..............   24,668,160    15,122,719    15,254,942
PROVISION FOR INCOME TAXES............................   12,317,153     7,195,641     6,982,480
                                                        -----------   -----------   -----------
NET INCOME............................................  $12,351,007   $ 7,927,078   $ 8,272,462
                                                        ===========   ===========   ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-33
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                                 1999          1998          1997
                                                              -----------   -----------   -----------
<S>                                                           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $12,351,007   $ 7,927,078   $ 8,272,462
  Adjustments to reconcile net income to net cash (used in)
    provided by operating activities:
    Depreciation and amortization...........................      256,365       182,115       205,159
    Bad debt expense........................................    1,321,684        42,102            --
    Deferred income taxes...................................     (661,937)       87,091      (251,713)
    (Increase) decrease in operating assets:
      Cash deposited with clearing organizations or
       segregated in compliance with federal regulations....   (1,406,726)   (4,294,711)    1,217,099
      Securities purchased under agreement to resell........  (19,500,000)           --            --
      Financial instruments owned...........................    3,969,387    (5,900,114)  (40,519,128)
      Receivables from brokers, dealers and clearing
       organizations........................................      955,140   (14,245,199)   (7,631,849)
      Receivables from customers............................       95,210     3,619,966    (2,710,919)
      Income taxes receivable...............................   (1,277,978)      (33,013)    2,251,756
      Other assets..........................................    1,737,593      (590,083)   (1,174,809)
    Increase (decrease) in operating liabilities:
      Financial instruments (equities) sold, not yet
       purchased............................................    5,321,194       783,667     4,252,228
      Payables to brokers, dealers and clearing
       organizations........................................   (9,661,942)   22,696,863     8,896,613
      Payables to customers.................................    1,983,924       696,228       967,860
      Payables to correspondents............................      436,906        (8,995)  (14,502,449)
      Payables to former stockholders.......................   (6,442,368)    6,442,368            --
      Accounts payable and accrued expenses.................    1,323,859       799,127     1,131,423
                                                              -----------   -----------   -----------
        Net cash (used in) provided by operating
        activities..........................................   (9,198,682)   18,204,490   (39,596,267)
                                                              -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of fixed assets..................................     (139,644)     (105,003)      (88,503)
  Purchase of exchange memberships..........................           --            --    (1,200,000)
                                                              -----------   -----------   -----------
        Cash used in investing activities...................     (139,644)     (105,003)   (1,288,503)
                                                              -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from subordinated liabilities....................    1,373,000     3,714,100    39,325,000
  Repayments of subordinated liabilities....................   (1,106,000)           --            --
  Dividends paid............................................     (745,402)     (638,916)     (638,916)
  Decrease (increase) in notes receivable--stockholders.....    2,542,631    (4,953,178)      278,222
  Retirement of common stock................................           --    (5,227,178)           --
  Issuance of common stock..................................           --     5,227,178       386,227
  Proceeds from bank loans..................................           --            --     1,700,000
  Repayment of bank loans...................................           --    (4,701,000)           --
  Redemption of preferred stock.............................           --    (1,215,190)           --
                                                              -----------   -----------   -----------
        Net cash provided by (used in) financing
        activities..........................................    2,064,229    (7,794,184)   41,050,533
                                                              -----------   -----------   -----------
NET (DECREASE) INCREASE IN CASH.............................   (7,274,097)   10,305,303       165,763
CASH, BEGINNING OF YEAR.....................................   10,670,335       365,032       199,269
                                                              -----------   -----------   -----------
CASH, END OF YEAR...........................................  $ 3,396,238   $10,670,335   $   365,032
                                                              ===========   ===========   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest................................................  $ 4,233,744   $ 4,174,670   $ 2,774,815
                                                              ===========   ===========   ===========
    Income taxes............................................  $14,264,331   $ 7,069,662   $ 6,010,000
                                                              ===========   ===========   ===========
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
  Decrease in secured demand notes receivable and
    liabilities subordinated to the claims of general
    creditors...............................................  $        --   $(2,000,000)  $(6,900,000)
                                                              ===========   ===========   ===========
  Increase (decrease) in market value of exchange
    memberships contributed by stockholders for use by the
    Company and liabilities subordinated to the claims of
    general creditors.......................................  $ 2,150,000   $(1,050,000)  $ 1,050,000
                                                              ===========   ===========   ===========
  Return of exchange memberships contributed for the use of
    the Company and liabilities subordinated to the claims
    of general creditors....................................  $        --   $        --   $(1,225,000)
                                                              ===========   ===========   ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-34
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                     PREFERRED        COMMON STOCK       ADDITIONAL                     NOTES
                                       STOCK      --------------------     PAID-IN      RETAINED     RECEIVABLE-
                                     SERIES C     NONVOTING    VOTING      CAPITAL      EARNINGS     STOCKHOLDERS      TOTAL
                                    -----------   ---------   --------   -----------   -----------   ------------   -----------
<S>                                 <C>           <C>         <C>        <C>           <C>           <C>            <C>
BALANCE, DECEMBER 31, 1996........  $10,648,599    $4,209      $4,201    $ 6,677,650   $15,255,619   $(1,890,971)   $30,699,307
Net income........................           --        --          --             --     8,272,462            --      8,272,462
Dividend declared.................           --        --          --             --      (638,916)           --       (638,916)
Loans to stockholders.............           --        --          --             --            --       278,222        278,222
Issuance of common stock--44
  shares voting and 44 shares non-
  voting..........................           --        44          44        386,139            --            --        386,227
                                    -----------    ------      ------    -----------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1997........  $10,648,599    $4,253      $4,245    $ 7,063,789    22,889,165    (1,612,749)    38,997,302
Net income........................           --        --          --             --     7,927,078            --      7,927,078
Dividend declared.................           --        --          --             --      (745,402)           --       (745,402)
Reclassification of stock.........           --         7          (7)            --            --            --             --
Loans to stockholders.............           --        --          --             --            --    (4,953,178)    (4,953,178)
Preferred stock retired--8,870
  shares Series C.................   (1,215,190)       --                         --            --    (1,215,190)
                                                                 ----
Purchase of common stock--396
  shares voting and 397 shares
  nonvoting.......................           --      (397)       (396)      (325,398)   (4,900,987)           --     (5,227,178)
Reissuance of common stock--396
  shares voting and 397 shares
  nonvoting.......................           --       397         396      5,226,385            --            --      5,227,178
                                    -----------    ------      ------    -----------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1998........    9,433,409     4,260       4,238     11,964,776    25,169,854    (6,565,927)    40,010,610
Net income........................           --        --          --             --    12,351,007            --     12,351,007
Dividend declared.................           --        --          --             --      (943,341)           --       (943,341)
Repayment of loans to
  stockholders....................           --        --          --             --            --     2,542,631      2,542,631
                                    -----------    ------      ------    -----------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1999........  $ 9,433,409    $4,260      $4,238    $11,964,776   $36,577,520   $(4,023,296)   $53,960,907
                                    ===========    ======      ======    ===========   ===========   ===========    ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-35
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

1. SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION--The consolidated financial statements include the
accounts of Henderson Brothers Holdings, Inc. (the "Corporation"), its wholly
owned subsidiary, Henderson Brothers, Inc. (the "Subsidiary"), and the
Subsidiary's wholly owned subsidiary, Henderson Brothers Futures Corporation
("HBFC"), an inactive company (collectively the "Company"). All material
intercompany transactions and balances have been eliminated.

    The Subsidiary is a broker-dealer registered with the Securities and
Exchange Commission (the "SEC") and a member of the New York Stock
Exchange, Inc. (the "NYSE"). Its primary business is to act as a specialist on
the NYSE. A specialist is required to maintain a fair and orderly market in
those securities which the specialist has been assigned. In its capacity as a
specialist, the Subsidiary deals only with other members of the NYSE.
Additionally, the Subsidiary executes certain transactions for its customers for
which it receives a commission. The Subsidiary receives, acquires and holds
funds and securities for its customers.

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

    Certain amounts in prior years were reclassified to conform with the current
year's presentation.

    FINANCIAL INSTRUMENTS--The Company records proprietary transactions in
securities and the related commission revenues and expenses on a trade date
basis. Financial instruments owned and financial instruments sold, but not yet
purchased, have been valued at quoted market values with the resulting net
unrealized gains and losses reflected in operations. Securities borrowed are
recorded at the amount of cash collateral advanced to the lender. These
transactions require the Subsidiary to deposit cash or other collateral with the
lender. The Subsidiary monitors the market value of securities borrowed on a
daily basis with additional collateral provided or excess collateral refunded,
as necessary.

    SECURITIES TRANSACTIONS--The Subsidiary records customers' securities
transactions on a settlement date basis with related commission revenues and
expenses recorded on a trade date basis. Receivables from and payables to
customers include amounts due on cash and margin transactions. Securities owned
by customers are held as collateral for receivables. Such collateral is not
reflected in the consolidated financial statements.

    RESALE AGREEMENTS--Securities purchased under agreements to resell are
accounted for as collateralized financings and are carried at the amounts the
securities will subsequently be resold. It is the policy of the Company to
obtain possession or have a third party obtain possession on their behalf, of
collateral with a market value equal to or in excess of the principal amount
loaned under resale agreements. Collateral is valued daily, and the Company may
require counterparties to deposit additional collateral or return collateral
pledged when appropriate.

    INCOME TAXES--The Company utilizes the asset and liability method to
calculate deferred tax assets and liabilities. Deferred taxes are recognized
based on the differences between financial reporting and income tax basis of
assets and liabilities using enacted income tax rates.

                                      F-36
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (CONTINUED)

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

    Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
about Fair Value of Financial Instruments," requires the Company to report the
fair value of financial instruments, as defined. Substantially all of the
Company's assets and liabilities are carried at fair value or contracted amounts
which approximate fair value.

3. RECEIVABLES FROM BROKERS, DEALERS AND CLEARING ORGANIZATIONS

    The balances presented as receivable from and payable to brokers, dealers
and clearing organizations consist of the following at December 31, 1999 and
1998:

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
Receivable from brokers, dealers and clearing organizations:
  Unsettled trades..........................................  $77,213,008   $81,697,237
  Securities borrowed.......................................   14,638,500    11,262,000
  Receivable from clearing organizations....................    2,014,185     1,785,795
  Securities failed to deliver..............................      245,820       357,825
  Commissions receivable....................................    2,122,028     2,085,824
                                                              -----------   -----------
                                                              $96,233,541   $97,188,681
                                                              ===========   ===========
Payable to brokers, dealers and clearing organizations:
  Unsettled trades..........................................  $61,134,401   $76,012,373
  Securities failed to receive..............................    7,369,573     2,023,869
  Commissions payable.......................................      198,131       327,805
                                                              -----------   -----------
                                                              $68,702,105   $78,364,047
                                                              ===========   ===========
</TABLE>

    Unsettled trades are shown net by counterparty.

4. SUBORDINATED LIABILITIES

    Subordinated liabilities consist of the following at December 31:

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
Subordinated debentures.....................................  $54,069,100   $53,802,100
NYSE memberships contributed by certain stockholders of the
  Corporation...............................................    4,600,000     2,450,000
                                                              -----------   -----------
                                                              $58,669,100   $56,252,100
                                                              ===========   ===========
</TABLE>

    The amounts and maturities of the subordinated debentures at December 31,
1999 are as follows:

<TABLE>
<CAPTION>
MATURITY                                                      INTEREST RATE               AMOUNT
- --------                                            ----------------------------------  -----------
<S>                                                 <C>                                 <C>
January 1, 2001...................................            Broker call rate less 1%  $ 1,700,000
November 18, 2004.................................                               8.04%   32,000,000
January 31, 2005..................................            Broker call rate less 1%   20,369,100
                                                                                        -----------
                                                                                        $54,069,100
                                                                                        ===========
</TABLE>

                                      F-37
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (CONTINUED)

4. SUBORDINATED LIABILITIES (CONTINUED)

    The Subsidiary's subordinated liabilities totaling $43,200,000 and
$41,050,000 in 1999 and 1998, respectively, which include $4,900,000 payable to
the Corporation in each year, have been approved by the NYSE and are thus
available to the Subsidiary in computing net capital pursuant to the SEC's
Uniform Net Capital Rule (15c3-1).

    Subordinated liabilities are withdrawable by the lender at stated maturity
dates or withdrawal can be accelerated upon six month's notice. Subordinated
debt can be repaid only if, after giving effect to such repayment, the
Subsidiary meets the SEC's capital regulations governing withdrawal of
subordinated debt.

    The subordinated debt maturing on January 31, 2005 is due to stockholders of
the Corporation. The outstanding balance at December 31, 1999 and 1998 was
$20,369,100 and $20,102,100, respectively.

    Aggregate interest expense on subordinated liabilities was approximately
$3,938,000, $4,122,000 and $2,900,000 for the years ended December 31, 1999,
1998 and 1997, respectively, which includes $1,260,700, $1,316,447 and $0,
respectively, due to stockholders of the Corporation.

    The subordinated debenture maturing on November 18, 2004 contains certain
restrictive covenants which require, among other things, that the Subsidiary
maintain specified levels of capital. At December 31, 1999 the Subsidiary was in
compliance with these restrictive covenants.

5. RELATED PARTY TRANSACTIONS

    Notes receivable from stockholders are reflected as an offset to
stockholders' equity. Interest earned on these notes amounted to approximately
$151,000, $61,000 and $73,000 for the years ended December 31, 1999, 1998 and
1997, respectively.

    Included in other assets are employee and affiliate loans and related
interest totaling approximately $412,150 and $2,000,000 in 1999 and 1998,
respectively. These receivables bear interest at 4.5% and are payable upon
demand.

6. COMMITMENTS

    The Subsidiary has an operating lease for office space expiring on
December 31, 2002. The lease contains provisions for escalations based on
certain costs incurred by the lessor.

    At December 31, 1999, minimum future lease payments were as follows:

<TABLE>
<CAPTION>
FISCAL YEAR                                             AMOUNT
- -----------                                            --------
<S>                                                    <C>
2000.................................................  $224,900
2001.................................................   224,900
2002.................................................   224,900
                                                       --------
                                                       $674,700
                                                       ========
</TABLE>

7. PROFIT-SHARING PLAN

    The Subsidiary maintains a profit-sharing plan for all of its employees.
Contributions to the plan are based on compensation as defined in the plan and
are at the discretion of management. Profit-

                                      F-38
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (CONTINUED)

7. PROFIT-SHARING PLAN (CONTINUED)
sharing contributions were $1,625,000, $1,448,000 and $1,374,000 for the years
ended December 31, 1999, 1998 and 1997, respectively.

    In connection with the pending sale of the Company, as described in
Note 11, it is the intention of management to terminate the profit-sharing plan.

8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT
   RISK

       In the normal course of business, the Company enters into various
   securities transactions as principal or agent. The execution, settlement and
   financing of those transactions can result in off-balance sheet risk and
   concentration of credit risk.

    In connection therewith, the Subsidiary may be exposed to a risk of loss not
reflected on the accompanying consolidated statement of financial condition for
securities sold, not yet purchased, should the value of the securities rise.

    In the normal course of business, the Subsidiary's clearing activities
involve settlement and financing of various customer securities transactions.
These activities may expose the Subsidiary to off-balance sheet risk in the
event the customer or other broker is unable to fulfill its contractual
obligations and the Subsidiary has to purchase or sell securities at a loss.

    The Subsidiary's customer securities activities are transacted on either a
cash or margin basis. In connection with these activities, the Subsidiary
executes and clears customer transactions involving the sale of securities, not
yet purchased, substantially all of which are transacted on a delivery vs.
payment basis. For margin transactions, the Subsidiary may be exposed to
significant off-balance sheet risk in the event margin requirements are not
sufficient to fully cover losses that customers may incur. In the event the
customer fails to satisfy its obligations, the Subsidiary may be required to
purchase or sell financial instruments at prevailing market prices to fulfill
customer obligations.

    The Subsidiary seeks to control the risks associated with customer
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines. The Subsidiary monitors margin
levels daily and, pursuant to such guidelines, requires customers to deposit
additional collateral or to reduce positions, when necessary.

    The Subsidiary is engaged in various brokerage activities whose
counterparties primarily include broker-dealers, banks and other financial
institutions. The Subsidiary may be exposed to the risk of default which depends
on the creditworthiness of the counterparty. It is the Subsidiary's policy to
review, as necessary, the credit standing of each counterparty with which it
conducts business.

9. REGULATORY REQUIREMENTS

    As a registered broker-dealer and member firm of the NYSE, the Subsidiary is
subject to the SEC's Uniform Net Capital Rule 15c3-1. The Subsidiary computes
its net capital under the alternative method permitted by the rule, which
requires that minimum net capital be equal to the greater of $250,000 or 2% of
the Rule 15c3-3 aggregate debit items, as defined. At December 31, 1999 and
1998, the Subsidiary had net capital of $72,306,426 and $76,624,072,
respectively, which exceeded the minimum requirement by $72,056,426 and
$76,374,072, respectively.

                                      F-39
<PAGE>
                HENDERSON BROTHERS HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (CONTINUED)

9. REGULATORY REQUIREMENTS (CONTINUED)
    The NYSE also requires certain specialists to maintain a minimum amount of
net liquid assets, as defined, which shall be the greater of $1,000,000 or 25%
of their position requirement ("Rule 104.2"). At December 31, 1999 and 1998, the
Subsidiary's NYSE minimum required dollar amount of net liquid assets, as
defined, was $23,970,445 and $27,699,242, respectively, compared to actual net
liquid assets, as defined, of $75,322,599 and $79,907,493, respectively.

10. INCOME TAXES

    The Company's federal income tax return is filed on a consolidated basis.
The Company's state and local income tax returns are filed on a combined basis.
The provisions for income taxes are as follows:

<TABLE>
<CAPTION>
                                          1999          1998         1997
                                       -----------   ----------   ----------
<S>                                    <C>           <C>          <C>
Current:
    Federal..........................  $ 8,084,981   $4,444,872   $4,648,000
    State and local..................    4,894,109    2,663,678    2,586,193
                                       -----------   ----------   ----------
                                        12,979,090    7,108,550    7,234,193
                                       -----------   ----------   ----------
Deferred:
    Federal..........................     (384,784)      50,626     (146,320)
    State and local..................     (277,153)      36,465     (105,393)
                                       -----------   ----------   ----------
                                          (661,937)      87,091     (251,713)
                                       -----------   ----------   ----------
Income tax expense...................  $12,317,153   $7,195,641   $6,982,480
                                       ===========   ==========   ==========
</TABLE>

    Deferred income taxes reflect the tax effect of temporary differences
between the financial reporting and tax basis of assets and liabilities.
Included in deferred income taxes payable is the remaining tax effect of the
Company's change to market value from LIFO cost for certain marketable
securities, which is being recognized over a 15 year period.

    A reconciliation of the difference between the expected income tax expense
on income computed at the U.S. statutory income tax rate and the Company's
actual income tax expense is shown in the following table:

<TABLE>
<CAPTION>
                                                            1999           1998           1997
                                                          --------       --------       --------
<S>                                                       <C>            <C>            <C>
Book income at federal statutory rate..............         35.0%          35.0%          35.0%
State and local taxes (net of federal benefit).....         11.9%          11.8%          10.6%
Non-deductible expenses............................          3.0%            .8%            .2%
                                                            ----           ----           ----
Income tax expense.................................         49.9%          47.6%          45.8%
                                                            ====           ====           ====
</TABLE>

11. PENDING SALE OF THE COMPANY

    On December 23, 1999 the Stockholders' of the Company entered into an
agreement with LaBranche & Co Inc. to sell all the outstanding capital stock of
the Company for approximately $230 million in cash. Pursuant to the agreement,
the Company is required to deliver at the closing, working capital, as defined
in the agreement, of $49 million and 19 NYSE memberships. The closing is
contingent on LaBranche & Co Inc.'s ability to obtain financing for the
transaction.

                                      F-40
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Stockholders of Henderson Brothers Holdings, Inc. and Subsidiary:

We have audited the consolidated financial statements of Henderson Brothers
Holdings, Inc. and Subsidiary (the "Company") as of December 31, 1999 and 1998,
and for the years then ended, and have issued our report thereon dated
January 28, 2000, which report expresses an unqualified opinion and included an
emphasis of a matter relating to the pending sale of the Company to LaBranche &
Co Inc. Such consolidated financial statements and our report are included
elsewhere in this prospectus. (The consolidated financial statements of the
Company for the year ended December 31, 1997 were audited by other auditors
whose report, dated February 16, 1998, expressed an unqualified opinion on those
statements.) Our audits also include the financial statement schedule of the
Company, listed elsewhere in this prospectus. Such financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/ Deloitte & Touche LLP

New York, New York

January 28, 2000

                                      F-41
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)

                  CONDENSED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           ASSETS
Cash........................................................  $ 2,578,443   $    80,229
Financial instruments owned--U.S. government obligations....   15,001,441            --
Investment in subsidiary, at equity.........................   51,541,438    56,807,581
Receivables:
  Subordinated loans........................................    4,900,000     4,900,000
  Receivable from subsidiary................................    2,412,795     6,062,398
  Income taxes..............................................           --        22,397
Other assets................................................       99,930       744,322
                                                              -----------   -----------
TOTAL ASSETS................................................  $76,534,047   $68,616,927
                                                              ===========   ===========
            LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
  Dividends payable.........................................  $   943,341   $   745,402
  Due to former stockholders................................           --     6,442,368
  Accounts payable and accrued expenses.....................    1,260,699     1,316,447
                                                              -----------   -----------
                                                                2,204,040     8,504,217
                                                              -----------   -----------
Subordinated notes..........................................   20,369,100    20,102,100
                                                              -----------   -----------
STOCKHOLDERS' EQUITY:
  Preferred stock, Series A, $1 par value (stated value of
    $1,000) 175.5 shares authorized, no shares
    outstanding.............................................           --            --
  Preferred stock, Series B, $1 par value (stated value of
    $917.18) 84 shares authorized, no shares outstanding....           --            --
  Preferred stock, $1 par value, 100,744 shares authorized,
    no shares issued........................................           --            --
  Preferred stock, Series C, $1 par value (stated value of
    $137) 99,995 shares authorized, 68,857 shares
    outstanding in 1999 and 1998............................    9,433,409     9,433,409
  Common stock, non-voting, $1 par value, 40,000 shares
    authorized 4,260 shares outstanding in 1999 and 1998....        4,260         4,260
  Common stock, voting, $1 par value, 20,000 shares
    authorized 4,238 shares outstanding in 1999 and 1998....        4,238         4,238
  Additional paid-in capital................................   11,964,776    11,964,776
  Retained earnings.........................................   36,577,520    25,169,854
  Notes receivable--stockholders............................   (4,023,296)   (6,565,927)
                                                              -----------   -----------
    Total stockholders' equity..............................   53,960,907    40,010,610
                                                              -----------   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................  $76,534,047   $68,616,927
                                                              ===========   ===========
</TABLE>

                  See notes to condensed financial statements.

                                      F-42
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)
                         CONDENSED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   ----------
<S>                                                           <C>           <C>
REVENUES:
  Dividends and interest....................................  $   618,606   $  801,960
  Management fees...........................................    2,100,000    2,100,000
                                                              -----------   ----------
    Total revenues..........................................    2,718,606    2,901,960
                                                              -----------   ----------
EXPENSES:
  Employee compensation and benefits........................      625,050      767,400
  Interest expense..........................................    1,260,700    1,316,447
  Other.....................................................      715,706       26,670
                                                              -----------   ----------
    Total expenses..........................................    2,601,456    2,110,517
                                                              -----------   ----------
INCOME BEFORE PROVISION FOR INCOME TAXES AND EQUITY IN
  EARNINGS OF SUBSIDIARY....................................      117,150      791,443
Provision for income taxes..................................       55,050      371,910
                                                              -----------   ----------
INCOME BEFORE EQUITY IN EARNINGS OF SUBSIDIARY..............       62,100      419,533
Equity in earnings of subsidiary, net of tax................   12,288,907    7,507,545
                                                              -----------   ----------
NET INCOME..................................................  $12,351,007   $7,927,078
                                                              ===========   ==========
</TABLE>

                  See notes to condensed financial statements

                                      F-43
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)
                       CONDENSED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   ----------
<S>                                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $12,351,007   $7,927,078
  Adjustments to reconcile net income to net cash (used in)
    provided by operating activities:
    Equity in subsidiary's earnings.........................  (12,288,907)  (7,507,545)
  (Increase) decrease in operating assets:
    Financial instruments owned.............................  (15,001,441)          --
    Receivables from related parties........................    3,704,653   (3,994,543)
    Income taxes receivable.................................       22,397      (22,397)
    Other assets............................................      644,392       40,872
  Increase (decrease) in operating liabilities:
    Due to former stockholders..............................   (6,442,368)   6,442,368
    Accounts payable and accrued expenses...................      (55,748)     229,163
                                                              -----------   ----------
      Net cash (used in) provided by operating activities...  (17,066,015)   3,114,996
                                                              -----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Dividends received from subsidiary........................   17,500,000           --
                                                              -----------   ----------
  CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from subordinated note...........................    1,373,000    3,714,100
  Repayment of subordinated liabilities.....................   (1,106,000)          --
  Redemption of preferred stock.............................           --   (1,215,190)
  Decrease (increase) in notes receivable--stockholders.....    2,542,631   (4,953,178)
  Dividends paid............................................     (745,402)    (638,916)
  Retirement of common stock................................           --   (5,227,178)
  Issuance of common stock..................................           --    5,227,178
                                                              -----------   ----------
      Cash provided by (used in) financing activities.......    2,064,229   (3,093,184)
                                                              -----------   ----------
NET INCREASE IN CASH........................................    2,498,214       21,812
CASH, BEGINNING OF YEAR.....................................       80,229       58,417
                                                              -----------   ----------
CASH, END OF YEAR...........................................  $ 2,578,443   $   80,229
                                                              ===========   ==========
  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest................................................  $ 1,316,447   $1,087,284
                                                              ===========   ==========
    Taxes settled with the Subsidiary through the
      intercompany accounts.................................  $    55,050   $  371,910
                                                              ===========   ==========
</TABLE>

                  See notes to condensed financial statements.

                                      F-44
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)

            CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                 PREFERRED        COMMON STOCK       ADDITIONAL                     NOTES
                                   STOCK      --------------------     PAID-IN      RETAINED     RECEIVABLE-
                                 SERIES C     NONVOTING    VOTING      CAPITAL      EARNINGS     STOCKHOLDERS      TOTAL
                                -----------   ---------   --------   -----------   -----------   ------------   -----------
<S>                             <C>           <C>         <C>        <C>           <C>           <C>            <C>
BALANCE, DECEMBER 31, 1997....  $10,648,599    $4,253      $4,245    $ 7,063,789   $22,889,165   $(1,612,749)   $38,997,302
Net income....................           --        --          --             --     7,927,078            --      7,927,078
Dividend declared.............           --        --          --             --      (745,402)           --       (745,402)
Reclassification of stock.....           --         7          (7)            --            --            --             --
Loans to stockholders.........           --        --          --             --            --    (4,953,178)    (4,953,178)
Preferred stock retired--8,870
  shares Series C.............   (1,215,190)       --          --             --            --            --     (1,215,190)
Purchase of common stock--396
  shares voting and 397 shares
  nonvoting...................           --      (397)       (396)      (325,398)   (4,900,987)           --     (5,227,178)
Reissuance of common stock--
  396 shares voting and 397
  shares nonvoting............           --       397         396      5,226,385            --            --      5,227,178
                                -----------    ------      ------    -----------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1998....    9,433,409     4,260       4,238     11,964,776    25,169,854    (6,565,927)    40,010,610
Net income....................           --        --          --             --    12,351,007            --     12,351,007
Dividend declared.............           --        --          --             --      (943,341)           --       (943,341)
Payment of loans to
  stockholders................           --        --          --             --            --     2,542,631      2,542,631
                                -----------    ------      ------    -----------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1999....  $ 9,433,409    $4,260      $4,238    $11,964,776   $36,577,520   $(4,023,296)   $53,960,907
                                ===========    ======      ======    ===========   ===========   ===========    ===========
</TABLE>

                  See notes to condensed financial statements.

