Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

AMONG

 

LEHMAN BROTHERS HOLDINGS INC.

 

LEHMAN BROTHERS INC.

 

LB 745 LLC

 

AND

 

BARCLAYS CAPITAL INC.

 

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Dated as of September 16, 2008

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Article I

DEFINITIONS

1

 

 

 

1.1

Certain Definitions

1

 

 

 

1.2

Other Definitional and Interpretive Matters

10

 

 

 

Article II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

11

 

 

 

2.1

Purchase and Sale of Assets

11

 

 

 

2.2

Excluded Assets

11

 

 

 

2.3

Assumption of Liabilities

11

 

 

 

2.4

Excluded Liabilities

12

 

 

 

2.5

Cure Amounts

13

 

 

 

2.6

Further Conveyances and Assumptions

13

 

 

 

2.7

Bulk Sales Laws

14

 

 

 

Article III

CONSIDERATION

14

 

 

 

3.1

Consideration

14

 

 

 

3.2

Payment of Cash Amount

14

 

 

 

3.3

Adjustment to Cash Amount

14

 

 

 

Article IV

CLOSING AND TERMINATION

15

 

 

 

4.1

Closing Date

15

 

 

 

4.2

Deliveries by Seller

15

 

 

 

4.3

Deliveries by Purchaser

16

 

 

 

4.4

Termination of Agreement

16

 

 

 

4.5

Procedure Upon Termination

16

 

 

 

4.6

Effect of Termination

16

 

 

 

Article V

REPRESENTATIONS AND WARRANTIES OF SELLER

18

 

 

 

5.1

Organization and Good Standing

18

 

 

 

5.2

Authorization of Agreement

18

 

 

 

5.3

Conflicts; Consents of Third Parties

18

 

 

 

5.4

Title to Purchased Assets

19

 

 

 

5.5

Compliance with Laws; Permits

19

 

 

 

5.6

No Other Representations or Warranties; Schedules

20

 

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Page

 

 

 

Article VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

20

 

 

 

6.1

Organization and Good Standing

20

 

 

 

6.2

Authorization of Agreement

21

 

 

 

6.3

Conflicts; Consents of Third Parties

21

 

 

 

6.4

Financial Capability

21

 

 

 

6.5

Condition of the Business

22

 

 

 

Article VII

BANKRUPTCY COURT MATTERS

22

 

 

 

7.1

[Reserved]

22

 

 

 

7.2

Bankruptcy Court Filings

22

 

 

 

Article VIII

COVENANTS

23

 

 

 

8.1

Access to Information

23

 

 

 

8.2

Conduct of the Business Pending the Closing

23

 

 

 

8.3

Consents

26

 

 

 

8.4

Regulatory Approvals

26

 

 

 

8.5

Further Assurances

27

 

 

 

8.6

Confidentiality

28

 

 

 

8.7

Preservation of Records

28

 

 

 

8.8

Publicity

29

 

 

 

8.9

Trademark License

29

 

 

 

8.10

Use of Purchased Intellectual Property

30

 

 

 

8.11

Deferred Transfers

31

 

 

 

8.12

Release of Guarantees

32

 

 

 

8.13

Transition Services

33

 

 

 

8.14

Subleases

33

 

 

 

8.15

Landlord Notice

33

 

 

 

8.16

Artwork

33

 

 

 

Article IX

EMPLOYEES AND EMPLOYEE BENEFITS

34

 

 

 

9.1

Employee Benefits

34

 

 

 

Article X

CONDITIONS TO CLOSING

35

 

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Page

 

 

 

10.1

Conditions Precedent to Obligations of Purchaser

35

 

 

 

10.2

Conditions Precedent to Obligations of Seller

36

 

 

 

10.3

Conditions Precedent to Obligations of Purchaser and Seller

37

 

 

 

10.4

Frustration of Closing Conditions

37

 

 

 

Article XI

[RESERVED]

37

 

 

 

Article XII

TAXES

37

 

 

 

12.1

Transfer Taxes

37

 

 

 

12.2

Prorations

38

 

 

 

12.3

Purchase Price Allocation

38

 

 

 

12.4

Adjustment to Purchase Price

38

 

 

 

Article XIII

MISCELLANEOUS

38

 

 

 

13.1

Expenses

38

 

 

 

13.2

Injunctive Relief

38

 

 

 

13.3

Submission to Jurisdiction; Consent to Service of Process

39

 

 

 

13.4

Waiver of Right to Trial by Jury

39

 

 

 

13.5

Entire Agreement; Amendments and Waivers

39

 

 

 

13.6

Governing Law

40

 

 

 

13.7

Notices

40

 

 

 

13.8

Severability

42

 

 

 

13.9

Binding Effect; Assignment

42

 

 

 

13.10

Non-Recourse

42

 

 

 

13.11

Counterparts

42

 

 

 

13.12

Scope of Purchased Assets

42

 

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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT, dated as of September 16, 2008 (this “Agreement”),
among LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation (“LBHI”), LEHMAN
BROTHERS INC., a Delaware corporation (“LBI” and, together with LBHI, the
“Seller”), LB 745 LLC, a Delaware limited liability company (“745”), and
BARCLAYS CAPITAL INC., a Connecticut corporation (“Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, LBHI is a debtor-in-possession under title 11 of the United States
Code, 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”), and filed voluntary
petitions for relief under chapter 11 of the Bankruptcy Code on September 15,
2008 in the United States Bankruptcy Court for the Southern District of New York
(Manhattan) (the “Bankruptcy Court”) (Case No. [08-13555]) (the “Bankruptcy
Case”);

 

WHEREAS, the Seller and its Subsidiaries presently conduct the Business;

 

WHEREAS, Seller and 745 desire to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase, acquire and assume from Seller and 745, pursuant
to Sections 363 and 365 of the Bankruptcy Code, all of the Purchased Assets and
Assumed Liabilities, all as more specifically provided herein; and

 

WHEREAS, an Affiliate of Purchaser has agreed to provide to LBHI a
debtor-in-possession facility (the “DIP Facility”) and has agreed to provide to
LBI certain other financing;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1                                 Certain Definitions.

 

For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms

 

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“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities, by
contract or otherwise.

 

“Breakup Fee and Competing Bid Order” means an order of the Bankruptcy Court in
the form attached as Exhibit A hereto.

 

“Business” means the U.S. and Canadian investment banking and capital markets
businesses of Seller including the fixed income and equities cash trading,
brokerage, dealing, trading and advisory businesses, investment banking
operations and LBI’s business as a futures commission merchant.

 

“Business Day” means any day of the year on which national banking institutions
in New York are open to the public for conducting business and are not required
or authorized to close.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Contract” means any contract, indenture, note, bond, lease or other agreement.

 

“Documents” means all files, documents, instruments, papers, books, reports,
records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers,
journals, title policies, customer lists, regulatory filings, operating data and
plans, technical documentation (design specifications, functional requirements,
operating instructions, logic manuals, flow charts, etc.), user documentation
(installation guides, user manuals, training materials, release notes, working
papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials related to or necessary for the
conduct of the Business and the Purchased Assets in each case whether or not in
electronic form.

 

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

 

“Excluded Assets” shall mean the following assets, properties, interests and
rights of Seller and its Subsidiaries:

 

(a)                                  the shares of capital stock, limited
liability company membership, general and limited partnership, and other equity
interests, of Seller and its Subsidiaries (other than (i) the capital stock of
Townsend Analytics and (ii) the capital stock or other equity interests of any
other Subsidiary that Seller and Purchaser may agree prior to the entry of the
Sale Order shall be a Purchased Asset);

 

(b)                                 all cash, cash equivalents, bank deposits or
similar cash items of LBI and its Subsidiaries (the “Retained Cash”) other than
$1.3 billion in cash, cash equivalents, bank deposits or similar cash items;

 

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(c)                                  all intercompany receivables;

 

(d)                                 the Excluded Contracts, including any
accounts receivable to the extent arising out of any Excluded Contract;

 

(e)                                  any Intellectual Property Rights that do
not constitute Purchased Intellectual Property;

 

(f)                                    any (i) confidential personnel and
medical records pertaining to any Excluded Employee; (ii) other books and
records that LBI is required by Law to retain, including, but not limited to,
books and records required to be retained by Rules 17a-3 and 17a-4 of the
Exchange Act with respect to the Purchased Assets or that LBHI reasonably
determines are necessary to retain including, without limitation, Tax Returns,
financial statements, and corporate or other entity filings; provided, however,
that Purchaser shall have the right to make copies of any portions of such
retained books and records that relate to the Business or any of the Purchased
Assets; and (iv) minute books, stock ledgers and stock certificates of
Subsidiaries..

