<PAGE>

                                                                 EXECUTION COPY

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


                          AGREEMENT AND PLAN OF MERGER

                         dated as of September 28, 2000

                                  by and among

                           DAIN RAUSCHER CORPORATION

                              ROYAL BANK OF CANADA

                                      and

                         VIKING MERGER SUBSIDIARY, INC.


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

<PAGE>

                               TABLE OF CONTENTS
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RECITALS

                                    ARTICLE I

                       CERTAIN DEFINITIONS; INTERPRETATION

  1.01 CERTAIN DEFINITIONS ..................................................... 2
  1.02 INTERPRETATION .......................................................... 8

                                    ARTICLE II

                                    THE MERGER

  2.01 THE MERGER .............................................................. 8
  2.02 EFFECTIVE TIME .......................................................... 9
  2.03 CLOSING ................................................................. 9
  2.04 RESERVATION OF RIGHT TO REVISE STRUCTURE ................................ 9

                                    ARTICLE III

                              CONSIDERATION; EXCHANGE

  3.01 Merger Consideration .................................................... 10
  3.02 Rights as Stockholders; Stock Transfers ................................. 10
  3.03 Payment for Shares ...................................................... 10
  3.04 Dissenting Stockholders ................................................. 11
  3.05 Options; Restricted Stock ............................................... 11

                                   ARTICLE IV

                        ACTIONS PENDING THE EFFECTIVE TIME

  4.01 FORBEARANCES OF THE COMPANY. ............................................ 12
  4.02 FORBEARANCES OF PARENT. ................................................. 15

                                   ARTICLE V

                          REPRESENTATIONS AND WARRANTIES

  5.01 DISCLOSURE SCHEDULES .................................................... 15


                                      -i-
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  5.02 STANDARD ................................................................ 16
  5.03 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................... 16
  5.04 REPRESENTATIONS AND WARRANTIES OF PARENT ................................ 34

                                   ARTICLE VI

                                   COVENANTS

  6.01 REASONABLE BEST EFFORTS ................................................. 35
  6.02 PROXY STATEMENT ......................................................... 36
  6.03 COMPANY STOCKHOLDERS MEETING ............................................ 37
  6.04 PRESS RELEASES .......................................................... 37
  6.05 ACCESS; INFORMATION ..................................................... 37
  6.06 ACQUISITION PROPOSALS ................................................... 38
  6.07 NO RIGHTS TRIGGERED ..................................................... 39
  6.08 REGULATORY APPLICATIONS ................................................. 39
  6.09 EMPLOYEE MATTERS ........................................................ 40
  6.10 NOTIFICATION OF CERTAIN MATTERS ......................................... 41
  6.11 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE ..................... 41
  6.12 SECTION 15 OF THE INVESTMENT COMPANY ACT ................................ 43
  6.13 ERISA CLIENTS ........................................................... 43

                                ARTICLE VII

                  CONDITIONS TO CONSUMMATION OF THE MERGER

  7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER .............. 44
  7.02 CONDITIONS TO OBLIGATION OF THE COMPANY ................................. 44
  7.03 CONDITIONS TO OBLIGATION OF PARENT AND THE MERGER SUBSIDIARY ............ 45

                                ARTICLE VIII

                                TERMINATION

  8.01 TERMINATION ............................................................. 46
  8.02 EFFECT OF TERMINATION AND ABANDONMENT ................................... 47
  8.03 TERMINATION FEE. ........................................................ 47


                                      -ii-

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                                    ARTICLE IX

                                   MISCELLANEOUS

  9.01 SURVIVAL ................................................................ 47
  9.02 WAIVER; AMENDMENT ....................................................... 48
  9.03 COUNTERPARTS ............................................................ 48
  9.04 GOVERNING LAW AND VENUE ................................................. 48
  9.05 EXPENSES ................................................................ 48
  9.06 NOTICES ................................................................. 48
  9.07 ENTIRE UNDERSTANDING; NO THIRD-PARTY BENEFICIARIES ...................... 50
  9.08 ASSIGNMENT .............................................................. 50
  9.09 ENFORCEMENT ............................................................. 50
</TABLE>

ANNEXES

Annex A   Form of Stock Option Agreement
Annex B   List of Designated Executives to Execute Employment Agreements
Annex C   Form of Certificate of Incorporation of Surviving Corporation


                                     -iii-

<PAGE>

         AGREEMENT AND PLAN OF MERGER, dated as of September 28, 2000 (this
"Agreement"), by and among Dain Rauscher Corporation (the "Company"), Royal
Bank of Canada (the "Parent") and Viking Merger Subsidiary, Inc. (the "Merger
Subsidiary").

                                    RECITALS

         A. THE COMPANY. The Company is a Delaware corporation, having its
principal place of business in Minneapolis, Minnesota.

         B. PARENT. Parent is a Canadian chartered bank, having its principal
place of business in Toronto, Ontario, Canada.

         C. THE MERGER SUBSIDIARY. The Merger Subsidiary is a Delaware
corporation and a wholly owned subsidiary of Parent that has been organized for
the purpose of effecting the Merger (as defined herein) in accordance with this
Agreement.

         D. THE MERGER. Subject to the terms and conditions contained in this
Agreement, the parties to this Agreement intend to effect the merger of the
Merger Subsidiary with and into the Company, with the Company being the
corporation surviving such merger.

         E. STOCK OPTION AGREEMENT. As a condition and inducement to Parent's
willingness to enter into this Agreement, the Board of Directors of the Company
has approved the grant to Parent of an option to purchase shares of Company
Common Stock (as defined herein) pursuant to a Stock Option Agreement with
Parent (the "Stock Option Agreement"), and concurrently with the execution and
delivery of this Agreement, the Company has executed and delivered the Stock
Option Agreement with Parent, in the form of Annex A.

         F. EMPLOYMENT AGREEMENTS. As further conditions and inducements to
Parent's willingness to enter into this Agreement, concurrently with the
execution and delivery of this Agreement, each of the Designated Executives (as
defined herein) has executed and delivered an employment agreement with the
Company (each, an "EMPLOYMENT AGREEMENT").

         G. BOARD ACTION. The respective Boards of Directors of each of the
Company, Parent and the Merger Subsidiary have each adopted resolutions
approving this Agreement and the Merger, and, in the case of each of the Boards
of Directors of the Company and Parent, the Stock Option Agreement, and, in the
case of each of the Boards of Directors of the Company and the Merger
Subsidiary, declaring the advisability of this Agreement in accordance with the
Delaware General Corporation Law, as amended, (the "DGCL").

         NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
<PAGE>

                                   ARTICLE I

                      CERTAIN DEFINITIONS; INTERPRETATION

         1.01 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:

         "ACQUISITION PROPOSAL" has the meaning assigned in Section 6.06.

         "AFFILIATE" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

         "AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.

         "AMEX" means the American Stock Exchange.

         "BANKRUPTCY AND EQUITY EXCEPTION" has the meaning assigned in Section
5.03(e)(i).

         "BUSINESS DAY" means any day other than Saturday, Sunday and any day on
which banks in the State of New York are required or authorized by law or
regulation to be closed.

         "BYLAWS" has the meaning assigned in Section 2.01(c).

         "CERTIFICATE OF INCORPORATION" has the meaning assigned in Section
2.01(b).

         "CFTC" means the Commodities Futures Trading Commission.

         "CLIENT" means any person to whom the Company or any of its
Subsidiaries provides investment advisory services under any Contract.

         "CLOSING" and "CLOSING DATE" have the meanings assigned in Section
2.03.

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "COMPANY" has the meaning assigned in the preamble to this Agreement.

         "COMPANY COMMON STOCK" means the common stock, par value $0.125 per
share, of the Company.

                                      -2-
<PAGE>

         "COMPANY FINANCIAL STATEMENTS" has the meaning assigned in Section
5.03(h)(ii).

         "COMPANY IP RIGHTS" has the meaning assigned in Section 5.03(y)(i).

         "COMPANY OPTIONS" means, collectively, outstanding options to purchase
shares of Company Common Stock under the Company Stock Plans.

         "COMPANY PROXY STATEMENT" has the meaning assigned in Section 6.02.

         "COMPANY REQUISITE VOTE" has the meaning assigned in Section 5.03(e).

         "COMPANY RESTRICTED STOCK" has the meaning assigned in Section 3.05(d).

         "COMPANY SEC DOCUMENTS" has the meaning assigned in Section 5.03(h).

         "COMPANY STOCK PLANS" has the meaning assigned in Section 5.03(b).

         "COMPANY STOCKHOLDERS MEETING" has the meaning assigned in Section
6.03.

         "COMPENSATION AND BENEFIT PLANS" has, with respect to any person, the
meaning assigned in Section 5.03(r)(i).

         "CONFIDENTIALITY AGREEMENT" has the meaning assigned in Section
6.05(b).

         "CONSTITUTIVE DOCUMENTS" means with respect to any juridical person,
such person's articles or certificate of incorporation and its bylaws, or
similar constitutive documents.

         "CONTRACT" means, with respect to any person, any agreement, indenture,
undertaking, debt instrument, contract, lease, understanding, arrangement, or
commitment to which such person or any of its Subsidiaries is a party or by
which any of them may be bound or to which any of their properties may be
subject.

         "COSTS" has the meaning assigned in Section 6.11(a).

         "DESIGNATED EXECUTIVES" means, collectively, the individuals identified
in Annex B.

         "DGCL" has the meaning assigned in the Recitals.

         "DISCLOSURE SCHEDULE" has the meaning assigned in Section 5.01.

         "DISSENTERS' SHARES" means shares of Company Common Stock the holders
of which shall have perfected and not withdrawn or lost their appraisal rights
in accordance with Section 262 of the DGCL.

                                      -3-
<PAGE>

         "EFFECTIVE TIME" means the date and time at which the Merger becomes
effective in accordance with Section 2.02.

         "EMPLOYEES" has the meaning assigned in Section 5.03(r)(i).

         "EMPLOYMENT AGREEMENT" means an employment agreement entered into
between the Company, on the one hand, and each of the Designated Executives, on
the other hand.

         "ENVIRONMENTAL LAWS" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement with
force of law relating to: (a) the protection or restoration of the environment,
health or safety (in each case as relating to the environment) or natural
resources; or (b) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "ERISA AFFILIATE" has, with respect to any person, the meaning assigned
in Section 5.03(r)(iii).

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

         "FUND BOARD" has the meaning assigned in Section 5.03(z)(i).

         "GAAP" means generally accepted accounting principles in the United
States.

         "GOVERNMENTAL AUTHORITY" means any United States or foreign government,
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, the SEC or any other
government authority, agency, department, board, commission or instrumentality
of the United States or any foreign government or any state or other political
subdivision thereof or any state insurance or banking authority, the Board of
Governors of the Federal Reserve System or the Federal Deposit Insurance
Corporation and any court, tribunal or arbitrator(s) of competent jurisdiction.

         "HAZARDOUS SUBSTANCE" means any hazardous or toxic substance, material
or waste, including those substances, materials and wastes listed in the United
States Department of Transportation Hazardous Materials Table (49 CFR Section
172.101), or by the United States Environmental Protection Agency as hazardous
substances (40 CFR pt 302) and amendments thereto, petroleum products or other
such substances, materials and wastes that are or become regulated under any
applicable local, state or federal law, including petroleum compounds, lead,
asbestos and polychlorinated biphenyls.

                                      -4-
<PAGE>

         "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.

         "INDEMNIFIED PARTIES" has the meaning assigned in Section 6.11(a).

         "INSURANCE AMOUNT" has the meaning assigned in Section 6.11(c).

         "INTELLECTUAL PROPERTY RIGHTS" has the meaning assigned in Section
5.03(y)(iii).

         "INVESTMENT ADVISERS ACT" means the Investment Advisers Act of 1940, as
amended, and the rules and regulations thereunder.

         "INVESTMENT COMPANY" means any investment company within the meaning of
the Investment Company Act, disregarding Section 3(c) thereof, that is
sponsored, organized, advised or managed by the Company or one of its
Subsidiaries or with respect to which the Company or one of its Subsidiaries
acts as "principal underwriter" as defined in the Investment Company Act
(including the Registered Funds).

         "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.

         "IRS" means the United States Internal Revenue Service.

         "LIEN" means any charge, mortgage, pledge, security interest,
restriction (other than a restriction on transfer arising under Securities
Laws), claim, lien, or encumbrance of any nature whatsoever.

         "LITIGATION" has the meaning assigned in Section 5.03(l).

         "MATERIAL ADVERSE EFFECT" means, with respect to Parent, the Company,
or the Surviving Corporation, respectively, an effect or change that,
individually or in the aggregate with such other effects or changes, is both
material and adverse with respect to the respective financial condition, results
of operations, assets or business of Parent and its Subsidiaries, the Company
and its Subsidiaries or the Surviving Corporation and its Subsidiaries, in each
case taken as a whole; PROVIDED, that "MATERIAL ADVERSE EFFECT" shall not be
deemed to include any effect resulting from this Agreement or the announcement
thereof or the effects of (i) changes of general scope in the economy or capital
markets conditions of the United States or Canada or (ii) changes in GAAP,
PROVIDED, FURTHER, that any exception in these clauses (i) and (ii) shall not
apply to any change to the extent such change disproportionately affects the
applicable party and its Subsidiaries compared to its peers.

         "MERGER" has the meaning assigned in Section 2.01(a).

         "MERGER CONSIDERATION" has the meaning assigned in Section 3.01(a).

                                      -5-
<PAGE>

         "MERGER SUBSIDIARY" has the meaning assigned in the preamble to this
Agreement.

         "MSRB" means the Municipal Securities Rulemaking Board.

         "MULTIEMPLOYER PLAN" has the meaning assigned in Section 5.03(r)(ii).

         "NASD" means the National Association of Securities Dealers, Inc.

         "NEW PLANS" has the meaning assigned in Section 6.09(b).

         "NYSE" means the New York Stock Exchange, Inc.

         "PARENT" has the meaning assigned in the preamble to this Agreement.

         "PARENT RESTRICTED STOCK" has the meaning assigned in Section 3.05(d).

         "PAYING AGENT" has the meaning assigned in Section 3.03.

         "PENSION PLAN" has, with respect to any person, the meaning assigned in
Section 5.03(r)(ii).

         "PERSON" means any individual, bank, corporation, limited liability
company, partnership, association, joint-stock company, business trust,
unincorporated organization or other entity.

         "PREVIOUSLY DISCLOSED" has the meaning assigned in Section 5.01.

         "REGISTERED FUNDS" has the meaning assigned in Section 5.03(z)(i).

         "REPORTS" has the meaning assigned in Section 5.03(g).

         "REPRESENTATIVES" means, with respect to any person, such person's
directors, officers, employees, legal, financial or other advisors or any
representatives of such legal, financial or other advisors.

         "RIGHTS" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
preemptive or other right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock or equity appreciation right or other
instrument the value of which is determined in whole or in part by reference to
the market price or value of, shares of capital stock of such person.

         "RIGHTS AGREEMENT" means the Rights Agreement of the Company, dated as
of April 30, 1997.

                                      -6-
<PAGE>

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

         "SECURITIES LAWS" means, collectively, the Securities Act, the Exchange
Act, the Investment Advisers Act, the Investment Company Act and all state
securities and "blue sky" laws and rules and regulations thereunder.