                                      F-45
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

1.  BASIS OF PRESENTATION

    The condensed unconsolidated financial statements of Henderson Brothers
Holdings, Inc. (the "Parent") should be read in conjunction with the
Consolidated Financial Statements of Henderson Brothers Holdings, Inc. and
Subsidiary and the notes thereto.

2.  SUBORDINATED NOTES

    The amounts and maturities of the subordinated notes at December 31, 1999
are as follows:

<TABLE>
<CAPTION>
MATURITY                         INTEREST RATE                      AMOUNT
- --------                         -------------                    -----------
<S>                              <C>                              <C>
January 31, 2005                 Broker call rate less 1%         $20,369,100
</TABLE>

    These notes are due to stockholders.

3.  RELATED PARTY TRANSACTIONS

    The Parent charges Henderson Brothers, Inc. (the "Subsidiary") a management
fee for services performed by the Parent. Additionally, the Parent is allocated
a portion of employee compensation and benefits expense from the Subsidiary.

    The Parent loaned the Subsidiary $4,900,000 in the form of a subordinated
debenture. This amount is due from the Subsidiary on February 28, 2001 and bears
interest at the broker call rate. Interest income was $350,216 for year ended
December 31, 1999.

4.  DIVIDENDS RECEIVED FROM SUBSIDIARY

    For the year ended December 31, 1999, the Parent received dividends of
$17,500,000 from its subsidiary.

                                      F-46
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)
                         CONDENSED STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S>                                                           <C>
Revenue:
  Interest..................................................  $  464,603
  Management fees...........................................   2,100,000
                                                              ----------
Total revenue...............................................   2,564,603
                                                              ----------
Expenses:
  Employee compensation and benefits........................     773,775
  Interest..................................................   1,087,283
  Other.....................................................      26,424
                                                              ----------
Total expenses..............................................   1,887,482
Income before provision for income taxes and equity in
  earnings of subsidiary....................................     677,121
Provision for income taxes..................................     333,000
                                                              ----------
Income before equity in earnings of subsidiary..............     344,121
Equity in earnings of subsidiary net of tax.................   7,928,341
                                                              ----------
Net income..................................................  $8,272,462
                                                              ==========
</TABLE>

                  See note to condensed financial statements.

                                      F-47
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)
                       CONDENSED STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S>                                                           <C>
Cash flows from operating activities:
  Net income................................................  $8,272,462
  Adjustments to reconcile net income to net cash used in
    operating activities:
    Amortization............................................      25,000
    Equity in subsidiary's earnings.........................  (7,928,341)
    (Increase) decrease in operating assets:
      Interest receivable...................................      21,172
      Receivables from subsidiary...........................  (1,804,558)
    Increase (decrease) in operating liabilities:
      Dividend payable......................................     106,486
      Payable to subsidiary.................................     (72,723)
      Taxes payable.........................................     333,000
      Bond interest payable.................................     287,482
                                                              ----------
        Net cash used in operating activities...............    (760,020)
                                                              ----------
Cash flows from investing activities:
  Investment in subordinated note...........................  (4,900,000)
                                                              ----------
        Cash used in investing activities...................  (4,900,000)
                                                              ----------
Cash flows from financing activities:
  Decrease in notes receivable--stockholders................     278,222
  Issuance of common stock..................................     386,227
  Proceeds from subordinated liabilities....................   5,625,000
  Dividends paid............................................    (638,916)
                                                              ----------
        Net cash provided by financing activities...........   5,650,533
Net decrease in cash........................................      (9,487)
Cash, beginning of year.....................................      67,904
                                                              ----------
Cash, the end of the year...................................  $   58,417
                                                              ==========
Supplemental disclosure of cash flow information:
  Cash paid during the year for interest....................  $  104,297
                                                              ==========
</TABLE>

                  See note to condensed financial statements.

                                      F-48
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)

             CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                        PREFERRED        COMMON STOCK       ADDITIONAL                    NOTES
                                          STOCK      --------------------    PAID-IN      RETAINED     RECEIVABLE-
                                        SERIES C     NONVOTING    VOTING     CAPITAL      EARNINGS     STOCKHOLDERS      TOTAL
                                       -----------   ---------   --------   ----------   -----------   ------------   -----------
<S>                                    <C>           <C>         <C>        <C>          <C>           <C>            <C>
BALANCE, DECEMBER 31, 1996...........  $10,648,599    $4,209      $4,201    $6,677,650   $15,255,619   $(1,890,971)   $30,699,307
Net income...........................           --        --          --           --      8,272,462            --      8,272,462
Dividend declared....................           --        --          --           --       (638,916)           --       (638,916)
Loans to stockholders................           --        --          --           --             --       278,222        278,222
Issuance of common stock--44 shares
  voting and 44 shares non-voting....           --        44          44      386,139             --            --        386,227
                                       -----------    ------      ------    ----------   -----------   ------------   -----------
BALANCE, DECEMBER 31, 1997...........  $10,648,599    $4,253      $4,245    $7,063,789   $22,889,165   $(1,612,749)   $38,997,302
                                       ===========    ======      ======    ==========   ===========   ============   ===========
</TABLE>

                  See note to condensed financial statements.

                                      F-49
<PAGE>
                       HENDERSON BROTHERS HOLDINGS, INC.
                             (PARENT COMPANY ONLY)
                     NOTE TO CONDENSED FINANCIAL STATEMENTS

1. NOTE TO CONDENSED FINANCIAL STATEMENTS

    The condensed financial statements of Henderson Brothers Holdings, Inc.
(Parent Company Only) should be read in conjunction with the consolidated
financial statements of Henderson Brothers Holdings, Inc. and Subsidiary and the
notes thereto contained elsewhere in this prospectus.

                                      F-50
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Board of Directors of Webco Securities, Inc.

    We have audited the accompanying balance sheets of Webco Securities, Inc. as
of October 31, 1999 and 1998, and the related statements of income and retained
earnings, changes in stockholders' equity and cash flows for each of the three
years in the period ended October 31, 1999. These financial statements are the
responsibility of the Company's management. 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 financial position of Webco Securities, Inc. as of
October 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended October 31, 1999 in conformity
with generally accepted accounting principles.

/s/ Glasser & Haims, PC
Valley Stream, N.Y.
November 29, 1999

                                      F-51
<PAGE>
                             WEBCO SECURITIES, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  AS OF OCTOBER 31,
                                                              -------------------------
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           ASSETS
Current Assets:
Cash........................................................  $ 1,574,392   $   556,068
Receivables from brokers and dealers........................   11,848,466    13,764,030
U.S. Treasury obligations--at market........................    7,207,243     1,800,983
Securities owned--at market value...........................    3,221,788     5,452,404
Exchange memberships owned, at cost (market value of
  $7,650,000 and $3,825,000, respectively)..................    1,301,362     1,301,362
Exchange memberships contributed for the use of the
  Corporation--at market....................................    2,550,000     1,275,000
Other assets................................................       14,021       126,718
                                                              -----------   -----------
        TOTAL ASSETS........................................  $27,717,272   $24,276,565
                                                              ===========   ===========
           LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
  Securities sold, but not yet purchased, at market value,
    primarily common and preferred stock....................  $ 1,376,846   $ 3,464,388
  Accounts payable and accrued liabilities..................    4,031,403     2,327,837
  Subordinated borrowings...................................    2,550,000     1,275,000
                                                              -----------   -----------
        TOTAL LIABILITIES...................................    7,958,249     7,067,225
Stockholders' equity........................................   19,759,023    17,209,340
                                                              -----------   -----------
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..........  $27,717,272   $24,276,565
                                                              ===========   ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-52
<PAGE>
                             WEBCO SECURITIES, INC.

            STATEMENTS OF REVENUE AND EXPENSES AND RETAINED EARNINGS

<TABLE>
<CAPTION>
                                                            FOR THE YEARS ENDED OCTOBER 31,
                                                        ---------------------------------------
                                                           1999          1998          1997
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Revenues:
  Commissions.........................................  $ 5,713,780   $ 5,025,275   $ 4,288,094
  Trading Gains.......................................    7,473,501     1,693,407     3,862,445
  Other...............................................      555,481       679,876       571,375
                                                        -----------   -----------   -----------
    Total Revenues....................................   13,742,762     7,398,558     8,721,914
                                                        -----------   -----------   -----------
Expenses:
  Compensation and benefits...........................    7,912,089     4,257,499     5,246,863
  Clearance fees......................................      165,000       100,835        96,549
  Occupancy, equipment rental and communications......      118,687       104,324        95,921
  Regulatory fees.....................................      444,376       359,658       196,043
  Leased exchange memberships.........................      391,667       341,935       155,000
  Other...............................................      537,242       522,291       548,810
                                                        -----------   -----------   -----------
                                                          9,569,061     5,686,542     6,339,186
                                                        -----------   -----------   -----------
    Net income before taxes...........................    4,173,701     1,712,016     2,382,728
Provision for income taxes............................    1,914,021       766,527     1,085,152
                                                        -----------   -----------   -----------
NET INCOME............................................    2,259,680       945,489     1,297,576
RETAINED EARNINGS, beginning of year..................   10,992,245    10,046,756     8,749,180
                                                        -----------   -----------   -----------
RETAINED EARNINGS, end of year........................  $13,251,925   $10,992,245   $10,046,756
                                                        ===========   ===========   ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-53
<PAGE>
                             WEBCO SECURITIES, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED OCTOBER 31,
                                                            ------------------------------------
                                                               1999         1998         1997
                                                            ----------   ----------   ----------
<S>                                                         <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income..............................................  $2,259,680   $  945,489   $1,297,576
  Changes in assets.......................................  (1,147,383)     888,298   (6,325,079)
  Changes in liabilities..................................    (383,976)  (2,197,496)   4,151,341
                                                            ----------   ----------   ----------
  Net cash provided by operations.........................     728,321     (363,709)    (876,162)
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock..................     290,003      779,339      624,392
                                                            ----------   ----------   ----------
Net change in cash........................................   1,018,324      415,630     (251,770)
Cash at beginning of fiscal year..........................     556,068      140,438      392,208
                                                            ----------   ----------   ----------
Cash at end of fiscal year................................  $1,574,392   $  556,068   $  140,438
                                                            ==========   ==========   ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-54
<PAGE>
                             WEBCO SECURITIES, INC.

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                            FOR THE YEARS ENDED OCTOBER 31,
                                                        ---------------------------------------
                                                           1999          1998          1997
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Balance at beginning of year..........................  $17,209,340   $15,484,512   $13,562,544
Net income for year...................................    2,259,680       945,489     1,297,576
Proceeds from issuance of common stock................      290,003       779,339       624,392
                                                        -----------   -----------   -----------
Balance at end of year................................  $19,759,023   $17,209,340   $15,484,512
                                                        ===========   ===========   ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-55
<PAGE>
                             WEBCO SECURITIES, INC.

                         NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

    The Corporation conducts its business as a specialist on the floor of the
New York Stock Exchange.

    All specialist trading is recorded to the last trade date of its fiscal
year.

    Securities owned, or sold but not yet purchased by the Corporation are
recorded at market value.

    Memberships in the New York Stock Exchange owned by the Corporation are
stated at cost. The Corporation owns three memberships.

    Memberships contributed for the use of the Corporation are stated at market
value. One such membership is contributed.

2. EMPLOYEE STOCK OPTION PLAN

    As of November 1, 1985, the Corporation established two Employee Stock
Ownership Plans. One such plan is a defined contribution plan set at ten (10%)
percent of covered salaries. The Corporation's management has indicated that it
has made all such mandated contributions. The second such plan is at the
discretion of management.

3. COMMITMENTS

    The Corporation has contractual commitments arising in the normal course of
business, the consummation of which would have no material impact on financial
position.

    The Corporation conducts its operations in lease premises under a lease
expiring October 31, 2001.

4. CONTINGENCIES

    The Corporation is currently undergoing an audit by the Internal Revenue
Service for fiscal year ended October 31, 1996. Management believes that any
adjustment that the Internal Revenue Service may propose would have no material
impact on financial position.

5. CAPITAL REQUIREMENTS

    The Corporation as a registered broker dealer is required to maintain a
minimum net capital. The Corporation as a specialist is also subject to
Rule 104.2 which specifies the minimum capital necessary for its specialist
securities. The Corporation's net capital exceeds these basic requirements.

                                      F-56
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                     [LOGO]

                               EXCHANGE OFFER FOR
                                  $250,000,000
                          12% EXCHANGE NOTES DUE 2007

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

                                   PROSPECTUS

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

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

    We have not authorized any dealer, sales person or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in the prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create and
implication that the information contained herein or our affairs have not
changed since the date hereof.

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

                                 April   , 2000
<PAGE>
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

    Section 145(a) of the General Corporation Law of the State of Delaware
("DGCL") provides that a Delaware 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 or 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 interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.

    Section 145(b) of the DGCL provides that a Delaware 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
acted in any of the capacities set forth above, 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 under similar
standards, except that no indemnification may be made in respect of 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 in which such
action or suit was brought shall determine that despite the adjudication of
liability, such person is fairly and reasonably entitled to be indemnified for
such expenses which the court shall deem proper.

    Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of any person who 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 or enterprise, against any liability asserted
against him or incurred by him in any such capacity or arising out of his status
as such whether or not the corporation would have the power to indemnify him
against such liabilities under such Section 145.

    Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director: (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit.

    Article Tenth of the certificate of incorporation of LaBranche & Co Inc.
(the "Company"), states that to the fullest extent permitted by the DGCL, no
director of the Company shall be personally liable to the Company, any of its
stockholders or any other person or entity for monetary damages for breach of
fiduciary duty owed to the Company, its stockholders or such other person or
entity owing to such director's position as a director of the Company.

                                      II-1
<PAGE>
    Article Eleventh of the Company's certificate of incorporation, contains
substantially the same provisions for indemnification as those contained in
Section 145 of the DGCL.

    The Company has entered into indemnification agreements with its current
directors and executive officers. The Company has agreed to insure its directors
and officers against losses arising from any claim against them as such for
wrongful acts or omission, subject to certain limitations.

    Under the underwriting agreement, the underwriters are obligated, under
certain circumstances, to indemnify officers, directors and controlling persons
of the Company against certain liabilities, including liabilities under the
Securities Act of 1933. Reference is made to the underwriting agreement filed as
Exhibit 1.1 hereto.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
NO.                     DESCRIPTION
- ---                     -----------
<C>                     <S>
         2.1            Plan of Incorporation of LaBranche & Co.*

         2.2            Exchange Agreement by and among LaBranche & Co Inc., LaB
                        Investing Co., L.L.C. and the members of LaB Investing Co.
                        L.L.C. listed on Schedule A thereto. *

         3.1            Amended and Restated Certificate of Incorporation of
                        LaBranche & Co Inc.*

         3.2            Amended and Restated Bylaws of LaBranche & Co Inc.*

         4.1            Specimen Stock Certificate.*

         4.2            Indenture, dated as of March 2, 2000, among LaBranche & Co.,
                        as issuer, and Firstar Bank, N.A., as trustee, relating to
                        the 12% Senior Subordinated Notes due 2007.**

         4.3            Form of 12% Senior Subordinated Notes due 2007 of LaBranche
                        & Co Inc. (included as Exhibit A to the Indenture filed as
                        Exhibit 4.5).**

         4.4            Registration Rights Agreement, dated as of March 2, 2000, by
                        and among LaBranche & Co Inc., as issuer, and Donaldson,
                        Lufkin & Jenrette Securities Corporation, Salomon Smith
                        Barney Inc. and ABN AMRO Incorporated, as initial
                        purchasers.**

         5.1            Opinion of Fulbright & Jaworski L.L.P.+

        10.1            Agreement of Lease between Aetna Life Insurance Company and
                        LaBranche & Co., dated January 6, 1984, as amended to date.*

        10.2            Second Amendment to Lease Agreement by and between Bank of
                        Communications and LaBranche & Co. dated July 1995, as
                        amended to date.*

        10.3            LaBranche & Co Inc. Equity Incentive Plan.*

        10.4            LaBranche & Co Inc. Annual Incentive Plan.*

        10.5            Form of Employment Letter between the Company and its
                        executive officers.*

        10.6            Form of Agreement Relating to Noncompetition and Other
                        Covenants.*

        10.7            Form of Pledge Agreement.*

        10.8            Stockholders' Agreement by and among LaBranche & Co Inc. and
                        the Stockholders listed on Schedule I thereto.*
</TABLE>

                                      II-2
<PAGE>

<TABLE>
<CAPTION>
NO.                     DESCRIPTION
- ---                     -----------
<C>                     <S>
        10.9            LaBranche & Co. Note Purchase Agreement, dated September 15,
                        1997, relating to the issuance of $20,000,000 aggregate
                        principal amount of 8.17% Subordinated Notes, as amended.*

        10.10           LaBranche & Co. Note Purchase Agreement, dated June 3, 1998,
                        relating to the issuance of $15,000,000 aggregate principal
                        amount of 7.69% Subordinated Notes.*

        10.11           Amendment to Note Purchase Agreements, dated as of August
                        23, 1999, relating to the issuance of $20,000,000 aggregate
                        principal amount of 8.17% Subordinated Notes and $15,000,000
                        aggregate principal amount of 7.69% Subordinated Notes.***

        10.12           Form of Subordinated Note.*

        10.13           Credit Agreement, dated as of June 26, 1998, by and among
                        LaBranche & Co. and The Bank of New York.*

        10.14           Amendment No. 1 to Credit Agreement, dated as of June 23,
                        1999, by and among LaBranche & Co. and The Bank of New
                        York.***

        10.15           Amendment No. 2 to Credit Agreement, dated as of August 24,
                        1999, by and among LaBranche & Co. and The Bank of New
                        York.***

        10.16           Amendment No. 3 to Credit Agreement, dated as of February 4,
                        2000, by and among LaBranche & Co. and The Bank of New
                        York.****

        10.17           Form of Indemnification Agreement.*

        10.18           Purchase Agreement, dated February 24, 2000, by and among
                        LaBranche & Co Inc. and Donaldson, Lufkin & Jenrette
                        Securities Corporation, Salomon Smith Barney Inc. and ABN
                        AMRO Incorporated, as initial purchasers, relating to the
                        issuance of $250,000,000 aggregate principal amount of 12%
                        Senior Subordinated Notes due 2007.**

        10.19           Indenture, dated as of August 24, 1999, among LaBranche & Co
                        Inc., as issuer, and Firstar Bank, N.A., as trustee,
                        relating to the 9 1/2% Senior Notes due 2004.***

        10.20           Form of 9 1/2% Senior Notes due 2004 of LaBranche & Co Inc.
                        (included as Exhibit A to the Indenture filed as Exhibit
                        4.2).***

        10.21           Registration Rights Agreement, dated as of August 24, 1999,
                        by and among LaBranche & Co Inc., as issuer, and Salomon
                        Smith Barney Inc. and Donaldson, Lufkin & Jenrette
                        Securities Corporation, as initial purchasers.***

        10.22           Amended and Restated Articles of Partnership of LaBranche &
                        Co.***

        10.23           LaB Investing Co., L.L.C. Amended and Restated Operating
                        Agreement.***

        10.24           Acquisition Agreement, dated August 16, 1999, by and between
                        Ernst & Company and LaBranche & Co.***

        10.25           Acquisition Agreement, dated August 16, 1999, by and between
                        Mill Bridge Inc., LaB Investing Co. L.L.C., LaBranche & Co
                        Inc. and LaBranche & Co.***

        10.26           Stock Purchase Agreement, dated as of December 23, 1999,
                        among LaBranche & Co Inc., Henderson Brothers Holdings, Inc.
                        and the stockholders listed on Schedule A thereto.*****

        10.27           Amendment to Stock Purchase Agreement, dated as of February
                        1, 2000, by and among LaBranche & Co Inc., Henderson
                        Brothers Holdings, Inc., and the authorized representatives
                        of the persons listed on Schedule A thereto.*****
</TABLE>

                                      II-3
<PAGE>

<TABLE>
<CAPTION>
NO.                     DESCRIPTION
- ---                     -----------
<C>                     <S>
        10.28           Agreement and Plan of Merger by and among LaBranche & Co
                        Inc., Webco Securities, Inc. and the Stockholders of Webco
                        Securities, Inc., dated as of January 26, 2000.+

        10.29           Employment Agreement between LaBranche & Co Inc. and Harvey
                        Traison, dated January 6, 2000.+

        12.1            Computation of Ratio of Earnings to Fixed Charges.*

        21              List of Subsidiaries.**

        23.1            Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
                        5.1).++

        23.2            Consent of Arthur Andersen LLP.+

        23.3            Consent of Deloitte & Touche LLP.+

        23.4            Consent of Glasser & Haims, P.C.+

        23.5            Consent of Goldstein Golub Kessler & Company, P.C.+

        24.1            Power of attorney (included on signature page).+

        25.1            Form T-1.++

        99.1            Form of Letter of Transmittal.++

        99.2            Form of Notice of Guaranteed Delivery.++
</TABLE>

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

    + Filed herewith.

   ++ To be filed by amendment.

    * Incorporated by reference to our Registration Statement on Form S-1
      (Registration No. 333-81079), as amended, effective August 18, 1999.

   ** Incorporated by reference to our Annual Report on Form 10-K/A, filed
April 4, 2000.

  *** Incorporated by reference to our Registration Statement on Form S-4
      (Registration No. 333-88119), as amended, effective November 3, 1999.

 **** Incorporated by reference to our Current Report on Form 8-K, filed
February 8, 2000.

***** Incorporated by reference to our Current Report on Form 8-K, filed
March 17, 2000.

ITEM 22. UNDERTAKINGS

    Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                      II-4
<PAGE>
    The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

    The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                      II-5
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on April 28, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       LABRANCHE & CO INC.

                                                       By:        /s/ GEORGE M.L. LABRANCHE, IV
                                                            -----------------------------------------
                                                                    George M.L. LaBranche, IV
                                                               CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>

                               POWER OF ATTORNEY

    KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of George M.L. LaBranche,
IV and Todd Graber as his true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to this registration statement, including post-effective amendments,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all that any said attorney-in-fact and
agent, each acting alone, or his substitutes or resubstitutes, may lawfully do
or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                    <S>                              <C>
            /s/ GEORGE M.L. LABRANCHE, IV              Chairman, Chief Executive
     -------------------------------------------         Officer, and President         April 28, 2000
              George M.L. LaBranche, IV                  (Principal Executive Officer)

             /s/ S. LAWRENCE PRENDERGAST               Executive Vice President,
     -------------------------------------------         Finance and Director           April 28, 2000
               S. Lawrence Prendergast

                                                       Senior Vice President, Chief
                /s/ HARVEY S. TRAISON                    Financial Officer and
     -------------------------------------------         Director (Principal Financial  April 28, 2000
                  Harvey S. Traison                      Officer)

                /s/ THOMAS E. DOOLEY                   Director
     -------------------------------------------                                        April 28, 2000
                  Thomas E. Dooley
</TABLE>

                                      II-6
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                    <S>                              <C>
                /s/ E. MARGIE FILTER                   Director
     -------------------------------------------                                        April 28, 2000
                  E. Margie Filter

               /s/ JAMES G. GALLAGHER                  Director
     -------------------------------------------                                        April 28, 2000
                 James G. Gallagher

             /s/ ALFRED O. HAYWARD, JR.                Director
     -------------------------------------------                                        April 28, 2000
               Alfred O. Hayward, Jr.

                   /s/ TODD GRABER                     Controller (Principal
     -------------------------------------------         Accounting Officer)            April 28, 2000
                     Todd Graber
</TABLE>

                                      II-7
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
NO.                     DESCRIPTION
- ---                     -----------
<C>                     <S>
         2.1            Plan of Incorporation of LaBranche & Co.*

         2.2            Exchange Agreement by and among LaBranche & Co Inc., LaB
                        Investing Co., L.L.C. and the members of LaB Investing Co.
                        L.L.C. listed on Schedule A thereto.*

         3.1            Amended and Restated Certificate of Incorporation of
                        LaBranche & Co Inc.*

         3.2            Amended and Restated Bylaws of LaBranche & Co Inc.*

         4.1            Specimen Stock Certificate.*

         4.2            Indenture, dated as of March 2, 2000, among LaBranche & Co.,
                        as issuer, and Firstar Bank, N.A., as trustee, relating to
                        the 12% Senior Subordinated Notes due 2007.**

         4.3            Form of 12% Senior Subordinated Notes due 2007 of LaBranche
                        & Co Inc. (included as Exhibit A to the Indenture filed as
                        Exhibit 4.5).**

         4.4            Registration Rights Agreement, dated as of March 2, 2000, by
                        and among LaBranche & Co Inc., as issuer, and Donaldson,
                        Lufkin & Jenrette Securities Corporation, Salomon Smith
                        Barney Inc. and ABN AMRO Incorporated, as initial
                        purchasers.**

         5.1            Opinion of Fulbright & Jaworski L.L.P. +

        10.1            Agreement of Lease between Aetna Life Insurance Company and
                        LaBranche & Co., dated January 6, 1984, as amended to date.*

        10.2            Second Amendment to Lease Agreement by and between Bank of
                        Communications and LaBranche & Co. dated July 1995, as
                        amended to date.*

        10.3            LaBranche & Co Inc. Equity Incentive Plan.*

        10.4            LaBranche & Co Inc. Annual Incentive Plan.*

        10.5            Form of Employment Letter between the Company and its
                        executive officers.*

        10.6            Form of Agreement Relating to Noncompetition and Other
                        Covenants.*

        10.7            Form of Pledge Agreement.*

        10.8            Stockholders' Agreement by and among LaBranche & Co Inc. and
                        the Stockholders listed on Schedule I thereto.*

        10.9            LaBranche & Co. Note Purchase Agreement, dated September 15,
                        1997, relating to the issuance of $20,000,000 aggregate
                        principal amount of 8.17% Subordinated Notes, as amended.*

        10.10           LaBranche & Co. Note Purchase Agreement, dated June 3, 1998,
                        relating to the issuance of $15,000,000 aggregate principal
                        amount of 7.69% Subordinated Notes.*

        10.11           Amendment to Note Purchase Agreements, dated as of August
                        23, 1999, relating to the issuance of $20,000,000 aggregate
                        principal amount of 8.17% Subordinated Notes and $15,000,000
                        aggregate principal amount of 7.69% Subordinated Notes.***

        10.12           Form of Subordinated Note.*

        10.13           Credit Agreement, dated as of June 26, 1998, by and among
                        LaBranche & Co. and The Bank of New York.*
</TABLE>

                                      II-8
<PAGE>

<TABLE>
<CAPTION>
NO.                     DESCRIPTION
- ---                     -----------
<C>                     <S>
        10.14           Amendment No. 1 to Credit Agreement, dated as of June 23,
                        1999, by and among LaBranche & Co. and The Bank of New
                        York.***

        10.15           Amendment No. 2 to Credit Agreement, dated as of August 24,
                        1999, by and among LaBranche & Co. and The Bank of New
                        York.***

        10.16           Amendment No. 3 to Credit Agreement, dated as of February 4,
                        2000, by and among LaBranche & Co. and The Bank of New
                        York.****

        10.17           Form of Indemnification Agreement.*

        10.18           Purchase Agreement, dated February 24, 2000, by and among
                        LaBranche & Co Inc. and Donaldson, Lufkin & Jenrette
                        Securities Corporation, Salomon Smith Barney Inc. and ABN
                        AMRO Incorporated, as initial purchasers, relating to the
                        issuance of $250,000,000 aggregate principal amount of 12%
                        Senior Subordinated Notes due 2007.**

        10.19           Indenture, dated as of August 24, 1999, among LaBranche & Co
                        Inc., as issuer, and Firstar Bank, N.A., as trustee,
                        relating to the 9 1/2% Senior Notes due 2004.***

        10.20           Form of 9 1/2% Senior Notes due 2004 of LaBranche & Co Inc.
                        (included as Exhibit A to the Indenture filed as Exhibit
                        4.2).***

        10.21           Registration Rights Agreement, dated as of August 24, 1999,
                        by and among LaBranche & Co Inc., as issuer, and Salomon
                        Smith Barney Inc. and Donaldson, Lufkin & Jenrette
                        Securities Corporation, as initial purchasers.***

        10.22           Amended and Restated Articles of Partnership of LaBranche &
                        Co.***

        10.23           LaB Investing Co., L.L.C. Amended and Restated Operating
                        Agreement.***

        10.24           Acquisition Agreement, dated August 16, 1999, by and between
                        Ernst & Company and LaBranche & Co.***

        10.25           Acquisition Agreement, dated August 16, 1999, by and between
                        Mill Bridge Inc., LaB Investing Co. L.L.C., LaBranche & Co
                        Inc. and LaBranche & Co.***

        10.26           Stock Purchase Agreement, dated as of December 23, 1999,
                        among LaBranche & Co Inc., Henderson Brothers Holdings, Inc.
                        and the stockholders listed on Schedule A thereto.*****

        10.27           Amendment to Stock Purchase Agreement, dated as of February
                        1, 2000, by and among LaBranche & Co Inc., Henderson
                        Brothers Holdings, Inc., and the authorized representatives
                        of the persons listed on Schedule A thereto.*****

        10.28           Agreement and Plan of Merger by and among LaBranche & Co
                        Inc., Webco Securities, Inc. and the Stockholders of Webco
                        Securities, Inc., dated as of January 26, 2000. +

        10.29           Employment Agreement between LaBranche & Co Inc. and Harvey
                        Traison, dated January 6, 2000. +

        12.1            Computation of Ratio of Earnings to Fixed Charges.*

        21              List of Subsidiaries.**

        23.1            Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
                        5.1).++

        23.2            Consent of Arthur Andersen LLP.+

        23.3            Consent of Deloitte & Touche LLP. +

        23.4            Consent of Glasser & Haims, P.C.+
</TABLE>

                                      II-9
<PAGE>

<TABLE>
<CAPTION>
NO.                     DESCRIPTION
- ---                     -----------
<C>                     <S>
        23.5            Consent of Goldstein Golub Kessler & Company, P.C.+

        24.1            Power of attorney (included on signature page).+

        25.1            Form T-1.++

        99.1            Form of Letter of Transmittal.++

        99.2            Form of Notice of Guaranteed Delivery.++
</TABLE>

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

    + Filed herewith.