 

 

(g)                                 any claim, right or interest of LBHI or any
of its Subsidiaries in or to any refund, rebate, abatement or other recovery for
Taxes, together with any interest due thereon or penalty rebate arising
therefrom, for any Tax period (or portion thereof) ending on or before the
Closing Date;

 

(h)                                 all insurance policies or rights to proceeds
thereof relating to the assets, properties, business or operations of Seller or
any of its Subsidiaries other than customer account insurance supplemental to
SIPC coverage included in the Business;

 

(i)                                     any rights, claims or causes of action
of Seller or any of its Subsidiaries against third parties relating to assets,
properties, business or operations of Seller or any of its Subsidiaries (other
than those primarily related to Purchased Assets) arising out of events
occurring on or prior to the Closing Date;

 

(j)                                     commercial real estate investments
(including commercial loans, equity investments in such commercial real estate
and other commercial real estate assets and all Archstone debt and equity
positions), private equity investments and hedge fund investments;

 

(k)                                  50% of each position in residential real
estate mortgage securities;

 

(l)                                     assets related to the soliciting,
placing, clearing and executing of buy and sell orders for derivatives contracts
by Lehman Brothers Derivative Products Inc. and all activities related or
ancillary thereto;

 

(m)                               all artwork owned by Seller and its
Subsidiaries;

 

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(n)                                 all assets primarily related to the IMD
Business and derivatives contracts;

 

(o)                                 any assets set aside, segregated, or
otherwise specifically identified as being held for the purpose of satisfying
Excluded Liabilities referred to in Section 2.4(e);

 

(p)                                 all real property leases of Seller and its
Subsidiaries, and all rights and obligations appurtenant thereto, as set forth
on Schedule 1.1(a), other than the Transferred Real Property Leases; and

 

(q)                                 Lehman Commercial Paper, Inc. and any assets
thereof.

 

“Excluded Contracts” means all of the Contracts of Seller and its Subsidiaries,
other than the Purchased Contracts.

 

“Furniture and Equipment” means all furniture, fixtures, furnishings, equipment,
vehicles, leasehold improvements, and other tangible personal property owned or
used by Seller and its Subsidiaries in the conduct of the Business, including
all desks, chairs, tables, Hardware, copiers, telephone lines and numbers,
telecopy machines and other telecommunication equipment, cubicles and
miscellaneous office furnishings and supplies.

 

“GAAP” means generally accepted accounting principles in the United States as of
the date hereof.

 

“Governmental Body” means any government or governmental or regulatory, judicial
or administrative, body thereof, or political subdivision thereof, whether
foreign, federal, state, national, supranational or local, or any agency,
instrumentality or authority thereof, or any court or arbitrator (public or
private) or any self-regulatory organization, including, but not limited to, the
Financial Industry Regulatory Authority.

 

“Hardware” means any and all computer and computer-related hardware, networks
and peripherals, including, but not limited to, information and communication
systems, computers, file servers, facsimile servers, scanners, color printers,
laser printers and networks.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“IMD Business” means the investment management business of Seller and its
Subsidiaries.

 

“Intellectual Property Rights”  means, collectively, all intellectual property
and other similar proprietary rights in any jurisdiction, whether owned or held
for use

 

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under license, whether registered or unregistered, including without limitation
such rights in and to:  (i) patents and applications therefor, including
continuations, divisionals, continuations-in-part, reissues, continuing patent
applications, reexaminations, and extensions thereof, any counterparts claiming
priority therefrom and patents issuing thereon (collectively, “Patents”) and
inventions, invention disclosures, discoveries and improvements, whether or not
patentable, (ii) all trademarks, service marks, trade names, service names,
brand names, all trade dress rights, logos, slogans, Internet domain names and
corporate names and general intangibles of a like nature, together with the
goodwill associated with any of the foregoing, and all applications,
registrations and renewals thereof and all common law rights thereto
(collectively, “Marks”), (iii) copyrights and registrations and applications
therefor and renewals and extensions thereof, and works of authorship, databases
and mask work rights, and all moral rights (collectively, “Copyrights”),
(iv) all Software, Technology, trade secrets and market and other data, and
rights to limit the use or disclosure of any of the foregoing by any Person, and
(v) all claims, causes of action and defenses relating to the enforcement of any
of the foregoing.

 

“Intellectual Property Licenses” means (i) any grant to a third Person of any
license, immunity, a covenant not to sue or otherwise any right to use or
exploit, any of the Purchased Intellectual Property owned by Seller or any of
its Subsidiaries, and (ii) any grant to Seller or its Subsidiaries of a license,
immunity, a covenant not to sue or otherwise any right to use or exploit any
Purchased Intellectual Property which is not owned by Seller or any of the
Subsidiaries.

 

“Knowledge of Seller” means the knowledge after due inquiry, as of the date of
this Agreement, of the senior officers and directors of Seller and its
Subsidiaries.

 

“Law” means any federal, state, local or foreign law, statute, code, ordinance,
rule or regulation (including rules of any self-regulatory organization).

 

“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or any proceedings or
investigations by or before a Governmental Body.

 

“Liability” means any debt, liability or obligation (whether direct or indirect,
known or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due), and including all costs and expenses
relating thereto.

 

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any
shareholder or similar agreement or encumbrance.

 

 “Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award of a Governmental Body.

 

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“Ordinary Course of Business” means the ordinary and usual course of normal
day-to-day operations of the Business through September 14, 2008 consistent with
past practice.

 

“Permits” means any approvals, authorizations, consents, licenses, permits,
registrations or certificates of a Governmental Body.

 

“Permitted Exceptions” means all (i) defects, exceptions, restrictions,
easements, rights of way and encumbrances of record, (ii) statutory liens for
current Taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith by appropriate
proceedings provided an appropriate reserve is established therefor;
(iii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or
incurred in the Ordinary Course of Business; (iv) zoning, entitlement and other
land use and environmental regulations by any Governmental Body provided that
such regulations have not been violated; (v) title of a lessor under a capital
or operating lease; (vi) Liens arising under the DIP Facility; and (vii) the
terms and provisions of the ground lease and related documents affecting the
property located at 745 Seventh Avenue, New York, NY (the “745 Seventh Ground
Lease”).

 

“Person” means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.

 

“Purchased Assets” means all of the assets of Seller and its Subsidiaries used
in connection with the Business (excluding the Excluded Assets), including;

 

(a)                                  the Retained Cash;

 

(b)                                 all deposits (including customer deposits,
security deposits for rent, electricity, telephone or otherwise and required
capital deposits) and prepaid charges and expenses of Seller and its
Subsidiaries associated with the Business, other than any deposits or prepaid
charges and expenses paid in connection with or relating to any Excluded Assets;

 

(c)                                  the Transferred Real Property Leases,
together with all improvements, fixtures and other appurtenances thereto and
rights in respect thereof;

 

(d)                                 government securities, commercial paper,
corporate debt, corporate equity, exchange traded derivatives and collateralized
short-term agreements with a book value as of the date hereof of approximately
$70 billion (collectively, “Long Positions”);

 

(e)                                  50% of each position in the residential
real estate mortgage securities;

 

(f)                                    the Furniture and Equipment;

 

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(g)                                 the Purchased Intellectual Property and all
income, royalties, damages and payments due or payable at the Closing or
thereafter relating to the Purchased Intellectual Property (including damages
and payments for past or future infringements or misappropriations thereof), the
right to sue and recover damages for past or future infringements or
misappropriations thereof and the right to fully and entirely stand in the place
of Seller in all matters related thereto;

 

(h)                                 the Purchased Contracts;

 