         "SELF-REGULATORY ORGANIZATION" means the NASD, the NYSE, the AMEX, the
MSRB, the Chicago Stock Exchange, The Chicago Mercantile Exchange, the Chicago
Board of Trade, the Cincinnati Stock Exchange, the Minneapolis Grain Exchange
and the New York Futures Exchange, the Philadelphia Stock Exchange or any other
commission, board, agency or body that is not a Governmental Authority but is
charged with the supervision or regulation of brokers, dealers, securities
underwriting or trading, stock exchanges, commodities exchanges, insurance
companies or agents, investment companies or investment advisers, or to the
jurisdiction or supervision of which the Company or one of its Subsidiaries is
otherwise subject.

         "STOCK OPTION AGREEMENT" has the meaning assigned in the Recitals.

         "SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.

         "SUPERIOR PROPOSAL" has the meaning assigned in Section 6.06.

         "SURVIVING CORPORATION" has the meaning assigned in Section 2.01(a).

         "TAX RETURNS" means, collectively, all returns, declarations, reports,
estimates, information returns and statements required to be filed under
federal, state, local or any foreign tax laws.

         "TAXES" means all taxes, levies or other similar assessments, however
denominated and whether imposed by a taxing authority within or without the
United States, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, goods and services, capital, transfer,
franchise, profits, license, withholding, payroll, employment, unemployment,
social security, employer health, excise, estimated, severance, stamp,
occupation, property or other taxes, custom duties, or other similar assessments
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority whether arising
before, on or after the Effective Date.

         "TREASURY SHARES" means shares of Company Common Stock, if any, owned
by the Company or any of its Subsidiaries other than shares (i) held by the
Company or any of its

                                      -7-
<PAGE>

         Subsidiaries in connection with any market-making or proprietary
         trading activity or for the account of another person, (ii) as to which
         the Company is or may be required to act in a fiduciary or similar
         capacity or (iii) held in satisfaction of a debt previously contracted.

                  1.02 INTERPRETATION. When a reference is made in this
Agreement to RECITALS, SECTIONS, ANNEXES OR SCHEDULES, such reference shall be
to a Recital or Section of, or Annex or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Whenever the words "INCLUDE," "INCLUDES" or "INCLUDING" are used in this
Agreement, they shall be deemed followed by the words "WITHOUT LIMITATION". No
rule of construction against the draftsperson shall be applied in connection
with the interpretation or enforcement of this Agreement. Whenever this
Agreement shall require a party to take an action, such requirement shall be
deemed an undertaking by such party to cause its Subsidiaries, and to use its
reasonable best efforts to cause its other Affiliates, to take appropriate
action in connection therewith.

                                   ARTICLE II

                                   THE MERGER

                  2.01 THE MERGER. At the Effective Time:

                  (a) STRUCTURE AND EFFECTS OF THE MERGER. Subject to Section
         2.04, the Merger Subsidiary will merge with and into the Company in
         accordance with the terms set forth in this Agreement (the "MERGER")
         and the separate corporate existence of the Merger Subsidiary will
         thereupon cease. The Company will be the surviving corporation in the
         Merger (sometimes hereinafter referred to as the "SURVIVING
         CORPORATION") and will continue to be governed by the laws of the State
         of Delaware, and the separate corporate existence of the Company, with
         all its rights, privileges, immunities, powers and franchises, will
         continue unaffected by the Merger, except as set forth in Section
         2.01(b). The Merger will have the effects specified in the DGCL.

                  (b) CERTIFICATE OF INCORPORATION. At the Effective Time, and
         without any further action on the part of Parent, the Merger Subsidiary
         or any holder of any shares of capital stock of the Company, the
         certificate of incorporation of the Company as in effect at the
         Effective Time shall be amended and restated to read in its entirety as
         set forth in ANNEX C, which shall be the certificate of incorporation
         of the Surviving Corporation (the "CERTIFICATE OF INCORPORATION"),
         until duly amended in accordance with the terms thereof and the DGCL.

                  (c) BYLAWS. The bylaws of the Surviving Corporation (the
         "BYLAWS") will be the bylaws of the Merger Subsidiary as in effect
         immediately prior to the Effective Time, until duly amended in
         accordance with the terms thereof and the aforementioned Certificate of
         Incorporation.

                                      -3-
<PAGE>

                  (d) DIRECTORS. The directors of the Surviving Corporation will
         be the members of the Executive Committee of the Company immediately
         prior to the Effective Time and such additional individuals as
         designated by Parent, and such directors, together with any additional
         directors as may thereafter be elected, shall hold such office until
         such time as their successors shall be duly elected or appointed and
         qualified or until their earlier death, resignation or removal in
         accordance with the Certificate of Incorporation and the Bylaws.

                  (e) OFFICERS. The officers of the Surviving Corporation will
         be the officers of the Company immediately prior to the Effective Time
         (as may be modified by the respective Employment Agreements of the
         Designated Executives), together with any additional officers as may be
         agreed upon prior to the Effective Time by the Merger Subsidiary and
         the Company, and such officers, together with any additional officers
         as may thereafter be elected, shall hold such office until such time as
         their successors shall be duly elected or appointed and qualified or
         until their earlier death, resignation or removal in accordance with
         the Certificate of Incorporation and the Bylaws.

                  2.02 EFFECTIVE TIME. The Merger shall become effective upon
the filing, in the office of the Secretary of State of the State of Delaware, of
a certificate of merger in accordance with Section 251 of the DGCL, or at such
later date and time as may be set forth in such certificate. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the parties
shall use their reasonable best efforts to cause the Merger to become effective
(a) on a date that is not later than three Business Days after the last of the
conditions set forth in Article VII (other than conditions that by their terms
cannot be satisfied until the time of Closing) shall have been satisfied or
waived in accordance with the terms of this Agreement (or, at the election of
Parent, on the last business day of the month in which such day occurs) or (b)
on such other date as the parties may agree in writing.

                  2.03 CLOSING. The closing of the Merger (the "CLOSING") shall
take place at the offices of Sullivan and Cromwell, 125 Broad Street, New York,
New York, or at such other time and place as the parties shall agree, on the
date (the "CLOSING DATE") when the Effective Time is intended to occur.

                  2.04 RESERVATION OF RIGHT TO REVISE STRUCTURE. At Parent's
election, the Merger may alternatively be structured (a) so that the Company is
merged with and into Merger Subsidiary (with Merger Subsidiary surviving) or a
directly or indirectly wholly owned subsidiary of Parent other than the Merger
Subsidiary, (b) so that a directly or indirectly wholly owned subsidiary of
Parent other than Merger Subsidiary is merged with and into the Company;
PROVIDED, HOWEVER, that no such change shall (i) alter or change the amount or
kind of the Merger Consideration or alter or change adversely the treatment of
the holders of Company Options, or (ii) materially impede or delay consummation
of the transactions contemplated by this Agreement. In the event of such an
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.

                                      -9-
<PAGE>

                                  ARTICLE III

                            CONSIDERATION; EXCHANGE

                  3.01 MERGER CONSIDERATION. Subject to the terms and conditions
of this Agreement, at the Effective Time, automatically by virtue of the Merger
and without any action on the part of Parent, the Merger Subsidiary or any
holder of shares of capital stock of the Company:

                  (a) Each share of Company Common Stock issued and outstanding
         immediately prior to the Effective Time (other than shares subject to
         Section 3.05(d), Dissenters' Shares, Treasury Shares and shares held
         directly or indirectly by Parent, except shares held by Parent or any
         of its Subsidiaries in a fiduciary capacity or in satisfaction of a
         debt previously contracted) will be converted into the right to receive
         U.S. $95.00 in cash, without interest thereon (the "MERGER
         CONSIDERATION").

                  (b) Each share of Company Common Stock that, immediately prior
         to the Effective Time, is a Treasury Share or is owned directly or
         indirectly by Parent, except shares held by Parent or any of its
         Subsidiaries in a fiduciary capacity or in satisfaction of a debt
         previously contracted, will be canceled and retired and will cease to
         exist, and no exchange or payment will be made therefor.

                  (c) At the Effective Time, each share of Common Stock, par
         value $0.01 per share, of the Merger Subsidiary issued and outstanding
         immediately prior to the Effective Time shall be converted into one
         share of common stock of the Surviving Corporation.

                  3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective
Time, holders of Company Common Stock (other than Dissenters' Shares) will cease
to be, and will have no rights as, stockholders of the Company, other than to
receive (a) any dividend or other distribution with respect to such Company
Common Stock with a record date occurring prior to the Effective Time and (b)
the Merger Consideration provided in this Article III. After the Effective Time,
there will be no transfers on the stock transfer books of the Company or the
Surviving Corporation of shares of Company Common Stock (other than Dissenters'
Shares, if applicable).

                  3.03 PAYMENT FOR SHARES. Parent shall make available or cause
to be made available to a bank appointed by Parent (which shall be reasonably
acceptable to the Company), as paying agent (the "PAYING AGENT"), amounts
sufficient in the aggregate to provide all funds necessary for the Paying Agent
to make payments of Merger Consideration to holders of shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. Promptly
after the Effective Time, Parent shall cause the Paying Agent to mail to each
person who was, at the Effective Time, a holder of record of outstanding shares
of Company Common Stock a form (mutually agreed to by Parent and the Company) of
letter of transmittal and instructions for use in effecting the surrender of the
certificates which, immediately prior to the Effective Time, represented any of
such shares in exchange for payment therefor. Upon surrender to the Paying Agent
of such certificates, together with such letter of transmittal, duly executed
and completed in accordance with the

                                      -10-
<PAGE>

instructions thereto, Parent shall promptly cause the Paying Agent to pay to
each person entitled thereto a check in the amount to which such person is
entitled, after giving effect to any required United States federal, state or
local tax withholdings. No interest will be paid or will accrue on the amount
payable upon the surrender of any such certificate. If payment is to be made to
a person other than the registered holder of the certificate surrendered, it
shall be a condition of such payment that the certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment pay any transfer or other similar taxes required by
reason of the payment to a person other than the registered holder of the
certificate surrendered or establish to the satisfaction of Parent or the Paying
Agent that such tax has been paid or is not applicable. One hundred and eighty
days following the Effective Time, Parent shall be entitled to cause the Paying
Agent to deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent that have not been disbursed to
holders of certificates formerly representing shares of Company Common Stock
outstanding on the Effective Time, and thereafter such holders shall be entitled
to look to Parent only as general creditors thereof with respect to the cash
payable upon due surrender of their certificates. Notwithstanding the foregoing,
neither the Paying Agent nor any party hereto shall be liable to any holder of
certificates formerly representing shares of Company Common Stock for any amount
paid to a public official pursuant to any applicable abandoned property, escheat
or similar law.

                  3.04 DISSENTING STOCKHOLDERS. Dissenters' Shares shall be
purchased and paid for in accordance with Section 262 of the DGCL. The Company
shall give Parent (a) prompt notice of any written demands for fair value
received by the Company, withdrawals of such demands, and any other related
instruments served pursuant to the DGCL and received by the Company and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for fair value under the DGCL. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for fair value for Dissenters' Shares or offer to settle, or settle, any
such demands.

                  3.05 OPTIONS; RESTRICTED STOCK. (a) Prior to the Effective
Time, the Company shall use reasonable best efforts to take such actions as may
be necessary, including obtaining consents from option holders to the extent
required, such that at the Effective Time each Company Option, other than the
Company Options described in paragraphs (b) and (c), whether or not then
exercisable, shall be canceled and only entitle the holder thereof, upon
surrender thereof, to receive an amount in cash equal to the difference between
the Merger Consideration and the exercise price per share of Common Stock of
such Company Option multiplied by the number of shares of Common Stock
previously subject to such Company Option.

                  (b) At the Effective Time, each Company Option that was
granted by the Company on or after January 28, 2000, and that is outstanding
immediately prior to the Effective Time, whether vested or unvested, will be
assumed by Parent. Each Company Option so assumed by Parent shall continue to
have, and be subject to, the same terms and conditions as set forth in the
Company Stock Plan (and any agreement) under which it was granted as in
existence immediately prior to the Effective Time, except that (i) each Company
Option shall be exercisable, when vested, for that number of whole shares of
common stock of Parent ("Parent

                                      -11-
<PAGE>

Common Stock") equal to the product of the number of shares of Company Common
Stock covered by the Company Option multiplied by a fraction, the numerator of
which is U.S. $95.00 and the denominator of which is the average for the five
trading days immediately preceding the Closing Date of the closing price of
Parent Common Stock on the New York Stock Exchange (such fraction, the "Exchange
Ratio"), provided that any fractional shares of Parent Common Stock resulting
from such multiplication shall be rounded to the nearest whole share; and (ii)
the exercise price per share of Parent Common Stock (expressed in U.S. dollars)
shall be equal to the exercise price per share of Company Common Stock divided
by the Exchange Ratio, provided that such exercise price shall be rounded to the
nearest cent.

                  (c) Each Company Option that was granted to Irving Weiser
pursuant to the option award agreement between Mr. Weiser and the Company, dated
January 4, 2000 shall be assumed by Parent in accordance with paragraph (b)
above, and shall be exerciseable according to the terms of the Employment
Agreement between Mr. Weiser and the Company dated as of the date hereof.

                  (d) The Company and Parent shall take such action as may be
necessary to cause each share of restricted Company Common Stock ("COMPANY
RESTRICTED STOCK") issued in calendar year 2000 to remain outstanding until, and
to be automatically converted at, the Effective Time into a number of shares of
restricted Parent Common Stock ("PARENT RESTRICTED STOCK") equal to the product
of one (1) multiplied by the Exchange Ratio (and rounded to the nearest whole
number of shares. Such shares of Parent Restricted Stock shall otherwise be
subject to the same terms and conditions as such Company Restricted Stock,
including terms and conditions pursuant to the related Company Stock Plans and
agreements, which shall be assumed by Parent as of the Effective Time, under
which they were issued. At the Effective Time, all references in the related
Company Stock Plans and agreements thereunder to the Company shall be deemed to
refer to Parent.

                                   ARTICLE IV

                       ACTIONS PENDING THE EFFECTIVE TIME

                  4.01 FORBEARANCES OF THE COMPANY. Except as expressly
contemplated by this Agreement and the Stock Option Agreement or as Previously
Disclosed, without the prior written consent of Parent, during the period from
the date of this Agreement to the Effective Time, the Company will not, and will
cause each of its Subsidiaries not to:

                  (a) ORDINARY COURSE. Conduct the business of the Company and
         its Subsidiaries other than in the ordinary and usual course consistent
         with past practice, fail to use reasonable best efforts consistent with
         the terms and provisions of this Agreement to preserve intact its
         business organizations, operations and assets and maintain its rights,
         franchises and

                                      -12-
<PAGE>

         existing relations with clients, customers, suppliers, counterparties,
         employees and business associates; subject to the restriction in
         Section 4.01(m)(ii), engage in any material new activities or lines of
         business or make any material changes to its existing activities or
         lines of business; or take any action which would reasonably be
         expected to have a material adverse effect upon the Company's ability
         to perform any of its material obligations under this Agreement or the
         Stock Option Agreement.

                  (b) CAPITAL STOCK. Other than pursuant to Rights Previously
         Disclosed and outstanding on the date hereof or pursuant to the Stock
         Option Agreement, (i) issue, sell or otherwise permit to become
         outstanding, or authorize the creation of, any additional shares of
         capital stock of the Company or any of its Subsidiaries or any Rights
         in respect thereof, (ii) enter into any agreement with respect to the
         foregoing, or (iii) permit any additional shares of capital stock of
         the Company or any of its Subsidiaries to become subject to new grants
         of employee or director stock options, other Rights or similar
         stock-based employee rights.