   ++ To be filed by amendment.

    * Incorporated by reference to our Registration Statement on Form S-1
      (Registration No. 333-81079), as amended, effective August 18, 1999.

   ** Incorporated by reference to our Annual Report on Form 10-K/A, filed
      April 4, 2000.

  *** Incorporated by reference to our Registration Statement on Form S-4
      (Registration No. 333-88119), as amended, effective November 3, 1999.

 **** Incorporated by reference to our Current Report on Form 8-K, filed
      February 8, 2000.

***** Incorporated by reference to our Current Report on Form 8-K, filed
      March 17, 2000.

                                     II-10



<PAGE>

                                                                   Exhibit 10.28


                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                              LaBRANCHE & CO INC.,

                             WEBCO SECURITIES, INC.

                                      AND

                   THE STOCKHOLDERS OF WEBCO SECURITIES, INC.

                                JANUARY 26, 2000


<PAGE>

                               TABLE OF CONTENTS

<TABLE>

<S>              <C>                                                                                                      <C>
         1.       Definitions...............................................................................................1

         2.       Basic Transaction.........................................................................................6
                           a.       The Merger..............................................................................6
                           b.       The Closing.............................................................................6
                           c.       Deliveries at the Closing...............................................................6
                           d.       Effect of Merger.  .....................................................................6
                           e.       Net Working Capital Adjustment..........................................................9
                           f.       Closing of Transfer Records............................................................10

         3.       Representations and Warranties of the Target and the Stockholders........................................10
                           a.       Organization, Qualification, and Corporate Power.......................................10
                           b.       Capitalization.........................................................................11
                           c.       Subsidiaries...........................................................................11
                           d.       Authorization of Transaction...........................................................11
                           e.       Noncontravention.......................................................................11
                           f.       [Reserved].............................................................................12
                           g.       Regulatory Matters.....................................................................12
                           h.       Brokers' Fees..........................................................................12
                           i.       Title to Tangible Assets...............................................................12
                           j.       Financial Statements...................................................................12
                           k.       Undisclosed Liabilities................................................................13
                           l.       Events Subsequent to the Target's Most Recent Fiscal Year End..........................13
                           m.       Legal and Regulatory Compliance........................................................14
                           n.       Taxes..................................................................................14
                           o.       Real Property..........................................................................16
                           p.       Intellectual Property..................................................................16
                           q.       Names, Franchises Etc..................................................................16
                           r.       Contracts..............................................................................16
                           s.       Powers of Attorney.....................................................................16
                           t.       Litigation.............................................................................16
                           u.       Employee Benefits......................................................................17
                           v.       Environmental, Health, and Safety Matters..............................................19
                           w.       Books and Records......................................................................19
                           x.       Net Capital............................................................................19
                           y.       Insurance..............................................................................19
                           z.       Labor Matters..........................................................................20
                           aa.      No Illegal or Improper Transactions....................................................20
                           bb.      Bank Accounts..........................................................................20
                           cc.      Related Party Transactions.............................................................20
                           dd.      Fairness Opinion.......................................................................20
                           ee.      Additional Tax Matters.................................................................20

</TABLE>


                                      -i-

<PAGE>


<TABLE>

<S>              <C>                                                                                                      <C>
         4.       Representations and Warranties of the Stockholders.......................................................21
                           a.       Investment.............................................................................21
                           b.       Target Shares..........................................................................21

         5.       Representations and Warranties of the Buyer..............................................................21
                           a.       Organization, Qualification, and Corporate Power.......................................21
                           b.       Capitalization.........................................................................22
                           c.       Authorization of Transaction...........................................................22
                           d.       Noncontravention.......................................................................22
                           e.       Brokers' Fees..........................................................................22
                           f.       Regulatory Matters.....................................................................23
                           g.       Taxes..................................................................................23
                           h.       Additional Tax Matters.  ..............................................................23
                           i.       Filings with the SEC...................................................................23
                           j.       Financial Statements...................................................................23
                           k.       Events Subsequent to the Buyer's Most Recent Public Report.............................24
                           l.       Legal and Regulatory Compliance........................................................24
                           m.       Litigation.............................................................................24
                           n.       Fairness Opinion.......................................................................24
                           o.       Employee Benefits......................................................................24

         6.       Pre-Closing Covenants....................................................................................25
                           a.       General................................................................................25
                           b.       Notices and Consents...................................................................25
                           c.       Operation of the Target's Business.....................................................26
                           d.       Operation of the Buyer's Business......................................................27
                           e.       Full Access............................................................................27
                           f.       No Transfer of the Shares..............................................................27
                           g.       Notice of Developments.................................................................27
                           h.       Exclusivity............................................................................27
                           i.       ESOP...................................................................................28

         7.       Post-Closing Covenants...................................................................................28
                           a.       General................................................................................28
                           b.       Litigation Support.....................................................................28
                           c.       Noncompetition, Nonsolicitation and Confidentiality....................................28
                           d.       Buyer Stock............................................................................29
                           e.       Transfer Restrictions..................................................................30
                           f.       Tax Returns............................................................................30
                           g.       Indemnification of Directors and Officers..............................................30
                           h.       ESOP Indemnification...................................................................31

         8.       Conditions to Obligation to Close........................................................................31
                           a.       Conditions to Each Party's Obligations.................................................31
                           b.       Conditions to the Obligations of the Buyer.............................................31

</TABLE>


                                      -ii-

<PAGE>

<TABLE>

<S>              <C>                                                                                                      <C>
                           c.       Conditions to the Obligations of the Target and the Closing
                                    Stockholders...........................................................................32

         9.       Remedies for Breaches of this Agreement..................................................................33
                           a.       Survival of Representations and Warranties.............................................33
                           b.       Indemnification Provisions for Benefit of the Buyer....................................34
                           c.       Indemnification Provisions for Benefit of the Stockholders.............................35
                           d.       Damages in the Event of Termination....................................................35
                           e.       Matters Involving Third Parties........................................................35
                           f.       Determination of Adverse Consequences..................................................36

         10.      Termination..............................................................................................36
                           a.       Termination of Agreement...............................................................36
                           b.       Effect of Termination..................................................................37

         11.      Miscellaneous............................................................................................37
                           a.       Nature of Certain Obligations..........................................................37
                           b.       Press Releases and Public Announcements................................................37
                           c.       No Third-Party Beneficiaries...........................................................38
                           d.       Entire Agreement.......................................................................38
                           e.       Succession and Assignment..............................................................38
                           f.       Counterparts...........................................................................38
                           g.       Headings...............................................................................38
                           h.       Notices................................................................................38
                           i.       Governing Law..........................................................................39
                           j.       Amendments and Waivers.................................................................39
                           k.       Severability...........................................................................40
                           l.       Expenses...............................................................................40
                           m.       Construction...........................................................................40
                           n.       Incorporation of Exhibits and Schedules................................................40
                           o.       Action by Principal Stockholder on Behalf of Each Stockholder..........................40

</TABLE>

Exhibit A   --   Form of Closing Note for Holders of Class A Target Shares
Exhibit B   --   Form of Closing Note for Holders of Class E Target Shares
Exhibit C   --   Form of Registration Rights Agreement


                                     -iii-

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

         Agreement and Plan of Merger ("AGREEMENT") entered into as of January
26, 2000, by and among LaBranche & Co Inc., a Delaware corporation (the
"BUYER"), Webco Securities, Inc, a Delaware corporation (the "TARGET"), and each
other person executing this Agreement on the signature pages hereof
(individually, a "STOCKHOLDER" and collectively, the "STOCKHOLDERS"). The Buyer,
the Target and the Stockholders are referred to collectively herein as the
"PARTIES."

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


         This Agreement contemplates a transaction in which the Buyer will
acquire all of the outstanding capital stock of the Target for cash and common
stock of the Buyer through a merger of the Target with and into the Buyer in
accordance with Section 368(a)(1)(A) of the Code.

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


         Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.

         1.       DEFINITIONS.

         "ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.

         "AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.

         "ALLOCABLE PORTION" means, with respect to the share of any Stockholder
in a particular amount, that fraction equal to the number of Target Shares the
Stockholder beneficially owns, as set forth in Exhibit 3(b) to the TARGET'S
DISCLOSURE SCHEDULE, over the total number of outstanding Target Shares, and
with respect to the share of any Closing Stockholder in a particular amount,
that fraction equal to the number of Target Shares the Closing Stockholder owns
of record as of the Closing Date over the total number of Target Shares
outstanding as of the Closing Date.

         "BOCKLET AGREEMENT" means that certain joint account agreement between
the Target and Bocklet & Co. dated as of June 22, 1998 relating to acting as a
specialist in the stock of Oakley, Inc.

         "BUYER" has the meaning set forth in the preface above.

         "BUYER'S DISCLOSURE SCHEDULE" means the disclosure schedule delivered
by the Buyer to the Target and the Principal Stockholder on the date hereof and
initialed by the Buyer, the Target and the Principal Stockholder.

         "BUYER PLANS" has the meaning set forth in Section 5(o) below.

<PAGE>

         "BUYER STOCK" means the common stock, par value $0.01 per share, of the
Buyer.

         "CASH CONSIDERATION" has the meaning set forth in Section 2(d)(vi)
below.

         "CERTIFICATE OF MERGER" has the meaning set forth in Section 2(c)
below.

         "CLOSING" has the meaning set forth in Section 2(b) below.

         "CLOSING CASH" has the meaning set forth in Section 2(d)(vi) below.

         "CLOSING DATE" has the meaning set forth in Section 2(b) below.

         "CLOSING NOTE" has the meaning set forth in Section 2(d)(vi) below.

         "CLOSING STOCKHOLDER" has the meaning set forth in Section 2(c) below.

         "CLOSING VALUE" has the meaning set forth in Section 2(d)(vii) below.
For all purposes hereof, if, between the date hereof and the Effective Time, the
outstanding shares of Buyer Stock shall have been changed into a different
number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, or if any extraordinary dividend or distribution is made with respect
to the Buyer Stock, then the determination of the Closing Value shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
extraordinary dividend, distribution or other similar event.

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "CONFIDENTIAL INFORMATION" means any information concerning the
business and affairs of the Target that is not already generally available to
the public.

         "DGCL" means the General Corporation Law of the State of Delaware, as
amended.

         "EFFECTIVE TIME" has the meaning set forth in Section 2(d)(i) below.

         "EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), (d) Employee
Welfare Benefit Plan (as defined in ERISA Section 3(1)), or (e) any other
material fringe benefit or other retirement, bonus, incentive, profit-sharing,
savings, change in control, employment, consulting, collective bargaining,
dependent care, employee assistance, post-retirement welfare, retention,
vacation, severance, disability or death benefit plan, program, agreement,
arrangement or understanding (whether or not written).

         "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).

         "ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and


                                       2

<PAGE>

pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, as such requirements are enacted and
in effect on or prior to the Closing Date.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "ERISA AFFILIATE" means, with respect to a specified Person, each
entity which is treated as a single employer with such Person for purposes of
Code Section 414 or ERISA Section 4001(a)(14).

         "ESOP" means the Target's Money Purchase Pension and Stock Bonus Plans.

         "ESTIMATED NET WORKING CAPITAL" has the meaning set forth in
Section 2(e)(i) below.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "FINAL NET WORKING CAPITAL" has the meaning set forth in Section
2(e)(ii) below.

         "GAAP" means United States generally accepted accounting principles for
broker-dealers as in effect from time to time applied consistently throughout
the periods involved.

         "GAP NOTE" has the meaning set forth in Section 2(d)(vii)(1) below.

         "GOVERNMENTAL ENTITY" shall mean any court, self-regulatory
organization, administrative or regulatory agency or commission or other U.S.,
federal, state, local, municipal or foreign government or governmental body,
official, authority or instrumentality.

         "HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

         "HENDERSON BROTHERS" means Henderson Brothers Holdings, Inc., a
Delaware corporation all the outstanding equity interests of which the Buyer has
agreed to acquire pursuant to a Stock Purchase Agreement dated as of December
23, 1999 among the Buyer, such corporation and all the stockholders of such
corporation.

         "INDEMNIFIED PARTY" has the meaning set forth in Section 9(e)(i) below.

         "INDEMNIFYING PARTY" has the meaning set forth in Section 9(e)(i)
below.

         "INDEPENDENT FIRM" means Ernst & Young LLP or such other nationally
recognized independent certified public accounting firm as shall be mutually
agreed upon by the Buyer and the Principal Stockholder within 10 days after the
event which gives rise to the need to refer any question to such firm pursuant
to the terms hereof.

         "IRA" means an individual retirement account, as defined in Section 408
of the Code.


                                       3

<PAGE>

         "KNOWLEDGE" means (i) with respect to the Target, the actual knowledge
of any of its directors and officers, (ii) with respect to any Stockholder, the
actual knowledge of such Stockholder and (iii) with respect to the Buyer, the
actual knowledge of any of its directors and officers.

         "LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including without limitation, those arising under
any law (including, without limitation, any environmental law), action or
government order and those arising under any contract, agreement, arrangement,
commitment or undertaking.

         "LIENS" shall mean all liens, charges, security interests, pledges,
rights or claims of others, restraints on transfer or other encumbrances of any
nature whatsoever.

         "MATERIAL ADVERSE CHANGE" means a change or development which results,
or is reasonably likely to result, in a Material Adverse Effect.

         "MATERIAL ADVERSE EFFECT" means any circumstance, change or effect that
is, or reasonably would be expected to be, materially adverse to the business or
financial condition of a Person or on the ability of the Parties to consummate
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that
"Material Adverse Effect" shall not include any circumstance, change or effect
directly or indirectly attributable to (i) circumstances, changes or effects
that generally affect the industry (or a portion thereof) in which the Target
operates; (ii) changes in general economic, legal, regulatory or political
conditions relating to the Target's business, or (iii) any actions taken or
omitted to be taken pursuant to the terms of this Agreement.

         "MERGER" has the meaning set forth in Section 2(a) below.

         "MERGER CONSIDERATION" has the meaning set forth in Section 2(d)(vi)
below.

         "MULTIEMPLOYER PLAN" has the meanings set forth in ERISA Section 3(37),
ERISA Section 4001(a)(3) and Code Section 414(f) and shall be deemed to include
any plan that is subject to ERISA Section 4063 or 4064.

         "NET WORKING CAPITAL" in respect of the Target means, as of a specific
date, the Target's total assets, including (i) receivables due to the Target
pursuant to the Bocklet Agreement, (ii) the Target's security deposits with its
landlord and (iii) accruals for overpayment of Taxes, but excluding NYSE
memberships and those assets identified on the Target's balance sheet as "Other
Assets" which are not cash, cash equivalents or readily convertible into cash,
less the Target's total liabilities (excluding the subordinated borrowing
associated with the NYSE membership of William E. Boye, Jr., the use of which
has been contributed to the Target), in each case as determined in accordance
with GAAP (except as set forth in Section 3(j) of the TARGET'S DISCLOSURE
SCHEDULE) and the Target's historical practices with respect to the
characterization and accounting treatment of such items.

         "NYSE" means the New York Stock Exchange.

         "PARTY" has the meaning set forth in the preface above.


                                       4

<PAGE>

         "PBGC" means the Pension Benefit Guaranty Corporation.

         "PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a Governmental Entity (or any
department, agency, or political subdivision thereof).

         "PRINCIPAL STOCKHOLDER" means William E. Boye, Jr. or, if he is unable
or unwilling to so act, William D. Boye or, if he is unable or unwilling to so
act, then an individual designated by those persons (or their heirs or legal
representatives) who are holders of a majority of the outstanding shares of
Class A Common Stock of the Target immediately prior to the Closing.

         "PUBLIC REPORT" has the meaning set forth in Section 5(i) below.

         "REDUCTION AMOUNT" has the meaning set forth in Section 2(e)(iii)(2)
below.

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SECURITY INTEREST" means any Lien, other than (a) mechanic's,
materialmen's, and similar Liens, (b) Liens for taxes not yet due and payable or
for taxes that the taxpayer is contesting in good faith through appropriate
proceedings and (c) purchase money Liens and Liens securing rental payments
under capital lease arrangements.

         "STOCK CONSIDERATION" has the meaning set forth in Section 2(d)(vi)
below.

         "STOCKHOLDER" has the meaning set forth in the preface above, except as
otherwise specifically provided herein.

         "SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.

         "TARGET" has the meaning set forth in the preface above.

         "TARGET'S DISCLOSURE SCHEDULE" means the disclosure schedule delivered
by the Target and the Stockholders to the Buyer on the date hereof and initialed
by the Target, the Principal Stockholder and the Buyer.

         "TARGET'S FINANCIAL STATEMENTS" has the meaning set forth in Section
3(j) below.

         "TARGET SHARE" means any share of the common stock, par value $1.00 per
share, of the Target.

         "TAX" or "TAXES" means any and all federal, state, local or foreign
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority,


                                       5

<PAGE>

including, without limitation: taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes,
license, registration and documentation fees; and customs duties, tariffs, and
similar charges.

         "TAX RETURN" means tax returns, reports, information returns, schedules
and statements required to be filed with any governmental or regulatory
authority with respect to Taxes.

         "TERM" has the meaning set forth in Section 7(c)(i) below.

         "THIRD PARTY CLAIM" has the meaning set forth in Section 9(e)(i) below.

         "TRUSTEE" means the trustee of the ESOP.

         "WORKING CAPITAL ADJUSTMENT" has the meaning set forth in Section
2(e)(iii)(2) below.

         2.       BASIC TRANSACTION.

                  a.       THE MERGER. On and subject to the terms and
conditions of this Agreement, the Target will merge with and into the Buyer (the
"MERGER") at the Effective Time. The Buyer shall be the corporation surviving
the Merger.

                  b.       THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York, commencing
at 10:00 a.m. local time on the later of February 24, 2000 or the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date and place as the Parties may mutually
determine (the "CLOSING DATE"), but on the same date as the filing of the
Certificate of Merger and the Effective Time stated therein.

                  c.       DELIVERIES AT THE CLOSING. At the Closing, (i) the
Target and/or the Stockholders will deliver to the Buyer the various
certificates, instruments, and documents referred to in Section 8(b) below, (ii)
the Buyer will deliver to the Target and/or the Stockholders the various
certificates, instruments, and documents referred to in Section 8(c) below,
(iii) the Target and the Buyer will file with the Secretary of State of the
State of Delaware a Certificate of Merger (the "CERTIFICATE OF MERGER"), (iv)
the Buyer will pay to the record holders of Target Shares as of the Closing Date
(the "CLOSING STOCKHOLDERS") the aggregate consideration for the Target Shares
described in Section 2(d)(vi) below in the manner provided in Section 2(d)(vi)
below and (v) the Closing Stockholders will deliver certificates evidencing the
Target Shares to the Buyer.

                  d.       EFFECT OF MERGER.

                           i.       GENERAL. The Merger shall become effective
(the "EFFECTIVE TIME") at such time as the Target and the Buyer file the
Certificate of Merger with the Secretary of State of the State of


                                       6

<PAGE>

Delaware or at such later time as specified in the Certificate of Merger. The
Merger shall have the effect set forth in the DGCL. The Buyer may, at any time
after the Effective Time, take any action (including executing and delivering
any document) in the name and on behalf of either the Target or the Buyer in
order to carry out and effectuate the transactions contemplated by this
Agreement.

                           ii.      From and after the Effective Time, the
separate corporate existence of the Buyer, with its purpose, object, rights,
privileges, powers, certificates and franchises, shall continue unimpaired by
the Merger. At the Effective Time, the separate corporate existence of the
Target shall cease, and the Buyer shall succeed to all the properties and assets
of the Target and to all debts, choses in action and other interests due or
belonging to the Target and shall be subject to, and responsible for, all debts,
liabilities and duties of the Target with the effects provided by the applicable
provisions of the DGCL.

                           iii.     CERTIFICATE OF INCORPORATION. The
certificate of incorporation of the Buyer in effect at and as of the Effective
Time will remain its certificate of incorporation without any modification or
amendment in the Merger.

                           iv.      BYLAWS. The bylaws of the Buyer in effect at
and as of the Effective Time will remain its bylaws without any modification or
amendment in the Merger.

                           v.       DIRECTORS AND OFFICERS. The directors and
officers of the Buyer in office at and as of the Effective Time will remain its
directors and officers (retaining their respective positions and terms of
office).

                           vi.      CONSIDERATION FOR TARGET SHARES. At and as
of the Effective Time, the Target Shares (other than any Target Shares held as
treasury shares by the Target, which shall be cancelled as of the Effective
Time) shall be converted into the right to receive, in the aggregate, (A) $12.2
million in cash (without interest), subject to adjustment pursuant to Section
2(d)(vii) and (e) below (the "CASH CONSIDERATION"), of which (x) $3,000,000 of
the Cash Consideration shall be paid by the Buyer to the Closing Stockholders at
the Closing in the form of separate promissory notes, in substantially the forms
attached hereto as EXHIBIT A and EXHIBIT B, made payable to the Closing
Stockholders in the aggregate amounts of their respective Allocable Portions of
such $3,000,000 (the "CLOSING NOTES"), and (y) the remainder of the Cash
Consideration (the "CLOSING CASH") shall be paid by the Buyer to the Closing
Stockholders at the Closing by separate certified checks, bank checks or wire
transfers (pursuant to written instructions delivered by the Principal
Stockholder to the Buyer at least three (3) business days prior to the Closing),
in the amounts of their respective Allocable Portions of the Closing Cash, plus
(B) 2.8 million shares of Buyer Stock, subject to adjustment pursuant to Section
2(d)(viii) below (the "STOCK CONSIDERATION," and together with the Cash
Consideration, the "MERGER CONSIDERATION"), of which each Closing Stockholder
shall be entitled to receive at the Closing a stock certificate evidencing that
number of shares of Buyer Stock represented by his, her or its Allocable Portion
of the Stock Consideration. No certificates representing fractional shares of
Buyer Stock shall be issued upon the surrender of Target Shares in connection
with the Merger. Any Closing Stockholder who otherwise would be entitled to a
fractional share of Buyer Stock in connection with the Merger shall be entitled
to receive at the Closing a payment of cash in an amount, rounded to the nearest
cent, determined by multiplying the fractional interest in Buyer Stock to which
such Closing Stockholder would otherwise be entitled (after taking into account
all Target Shares then held of record by such Closing Stockholder) by the
Closing Value. No


                                       7

<PAGE>

Target Share shall be deemed to be outstanding or to have any rights other than
those set forth above in this Section 2(d)(vi) after the Effective Time.

                           vii.     ADJUSTMENT TO CASH CONSIDERATION.

                  (1)      If the daily volume weighted average price of a share
                           of Buyer Stock during the 10 consecutive trading days
                           ending on and including the second trading day prior
                           to the Closing (the "CLOSING VALUE") is greater than
                           or equal to $10.00 per share but less than $11.00 per
                           share, the Buyer will execute and deliver to the
                           Closing Stockholders separate interest-free
                           promissory notes (the "GAP NOTES") payable to the
                           Closing Stockholders in the amounts of their
                           respective Allocable Portions of the amount equal to
                           the difference between (1) $30.8 million minus (2)
                           the product of 2.8 million times the Closing Value,
                           which amounts shall be payable in three equal
                           installments on the six-month, 12-month and 18-month
                           anniversaries of the Closing Date, and which notes
                           shall be subordinated to (x) the existing senior
                           indebtedness of the Buyer in the original aggregate
                           principal amount of $116 million and (y) the
                           indebtedness proposed to be incurred by the Buyer in
                           connection with its acquisition of Henderson
                           Brothers.

                  (2)      If the Closing Value is greater than or equal to
                           $8.00 per share but less than $10.00 per share, (A)
                           the Cash Consideration will be increased by an amount
                           equal to the difference between (x) $28 million minus
                           (y) the product of 2.8 million multiplied by the
                           Closing Value, and (B) the Gap Notes which the Buyer
                           will execute and deliver to the Closing Stockholders
                           shall be payable to the Closing Stockholders in the
                           amounts of their respective Allocable Portions of
                           $2.8 million, which amounts shall be payable in three
                           equal installments on the six-month, 12-month and 18-
                           month anniversaries of the Closing Date, and which
                           notes shall be subordinated to (x) the existing
                           senior indebtedness of the Buyer in the original
                           aggregate principal amount of $116 million and (y)
                           the indebtedness proposed to be incurred by the Buyer
                           in connection with its acquisition of Henderson
                           Brothers.

                           viii.    ADJUSTMENT TO STOCK CONSIDERATION. If the
value of the Stock Consideration as of the Effective Time, based on the Closing
Value, exceeds $44.8 million, the number of shares of Buyer Stock constituting
the Stock Consideration shall be reduced to that number of shares of Buyer Stock
having a value as of the Effective Time, based on the Closing Value, equal to
$44.8 million. In addition, without limiting the provisions of Section 2(d)(vi)
and (viii), if, between the date hereof and the Effective Time, the outstanding
shares of Buyer Stock shall have been changed into a different number of shares
or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares, or
if any extraordinary dividend or distribution is made with respect to the Buyer
Stock, then the Stock Consideration shall be correspondingly adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, extraordinary dividend, distribution or other
similar event.

                           ix.      BUYER SHARES. Each share of Buyer Stock
outstanding at and as of the Effective Time will remain issued and outstanding.


                                       8

<PAGE>

                  e.       NET WORKING CAPITAL ADJUSTMENT.

                           i.       For purposes of the Closing, the Target
shall estimate the amount of its Net Working Capital as of the Closing Date on
the basis of the most current information then available. The Target shall
notify the Buyer of its calculation of the Target's estimated Net Working
Capital (the "ESTIMATED NET WORKING CAPITAL") and deliver a copy of such
calculation to the Buyer at least three, but not more than five, business days
prior to Closing. The Cash Consideration to be paid at the Closing shall be
adjusted based upon the Estimated Net Working Capital as follows:

                  (1)      If the Estimated Net Working Capital is less than $18
                           million, the Cash Consideration to be paid at Closing
                           shall be decreased by the difference between
                           $18,000,000 less the Estimated Net Working Capital;

                  (2)      If the Estimated Net Working Capital is equal to $18
                           million, there shall be no Cash Consideration
                           adjustment pursuant to this Section 2(e).

                  (3)      If the Estimated Net Working Capital is greater than
                           $18 million, the Cash Consideration to be paid at
                           Closing shall be increased by the difference between
                           the Estimated Net Working Capital less $18,000,000.