(i)                                     all Documents that are used in, held for
use in or intended to be used in, or that arise in connection with, or are
necessary to carry on or are related to the operation of the Business, including
Documents relating to products, services, marketing, advertising, promotional
materials, Purchased Intellectual Property, personnel files for Transferred
Employees and all files, customer files and documents (including credit
information), account agreements, books and records required to be maintained in
connection with the Business under applicable Law, compliance manuals,
supervisory policies and procedures, customer lists, supplier lists, records,
literature and correspondence, whether or not physically located on any of the
premises referred to in clause (d) above, but excluding (i) personnel files for
Excluded Employees of Seller or its Subsidiaries who are not Transferred
Employees, (ii) such files as may be required under applicable Law regarding
privacy, (iii) Documents which Seller is not permitted to transfer pursuant to
any contractual confidentiality obligation owed to any third party, and (iv) any
Documents primarily related toany Excluded Assets;

 

(j)                                     all Permits used by Seller in the
Business to the extent assignable under applicable Law;

 

(k)                                  all supplies owned by Seller and used in
connection with the Business;

 

(l)                                     all rights of Seller under
non-disclosure or confidentiality, non-compete, or non-solicitation agreements
with employees, contractors and agents of Seller or its Subsidiaries or with
third parties to the extent relating to the Business or the Purchased Assets (or
any portion thereof);

 

(m)                               rights to “Lehman” indices and analytics that
support the indices and all other indices and analytics used in the Business;

 

(n)                                 general trading tools supporting the
Business;

 

(o)                                 the stock of  Townsend Analytics and the
stock, equity interests or assets of any other Subsidiary of LBI that the Seller
and Purchaser may mutually agree on prior of the entry of the Sale Order and of
which a notice has been provided to any statutory committee;

 

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(p)                                 the equity interests or assets (at the
election of Purchaser in its sole discretion prior to the entry of the Sale
Order) of Eagle Energy Management LLC;

 

(q)                                 all past and present goodwill and other
intangible assets associated with or symbolized by the Business, including
customer and supplier lists and the goodwill associated with the Purchased
Intellectual Property;

 

(r)                                    Mercantile Exchange license agreements
with respect to 335 South LaSalle Street, Chicago, IL and 400 South LaSalle
Street, Chicago, IL; and

 

(s)                                  any insurance proceeds from the occurrence
after the date hereof and prior to Closing, of any casualty or event loss with
respect to any Transferred Real Property Leases or any properties subject
thereto.

 

“Purchased Contracts” means all Contracts designated as Purchased Contracts
pursuant to Section 2.5.

 

“Purchased Intellectual Property” means the Purchased Marks and all other
Intellectual Property Rights, Software and Technology throughout the world that
are used in, related to, or otherwise necessary for the Business, including all
Intellectual Property Rights embodied in or arising from the Purchased Assets.

 

“Purchased Marks” means the Mark “LEHMAN” and “LEHMAN BROTHERS” throughout the
world, all other Marks throughout the world containing or incorporating the name
“LEHMAN,” the Internet domain name www.lehman.com, all other Internet domain
names containing or incorporating any Purchased Marks, and any other Mark
throughout the world that is used in, related to, or otherwise necessary for the
Business; in each case, together with all of the goodwill associated therewith
and all registrations and applications for the foregoing and all common law
rights thereto.

 

“Sale Motion” means the motion or motions of Seller, in form and substance
reasonably acceptable to Purchaser and Seller, seeking approval and entry of the
Breakup Fee and Competing Bid Order and Sale Order.

 

“Sale Order” shall be an order or orders of the Bankruptcy Court in form and
substance reasonably acceptable to Purchaser and Seller approving this Agreement
and all of the terms and conditions hereof, and approving and authorizing Seller
to consummate the transactions contemplated hereby.  Without limiting the
generality of the foregoing, such order shall find and provide, among other
things, that (i) the Purchased Assets sold to Purchaser pursuant to this
Agreement shall be transferred to Purchaser free and clear of all Liens (other
than Liens created by Purchaser and Permitted Exceptions) and claims, such Liens
and claims to attach to the Purchase Price; (ii) Purchaser has acted in “good
faith” within the meaning of Section 363(m) of the Bankruptcy Code; (iii) this
Agreement was negotiated, proposed and entered into by the parties without
collusion, in good faith and from arm’s length bargaining positions; (iv) the
Bankruptcy Court shall

 

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retain jurisdiction to resolve any controversy or claim arising out of or
relating to this Agreement, or the breach hereof as provided in Section 13.3
hereof; and (v) this Agreement and the transactions contemplated hereby may be
specifically enforced against and binding upon, and not subject to rejection or
avoidance by, Seller or any chapter 7 or chapter 11 trustee of Seller.

 

“Software” means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies and application
programming interfaces, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing,
screens, user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons, and (iv) all software-related
specifications documentation including user manuals and other training
documentation related to any of the foregoing.

 

“Subsidiary” means any Person of which a majority of the outstanding voting
securities or other voting equity interests are owned, directly or indirectly,
by Seller.

 

“Tax Authority” means any state or local government, or agency, instrumentality
or employee thereof, charged with the administration of any law or regulation
relating to Taxes.

 

“Taxes” means (i) all federal, state, local or foreign taxes, charges or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, and (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any taxing authority in connection with any item
described in clause (i).

 

“Tax Return” means all returns, declarations, reports, estimates, information
returns and statements required to be filed in respect of any Taxes.

 

“Technology” means, collectively, all designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, business and marketing information,
research and development, technical data, programs, subroutines, tools,
materials, specifications, processes, inventions (whether patentable or
unpatentable and whether or not reduced to practice), apparatus, creations,
improvements, works of authorship and other similar materials, non-public or
confidential information, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other tangible embodiments of the foregoing,
in any form whether or not specifically listed herein, and all related
technology.

 

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“Transferred Real Property Leases” means the leases listed on Schedule 1.1(b) 
attached hereto and any rights and obligations appurtenant thereto.

 

1.2                                 Other Definitional and Interpretive Matters

 

(a)                                  Unless otherwise expressly provided, for
purposes of this Agreement, the following rules of interpretation shall apply:

 

Calculation of Time Period.  When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded.  If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

 

Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.

 

Exhibits/Schedules.  All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein.  Any matter or item disclosed on one schedule shall be
deemed to have been disclosed on each other schedule.  Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein shall be
defined as set forth in this Agreement.

 

Gender and Number.  Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

 

Headings.  The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement.  All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

 

Herein.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

 

Including.  The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

 

(b)                                 The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and, in the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as jointly drafted by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.

 

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ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

 

2.1                                 Purchase and Sale of Assets.  On the terms
and subject to the conditions set forth in this Agreement, at the Closing (as
defined below), Purchaser shall purchase, acquire and accept from the Seller and
745, and Seller and 745 shall sell, transfer, assign, convey and deliver (or
cause to be sold, transferred, assigned, conveyed and delivered) to Purchaser,
all of Seller’s and its applicable Subsidiaries’ right, title and interest in,
to and under the Purchased Assets free and clear of all Liens pursuant to
Section 363(f) of the Bankruptcy Code.

 

2.2                                 Excluded Assets.  Nothing herein contained
shall be deemed to sell, transfer, assign or convey the Excluded Assets to
Purchaser, and Seller (directly and indirectly) shall retain all right, title
and interest to, in and under the Excluded Assets.

 

2.3                                 Assumption of Liabilities.  On the terms and
subject to the conditions set forth in this Agreement, at the Closing, Purchaser
shall assume, effective as of the Closing, and shall timely perform and
discharge in accordance with their respective terms, the following  Liabilities
of Seller and its Subsidiaries (collectively, the “Assumed Liabilities”):

 

(a)                                  all Liabilities of Seller incurred, after
the Closing, in connection with the Business;

 

(b)                                 all Liabilities of Seller under the
Purchased Contracts arising after, with respect to each entity comprising
Seller, the date on which such entity commenced a voluntary case or cases under
Chapter 11 or Chapter 7, as the case may be, of the Bankruptcy Code;

 

(c)                                  all Liabilities assumed under Article IX;

 

(d)                                 accounts payable incurred in the Ordinary
Course of Business of Seller after, with respect to each entity comprising
Seller, the date on which such entity commenced a voluntary case or cases under
Chapter 11 or Chapter 7, as the case may be, of the Bankruptcy Code, associated
with the Business other than any accounts payable arising out of one in
connection with any Excluded Contract (including, for the avoidance of doubt,
(i) invoiced accounts payable and (ii) accrued but uninvoiced accounts payable);

 

(e)                                  all Transfer Taxes applicable to the
transfer of the Purchased Assets pursuant to this Agreement;

 

(f)                                    all other Liabilities to the extent
related to the Business, the Purchased Assets or the Transferred Employees
arising after the Closing;

 

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(g)                                 all Liabilities under Transferred Real
Property Leases from the date of Closing forward;

 

(h)                                 all Liabilities relating to amounts required
to be paid by Purchaser hereunder; and

 

(i)                                     all short positions and “repos” relating
to any securities or interests of the types included in the definition of “Long
Positions” with a book value as of the date hereof of approximately $69 billion
(collectively, “Short Positions” and, together with the Long Positions,
“Positions”).