                  (c) DIVIDENDS, ETC. (i) Make, declare, pay or set aside for
         payment any dividend (other than dividends from wholly owned
         Subsidiaries to the Company or another wholly owned Subsidiary of the
         Company, and regular quarterly cash dividends on the Company Common
         Stock at a rate not exceeding U.S. $0.22 per share per calendar
         quarter) or other distribution (whether in stock, cash or property) on
         or in respect of, or declare or make any distribution on, any shares of
         capital stock of the Company or any of its Subsidiaries or (ii)
         directly or indirectly adjust, split, combine, redeem, reclassify,
         purchase or otherwise acquire, any shares of its capital stock.

                  (d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into,
         amend, modify or renew any employment, consulting, severance or similar
         contract, agreement or arrangement or any other agreement with any
         director, officer or employee of the Company or any of its
         Subsidiaries, or grant any salary or wage increase or increase any
         employee benefit (including incentive or bonus payments), except (i)
         for changes that are required by applicable law, (ii) to satisfy
         Previously Disclosed contractual obligations existing as of the date
         hereof, (iii) for merit-based or annual salary increases in the
         ordinary course of business and in accordance with past practice or
         (iv) for employment arrangements for, or grants of awards to, newly
         hired employees in the ordinary and usual course of business consistent
         with past practice provided that total annual guaranteed compensation
         for such newly-hired employee shall not exceed U.S. $500,000.

                  (e) BENEFIT PLANS. Enter into, establish, adopt or amend or
         communicate any intention to take such action (except (i) as may be
         required by applicable law or (ii) to satisfy Previously Disclosed
         contractual obligations existing as of the date hereof) any pension,
         retirement, stock option, stock purchase, savings, profit sharing,
         deferred compensation, consulting, bonus, group insurance or other
         employee benefit, incentive or welfare contract, plan or arrangement,
         or any trust agreement (or similar arrangement) related thereto, in
         respect of any director, officer or employee of the Company or any of
         its Subsidiaries, or take

                                      -13-
<PAGE>

         any action to accelerate the vesting or exercisability of stock
         options, restricted stock or other compensation or benefits payable
         thereunder.

                  (f) DISPOSITIONS. Except (i) as Previously Disclosed or (ii)
         for sales of securities or other investments or assets in the ordinary
         and usual course of business consistent with past practice, sell,
         transfer, mortgage, encumber or otherwise dispose of or permit the
         creation of any Lien in respect of or discontinue any material amount
         of its assets, business or properties.

                  (g) ACQUISITIONS. Except (i) as Previously Disclosed or (ii)
         in the ordinary and usual course of business consistent with past
         practice, acquire any assets, business, or properties of any other
         entity.

                  (h) CONSTITUTIVE DOCUMENTS. Amend the Constitutive Documents
         of the Company or any of its Subsidiaries.

                  (i) ACCOUNTING METHODS. Implement or adopt any change in its
         accounting principles, practices or methods, other than as may be
         required by GAAP.

                  (j) TAX MATTERS. Make or change any material Tax election,
         change any method of Tax accounting, file any income Tax Return, settle
         any audit, examination or deficiency Litigation with respect to a
         material amount of Taxes, request any private letter or similar Tax
         ruling or enter into any closing agreement with any taxing authority
         with respect to a material amount of Taxes; provided, however, that the
         Company may change a method of tax accounting if it obtains the prior
         written consent of Parent (which consent shall not be unreasonably
         withheld and shall be granted if such change is required by a change in
         applicable law).

                  (k) CONTRACTS. Except in the ordinary and usual course of
         business consistent with past practice, enter into or terminate any
         material Contract or amend or modify in any material respect any of its
         existing material Contracts.

                  (l) CLAIMS. Settle any claim, action or proceeding, except for
         any claim, action or proceeding involving solely money damages in an
         amount, individually and in the aggregate for all such settlements, not
         more than U.S. $250,000 and which would not reasonably be expected to
         establish an adverse precedent or basis for subsequent settlements or
         require material changes in business practices.

                  (m) ADVERSE ACTIONS. (i) Knowingly take any action that would
         reasonably be expected to (x) result in any of the Company's
         representations or warranties set forth in this Agreement (subject to
         the standard set forth in Section 5.02) or the Stock Option Agreement
         being or becoming untrue at any time at or prior to the Effective Time
         or (y) result in any of the conditions to the Merger set forth in
         Article VII not being satisfied except, in each case, as may be
         required by applicable law, or (ii) engage in any new line of business
         or make any

                                      -14-
<PAGE>

         acquisition that would not be permissible for a United States financial
         holding company (as defined in the Bank Holding Company Act of 1956, as
         amended) or would subject Parent, the Company or any Subsidiary of
         either to material regulation by a Governmental Authority that does not
         presently regulate such company or to regulation by a Governmental
         Authority that is materially different from current regulation.

                  (n) INDEBTEDNESS. Incur any indebtedness for borrowed money
         other than in the ordinary and usual course of business consistent with
         past practice.

                  (o) FUND ACTION. Except as and to the extent required, based
         upon the written advice of outside counsel, in the exercise of the
         fiduciary obligations of the Company or one of its Subsidiaries to any
         Investment Company, request that any action be taken by any Fund Board,
         other than (i) routine actions that could not, individually or in the
         aggregate, reasonably be expected to have a Material Adverse Effect on
         the Company or any Investment Company or (ii) actions Previously
         Disclosed.

                  (p) COMMITMENTS. Agree, commit to or enter into any agreement
         to take any of the actions referred to in Section 4.01 (a) through (n).

                  4.02 FORBEARANCES OF PARENT. Except as expressly contemplated
by this Agreement and the Stock Option Agreement, without the prior written
consent of the Company, Parent will not, and will cause each of its Subsidiaries
not to, knowingly take any action which could reasonably be expected to result
in (a) any of its representations and warranties set forth in this Agreement
(subject to the standard set forth in Section 5.02) or the Stock Option
Agreement being or becoming untrue in any material respect at any time at or
prior to the Effective Time, (b) any of the conditions to the Merger set forth
in Article VII not being satisfied, except, in each case, as may be expressly
required by applicable law.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

                  5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, the
Company has delivered to Parent, and Parent has delivered to the Company, a
schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth, among other
things, items the disclosure of which is necessary or appropriate (subject to
the standard set forth in Section 5.02) either (a) in response to an express
informational requirement contained in or requested by a provision hereof or (b)
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04, respectively, or to one or more of its covenants contained
in Article IV; PROVIDED that the mere inclusion of an item in a Disclosure
Schedule as an exception to a representation or warranty shall not be deemed an
admission by the disclosing party that such item (or any undisclosed item or
information of comparable or greater significance) represents a material
exception or fact, event or circumstance

                                      -15-
<PAGE>

with respect to the Company or Parent, respectively. Information set forth in a
Disclosure Schedule, whether in response to an express informational requirement
or as an exception to one or more representations or warranties or one or more
covenants, in each case that is contained in a correspondingly enumerated
section of such Disclosure Schedule, is described herein as "PREVIOUSLY
DISCLOSED " and each of Parent and the Company hereby represents and warrants
that such information is true and correct.

                  5.02 STANDARD. No disclosure contemplated by Section 5.01 or
representation or warranty of the Company or Parent contained in Section 5.03
(other than Sections 5.03(b), 5.03(c)(i) (the (A) first sentence thereof and (B)
the third, fourth and fifth sentences thereof, but, in the case of (B), only in
respect of Dain Rauscher Incorporated), 5.03(e) and 5.03(i)) or 5.04 (other than
Sections 5.04(b) and 5.04(e)) shall be deemed untrue or incorrect for any
purpose under this Agreement, and no party hereto shall be deemed to have
breached a particular representation or warranty or to have made any
misrepresentation, as a consequence of the existence of any fact, event, or
circumstance that should have been disclosed as an exception to a particular
representation or warranty, unless such fact, event or circumstance, whether
individually or taken together with all other facts, events or circumstances
that should have been but were not so disclosed (whether or not as exceptions)
with respect to any such particular representation or warranty contained in
Section 5.03 or 5.04, results or would reasonably be expected to result in a
Material Adverse Effect with respect to the Company, in the case of Section
5.03, or Parent, in the case of Section 5.04, or would materially impair the
ability of the parties to consummate the Merger in a timely manner.

                  5.03 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
Previously Disclosed in a section of its Disclosure Schedule corresponding to
the relevant paragraph below, the Company hereby represents and warrants to
Parent and the Merger Subsidiary as follows:

                  (a) ORGANIZATION, STANDING AND AUTHORITY. The Company has been
         duly incorporated and is an existing corporation in good standing under
         the laws of the State of Delaware. The Company is duly qualified to do
         business and is in good standing in the States of the United States and
         each foreign jurisdiction where its ownership or leasing of property or
         the conduct of its business requires it to be so qualified. Each of the
         Company and its Subsidiaries has in effect all federal, state, local,
         and foreign governmental authorizations necessary for it to own or
         lease its properties and assets and to carry on its business as it is
         now conducted. Dain Rauscher Incorporated is duly registered, qualified
         to do business and in good standing as a broker-dealer with the SEC,
         and is a member in good standing of all Self-Regulatory Organizations
         to which it is subject, and a list of such Self-Regulatory
         Organizations has been delivered to Parent.

                  (b) CAPITAL STOCK. As of the date of this Agreement, the
         Company has (i) 60,000,000 authorized shares of Company Common Stock,
         of which 12,921,865 shares were outstanding as of September 27, 2000
         (along with the associated rights to purchase Series A Junior
         Participating Preferred Stock, par value $1.00 per share) and 373,918
         shares are held as Treasury Shares as of September 27, 2000, (ii)
         2,000,000 authorized shares of $1

                                      -16-
<PAGE>

         Par Value Preferred Stock, par value $1.00 per share, of which no
         shares are issued and outstanding, (iii) 1,940 authorized shares of 7%
         Convertible Preferred Stock, par value $100.00 per share, of which no
         shares are issued and outstanding, (iv) 500,000 authorized shares of
         $16 Par Value Preferred Stock, par value $16.00 per share, of which no
         shares are issued and outstanding and (v) 200,000 authorized shares of
         Series A Junior Participating Preferred Stock, par value $1.00 per
         share, of which no shares are issued and outstanding. All of the
         outstanding shares of Company Common Stock have been duly authorized
         and are validly issued, fully paid and nonassessable, and have not been
         issued in violation of any preemptive rights. Set forth on the
         Company's Disclosure Schedule is a list of each Compensation and
         Benefit Plan under which any shares of capital stock of the Company or
         any Rights with respect thereto have been or may be awarded or issued
         ("COMPANY STOCK PLANS"). As of September 26, 2000, the Company has
         outstanding Company Options representing the right to acquire 2,547,528
         shares of Company Common Stock. Except as described in the immediately
         preceding sentence, the Company has no Company Common Stock authorized
         for issuance pursuant to any Company Stock Plans. Except as described
         in this Section 5.03(b), there are no outstanding Rights of any kind
         with respect to the Company, and no securities or obligations
         evidencing such Rights are authorized, issued or outstanding. The
         shares of Company Common Stock issuable pursuant to the Stock Option
         Agreement have been duly authorized for issuance by the Company and,
         upon any issuance of such shares in accordance with the terms of the
         Stock Option Agreement, such shares will be duly authorized, validly
         issued, fully paid and nonassessable and free and clear of any Liens.
         The Company does not have outstanding any bonds, debentures, notes or
         other obligations the holders of which have the right to vote (or which
         are convertible into or exercisable for securities having the right to
         vote) with the stockholders of the Company on any matter.

                  (c) Subsidiaries.

                           (i) Exhibit 21 to the Company's Annual Report on Form
                  10-K for the fiscal year ended December 31, 1999 includes all
                  the Subsidiaries of the Company which as of the date hereof
                  are Significant Subsidiaries. The Company has Previously
                  Disclosed a list of all its Subsidiaries, including the states
                  in which such Subsidiaries are organized, a brief description
                  of such Subsidiaries' principal activities, and if any of such
                  Subsidiaries is not wholly owned by the Company or one of its
                  Subsidiaries, the percentage owned by the Company or any such
                  Subsidiary and the names and percentage ownership by any other
                  person. No equity securities of any of the Company's
                  Subsidiaries are or may become required to be issued (other
                  than to the Company or a wholly owned Subsidiary of the
                  Company) by reason of any Rights with respect thereto. There
                  are no Contracts by which any of the Company's Subsidiaries is
                  or may be bound to sell or otherwise issue any shares of its
                  capital stock, and there are no Contracts relating to the
                  rights of the Company to vote or to dispose of such shares.
                  All of the shares of capital stock of each of the Company's
                  Subsidiaries are fully paid and nonassessable and subject to
                  no preemptive rights or

                                      -17-
<PAGE>

                  Rights and, except as Previously Disclosed, are owned by the
                  Company or a Company Subsidiary free and clear of any Liens.
                  Each of the Company's Subsidiaries is in good standing under
                  the laws of the jurisdiction in which it is organized, and is
                  duly qualified to do business and in good standing in each
                  jurisdiction where its ownership or leasing of property or the
                  conduct of its business requires it to be so qualified.

                           (ii) The Company has Previously Disclosed, as of the
                  date hereof, a list of all equity securities it or one of its
                  Subsidiaries holds involving, in the aggregate, beneficial
                  ownership or control by the Company or any such Subsidiary of
                  5% or more of any class of the issuer's voting securities or
                  25% or more of any class of the issuer's securities, including
                  a description of any such issuer and the percentage of the
                  issuer's voting and/or non-voting securities and, as of the
                  Effective Time, no additional persons would need to be
                  included on such a list. The Company has Previously Disclosed
                  a list, as of the date hereof, of all partnerships, limited
                  liability companies, joint ventures or similar entities, in
                  which it owns or controls an equity, partnership or membership
                  interest, directly or indirectly, and the nature and amount of
                  each such interest, and as of the Effective Time, no
                  additional persons would need to be included on such a list.

                  (d) CORPORATE POWER. The Company and each of its Subsidiaries
         has the corporate power and authority to carry on its business as it is
         now being conducted and to own or lease all its properties and assets.
         The Company has made available to Parent a brief description of each
         line of business in which the Company or any Company Subsidiary is
         engaged.

                  (e) CORPORATE AUTHORITY AND ACTION.

                           (i) The Company has the requisite corporate power and
                  authority, and has taken all corporate action necessary, in
                  order to authorize the execution and delivery of, and the
                  performance of its obligations under, this Agreement and the
                  Stock Option Agreement and, subject only to obtaining the
                  requisite adoption of this Agreement by the holders of a
                  majority of the shares of Company Common Stock entitled to
                  vote at the Company Stockholder Meeting (the "COMPANY
                  REQUISITE VOTE"), to adopt the plan of merger contained in
                  this Agreement and, in accordance therewith, to consummate the
                  Merger. Each of this Agreement, the Stock Option Agreement and
                  each Employment Agreement constitutes the valid and legally
                  binding agreement of the Company, enforceable against the
                  Company in accordance with its terms, subject to bankruptcy,
                  insolvency, reorganization, moratorium, fraudulent transfer
                  and similar laws of general applicability relating to or
                  affecting creditors' rights and to general equity principles
                  (the "BANKRUPTCY AND EQUITY EXCEPTION").

                                      -18-
<PAGE>

                           (ii) The Company has taken all action necessary in
                  order to exempt this Agreement, the Stock Option Agreement and
                  the Merger and the other transactions contemplated hereby and
                  thereby from, and this Agreement, the Stock Option Agreement
                  and the Merger and the other transactions contemplated hereby
                  and thereby are exempt from, (x) the requirements of any
                  "moratorium," "control share," "fair price" or other
                  antitakeover laws and regulations of the State of Delaware,
                  including Section 203 of the DGCL, and of any other State and
                  (y) the provisions of Article Fourteenth of the Company's
                  certificate of incorporation with respect to "Business
                  Combinations" and any other applicable provisions of the
                  Company's Constitutive Documents.