                           ii.      Within ten (10) business days following the
Closing, the Buyer shall deliver to the Principal Stockholder, for and on behalf
of all the Closing Stockholders, its calculation of the Target's Net Working
Capital as of the Closing Date (the "FINAL NET WORKING CAPITAL") and related
supporting documentation. Within 10 business days following his receipt of the
Buyer's Final Net Working Capital calculation, the Principal Stockholder shall
have the right to object in writing thereto, setting forth a specific
description of his objections. If the Principal Stockholder does not so object
during such period, the Principal Stockholder shall be deemed to have agreed,
for and on behalf of all the Closing Stockholders, to the Final Net Working
Capital calculation. If the Principal Stockholder so objects and the Buyer and
the Principal Stockholder cannot mutually agree on the Final Net Working Capital
calculation within five business days of Purchaser's receipt of the Principal
Stockholder's objections, the dispute shall be promptly submitted to the
Independent Firm, except as otherwise agreed by the Buyer and the Principal
Stockholder.

                           iii.     Based upon the Final Net Working Capital, as
finally determined pursuant to Section 2(e) hereof, the following post-Closing
deliveries shall be made, as applicable:

                  (1)      If the Final Net Working Capital is greater than the
                           Estimated Net Working Capital, the Buyer shall
                           deliver to the Closing Stockholders separate
                           certified checks, bank checks or wire transfer
                           payments of cash in the amounts of their respective
                           Allocable Portions of the amount equal to the
                           difference between the Final Net Working Capital,
                           less the Estimated Net Working Capital, together with
                           interest accrued from the Closing Date until and
                           including the date of such payments at the fixed rate
                           of 10% per annum. Simultaneously therewith, the Buyer
                           also shall deliver to the Closing Stockholders
                           payments under the Closing Notes of principal in the
                           amounts of their respective Allocable Portions of
                           $500,000, plus accrued interest under the Closing
                           Notes with respect to such payments of principal;


                                       9

<PAGE>

                  (2)      If the Final Net Working Capital is less than the
                           Estimated Net Working Capital, the Buyer shall be
                           entitled to receive from each Closing Stockholder a
                           payment in the amount of such Closing Stockholder's
                           Allocable Portion of the amount equal to the
                           difference between the Estimated Net Working Capital,
                           less the Final Net Working Capital, together with
                           interest accrued from the Closing Date until and
                           including the date of such payment at the fixed rate
                           of 10% per annum (the "WORKING CAPITAL ADJUSTMENT").
                           Each such payment shall be effected by a reduction,
                           effective as of the Closing Date, in the principal
                           amount of the Closing Note issued to such Closing
                           Stockholder in an amount (the "Reduction Amount")
                           equal to (x) the amount of such Closing Stockholder's
                           Allocable Portion of the Working Capital Adjustment,
                           plus (y) accrued interest under the Closing Note
                           issued to such Closing Stockholder with respect to
                           the Reduction Amount. To the extent the aggregate
                           Reduction Amounts are less than $500,000, the Buyer
                           shall deliver to the Closing Stockholders payments
                           under the Closing Notes of principal in the amounts
                           of their respective Allocable Portions of the amount
                           equal to the difference between $500,000 minus the
                           aggregate Reduction Amounts, plus accrued interest
                           under the Closing Notes with respect to such payments
                           of principal; and

                  (3)      If the Final Net Working Capital is equal to the
                           Estimated Net Working Capital, the Buyer shall
                           deliver to the Closing Stockholders payments under
                           the Closing Notes of principal in the amounts of
                           their respective Allocable Portions of $500,000, plus
                           accrued interest under the Closing Notes with respect
                           to such payments of principal.

                           iv.      Any post-Closing payment required to be made
pursuant to Section 2(e) shall be made within two business days after the final
determination of Final Net Working Capital.

                  f.       CLOSING OF TRANSFER RECORDS. After the close of
business on the Closing Date, transfers of Target Shares outstanding prior to
the Effective Time shall not be made on the stock transfer books of the Buyer,
as the surviving corporation.

         3.       REPRESENTATIONS AND WARRANTIES OF THE TARGET AND THE
STOCKHOLDERS. The Stockholders, as a group, and the Target jointly and severally
represent and warrant to the Buyer that the statements contained in this Section
3 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Effective Time (as though made then and as though the
Effective Time were substituted for the date of this Agreement throughout this
Section 3), except as set forth in the TARGET'S DISCLOSURE SCHEDULE. For
purposes of this Section 3 (other than Section 3(d) and (e)), the term
"Stockholders" shall exclude the Trustee.

                  a.       ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Target is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. The Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect on the Target. The Target
has full corporate power and authority to carry on the business in which it is
engaged and to own and use the properties owned and used by it.


                                       10

<PAGE>

                  b.       CAPITALIZATION. The entire authorized capital stock
of the Target consists of 80,000 Target Shares, 40,000 of which is denominated
Class A Common Stock, of which 32,362.42 shares are issued and outstanding, and
40,000 of which is denominated Class E Common Stock, of which 18,552.75 shares
are issued and outstanding. As of the date hereof, all of the issued and
outstanding Target Shares have been duly authorized, are validly issued, fully
paid, and nonassessable and are held of record as set forth in Exhibit 3(b) to
the TARGET'S DISCLOSURE SCHEDULE. Except as set forth herein and other than
shares held in treasury, there are no shares of capital stock or other voting
securities of the Target issued and outstanding. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require the
Target to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Target.

                  c.       SUBSIDIARIES. The Target has no Subsidiaries. Except
for equity interests which it owns in connection with the conduct of its
specialist business, the Target does not, directly or indirectly, own any equity
interests in any other Person.

                  d.       AUTHORIZATION OF TRANSACTION. The Target and the
Stockholders have full power and authority (including full corporate power and
authority in the case of the Target) to execute and deliver this Agreement and
the other documents contemplated hereby to which they are a party and to perform
their respective obligations hereunder and thereunder. By his or her execution
hereof, each Stockholder who beneficially owns Class E Target Shares, as set
forth in Exhibit 3(b) to the TARGET'S DISCLOSURE SCHEDULE, in their respective
capacities as a named fiduciary of their respective accounts under the ESOP,
hereby direct the Trustee (i) to take such actions as are necessary to exercise
the voting rights appurtenant to the Target Shares held in their respective ESOP
accounts in favor of the Merger and (ii) to execute this Agreement. By his or
her execution hereof, each Stockholder hereby consents to the Merger. This
Agreement and the other documents contemplated hereby to which they are a party
(assuming execution and delivery by the Buyer) constitute the valid and legally
binding obligations of the Target and each Stockholder, as the case may be,
enforceable in accordance with its terms and conditions, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity,
whether considered in a proceeding in equity or at law. Neither the Target nor
any Stockholder or Closing Stockholder is required to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a Material Adverse Effect on the Target.

                  e.       NONCONTRAVENTION. The execution, delivery and
performance of this Agreement and the other documents contemplated hereby, and
the consummation by the Target, the Stockholders and the Closing Stockholders of
the transactions contemplated hereby, do not and will not (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Target, a Stockholder or a Closing Stockholder is subject or
any provision of the Target's charter or bylaws or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Target, a Stockholder or a Closing Stockholder is a
party


                                       11

<PAGE>

or by which the Target is bound or to which any of its, his or her assets is
subject (or result in the imposition of any Security Interest upon any of its
his or her assets), except where the conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on the Target. By the Target's
and each Stockholder's execution hereof, the Target and each Stockholder hereby
waive the provisions of any shareholders agreement or any buy-back agreement or
any other agreement to the extent, and for so long as, the same would be in
conflict with the execution, delivery and performance of this Agreement.

                  f.       [RESERVED]

                  g.       REGULATORY MATTERS. The Target is and has been duly
registered as a broker-dealer with the SEC and in the states where such
registration is required under the securities laws of such states. The Target is
and has been duly registered as a NYSE specialist. The Target and its employees
are in compliance in all material respects with all federal and state laws and
NYSE rules regulating broker-dealers or specialists or requiring registration,
licensing or qualification as a broker-dealer or specialist, and the Target is a
member in good standing and has all material licenses and authorizations in
self-regulatory or trade organizations or registered clearing agencies required
to permit the operation of its business as presently conducted. Each such
federal, state and NYSE registration is in full force and effect. The Target has
furnished or made available to the Buyer a true, correct and complete copy of
its Form BD, as amended to date, filed by the Target with the SEC.

                  h.       BROKERS' FEES. The Target does not have any liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement, for which the
Buyer could become liable or obligated.

                  i.       TITLE TO TANGIBLE ASSETS. The Target has good and
marketable title to, or a valid leasehold interest in, the material tangible
assets used regularly by such entity in the conduct of its business, free and
clear of any Security Interest or Lien.

                  j.       FINANCIAL STATEMENTS.

                           i.       Target has delivered to the Buyer the
audited balance sheets and statements of income, changes in stockholders'
equity, and cash flows as of and for the fiscal years ended October 31, 1995,
1996, 1997, 1998 and 1999 for the Target. The Target has also made available to
the Buyer true, correct and complete copies of the unaudited balance sheet and
statements of income and changes in stockholders' equity as of December 31, 1999
(collectively, the "TARGET'S FINANCIAL STATEMENTS"). The Target's Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby and
present fairly the financial condition of the Target as of such dates and the
results of operations of the Target for such periods; PROVIDED, HOWEVER, that
the interim statements are subject to normal year-end adjustments and lack
footnotes and other presentation items. The Target has made available to the
Buyer true and complete copies of all of the Target's FOCUS Reports filed on
Form X-17A-5 (the "FOCUS REPORTS") as of the periods covered in the Target's
Financial Statements. Each FOCUS Report complied (and with respect to Focus
Reports filed after the date hereof and prior to the Closing Date, will comply)
at the date thereof in all material respects with the rules and regulations of
the SEC relating thereto and fairly present the information required to be
presented therein pursuant to Rule 17a-5 under the Exchange Act.


                                       12

<PAGE>

                           ii.      All material liabilities and obligations,
whether absolute, accrued, contingent or otherwise, whether direct or indirect,
and whether due or to become due, which existed at the respective dates of the
Target's Financial Statements have been disclosed in the balance sheets included
in the Target's Financial Statements or in notes to the Target's Financial
Statements to the extent such liabilities were required, under GAAP, to be so
disclosed. The statements of operations, accumulated deficit and cash flows
included in the Target's Financial Statements present fairly the results of
operations, accumulated deficit and cash flows of Target for the periods
indicated. The statements of operations included in the Target's Financial
Statements do not contain any material items of non-recurring income (as defined
by GAAP) or other income not earned in the ordinary course of business except as
expressly specified therein.

                           iii.     As of October 31, 1999 and as of the Closing
Date, the accounts and notes receivable of the Target reflected on the balance
sheet of the Target as of each of such dates were and will be net of reserves
reflected on such balance sheet and collectible in full over the period of usual
trade terms. To the Knowledge of the Target and each Stockholder, there do not
and will not exist any defenses, counterclaims or set-offs which could
materially adversely affect such receivables, and all such receivables are or
will be actual and bona fide receivables representing obligations for the total
dollar amount thereof shown on the books of the Target. As of the date of each
such balance sheet, the Target has or will have fully performed all material
obligations with respect to its accounts and notes receivable which it has or
will have been obligated to perform prior to the date of such balance sheet.

                  k.       UNDISCLOSED LIABILITIES. The Target does not have any
liabilities, whether known or unknown, contingent or otherwise, including any
liability for Taxes, except for (i) liabilities set forth in the Target's
Financial Statements or in the notes thereto, (ii) liabilities which have arisen
after October 31, 1999 in the ordinary course of business consistent with past
custom and practice, and (iii) liabilities set forth in Section 3(k) of the
TARGET'S DISCLOSURE SCHEDULE.

                  l.       EVENTS SUBSEQUENT TO THE TARGET'S MOST RECENT FISCAL
YEAR END. Since October 31, 1999, there has not been any Material Adverse Change
in the business or financial condition of the Target. Since October 31, 1999,
the business of the Target has been conducted in the ordinary course and
consistent with past practice and there has not been: (i) any repurchase,
redemption or other acquisition by the Target of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Target; (ii) any amendment of any material term of any outstanding capital stock
of the Target; (iii) any material change in any method of accounting or
accounting practice by the Target, except for any such change required by reason
of a concurrent change in generally accepted accounting principles or disclosed
in the Target's Financial Statements; or (iv) any (A) grant of any severance or
termination pay to any current or former director, officer or employee of the
Target, (B) entry into any written employment, severance, termination, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any current, former or prospective director, officer or employee
of the Target, (C) increase in benefits payable under any existing severance or
termination pay policies or employment agreements, or (D) increase in
compensation, bonus or other benefits payable to any director, officer or
employee of the Target, other than in the ordinary course of business.

                  m.       LEGAL AND REGULATORY COMPLIANCE. The Target has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and


                                       13

<PAGE>

charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) and all applicable rules and regulations the NYSE, except
where the failure to comply would not have a Material Adverse Effect on the
Target. The Target is not in material violation of and has no material
liabilities, whether accrued, absolute, contingent or otherwise, under any
federal, state, local or foreign law, ordinance or regulation or any order,
judgment, injunction, decree or other requirement of any court, arbitrator or
Governmental Entity, including without limitation laws relating to labor and
employment practices, health and safety, zoning, pollution or protection of the
environment. During the last three years, the Target has not received notice of,
and there has not been any citation, fine or penalty imposed against the Target
for, any such violation or alleged violation.

                  n.       TAXES.

                           i.       The Target has timely filed or will timely
file all Tax Returns that it was required or will be required to file, and has
paid all Taxes shown thereon as owing, except where the failure to file Tax
Returns or to pay Taxes would not have a Material Adverse Effect on the Target.
All such Tax Returns of the Target are, or will be when filed, true, correct and
complete.

                           ii.      All Taxes required to have been paid on or
before the date hereof by or on behalf of the Target or in respect of its
income, assets or operations have been fully and timely paid, and adequate
reserves or accruals for Taxes have been or, as of the Effective Time, will be
provided in the books and records of the Target in accordance with GAAP with
respect to any period for which Tax Returns have not yet been filed or for which
Taxes are not yet due and owing as of the date hereof and as of the Effective
Time, as the case may be. The reserves and accruals for Taxes of the Target as
of the Closing Date will be taken into account in the calculation of Net Working
Capital.

                           iii.     Section 3(n) of the TARGET'S DISCLOSURE
SCHEDULE lists all Tax Returns filed with respect to the Target for taxable
periods ended on or after October 31, 1995, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are the
subject of audit. The Target has made available to the Buyer correct and
complete copies of all Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Target since October 31, 1995.
The Target has not received any notice from any taxing authority that it intends
to conduct an audit or investigation or assert any claim in a jurisdiction where
the Target does not file Tax Returns such that it is or may be subject to
taxation by that jurisdiction. All deficiencies asserted or assessments made as
a result of any examinations by any taxing authority of the Tax Returns of, or
covering or including, the Target have been fully paid. No issue has been raised
by a U.S. federal, state, local or foreign taxing authority in any current or
prior examination which, by application of the same or similar principles, could
reasonably be expected to result in a proposed deficiency for any subsequent
taxable period.

                           iv.      The Target has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.

                           v.       The Target is not a party to any Tax
allocation or sharing agreement (whether written or not written).

                           vi.      The Target has complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and has duly and timely withheld


                                       14

<PAGE>

from employee salaries, wages and other compensation and has paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over for all periods under all applicable laws.

                           vii.     Neither the Target nor any other Person
(including any of the Stockholders) on behalf of the Target has (A) filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Target, (B)
agreed to or is required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign law by reason of a
change in accounting method initiated by the Target or has any knowledge that
the Internal Revenue Service has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to the
business or operations of the Target, or has otherwise taken any action that
would have the effect of deferring any liability for Taxes from any taxable
period ending on or before the Closing to any taxable period ending thereafter,
or (C) executed or entered into closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof or any similar provision of state,
local or foreign law with respect to the Target.

                           viii.    No power of attorney with respect to any
Target Tax matter is currently in force.

                           ix.      There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by the Target by
reason of Section 280G or 162(m) of the Code.

                           x.       The Target has substantial authority for the
treatment of, or has disclosed (in accordance with Section 6662(d)(2)(B)(ii) of
the Code) on its federal income Tax Returns, all positions taken therein that
could give rise to a substantial understatement of federal income tax within the
meaning of Section 6662(d) of the Code.

                           xi.      The Target is not subject to any private
letter ruling of the Internal Revenue Service or comparable rulings of other
taxing authorities.

                           xii.     There are no liens as a result of any unpaid
Taxes upon any of the assets of the Target.

                           xiii.    All material Tax elections of the Target are
clearly set forth in the Tax Returns described in Section 3(n).

                           xiv.     The Target has never been a member of any
affiliated group within the meaning of Section 1504 of the Code or any similar
group defined under a similar provision of state, local or foreign law,
including, but not limited to, any combined, consolidated or unitary group
("AFFILIATED GROUP") for any Tax purposes. The Target does not own any interest
in any entity that is treated as a partnership for U.S. federal income tax
purposes or would be treated as a pass-through or transparent entity for any tax
purpose. The Target has no liability for Taxes by reason of being a
successor-in-interest or transferee of another entity.


                                       15

<PAGE>

                           xv.      The Target has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii).

                  o.       REAL PROPERTY. The Target does not own any real
property. Section 3(o) of the TARGET'S DISCLOSURE SCHEDULE lists all real
property leased or subleased to the Target. The Target has made available to the
Buyer correct and complete copies of the leases and subleases listed in Section
3(o) of the TARGET'S DISCLOSURE SCHEDULE (as amended to date). Each lease and
sublease listed in Section 3(o) of the TARGET'S DISCLOSURE SCHEDULE is legal,
valid, binding, enforceable, and in full force and effect, except where the
illegality, invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a Material Adverse Effect on the Target.

                  p.       INTELLECTUAL PROPERTY. The Target has no (i) patent
or registration issued to it with respect to any of its intellectual property,
(ii) pending patent application or application for registration with respect to
any of its intellectual property, or (iii) license, agreement, or other
permission which the Target has granted to any third party with respect to any
of its intellectual property.

                  q.       NAMES, FRANCHISES ETC. The Target has the right to
use its name in every state and country in which it now does business. The
Target has not infringed or violated in any way any trademark, trade name,
copyright, trade secret rights or contractual relationships of others, and has
not received any notice, claim or protest in respect of any such violations or
infringement. The Target has not given any indemnification to any person for any
such violations or infringements.

                  r.       CONTRACTS. Section 3(r) of the TARGET'S DISCLOSURE
SCHEDULE lists all written contracts and other agreements to which the Target is
a party, the performance of which will involve consideration in excess of
$50,000 annually or is material to the operations of the Target. The Target has
made available to the Buyer a correct and complete copy of each contract or
other agreement listed in Section 3(r) of the TARGET'S DISCLOSURE SCHEDULE (as
amended to date). Each such contract or other agreement is legal, valid,
binding, enforceable, and in full force and effect, and no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under any such contract or other agreement.

                  s.       POWERS OF ATTORNEY. There are no outstanding powers
of attorney executed on behalf of the Target.

                  t.       LITIGATION. Except as would not have a Material
Adverse Effect on the Target either individually or in the aggregate, there are
no actions by or against, or relating to the business of, the Target (or by or
against the Stockholders and relating to the Target's business or the Target)
(i) pending before any court, arbitration panel or any governmental or
regulatory authority or (ii) to the Knowledge of the Target or any Stockholder,
threatened to be brought by or before any court, arbitration panel or any
governmental or regulatory authority. None of the Target or any Stockholder is
subject to any governmental order (nor, to the Knowledge of the Target or any
Stockholder, are there any such governmental orders threatened to be imposed by
any governmental or regulatory authority) which has had or is reasonably likely
to have a Material Adverse Effect on the Target. There has not been any action
decided against or settled by any of the Stockholders, the Target or any of the
Target's directors, officers or employees during the last three (3) years in
connection with the Target's business which has had a


                                       16

<PAGE>

Material Adverse Effect on the Target. The Target is not subject to any
agreement or instrument or subject to any judgment, order, writ, injunction,
decree, rule, regulation or ordinance (other than rules, regulations or
ordinances that are generally applicable to specialists) that has had or is
reasonably likely to have a Material Adverse Effect on the Target.

                  u.       EMPLOYEE BENEFITS.

                           i.       Section 3(u) of the TARGET'S DISCLOSURE
SCHEDULE lists each Employee Benefit Plan that the Target maintains or sponsors
or to which the Target contributes (or has an obligation to contribute), and
each Employee Benefit Plan with respect to which the Target has any direct or
indirect liability (contingent or otherwise).

                           ii.      Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form and in operation in
all respects with its terms and applicable law, including ERISA and the Code,
except where the failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect on the Target.

                           iii.     All contributions (including all employer
contributions and employee salary reduction contributions), premiums and other
payments relating to all periods ending prior to the date of this Agreement have
been paid to, or with respect to, each such Employee Benefit Plan.

                           iv.      Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan (1) has received a favorable determination letter
from the Internal Revenue Service (that is currently in effect) to the effect
that it meets the qualification requirements of Code Section 401(a) and that its
related trust is exempt from taxation under Code Section 501(a) and, since the
date of the last determination letter, has not been amended or operated in a
manner which would adversely affect its qualified status (and no event has
occurred which has caused or could cause the loss of such status), (2) is, and
has been since its inception, qualified under Code Section 401(a), and its
related trust is, and has been since its inception, exempt from taxation under
Code Section 501(a), and (3) has not been terminated or partially terminated
within the meaning of Code Section 411(d)(3).

                           v.       As of the last day of the most recent prior
plan year, the market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan equaled or exceeded, and as of the
Closing Date will equal or exceed, the present value of liabilities thereunder
(determined on a plan termination basis).

                           vi.      The Target has delivered to the Buyer
correct and complete copies of the plan documents (and, if not written, a
complete description thereof) and summary plan descriptions, and where
applicable, the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, the most recent
balance sheet and financial statement, the most recent actuarial reports or
valuation statements, any private letter ruling, opinion letter, prohibited
transaction exemption or other determination issued by the Internal Revenue
Service, the Department of Labor or the PBGC (and any application therefor which
has been withdrawn) and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee Benefit Plan.


                                       17

<PAGE>

                           vii.     With respect to each Employee Benefit Plan
that the Target or any ERISA Affiliate maintains or has maintained during the
prior six years or to which any of them contributes, or has been required to
contribute during the prior six years:

                  (1)      No action, suit, proceeding, claim, hearing or
investigation with respect to such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of the Stockholders,
threatened and, to the Knowledge of the Stockholders, no facts or circumstances
exist which could give rise to an action, suit, proceeding, claim, hearing or
investigation which, if asserted, would result in a Material Adverse Effect on
the Target;

                  (2)      No application, proceeding or other matter is pending
before the Internal Revenue Service, the Department of Labor or any other
governmental agency; and

                  (3)      The Target has not incurred, and will not incur, any
direct or indirect liability to the PBGC or otherwise under Title IV of ERISA
(including any withdrawal liability).

                           viii.    Neither the Target nor its ERISA Affiliates
(nor their predecessors) have ever contributed to, otherwise participated in or
in any way, directly or indirectly, have any liability with respect to any
Employee Benefit Plan which is subject to Title IV of ERISA or any Multiemployer
Plan. No "accumulated funding deficiency" (within the meaning of Code Section
412 or ERISA Section 302) has been or could be expected to be incurred (whether
or not waived) and no excise or other taxes have been or could be expected to be
incurred or are due because of any failure to comply with the minimum funding
standards of the Code or ERISA. No security under Code Section 401(a)(29) has
been or could be expected to be required and the assets of the Target are not,
and have not been, subject to any lien under ERISA or the Code. With respect to
each such Employee Benefit Plan, individually and in the aggregate, no event has
occurred and, to the Knowledge of Stockholders, there exists no condition or
facts or circumstances which would result in or could reasonably be expect to
result a Material Adverse Effect on the Target.

                           ix.      With respect to each such Employee Benefit
Plan which is an "employee benefit plan" within the meaning of ERISA Section
3(3) or which is a "plan" within the meaning of Code Section 4975(e), there has
occurred no transaction which is prohibited by ERISA Section 406 or which
constitutes a "prohibited transaction" under Code Section 4975(c) and with
respect to which a prohibited transaction exemption is not currently in effect
(except for transactions which, individually or in the aggregate, would not have
a Material Adverse Effect on the Target) and the consummation of the transaction
contemplated by this Agreement will not constitute or directly or indirectly
result in such a "prohibited transaction."

                           x.       The Target has complied in all material
respects with the provisions of Code Section 4980B with respect to each such
Employee Benefit Plan which is a group health plan within the meaning of Code
Section 5001(b)(1). Neither the Target nor its ERISA Affiliates maintain,
contribute to, or are obligated under any plan, contract, policy or arrangement
providing health or death benefits (whether or not insured) to current or former
employees or other personnel beyond the termination of their employment or other
services (other than pursuant to Code Section 4980B).


                                       18

<PAGE>

                           xi.      Each such Employee Benefit Plan may be
unilaterally terminated and/or amended by the Target at any time and no event,
circumstance or condition exists that would prevent any such amendment or
termination. The consummation of the transaction contemplated by this Agreement
will not (either alone or in conjunction with another event, such as a
termination of employment or other services) entitle any employee or other
person to receive severance or other compensation which would not otherwise be
payable absent the consummation of the transaction contemplated by this
Agreement or cause the acceleration of the time of payment or vesting of any
award or entitlement under any Employee Benefit Plan. Neither the Target nor its
ERISA Affiliates, or any officer or employee thereof, have made any promises or
commitments, whether legally binding or not, to create any additional plan,
agreement, or arrangement, or to modify or change any existing Employee Benefit
Plan. Neither the Target nor its ERISA Affiliates have any unfunded liabilities
pursuant to any Employee Pension Benefit Plan that is not intended to be
qualified under Code Section 401(a).

                           xii.     No person other than a Stockholder or a
Closing Stockholder has any right, title or interest in, or with respect to, the
Target Shares held in the ESOP by the Trustee. The Target Shares held in the
ESOP by the Trustee have been properly allocated among the ESOP participants and
beneficiaries in accordance with the provisions of the ESOP and applicable law.
There are no outstanding share acquisition loans under, or relating to, the
ESOP.

                  v.       ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.

                           i.       The Target is in compliance with
Environmental, Health, and Safety Requirements, except for such noncompliance as
would not have a Material Adverse Effect on the Target.