 

2.4                                 Excluded Liabilities.  Notwithstanding
anything herein to the contrary, Purchaser will not assume or be liable for any
Excluded Liabilities.  “Excluded Liabilities” shall mean all Liabilities of
Seller and its Subsidiaries to the extent they do not arise out of the Business
and the following Liabilities:

 

(a)                                  all Liabilities arising out of Excluded
Assets, including Contracts that are not Purchased Contracts;

 

(b)                                 except as otherwise provided in Article XII,
all Liabilities for Taxes of Seller for any Tax periods (or portions thereof)
ending on or before the Closing Date;

 

(c)                                  except as otherwise provided in this
Agreement and other than any cure amounts that Purchaser is required to pay
pursuant to Section 2.5, Liabilities incurred in the Ordinary Course of Business
existing prior to the filing of the Bankruptcy Case that are subject to
compromise under the Bankruptcy Case (the “Compromised Liabilities”);

 

(d)                                 except as expressly assumed pursuant to
Article IX hereof, any Liabilities relating to the employment, potential
employment or termination of employment of any Person relating to or arising out
of any period prior to the Closing, including without limitation any Liability
under or relating to any employee benefit plan, program, agreement or
arrangement, including in respect of equity compensation plans and tax-qualified
or not tax-qualified pension or saving plans as to which the parties agree there
shall be no transfer to or assumption of Liabilities by the Purchaser;

 

(e)                                  all Liabilities relating to amounts
required to be paid by Seller, hereunder, including upon any breach;

 

(f)                                    all Liabilities under Excluded Real
Property Leases and Transferred Real Property Leases other than Liabilities
under Transferred Real Property Leases from the date of Closing forward; and

 

(g)                                 all intercompany payables.

 

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2.5                                 Cure Amounts. For a period of 60 days after
the Closing, the Purchaser shall have the right upon notice to Seller to
designate any contract related to the assets purchased from the Seller by
Purchaser or its Affiliates (the “Related Contracts”) as either (1) a Purchased
Contract or (2) a Contract not designated as a Purchase Contract (a “Rejected
Contract”).  Until a Related Contract is so designated, Buyer shall be obligated
to pay or cause to be paid ordinary course amounts due under such contracts in
accordance with the terms thereof.  If a Related Contract is designated as a
Purchased Contract, such Purchased Contract shall be assigned to the Purchaser
and upon such assignment Purchaser shall be obligated to pay or cause to be paid
the cure amount in respect of such Purchased Contract.  If a Related Contract is
designated as a Rejected Contract, Purchaser shall have no further obligations
in respect thereof.  In the event of any dispute relating to such cure amount,
Purchaser shall escrow such funds in a manner satisfactory to the court. This
Section will not apply to real property leases.

 

2.6                                 Further Conveyances and Assumptions.

 

(a)                                  From time to time following the Closing,
Seller shall, or shall cause its Affiliates to, make available to Purchaser such
data in personnel records of Transferred Employees as is reasonably necessary
for Purchaser to transition such employees into Purchaser’s records.

 

(b)                                 From time to time following the Closing,
without further consideration, Seller and Purchaser shall, and shall cause their
respective Affiliates to, do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged or delivered, all such further conveyances, deeds,
assignments, notices, assumptions, releases, acquaintances, powers of attorney
and assurances (including any notarization, authentication, legalization and
consularization of the signatures of Seller’s and its Subsidiaries’
representatives), and such other instruments, and shall take such further
actions, as may be reasonably necessary or appropriate to assure fully to
Purchaser and its respective successors or assigns, all of the properties,
rights, titles, interests, estates, remedies, powers and privileges intended to
be conveyed to Purchaser under this Agreement and the Seller Documents, and to
assure fully to Seller and its Affiliates and their successors and assigns, the
assumption of the liabilities and obligations intended to be assumed by
Purchaser under this Agreement and the Seller Documents, and to otherwise make
effective the transactions contemplated hereby and thereby.

 

(c)                                  If any third-party consent is required for
the assignment of any Intellectual Property Licenses to Purchaser and such
consent cannot be obtained, then, to the extent permitted by Applicable Law,
Seller shall sublicense whatever rights they are permitted to sublicense under
the respective Intellectual Property Licenses, provided such sublicense is at no
cost to Seller.  If, however, Seller is permitted to sublicense only at a one
time, fixed payment or an ongoing fee, Seller shall notify Purchaser thereof
and, only if Purchaser agreed in writing to be responsible to such payment or
fee, as applicable, Seller shall sublicense whatever rights it is permitted to
sublicense under the respective Intellectual Property Licenses, subject to the
payment or fee being paid by Purchaser.

 

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2.7                                 Bulk Sales Laws.  Purchaser hereby waives
compliance by Seller and its Subsidiaries with the requirements and provisions
of any “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable
with respect to the sale and transfer of any or all of the Purchased Assets to
Purchaser.

 

ARTICLE III

CONSIDERATION

 

3.1                                 Consideration.  The aggregate consideration
for the Purchased Assets shall be (a) the Cash Amount and (b) the assumption of
the Assumed Liabilities by Purchaser.  The “Cash Amount” shall equal an amount
in cash equal to the sum of (i) $250 million, (ii) the appraised value (as
reasonably determined by an independent, recognized appraiser) of the Lehman
headquarters at 745 Seventh Avenue in New York City less a reasonable market
commission that would be paid assuming a sale of such property as of the
Closing, (iii) the appraised value (as reasonably determined by an independent,
recognized appraiser) of the Cranford New Jersey Data Center less a reasonable
market commission that would be paid assuming a sale of such property as of the
Closing, and (iv) the appraised value (as reasonably determined by an
independent, recognized appraiser) of the Piscataway New Jersey Data Center less
a reasonable market commission that would be paid assuming a sale of such
property as of the Closing.  For illustrative purposes only, the parties note
that as of the date hereof they expect that the Cash Amount will be
approximately $1.7 billion (less the aforementioned assumed commissions).

 

3.2                                 Payment of  Cash Amount.  On the Closing
Date, Purchaser shall pay the Cash Amount to Seller, which shall be paid by wire
transfer of immediately available funds into an account designated by Seller.

 

3.3                                 Adjustment to Cash Amount.  Promptly
following the first anniversary of the Closing Date, Purchaser shall determine
with respect to each Position (long or short, including repos), that was part of
the Purchased Assets and was sold on or prior to such first anniversary, the
profit or loss realized from such sale (such profit or loss determined by
reference to LBI’s mark (book value) for such Position as of the date hereof). 
Purchaser shall provide reasonable supporting information to Seller with respect
to such calculation of profit or loss.  If the aggregate amount of all such
profits exceeds the aggregate amount of all such losses (a) by up to $500
million, Purchaser shall promptly pay Seller such net amount, or (b) by more
than $500 million, Purchaser shall promptly pay Seller the sum of $500 million
plus one-half of the excess of such net amount over $500 million (but in no
event shall Purchaser pay Seller more than $750 million pursuant to this
Section 3.3).  For purposes of this Section 3.3, the time value of money shall
be disregarded and no interest shall be deemed earned.