                  (f) GOVERNMENTAL FILINGS; NO VIOLATIONS. Other than those (i)
         referred to in Section 2.02, (ii) under the HSR Act, the Exchange Act
         and the Securities Act, (iii) required to be made pursuant to the
         European Community Merger Control Regulation, (iv) required to be made
         with Self-Regulatory Organizations and Governmental Authorities
         regulating brokers, dealers, investment advisors, investment companies,
         banks, trust companies and insurance companies, (v) required to be made
         pursuant to state insurance or banking and trust company regulations
         and (vi) such other filings and/or notices set forth in the Company's
         Disclosure Schedule, no notices, reports, applications or other filings
         are required to be made by the Company or any of its Subsidiaries with,
         nor are any consents, registrations, approvals, permits or
         authorizations required to be obtained by any of them from, any
         Governmental Authority in connection with the execution and delivery
         of, and the performance of its obligations under, this Agreement and
         the Stock Option Agreement by the Company and the consummation by the
         Company of the Merger and the other transactions contemplated hereby
         and thereby. Subject, in the case of clause (A) below, to obtaining the
         Company Requisite Vote, and the making or obtaining of all filings,
         notices, applications, consents, registrations, approvals, permits or
         authorizations with or of any relevant Governmental Authority with
         respect to the Merger and the other transactions contemplated hereby
         and by the Stock Option Agreement, the execution, delivery and
         performance by the Company of this Agreement and the Stock Option
         Agreement and the consummation by the Company of the Merger and the
         other transactions contemplated hereby and thereby, do not and will not
         (A) constitute a breach or violation of, or a default under, or cause
         or allow the acceleration or creation of a Lien (with or without the
         giving of notice, passage of time or both) pursuant to, any law, rule
         or regulation or any judgment, decree, order, governmental or
         non-governmental permit or license, or any Contract of it or of any of
         its Subsidiaries or to which the Company or any of the Company's
         Subsidiaries or its or their properties is subject or bound or (B)
         constitute a breach or violation of, or a default under, the
         Constitutive Documents of the Company or any of its Subsidiaries or (C)
         require any consent or approval under any such law, rule, regulation,
         judgment, decree, order, governmental or non-governmental permit or
         license or the consent or approval of any other party to any such
         Contract.

                                      -19-
<PAGE>

                  (g) REPORTS. The Company and its Subsidiaries have timely
         filed all reports, registrations, statements and other filings,
         together with any amendments required to be made with respect thereto,
         that were required to be filed since December 31, 1996 with (i) the SEC
         or the CFTC, (ii) any applicable federal, state, local or foreign
         Governmental Authorities or (iii) any Self-Regulatory Organization (all
         such reports and statements, including the financial statements,
         exhibits and schedules thereto, being collectively referred to herein
         as the "REPORTS"), including without limitation, all reports,
         registrations, statements and filings required under the Securities
         Laws. Each of the Reports complied with the statutes, rules,
         regulations and orders enforced or promulgated by the Governmental
         Authority with which they were filed and did not contain any untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading.

                  (h) COMPANY SEC DOCUMENTS AND FINANCIAL STATEMENTS.

                           (i) The Company has made available to Parent copies
                  of each registration statement, offering circular, report,
                  definitive proxy statement or information statement under the
                  federal Securities Laws filed, used or circulated by it or any
                  of its Subsidiaries with respect to periods since December 31,
                  1996 through the date of this Agreement and will promptly make
                  available each such registration statement, offering circular,
                  report, definitive proxy statement or information statement
                  filed, used or circulated after the date hereof (collectively,
                  the "COMPANY SEC DOCUMENTS"), each in the form (including
                  exhibits and any amendments thereto) filed with the SEC (or if
                  not so filed, in the form used or circulated). As of their
                  respective dates (giving effect to any amendments or
                  modifications if filed on or prior to the date of this
                  Agreement), each of the Company SEC Documents, including the
                  financial statements, exhibits and schedules thereto, filed,
                  used or circulated prior to the date hereof complied (and each
                  of the Company SEC Documents filed after the date of this
                  Agreement, will comply) as to form with applicable Securities
                  Laws and did not (or in the case of reports, statements, or
                  circulars filed after the date of this Agreement, will not) as
                  of its date of filing or mailing to stockholders contain any
                  untrue statement of a material fact or omit to state a
                  material fact required to be stated therein or necessary to
                  make the statements made therein, in the light of the
                  circumstances under which they were made, not misleading.

                           (ii) Each of the Company's consolidated statements of
                  financial condition or balance sheets included in or
                  incorporated by reference into the Company SEC Documents,
                  including the related notes and schedules, fairly presented
                  (or, in the case of Company SEC Documents filed after the date
                  of this Agreement, will fairly present) in all material
                  respects the consolidated financial position of the Company
                  and its Subsidiaries as of the date of such statement of
                  financial condition or balance sheet and each of the
                  consolidated statements of income, cash flows and

                                      -20-
<PAGE>

                  stockholders' equity included in or incorporated by reference
                  into Company SEC Documents, including any related notes and
                  schedules (collectively, the foregoing financial statements
                  and related notes and schedules are referred to as the
                  "COMPANY FINANCIAL STATEMENTS"), fairly presented (or, in the
                  case of those contained in Company SEC Documents filed after
                  the date of this Agreement, will fairly present) in all
                  material respects the consolidated results of operations, cash
                  flows and stockholders' equity, as the case may be, of the
                  Company and its Subsidiaries for the periods set forth therein
                  (subject, in the case of unaudited statements, to normal
                  year-end audit adjustments), in each case in accordance with
                  GAAP consistently applied during the periods involved (except
                  as may be noted therein and except, in the case of unaudited
                  statements, for the absence of notes).

                  (i) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
         the Company Financial Statements or the Company SEC Documents filed
         prior to the date hereof, none of the Company or its Subsidiaries has
         any obligation or liability (contingent or otherwise), that,
         individually or in the aggregate, would reasonably be expected to have
         a Material Adverse Effect on the Company.

                  (j) ABSENCE OF CERTAIN CHANGES. Except as expressly
         contemplated by this Agreement or the Stock Option Agreement or the
         transactions contemplated hereby or thereby and except as disclosed in
         the Company SEC Documents filed prior to the date hereof, since
         December 31, 1999, the Company and its Subsidiaries have conducted
         their business only in the ordinary and usual course consistent with
         past practice, and there has not been (i) any Material Adverse Effect
         on the Company or, to the knowledge of the Company, any development or
         combination of developments which would reasonably be expected to have
         a Material Adverse Effect on the Company, (ii) any declaration, setting
         aside or payment of any dividend or other distribution (whether in
         cash, stock or property) with respect to any of the Company's capital
         stock, other than regular quarterly cash dividends of U.S. $0.22 per
         share on the Company's Common Stock, (iii) any split, dividend,
         combination, recapitalization or similar transaction with respect to
         any of the Company's capital stock or any issuance or the authorization
         of any issuance of any other securities in respect of, in lieu of or in
         substitution for shares of the Company's capital stock, except for
         issuances of Company Common Stock upon the exercise of Company Options
         awarded prior to the date hereof in accordance with their terms, (iv)
         (A) any granting by the Company or any of its Subsidiaries to any
         current or former director, executive officer or other key employee of
         the Company or its Subsidiaries of any increase in compensation, bonus
         or other benefits, except for normal increases in the ordinary and
         usual course of business and consistent with past practice or as was
         required under any employment agreement in effect as of June 30, 2000,
         (B) any granting by the Company or any of its Subsidiaries to any such
         current or former director, executive officer or key employee of any
         increase in severance or termination pay, except in the ordinary and
         usual course of business and consistent with past practice, or (C) any
         entry by the Company or any of its Subsidiaries into, or any amendments
         of, any Compensation and Benefit Plan, other than in the ordinary and
         usual course of

                                      -21-
<PAGE>

         business and consistent with past practice, (v) except as required by a
         change in GAAP, any change in accounting methods, principles or
         practices by the Company materially affecting its assets, liabilities
         or business or (vi) any tax election that would be material to the
         Company or any of its tax attributes or any settlement or compromise of
         any material income tax liability.

                  (k) PROPERTIES; SECURITIES. Except as specifically reserved
         against or otherwise disclosed in the Company Financial Statements and
         except for those properties and assets that have been sold or otherwise
         disposed of in the ordinary and usual course of business consistent
         with past practice, the Company and its Subsidiaries have good and
         marketable title, free and clear of all Liens, to all of the properties
         and assets, tangible and intangible, reflected in the Company Financial
         Statements as being owned by the Company or its Subsidiaries as of the
         dates thereof. The Company and its Subsidiaries do not, directly or
         indirectly, control any real property not used in the ordinary and
         usual course of their business. All buildings and all fixtures,
         equipment, and other property and assets which are held under leases or
         subleases by any of the Company or its Subsidiaries are held under
         valid leases or subleases enforceable in accordance with their
         respective terms. Each of the Company and its Subsidiaries has good and
         marketable title to all securities held by it (except securities sold
         under repurchase agreements or held in any fiduciary or agency
         capacity), free and clear of any Lien, except to the extent such
         securities are pledged in the ordinary and usual course of business
         consistent with prudent business practices to secure obligations of the
         Company or any of its Subsidiaries. Such securities are properly valued
         on the books of the Company or its Subsidiaries in accordance with
         GAAP.

                  (l) LITIGATION; REGULATORY ACTION. Except as disclosed in the
         Company SEC Documents filed before the date of this Agreement, no
         litigation, proceeding, investigation or controversy ("LITIGATION")
         before any court, arbitrator, mediator or Governmental Authority is
         pending against or involves the Company or any of its Subsidiaries,
         and, to the Company's knowledge, no such Litigation has been
         threatened; neither the Company nor any of its Subsidiaries or
         properties is a party to or is subject to any order, decree, agreement,
         memorandum of understanding or similar arrangement with, or a
         commitment letter or similar submission to, any Governmental Authority
         (including the SEC, the CFTC and the Federal Trade Commission) or
         Self-Regulatory Organization charged with the supervision or regulation
         of broker-dealers, securities underwriting or trading, stock exchanges,
         commodities exchanges, investment companies, investment advisers or
         insurance agents and brokers or the supervision or regulation of the
         Company or any of its Subsidiaries or any of the other businesses they
         conduct; and neither the Company nor any of the Company Subsidiaries
         has been notified by or received another communication from any such
         Governmental Authority or Self-Regulating Organization to the effect
         that such Governmental Authority or Self-Regulatory Organization is
         contemplating issuing or requesting (or is considering the
         appropriateness of issuing or requesting) any such order, decree,
         agreement, memorandum of understanding, commitment letter or similar
         submission. Previously Disclosed is a true and complete list, as of the
         date hereof, of all Litigation

                                      -22-
<PAGE>

         pending or, to the Company's knowledge, threatened arising out of any
         state of facts relating to the sale of investment, insurance or hedging
         products by the Company, the Company Subsidiaries or, to the knowledge
         of the Company, any employees thereof (including, without limitation,
         equity or debt securities, mutual funds, insurance contracts,
         annuities, partnership and limited partnership interests, interests in
         real estate, investment banking services, securities underwritings in
         which the Company or any of its Subsidiaries was a manager, co-manager,
         syndicate member or distributor, derivatives contracts or structured
         notes).

                  (m) COMPLIANCE WITH LAWS. Each of the Company and its
         Subsidiaries, and, to the knowledge of the Company, their respective
         officers and employees:

                           (i) in the conduct of business, including its sales
                  and marketing practices, is in compliance with all applicable
                  federal, state, local and foreign statutes, laws, regulations,
                  ordinances, rules, judgments, suitability requirements, orders
                  or decrees applicable thereto or to the employees conducting
                  such businesses, and with the applicable rules of all
                  Self-Regulatory Organizations to which it is subject;

                           (ii) has all permits, licenses, authorizations,
                  orders and approvals of, and has made or obtained all filings,
                  notices, applications, consents, registrations, approvals,
                  permits or authorizations with, to or of all Governmental
                  Authorities and Self-Regulatory Organizations that are
                  required in order to permit it to own and operate its
                  businesses as presently conducted; all such permits, licenses,
                  authorizations, orders and approvals are in full force and
                  effect and, to the Company's knowledge, no suspension or
                  cancellation of any of them is threatened or reasonably
                  likely; and all such filings, applications and registrations
                  are current;

                           (iii) has, since December 31, 1997, received no
                  written notification or, to the knowledge of the Company,
                  other communication from any Governmental Authority or
                  Self-Regulatory Organization (A) asserting that it is not in
                  compliance with any of the statutes, rules, regulations, or
                  ordinances which such Governmental Authority or
                  Self-Regulatory Organization enforces, or has otherwise
                  engaged in any unlawful business practice, (B) threatening to
                  revoke any license, franchise, permit, seat on any stock or
                  commodities exchange, or governmental authorization, (C)
                  requiring it (including any of its directors or controlling
                  persons) to enter into any order, decree, agreement,
                  memorandum of understanding or similar arrangement (or
                  requiring the board of directors thereof to adopt any
                  resolution or policy) or (D) restricting or disqualifying the
                  activities of the Company or any of its Subsidiaries (except
                  for restrictions generally imposed by rule, regulation or
                  administrative policy on brokers, dealers or investment
                  advisors generally);

                           (iv) is not aware of any pending or threatened
                  investigation, review or disciplinary proceedings by any
                  Governmental Authority or Self-Regulatory

                                      -23-
<PAGE>

                  Organization against the Company, any of its Subsidiaries or
                  any officer, director or employee thereof (including any
                  investigations, reviews or proceedings relating to sales or
                  marketing practices);

                           (v) is not, nor is any Affiliate of it, subject to a
                  "statutory disqualification" as defined in Section 3(a)(39) of
                  the Exchange Act and is not subject to a disqualification that
                  would be a basis for censure, limitations on the activities,
                  functions or operations of, or suspension or revocation of the
                  registration of any broker-dealer Subsidiary as a
                  broker-dealer, municipal securities dealer, government
                  securities broker or government securities dealer under
                  Section 15, Section 15B or Section 15C of the Exchange Act,
                  and there is no reasonable basis for, nor has the Company been
                  notified of, any proceeding or investigation, whether
                  preliminary or otherwise, that would reasonably be expected to
                  result in, any such censure, limitations, suspension or
                  revocation;

                           (vi) is not required to be registered as an
                  investment company;

                           (vii) is not acting as the "sponsor" of a
                  "broker-dealer trading program", as such terms are defined in
                  Rule 17a-23 under the Exchange Act; and

                           (viii) in the conduct of its business with respect to
                  employee benefit plans subject to Title I of ERISA, it has not
                  (A) breached any applicable fiduciary duty under Part 4 of
                  Title I of ERISA which, individually or in the aggregate,
                  would reasonably be expected to subject it to material
                  liability under Sections 405 or 409 of ERISA, (B) engaged in a
                  "prohibited transaction" within the meaning of Section 406 of
                  ERISA or Section 4975(c) of the Code which, individually or in
                  the aggregate, would reasonably be expected to subject it to
                  material liability or Taxes under Sections 409 or 502(i) of
                  ERISA or Section 4975(a) of the Code or (C) engaged in any
                  conduct that would constitute a crime or violation listed in
                  Section 411 of ERISA which would reasonably be expected to
                  preclude the Company from providing services to any such plan.