                           ii.      The Target has not received any written
notice, report or other information regarding any actual or alleged material
violation of Environmental, Health, and Safety Requirements, or any material
liabilities or potential material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to the Target or any of its facilities arising
under Environmental, Health, and Safety Requirements, the subject of which is
reasonably likely to have a Material Adverse Effect on the Target.

                  w.       BOOKS AND RECORDS. All minute books and stock records
of the Target have been made available to the Buyer.

                  x.       NET CAPITAL. The Target is, and since November 1,
1996 has continuously been, in material compliance with SEC Rule 15c3-1 and NYSE
Rule 104 regarding its net capital and net liquid assets requirements.

                  y.       INSURANCE. The Target has insurance coverage with
reputable insurers for the Target's operations in amounts and covering such
risks as the Target reasonably believes necessary, in accordance with its
regular insurance practices.

                  z.       LABOR MATTERS. The Target is not a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor, as of
the date hereof, is the Target the subject of any proceeding asserting that the
Target has committed an unfair labor practice or seeking to compel it to bargain
with any labor union or labor


                                       19

<PAGE>

organization nor, as of the date of this Agreement, is there pending or, to the
Knowledge of the Target or any Stockholder, threatened, any material labor
strike, dispute, walkout, work stoppage, slow-down or lockout involving the
Target.

                  aa.      NO ILLEGAL OR IMPROPER TRANSACTIONS. Neither the
Target nor any of its directors, officers, employees, or, to the Knowledge of
the Target or any Stockholder, agents or Affiliates, has directly or indirectly
used funds or other assets of the Target or made any promise or undertaking in
such regard, for (i) illegal contributions, gifts, entertainment or other
expenses relating to political activity; (ii) illegal payments to or for the
benefit of officials or employees of any Governmental Entity; (iii) illegal
payments to or for the benefit of, including the sharing of profits with, any
person, firm, corporation or other entity, or any director, officer, employee,
agent or representative thereof; or (iv) the establishment or maintenance of a
secret or unrecorded fund; and there have been no false or fictitious entries
made in the books or records of the Target with respect to any of the foregoing.

                  bb.      BANK ACCOUNTS. TARGET'S DISCLOSURE SCHEDULE contains
a true, correct and complete list of the names, locations and account
information of all banks, trust companies, savings and loan associations and
other financial institutions at which the Target maintains safe deposit boxes or
accounts of any nature (other than brokerage accounts maintained in the ordinary
course of business).

                  cc.      RELATED PARTY TRANSACTIONS. No current or former
officer or director (including their respective family members), employee or
stockholder, or any associate (as defined in the rules promulgated under the
Securities Exchange Act of 1934, as amended) of the Target, is presently, or, in
the last three years has been, (a) a party to any transaction with the Target
other than on an arms-length basis (including, without limitation, any contract,
agreement or other arrangement providing for the furnishing of services by, or
rental of real or personal property from, or otherwise requiring payments to,
any such officer or director (including their respective family members),
employee, stockholder or associate) or (b) to the Knowledge of the Target or any
Stockholder, the direct or indirect owner of an interest in any corporation,
firm, association or business organization which is a present (or potential)
competitor of the Target, other than an interest of not more than an aggregate
of one percent (1%) of any class of stock of any company which is listed on a
national securities exchange or traded in the over-the-counter market.

                  dd.      FAIRNESS OPINION. The Target has received the written
opinion of Legg Mason Wood Walker, Incorporated, to the effect that, as of the
date hereof, the Merger Consideration to be paid to the Closing Stockholders is
fair, from a financial point of view, to the Target and the holders of Target
Shares.

                  ee.      ADDITIONAL TAX MATTERS. The liabilities of the Target
to be assumed by the Buyer in the Merger and the liabilities to which the
transferred assets of the Target are subject at the Effective Time are and will
have been incurred in the ordinary course of business within the meaning of the
applicable Treasury Regulations. No shares of capital stock of the Target have
been (or, prior to the Effective Time, will be) redeemed prior to or in
connection with the Merger, and the Target has not made (and, prior to the
Effective Time, will not make) any extraordinary distribution (with the meaning
of Section 1.368-1T(e) of the Treasury Regulations) with respect to its stock
prior to or in connection with the Merger.

         4.       REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of
the Stockholders represents and warrants to the Buyer that the statements
contained in this Section 4 are correct and complete as of the


                                       20

<PAGE>

date of this Agreement and will be correct and complete as of the Effective Time
(as though made then and as though the Effective Time were substituted for the
date of this Agreement throughout this Section 4) with respect to himself or
herself, except as set forth in the TARGET'S DISCLOSURE SCHEDULE. For purposes
of Section 4(a), the term "Stockholders" shall exclude the Trustee.

                  a.       INVESTMENT. The Stockholder (A) understands that the
Stock Consideration has not been, and may not be, registered under the
Securities Act, or under any state securities laws, and is being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (B) is acquiring the Stock Consideration solely
for his or her own account for investment purposes, and not with a view to the
distribution thereof, (C) is a sophisticated investor with knowledge and
experience in business and financial matters, (D) has received certain
information concerning the Buyer, including the Public Reports, and has had the
opportunity to obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the Stock Consideration, (E) is able to
bear the economic risk and lack of liquidity inherent in holding the Stock
Consideration and (F) has not relied upon any representations or warranties of
the Buyer other than those contained in this Agreement and the other documents
contemplated hereby.

                  b.       TARGET SHARES. As of the date hereof and, except as
otherwise permitted under this Agreement, as of the Effective Time, the
Stockholder holds of record and/or owns beneficially the number of Target Shares
set forth next to his or her name in Exhibit 3(b) to the TARGET'S DISCLOSURE
SCHEDULE, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act, state securities laws and the Rules of
the NYSE), Liens, taxes, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Stockholder is not a party to
any option, warrant, purchase right, or other contract or commitment that could
require the Stockholder to sell, transfer or otherwise dispose of any capital
stock of the Target (other than this Agreement and as set forth in the Target's
Restated Certificate of Incorporation, as amended). The Stockholder is not a
party to any voting trust, proxy or other agreement or understanding with
respect to the voting of any capital stock of the Target, other than those
referred to in the last sentence of Section 3(e) which are hereby waived to the
extent set forth in Section 3(e) and, with respect to the Trustee, other than
pursuant to the terms of the ESOP.

         5.       REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Target and the Stockholders that the statements
contained in this Section 5 are correct and complete as of the date of this
Agreement and, except to the extent any of such statements may be applicable to
Henderson Brothers or any of its Subsidiaries, will be correct and complete as
of the Effective Time (as though made then and as though the Effective Time were
substituted for the date of this Agreement throughout this Section 5) except as
set forth in the BUYER'S DISCLOSURE SCHEDULE.

                  a.       ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. Each of the Buyer's
Subsidiaries is a corporation, limited liability company or partnership duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Buyer and the Buyer's
Subsidiaries is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required, except
where the lack of such qualification would not have a Material Adverse Effect on
the Buyer and its Subsidiaries taken as a whole. Each of the Buyer and the
Buyer's Subsidiaries has full corporate or other organizational power and


                                       21

<PAGE>

authority to carry on the business in which it is engaged and to own and use the
properties owned and used by it.

                  b.       CAPITALIZATION. The entire authorized capital stock
of the Buyer consists of 200,000,000 shares of common stock, par value $0.01 per
share, of which 48,875,000 shares are issued and outstanding, and 10,000,000
shares of preferred stock, par value $0.01 per share, of which no shares are
issued and outstanding. All of the issued and outstanding shares of the Buyer's
capital stock have been duly authorized, are validly issued, fully paid, and
nonassessable. Except for this Agreement, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the Buyer
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Buyer.

                  c.       AUTHORIZATION OF TRANSACTION. The Buyer has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement and the other documents contemplated hereby to which they are parties
(assuming execution and delivery by the Target and the Stockholders) constitute
the valid and legally binding obligation of the Buyer, enforceable in accordance
with its terms and conditions, except as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity, whether considered in a proceeding
in equity or at law. The Buyer is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
Material Adverse Effect on the Buyer and its Subsidiaries taken as a whole.

                  d.       NONCONTRAVENTION. The execution, delivery and
performance of this Agreement and the other documents contemplated hereby, and
the consummation by the Buyer of the transactions contemplated hereby, do not
and will not (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which the Buyer, or any of the
Buyer's Subsidiaries is subject or any provision of the Buyer's charter or
bylaws or the similar organizational documents of any of the Buyer's
Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
the Buyer or any of the Buyer's Subsidiaries is a party or by which the Buyer or
any of the Buyer's Subsidiaries is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets), except where the conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice or Security Interest would
not have a Material Adverse Effect on the Buyer and its Subsidiaries taken as a
whole.

                  e.       BROKERS' FEES. None of the Buyer and the Buyer's
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which the Target or the Stockholders could become liable or
obligated.

                  f.       REGULATORY MATTERS. LaBranche & Co., a Subsidiary of
the Buyer, is and has been duly registered as a broker-dealer with the SEC and
in the states where such registration is required under


                                       22


<PAGE>



the securities laws of such states. LaBranche & Co. is and has been duly
registered as a NYSE specialist. LaBranche & Co. and its employees are in
compliance with all federal and state laws and NYSE rules regulating
broker-dealers or specialists or requiring registration, licensing or
qualification as a broker-dealer or specialist, and LaBranche & Co. is a member
in good standing and has all material licenses and authorizations in
self-regulatory or trade organizations or registered clearing agencies required
to permit the operation of its business as presently conducted. Each such
federal, state and NYSE registration is in full force and effect. The Buyer has
furnished to the Target a true, correct and complete copy of LaBranche & Co.'s
Form BD, as amended to date, filed by LaBranche & Co. with the SEC.

                  g.       TAXES. Each of the Buyer and the Buyer's Subsidiaries
has timely filed or will timely file all Tax Returns that it was required or
will be required to file, and has paid all Taxes shown thereon as owing, except
where failure to file such Tax Returns or to pay such Taxes would not have a
Material Adverse Effect on the Buyer and its Subsidiaries taken as a whole. All
such Tax Returns of the Buyer and the Buyer's Subsidiaries are, or will be when
filed, true, correct and complete in all material respects.

                  h.       ADDITIONAL TAX MATTERS. It is the present intention
of the Buyer to continue the historic businesses of the Target or use at least a
significant portion of the Target's historic business assets in a business, in
each case within the meaning of Treasury Regulation Section 1.368-1(d). The
Buyer does not have any plan or intention to sell, exchange, distribute,
transfer or otherwise dispose of any of the assets of the Target to be acquired
in the Merger, except for (i) dispositions made in the ordinary course of
business and (ii) transfers permitted by Section 368(a)(2)(C) of the Code or to
a member of the Buyer's qualified group (as defined in Section 1.368-1(d)(4) of
the Treasury Regulations).

                  i.       FILINGS WITH THE SEC. The Buyer has made all filings
with the SEC that it has been required to make under the Securities Act and the
Exchange Act (collectively, together with all of the Buyer's voluntary filings
with the SEC, the "PUBLIC REPORTS"). Each of the Public Reports has complied
with the Securities Act or the Exchange Act, as applicable, in all material
respects. None of the Public Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Buyer has
delivered to the Target a correct and complete copy of each Public Report
(together with all exhibits and schedules thereto and as amended to date).

                  j.       FINANCIAL STATEMENTS. The financial statements
included in the Public Reports (including the related notes and schedules) have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby and present fairly the financial condition of the
Buyer and its Subsidiaries on a consolidated basis as of such dates and the
results of operations of the Buyer and its Subsidiaries on a consolidated basis
for such periods; PROVIDED, HOWEVER, that the interim statements are subject to
normal year-end adjustments and lack footnotes and other presentation items.

                  k.       EVENTS SUBSEQUENT TO THE BUYER'S MOST RECENT PUBLIC
REPORT. Since September 30, 1999, there has not been any Material Adverse Change
in the business, operations or financial condition of the Buyer or of the Buyer
and its Subsidiaries taken as a whole. Since September 30, 1999, (a) the
business of the Buyer and each of its Subsidiaries has been conducted in the
ordinary course and consistent with past practice and (b) no event has occurred
or fact or circumstance arisen that, individually or taken


                                       23

<PAGE>

together with all other events, facts and circumstances, has had or is
reasonably likely to have a Material Adverse Effect on the Buyer and its
Subsidiaries taken as a whole.

                  l.       LEGAL AND REGULATORY COMPLIANCE. Each of the Buyer
and the Buyer's Subsidiaries has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) and all applicable rules and regulations
the NYSE, except where the failure to comply would not have a Material Adverse
Effect on the Buyer and its Subsidiaries taken as a whole.

                  m.       LITIGATION. Except as would not have a Material
Adverse Effect on the Buyer and its Subsidiaries taken as a whole either
individually or in the aggregate, there are no actions by or against, or
relating to the business of, the Buyer (i) pending before any court, arbitration
panel or any governmental or regulatory authority or (ii) to the Knowledge of
the Buyer, threatened to be brought by or before any court, arbitration panel or
any governmental or regulatory authority. The Buyer is not subject to any
governmental order (nor, to the Knowledge of the Buyer, are there any such
governmental orders threatened to be imposed by any governmental or regulatory
authority) which has had or is reasonably likely to have a Material Adverse
Effect on the Buyer and its Subsidiaries taken as a whole. There has not been
any action decided against or settled by the Buyer or any of its directors,
officers or employees during the last three (3) years in connection with the
Buyer's business which has had a Material Adverse Effect on the Buyer and its
Subsidiaries taken as a whole. The Buyer is not subject to any agreement or
instrument or subject to any judgment, order, writ, injunction, decree, rule,
regulation or ordinance (other than rules, regulations or ordinances that are
generally applicable to specialists) that has had or is reasonably likely to
have a Material Adverse Effect on the Buyer and its Subsidiaries taken as a
whole.

                  n.       FAIRNESS OPINION. The Buyer has received the written
opinion of Donaldson, Lufkin & Jenrette Securities Corporation to the effect
that, as of the date hereof, the Merger and the Merger Consideration to be paid
to the Closing Stockholders is fair, from a financial point of view, to the
Buyer and its stockholders.

                  o.       EMPLOYEE BENEFITS.

                           (i)      Each Employee Benefit Plan currently
maintained or contributed to by the Buyer (the "BUYER PLANS") (and each related
trust, insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA and the Code, except where
the failure to comply would not have a Material Adverse Effect on the Buyer and
its Subsidiaries taken as a whole.

                           (A)      All contributions (including all employer
                  contributions and employee salary reduction contributions)
                  which are due have been paid to each Buyer Plan which is an
                  Employee Pension Benefit Plan.

                           (B)      Each Buyer Plan which is an Employee Pension
                  Benefit Plan has received a determination letter from the
                  Internal Revenue Service to the effect that it meets the
                  requirements of Code Section 401(a).

                           (C)      As of the last day of the most recent prior
                  plan year, the market value of assets under each Buyer Plan
                  which is an Employee Pension Benefit Plan (other than any


                                       24

<PAGE>

                  Multiemployer Plan) equaled or exceeded the present value of
                  liabilities thereunder (determined in accordance with then
                  current funding assumptions).

                           (ii)     With respect to each Buyer Plan that the
Buyer or any ERISA Affiliate maintains or has maintained during the prior six
years or to which any of them contributes, or has been required to contribute
during the prior six years:

                           (A)      No action, suit, proceeding, hearing or
                  investigation with respect to the administration or the
                  investment of the assets of any such Buyer Plan (other than
                  routine claims for benefits) is pending, except where the
                  action, suit, proceeding, hearing or investigation would not
                  have a Material Adverse Effect on the Buyer and its
                  Subsidiaries taken as a whole.

                           (B)      Neither the Buyer nor any of its ERISA
                  Affiliates has incurred any liability to the PBGC (other than
                  PBGC premium payments) or otherwise under Title IV of ERISA
                  (including any withdrawal liability) with respect to any Buyer
                  Plan which is an Employee Pension Benefit Plan.

         6.       PRE-CLOSING COVENANTS. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing:

                  a.       GENERAL. Each of the Parties will use its, his or her
reasonable best efforts to take all actions and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 8 below).

                  b.       NOTICES AND CONSENTS. Each of the Parties will give
any notices to third parties, and use its reasonable best efforts to obtain any
third party consents, that any other Party reasonably may request in connection
with the matters referred to in Section 3(d) and (e) and Section 5(c) and (d)
hereof. Each of the Parties will give any notices to, make any filings with, and
use its reasonable best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with the
matters referred to in Section 3(d) and (e) and Section 5(c) and (d) hereof.
Without limiting the generality of the foregoing, (i) the Buyer will take all
actions that may be necessary, proper, or advisable under state securities laws
in connection with the offering and issuance of the Stock Consideration pursuant
to this Agreement and (ii) each of the Parties will file any Notification and
Report Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the Hart-Scott-Rodino Act, will use its reasonable
best efforts to obtain a waiver from the applicable waiting period, and will
make any further filings pursuant thereto that may be necessary, proper or
advisable in connection therewith.

                  c.       OPERATION OF THE TARGET'S BUSINESS. Except as
described in Section 6(c) of the Target's Disclosure Schedule, between the date
hereof and the Closing Date, the Target will

                           i.       conduct its business in the ordinary course
and consistent with its past practice;


                                       25

<PAGE>

                           ii.      refrain from (A) making any changes in its
capital structure, (B) issuing any shares of its capital stock or securities
convertible or exercisable into, or exchangeable for, shares of its capital
stock, (C) declaring or paying any dividends which are, in nature or amount,
inconsistent with the Target's historic dividend payment practice, (D) adopting
or proposing any changes in its certificate of incorporation or by-laws, (E)
directly or indirectly merging or consolidating with another entity, (F)
incurring any indebtedness for borrowed money (including, without limitation, by
way of guarantee or the issuance and sale of debt securities or rights to
acquire debt securities) other than indebtedness incurred in the ordinary course
of business, (G) adopting, increasing benefits under or otherwise modifying any
Employee Benefit Plan, (H) terminating any of its existing insurance policies or
modifying or reduce the coverage thereunder, (I) settling or compromising, or
agreeing to settle or compromise, any suit or other litigation matter or matter
in an arbitration proceeding for any material amount (after taking into account
any insurance proceeds to which the Target is entitled) or otherwise on terms
which would reasonably be expected to have a Material Adverse Effect on the
Target, or (J) entering into any commitments or agreements with respect to the
foregoing without the prior written consent of the Buyer;

                           iii.     use commercially reasonable efforts to
preserve and retain its business, employees, properties and goodwill;

                           iv.      refrain from changing the compensation of,
or from entering into any new employment, severance or other agreements with,
any of its officers, directors, employees or consultants or entering into or
renewing any material contractual obligations, except in the ordinary course of
business consistent with its past practice;

                           v.       use its best efforts to repay any and all
outstanding indebtedness or Liens of the Target and pay or otherwise satisfy all
other obligations of the Target; and

                           vi.      file all Tax Returns required to be filed by
the Target on or prior to the Closing and pay any and all Taxes due with respect
to such Tax Returns. All Tax Returns described in this Section 6(c)(vi) shall be
prepared in a manner consistent with prior practice unless a past practice has
been finally determined to be incorrect by the applicable taxing authority or a
contrary treatment is required by applicable tax laws (or judicial or
administrative interpretations thereof). The Target shall provide the Buyer with
copies of such completed Tax Returns at least 10 days prior to the due date, and
the Buyer shall be provided an opportunity to review such Tax Returns and
supporting work papers and schedules prior to the filing of such Tax Returns.
Target will not make any material Tax elections without the Buyer's prior
written consent.

                           vii.     use its best efforts to maintain its
registration and remain in good standing with the SEC and NYSE, and with the
states where such registration is required under the securities laws of such
states.

                  d.       OPERATION OF THE BUYER'S BUSINESS. Except as
described in Section 6(d) of the BUYER'S DISCLOSURE SCHEDULE, between the date
hereof and the Closing Date, the Buyer will conduct its business in the ordinary
course and consistent with its past practice and will not knowingly engage in
any practice, take any action, fail to take any commercially reasonable action
or enter into any transaction which could cause any of its representations or
warranties to be untrue or result in a breach of any covenant made by it in this
Agreement.


                                       26

<PAGE>

                  e.       FULL ACCESS. Each of the Target and the Buyer will
permit representatives of the other to have full access at all reasonable times,
and in a manner so as not to unnecessarily interfere with the normal business
operations of the Buyer or the Target, as the case may be, to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to the Buyer or the Target, as the case may be.
Subject to the requirements of law or legal process, each of the Parties will
treat and hold as such any Confidential Information it receives from any other
Party in the course of the reviews contemplated by this Section 6(e), will not
use any of the Confidential Information except in connection with this Agreement
or as required by law or legal process, and, if this Agreement is terminated for
any reason whatsoever, will return to such Party all tangible embodiments (and
all copies) of the Confidential Information which are in its possession.

                  f.       NO TRANSFER OF THE SHARES. Each Stockholder agrees
that, without the Buyer's consent, which shall not unreasonably be withheld,
prior to the Closing, he or she will not sell, assign, transfer, gift, pledge or
otherwise dispose of, or otherwise agree to take such action with respect to,
his or her Target Shares. Notwithstanding the foregoing restriction, however,
(i) the Trustee shall be permitted to distribute Target Shares held in the ESOP
to the beneficiaries thereof in accordance with the terms of the ESOP and
applicable law, and (ii) a Stockholder shall be permitted to assign or transfer
his or her Target Shares prior to the Closing to an IRA in a rollover
contribution or as a result of his or her death or incapacity, provided that (1)
the Stockholder, or his duly authorized representative, promptly notifies the
Buyer in writing of such assignment or transfer in advance of such transfer, if
practicable, and (2) in the case of a rollover contribution to an IRA, such
transfer is limited to Target Shares allocated to the Stockholder by the ESOP.
Each Stockholder agrees that, in the event of any such permitted transfer, such
Stockholder will continue to be bound by all of his or her representations,
warranties, covenants and obligations under this Agreement.

                  g.       NOTICE OF DEVELOPMENTS.

                           i.       The Target will give prompt written notice
to the Buyer of any development causing a breach of any of the representations
and warranties contained in Sections 3 and 4 above.

                           ii.      The Buyer will give prompt written notice to
the Target of any development causing a breach of any of the representations and
warranties contained in Section 5 above or any failure to satisfy the condition
set forth in Section 8(c)(vi).

                  h.       EXCLUSIVITY. None of the Target or the Stockholders
will solicit or initiate the submission of any proposal or offer from any Person
relating to the acquisition of all or substantially all the capital stock or
assets of the Target (including any acquisition structured as a merger,
consolidation, or share exchange).

                  i.       ESOP. The Target will effectuate the termination of
the ESOP and cause the Trustee to distribute all the assets of the ESOP in
accordance with the ESOP's terms and applicable law in a manner that will not
adversely affect the tax-qualified status of the ESOP.

         7.       POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the Closing.


                                       27


<PAGE>

                  a.       GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further actions (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 9 below).

                  b.       LITIGATION SUPPORT. In the event and for so long as
any Party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Target, each of the other Parties shall
reasonably cooperate with it, him or her, or its, his or her counsel, in the
defense or contest, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the defense or contest, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 9 below).

                  c.       NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY.

                           i.       NONCOMPETITION. Each Stockholder
acknowledges that he or she has extensive knowledge and a unique understanding
of the business of the Target, has been directly involved with the establishment
and continued development of its customer relations and has had access to all of
the proprietary and Confidential Information used in the business of the Target.
Each Stockholder further acknowledges that if he or she, directly or indirectly,
were to compete with the Buyer or any of the Buyer's Subsidiaries in such
business following the Closing, the value associated with the Buyer's
acquisition of the Target and the goodwill of the Target would be adversely
affected. In furtherance of the Merger and to more effectively protect the value
of the Target and the Buyer, each Stockholder covenants and agrees that, for a
period beginning on the Closing Date and ending on the date which is two years
thereafter (the "TERM"), such Stockholder shall not, directly or indirectly, as
a sole proprietor, employee, agent, consultant, stockholder, director, partner
or in any other individual or representative capacity, act, or own, operate,
manage, control, engage in, invest in, or participate in, act as a consultant or
advisor to, render services for (alone or in association with any Person), or
otherwise assist any Person that engages in or owns, operates, manages or
controls a Person which acts as a specialist or otherwise makes a market in any
stock for which the Buyer or any Subsidiary of the Buyer acts as a specialist as
of the Closing Date (other than stock of a successor by merger or acquisition if
the stock for which the Buyer or any Subsidiary of the Buyer acts as specialist
is issued by a company that is not the surviving publicly traded entity in such
a transaction), except on behalf of the Buyer or any of its Affiliates, unless
the Buyer ceases to act as a specialist for or make a market in such stock
voluntarily or as a result of regulatory action. Notwithstanding the foregoing,
nothing contained in this Section 7(c)(i) shall prohibit any Stockholder,
directly or indirectly, from owning not more than an aggregate of one percent
(1%) of any class of stock of any company which is listed on a national
securities exchange or traded in the over-the-counter market.

                           ii.      NONSOLICITATION. Each Stockholder agrees
that, during the Term, such Stockholder will not, directly or indirectly, as a
sole proprietor, employee, agent, consultant, principal or otherwise, solicit
for employment or otherwise seek to adversely influence or adversely alter the


                                       28

<PAGE>

relationship between the Buyer or any of its Affiliates and any person who is or
was an employee (other than clerical or administrative personnel) of the Buyer,
the Target or any of their respective Affiliates during the 365 days preceding
such solicitation, except on behalf of the Buyer or any of its Affiliates;
PROVIDED, HOWEVER, that (x) a general solicitation for employment contained in a
newspaper or other periodical shall not constitute a breach of this Section
7(c)(ii), and (y) the restriction on solicitation of an employee of the Buyer,
the Target or any of their respective Affiliates contained in this Section
7(c)(ii) shall not apply to the solicitation of an employee whose employment has
been terminated by the Buyer without cause.

                           iii.     CONFIDENTIALITY. After the Closing, each
Stockholder shall strictly maintain the confidentiality of all information,
documents and materials relating to the Target, except to the extent disclosure
of any such information is required by law or authorized by the Buyer. In the
event that any Stockholder reasonably believes after consultation with counsel
that he or she is required by law to disclose any confidential information
described in this Section 7(c)(iii), such Stockholder will (x) provide the Buyer
with prompt notice before such disclosure in order that the Buyer may attempt to
obtain a protective order or other assurance that confidential treatment will be
accorded to confidential information, and (y) cooperate with the Buyer in
attempting to obtain such order or assurance. The provisions of this Section
7(c)(iii) shall not apply to any information, documents or materials which are
in the public domain or shall come into the public domain, other than by reason
of default by any Stockholder or his or her Affiliate under this Agreement, or
becomes known in the industry through no wrongful act on the part of any
Stockholder or his or her Affiliate.

                           iv.      REMEDIES. The Stockholders agree that the
Buyer shall be entitled to specific performance of the provisions of this
Section 7(c). If a court of competent jurisdiction declares that any term or
provision of this Section 7(c) is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision. This Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

                  d.       BUYER STOCK. Each certificate evidencing the Stock
Consideration will be imprinted with a legend substantially in the following
form:

                           "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
                  NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAW AND MAY
                  NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
                  OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
                  REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND
                  ANY APPLICABLE STATE SECURITIES LAW, OR THE RECEIPT BY THE
                  COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
                  THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED."


                                       29

<PAGE>

                  e.       TRANSFER RESTRICTIONS. Each Stockholder agrees that,
without the prior written consent of the Buyer, such Stockholder will not sell,
contract to sell or otherwise sell, dispose of, loan, transfer, assign, gift,
pledge or grant any rights to any shares of Buyer Stock received as Stock
Consideration on or before August 24, 2000, except to the following permitted
transferees: (i) upon the death or disability of such Stockholder, to his or her
respective heirs, successors or assigns, (ii) to a spouse or lineal descendent,
or a trust for the benefit of a spouse or lineal descendant, of such
Stockholder, solely for estate planning purposes or (iii) to an Individual
Retirement Account as a direct result of the termination of the ESOP; PROVIDED
that, in every permitted transfer, (x) such Stockholder notifies the Buyer in
writing of the proposed transfer, (y) the proposed transfer is effected in
accordance with all applicable federal and state securities laws and (z) the
permitted transferee agrees in writing to be bound by the provisions of this
Section 7(e).

                  f.       TAX RETURNS. The Buyer shall be responsible for
filing or causing to be filed all Tax Returns required to be filed by or on
behalf of the Target after the Closing Date. To the extent any Taxes shown due
on such Tax Returns are indemnifiable by the Stockholders, such Tax Returns
shall be prepared in a manner consistent with prior practice, unless otherwise
required by applicable law. The Buyer shall provide the Principal Stockholder
with a draft of any such Tax Return at least fifteen (15) days prior to the due
date for filing such Tax Return (taking into account any applicable extensions),
and the Principal Stockholder may provide the Buyer with written comments on
such draft Tax Return within five (5) business days after his receipt of such
draft. The Buyer and the Principal Stockholder shall attempt to resolve any
disputes regarding such draft Tax Return in good faith at least five (5)
business days prior to the due date for filing such Tax Return, but if the Buyer
and the Principal Stockholder cannot resolve any dispute regarding such draft
Tax Return at least five (5) business days prior to the due date for filing such
Tax Return, the dispute shall be promptly submitted to the Independent Firm,
except as otherwise agreed by the Buyer and the Principal Stockholder.

                  g.       INDEMNIFICATION OF DIRECTORS AND OFFICERS. From and
after the Effective Time, the Buyer will indemnify each individual who served as
a director or officer of the Target at any time prior to the Effective Time from
and against any and all Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by any matters existing or occurring at
or prior to the Effective Time (excluding this Agreement or any of the
transactions contemplated herein) to the fullest extent such individual would
have been indemnified as a director or officer of the Target prior to the
Effective Time and as then permitted under applicable law, PROVIDED, HOWEVER,
that nothing contained in this Section 7(g) shall in any manner be deemed to
affect the indemnification obligations of the Target and the Stockholders set
forth in Section 9 hereof.

                  h.       ESOP INDEMNIFICATION. In addition to (but without
duplication of) the Buyer's rights under Section 9 below, from and after the
Effective Time, each Stockholder (other than the Trustee) will indemnify Buyer
from and against his or her Allocable Portion of any and all Adverse
Consequences resulting from, arising out of, relating to, or caused by the ESOP.