 

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ARTICLE IV

 

CLOSING AND TERMINATION

 

4.1                                 Closing Date.  Subject to the satisfaction
of the conditions set forth in Sections 10.1, 10.2 and 10.3 hereof (or the
waiver thereof by the party entitled to waive that condition), the closing of
the purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities provided for in Article II hereof (the “Closing”) shall take place
at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue, New
York, New York 10153 (or at such other place as the parties may designate in
writing) at 10 a.m (New York time) on the day of, or at Purchaser’s election the
Business Day following, the satisfaction or waiver of the conditions set forth
in Article X (other than conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of such conditions),
unless another time or date, or both, are agreed to in writing by the parties
hereto.  The date on which the Closing shall be held is referred to in this
Agreement as the “Closing Date.”  Unless otherwise agreed by the parties in
writing, the Closing shall be deemed effective and all right, title and interest
of Seller to be acquired by Purchaser hereunder shall be considered to have
passed to Purchaser as of 12:01 a.m. (New York time) on the Closing Date.

 

4.2                                 Deliveries by Seller.  At the Closing,
Seller shall deliver to Purchaser:

 

(a)                                  a duly executed, reasonably customary bill
of sale in the form of Exhibit A hereto;

 

(b)                                 duly executed, reasonably customary
assignment and assumption agreements (including, with respect to the 745 Seventh
ground lease, all assignments that were entered into in connection with Seller’s
acquisition of such lease) and duly executed assignments of the U.S. and
Canadian trademark registrations and applications included in the Purchased
Intellectual Property, in a form suitable for recording in the U.S. and Canadian
trademark office, and general assignments of all other Purchased Intellectual
Property;

 

(c)                                  a certificate, duly executed by Seller,
that Seller is not a “foreign person” within the meaning of Section 1445 of the
Code;

 

(d)                                 duly executed Seller Sublease and Purchaser
Subleases; and

 

(e)                                  all other instruments of conveyance and
transfer, in form and substance reasonably acceptable to Purchaser, as may be
necessary to convey the Purchased Assets to Purchaser or as Purchaser may
reasonably request, including such instruments of conveyance and transfer in
form and substance comparable to the instruments of conveyance and transfer
exchanged in connection with Seller’s acquisition of the 745 Seventh Ground
Lease.

 

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4.3                                 Deliveries by Purchaser.  At the Closing,
Purchaser shall deliver to Seller:

 

(a)                                  the Purchase Price, in immediately
available funds, as set forth in Section 3.2 hereof;

 

(b)                                 a duly executed, reasonably customary
assignment and assumption agreement; and

 

(c)                                  duly executed Purchaser Subleases and
Seller Sublease.

 

4.4                                 Termination of Agreement.  This Agreement
may be terminated prior to the Closing as follows:

 

(a)                                  by Purchaser or Seller, if the Closing
shall not have occurred by the close of business on September 24, 2008 (the
“Termination Date”);

 

(b)                                 by mutual written consent of Seller and
Purchaser;

 

(c)                                  by Seller or Purchaser if there shall be in
effect a final nonappealable Order of a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; it being agreed that the parties hereto
shall promptly appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence);

 

(d)                                 by Purchaser upon the entry of an order by
the Bankruptcy Court authorizing a Competing Transaction; or

 

(e)                                  by Purchaser if the Breakup Fee and
Competing Bid Order is not approved by the Bankruptcy Court in the form attached
hereto as Exhibit A.

 

4.5                                 Procedure Upon Termination.  In the event of
termination and abandonment by Purchaser or Seller, or both, pursuant to
Section 4.4 hereof, written notice thereof shall forthwith be given to the other
party or parties, and this Agreement shall terminate, and the purchase of the
Purchased Assets hereunder shall be abandoned, without further action by
Purchaser or Seller.  If this Agreement is terminated as provided herein each
party shall redeliver all documents, work papers and other material of any other
party relating to the transactions contemplated hereby, whether so obtained
before or after the execution hereof, to the party furnishing the same.

 

4.6                                 Effect of Termination.

 

(a)                                  In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of its
duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to Purchaser or
Seller; provided, however, that the obligations of the parties set

 

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forth in Sections 4.6 and 8.6 and Article XIII hereof shall survive any such
termination and shall be enforceable hereunder.

 

(b)                                 Nothing in this Section 4.6 shall relieve
Purchaser or Seller of any liability for a material breach of this Agreement
prior to the date of termination, The damages recoverable by the non-breaching
party shall include all attorneys’ fees reasonably incurred by such party in
connection with the transactions contemplated hereby.

 

(c)                                  The Confidentiality Agreement shall survive
any termination of this Agreement and nothing in this Section 4.6 shall relieve
Purchaser or Seller of their obligations under the Confidentiality Agreement;
provided, that upon the termination of this Agreement, the non-solicitation
obligations of Purchaser and its Affiliates under the Confidentiality Agreement
shall be of no further force and effect; provided further that upon the Closing,
the non-solicitation obligation of Purchaser and its Affiliates under the
Confidentiality Agreement with respect to non-U.S. employees of the
broker-dealer and investment banking business shall be of no further force and
effect.

 

(d)                                 In the event that Purchaser terminates this
Agreement pursuant to Section 4.4(d), Sellers shall pay to Purchaser (i) the
Break-Up Fee promptly upon such termination and (ii) the Expense Reimbursement
as provided in the Breakup Fee and Competing Bid Order.

 

(e)                                  In the event that Purchaser or Seller
terminates this Agreement pursuant to Section 4.4(a) and at any time after the
date of this Agreement and prior to such termination a bona fide proposal for a
Competing Transaction shall have been publicly disclosed or otherwise
communicated to the Sellers and shall not have been irrevocably withdrawn, then
if a Qualified Bid shall be consummated within twelve months after such
termination Sellers shall pay to Purchaser (i) the Break-Up Fee and (ii) the
Expense Reimbursement as provided in the Breakup Fee and Competing Bid Order on
the date of such consummation.

 

(f)                                    The parties hereto acknowledge that the
agreements contained in this Section 4.6 are an integral part of the
transactions contemplated by this Agreement. The Sellers shall be jointly and
severally liable for any amount due to Purchaser pursuant to this Section 4.6. 
In the event that the Sellers shall fail to pay any amounts due pursuant to this
Section 4.6, the Sellers shall reimburse Purchaser for all reasonable costs and
expenses actually incurred or accrued by Purchaser (including reasonable fees
and expenses of counsel) in connection with the collection under and enforcement
of this Section 4.6.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Purchaser that:

 

5.1                                 Organization and Good Standing.  Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted.  Seller is duly qualified or authorized to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized or in
good standing would not have a material adverse effect.

 

5.2                                 Authorization of Agreement.  Except for such
authorization as is required by the Bankruptcy Court (as hereinafter provided
for), Seller has all requisite power, authority and legal capacity to execute
and deliver this Agreement and Seller has all requisite power, authority and
legal capacity to execute and deliver each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
Seller in connection with the consummation of the transactions contemplated by
this Agreement (the “Seller Documents”), to perform their respective obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  The execution and delivery of this Agreement and the Seller
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on the part
of Seller.  This Agreement has been, and each of the Seller Documents will be at
or prior to the Closing, duly and validly executed and delivered by Seller which
is a party thereto and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto, the entry of the Sale Order, and, with
respect to Seller’s obligations under Section 4.4, the entry of the Breakup Fee
and Competing Bid Order) this Agreement constitutes, and each of the Seller
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of Seller enforceable against Seller or, as the case may be,
its Subsidiary in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).

 

5.3                                 Conflicts; Consents of Third Parties.

 

(a)                                  None of the execution and delivery by
Seller of this Agreement or by Seller and its Subsidiaries of the Seller
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by Seller and its Subsidiaries with any of the provisions hereof
or thereof will conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination or cancellation under any provision of (i) the certificate of
incorporation and by-laws or comparable organizational documents of Seller or
any Subsidiary; (ii) subject

 

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to entry of the Sale Order, any Order of any Governmental Body applicable to
Seller or any of the properties or assets of Seller as of the date hereof; other
than, in the case of clause (ii), such conflicts, violations, defaults,
terminations or cancellations that would not have a material adverse effect.