                  (n) CLIENTS.

                           (i) The Company and its Subsidiaries are in
                  compliance with the terms of each investment advisory Contract
                  with each Client, and each such Contract is in full force and
                  effect with respect to the applicable Client. There are no
                  material disputes pending or threatened with any Client or
                  with any former Client. The Company has made available to
                  Parent true and complete copies of all material advisory,
                  sub-advisory and similar agreements with any Clients.

                                      -24-
<PAGE>

                           (ii) The Company shall as promptly as practicable
                  after the date hereof deliver to Parent a list of each Client
                  that is subject to regulation as an investment company under
                  the Investment Company Act.

                           (iii) Each extension of credit by the Company or any
                  of its Subsidiaries to any Client is in compliance with
                  Federal Reserve Board Regulation T or any substantially
                  similar regulation of any Governmental Authority.

                  (o) REGISTRATIONS.

                           (i) The Company, each of its Subsidiaries and each of
                  its or their officers and employees who are required to be
                  registered as a broker-dealer, an investment adviser, a
                  registered representative, an insurance agent, a commodity
                  trading advisor, a commodity pool operator, a futures
                  commission merchant, an introducing broker, a transfer agent
                  or a sales person (or in a similar capacity) under any United
                  States federal, state, local or foreign statutes, laws, rules
                  or regulations, including with the SEC, the CFTC, the
                  securities commission or similar authority or insurance
                  authority of any state or foreign jurisdiction or any
                  Self-Regulatory Organization, are duly registered as such and
                  such registrations are in full force and effect. All United
                  States Federal, state, local and foreign registration
                  requirements have been complied with and such registrations as
                  currently filed, and all periodic reports required to be filed
                  with respect thereto, are accurate and complete.

                           (ii) The Company has made available to Parent true
                  and correct copies of (A) each Form G-37/G-38 filed with the
                  MSRB since January 1, 1998 and (B) all records required to be
                  kept by the Company under Rule G-8(a)(xvi) of the MSRB. Except
                  as set forth in the foregoing, since January 1, 1998, there
                  have been no contributions or payments, and there is no other
                  information, that would be required to be disclosed by the
                  Company or any of the Company's Subsidiaries on any such Form
                  or recorded by the Company or any such Subsidiary pursuant to
                  such Rule.

                  (p) ENVIRONMENTAL MATTERS. The Company and its Subsidiaries
         have complied at all times with applicable Environmental Laws; no
         property (including buildings and any other structures) currently or
         formerly owned or operated (or which the Company or any of its
         Subsidiaries would be deemed to have owned or operated under any
         Environmental Law) by the Company or any of its Subsidiaries or in
         which the Company or any of its Subsidiaries (whether as fiduciary or
         otherwise) has a Lien, has been contaminated with, or has had any
         release of, any Hazardous Substance in such form or substance so as to
         create any liability for the Company or its Subsidiaries; the Company
         is not subject to liability for any Hazardous Substance disposal or
         contamination on any other third-party property; within the last six
         years, the Company and its Subsidiaries have not received any notice,
         demand letter, claim or request for information alleging any violation
         of, or liability of the Company under, any Environmental Law; the
         Company and its Subsidiaries are not subject to any order,

                                      -25-
<PAGE>

         decree, injunction or other agreement with any Governmental Authority
         or any third party relating to any Environmental Law; the Company and
         its Subsidiaries are not aware of any reasonably likely liability
         relating to environmental circumstances or conditions (including the
         presence of asbestos, underground storage tanks, lead products or
         polychlorinated biphenyls) involving the Company or one of its
         Subsidiaries, any currently or formerly owned or operated property
         (whether as fiduciary or otherwise), or any reasonably likely liability
         related to any Lien held by the Company or one of its Subsidiaries; and
         the Company has made available to Parent copies of all environmental
         reports, studies, sampling data, correspondence, filings and other
         environmental information in its possession relating to the Company or
         one of its Subsidiaries, or any currently or formerly owned or operated
         property or any property in which the Company or one of its
         Subsidiaries (whether as fiduciary or otherwise) has held a Lien.

                  (q) NO BROKERS. None of the Company or its Subsidiaries, or
         any of their directors, officers or employees, has employed any broker
         or finder, or incurred any broker's or finder's commissions or fees, in
         connection with the Merger or the other transactions contemplated by
         this Agreement or the Stock Option Agreement, except that the Company
         has engaged Credit Suisse First Boston as its financial adviser, the
         arrangements with which (including fees) have been previously discussed
         with Parent.

                  (r) COMPENSATION AND BENEFIT PLANS.

                           (i) The Company has Previously Disclosed a complete
                  list of all benefit and compensation plans, contracts,
                  policies or arrangements covering current or former employees
                  of the Company and its Subsidiaries (the "EMPLOYEES") and
                  current or former directors of the Company, including, but not
                  limited to, "employee benefit plans" within the meaning of
                  Section 3(3) of ERISA, and bonus, deferred compensa-tion,
                  pension, retirement, profit-sharing, thrift, savings,
                  severance, employee stock ownership, stock bonus, stock
                  purchase, restricted stock and stock option plans, all
                  employment or severance contracts (other than offer letters to
                  employees which individually provide for total annual
                  compensation to an employee of less than $250,000), all
                  medical, dental, health and life insurance plans and all other
                  employee benefit plans, contracts or arrangements (the
                  "COMPENSATION AND BENEFIT PLANS"). True and complete copies of
                  all Compensation and Benefit Plans, including, but not limited
                  to, any trust instruments and/or insurance contracts, if any,
                  forming a part thereof, and all amendments thereto have been
                  made available to Parent.

                           (ii) All Compensation and Benefit Plans have been
                  operated in accordance with their terms and are in substantial
                  compliance with all applicable law. Each Compensation and
                  Benefit Plan which is an "employee pension benefit plan"
                  within the meaning of Section 3(2) of ERISA ("PENSION PLAN")
                  and which is intended to be qualified, under Section 401(a) of
                  the Code, has received a favorable determination

                                      -26-
<PAGE>

                  letter from the IRS with respect to "TRA" (as defined in
                  Section 1 of IRS Revenue Procedure 93-39), and the Company is
                  not aware of any circumstances which could reasonably be
                  expected to result in the revocation or denial of any such
                  favorable determination letter. There is no pending or, to the
                  knowledge of the Company, threatened litigation relating to
                  the Compensation and Benefit Plans. Neither the Company nor
                  any of its Subsidiaries has engaged in a transaction with
                  respect to any Compensation and Benefit Plan that would
                  subject the Company or any of its Subsidiaries to a tax or
                  penalty imposed by either Section 4975 of the Code or Section
                  502(i) of ERISA in an amount which would be material.

                           (iii) Neither the Company nor any entity which is
                  considered one employer with the Company under Section 4001 of
                  ERISA or Section 414 of the Code (an "ERISA AFFILIATE") has
                  ever maintained any plan which has been subject to Title IV of
                  ERISA. Neither the Company nor any of its Subsidiaries
                  presently contributes to a Multiemployer Plan, nor have they
                  contributed to such a plan within the past six calendar years.
                  No notice of a "reportable event", within the meaning of
                  Section 4043 of ERISA for which the 30-day reporting
                  requirement has not been waived, has been required to be filed
                  for any Pension Plan or by any ERISA Affiliate within the past
                  12-month period ending on the date hereof.

                           (iv) All contributions required to be made under the
                  terms of any Compensation and Benefit Plan have been timely
                  made or have been reflected on the Company Financial
                  Statements. Neither any Pension Plan nor any single-employer
                  plan of an ERISA Affiliate has an "accumulated funding
                  deficiency" (whether or not waived) within the meaning of
                  Section 412 of the Code or Section 302 of ERISA. Neither the
                  Company nor any of its Subsidiaries has provided, or is
                  required to provide, security to any Pension Plan or to any
                  single-employer plan of an ERISA Affiliate pursuant to Section
                  401(a)(29) of the Code.

                           (v) Neither the Company nor any of its Subsidiaries
                  has any obligations for post-termination health and life
                  benefits other than as required by Part 6 of Subtitle B of
                  Title I of ERISA. There are no restrictions on the rights of
                  the Company or any of its Subsidiaries to amend or terminate
                  any such post-termination health and life arrangement without
                  incurring any liability thereunder.

                           (vi) Neither the execution and delivery of this
                  Agreement or the Stock Option Agreement nor the consummation
                  of the transactions contemplated hereby or thereby will (A)
                  result in any payment (including, without limitation,
                  severance, unemployment compensation, golden parachute or
                  otherwise) becoming due to any director or any Employee under
                  any Compensation and Benefit Plan or otherwise from the
                  Company or any of its Subsidiaries, (B) increase any benefits
                  otherwise payable under any Compensation and Benefit Plan, (C)
                  result in any acceleration of the time of payment or vesting
                  or trigger any payment on funding (through a grantor

                                      -27-
<PAGE>

                  trust or otherwise) of any Company Option, Right or any
                  benefit payable under any Compensation and Benefit Plan, (D)
                  result in any payment that would not be deductible under
                  Section 162(m) or Section 280G of the Code or (E) cause the
                  Company or any of its Subsidiaries to record additional
                  compensation expense on its income statement with respect to
                  any outstanding stock option or equity-based award.

                  (s) NO KNOWLEDGE. The Company knows of no reason relating to
         the Company or its Subsidiaries why the regulatory approvals referred
         to in Section 7.01(b) should not be obtained without the imposition of
         any condition of the type referred to in the proviso contained in such
         Section 7.01(b).

                  (t) LABOR RELATIONS. Each of the Company and its Subsidiaries
         is in compliance with all applicable laws respecting employment and
         employment practices, terms and conditions of employment and wages and
         hours, including, without limitation, the Immigration Reform and
         Control Act, the Worker Adjustment and Retraining Notification Act, any
         such laws respecting employment discrimination, disability rights or
         benefits, equal opportunity, plant closure issues, affirmative action,
         workers' compensation, employee benefits, severance payments, labor
         relations, employee leave issues, wage and hour standards, occupational
         safety and health requirements and unemployment insurance and related
         matters. None of the Company or its Subsidiaries is engaged in any
         unfair labor practice and there is no unfair labor practice complaint
         pending or, to the knowledge of the Company, threatened against any of
         the Company or its Subsidiaries before the National Labor Relations
         Board. Neither the Company nor any of its Subsidiaries is a party to,
         is negotiating, or is bound by, any collective bargaining agreement,
         contract or other agreement or understanding with a labor union or
         labor organization, nor is the Company or any of its Subsidiaries the
         subject of a proceeding asserting that the Company or any such
         Subsidiary has committed an unfair labor practice (within the meaning
         of the National Labor Relations Act) or seeking to compel it or such
         Subsidiary to bargain with any labor organization as to wages and
         conditions of employment, nor is there any strike or other labor
         dispute involving the Company or any of its Subsidiaries, pending or,
         to its knowledge, threatened, nor is it aware of any activity involving
         the Company's or any of its Subsidiaries' employees seeking to certify
         a collective bargaining unit or engaging in any other organization
         activity.

                  (u) INSURANCE. The Company and its Subsidiaries are insured
         with reputable insurers against such risks and in such amounts as the
         management of the Company reasonably has determined to be prudent in
         accordance with industry practices. All of the insurance policies,
         binders, or bonds maintained by the Company or its Subsidiaries are in
         full force and effect; the Company and its Subsidiaries are not in
         default thereunder; and all claims thereunder have been filed in due
         and timely fashion. The Company has made available to Parent a list of
         all insurance policies maintained by or for the benefit of the Company
         or its Subsidiaries or their directors, officers, employees or agents.

                                      -28-
<PAGE>

                  (v) TAXES. The Company and its Subsidiaries have filed
         completely and correctly in all material respects all material Tax
         Returns which are required by all applicable laws to be filed by them,
         and have paid, or made adequate provision for the payment of, all Taxes
         which have or may become due and payable pursuant to said Tax Returns
         and all other Taxes, governmental charges and assessments received to
         date other than those Taxes being contested in good faith for which
         provision has been made in accordance with GAAP on the most recent
         consolidated balance sheet of the Company set forth in the Financial
         Statements. All Taxes which the Company and its Subsidiaries are
         required by law to withhold and collect have been duly withheld and
         collected, and have been paid over, in a timely manner, to the proper
         taxing authorities to the extent due and payable. Each of the Company
         and its Subsidiaries has complied in all material respects with all
         requirements (including record retention) applicable to information
         reporting. The Company and its Subsidiaries have not executed any
         waiver to extend, or otherwise taken or failed to take any action that
         would have the effect of extending, the applicable statute of
         limitations in respect of any Tax liabilities of the Company or any of
         its Subsidiaries for the taxable years prior to and including the most
         recent taxable year. Neither the Company nor any of its Subsidiaries
         (or any predecessor thereto) is a "consenting corporation" within the
         meaning of Section 341(f) of the Code. None of the Company or any of
         its Subsidiaries has been a member of any consolidated group (other
         than with the Company and its Subsidiaries) for Tax purposes. The
         Company and its Subsidiaries are not a party to any tax sharing
         agreement or arrangement (other than with the Company and its
         Subsidiaries). No material liens or encumbrances for Taxes exist with
         respect to any of the assets or properties of the Company or any of its
         Subsidiaries, except for statutory liens for Taxes not yet due or
         payable or that are being contested in good faith. All of the U.S.
         federal income Tax Returns filed by or on behalf of each of the Company
         and its Subsidiaries have been examined by and settled with the IRS, or
         the statute of limitations with respect to the relevant Tax liability
         expired, for all taxable periods ending on or before the date of this
         Agreement. All Taxes due with respect to any completed and settled
         audit, examination or deficiency Litigation with any taxing authority
         have been paid in full. There is no audit, examination, deficiency, or
         refund Litigation pending with respect to any Taxes and no taxing
         authority has given written notice of the commencement of any audit,
         examination or deficiency Litigation with respect to any Taxes. No
         closing agreements, private letter rulings, technical advice memoranda
         or similar agreements or rulings have been entered into or issued by
         any taxing authority with respect to the Company or any of its
         Subsidiaries. There are no outstanding assessments, claims or
         deficiencies for any Taxes of the Company or any of its Subsidiaries
         that have been proposed, asserted or assessed in writing. There is no
         outstanding written claim by a taxing authority that the Company or any
         of its Subsidiaries may be subject to taxation or required to file a
         Tax Return in a jurisdiction where it does not file Tax Returns and
         none of the Company or any of their Subsidiaries is aware of any
         jurisdiction that could properly make such a claim. Each of the Company
         and its Subsidiaries that is required to be registered for the purposes
         of sales tax, transfer taxes, value added taxes or any similar Tax has
         been so registered, and it has complied in all material respects with
         all statutory requirements, orders, provisions, directions or
         conditions relating to such Taxes. The

                                      -29-
<PAGE>

         Company has not been requested to and has not agreed to include in a
         taxable period ending after the Effective Time any taxable income
         attributable to income that economically accrued in a prior taxable
         period as a result of Section 481 of the Code, the installment method
         of accounting or any comparable provision of state or local Tax law.
         None of the Company or any of its Subsidiaries has been a "distributing
         corporation" or a "controlled corporation" in any distribution
         occurring during the last 3 years in which the parties to such
         distribution treated the distribution as one to which Section 355 of
         the Code applied. No Tax is required to be withheld pursuant to Section
         1445 of the Code as a result of the Merger. All Tax Returns of the
         Company and each of its Subsidiaries and all closing agreements,
         private letter rulings, technical advice memoranda or similar
         agreements or rulings (if any) entered into with or issued by any
         taxing authority, by or with respect to the Company or any of its
         Subsidiaries that were delivered by the Company pursuant to Parent's
         due diligence request are true copies of such documents.