                                       30

<PAGE>

         8.       CONDITIONS TO OBLIGATION TO CLOSE.

                  a.       CONDITIONS TO EACH PARTY'S OBLIGATIONS. The
obligation of each of the Parties to consummate the transactions to be performed
by it in connection with the Closing is subject to the satisfaction of the
following conditions:

                           i.       the NYSE shall have approved the
consummation of the transactions contemplated by this Agreement;

                           ii.      there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement; and

                           iii.     all applicable waiting periods (and any
extensions thereof) under the Hart- Scott-Rodino Act shall have expired or
otherwise been terminated and the Parties shall have received all other
necessary authorizations, consents, and approvals of governments and
governmental agencies.

                  b.       CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The
obligation of the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:

                           i.       the representations and warranties set forth
in Section 3 and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date, and the Target and the Stockholders
shall have performed and complied with all of its, his or her covenants
hereunder in all material respects, in each case without giving effect to any
materiality or knowledge qualifiers contained therein;

                           ii.      the Target and the Principal Stockholder
shall have delivered to the Buyer a certificate to the effect that each of the
conditions specified above in Section 8(b)(i) are satisfied in all respects,
executed by the President of the Target and the Principal Stockholder for and on
behalf of the Stockholders, dated as of the Closing Date;

                           iii.     the Buyer or one of its Affiliates shall
have entered into new a-b-c agreements with respect to each of the NYSE
memberships listed on TARGET'S DISCLOSURE SCHEDULE;

                           iv.      the Buyer shall have received from Thacher
Proffitt & Wood, counsel to the Target and the Stockholders, an opinion in form
and substance to be mutually agreed upon by the Buyer and the Principal
Stockholder, addressed to the Buyer, and dated as of the Closing Date;

                           v.       each of the Closing Stockholders shall have
executed and delivered to the Buyer the Registration Rights Agreement
substantially in the form of EXHIBIT C attached hereto;

                           vi.      the Target shall have furnished to the Buyer
reasonably satisfactory evidence (in the form of certified resolutions of the
Target Board of Directors and a copy of the Target's application to the Internal
Revenue Service for a determination letter on the qualified status of the ESOP
on termination) that the Target has satisfied all its obligations arising under
the ESOP, that the ESOP has been


                                       31

<PAGE>

terminated, and its trusts liquidated, without any further liability to the
Target, the Buyer or the ESOP and that all the assets of the ESOP have been
distributed to its participants in accordance with its terms and applicable law;

                           vii.     the Target shall have furnished to the Buyer
reasonably satisfactory evidence that all stock options to purchase Target
Shares have been terminated without any further liability to the Target or the
Buyer;

                           viii.    the Target shall have furnished to the Buyer
reasonably satisfactory evidence of its satisfaction in full and the termination
of any of its outstanding obligations under the agreement with its employees
described in Section 3(z) of the TARGET'S DISCLOSURE SCHEDULE;

                           ix.      all stock certificates representing the
Target Shares, duly endorsed in blank or accompanied by stock powers executed in
blank, shall have been surrendered by the Stockholders to the Buyer;

                           x.       all written consents, assignments, waivers
or authorizations that are required as a result of the Merger for the
continuation in full force and effect of any contracts set forth in Section 3(r)
of the TARGET'S DISCLOSURE SCHEDULE shall have been obtained;

                           xi.      the Target, the Stockholders and the Closing
Stockholders shall have executed and delivered to the Buyer any other documents
and instruments as the Buyer may reasonably require in order to effectuate the
transactions contemplated by this Agreement; and

                           xii.     all actions to be taken by the Target, the
Stockholders and the Closing Stockholders in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the Buyer and its counsel.

The Buyer may waive any condition specified in this Section 8(b) if it executes
a writing so stating at or prior to the Closing.

                  c.       CONDITIONS TO THE OBLIGATIONS OF THE TARGET AND THE
CLOSING STOCKHOLDERS. The obligation of the Target and the Closing Stockholders
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:

                           i.       the representations and warranties set forth
in Section 5 above shall be true and correct in all material respects at and as
of the Closing Date, and the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects, in each case without giving
effect to any materiality or knowledge qualifiers contained therein;

                           ii.      the Buyer shall have delivered to the Target
a certificate to the effect that the each of the conditions specified above in
Section 8(c)(i) is satisfied in all respects executed by the Chief Executive
Officer and Executive Vice President, Finance of the Buyer, dated as of the
Closing Date;


                                       32

<PAGE>

                           iii.     the Buyer shall have delivered to the
Closing Stockholders the Closing Notes and, if necessary, the Gap Notes;

                           iv.      the Buyer shall have executed and delivered
to the Closing Stockholders the Registration Rights Agreement substantially in
the form of EXHIBIT C attached hereto;

                           v.       the Target shall have received from
Fulbright & Jaworski L.L.P. counsel to the Buyer, an opinion in form and
substance to be mutually agreed upon by the Buyer and the Principal Stockholder,
addressed to the Target, and dated as of the Closing Date;

                           vi.      assuming the transactions contemplated by
the Stock Purchase Agreement, dated as of December 23, 1999 (as may be amended
from time to time, the "Henderson Agreement"), by and among the Buyer, Henderson
Brothers Holdings, Inc. and the stockholders listed on Schedule A thereto, are
consummated prior to the Closing, there shall have been no breach of the
Henderson Agreement by Henderson Brothers Holdings, Inc. or any such stockholder
which would result in or is reasonably likely to result in a Material Adverse
Effect on the Buyer and its Subsidiaries taken as a whole;

                           vii.     any other documents and instruments as the
Target and the Closing Stockholders may reasonably require in order to
effectuate the transactions contemplated by this Agreement; and

                           viii.    all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Target and its counsel.

The Target and the Principal Stockholder may waive any condition specified in
this Section 8(c) if they execute a writing so stating at or prior to the
Closing.

         9.       REMEDIES FOR BREACHES OF THIS AGREEMENT.

                  a.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of the Parties contained in Sections 3 and 5
hereof (other than in Section 3(a) through (e), Section 3(h) and Section 5(a)
through (e) hereof) shall survive the Closing hereunder (unless the damaged
Party had Knowledge of any misrepresentation or breach of warranty at the
Effective Time and waived such misrepresentation or breach in writing) and
continue in full force and effect for a period of eighteen months following the
Closing Date, except for the representations and warranties set forth in Section
3(n) and (u) hereof, which shall continue in full force and effect until 60 days
after the end of the statute of limitations applicable to the assessment and
collection of those Taxes or the institution of those claims for liability in
respect of Employee Benefit Plans, in each instance to the extent subject to
indemnification by the Stockholders hereunder. All the representations and
warranties of the Parties contained in Section 3(a) through (e), Section 3(h),
Section 4 and Section 5(a) through (e) hereof shall survive the Closing
hereunder (unless the damaged Party had Knowledge of any misrepresentation or
breach of warranty at the Effective Time and waived such misrepresentation or
breach in writing) and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations).


                                       33

<PAGE>

                  b.       INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.

                           i.       In the event the Target or any Stockholder
breaches any of its representations or warranties contained in Section 3 hereof
or any of its covenants contained herein, and if there is an applicable survival
period pursuant to Section 9(a) hereof, PROVIDED that the Buyer makes a written
claim for indemnification against the Stockholders pursuant to Section 11(h)
hereof within such survival period, then each Stockholder shall indemnify the
Buyer from and against his or her Allocable Portion of any Adverse Consequences
the Buyer shall suffer through and after the date of the claim for
indemnification caused by the breach; PROVIDED, HOWEVER, that no Stockholder
shall have any obligation to indemnify the Buyer from and against any Adverse
Consequences caused by the breach of any representation, warranty or covenant of
the Target (1) until the Buyer has suffered Adverse Consequences by reason of
all such breaches in excess of (x) a $25,000 aggregate deductible in the case of
one or more breaches of any of the representations and warranties contained in
Section 3(n) and (u) hereof, and (y) a $200,000 aggregate deductible in the case
of all other breaches (after which points each Stockholder will be obligated to
indemnify the Buyer only from and against his or her Allocable Portion of any
further such Adverse Consequences), and (2) to the extent the Adverse
Consequences the Buyer has suffered by reason of all such breaches of
representations and warranties (other than those contained in Section 3(n) and
(u) hereof) exceeds his or her Allocable Portion of $5,000,000 (excluding the
$200,000 aggregate deductible), after which point no Stockholder will be
obligated to indemnify the Buyer from and against any further such Adverse
Consequences (other than those caused by a breach of any representation or
warranty contained in Section 3(n) and (u)).

                           ii.      In the event any of the Stockholders
breaches any of his or her representations or warranties in Section 4 above or
any of his or her covenants contained herein, and, if there is an applicable
survival period pursuant to Section 9(a) above, PROVIDED that the Buyer makes a
written claim for indemnification against the Stockholder pursuant to Section
11(h) below within such survival period, then such Stockholder shall indemnify
the Buyer from and against the entirety of any Adverse Consequences the Buyer
shall suffer through and after the date of the claim for indemnification caused
by the breach.

                  c.       INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
STOCKHOLDERS.

                           i.       In the event the Buyer breaches any of its
representations, warranties or covenants contained herein, and, if there is an
applicable survival period pursuant to Section 9(a) above, PROVIDED that any of
the Stockholders or the Principal Stockholder on behalf of all of the
Stockholders makes a written claim for indemnification against the Buyer
pursuant to Section 11(h) below within such survival period, then the Buyer
shall indemnify each of the Stockholders from and against the entirety of any
Adverse Consequences the Stockholder shall suffer through and after the date of
the claim for indemnification caused by the breach; PROVIDED, HOWEVER, that the
Buyer shall not have any obligation to indemnify the Stockholders from and
against any Adverse Consequences caused by the breach of any representation,
warranty or covenant of the Buyer (1) until the Stockholders have suffered
Adverse Consequences by reason of all such breaches in excess of a $200,000
aggregate deductible (after which point the Buyer will be obligated only to
indemnify the Stockholders from and against any further such


                                       34

<PAGE>

Adverse Consequences), and (2) to the extent the Adverse Consequences the
Stockholders have suffered by reason of all such breaches exceeds $5,000,000
(excluding the aggregate deductible).

                           ii.      The Buyer shall indemnify the Stockholders
against any income Tax imposed on them (following a final determination (within
the meaning of Section 1313 of the Code)) as a result of the Merger not
qualifying as a reorganization under Section 368(a) of the Code by reason of any
action or inaction on the part of the Buyer subsequent to the Effective Time.

                  d.       DAMAGES IN THE EVENT OF TERMINATION. In the event
this Agreement is terminated pursuant to Section 10(a) hereof, each of the
Target and the Buyer agrees that it will seek damages only from the other for
any Adverse Consequences to it caused by the other's (or, in the case of Adverse
Consequences to the Buyer, any of the Stockholders') breach prior to such
termination of any of the other's (or, in the case of Adverse Consequences to
the Buyer, any of the Stockholders') representations, warranties or covenants
contained herein.

                  e.       MATTERS INVOLVING THIRD PARTIES.

                           i.       If any third party shall notify any Party
(the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other Party (the
"INDEMNIFYING PARTY") under this Section 9, then the Indemnified Party shall
promptly (and in any event within five business days after receiving notice of
the Third Party Claim) notify each Indemnifying Party thereof in writing;
PROVIDED that the failure of the Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 9, except and only to the extent the Indemnifying Party's ability to
defend against, mitigate or diminish the amount of such claim is materially
prejudiced by such failure.

                           ii.      Any Indemnifying Party will have the right
at any time to assume and thereafter conduct the defense of the Third Party
Claim with counsel of his or her choice reasonably satisfactory to the
Indemnified Party; PROVIDED, HOWEVER, that the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party; PROVIDED,
FURTHER, the Indemnified Party shall have the right to employ separate counsel
to participate in the defense of any such Third Party Claim or litigation to
which the Indemnified Party is a party, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless (i) the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such action, (ii) the
Indemnifying Party shall not have employed counsel reasonably satisfactory to
the Indemnified Party to take charge of the defense of such action within a
reasonable time after notice of the institution of such action, (iii) the
Indemnified Party shall have reasonably concluded that there may be material
defenses available to it that are different from or additional to those
available to the Indemnifying Party or (iv) the use of counsel chosen by the
Indemnifying Party to represent the Indemnified Party would present such counsel
with a conflict of interest (in which case the Indemnifying Party shall not have
the right to direct the defense of such action on behalf of the Indemnified
Party), in any of which events the reasonable fees and expenses of such counsel
shall be borne by the Indemnifying Party and paid as incurred.


                                       35

<PAGE>

                           iii.     Unless and until an Indemnifying Party
assumes the defense of the Third Party Claim as provided in Section 9(e)(ii)
above, however, the Indemnified Party may defend against the Third Party Claim
in any manner he or she reasonably may deem appropriate.

                           iv.      In no event will the Indemnified Party
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of each of the
Indemnifying Parties (not to be withheld unreasonably).

                  f.       DETERMINATION OF ADVERSE CONSEQUENCES. The Parties
shall make appropriate adjustments for tax benefits and insurance coverage in
determining Adverse Consequences for purposes of this Section 9. If any
indemnification payment under this Section 9 is determined to be taxable to the
Indemnified Party by any taxing authority, the Indemnifying Party shall also
indemnify the Indemnified Party for any Adverse Consequences resulting from the
receipt of such payment. All indemnification payments under this Section 9
(except any which represent interest) shall be deemed adjustments to the Merger
Consideration.

         10.      TERMINATION.

                  a.       TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:

                           i.       the Buyer, the Target and the Principal
Stockholder may terminate this Agreement by mutual written consent at any time
prior to the Effective Time;

                           ii.      the Buyer may terminate this Agreement by
giving written notice to the Target and the Principal Stockholder at any time
prior to the Effective Time (1) in the event the Target or any of the
Stockholders has breached any material representation, warranty or covenant
contained in this Agreement in any material respect (without giving effect to
any materiality qualifiers contained therein), the Buyer has notified the Target
and the Principal Stockholder of the breach, and the breach has continued
without cure for a period of 15 days after the notice of breach or (2) if the
Closing shall not have occurred on or before March 23, 2000 by reason of the
failure of any condition precedent under Section 8(b) hereof (unless the failure
results primarily from the Buyer breaching any representation, warranty or
covenant contained in this Agreement);

                           iii.     the Target or the Principal Stockholder may
terminate this Agreement by giving written notice to the Buyer at any time prior
to the Effective Time (1) in the event the Buyer has breached any material
representation, warranty or covenant contained in this Agreement in any material
respect (without giving effect to any materiality qualifiers contained therein),
the Target or the Principal Stockholder has notified the Buyer of the breach,
and the breach has continued without cure for a period of 15 days after the
notice of breach or (2) if the Closing shall not have occurred on or before
March 23, 2000 by reason of the failure of any condition precedent under Section
8(c) hereof (unless the failure results primarily from the Target or any of the
Stockholders themselves breaching any representation, warranty or covenant
contained in this Agreement); and


                                       36

<PAGE>

                           iv.      the Target or the Principal Stockholder may
terminate this Agreement by giving written notice to the Buyer prior to the
Closing in the event the Closing Value is less than $8.00 per share.

                  b.       EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 10(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); PROVIDED,
HOWEVER, that the confidentiality provisions contained in Section 6(e) shall
survive any such termination.

         11.      MISCELLANEOUS.

                  a.       NATURE OF CERTAIN OBLIGATIONS.

                  i.       The representations and warranties of each of the
Stockholders in Section 4 hereof and the covenants of each of the Stockholders
contained herein are several obligations. This means that the particular
Stockholder making the representation, warranty, or covenant will be solely
responsible only to the extent provided in Section 9 above for any Adverse
Consequences the Buyer may suffer as a result of any breach thereof.

                  ii.      The representations and warranties of the Target and
the Stockholders contained in Section 3 hereof are joint obligations. This means
that each Stockholder will be responsible to the extent provided in Section 9
above for his or her Allocable Portion of any Adverse Consequences the Buyer may
suffer as a result of any breach thereof.

                  b.       PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior written
approval of the Buyer, the Target and the Principal Stockholder; PROVIDED,
HOWEVER, that any Party may make any public disclosure that such party believes
in good faith is required by applicable law or any listing or trading agreement
concerning publicly-traded securities (in which case
the disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).

                  c.       NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns, PROVIDED, HOWEVER, that the
provisions of Section 7(g) hereof are intended for the benefit of the
individuals referred to therein and their respective legal representatives.

                  d.       ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements or representations by or
among the Parties, written or oral, to the extent they have related in any way
to the subject matter hereof.

                  e.       SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of each of the Parties named herein,
including the Closing Stockholders, and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its, his
or her rights,


                                       37

<PAGE>

interests, or obligations hereunder without the prior written approval of the
Buyer, the Target and the Principal Stockholder; PROVIDED, HOWEVER, that the
Buyer may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder), and any Stockholder may assign any or all of his or her
rights and interests hereunder to the extent permitted by the express terms of
this Agreement.

                  f.       COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

                  g.       HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

                  h.       NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:

                  IF TO THE TARGET OR THE STOCKHOLDERS:

                           c/o William E. Boye, Jr.
                           575 Curan Place
                           Franklin Lakes, New Jersey 07417

                  COPY TO:

                           Thacher Proffitt & Wood
                           Two World Trade Center, 39th Floor
                           New York, New York  10048
                           Attn:  Thomas N. Talley, Esq.

                  IF TO THE BUYER:

                           LaBranche & Co Inc.
                           One Exchange Plaza, 25th Floor
                           New York, New York  10006
                           Attn:  Michael LaBranche
                                  Chairman, President and Chief Executive
                                  Officer

                  COPY TO:

                           Fulbright & Jaworski L.L.P.
                           666 Fifth Avenue
                           New York, New York  10103-3198
                           Attn:  Jeffrey M. Marks, Esq.


                                       38

<PAGE>

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.

                  i.       GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York, except that the DGCL shall apply to matters governed exclusively thereby.

                  j.       AMENDMENTS AND WAIVERS. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by the Buyer, the Target and the Principal Stockholder. No waiver by any Party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.

                  k.       SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.

                  l.       EXPENSES. Each of the Buyer and the Target will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby, whether
or not the Closing occurs. The Stockholders and the Closing Stockholders will
bear all their own costs and expenses (including all of their legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby, including any recordation, sales, use, stamp, filing,
transfer, documentary or similar fees or Taxes and related costs and fees
relating to the transfer of their Target Shares as contemplated by this
Agreement.

                  m.       CONSTRUCTION. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.

                  n.       INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules (including the Disclosure Schedules) identified in this Agreement
are incorporated herein by reference and made a part hereof.


                                       39

<PAGE>

                  o.       ACTION BY PRINCIPAL STOCKHOLDER ON BEHALF OF EACH
STOCKHOLDER. Not withstanding anything in this Agreement to the contrary, each
Stockholder, other than the Trustee, (i) irrevocably constitutes and appoints
the Principal Stockholder as the true and lawful agent and attorney-in-fact of
such Stockholder with full power to appoint a substitute or substitutes to act
hereunder with respect to all matters arising in connection with the
transactions contemplated hereby and (ii) hereby directs and authorizes the
Principal Stockholder, for and on behalf of such Stockholder and/or all
Stockholders, to execute and deliver all documents and to take all such other
actions and to make all such determinations as the Principal Stockholder shall,
in his sole discretion, deem necessary or appropriate in connection with the
transactions and other matters contemplated by this Agreement, including Section
9 hereof, all such executed and delivered documents, actions and determinations
to be binding on such Stockholder and/or all Stockholders.

                                   * * * * *


                                       40

<PAGE>

         IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.

                                LaBRANCHE & CO INC.

                                By: /s/ Michael LaBranche
                                   -------------------------------------
                                   Name:  Michael LaBranche
                                   Title: Chairman, Chief Executive
                                          Officer and President

                                WEBCO SECURITIES, INC.

                                By: /s/ William D. Boye
                                   -------------------------------------
                                   Name:  William E. Boye, Jr.
                                   Title: President

                                THE STOCKHOLDERS


                                /s/ William E. Boye, Jr
                                ----------------------------------------
                                WILLIAM E. BOYE, JR.


                                /s/ William D. Boye
                                ----------------------------------------
                                WILLIAM D. BOYE


                                /s/ Nancy R. Boye
                                ----------------------------------------
                                NANCY R. BOYE


                                       41

<PAGE>

                                /s/ Nancy R. Boye, Trustee
                                ----------------------------------------
                                NANCY R. BOYE, TR UA 04/10/6

                                /s/ William E. Boye Jr., as attorney in fact
                                ------------------------------------------
                                ROBERT R. BOYE

                                /s/ William D. Boye, as custodian under
                                UGMA for Alexander D. Boye
                                ----------------------------------------
                                ALEXANDER D. BOYE

                                /s/ Brett A. Boye
                                ----------------------------------------
                                BRETT A. BOYE

                                /s/ William E. Boye, as attorney in fact
                                for Melinda Boye, custodian under UGMA for
                                ----------------------------------------
                                JEFFERY A. BOYE

                                /s/ William E. Boye Jr., as attorney in fact
                                --------------------------------------------
                                MELINDA L. BOYE

                                /s/ David L. Boudreau
                                ----------------------------------------
                                DAVID L. BOUDREAU

                                /s/ Thomas J. Facchine
                                ----------------------------------------
                                THOMAS J. FACCHINE

                                /s/ Richard A. Rike
                                ----------------------------------------
                                RICHARD A. RIKER


                                       42

<PAGE>

                                /s/ Florence M. Lepera
                                ----------------------------------------
                                FLORENCE M. LEPERA

                                /s/ William E. Boye Jr., as attorney in fact
                                ---------------------------------------------
                                VINCENT D. PROVENZANO

                                /s/ Thomas N. Talley, Trustee
                                ----------------------------------------
                                THOMAS N. TALLEY TR UA 10/31/86
                                (MONEY PURCHASE PENSION PLAN)

                                /s/ Thomas N. Talley, Trustee
                                --------------------------------------
                                THOMAS N. TALLEY TR UA 10/31/86
                                (STOCK BONUS PLAN)

                                                   *
                                ----------------------------------------
                                AARON D. ALBERT

                                                   *
                                ---------------------------------------
                                PAUL ALWARD

                                /s/ Danielle August
                                ----------------------------------------
                                DANIELLE AUGUST

                                                   *
                                ----------------------------------------
                                DEREK BARNES


                                       43

<PAGE>

                                /s/ Anthony D'Agostino
                                ----------------------------------------
                                ANTHONY D'AGOSTINO

                                /s/ Scott Douglas
                                ----------------------------------------
                                SCOTT DOUGLAS

                                                   *
                                ----------------------------------------
                                CONNOR V. DUNNE

                                                   *
                                --------------------------------------
                                JAMES E. HARTUNG

                                /s/ Michael Ryan
                                ----------------------------------------
                                MICHAEL RYAN

                                /s/ Josette Sanacore
                                --------------------------------------
                                JOSETTE SANACORE

                                /s/ Craig Torswick
                                ----------------------------------------
                                CRAIG TORSWICK

                                /s/ Stephanie Turco
                                ----------------------------------------
                                STEPHANIE TURCO

                                /s/ Keith A. Zimmerman
                                ----------------------------------------
                                KEITH A. ZIMMERMAN


                                       44
<PAGE>

         EXHIBIT A - Closing Note for Holders of Class A Target Shares


                                PROMISSORY NOTE


[$______]                                                      February __, 2000


        FOR VALUE RECEIVED, the undersigned, LaBranche & Co Inc., a Delaware
corporation (the "MAKER"), hereby agrees to pay to __________________(the
"PAYEE") the principal amount of _______________DOLLARS ($____________) (the
"PRINCIPAL AMOUNT") [which is the Payee's Allocable Portion of $3,000,000],
plus interest payable at the fixed rate of 10% per annum. This note is being
executed in connection with the Agreement and Plan of Merger ("MERGER
AGREEMENT") entered into as of January 25, 2000 by and among the Maker, Webco
Securities, Inc, a Delaware corporation ("WEBCO"), and each other person
executing the Merger Agreement on the signature pages thereof. Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed thereto in the Merger Agreement.

        A.       All payments of the Principal Amount and any interest accrued
with respect thereto shall be made to the Payee at the following times, in
the following amounts and subject to the following terms and conditions:

                 1.       $__________ [which is the Payee's Allocable Portion of
        $500,000], plus the amount of all accrued and unpaid interest with
        respect thereto, shall be paid by the Maker to the Payee by certified
        or bank check or wire transfer two business days after the final
        determination of Final Net Working Capital in accordance with
        Section 2(e)(ii) of the Merger Agreement, PROVIDED, HOWEVER, that if
        the Final Net Working Capital is less than the Estimated Net Working
        Capital, the Principal Amount shall be deemed to have been reduced as
        of the date hereof by an amount equal to the Payee's Allocable
        Portion of the difference between the Estimated Net Working Capital
        less the Final Net Working Capital;

                 2.       $__________  [which is the Payee's Allocable Portion
        of $2,500,000], plus the amount of all accrued and unpaid interest
        with respect thereto, shall be paid by the Maker to the Payee by
        certified of bank check or wire transfer on the date which is 18
        months from the date hereof (the "MATURITY DATE"), PROVIDED, HOWEVER,
        that such amount shall be deemed to have been reduced as of the date
        hereof by the amount of any indemnification payments from the Payee
        to which the Maker is entitled pursuant to, and in accordance with,
        Section 9 of the Merger Agreement. For purposes of determining
        whether and to what extent the Principal Amount shall be reduced
        under this Paragraph A(2), the following procedures shall apply:

                          (a)      Prior to the Maturity Date, the Maker shall
                 give written notice (each, a "CLAIM NOTICE") to the
                 Principal Stockholder and the Payee specifying in reasonable
                 detail the nature and dollar amount of any claim as to which
                 indemnification is sought by the Maker under the Merger
                 Agreement (each, a "CLAIM"). The Maker

<PAGE>

                 may make more than one Claim with respect to any underlying
                 set of facts;

                          (b)      Any objection by the Principal Stockholder
                 to a particular Claim Notice (an "OBJECTION") shall be in
                 writing, shall set forth in reasonable detail the grounds
                 for such objection and must be received by the Maker within
                 ten (10) business days after the date of receipt of such Claim
                 Notice;

                          (c)      If the Maker does not receive from the
                 Principal Stockholder an Objection within ten (10) business
                 days from the date of receipt of such Claim Notice, the
                 Principal Amount shall be deemed to have been reduced as of
                 the date hereof by the Payee's Allocable Portion of the
                 amount specified in the Claim Notice;

                          (d)      If the Maker receives from the Principal
                 Stockholder an Objection within ten (10) business days from
                 the receipt of such Claim Notice, the amount of such Claim
                 shall be deemed to be in dispute to the extent set forth in
                 such Objection (each, a "DISPUTED AMOUNT"). If such
                 Objection does not dispute the entire amount of the Claim
                 Notice, the Principal Amount shall be deemed to have been
                 reduced as of the date hereof by the Payee's Allocable
                 Portion of the amount of the undisputed portion of such
                 Claim Notice;

                         (e)       On the Maturity Date, the Maker shall pay
                 to the Payee by certified or bank check or wire transfer the
                 then-remaining Principal Amount, plus the amount of all
                 accrued and unpaid interest with respect thereto, less the
                 sum of (i) the Payee's Allocable Portion of the aggregate
                 Disputed Amounts, (ii) the Payee's Allocable Portion of the
                 aggregate amount of all other pending Claims for which Claim
                 Notices have been delivered by the Maker pursuant to
                 Paragraph A(2)(a) above (each, a "PENDING CLAIM") and (iii)
                 the legal and other expenses incurred by the Principal
                 Stockholder in representing the Payee in connection herewith
                 or in connection with the Merger Agreement, as determined by
                 the Principal Stockholder and acknowledged to the Maker in
                 writing by the Payee, which expenses shall be paid by the
                 Maker directly to the Principal Stockholder, on behalf of
                 the Payee, for remittance to the appropriate creditor; and

                          (f)      Thereafter, all Disputed Amounts and
                 Pending Claims shall be resolved in accordance with the
                 Merger Agreement, and, as each such Disputed Amount and
                 Pending Claim is resolved, either (i) the remaining unpaid
                 Principal Amount represented by the Payee's Allocable
                 Portion of such Disputed Amount or Pending Claim, plus the
                 amount of all accrued and unpaid interest with respect
                 thereto,


                                      -2-

<PAGE>

                 shall be paid by the Maker to the Payee by certified or bank
                 check or wire transfer within two business days after such
                 resolution, to the extent such Disputed Amount or Pending
                 Claim is resolved in favor of the Payee, and/or (ii) the
                 Principal Amount shall be deemed to have been reduced as of
                 the date hereof by the remaining unpaid Principal Amount
                 represented by the Payee's Allocable Portion of such
                 Disputed Amount or Pending Claim is resolved in favor of the
                 Maker.