 

(b)                                 No consent, waiver, approval, Order, Permit
or authorization of, or declaration or filing with, or notification to, any
Person or Governmental Body is required on the part of Seller or any Subsidiary
in connection with the execution and delivery of this Agreement or the Seller
Documents, the compliance by Seller or any Subsidiary with any of the provisions
hereof or thereof, the consummation of the transactions contemplated hereby or
thereby or the taking by Seller or any Subsidiary of any other action
contemplated hereby or thereby, except for (i) compliance with the applicable
requirements of the HSR Act, (ii) the entry of the Sale Order, (iii) the entry
of the Breakup Fee and Competing Bid Order with respect to Seller’s obligations
under Section 4.6, (iv) filings of applications and notices with, and receipt of
consents, authorizations, approvals, exemptions or non-objections from, the
Securities and Exchange Commission (the “SEC”), foreign and state securities
authorities, the Financial Industry Regulatory Authority (“FINRA”), the
Commodity Futures Trading Commission (“CFTC”), National Futures Association
(“NFA”) applicable securities, commodities and futures exchanges, the Financial
Services Authority (“FSA”) and other industry self-regulatory organizations
(“SRO”), (v) the filing of any other required applications, filings or notices
with the Board of Governors of the Federal Reserve System (the “Federal
Reserve”), any foreign, federal or state banking, other regulatory,
self-regulatory or enforcement authorities or any courts, administrative
agencies or commissions or other governmental authorities or instrumentalities,
and (vi) such other consents, waivers, approvals, Orders, Permits,
authorizations, declarations, filings and notifications, the failure of which to
obtain or make would not have a material adverse effect.

 

5.4                                 Title to Purchased Assets.  Other than the
real property subject to the Transferred Real Property Leases, intellectual
property licensed to Seller and the personal property subject to personal
property leases, Seller owns (directly or indirectly) each of the Purchased
Assets, and Purchaser will be vested with good and exclusive title to such
Purchased Assets, free and clear of all Liens, other than Permitted Exceptions,
to the fullest extent permissible under Section 363(f) of the Bankruptcy Code. 
The Purchased Assets, together with all of Seller’s agreements hereunder and
under the Seller Documents, constitute all of the necessary assets and services
used by Seller and its Affiliates to operate the Business as it is currently
operated.

 

5.5                                 Compliance with Laws; Permits.

 

(a)                                  Seller and its Subsidiaries, and their
respective personnel, are in compliance with all Laws applicable to their
respective operations or assets or the Business, except where the failure to be
in compliance would not have a material adverse effect.  Neither Seller nor any
of its Subsidiaries has received any written notice of or been charged with the
violation of any Laws applicable to their respective operations or

 

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assets or the Business, except where such violation would not have a material
adverse effect.

 

(b)                                 Seller and its Subsidiaries currently have
all Permits which are required for the operation of the Business as presently
conducted, except where the absence of which would not have a material adverse
effect.  Neither Seller nor any of its Subsidiaries is in default or violation
(and no event has occurred which, with notice or the lapse of time or both,
would constitute a default or violation) of any term, condition or provision of
any Permit to which it is a party required for the operation of the Business as
presently conducted, except where such default or violation would not be
material.

 

5.6                                 No Other Representations or Warranties;
Schedules.  Except for the representations and warranties contained in this
Article V (as modified by the Schedules hereto), neither Seller nor any other
Person makes any other express or implied representation or warranty with
respect to Seller, its Subsidiaries, the Business, the Purchased Assets, the
Assumed Liabilities or the transactions contemplated by this Agreement, and
Seller disclaims any other representations or warranties, whether made by
Seller, any Affiliate of Seller or any of their respective officers, directors,
employees, agents or representatives.  Except for the representations and
warranties contained in Article V hereof (as modified by the Schedules hereto),
Seller (i) expressly disclaims and negates any representation or warranty,
expressed or implied, at common law, by statute, or otherwise, relating to the
condition of the Purchased Assets (including any implied or expressed warranty
of merchantability or fitness for a particular purpose, or of conformity to
models or samples of materials) and (ii) disclaims all liability and
responsibility for any representation, warranty, projection, forecast,
statement, or information made, communicated, or furnished (orally or in
writing) to Purchaser or its Affiliates or representatives (including any
opinion, information, projection, or advice that may have been or may be
provided to Purchaser by any director, officer, employee, agent, consultant, or
representative of Seller or any of its Affiliates).  Seller makes no
representations or warranties to Purchaser regarding the probable success or
profitability of the Business.  The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed or is material or that such matter would
result in a material adverse effect.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to Seller that:

 

6.1                                 Organization and Good Standing.  Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Connecticut and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now conducted.

 

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6.2                                 Authorization of Agreement.  Purchaser has
full corporate power and authority to execute and deliver this Agreement and
each other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by Purchaser in connection with the consummation of
the transactions contemplated hereby and thereby (the “Purchaser Documents”),
and to consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by Purchaser of this Agreement and each
Purchaser Document have been duly authorized by all necessary corporate action
on behalf of Purchaser.  This Agreement has been, and each Purchaser Document
will be at or prior to the Closing, duly executed and delivered by Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each Purchaser Document when
so executed and delivered will constitute, the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).

 

6.3                                 Conflicts; Consents of Third Parties.

 

(a)                                  None of the execution and delivery by
Purchaser of this Agreement or the Purchaser Documents, the consummation of the
transactions contemplated hereby or thereby, or the compliance by Purchaser with
any of the provisions hereof or thereof will conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of (i) the certificate of incorporation and by-laws of Purchaser,
(ii)  any Contract or Permit to which Purchaser is a party or by which Purchaser
or its properties or assets are bound,  (iii) any Order of any Governmental Body
applicable to Purchaser or by which any of the properties or assets of Purchaser
are bound or (iv) any applicable Law.

 

(b)                                 No consent, waiver, approval, Order, Permit
or authorization of, or declaration or filing with, or notification to, any
Person or Governmental Body is required on the part of Purchaser in connection
with the execution and delivery of this Agreement or the Purchaser Documents,
the compliance by Purchaser with any of the provisions hereof or thereof, the
consummation of the transactions contemplated hereby or thereby or the taking by
Purchaser of any other action contemplated hereby or thereby, or for Purchaser
to conduct the Business, except for compliance with the regulatory regimes
referred to in Section 5.3(b) or as would not have a material adverse effect.

 

6.4                                 Financial Capability.  Purchaser (i) has,
and at the Closing will have, sufficient internal funds) available to pay the
Cash Amount and any expenses incurred by Purchaser in connection with the
transactions contemplated by this Agreement, (ii) has, and at the Closing will
have, the resources and capabilities (financial or otherwise) to

 

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perform its obligations hereunder, and (iii) has not incurred any obligation,
commitment, restriction or Liability of any kind, which would impair or
adversely affect such resources and capabilities.

 

6.5                                 Condition of the Business.  Notwithstanding
anything contained in this Agreement to the contrary, Purchaser acknowledges and
agrees that Seller is not making any representations or warranties whatsoever,
express or implied, beyond those expressly given by Seller in Article V hereof
(as modified by the Schedules hereto as supplemented or amended), and Purchaser
acknowledges and agrees that, except for the representations and warranties
contained therein, the Purchased Assets and the Business are being transferred
on a “where is” and, as to condition, “as is” basis.  Any claims Purchaser may
have for breach of representation or warranty shall be based solely on the
representations and warranties of Seller set forth in Article V hereof (as
modified by the Schedules hereto as supplemented or amended).  Purchaser further
represents that neither Seller nor any of its Affiliates nor any other Person
has made any representation or warranty, express or implied, as to the accuracy
or completeness of any information regarding Seller or any of its Subsidiaries,
the Business or the transactions contemplated by this Agreement not expressly
set forth in this Agreement, and none of Seller, any of its Affiliates or any
other Person will have or be subject to any liability to Purchaser or any other
Person resulting from the distribution to Purchaser or its representatives or
Purchaser’s use of, any such information, including any confidential memoranda
distributed on behalf of Seller relating to the Business or other publications
or data room information provided to Purchaser or its representatives, or any
other document or information in any form provided to Purchaser or its
representatives in connection with the sale of the Business and the transactions
contemplated hereby.  Purchaser acknowledges that it has conducted to its
satisfaction, its own independent investigation of the Business and, in making
the determination to proceed with the transactions contemplated by this
Agreement, Purchaser has relied on the results of its own independent
investigation.