                  (w) DERIVATIVES. All exchange-traded or over-the-counter swap,
         forward, future, option, cap, floor or collar financial contract or any
         other similar arrangement, whether entered into for the Company's
         account, or for the account of one or more of the Company's
         Subsidiaries or their customers, were entered into (i) in accordance
         with prudent business practices and all applicable laws, rules,
         regulations and regulatory policies and (ii) with counterparties
         believed to be financially responsible at the time; and each of them
         constitutes the valid and legally binding obligation of the Company or
         any of its Subsidiaries, enforceable in accordance with its terms
         (except as enforceability may be limited by the Bankruptcy and Equity
         Exception), and are in full force and effect. Neither the Company nor
         any of its Subsidiaries, nor to the Company's knowledge any other party
         thereto, is in breach of any of its obligations under any such
         agreement or arrangement. The Company SEC Documents disclose the value
         of such agreements and arrangements on a mark-to-market basis in
         accordance with GAAP, as modified to give effect to Statement of
         Financial Accounting Standards No. 133, and, since December 31, 1999,
         there has not been a material change in such value.

                  (x) ACCOUNTING CONTROLS. Each of the Company and its
         Subsidiaries has devised and maintained systems of internal accounting
         controls sufficient to provide reasonable assurances, in the judgment
         of the Board of Directors of the Company, that (i) all material
         transactions are executed in accordance with management's general or
         specific authorization; (ii) all material transactions are recorded as
         necessary to permit the preparation of financial statements in
         conformity with GAAP consistently applied with respect to
         broker-dealers or any other criteria applicable to such statements,
         (iii) access to the material property and assets of the Company and its
         Subsidiaries is permitted only in accordance with management's general
         or specific authorization; and (iv) the recorded accountability for
         items is compared with the actual levels at reasonable intervals and
         appropriate action is taken with respect to any differences.

                                      -30-
<PAGE>

                  (y) INTELLECTUAL PROPERTY.

                           (i) The Company and its Subsidiaries own or have the
                  right to use all material Intellectual Property Rights (as
                  defined below) necessary or required for the operation of
                  their business as currently conducted (collectively, "COMPANY
                  IP RIGHTS"), and have the right to use, license, sublicense or
                  assign the same without material liability to, or any
                  requirement of consent from, any other person or party. Such
                  Company IP Rights constitute all Intellectual Property Rights
                  necessary for the conduct of their businesses in the manner
                  conducted immediately prior to the Effective Time. All Company
                  IP Rights are either owned by the Company or its Subsidiaries
                  free and clear of all Liens or are used pursuant to a license
                  agreement; each such license agreement is valid and
                  enforceable and in full force and effect; neither the Company
                  nor any of its Subsidiaries is in material default thereunder;
                  and to the knowledge of the Company, no corresponding licensor
                  is in material default thereunder. None of the Company IP
                  Rights infringes or otherwise conflicts with any Intellectual
                  Property Rights or other right of any person; there is no
                  pending or, to the knowledge of the Company, threatened
                  litigation, adversarial proceeding, administrative action or
                  other challenge or claim relating to any Company IP Rights;
                  there is no outstanding order relating to any Company IP
                  Rights; to the knowledge of the Company, there is currently no
                  infringement by any person of any Company IP Rights; and the
                  Company IP Rights owned, used or possessed by the Company and
                  its Subsidiaries is sufficient and adequate to conduct the
                  business of the Company and its Subsidiaries to the full
                  extent as such business is currently conducted.

                           (ii) To the knowledge of the Company, no employee of
                  the Company or any of its Subsidiaries is in violation of any
                  term of any employment contract, patent disclosure agreement
                  or any other contract or agreement relating to the
                  relationship of any such employee with the Company or such
                  Subsidiary or any other party because of the nature of the
                  business conducted by the Company or its Subsidiaries or
                  proposed to be conducted by the Company or its Subsidiaries.

                           (iii) As used herein, the term "INTELLECTUAL PROPERTY
                  RIGHTS" shall mean all worldwide industrial and intellectual
                  property rights, including, without limitation, patents,
                  patent applications, patent rights, trademarks, trademark
                  applications, trade names, service marks, service mark
                  applications, copyright, copyright applications, franchises,
                  licenses, inventories, know-how, trade secrets, customer
                  lists, proprietary processes and formulae, all source and
                  object code, algorithms, architecture, structure, display
                  screens, layouts, inventions, development tools, Software,
                  Databases and all documentation and media constituting,
                  describing or relating to the above, including, without
                  limitation, manuals, memoranda and records.

                                      -31-
<PAGE>

                  (z) INVESTMENT ADVISORY ACTIVITIES.

                           (i) Certain of the Company's Subsidiaries provide
                  investment management, investment advisory, sub-advisory,
                  administration, distribution or certain other services to the
                  Investment Companies. Each of the Investment Companies (or the
                  trust or corporation of which it is a series) is duly
                  organized and existing in good standing under the laws of the
                  jurisdiction under which it is organized. Each of the
                  Investment Companies (or the trust or corporation of which it
                  is a series) that is registered or required to be registered
                  under the Investment Company Act ("REGISTERED FUNDS") is
                  governed by a board of trustees or directors (each a "FUND
                  BOARD" and, collectively, the "FUND BOARDS") consisting of at
                  least 50% of trustees or directors who are not "interested
                  persons" (as defined in the Investment Company Act) of the
                  Registered Funds or the Company. The Fund Boards operate in
                  all material respects in conformity with the requirements and
                  restrictions of Sections 10 and 16 of the Investment Company
                  Act, to the extent applicable.

                           (ii) Each of the Investment Companies is in
                  compliance with all applicable foreign, United States Federal
                  and state laws, rules and regulations of the SEC, the CFTC,
                  the IRS, and any Self-Regulatory Organization having
                  jurisdiction over such Investment Company. The Company has
                  made available to Parent true and complete copies of all the
                  Constitutive Documents and related advisory agreements of all
                  of the Investment Companies managed or advised by the Company
                  or any of its Subsidiaries.

                           (iii) Except for the entities identified as such in
                  the Company's Disclosure Schedule, none of the Company or its
                  Subsidiaries is or has been during the past five years an
                  "investment adviser" within the meaning of the Investment
                  Advisers Act, required to be registered, licensed or qualified
                  as an investment advisor under the Investment Advisers Act or
                  subject to any liability or disability by reason of any
                  failure to be so registered, licensed or qualified.

                           (iv) Each Investment Company has been operated in
                  compliance with its respective objectives, policies and
                  restrictions, including without limitation, those set forth in
                  the applicable prospectus and registration statement for that
                  Investment Company or governing instruments for a Client. The
                  Company and its Subsidiaries have operated the investment
                  accounts with respect to which they provide discretionary
                  investment advisor services in accordance with the investment
                  objectives and guidelines in effect for such investment
                  accounts.

                           (v) Each Registered Fund has duly adopted procedures
                  pursuant to Rules 17a-7, 17e-1 and 10f-3 under the Investment
                  Company Act, to the extent applicable.

                                      -32-
<PAGE>

                           (vi) Neither the Company, nor any "affiliated person"
                  (as defined in the Investment Company Act) thereof, is
                  ineligible pursuant to Section 9 of the Investment Company Act
                  to serve as an investment advisor (or in any other capacity
                  contemplated by the Investment Company Act) to an Investment
                  Company; neither the Company, nor any "associated person" (as
                  defined in the Investment Advisors Act) thereof, is ineligible
                  pursuant to Section 203 of the Investment Advisors Act to
                  serve as an investment advisor or as an associated person to a
                  registered investment advisor.

                  (aa) FINANCIAL OPINION. The Board of Directors of the Company
         has received the opinion of Credit Suisse First Boston, dated the date
         of this Agreement, to the effect that, as of such date, the Merger
         Consideration is fair from a financial point of view to holders of
         shares of Company Common Stock.

                  (bb) CERTAIN CONTRACTS. Except as set forth in the Company SEC
         Documents filed prior to the date hereof, neither the Company nor any
         of its Subsidiaries is a party to or bound by any non-competition
         agreement or any other agreement or obligation (i) which limits or
         purports to limit in any respect the manner in which, or the localities
         in which, any business of the Company or its Subsidiaries is or could
         be conducted or the types of business that the Company or its
         Subsidiaries conducts or may conduct or (ii) which would reasonably be
         understood to limit or purport to limit in any respect the manner in
         which, or the localities in which, any business of the Parent or its
         Subsidiaries is or could be conducted or the types of business that the
         Parent or its Subsidiaries conducts or may conduct.

                  (cc) RIGHTS PLAN.

                           (i) The Company has amended the Rights Agreement to
                  provide that Parent shall not be deemed an Acquiring Person
                  (as defined in the Rights Agreement) and that the Rights (as
                  defined in the Rights Agreement) will not separate from the
                  shares of Company Common Stock as a result of entering into
                  this Agreement or the Stock Option Agreement or consummating
                  the Merger or the other transactions contemplated by this
                  Agreement or the Stock Option Agreement.

                           (ii) The Company has taken all necessary action with
                  respect to all of the outstanding Rights (as defined in the
                  Rights Agreement) so that, as of immediately prior to the
                  Effective Time, as a result of this Agreement, the Stock
                  Option Agreement and the transactions contemplated by this
                  Agreement and the Stock Option Agreement, (A) neither the
                  Company nor Parent will have any obligations under the Rights
                  (as defined in the Rights Agreement) or the Rights Agreement
                  and (B) the holders of the Rights (as defined in the Rights
                  Agreement) will have no rights under the Rights (as defined in
                  the Rights Agreement) or the Rights Agreement.

                                      -33-
<PAGE>

                  5.04 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as
Previously Disclosed in a section of its Disclosure Schedule corresponding to
the relevant paragraph below, Parent hereby represents and warrants to the
Company as follows:

                  (a) ORGANIZATION, STANDING AND AUTHORITY. Parent and the
         Merger Subsidiary each has been duly incorporated and is an existing
         corporation in good standing under the laws of the jurisdiction of its
         incorporation. Parent and the Merger Subsidiary each is duly qualified
         to do business and is in good standing in the States of the United
         States and foreign jurisdictions where its ownership or leasing of
         property or the conduct of its business requires it to be so qualified.
         Each of Parent and its Subsidiaries has in effect all United States
         Federal, state, local and foreign governmental authorizations necessary
         for it to own or lease its properties and assets and to carry on its
         business as it is now conducted.

                  (b) CORPORATE AUTHORITY. Parent and the Merger Subsidiary each
         has the requisite corporate power and authority, and has taken all
         corporate action necessary, in order to authorize the execution and
         delivery of, and the performance of its obligations under, this
         Agreement and, in the case of Parent, the Stock Option Agreement, and
         to adopt the plan of merger contained in this Agreement and, in
         accordance therewith, to consummate the Merger. Each of this Agreement
         and, in the case of Parent, the Stock Option Agreement, is the valid
         and binding agreement of Parent and the Merger Subsidiary, as the case
         may be, enforceable against it in accordance with its terms subject to
         the Bankruptcy and Equity Exception.

                  (c) GOVERNMENTAL FILINGS; NO VIOLATIONS. Other than the
         filings and/or notices (i) referred to in Section 2.02, (ii) under the
         HSR Act, the Exchange Act and the Securities Act, (iii) required to be
         made pursuant to the European Community Merger Control Regulation and
         the Bank Act [Canada], (iv) required to be made pursuant to state
         insurance or banking regulations, (v) required to be made with the NYSE
         and other Self-Regulatory Organizations and (vi) such other filings
         and/or notices set forth in Parent's Disclosure Schedule, no notices,
         reports, applications or other filings are required to be made by
         Parent or any of its Subsidiaries with, nor are any consents,
         registrations, approvals, permits or authorizations required to be
         obtained by any of them from, any Governmental Authority in connection
         with the execution and delivery of this Agreement and the Stock Option
         Agreement by Parent, the execution and delivery of this Agreement by
         the Merger Subsidiary and the consummation by Parent and the Merger
         Subsidiary of the Merger and the other transactions contemplated hereby
         and thereby. Subject to the making or obtaining of all filings,
         notices, applications, consents, registrations, approvals, permits or
         authorizations with or of any relevant Governmental Authority with
         respect to the Merger and the other transactions contemplated hereby
         and by the Stock Option Agreement, the execution, delivery and
         performance of this Agreement and the Stock Option Agreement, and the
         consummation of the Merger and other transactions contemplated hereby
         and thereby, does not and will not (A) constitute a breach or violation
         of, or a default under, or cause or allow the acceleration or creation
         of a Lien (with or without the giving of notice, passage of time or

                                      -34-
<PAGE>

         both) pursuant to, any law, rule or regulation or any judgment, decree,
         order, governmental or non-governmental permit or license, or any
         Contract of it or of any of its Subsidiaries or to which Parent or any
         of Parent's Subsidiaries or its or their properties is subject or
         bound, (B) constitute a breach or violation of, or a default under, the
         Constitutive Documents of Parent or any of its Subsidiaries, or (C)
         require any consent or approval under any such law, rule, regulation,
         judgment, decree, order, governmental permit or license, or the consent
         or approval of any other party to any such Contract.

                  (d) NO KNOWLEDGE. As of the date hereof, Parent knows of no
         reason relating to Parent or its Subsidiaries why the regulatory
         approvals referred to in Section 7.01(b) should not be obtained without
         the imposition of any condition of the type referred to in the proviso
         contained in such Section 7.01(b).

                  (e) FUNDS. At the Effective Time, Parent will have the funds
         necessary to consummate the Merger and pay the Merger Consideration in
         accordance with the terms of this Agreement.

                  (f) INTERIM OPERATIONS OF THE MERGER SUBSIDIARY. The Merger
         Subsidiary was formed solely for the purpose of engaging in the
         transactions contemplated hereby and has engaged in no business other
         than in connection with the transactions contemplated by this
         Agreement. The Merger Subsidiary is a wholly owned subsidiary of
         Parent.

                  (g) NO BROKERS. None of Parent or its Subsidiaries, or any of
         their directors, officers or employees, has employed any broker or
         finder, or incurred any broker's or finder's commissions or fees, in
         connection with the Merger or the other transactions contemplated by
         this Agreement or the Stock Option Agreement, except that Parent has
         engaged Lazard Freres & Co. as its financial advisor.

                  (h) LEGAL PROCEEDINGS. As of the date hereof, none of the
         Parent or any of its Subsidiaries is a party to any, and there are not
         pending or, to the knowledge of Parent, threatened, material legal,
         administrative, arbitral or other proceedings, claims, actions or
         governmental or regulatory investigations of any nature challenging the
         validity or propriety of the transactions contemplated by this
         Agreement or that would impair the ability of Parent to perform its
         obligations hereunder.

                                   ARTICLE VI

                                   COVENANTS

                  6.01 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions of this Agreement, each of the Company and Parent agrees to use its
reasonable best efforts in good faith to take, or cause to be taken (including
causing any of its Subsidiaries to take), all actions, and to do, or

                                      -35-
<PAGE>

cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
reasonably practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.