        B.       Any amount payable hereunder which is not paid when due in
accordance with the terms and conditions hereof shall bear interest until
paid at a rate which is 1.5% per annum higher than the interest rate
otherwise applicable hereunder.

        C.       The Maker shall have the right to prepay this Note in whole
at any time or in part from time to time without premium or penalty.

        D.       Each of the following events shall constitute an "Event of
Default" for purposes hereof;

                 1.       FAILURE TO PAY NOTE.  Default in the payment of the
        principal of, or any interest on, this Note when the same shall have
        become due and payable and the default continues for a period of five
        business days thereafter;

                 2.       FAILURE TO PAY OTHER INDEBTEDNESS. Default by the
        Maker or any other entity controlled by the Maker within the meaning
        of Rule 2 of the New York Stock Exchange (a "SUBSIDIARY") under any
        indebtedness for borrowed money (other than indebtedness of any
        Subsidiary or of the Maker in either case to any other Subsidiary),
        and such default is either (a) caused by the failure to make any
        payment of principal or interest due on such indebtedness within any
        applicable grace period, or (b) results in the acceleration of such
        indebtedness prior to the stated maturity thereof, PROVIDED,
        HOWEVER,that the provisions of this Paragraph D(2) shall not apply to
        any indebtedness which does not exceed $1,000,000 in the aggregate
        and which is not material to the operations of the Maker and its
        Subsidiaries; and

                 3.       INSOLVENCY OR BANKRUPTCY. The Maker or any
        Subsidiary shall suspend or discontinue its business operations, or
        the Maker or any Subsidiary shall make an assignment for the benefit
        of creditors or a composition with creditors, shall be generally
        unable to pay its debts as such debts become due or shall file a
        petition commencing a voluntary case concerning the Maker or any
        Subsidiary under any chapter of Title 11 of the United States Code
        entitled "Bankruptcy," or an involuntary case shall be commenced
        against the Maker or any Subsidiary under any such chapter and relief
        is ordered against the Maker or any Subsidiary or the petition is
        controverted but is not dismissed within 60 days after the
        commencement of the case, or the Maker or any Subsidiary shall
        petition or apply to any tribunal for the appointment of any
        receiver, liquidator, custodian or trustee of or for it or any


                                      -3-

<PAGE>

        substantial part of its property, or shall commence any proceeding
        relating to the Maker or any Subsidiary under any bankruptcy,
        reorganization, arrangement, readjustment of debt, receivership,
        dissolution or liquidation law or statute of any jurisdiction,
        whether now or hereafter in effect, or if there is commenced against
        the Maker or any Subsidiary any such proceeding which remains
        undismissed for a period of 60 days, or an order, judgment or decree
        approving the petition in any such proceeding shall be entered, or
        the Maker or any Subsidiary by any act or failure to act indicates
        its consent to, approval of or acquiescence in any such proceeding or
        the appointment of any receiver, liquidator, custodian or trustee of
        or for it or any substantial part of its property, or suffered any
        such appointment to continue undischarged or unstayed for a period of
        60 days, or the Maker or any Subsidiary shall take any corporate
        action for the purpose of effecting any of the foregoing, PROVIDED,
        HOWEVER, that the provisions of this Paragraph D(3) shall not apply
        to any Subsidiary as to which neither the assets nor the aggregate
        indebtedness for borrowed money exceed $500,000 and which is not
        material to the operations of the Maker and its Subsidiaries taken as
        a whole.

The Maker shall promptly notify the Principal Stockholder and the Payee of
the occurrence of an Event of Default described in Paragraph D(2) and (3)
above. Upon the occurrence of an Event of Default described in Paragraph D(3)
above, this Note shall become immediately due and payable, all without notice
of any kind. In the case of any other Event of Default, the Payee may declare
this Note to be due and payable, whereupon this Note shall become immediately
due and payable, all without notice of any kind.

        E.       The rights and benefits of the Payee under this Note shall
inure to the benefit of his, her or its successors, assigns, heirs and legal
representatives.

        F.       The Maker shall pay all reasonable costs of collection,
including attorneys' fees, which may be incurred by the Payee in the
collection of this Note or any portion thereof.

        G.       All notices, requests, demands and other communications made
in connection with this Note shall be in writing and shall be deemed to have
been duly given (1) on the date of hand delivery, if delivered to the Maker,
the Payee or the Principal Stockholder, on behalf of the Payee, as the case
may be, (2) one day after deposit, postage prepaid, with a nationally
recognized airline courier, (3) seven calendar days after mailing, with
proper postage, by certified or registered mail, prepaid, return receipt
requested, addressed to the Maker at One Exchange Plaza, 25th Floor, New
York, New York 10006, the Payee at_______________________________, or the
Principal Stockholder, on behalf of the Payee, at 575 Curan Place, Franklin
Lakes, New Jersey 07417, or (4) on the date of receipt if sent by confirmed
telecopy. Such address may be changed, at any time and from time to time, by
means of a notice given in the manner provided in this Paragraph G.

        H.       This Note is made and delivered in, and shall be governed,
construed and enforced under, the laws of the State of New York, without
regard to the conflicts of law principles thereof.


                                      -4-

<PAGE>

        1.       Notwithstanding anything in this Note to the contrary, by
accepting this Note, the Payee acknowledges the application of Section 11(o)
of the Merger Agreement to this Note and, pursuant thereto, the right, power
and authority of the Principal Stockholder to act for and on behalf of the
Payee with respect to all actions and decisions to be taken or made by the
Payee in connection with this Note.

                                        LaBRANCHE & CO INC.


                                        By:
                                           -------------------------------------
                                              George M.L. LaBranche, IV
                                              Chairman, President & Chief
                                              Executive Officer


                                      -5-

<PAGE>

         EXHIBIT B - Closing Note for Holders of Class E Target Shares

                                PROMISSORY NOTE


[$      ]                                                      February __, 2000


        FOR VALUE RECEIVED, the undersigned, LaBranche & Co Inc., a Delaware
corporation (the "MAKER"), hereby agrees to pay to __________________(the
"PAYEE") the principal amount of _______________DOLLARS ($____________) (the
"PRINCIPAL AMOUNT") [which is the Payee's Allocable Portion of $3,000,000],
plus interest payable at the fixed rate of 10% per annum. This note is being
executed in connection with the Agreement and Plan of Merger ("MERGER
AGREEMENT") entered into as of January 25, 2000 by and among the Maker, Webco
Securities, Inc., a Delaware corporation ("WEBCO"), and each other person
executing the Merger Agreement on the signature pages thereof. Capitalized
terms used herein and not otherwise defined herein shall have the respective
meaning ascribed thereto in the Merger Agreement.

        A.       All payments of the Principal Amount and any interest accrued
with respect thereto shall be made to the Payee at the following times, in
the following amounts and subject to the following terms and conditions:

                 1.       $__________ [which is the Payee's Allocable Portion of
        $500,000], plus the amount of all accrued and unpaid interest with
        respect thereto, shall be paid by the Maker to the Payee by certified
        or bank check or wire transfer two business days after the final
        determination of Final Net Working Capital in accordance with
        Section 2(e)(ii) of the Merger Agreement, PROVIDED, HOWEVER, that if
        the Final Net Working Capital is less than the Estimated Net Working
        Capital, the Principal Amount shall be deemed to have been reduced as
        of the date hereof by an amount equal to the Payee's Allocable
        Portion of the difference between the Estimated Net Working Capital
        less the Final Net Working Capital;

                 2.       $__________  [which is the Payee's Allocable Portion
        of $2,500,000], plus the amount of all accrued and unpaid interest
        with respect thereto, shall be paid by the Maker to the Payee by
        certified or bank check or wire transfer on the date which is 18
        months from the date hereof (the "MATURITY DATE"), PROVIDED, HOWEVER,
        that such amount shall be deemed to have been reduced as of the date
        hereof by the amount of any indemnification payments from the Payee
        to which the Maker is entitled pursuant to, and in accordance with,
        Section 9 of the Merger Agreement. For purposes of determining
        whether and to what extent the Principal Amount shall be reduced
        under this Paragraph A(2), the following procedures shall apply:

                          (a)      Prior to the Maturity Date, the Maker shall
                 give written notice (each, a "CLAIM NOTICE") to the Payee
                 specifying in reasonable detail the nature and dollar amount
                 of any claim as to which indemnification is sought by the
                 Maker under the Merger Agreement (each, a "CLAIM"). The
                 Maker may make more than one Claim with respect to any
                 underlying set of facts;

<PAGE>

                          (b)      Any objection by the Payee to a particular
                 Claim Notice (an "OBJECTION") shall be in writing, shall set
                 forth in reasonable detail the grounds for such objection
                 and must be received by the Maker within ten (10) business
                 days after the date of receipt of such Claim Notice;

                          (c)      If the Maker does not receive from the
                 Payee an Objection within ten (10) business days from the
                 date of receipt of such Claim Notice, the Principal Amount
                 shall be deemed to have been reduced as of the date hereof
                 by the Payee's Allocable Portion of the amount specified in
                 the Claim Notice;

                          (d)      If the Maker receives from the Payee an
                 Objection within ten (10) business days from the date of
                 receipt of such Claim Notice, the amount of such Claim shall
                 be deemed to be in dispute to the extent set forth in such
                 Objection (each, a "DISPUTED AMOUNT"). If such Objection
                 does not dispute the entire amount of the Claim Notice, the
                 Principal Amount shall be deemed to have been reduced as of
                 the date hereof by the Payee's Allocable Portion of the
                 amount of the undisputed portion of such Claim Notice;

                          (e)      On the Maturity Date, the Maker shall pay
                 to the Payee by certified or bank check or wire transfer the
                 then-remaining Principal Amount, plus the amount of all
                 accrued and unpaid interest with respect thereto, less the
                 sum of (i) the Payee's Allocable Portion of the aggregate
                 Disputed Amounts and (ii) the Payee's Allocable Portion of
                 the aggregate amount of all other pending Claims for which
                 Claim Notices have been delivered by the Maker pursuant to
                 Paragraph A(2)(a) above (each a "PENDING CLAIM"); and

                          (f)      Thereafter, all Disputed Amounts and
                 Pending Claims shall be resolved in accordance with the
                 Merger Agreement, and, as each such Disputed Amount and
                 Pending Claim is resolved, either (i) the remaining unpaid
                 Principal Amount represented by the Payee's Allocable
                 Portion of such Disputed Amount or Pending Claim, plus the
                 amount of all accrued and unpaid interest with respect
                 thereto, shall be paid by the Maker to the Payee by
                 certified or bank check or wire transfer within two business
                 days after such resolution, to the extent such Disputed
                 Amount or Pending Claim is resolved in favor of the Payee,
                 and/or (ii) the Principal Amount shall be deemed to have
                 been reduced as of the date hereof by the remaining unpaid
                 Principal Amount represented by the Payee's Allocable
                 Portion of such Disputed Amount or Pending Claim, to the
                 extent such Disputed Amount or Pending Claim is resolved in
                 favor of the Maker.


                                      -2-

<PAGE>

        B.       Any amount payable hereunder which is not paid when due in
accordance with the terms and conditions hereof shall bear interest until
paid at a rate which is 1.5% per annum higher than the interest rate
otherwise applicable hereunder.

        C.       The Maker shall have the right to prepay this Note in whole
at any time or in part from time to time without premium or penalty.

        D.       Each of the following events shall constitute an "Event of
Default" for purposes hereof:

                 1.       FAILURE TO PAY NOTE. Default in the payment of the
        principal of, or any interest on, this Note when the same shall have
        become due and payable and the default continues for a period of five
        business days thereafter;

                 2.       FAILURE TO PAY OTHER INDEBTEDNESS. Default by the
        Maker or any other entity controlled by the Maker within the meaning
        of Rule 2 of the New York Stock Exchange (a "SUBSIDIARY") under any
        indebtedness for borrowed money (other than indebtedness of any
        Subsidiary or of the Maker in either case to any other Subsidiary),
        and such default is either (a) caused by the failure to make any
        payment of principal or interest due on such indebtedness within any
        applicable grace period, or (b)results in the acceleration of such
        indebtedness prior to the stated maturity thereof, PROVIDED, HOWEVER,
        that the provisions of this Paragraph D(2) shall not apply to any
        indebtedness which does not exceed $1,000,000 in the aggregate and
        which is not material to the operations of the Maker and its
        Subsidiaries; and

                 3.       INSOLVENCY OR BANKRUPTCY. The Maker or any
        Subsidiary shall suspend or discontinue its business operations, or
        the Maker or any Subsidiary shall make an assignment for the benefit
        of creditors or a composition with creditors, shall be generally
        unable to pay its debts as such debts become due or shall file a
        petition commencing a voluntary case concerning the Maker or any
        Subsidiary under any chapter of Title 11 of the United States Code
        entitled "Bankruptcy," or an involuntary case shall be commenced
        against the Maker or any Subsidiary under any such chapter and relief
        is ordered against the Maker or any Subsidiary or the petition is
        controverted but is not dismissed within 60 days after the
        commencement of the case,or the Maker or any Subsidiary shall
        petition or apply to any tribunal for the appointment of any
        receiver, liquidator, custodian or trustee of or for it or any
        substantial part of its property, or shall commence any proceeding
        relating to the Maker or any Subsidiary under any
        bankruptcy,reorganization, arrangement,readjustment of debt,
        receivership, dissolution or liquidation law or statute of any
        jurisdiction, whether now or hereafter in effect, or if there is
        commenced against the Maker or any Subsidiary any such proceeding
        which remains undismissed for a period of 60 days, or an order,
        judgment or decree approving the petition in any such proceeding
        shall be entered, or the Maker or any Subsidiary by any act or
        failure to act indicates its consent to, approval of or acquiescence
        in any such proceeding or the appointment of any receiver,
        liquidator, custodian or trustee of or for it or any


                                      -3-

<PAGE>

        substantial part of its property, or suffered any such appointment to
        continue undischarged or unstayed for a period of 60 days, or the
        Maker or any Subsidiary shall take any corporate action for the
        purpose of effecting any of the foregoing, PROVIDED, HOWEVER, that
        the provisions of this Paragraph D(3) shall not apply to any
        Subsidiary as to which neither the assets nor the aggregate
        indebtedness for borrowed money exceed $500,000 and which is not
        material to the operations of the Maker and its Subsidiaries taken as
        a whole.

The Maker shall promptly notify the Payee of the occurrence of an Event of
Default described in Paragraph D(2) and (3) above. Upon the occurrence of an
Event of Default described in Paragraph D(3) above, this Note shall become
immediately due and payable, all without notice of any kind. In the case of
any other Event of Default, the Payee may declare this Note to be due and
payable, whereupon this Note shall become immediately due and payable, all
without notice of any kind.

        E.       The rights and benefits of the Payee under this Note shall
inure the benefit of his, her or its successors, assigns, heirs and legal
representatives.

        F.       The Maker shall pay all reasonable costs of collection,
including attorneys' fees, which may be incurred by the Payee in the
collection of this Note or any portion thereof.

        G.       All notices, requests, demands and other communications made
in connection with this Note shall be in writing and shall be deemed to have
been duly given (1) on the date of hand delivery, if delivered to the Maker
or the Payee, as the case may be, (2) one day after deposit, postage prepaid,
with a nationally recognized airline courier, (3) seven calendar days after
mailing, with proper postage, by certified or registered mail, prepaid,
return receipt requested, addressed to the Maker at One Exchange Plaza, 25th
Floor, New York, New York 10006, or the Payee
at______________________________________, or (4) on the date of receipt if
sent by confirmed telecopy. Such addresses may be changed, at any time and
from time to time, by means of a notice given in the manner provided in the
Paragraph G.

        H.       This Note is made and delivered in, and shall be governed,
construed and enforced under, the laws of the State of New York, without
regard to the conflicts of law principles thereof.

                                        LaBRANCHE & CO INC.


                                        By:
                                           -------------------------------------
                                              George M.L. LaBranche, IV
                                              Chairman, President & Chief
                                              Executive Officer


                                      -4-

<PAGE>

                                                                       EXHIBIT C


                         REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (the "Agreement") made as of this 9th day
of March, 2000 by and among LaBRANCHE & CO INC., a Delaware corporation (the
"Company"), and the stockholders of the Company set forth on the signature pages
hereto (each, a "Stockholder" and, collectively, the "Stockholders").

                              W I T N E S S E T H:

         WHEREAS, the Company, Webco Securities, Inc., a Delaware corporation
("Webco") and and the other signatories thereto, have entered into an Agreement
and Plan of Merger, dated as of January 26, 2000 (the "Merger Agreement"),
pursuant to which Webco is merging with and into the Company as of the date
hereof (the "Merger") and the Stockholders are acquiring shares of the Company's
common stock, $.01 par value per share (the "Common Stock");

        WHEREAS, the parties hereto desire to promote the interests of the
Company and the interests of the Stockholders by establishing herein certain
terms and conditions upon which the Company will register certain of the shares
of Common Stock acquired by the Stockholders in connection with the Merger.

        NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

         1.       CERTAIN DEFINITIONS. As used herein, the following terms shall
have the following respective meanings:

                  "Boye Estate" shall mean the estate of William E. Boye, Jr.
subsequent to his death.

                  "Boye Estate Shares" shall mean any shares of Registrable
Securities issued to and held or beneficially owned by William E. Boye, Jr. at
the time of his death.

                  "Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.

                  "Demand Registration" shall mean either the registration
pursuant to the Stockholder Request or the Boye Estate Request, as the case may
be (as each is defined in Section 4.1(a)).

                  "Holder" shall mean any holder of Registrable Securities.


                                       1

<PAGE>

                  "Initiating Holder" shall mean (i) in the case of the
Stockholder Request, William E. Boye, Jr. or, if he is unable or unwilling to so
act, William D. Boye or, if he is unable or unwilling to so act, then an
individual designated by those persons (or their heirs or legal representatives)
who are holders of a majority of the Class A Common Stock of Webco at the
effective time of the Merger, for and on behalf of the Stockholders, or (ii) in
the case of the Boye Estate Request, the authorized representatives of the Boye
Estate.

                  "Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder and the declaration or ordering of the effectiveness of such
registration statement.

                  "Registrable Securities" shall mean (i) in the case of the
Stockholder Request, up to 800,000 shares of Common Stock issued to and held by
the Stockholders pursuant to the Merger Agreement, (ii) in the case of the Boye
Estate Request, all the Boye Estate Shares, (iii) in the case of Section 4.2,
all the Stockholder Shares, and (iv) shares of Common Stock issued to the
Stockholders with respect to the shares referred to in the foregoing clauses
(i), (ii) and (iii) upon any stock split, stock dividend, merger, consolidation,
recapitalization or similar event, excluding all such shares which (x) have been
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (y) have been publicly sold pursuant to
Rule 144 or (z) are eligible for sale without restriction under Rule 144(k).

                  "Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Section 4 hereof, including, without limitation,
all registration, qualification and filing fees, exchange listing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, the fees and expenses of one counsel for all the selling
Holders and other security holders, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company).

                  "Request" shall mean either the Stockholder Request or the
Boye Estate Request, as the case may be.

                  "Restricted Securities" shall mean the securities of the
Company required to bear or bearing the legend set forth in Section 2 hereof.

                  "Rule 144" shall mean Rule 144, or any successor rule, under
the Securities Act.

                  "Rule 144(k)" shall mean Rule 144(k), or any successor rule,
under the Securities Act.

                  "Securities Act" shall mean the Securities Act of 1933, as
amended.


                                       2

<PAGE>

                  "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for any Holder (other than the fees and
disbursements of counsel included under Registration Expenses).

                  "Stockholder Shares" shall mean the shares of Common Stock
issued to the Stockholders pursuant to the Merger Agreement.

         2.       RESTRICTIVE LEGEND. Each certificate representing Stockholder
Shares shall (unless otherwise permitted or unless the Stockholder Shares
evidenced by such certificate shall have been registered under the Securities
Act) be stamped or otherwise imprinted with a legend in substantially the
following form (in addition to any legend required under applicable state
securities laws):

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
         SECURITIES LAW AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
         HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
         REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY
         APPLICABLE STATE SECURITIES LAW, OR THE RECEIPT BY THE COMPANY OF AN
         OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
         REGISTRATION IS NOT REQUIRED.

                  Upon request of a Holder of such a certificate, the Company
shall remove the foregoing legend from the certificate or issue to such Holder a
new certificate therefor free of any transfer legend, if (x) with such request,
the Company shall have received either the opinion referred to in Section 3
hereof stating that any transfer by such Holder of the Restricted Securities
evidenced by such certificate will not violate the Securities Act and applicable
state securities laws, or (y) in accordance with paragraph (k) of Rule 144, such
Holder is not and has not during the last three months been an affiliate of the
Company and such Holder has held the Restricted Securities represented by such
certificate for a period of at least two years. The Company will use its best
efforts to assist any Holder in complying with the provisions of this Section 2
for removal of the legend set forth above.

         3.       NOTICE OF PROPOSED TRANSFERS. The Holder of each certificate
representing Stockholder Shares by acceptance thereof agrees to comply in all
respects with the provisions of this Agreement. Except as otherwise permitted by
the Merger Agreement, prior to any proposed transfer of any Restricted
Securities (other than under circumstances described in Section 4 hereof), the
Holder thereof shall give written notice to the Company of such Holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer in detail, and shall be accompanied
(except in transactions in compliance with Rule 144) by a written opinion of
legal counsel who shall be satisfactory to the Company, addressed to the Company
and reasonably satisfactory in form and substance to the Company's counsel,
stating that the proposed


                                       3

<PAGE>

transfer of the Restricted Securities may be effected without registration under
the Securities Act and applicable state securities laws, whereupon the Holder of
such Restricted Securities, subject to Section 7(e) of the Merger Agreement,
shall be entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by the Holder to the Company. Each certificate
evidencing the Restricted Securities transferred as provided above shall bear
the appropriate restrictive legend set forth above, unless the opinion of
counsel referred to above further states that no such legend is required in
order to establish compliance with any provisions of the Securities Act or
applicable state securities laws.

         4.       REGISTRATION RIGHTS.

         4.1      (a)      REQUEST FOR REGISTRATION. Pursuant to this
Section 4.1(a), at any time after the Company becomes eligible to register
shares of Common Stock with the Commission pursuant to a registration statement
on Form S-3, the Initiating Holder shall be entitled to present to the Company
one written request (the "Stockholder Request") that the Company effect a
registration of Registrable Securities held by some or all of the Stockholders;
PROVIDED, HOWEVER, that the Initiating Holder shall have no obligation to
present the Stockholder Request unless at least 100,000 shares of Registrable
Securities in the aggregate are covered by such request. In addition, in the
event of the death of William E. Boye, Jr. prior to the first anniversary of the
date hereof, the Initiating Holder shall be entitled to present to the Company
one written request (the "Boye Estate Request") that the Company effect a
registration of all or a portion of the Boye Estate Shares, but in no event
shall the Company be required to effect such registration prior to its becoming
eligible to register shares of Common Stock with the Commission pursuant to a
registration statement on Form S-3 .

                  If the Company shall receive from the Initiating Holder a
Request that the Company effect any registration with respect to all or a part
of the Registrable Securities, the Company will use its reasonable best efforts
to effect a Demand Registration as soon as practicable after receipt of the
Request (including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws (except that the Company shall not be required to
qualify the offering under the blue sky laws of any jurisdiction in which the
Company would be required to execute a general consent to service of process
unless the Company is already subject to service in such jurisdiction) and
appropriate compliance with applicable regulations issued under the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request; PROVIDED that, after the Company has effected a
Demand Registration pursuant to the Stockholder Request, the Initiating Holder
may not make any further Stockholder Requests; and PROVIDED, FURTHER, that,
after the Company has effected a Demand Registration pursuant to the Boye Estate
Request, the Initiating Holder may not make any further Boye Estate Requests.

                  The registration statement filed pursuant to a Request of the
Initiating Holder may, subject to the provisions of Section 4.1(b) below,
include other securities of the Company which are held by officers or directors
of the Company or which are held by persons who, by virtue of


                                       4

<PAGE>

agreements with the Company, are entitled to include their securities in any
such registration (collectively, "Other Stockholders") and may include
securities of the Company being sold for the account of the Company.

                  (b)      UNDERWRITING. If all or any portion of the
Registrable Securities covered by a Request are, at the request of the
Initiating Holder, to be distributed by means of an underwriting, the Initiating
Holder shall so advise the Company as a part of the Request. Any underwriter
selected by the Initiating Holder shall be subject to the Company's approval.

                  The Company shall (together with all Holders and Other
Stockholders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
representative of the underwriters. Notwithstanding any other provision of this
Section 4.1, if the representative of the underwriters advises the Initiating
Holder in writing that, in the opinion of the underwriters, marketing factors
require a limitation on the number of shares to be underwritten, the Company
shall so advise the Initiating Holder, and the number of shares of Registrable
Securities and other securities that may be included in the registration and
underwriting shall be allocated in the following manner: (i) the securities
being sold for the account of the Company shall be excluded from such
registration and underwriting to the extent required by such limitation, and
(ii) if a limitation on the number of shares is still required, the securities
held by Other Stockholders of the Company shall be excluded from such
registration and underwriting to the extent required by such limitation in
proportion, as nearly as practicable, to the respective amounts of securities
requested to be registered by such Other Stockholders, and (iii) if a limitation
on the number of shares is still required, the securities being sold for the
account of the Holders shall be excluded from such registration and underwriting
to the extent required by such limitation, in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and other
securities which the Initiating Holder had requested to be included in such
registration. If the Company, the Initiating Holder or any Other Stockholder who
has requested inclusion in such registration as provided above disapproves of
the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the Initiating Holder. The
securities so withdrawn shall also be withdrawn from registration.

                  (c)      The Company shall have the right to defer a Request
of the Initiating Holder to effect a Demand Registration for up to seventy-five
(75) calendar days if, in the Company's good faith judgment, effecting a
registration would be seriously detrimental to the Company, or material
nonpublic information about the Company exists and the Board concludes as a
result, that it would not be in the Company's best interest to file such
registration statement at such time.

         4.2      COMPANY REGISTRATION.

                  (a)      If, at any time after the Company becomes eligible to
register shares of Common Stock with the Commission pursuant to a registration
statement on Form S-3, the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders exercising their respective demand registration rights (other than a
registration


                                       5

<PAGE>

relating solely to employee benefit plans, a registration relating solely to a
Commission Rule 145 transaction or a registration on any registration form which
does not permit secondary sales), the Company will:

                           (i)      promptly within ten (10) days of such
determination give to each Holder written notice thereof; and

                           (ii)     include in such registration and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder within twenty (20) days after
receipt of the written notice from the Company described in clause (i) above,
except as set forth in Section 4.2(b) below. Such written request may specify
all or a part of a Holder's Registrable Securities.

                  (b)      UNDERWRITING. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders by written notice. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall (together with the Company distributing its securities for
its own account through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 4.2, if the representative
of the underwriters advises the Company in writing that, in its opinion,
marketing factors require a limitation on the number of shares to be
underwritten, the Company shall so advise all Holders requesting registration,
and the number of shares that may be included in the registration and
underwriting shall be allocated first to the Company for securities being sold
for its account and then in the following manner: (i) the securities requested
to be registered by officers or directors of the Company shall be excluded from
such registration and underwriting to the extent required by such limitation in
proportion, as nearly as practicable, to the respective amounts of securities
requested to be registered by such officers and directors, and (ii) if a
limitation on the number of shares is still required, the securities being sold
for the account of the Holders and Other Stockholders shall be excluded from
such registration and underwriting to the extent required by such limitation in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities and other securities which they had requested to be included in such
registration. If any Holder or Other Stockholder who has requested inclusion in
such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the underwriter.