 

ARTICLE VII

BANKRUPTCY COURT MATTERS

 

7.1                                 [Reserved]

 

7.2                                 Bankruptcy Court Filings.  As promptly as
practicable following the execution of this Agreement, Seller shall file with
the Bankruptcy Court the Sale Motion seeking entry of the Sale Order and the
Breakup Fee and Competing Bid Order.  Purchaser agrees that it will promptly
take such actions as are reasonably requested by Seller to assist in obtaining
entry of the Sale Order and the Breakup Fee and Competing Bid Order and a
finding of adequate assurance of future performance by Purchaser, including
furnishing affidavits or other documents or information for filing with the
Bankruptcy Court for the purposes, among others, of providing necessary
assurances of performance by Purchaser under this Agreement and demonstrating
that Purchaser is a “good faith” purchaser under Section 363(m) of the
Bankruptcy Code.  Purchaser shall

 

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 not, without the prior written consent of Seller, file, join in, or otherwise
support in any manner whatsoever any motion or other pleading relating to the
sale of the Purchased Assets hereunder.  In the event the entry of the Sale
Order or the Breakup Fee and Competing Bid Order shall be appealed, Seller and
Purchaser shall use their respective reasonable efforts to defend such appeal.

 

ARTICLE VIII

 

COVENANTS

 

8.1                                 Access to Information.  Seller agrees that,
until the earlier of the Closing and termination of this Agreement, Purchaser
shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Business
and such examination of the books and records of the Business, the Purchased
Assets and the Assumed Liabilities as it reasonably requests and to make
extracts and copies of such books and records.  Any such investigation and
examination shall be conducted during regular business hours upon reasonable
advance notice and under reasonable circumstances and shall be subject to
restrictions under applicable Law.  Seller shall cause the officers, employees,
consultants, agents, accountants, attorneys and other representatives of Seller
and its Subsidiaries to cooperate with Purchaser and Purchaser’s representatives
in connection with such investigation and examination, and Purchaser and its
representatives shall cooperate with Seller and its representatives and shall
use their reasonable efforts to minimize any disruption to the Business. 
Notwithstanding anything herein to the contrary, no such investigation or
examination shall be permitted to the extent that it would require Seller or any
of its Subsidiaries to disclose information subject to attorney-client privilege
or conflict with any confidentiality obligations to which Seller or any of its
Subsidiaries is bound.

 

8.2                                 Conduct of the Business Pending the
Closing.  In order to attempt to preserve the going concern value of the
Business, Purchaser shall have the right to be on-site and shall coordinate and
consult with representatives of Seller regarding the business, operations and
management of the Business   In addition, until the earlier of the Closing and
termination of this Agreement, except (1) as required by applicable Law, (2) as
otherwise expressly contemplated by this Agreement, or (3) with the prior
written consent of Purchaser:

 

(a)                                  Seller shall, and shall use its best
efforts to cause its Subsidiaries whose equity or assets constitute Purchased
Assets to:

 

(i)                                     conduct the Business only in the
Ordinary Course of Business (recognizing its current distressed state); and

 

(ii)                                  use its commercially reasonable efforts to
(A) preserve the present business operations, organization and goodwill of the
Business, and (B) 

 

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preserve the present relationships with customers and suppliers of the Business
and Seller’s Subsidiaries (recognizing that Seller reserves the right to cause
any of its Subsidiaries, other than a Subsidiary the equity or assets of which
constitutes a Purchased Asset, to commence a proceeding under the Bankruptcy
Code or other applicable state or foreign law); and

 

(b)                                 Seller shall not, and shall not permit its
Subsidiaries whose equity or assets constitute Purchased Assets to, solely as it
relates to the Business:

 

(i)                                     other than in the Ordinary Course of
Business, (A) materially increase the annual level of compensation of any
director or executive officer of Seller, (B) increase the annual level of
compensation payable or to become payable by Seller or any of its Subsidiaries
to any such director or executive officer, (C) grant any unusual or
extraordinary bonus, benefit or other direct or indirect compensation to any
such director or executive officer, or (D) enter into any employment, deferred
compensation, severance, consulting, non-competition or similar agreement (or
amend any such agreement) to which Seller or any of its Subsidiaries is a party
or involving any such director or executive officer, except, in each case, as
required by applicable Law from time to time in effect or by any existing
employee benefit plans;

 

(ii)                                  make or rescind any material election
relating to Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or except as may be required by applicable Law or GAAP, make any material change
to any of its methods of accounting or methods of reporting income or deductions
for Tax or accounting practice or policy from those employed in the preparation
of its most recent tax returns;

 

(iii)                               subject any of the Purchased Assets to any
Lien, except for Permitted Exceptions;

 

(iv)                              cancel or compromise any material debt or
claim or waive or release any material right of Seller or any of its
Subsidiaries that constitutes a Purchased Asset except in the Ordinary Course of
Business;

 

(v)                                 [Reserved];

 

(vi)                              enter into, modify or terminate any labor or
collective bargaining agreement or, through negotiation or otherwise, make any
commitment or incur any liability to any labor organization;

 

(vii)                           other than (A) in the Ordinary Course of
Business or (B) secured borrowings from the Federal Reserve Bank under the
Primary Dealer Facility, incur any indebtedness for borrowed money, issue any
debt securities,

 

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assume, guarantee, endorse or otherwise become responsible for the obligations
of any other individual, corporation or other entity, or make any loan or
advance or capital contribution to, or investment in, any person, in any case
that would be related to the Business or constitute an Assumed Liability;

 

(viii)                        set any record date or payment date for the
payment of any dividends on its capital stock or make, declare or pay any
dividend, or make any other distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital stock or any securities
or obligations convertible (whether currently convertible or convertible only
after the passage of time or the occurrence of certain events) into or
exchangeable for any shares of its capital stock;

 

(ix)                                sell, transfer, pledge, lease, license,
mortgage, encumber or otherwise dispose of any of Purchased Assets (including
pursuant to securitizations) to any individual, corporation or other entity or
cancel, release or assign any material amount of indebtedness related to the
Business to any such person or any claims held by any such person, other than
any such transactions as are in the Ordinary Course of Business;

 

(x)                                   transfer ownership, or grant any license
or other rights, to any person or entity of or in respect of any Purchased
Intellectual Property, other than grants of non-exclusive licenses pursuant to
license agreements entered into in the Ordinary Course of Business;

 

(xi)                                in connection with the Business, make any
investment in, or any acquisition of, any business entity or division, by
merger, consolidation, asset purchase or other business combination, or by
contributions to capital; or make any property transfers or purchases of any
property or assets, in or from any other individual, corporation, joint venture
or other entity;

 

(xii)                             in connection with the Business, conduct its
operations or take actions related to trading or credit extension in any manner
other than in the Ordinary Course of Business;

 

(xiii)                          change in any material respect the policies,
practices and procedures governing operations of the Business;

 

(xiv)                         amend or otherwise modify, except in the Ordinary
Course of Business, or knowingly violate in any material respect the terms of,
any Purchased Contract, or (ii) except as may be required by applicable Law,
create or renew any agreement or contract or other binding obligation related to
the Business containing (A) any material restriction on the ability of Purchaser
to conduct the Business as it is presently being conducted or (B) any material

 

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restriction on the ability of Purchaser to engage in any type of activity or
business after the Closing;

 

(xv)                            abandon, cancel, let lapse, fail to renew, fail
to continue to prosecute, protect, or defend, or dispose of, any Purchased
Intellectual Property;

 

(xvi)                         commence or settle any claim, action or proceeding
related to the Business, other than settlements resulting solely in the payment
of monetary damages in amounts not in excess of $500,000 in the aggregate; or

 

(xvii)                      agree to do anything prohibited by this Section 8.2.

 

8.3                                 Consents.  Seller shall use (and shall cause
each of its Subsidiaries to use) its commercially reasonable efforts, and
Purchaser shall cooperate with Seller, to obtain at the earliest practicable
date all consents and approvals required to consummate the transactions
contemplated by this Agreement, including, without limitation, the consents and
approvals referred to in Section 5.3(b) hereof; provided, however, that Seller
shall not be obligated to pay any consideration therefor to any third party from
whom consent or approval is requested or to initiate any litigation or legal
proceedings to obtain any such consent or approval.