                  (b) Without limiting the generality of Section 6.01(a), the
Company agrees to use its reasonable best efforts to obtain (i) any consents of
Clients (including in the case of Registered Funds, the boards of directors or
trustees and the stockholders of such Registered Funds) necessary under any
Advisory Agreement or the Investment Company Act in connection with any deemed
assignment of any such Advisory Agreement upon consummation of the Merger and
(ii) the consent or approval of all persons party to a Contract with the Company
or any of its Subsidiaries, to the extent such consent or approval is required
in order to consummate the Merger or for the Surviving Corporation to receive
the benefits of such Contract; PROVIDED that in no event shall the Company be
deemed to have failed to satisfy the condition set forth in 7.03(b) solely on
the basis that such consents on approvals have not been obtained as of the
Closing Date.

                  6.02 PROXY STATEMENT. (a) The Company will as promptly as
practicable prepare and file with the SEC a Proxy Statement to be sent to the
Company's Stockholders (the "COMPANY PROXY STATEMENT") and shall use its
reasonable best efforts to have the Company Proxy Statement cleared by the SEC
promptly. The Company will cause the Company Proxy Statement to comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder. The Company will advise Parent
promptly of the time when the Company Proxy Statement and any amendment or
supplement to the Company Proxy Statement has been filed, or any request by the
SEC for amendment of the Company Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. Each of the
Company and Parent agrees to use its reasonable best efforts, after consultation
with the other, to respond promptly to all such comments of and requests by the
SEC.

                  (b) The Company agrees, as to itself and its Subsidiaries,
that none of the information (except with respect to information supplied by or
on behalf of Parent or Merger Subsidiary for inclusion therein) included or
incorporated by reference in the Company Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the time
or times of the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If at any time prior
to the date of the Company Stockholders Meeting any information relating to the
Company or any of its Affiliates, officers, or directors, should be discovered
by the Company and which should be set forth in an amendment or supplement to
the Company Proxy Statement, so that such document would not include any
misstatement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company shall
promptly notify Parent and, to the extent required by law, an appropriate
amendment or supplement describing

                                      -36-
<PAGE>

such information shall be promptly filed by the Company with the SEC and, to the
extent required by law, disseminated by the Company to the stockholders of the
Company.

                  (c) The Company will use its reasonable best efforts to cause
the definitive Company Proxy Statement and all required amendments and
supplements thereto to be mailed to its stockholders as promptly as practicable
after the date hereof.

                  6.03 COMPANY STOCKHOLDERS MEETING. The Company will take, in
accordance with applicable law and its Constitutive Documents, all action
necessary to convene a special meeting of the holders of the Company's Common
Stock at which the holders of the Company's Common Stock will consider the
adoption of this Agreement (including any adjournments or postponements thereof,
the "COMPANY STOCKHOLDERS MEETING") as promptly as practicable after the date
hereof. Subject to the terms of this Agreement and subject to its fiduciary
obligations under applicable law, the Board of Directors of the Company shall
recommend to its stockholders the adoption of this Agreement and shall use best
reasonable efforts to solicit such adoption. In the event that subsequent to the
date hereof, the Board of Directors of the Company determines that this
Agreement is no longer advisable and either makes no recommendation or
recommends that its stockholders reject it, the Company shall nevertheless
submit this Agreement to the holders of the Company Common Stock for adoption at
the Company Stockholders Meeting unless this Agreement shall have been
terminated in accordance with its terms prior to the Company Stockholders
Meeting.

                  6.04 PRESS RELEASES. The initial press release concerning the
Merger and the other transactions contemplated by this Agreement and the Stock
Option Agreement shall be a joint press release in such form agreed to by the
parties and thereafter the Company and Parent each shall consult with the other
and provide each other the opportunity to review, comment upon and use
reasonable best efforts to agree on, any press release or other public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and the Stock Option Agreement prior to issuing any press
releases or otherwise making public announcements with respect to the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement and neither party shall issue any press release or otherwise make any
public announcements with respect thereto without the other's prior consent,
except as may be required by law or court process or by obligations pursuant to
any listing agreement with or rules of any applicable securities exchange.

                  6.05 ACCESS; INFORMATION. (a) The Company agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information it shall afford Parent and its Representatives, such access during
normal business hours throughout the period prior to the Effective Time to the
books, records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and Representatives of the Company
and to such other information as Parent may reasonably request and, during such
period, it shall furnish promptly to such other party (i) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of the Securities Laws or banking or insurance laws, and (ii) all
other

                                      -37-
<PAGE>

information concerning the business, properties and personnel of it as the other
may reasonably request.

                  (b) Parent agrees that any information obtained pursuant to
this Section 6.05 shall be kept confidential in accordance with the letter
agreement, dated July 19, 2000 (the "CONFIDENTIALITY AGREEMENT"), between Parent
and the Company. No investigation by Parent of the business and affairs of the
Company and its Subsidiaries shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement or the
conditions to consummation of the Merger contained in Article VII.

                  6.06 ACQUISITION PROPOSALS. The Company agrees that it shall
not, and shall use its reasonable best efforts to cause its officers, directors,
agents, advisors and Affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any tender or exchange offer, proposal for a merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets or operations of, the Company or any
of its Subsidiaries (any of the foregoing, an "ACQUISITION PROPOSAL"), other
than the transactions contemplated by this Agreement or the Stock Option
Agreement; PROVIDED, that nothing contained in this Agreement shall prevent the
Company's Board of Directors from (i) making any disclosure to its stockholders
if, in the good faith judgment of its Board of Directors, failure so to disclose
would be inconsistent with its obligations under applicable law; (ii) providing
(or authorizing the provision of) information to, or engaging in (or
authorizing) such discussions or negotiations with, any person who has made a
bona fide written Acquisition Proposal received after the date hereof which did
not result from a breach of this Section 6.06; (iii) recommending such an
Acquisition Proposal to its stockholders (and in connection therewith
withdrawing its favorable recommendation to stockholders of this Agreement), if
and only to the extent that, in the case of actions referred to in clause (ii)
or (iii), (x) such Acquisition Proposal is a Superior Proposal, (y) the
Company's Board of Directors, after having consulted with and considered the
advice of outside counsel to such Board, determines in good faith that providing
such information or engaging in such negotiations or discussions, or making such
recommendation, is required in order to discharge the directors' fiduciary
duties in accordance with the DGCL and (z) the Company receives from such person
a confidentiality agreement substantially in the form of the Confidentiality
Agreement. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any
Acquisition Proposal by a third party on terms which the Company's Board of
Directors determines in its good faith judgment, after consultation with its
financial advisors (whose advice shall be communicated to Parent), to be more
favorable from a financial point of view to its stockholders than the Merger and
the other transactions contemplated hereby, after taking into account the
likelihood of consummation of such transaction on the terms set forth therein,
taking into account all legal, financial (including the financing terms of any
such proposal), regulatory and other aspects of such proposal and any other
relevant factors permitted under applicable law, after giving Parent at least
five Business Days to respond to such third-party Acquisition Proposal once the
Board has notified Parent that in the absence of any further action by Parent it
would consider such Acquisition Proposal to be a Superior Proposal, and then

                                      -38-
<PAGE>

taking into account any amendment or modification to this Agreement proposed by
Parent. The Company also agrees immediately to cease and cause to be terminated
any activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Parent, with respect to any of the
foregoing. The Company shall promptly (within 24 hours) advise Parent following
the receipt by it of any Acquisition Proposal and the material terms thereof
(including the identity of the person making such Acquisition Proposal), and
advise Parent of any developments (including any change in such terms) with
respect to such Acquisition Proposal promptly upon the occurrence thereof.

                  Nothing contained in this Section 6.06 or any other provision
of this Agreement will prohibit the Company or the Company's Board of Directors
from notifying any third party that contacts the Company on an unsolicited basis
after the date hereof concerning an Acquisition Proposal of the Company's
obligations under this Section 6.06.

                  6.07 NO RIGHTS TRIGGERED. The Company shall take all
reasonable steps necessary to ensure that the entering into of this Agreement
and the Stock Option Agreement and the consummation of the transactions
contemplated hereby and thereby and any other action or combination of actions,
or any other transactions contemplated hereby and thereby, do not and will not
result in the grant of any Rights to any person (a) under the Constitutive
Documents of the Company or any of its Subsidiaries or (b) under any Contract to
which the Company or any of its Subsidiaries is a party except, in each case, as
expressly contemplated by the Agreement and the Stock Option Agreement.

                  6.08 REGULATORY APPLICATIONS. (a) Parent, the Company and
their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings,
notices, applications, consents, registrations, approvals, permits and
authorizations with, to, or of all third parties and Governmental Authorities
necessary to consummate the transactions contemplated by this Agreement as
promptly as reasonably practicable. Parent shall have the right to review in
advance, and to the extent practicable to consult with the Company, subject to
applicable laws relating to the exchange of information, with respect to, all
material written information submitted to any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, Parent agrees to act reasonably and as promptly
as practicable. Each of Parent and the Company agrees that it will consult with
the other party hereto with respect to the obtaining of all material consents,
registrations, approvals, permits and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party apprised
of the status of material matters relating to completion of the transactions
contemplated hereby.

                  (b) Subject to applicable laws governing the exchange of
information, each of Parent and the Company will, upon request, furnish the
other party with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be

                                      -39-
<PAGE>

reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.

                  (c) The Company will cooperate with Parent to ensure that, to
the extent reasonably practicable, on the Closing Date the activities and assets
of the Company and its Subsidiaries are permitted to be conducted or held by
Parent (as a foreign bank qualified as a financial holding company) and its
Subsidiaries under the Bank Holding Company Act of 1956, as amended or the Bank
Act (Canada), if applicable. As of the date hereof, Parent has no knowledge of
any reason why such activities or assets would not be so permitted.

                  6.09 EMPLOYEE MATTERS. (a) Parent will honor or will cause the
Surviving Corporation to honor, in accordance with their terms, all benefit
obligations to Employees accrued as of the Effective Time and all employee
severance obligations under plans and policies in existence on the date of this
Agreement.

                  (b) For one year after the Effective Time, Parent shall
provide, or shall cause to be provided, to the Employees, employee benefits
that, in the aggregate, are substantially comparable to those provided to such
Employees immediately prior to the Effective Time. To ensure that the Company
will have the benefit of continuity of employment the Company shall cooperate
with Parent between the date hereof and the Effective Time to establish
compensation practices applicable after the Effective Time comparable to those
currently applied by the Company, and it is the intention of the parties that
such practices may be amended from time to time to ensure that the Company
remains competitive in its ability to attract talented personnel and to meet
business needs. For all purposes under the employee benefit and compensation
plans of Parent and its Affiliates providing benefits to any Employees after the
Effective Time (the "NEW PLANS"), each Employee shall be credited with his or
her years of service with the Company and its Affiliates before the Effective
Time, other than for purposes of benefit accrual under any defined benefit
pension plan, and except to the extent such credit would result in a duplication
of benefits in respect of such period. In addition, and without limiting the
generality of the foregoing, for purposes of each New Plan providing medical,
dental, pharmaceutical, vision and/or disability benefits to any Employee,
Parent shall cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan to be waived for such Employee and his or her
covered dependents to the extent such exclusion or limitation was waived under
the comparable Compensation and Benefit Plan, and Parent shall cause any
eligible expenses incurred by such Employee and his or her covered dependents
during the portion of the plan year of the comparable Compensation and Benefit
Plan ending as of the date such Employee's participation in the corresponding
New Plan begins to be taken into account under such New Plan for purposes of
satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such Employee and his or her covered dependents for the applicable
plan year as if such amounts had been paid in accordance with such New Plan.

                                      -40-
<PAGE>

                  (c) Parent shall or shall cause the Surviving Corporation to
take all actions necessary to effectuate the items set forth in Section 6.09(c)
of the Company Disclosure Schedule with respect to the establishment of a
retention bonus plan for the employees of the Company.

                  6.10 NOTIFICATION OF CERTAIN MATTERS. (a) Each of the Company
and the Parent shall give prompt notice to the other of any fact, event or
circumstance known to it that could reasonably be expected, individually or
taken together with all other facts, events and circumstances known to it, to
result in a material breach of any of its representations, warranties, covenants
or agreements contained herein.

                  (b) The Company shall promptly notify Parent of:

                  (i) Any written notice or other bona fide communication from
         any person alleging that the consent of such person is or may be
         required as a condition to the Merger;

                  (ii) Any notice or other written communications from any
         Client (A) terminating or threatening to terminate any material
         Contract with the Company relating to the rendering of services to such
         client or (B) relating to any material dispute with such Client; or

                  (iii) Any written notice or other material communication from
         any Governmental Authority or Self-Regulatory Organization in
         connection with the transactions contemplated by this Agreement.

                  (c) The Company and its Subsidiaries shall, prior to the
Closing Date, use its reasonable best efforts to notify its insurers in writing
of all known incidents, events and circumstances which could reasonably be
expected to give rise to a claim against the Company or its Subsidiaries.

                  6.11 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a)
From and after the Effective Time, Parent agrees to cause the Surviving
Corporation to indemnify and hold harmless each present and former director and
officer of the Company, determined as of the Effective Time (the "INDEMNIFIED
PARTIES"), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "COSTS")
incurred in connection with any actual or threatened claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company would have been permitted under
Delaware law and its Constitutive Documents in effect on the date hereof to
indemnify such person (and Parent shall also cause the Surviving Corporation to
advance expenses as incurred to the fullest extent permitted under applicable
law provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification); PROVIDED that any determination required to be
made with respect to whether such an officer's or director's conduct complies
with the standards set forth under Delaware law and the Company's Constitutive

                                      -41-
<PAGE>

Documents shall be made by independent counsel reasonably acceptable to both the
Indemnified Party and the Surviving Corporation.

                  (b) Any Indemnified Party wishing to claim indemnification
under Section 6.11(a), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify the Surviving Corporation thereof, but
the failure to so notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice the Surviving Corporation. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Surviving Corporation shall have the right to assume
the defense thereof and the Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Surviving Corporation elects not to
assume such defense or independent counsel reasonably acceptable to both the
Indemnified Party and the Surviving Corporation advises that there are issues
which raise conflicts of interest between the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; PROVIDED, HOWEVER, that the Surviving Corporation shall be obligated
pursuant to this Section 6.11 to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate reasonably in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent; and PROVIDED FURTHER that the Surviving Corporation shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.

                  (c) For a period of six years from the Effective Time, Parent
shall use its reasonable best efforts to cause the Surviving Corporation to
provide director's and officer's liability insurance to the present and former
officers and directors of the Company or any of the Company's Subsidiaries
(determined as of the Effective Time) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that coverage
currently provided by the Company; PROVIDED; HOWEVER, that in no event shall the
Surviving Corporation be required to expend more than 200 percent of the current
amount expended by the Surviving Corporation (such product, the "INSURANCE
AMOUNT") to maintain or procure such directors and officers insurance coverage;
provided, further, that if the Surviving Corporation is unable to maintain or
obtain the insurance called for by this Section 6.11(c), Parent shall use its
reasonable best efforts to cause the Surviving Corporation to obtain as much
comparable insurance as is available for the Insurance Amount; and PROVIDED,
FURTHER, that officers and directors of the Company or any Company Subsidiary
may be required to make application and provide reasonable and customary
representations and warranties to the Surviving Corporation's insurance carrier
for the purpose of obtaining such insurance.