         4.3      EXPENSES OF REGISTRATION.

                  (a)      The Company shall bear all Registration Expenses and
the selling Holders shall bear all Selling Expenses (in proportion, as nearly as
practicable, to the Registrable Securities of each Holder being registered)
incurred in connection with any registration, qualification or compliance
pursuant to the provisions of Section 4.1 or 4.2.


                                       6

<PAGE>

         4.4      REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will:

                  (a)      Keep such registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; PROVIDED, HOWEVER, that in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, PROVIDED that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and PROVIDED further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (x) includes any prospectus required by Section
10(a)(3) of the Securities Act or (y) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (x) and (y) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement;

                  (b)      Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of
securities covered by such registration statement;

                  (c)      Furnish such number of prospectuses and other
documents incident thereto, including any term sheet or any amendment of or
supplement to the prospectus, as a selling Holder from time to time may
reasonably request;

                  (d)      Notify each seller, at its last known addresses as
set forth in the Company's books and records, of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;

                  (e)      Cause all Registrable Securities included in such
registration to be listed on each, if any, securities exchange or system on
which similar securities issued by the Company are then listed;


                                       7

<PAGE>

                  (f)      Make reasonably available for inspection by any
seller of Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney or
accountant retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers and directors to supply all information reasonably
requested by any such seller, underwriter, attorney or accountant in connection
with such registration statement; PROVIDED, HOWEVER, that such seller,
underwriter, attorney or accountant shall agree to hold in confidence and trust
all information so provided;

                  (g)      At the request of any underwriter in connection with
an underwritten offering, furnish an opinion of counsel for the Company, dated
the effective date of the registration statement, and "comfort" letters signed
by the Company's independent public accountants who have examined and reported
on the Company's financial statements included in the registration statement, to
the extent permitted by the standards of the AICPA or other relevant
authorities, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the case of
the accountants' "comfort" letters) with respect to events subsequent to the
date of the financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' "comfort" letters delivered to the
underwriters in underwritten public offerings of securities; and

                  (h)      Otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.

         5.       INDEMNIFICATION.

                  (a)      The Company will indemnify each Holder, each of its
officers, directors and partners, and each person controlling such Holder, with
respect to which registration, qualification or compliance has been effected
pursuant to Section 4 hereof, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions, proceedings or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus or other document (including any related
registration statement) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses as they are reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
PROVIDED that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by such


                                       8

<PAGE>

Holder or underwriter and stated to be specifically for use therein or to the
extent due to the failure of such Holder or underwriter to provide an updated
prospectus or other document to a purchaser at a time when the Company has
informed such Holder or underwriter of a material misstatement or omission in a
prospectus or other document and has provided updated prospectuses or other
documents correcting such misstatement or omission.

                  (b)      Each Holder will, if Registrable Securities held by
it are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify the Company, each of its directors
and officers and each underwriter, if any, of the Company's securities covered
by such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each other Holder and each of their officers, directors
and partners, and each person controlling such Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus or other document,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and such Holders, directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder and stated to be
specifically for use therein.

                  (c)      Each party entitled to indemnification under this
Section 5 (the "Indemnified Party") shall give notice in writing to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, PROVIDED that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such Indemnified Party's expense; PROVIDED,
however, that the Indemnifying Party shall pay the expense of one counsel for
all similarly situated Indemnified Parties if representation of such Indemnified
Parties by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Parties
and any other party represented by such counsel in such proceeding, and PROVIDED
FURTHER that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 5, unless such failure materially prejudices the ability of the
Indemnifying Party to defend against the claims asserted against the Indemnified
Party. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation,


                                       9

<PAGE>

and no Indemnified Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the Indemnifying Party.
Each Indemnified Party shall furnish such information regarding itself or the
claim in question as an Indemnifying Party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.

                  (d)      If the indemnification provided for in this Section 5
is unavailable to an Indemnified Party in respect of any losses, claims, damages
or liabilities referred to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the stockholders offering securities in the
offering (the "Selling Stockholders") on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Selling Stockholders on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Selling Stockholders and the parties' relevant intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Selling Stockholders agree that it would not be
just and equitable if contribution pursuant to this Section 5(d) were based
solely upon the number of entities from whom contribution was requested or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 5(d). The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to above in this Section 5(d) shall be deemed to include
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim, subject to
the provisions of Section 5(d) hereof. No person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.

         6.       INFORMATION BY HOLDER. Each Holder shall furnish to the
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.

         7.       "LOCK-UP" AGREEMENT. Each Holder, if requested by the Company
and the managing underwriter of an offering by the Company of Common Stock or
other securities of the Company pursuant to a registration statement, shall
agree not to sell publicly or otherwise transfer or dispose of any Stockholder
Shares or other securities of the Company held by such Holder (other than those
included in the registration) for a specified period of time (not to exceed one
hundred eighty (180) days) following the effective date of such registration
statement.


                                       10

<PAGE>

         8.       RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Restricted Securities to the public without registration, the
Company agrees to:

                  (a)      use its reasonable best efforts to make and keep
public information available as those terms are understood and defined in Rule
144 under the Securities Act at all times from and after ninety (90) days
following the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;

                  (b)      use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and

                  (c)      so long as the Holders own any Restricted Securities,
furnish to the Holders forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as the Holders may reasonably request in availing themselves
of any rule or regulation of the Commission allowing the Holders to sell any
such securities without registration.

         9.       TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register securities granted to the Holders by the Company
under Section 4 may be transferred or assigned, PROVIDED that the Company is
given written notice at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the Registrable Securities with respect to which such
registration rights are being transferred or assigned, and PROVIDED further that
the transferee or assignee of such rights assumes the obligations of the Holders
under this Agreement, and PROVIDED further that said transferee or assignee is
not a Competitor (as defined below) or an affiliate of a Competitor of the
Company. A "Competitor" shall mean any specialist on the New York Stock Exchange
or any other person or entity which acts as a market maker in securities and
which, now or in the future, competes directly with the Company or any of its
affiliates.

         10.      TERMINATION. Subject to Section 4.1(a), the provisions of
Sections 4.1 and 4.2 of this Agreement shall terminate on the first anniversary
of the Closing Date or, if Rule 144 is not available to any Holder(s) because
adequate current public information with respect to the Company required by Rule
144(c) is not available, at such later time as the Company advises such
Holder(s) that such public information is available or is no longer required to
be available in order for such Holder(s) to sell pursuant to Rule 144.


                                       11

<PAGE>

         11.      ACTION BY INITIATING HOLDER ON BEHALF OF EACH HOLDER.
Notwithstanding anything in this Agreement to the contrary, each Holder (i)
irrevocably constitutes and appoints the Initiating Holder as the true and
lawful agent and attorney-in-fact of such Holder with full power to appoint a
substitute or substitutes to act hereunder with respect to all matters arising
in connection with the transactions contemplated hereby, including presenting a
Stockholder Request under Section 4.1 hereof, and (ii) hereby directs and
authorizes the Initiating Holder, for and on behalf of such Holder and/or all
Holders, to execute and deliver all documents and to take all such other actions
and to make all such determinations as the Initiating Holder shall, in his sole
discretion, deem necessary or appropriate in connection with the transactions
contemplated by this Agreement, all such executed and delivered documents,
actions and determinations to be binding on such Holder and/or all Holders.

         12.      AMENDMENT; WAIVER. No amendment, alteration or modification of
this Agreement shall be valid unless in each instance such amendment, alteration
or modification is expressed in a written instrument executed by Holders who own
at least a majority of the Stockholder Shares. No waiver of any provision of
this Agreement shall be valid unless it is expressed in a written instrument
duly executed by the party or parties making such waiver; it being agreed and
understood that execution by Holders who own a majority of the Stockholder
Shares shall constitute a waiver by all the Stockholders. The failure of any
party to insist, in any one or more instances, on performance of any of the
terms and conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant or condition but the obligation of any party with
respect thereto shall continue in full force and effect.

         13.      SPECIFIC PERFORMANCE. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of a failure to perform any of the obligations under this Agreement.
Therefore, all parties hereto shall have the right to specific performance of
the obligations of the other parties under this Agreement, and if any party
hereto shall institute an action or proceeding to enforce the provisions hereof,
any person (including the Company) against whom such action or proceeding is
brought hereby waives the claim or defense therein that such party has an
adequate remedy at law, and such person shall not urge in any such action or
proceeding the claim or defense that such remedy at law exists.

         14.      NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, return receipt requested, or transmitted by facsimile or
delivered either by hand, by messenger or by nationally recognized overnight
courier, addressed:

                  (a)      if to the Holders, to William E. Boye, Jr. or his
         designated successor at the following address, or at such other address
         as they shall have furnished to the Company in writing:


                                       12

<PAGE>

                                    William E. Boye, Jr.
                                    575 Curan Place
                                    Franklin Lakes, New Jersey  07417

                  with a copy to:

                                    Thacher Proffitt & Wood
                                    Two World Trade Center, 39th Floor
                                    New York, New York  10048
                                    Attn: Thomas N. Talley, Esq.

                  (b) if to the Company, at the following address, or at such
         other address as the Company shall have furnished to the Holders,

                                    LaBranche & Co Inc.
                                    One Exchange Plaza
                                    New York, New York 10006
                                    Fax: (212) 344-1469
                                    Attn: Michael LaBranche

                  with a copy to:

                                    Fulbright & Jaworski L.L.P.
                                    666 Fifth Avenue
                                    New York, New York 10103
                                    Fax: (212) 752-5958
                                    Attention: Jeffrey M. Marks, Esq.

         Alternatively, to such other address as a party hereto supplies to each
other party in writing.

         15.      SUCCESSORS AND ASSIGNS. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective permitted transferees, successors and assigns of the parties
hereto, whether so expressed or not.

         16.      GOVERNING LAW. This Agreement is to be governed by and
interpreted under the laws of the State of New York without giving effect to the
principles of conflicts of laws thereof.

         17.      TITLES AND SUBTITLES. The titles of the sections of this
Agreement are for the convenience of reference only and are not to be considered
in construing this Agreement.

         18.      SEVERABILITY. The invalidity or unenforceability of any
provisions of this Agreement shall not be deemed to affect the validity or
enforceability of any other provision of this Agreement.


                                       13

<PAGE>

         19.      ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the full and entire understanding and agreement between the parties
with respect to the subject matter hereof and supersedes all previous
agreements, arrangements and understandings, whether written or oral, with
respect to the subject matter hereof.

         20.      COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.

                                        LABRANCHE & CO INC.

                                        By:
                                           -------------------------------------
                                             George M.L. LaBranche, IV
                                             Chairman, Chief Executive Officer
                                             and President

                                        HOLDERS:

                                        William E. Boye, Jr.

                                        William D. Boye

                                        Nancy R. Boye

                                        Robert R. Boye


<PAGE>

                                                                   Exhibit 10.29


                              LaBRANCHE & CO INC.
                               One Exchange Plaza
                               Twenty-Fifth Floor
                            New York, New York 10006

                                                                 January 6, 2000

Mr. Harvey Traison
155 West 68th Street, Apt. #20-02
New York, New York 10023-5832

Dear Mr. Traison:

         We are pleased to offer you employment as the Senior Vice President &
         Chief Financial Officer of LaBranche & Co Inc. (the "Company" and,
         collectively with its subsidiaries and affiliates, the "Firm") upon the
         terms and conditions set forth herein.

1.       You shall be employed by the Firm, subject to the terms and conditions
         of this Agreement, for the period (the "Employment Period") commencing
         on March 1, 2000 (the "Commencement Date") and, unless terminated
         earlier in accordance herewith, ending on February 28, 2003 (the
         "Initial Employment Period"). The Employment Period shall be
         automatically extended for successive additional one (1) year periods
         (the "Additional Periods") unless, at least ninety (90) days prior to
         the end of the Initial Employment Period or any Additional Period, as
         the case may be, the Firm or you has notified the other in writing that
         the Employment Period shall terminate at the end of the then current
         term.

2.       During the Employment Period, you shall: (i) have such duties and
         responsibilities consistent with your position as are assigned by the
         Firm from time to time; (ii) devote substantially all of your entire
         business time to the faithful, diligent and competent performance of
         your duties and responsibilities; and (iii) be subject to the
         direction, supervision and control of the Firm. You shall refrain from
         engaging in any aspect of the securities business except on behalf of
         the Firm without the prior approval of the New York Stock Exchange,
         Inc. (the "NYSE") and the Firm. The foregoing shall not prevent you
         from participating in industry and charitable affairs (including those
         set forth on Schedule I hereto) and from managing your passive personal
         investments and those of your family provided that, individually and in
         the aggregate, such activities do not materially interfere with the
         performance of your duties hereunder. You shall be appointed to the
         Company's Board of Directors (the "Board") as soon as reasonably
         practicable after the Commencement Date. The Firm shall use its best
         efforts to cause you to be elected or appointed (or, reelected or
         reappointed, as the case may be) to the Board at all times during the
         Employment Period. If elected or appointed to the Board, you shall
         serve as a director without additional compensation. You shall be
         subject to all terms and

<PAGE>

Mr. Harvey Traison
Page 2

         conditions of employment generally applicable to senior executive
         employees of the Firm, as established by the Firm from time to time and
         as previously communicated to you.

3.       During the Initial Employment Period, the Firm shall pay to you an
         annual base salary of not less than Two Hundred Fifty Thousand Dollars
         ($250,000). Thereafter, the amount of your annual base salary during
         the Additional Periods shall be as agreed upon by you and the Firm.
         Such salary shall be paid in accordance with the Firm's normal payroll
         practices. You also shall be entitled to receive an annual bonus under
         the Company's Annual Incentive Plan (which was filed as an exhibit to
         the Company's Registration Statement on Form S-1) in accordance with
         the terms thereof as in effect from time to time.

4.       Subject to your satisfaction of any applicable eligibility
         requirements, you shall be entitled to participate, in accordance with
         the terms thereof, in all employee benefit plans and programs generally
         provided by the Firm to its senior executives (including any health,
         disability, insurance or other benefit plans or programs now existing
         or hereafter adopted), provided, however, that in the case of health
         benefits, such benefits are not duplicative of those to which you are
         entitled under the health benefit plan maintained by your prior
         employer. You also shall be entitled to up to twenty-five (25) days of
         paid vacation per calender year (pro-rated for partial years) at such
         times as agreed between you and the Chief Executive Officer of the
         Company.

5.       You shall be reimbursed by the Firm for all reasonable business
         expenses incurred by you in the performance of your duties hereunder
         for which you submit expense statements or vouchers and such other
         supporting information and substantiation as the Firm customarily
         requires of its employees.

6.       You or the Firm may terminate your employment at any time for any
         reason, or for no reason, by giving not less than ninety (90) days'
         prior written notice of termination, provided, however, that the Firm
         may elect to place you on paid leave for all or any part of such 90-day
         period, and provided, further, that no advance notice need be given by
         the Firm to you in connection with a termination of your employment for
         Cause or on account of Disability. "Cause" means: (i) your breach of
         this Agreement or any other written agreement between you and the Firm
         which is not cured by you within ten (10) days of your receipt of
         written notice thereof; (ii) your violation of any Firm policy
         (including in respect of hedging or confidential information) as in
         effect from time to time which is not cured (if such violation is in
         fact curable) by you within ten (10) days of your receipt of written
         notice thereof; (iii) your conviction of, or pleading NOLO CONTENDERE
         to, a crime involving moral turpitude or a felony; or (iv) your
         becoming subject to any "statutory disqualification" within the meaning
         of Section 3(a)(39) of the Securities Exchange Act of

<PAGE>

Mr. Harvey Traison
Page 3

         1934, as amended (the "Exchange Act"). "Disability" means your absence
         from employment for at least 120 days in any 12-month period as a
         result of your incapacity due to mental or physical illness, as
         determined by the Firm.

7.       You shall comply with all laws applicable to the securities business of
         the Firm and with all rules and regulations of the Securities and
         Exchange Commission, the NYSE (and any other securities exchange of
         which the Firm is a member), and the regulatory authority of any state
         in which the Firm is registered as a broker-dealer. You shall provide
         the Firm with such written information as may be necessary for the Firm
         to complete accurately all forms required by the rules and regulations
         of the NYSE, the Securities and Exchange Commission or any other
         regulatory organization to which the Firm is subject. You shall
         acknowledge that you are an agent and/or representative of the Firm in
         registration applications filed with appropriate regulatory
         authorities, and you shall be subject to the applicable approved person
         rules of the NYSE. You acknowledge that you are not subject to any
         "statutory disqualification" within the meaning of Section 3(a)(39) of
         the Exchange Act. You shall furnish the Firm with (for example, an
         affidavit of your tax return preparer) that you have filed all required
         tax returns and paid all required taxes for each tax year during the
         Employment Period.

8.       You acknowledge that during the course of your involvement in the
         Firm's activities or otherwise, you will obtain information concerning
         the Firm's businesses, strategies, operations, financial affairs,
         organizational and personnel matters (including information regarding
         any aspect of your tenure as an officer, director, consultant or
         employee of the Firm or of the termination of such office, position,
         arrangement or employment), policies, procedures or concerning those of
         third parties (collectively, "Confidential Information"). You further
         acknowledge that you may obtain Confidential Information in written or
         electronic form or orally. Notwithstanding the foregoing, Confidential
         Information shall not include any information which is (i) generally
         known within the securities industry, unless and to the extent such
         information becomes known as a result of your acts or omissions, or
         (ii) disclosed by you in order to comply with legal process, provided
         that you provide prompt notice to the Firm of your receipt of such
         process and cooperate with the Firm in attempting to obtain a
         protective order preventing such disclosure. In consideration of, and
         as a condition to, access to such Confidential Information, and without
         prejudice to or limitation of any other confidentiality obligations
         imposed by agreement or by law, you hereby undertake to use and protect
         Confidential Information in accordance with any restrictions placed on
         its use or disclosure. Except as authorized in advance by the Board,
         you may not: (i) use for your own account any Confidential Information,
         or (ii) disclose or allow disclosure of any Confidential Information,
         or of any information derived therefrom, in whatever form, to any
         person unless such person is a director, officer, partner, employee,
         attorney or agent of the Firm and, in your reasonable

<PAGE>

Mr. Harvey Traison
Page 4

         good faith judgment, has a need to know the Confidential Information or
         information derived therefrom in furtherance of the business of the
         Firm. The foregoing obligations will survive, and remain binding and
         enforceable notwithstanding any termination of your employment with the
         Firm and any settlement of the financial rights and obligations arising
         from your employment with the Firm.

9.       In view of your importance to the Firm, you agree that the Firm would
         likely suffer significant harm from your competing with the Firm during
         the Employment Period and, except in the event that you are terminated
         by the Firm without Cause, the twelve (12) month period following the
         termination of the Employment Period for any reason (the "Restricted
         Period"). Accordingly, you agree that during the Restricted Period you
         will not, without the prior written consent of the Chief Executive
         Officer of the Company:

         (i)      form, or acquire a 5% or greater equity ownership, voting or
                  profit participation interest in, any Competitive Enterprise;
                  or

         (ii)     associate (including, but not limited to, association as an
                  officer, employee, partner, director, consultant, creditor,
                  agent or advisor) with any Competitive Enterprise and in
                  connection with such association engage in, or directly or
                  indirectly manage or supervise personnel engaged in, any
                  activity:

                  (A)      which is similar or substantially related to any
                           activity in which you were engaged, in whole or in
                           part, at the Firm, or

                  (B)      which calls for the application of the same or
                           similar specialized knowledge or skills as those
                           utilized by you or in your activities with the Firm,
                           at any time during the twelve (12) month period
                           immediately prior to the date of termination (or, in
                           the case of an action taken during your period of
                           employment with the Firm, during the twelve (12)
                           month period immediately prior to such action), and,
                           in any such case, irrespective of the purpose of the
                           activity or whether the activity is or was in
                           furtherance of advisory, agency, proprietary or
                           fiduciary business of either the Firm or the
                           Competitive Enterprise.

         (iii)    in any manner, directly or indirectly; (A) solicit a listed
                  company to transact business with a Competitive Enterprise or
                  to reduce or refrain from doing any business with the Firm, or
                  (B) interfere with or damage (or attempt to interfere with or
                  damage) any relationship between the Firm and a listed
                  company. The term "listed companies" means any company (x) for
                  which the Firm acts as a specialist, (y) which is seeking a
                  listing of its stock on the NYSE, or (z) which is

<PAGE>

Mr. Harvey Traison
Page 5

                  identified by the Firm as a potential listed company (whether
                  by new listing, transfer or other means) during the period of
                  your employment by the Firm.

         (iv)     in any manner, directly or indirectly, solicit any person who
                  is an employee of the Firm to resign from the Firm or to apply
                  for or accept employment with any Competitive Enterprise.

For purposes of this Agreement, a "Competitive Enterprise" is a business
enterprise that (A) engages in any activity, or (B) owns or controls a
significant interest in any entity that engages in any activity, that, in either
case, competes anywhere with any business activity in which the Firm is engaged.
The activities covered by the previous sentence include, without limitation,
specialist services, making markets in securities and/or securities brokerage,
sales, lending, custody, clearance, settlement or trading.

10.      If any of the provisions of Section 8 or 9 is finally held to be
         invalid, illegal or unenforceable because it exceeds the maximum scope
         determined to be acceptable to permit such provision to be enforceable,
         such Section will be deemed to be modified to the minimum extent
         necessary to modify such scope in order to make such provision
         enforceable hereunder.

11.      Subject to the provisions of Sections 12 and 13 hereof, any dispute,
         controversy or claim between you and the Firm arising out of or
         relating to or concerning the provisions of this Agreement, your
         employment with the Firm (or termination thereof) or otherwise
         concerning any rights, obligations or other aspects of your employment
         relationship in respect of the Firm ("Employment Related Matters")
         shall be finally settled by arbitration in New York City before, and in
         accordance with the rules then obtaining of, the NYSE or, if the NYSE
         declines to arbitrate the matter, the American Arbitration Association
         (the "AAA") in accordance with the commercial arbitration rules of the
         AAA, PROVIDED HOWEVER, that, in addition to the right to compel
         arbitration of any dispute or controversy, you or the Firm may bring an
         action or special proceeding in a state or federal court of competent
         jurisdiction sitting in New York City, whether or not an arbitration
         proceeding has theretofore been or is ever initiated, for the purpose
         of temporarily, preliminarily, or permanently enforcing the provisions
         of this Agreement or to enforce an arbitration award.

12.      Notwithstanding the provisions of Section 11, and in addition to its
         right to submit any dispute or controversy to arbitration, the Firm may
         bring an action or special proceeding in a state or federal court of
         competent jurisdiction sitting in the City of New York, whether or not
         an arbitration proceeding has theretofore been or is ever initiated,
         for the purpose of temporarily, preliminarily or permanently enforcing
         the provisions of Sections 8 or 9 of this Agreement.

<PAGE>

Mr. Harvey Traison
Page 6

13.      You and the Firm hereby irrevocably submit to the exclusive
         jurisdiction of any state or federal court located in the City of New
         York over any suit, action or proceeding arising out of or relating to
         or concerning this Agreement, or any Employment Related Matter that is
         not otherwise arbitrated or resolved according to the provisions of
         Section 11 hereof.

14.      The Firm may withhold from any and all amounts payable hereunder such
         federal, state and local taxes as may be required to be withheld
         pursuant to any applicable law or regulation.

15.      This Agreement shall be governed by and construed in accordance with
         the laws of the State of New York, without regard to principles of
         conflict of laws.

16.      This Agreement shall supersede any and all prior understandings and
         agreements between you and the Firm, whether written or oral, relating
         to the subject matter hereof. Notices hereunder shall be delivered to
         the Company at its principal executive office directed to the attention
         of the Company's Secretary, and to you at your last address appearing
         in the Company's employment records.

17.      You may not, directly or indirectly, assign your rights or obligations
         hereunder. The Company may at any time and from time to time assign its
         rights and obligations hereunder, including, without limitation, to any
         of its subsidiaries or affiliates (and have such rights and obligations
         reassigned to it or to any other subsidiary or affiliate). This
         Agreement shall inure to the benefit of and be binding upon the Company
         and its successors and assigns. This Agreement may not be amended or
         modified other than by a written agreement executed by you and the
         Company or its successors, nor may any provision hereof be waived other
         than by a writing executed by you or the Company or its successors.

18.      You represent and warrant that you are free to enter into this
         Agreement and to perform the duties required hereunder, and that there
         are no other employment agreements or understandings, restrictive
         covenants or other restrictions, whether written or oral, preventing
         the performance of your duties hereunder.

19.      If any provision of this Agreement is finally held to be invalid,
         illegal or unenforceable (whether in whole or in part), such provision
         shall be deemed modified to the extent, but only to the extent, of such
         invalidity, illegality or unenforceability and the remaining provisions
         shall not be affected thereby. Except as expressly provided herein,
         this Agreement shall not confer on any person other than you and the
         Firm any rights or remedies hereunder.

<PAGE>

Mr. Harvey Traison
Page 7

         Please confirm your acceptance and agreement to the terms and
conditions hereof by signing and returning the enclosed duplicate of this letter
which shall thereupon constitute an agreement between you and the Company.


                                        Very truly yours,

                                        LaBRANCHE & CO INC.


                                        By: /s/ George M.L. LaBranche, IV
                                            ------------------------------------
                                            Name:  George M.L. LaBranche, IV
                                            Title: Chairman, Chief Executive
                                                   Officer & President

Agreed & accepted
as of the date hereof:

By: /s/ Harvey Traison
   --------------------------
         Harvey Traison

<PAGE>
                                                                    EXHIBIT 23.2

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

    As independent public accountants, we hereby consent to the use of our
report dated January 24, 2000 and to all references to our Firm included in, or
made part of, the LaBranche & Co Inc. Registration Statement on Form S-4 dated
April 28, 2000.

/s/ Arthur Andersen LLP

New York, New York
April 28, 2000

<PAGE>
                                                                    EXHIBIT 23.3

                         INDEPENDENT AUDITOR'S CONSENT

    We consent to the use in this Registration Statement of LaBranche & Co. Inc.
on Form S-4 of our report dated January 28, 2000 relating to the financial
statements of Henderson Brothers Holdings, Inc. and Subsidiary (which expressed
an unqualified opinion with an emphasis of a matter relating to the pending sale
of Henderson Brothers Holdings, Inc. to LaBranche & Co. Inc.), appearing in the
Prospectus, which is part of this Registration Statement, and of our report
dated January 28, 2000 relating to the financial statement schedules of
Henderson Brothers Holdings, Inc. appearing elsewhere in this Registration
Statement.

    We also consent to the reference to us under the heading "Experts" in such
Prospectus.

/s/ Deloitte & Touche LLP

New York, New York
April 26, 2000

<PAGE>
                                                                    EXHIBIT 23.4

                      [LETTERHEAD OF GLASSER & HAIMS, PC]

                          INDEPENDENT AUDITOR'S REPORT

To LaBranche & Co Inc.
As the Issuer

    We hereby consent to the use of our report dated November 29, 1999, on the
financial statements of Webco Securities, Inc. as of October 31, 1999 and
October 31, 1998, in the Registration Statement on Form S-4 for LaBranche & Co
Inc.'s $250,000,000 senior subordinated notes due 2007.

GLASSER & HAIMS, CPA, PC
Valley Stream, New York

April 27, 2000

<PAGE>
                                                                    EXHIBIT 23.5

                         INDEPENDENT AUDITOR'S CONSENT

To the Board of Directors and Stockholders of
Henderson Brothers Holdings, Inc.

We hereby consent to the use in the Prospectus constituting part of the
Registration Statement of LaBranche & Co Inc. on Form S-4 of our report, dated
February 16, 1998, on the consolidated statements of income, cash flows, and
changes in stockholders' equity of Henderson Brothers Holdings, Inc. and
subsidiary for the year ended December 31, 1997, which appear in such
Prospectus. We also consent to the reference to our firm under the caption
"Experts" in such Prospectus.

GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.

New York, New York

April 28, 2000


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