                                      -42-
<PAGE>

                  6.12 SECTION 15 OF THE INVESTMENT COMPANY ACT. If the Merger
and the transactions contemplated hereby constitute a deemed "assignment" (as
defined in the Investment Company Act and the Investment Advisors Act) of the
advisory agreement with any Registered Fund or any other Client:

                  (a) The Company will use its reasonable best efforts to obtain
as promptly as practicable, (i) if required by the Investment Company Act or by
the terms of the advisory agreement with any Registered Fund, the approval of
the Board of Directors and the stockholders of each such Registered Fund,
pursuant to the provisions of Section 15 of the Investment Company Act
applicable thereto, of a new investment company advisory agreement for such
Registered Fund with the applicable Subsidiary of the Company no less favorable
to the Company or its Subsidiaries to that in effect immediately prior to the
Closing, and (ii) a consent to assignment (which may be in the form of a
"negative consent") from each other Client to whom it or any of its Subsidiaries
is providing investment advisory services;

                  (b) Parent will use its reasonable best efforts to assure,
prior to the Closing, the satisfaction of the conditions set forth in Section
15(f) of the Investment Company Act with respect to each Registered Fund; and

                  (c) Parent agrees to use its reasonable best efforts to assure
compliance with the conditions of Section 15(f) of the Investment Company Act
with respect to the Registered Funds;

PROVIDED that in no event shall the conditions set forth in Sections 7.01(c),
7.02(b) and 7.03(b) be deemed not to have been satisfied solely on the basis
that such consents or approvals have not been obtained, or the conditions
described in (b) or (c) above have not been satisfied or complied with, at the
Effective Time.

                  6.13 ERISA CLIENTS. As soon as reasonably practicable after
the date Parent delivers to the Company the schedule referred to below, the
Company shall deliver to Parent a schedule identifying each Client that is (i)
an employee benefit plan, as defined in Section 3(3) of ERISA, that is subject
to Title I of ERISA; (ii) a person acting on behalf of such a plan; or (iii) an
entity whose assets include the assets of such a plan, within the meaning of
ERISA and applicable regulations (hereinafter referred to as an "ERISA CLIENT");
and listing each contract or agreement, if any, and all amendments thereto, in
effect on the date hereof, entered into by the Company or any of its
Subsidiaries with respect to or on behalf of any ERISA Client, pursuant to which
any of the entities identified in a schedule to be delivered by Parent to the
Company as soon as reasonably practicable after the date hereof (including any
entity that, to the knowledge of the Company, is an affiliate of any of the
entities identified in such schedule) has agreed to (x) execute securities
transactions; (y) provide any other goods or services; or (z) purchase, sell,
exchange or swap securities or any other economic interest therein or derivative
thereof, including rights to receive or obligations to pay interest or principal
under any debt obligation, or rights to receive or obligations to pay interest
or principal denominated in a particular currency.

                                      -43-
<PAGE>

                                  ARTICLE VII

                    CONDITIONS TO CONSUMMATION OF THE MERGER

                  7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each of Parent, the Merger Subsidiary and
the Company to consummate the Merger is subject to the fulfillment or written
waiver by Parent and the Company prior to the Closing of each of the following
conditions:

                  (a) STOCKHOLDER APPROVAL. This Agreement shall have been duly
         adopted by the stockholders of the Company by the Company Requisite
         Vote.

                  (b) GOVERNMENTAL AND REGULATORY CONSENTS. All approvals,
         consents and authorizations of, filings and registrations with, and
         applications and notifications to all Governmental Authorities required
         for the consummation of the Merger or for the prevention of any
         termination of any right, privilege, license or agreement of either
         Parent and its Subsidiaries or the Company and its Subsidiaries shall
         have been obtained or made and shall be in full force and effect and
         all waiting periods required by law shall have expired; PROVIDED,
         HOWEVER, that none of the preceding shall be deemed obtained or made if
         it shall be subject to any condition or restriction the effect of
         which, together with any other such conditions or restrictions, would
         be reasonably expected to have a Material Adverse Effect on the
         Surviving Corporation or Parent after the Effective Time.

                  (c) THIRD PARTY CONSENTS. All consents or approvals of all
         persons, other than Governmental Authorities, required for or in
         connection with the execution, delivery and performance of this
         Agreement and the consummation of the Merger shall have been obtained
         and shall be in full force and effect, unless the failure to obtain any
         such consent or approval would not reasonably be expected to have,
         individually or in the aggregate, a Material Adverse Effect on the
         Surviving Corporation.

                  (d) NO INJUNCTION. No Governmental Authority of competent
         jurisdiction shall have enacted, issued, promulgated, enforced or
         entered any statute, rule, regulation, judgment, decree, injunction or
         other order (whether temporary, preliminary or permanent) which is in
         effect and restrains, enjoins or otherwise prohibits consummation of
         the Merger or the other transactions contemplated by this Agreement.

                  7.02 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation
of the Company to consummate the Merger is also subject to the fulfillment or
written waiver by the Company prior to the Closing of each of the following
conditions:

                  (a) REPRESENTATIONS AND WARRANTIES. Subject to the standard
         set forth in Section 5.02, the representations and warranties of Parent
         set forth in this Agreement shall be true and correct (or, in the case
         of any such representation and warranty of Parent set forth in

                                      -44-
<PAGE>

         Section 5.04(b), true and correct in all material respects) as of the
         date of this Agreement and as of the Closing Date as though made on and
         as of the Closing Date (except that representations and warranties that
         by their terms speak as of the date of this Agreement or some other
         date shall be true and correct only as of such date), and the Company
         shall have received a certificate, dated the Closing Date, signed on
         behalf of Parent by a senior executive officer to such effect.

                  (b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent and the
         Merger Subsidiary shall have performed in all material respects all
         obligations required to be performed by them under this Agreement at or
         prior to the Closing Date, and the Company shall have received a
         certificate, dated the Closing Date, signed on behalf of Parent by a
         senior executive officer to such effect.

                  7.03 CONDITIONS TO OBLIGATION OF PARENT AND THE MERGER
SUBSIDIARY. The obligation of each of Parent and the Merger Subsidiary to
consummate the Merger is also subject to the fulfillment or written waiver by
Parent prior to the Closing of each of the following conditions:

                  (a) REPRESENTATIONS AND WARRANTIES. Subject to the standard
         set forth in Section 5.02, the representations and warranties of the
         Company set forth in this Agreement shall be true and correct (or in
         the case of any such representation and warranty of the Company
         described in the first parenthetical of Section 5.02, true and correct
         in all material respects) as of the date of this Agreement and as of
         the Closing Date as though made on and as of the Closing Date (except
         that representations and warranties that by their terms speak as of the
         date of this Agreement or some other date shall be true and correct
         only as of such date) and Parent shall have received a certificate,
         dated the Closing Date, signed on behalf of the Company by the Chief
         Executive Officer and the Chief Financial Officer of the Company to
         such effect.

                  (b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
         shall have performed in all material respects all obligations required
         to be performed by it under this Agreement at or prior to the Closing
         Date, and Parent shall have received a certificate, dated the Closing
         Date, signed on behalf of the Company by the Chief Executive Officer
         and the Chief Financial Officer of the Company to such effect.

                  (c) EMPLOYMENT AGREEMENTS. The Employment Agreements of (i)
         each individual comprising Group A as set forth in ANNEX B and (ii) the
         three individuals comprising Group B as set forth in ANNEX B shall be
         in full force and effect and, in each case, such individual shall still
         be employed by the Company and shall not have committed an act or
         omission that would permit their termination for "cause" thereunder;
         PROVIDED, HOWEVER, that this condition shall not be deemed unsatisfied
         as a result of the death or disability of one of the individuals named
         in Group A as set forth in ANNEX B or any or all of the individuals
         named in Group B as set forth in ANNEX B.

                                      -45-
<PAGE>

                                  ARTICLE VIII

                                  TERMINATION

                  8.01 TERMINATION. This Agreement may be terminated, and the
Merger may be abandoned at any time prior to the Effective Time:

                  (a) MUTUAL CONSENT. By the mutual consent of Parent, the
         Merger Subsidiary and the Company.

                  (b) BREACH. By Parent and the Merger Subsidiary, on the one
         hand, or the Company, on the other hand, in the event of either: (i) a
         breach by the other party of any representation or warranty contained
         herein, which breach cannot be or has not been cured within 30 days
         after the giving of written notice to the breaching party of such
         breach; or (ii) a breach by the other party of any of the covenants or
         agreements contained herein, which breach cannot be or has not been
         cured within 30 days after the giving of written notice to the
         breaching party of such breach and, in each case (i) and (ii), which
         breach, individually or in the aggregate with other such breaches,
         would cause the conditions set forth in Section 7.03(a) or (b), in the
         case of a breach by the Company, or Section 7.02(a) or (b), in the case
         of a breach by Parent or the Merger Subsidiary, not to be satisfied or
         would reasonably be expected to prevent, materially delay or materially
         impair the ability of the Company, the Merger Subsidiary or Parent to
         consummate the Merger and the other transactions contemplated by this
         Agreement.

                  (c) DELAY. By Parent or the Company in the event that the
         Effective Time has failed to occur on or before March 31, 2001, except
         to the extent that such failure arises out of or results from the
         knowing action or inaction of the party seeking to terminate pursuant
         to this Section 8.01(c).

                  (d) NO REGULATORY APPROVAL. By the Company or Parent, if the
         approval of any Governmental Authority required for consummation of the
         Merger and the other transactions contemplated by this Agreement shall
         have been denied by final nonappealable action of such Governmental
         Authority, or such Governmental Authority shall have requested the
         permanent withdrawal of any application therefor, or any such approval
         shall have become final and unappealable and be made subject to any
         condition or restriction described in the proviso to Section 7.01(b).

                  (e) NO STOCKHOLDER APPROVAL. By Parent, if the Company
         Requisite Vote is not obtained at the Company Stockholders Meeting
         called to obtain the Company Requisite Vote.

                  (f) FAILURE TO RECOMMEND, ETC. By Parent, if at any time prior
         to the Company Stockholders Meeting, the Company's Board of Directors
         shall have failed to make its

                                      -46-
<PAGE>

         recommendation referred to in Section 6.03, withdrawn such
         recommendation or modified or changed such recommendation in a manner
         adverse to the interests of Parent.

                  (g) ACQUISITION PROPOSAL. By Parent, if the Board of Directors
         of the Company shall take any of the actions described in clause (ii)
         or (iii) of the proviso to Section 6.06.

                  8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (a) as set forth in Sections 8.03
and 9.01 hereof, (b) that the Stock Option Agreement shall be governed by its
own terms as to termination and (c) that termination will not relieve a
breaching party from liability for any knowing or willful breach of this
Agreement.

                  8.03 TERMINATION FEE. (a) In addition to any other rights that
Parent has under this Agreement, the Stock Option Agreement and/or otherwise, if
this Agreement is terminated by Parent pursuant to Section 8.01(f) or 8.01(g),
then the Company shall pay to Parent U.S. $14 million.

                  (b) Any payment required to be made under paragraph (a) above
shall be payable, without setoff, by wire transfer in immediately available
funds, to an account specified by Parent, within three Business Days following
such termination.

                  (c) The Company acknowledges that the agreements contained in
this Section 8.03 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails promptly to pay any amount due
pursuant to this Section 8.03, and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the payment
set forth in this Section 8.03, the Company shall pay to Parent's costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest on any amount due pursuant to this Section 8.03 from the date such
amount becomes payable until the date of such payment at the prime rate of
Citibank N.A. in effect on the date such payment was required to be made plus
two (2) percent.

                                   ARTICLE IX

                                 MISCELLANEOUS

                  9.01 SURVIVAL. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time or
termination of this Agreement; PROVIDED, HOWEVER, that (a) the agreements of the
parties contained in Article III and 6.05(b), and in this Article IX shall
survive the Effective Time and (b) if this Agreement is terminated prior to the
Effective Time, the agreements of the parties contained in Sections 8.02 and
8.03 and in this Article IX shall survive such termination.

                                      -47-
<PAGE>

                  9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any
provision of this Agreement may be (a) waived by the party benefitted by the
provision in a writing signed by such person, or (b) amended or modified at any
time, by an agreement in writing between the parties hereto and executed in the
same manner as this Agreement, except that, after adoption of the Agreement by
the stockholders of the Company, no amendment may be made which under applicable
law requires further approval of such stockholders without obtaining such
required further approval.

                  9.03 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original.

                  9.04 GOVERNING LAW AND VENUE. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of Delaware
applicable to contracts made and to be performed entirely within such State. The
parties hereby irrevocably submit to the jurisdiction of the Federal courts of
the United States of America and the state courts of the State of Delaware, in
each case located in the State of Delaware, solely in respect of the
interpretation and enforcement of the provisions of this Agreement and the Stock
Option Agreement and of the documents referred to in this Agreement and the
Stock Option Agreement, and in respect of the transactions contemplated hereby
and thereby, and hereby waive, and agree not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement hereof or
thereof or of any such document, that it is not subject thereto or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that this Agreement
or the Stock Option Agreement or any such document may not be enforced in or by
such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware Federal or state court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9.06 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.

                  9.05 EXPENSES. Whether or not the Merger is consummated, each
party hereto will bear all expenses incurred by it in connection with this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby.

                  9.06 NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given (a) on the
date of delivery, if personally delivered or telecopied (with confirmation), (b)
on the first Business Day following the date of dispatch, if delivered by a
recognized next-day courier service, or (c) on the third Business Day following
the date of mailing, if mailed by registered or certified mail (return receipt
requested), in each case to such party at its address or telecopy number set
forth below or such other address or numbers as such party may specify by notice
to the parties hereto.

                                      -48-
<PAGE>

If to the Company, to:

          Dain Rauscher Corporation
          Dain Rauscher Plaza
          60 South Sixth Street
          Minneapolis, Minnesota 55402
          Attention: Carla Smith
          Facsimile: (612) 371-7203

With a copy to:

          Dorsey and Whitney
          Pillsbury Center South
          220 South Sixth Street
          Minneapolis, Minnesota 55402
          Attention: William B. Payne
          Facsimile: (612) 340-8738

                    and

          Wachtell, Lipton, Rosen & Katz
          51 West 52nd Street
          New York, New York 10019
          Attention: Edward D. Herlihy
          Facsimile: (212) 403-2000

If to Parent or the Merger Subsidiary, to:

          Royal Bank of Canada
          200 Bay Street
          Royal Bank Plaza
          Toronto, Ontario
          Canada M5J 2J5
          Attention: Sandra Jorgenson
          Facsimile: (416) 955-3590

With a copy to:

          Donald J. Toumey, Esq.
          Sullivan & Cromwell
          125 Broad Street
          New York, New York 10004
          Facsimile: (212) 558-3588

                                      -49-
<PAGE>

                  9.07 ENTIRE UNDERSTANDING; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Stock Option Agreement and the documents referred to herein
and therein represent the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby and such
agreements supersede any and all other oral or written agreements heretofore
made, including the Confidentiality Agreement (except as set forth in Section
6.05(b) of this Agreement). Except for Section 6.11, which shall inure to the
benefit of and be enforceable by the Indemnified Parties named therein and their
heirs and legal representatives, nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

                  9.08 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, in whole or
in part (except by operation of law), by any of the parties hereto without the
prior written consent of each other party hereto, except that Parent and the
Merger Subsidiary may assign or delegate in their sole discretion any or all of
their rights, interests or obligations under this Agreement to any direct or
indirect, wholly owned subsidiary of Parent, but no such assignment shall
relieve Parent of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns.

                  9.09 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.

                           *          *          *

                                      -50-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized officers, all
as of the day and year first above written.


                                             DAIN RAUSCHER CORPORATION


                                             By:
                                                  ------------------------------
                                                  Name:
                                                  Title:


                                             ROYAL BANK OF CANADA


                                             By:
                                                  ------------------------------
                                                  Name:
                                                  Title:


                                             By:
                                                  ------------------------------
                                                  Name:
                                                  Title:


                                             VIKING MERGER SUBSIDIARY, INC.


                                             By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                      -51-