 

8.4                                 Regulatory Approvals.

 

(a)                                  If necessary, Purchaser and Seller shall
(a) make or cause to be made all filings required of each of them or any of
their respective Subsidiaries or subsidiaries, as applicable, or Affiliates
under the HSR Act or other Antitrust Laws with respect to the transactions
contemplated hereby as promptly as practicable and, in any event, within 1
Business Day after the date of this Agreement, (b) comply at the earliest
practicable date with any request under such Laws for additional information,
documents, or other materials received by each of them or any of their
respective Subsidiaries or subsidiaries, as applicable, from any other
Governmental Body in respect of such filings or such transactions, and
(c) cooperate with each other in connection with any such filing  and in
connection with resolving any investigation or other inquiry of any Governmental
Body under any Antitrust Laws with respect to any such filing or any such
transaction.  Each such party shall use best efforts to furnish to each other
all information required for any application or other filing to be made pursuant
to any applicable law in connection with the transactions contemplated by this
Agreement.  Each such party shall promptly inform the other parties hereto of
any oral communication with, and provide copies of written communications with,
any Governmental Body regarding any such filings or any such transaction.  No
party hereto shall independently participate in any formal meeting with any
Governmental Body (other than Purchaser solely with respect to a Governmental
Body in the United Kingdom) in respect of any such filings, investigation, or
other inquiry without giving the other parties hereto prior notice of the
meeting and, to the extent permitted by such Governmental Body, the opportunity
to attend and/or participate.  Subject to applicable law, the parties hereto
will consult and cooperate with

 

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one another in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto relating to proceedings under the HSR Act or other
Antitrust Laws.  Seller and Purchaser may, as each deems advisable and
necessary, reasonably designate any competitively sensitive material provided to
the other under this Section 8.4 as “outside counsel only.”  Such materials and
the information contained therein shall be given only to the outside legal
counsel of the recipient and will not be disclosed by such outside counsel to
employees, officers, or directors of the recipient, unless express written
permission is obtained in advance from the source of the materials (Seller or
Purchaser, as the case may be).

 

(b)                                 Each of Purchaser and Seller shall use its
best efforts to resolve such objections, if any, as may be asserted by any
Governmental Body with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the “Antitrust Laws”).  In
connection therewith, if any Legal Proceeding is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement is in
violation of any Antitrust Law, each of Purchaser and Seller shall cooperate and
use its best efforts to contest and resist any such Legal Proceeding, and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents, or restricts consummation of the transactions
contemplated by this Agreement, including by pursuing all available avenues of
administrative and judicial appeal and all available legislative action, unless,
by mutual agreement, Purchaser and Seller decide that litigation is not in their
respective best interests.

 

8.5                                 Further Assurances.

 

(a)                                  Each of Seller and Purchaser shall use its
commercially reasonable efforts to (i) take all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.

 

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(b)                                 In the event that, for any reason including
a determination by a court of competent jurisdiction that any sale, transfer,
assignment, conveyance or delivery  contemplated by this Agreement is
ineffective or invalid to vest or confirm such title,  any conveyance,
assignment, assumption, allocation or other action is necessary or appropriate
to vest in or confirm to Purchaser full title to any of the Purchased Assets
vested in Purchaser pursuant to Section 2.1, or to cause Purchaser to assume any
Liabilities allocated to Purchaser pursuant to Section 2.3, then Seller shall,
and shall cause its Subsidiaries to, execute and deliver all such instruments
and take all such actions necessary in order to convey, assign or allocate such
Purchased Assets or Liabilities to Purchaser.

 

8.6                                 Confidentiality.

 

(a)                                  Purchaser acknowledges that the
Confidential Information provided to it in connection with this Agreement,
including under Section 8.1,  and the consummation of the transactions
contemplated hereby, is subject to the terms of the confidentiality agreement
between Purchaser and Seller dated September 11, 2008 (the “Confidentiality
Agreement”), the terms of which are incorporated herein by reference.  Effective
upon, and only upon, the Closing Date, the Confidentiality Agreement shall
terminate with respect to information relating solely to the Business or
otherwise included in the Purchased Assets; provided, however, that Purchaser
acknowledges that any and all other Confidential Information provided to it by
Seller or its representatives concerning Seller and its Subsidiaries shall,
other than Purchased Assets, remain subject to the terms and conditions of the
Confidentiality Agreement after the Closing Date.  For purposes of this
Section 8.6, “Confidential Information” shall mean any confidential information
with respect to, including, methods of operation, customers, customer lists,
products, prices, fees, costs, Technology, inventions, Trade Secrets, know-how,
Software, marketing methods, plans, personnel, suppliers, competitors, markets
or other specialized information or proprietary matters.

 

(b)                                 From and after the Closing, Seller shall,
and shall cause its Subsidiaries to, use the same efforts to maintain the
confidentiality of any proprietary or confidential information regarding the
Purchased Intellectual Property as Seller and/or its Subsidiaries used to
maintain the confidentiality of such information prior to the Closing.

 

8.7                                 Preservation of Records.  Seller and
Purchaser agree that each of them shall preserve and keep the records held by it
or their Affiliates relating to the Business for a period of seven (7) years
from the Closing Date (or such longer period as may be required by applicable
Law) and shall make such records and personnel available to the other as may be
reasonably required by such party in connection with, among other things, any
insurance claims by, Legal Proceedings or tax audits against or governmental
investigations of Seller or Purchaser or any of their Affiliates or in order to
enable Seller or Purchaser to comply with their respective obligations under
this Agreement and each other agreement, document or instrument contemplated
hereby or thereby.  In the event Seller or Purchaser wishes to destroy such
records before or after that time (and such

 

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proposed destruction is not in violation of applicable Law), such party shall
first give ninety (90) days prior written notice to the other and such other
party shall have the right at its option and expense, upon prior written notice
given to such party within such ninety (90) day period, to take possession of
the records within one hundred and eighty (180) days after the date of such
notice.

 

8.8                                 Publicity.  Neither Seller nor Purchaser
shall issue any press release or public announcement concerning this Agreement
or the transactions contemplated hereby without obtaining the prior written
approval of the other party hereto, which approval will not be unreasonably
withheld or delayed, unless, in the sole judgment of Purchaser or Seller,
disclosure is otherwise required by applicable Law or by the Bankruptcy Court
with respect to filings to be made with the Bankruptcy Court in connection with
this Agreement or by the applicable rules of any stock exchange on which
Purchaser or Seller lists securities, provided that the party intending to make
such release shall use its best efforts consistent with such applicable Law or
Bankruptcy Court requirement to consult with the other party with respect to the
text thereof.

 

8.9                                 Trademark License.

 

(a)                                  From and after the closing Purchaser hereby
grants Seller a perpetual, worldwide, nonexclusive, full paid, royalty-free
license under the trademarks “LEHMAN” and “LEHMAN BROTHERS,” including any logos
containing such names (collectively, the “Licensed Marks”) for any of its
existing uses or in connection with the IMD Business and the unwinding of any of
its other operations including use in corporate or other entity names. The
foregoing license as it relates to the IMD Business shall be assignable by
Seller without the need for further consent to a purchaser of all or
substantially all of the equity interests in or assets of the IMD Business.
Seller shall have the right to sublicense the foregoing license to any of its
Subsidiaries and an assignee in connection with a sale of all or substantially
all of the IMD Business shall have a right to sublicense such right to any of
its Affiliates in connection with the conduct of that business, provided that
any such sublicense shall terminate on the date when Seller’s or its assignee’s
license terminates. In the remainder of this provision, the licensee or
sublicense (Seller or Seller’s assignee or their sublicensees) shall be referred
to as “Licensee.” Each Licensee acknowledges Purchaser’s ownership of the
Licensed Marks and the validity of the Licensed Marks and shall not register any
confusingly similar mark in any jurisdiction. All goodwill arising from use of
the Licensed Marks shall inure to Purchaser’s benefit. Each Licensee shall use
each Licensed Mark in connection with any markings or other notices as required
by law. Purchaser shall have the right to supervise and control  the use of the
Licensed Marks by each Licensee, including by reviewing specimens of use of the
Licensed Marks, with respect to the nature and quality of the products and
services designed, performed, distributed, sold or otherwise commercialized by
such Licensee and the materials used to promote such products and services for
the purpose of protecting and maintaining the validity of the Licensed Marks and
the goodwill associated with the Licensed Marks.  Each Licensee shall at all
times use the Licensed Marks only in connection with goods and services of
quality at least as

 

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high as that offered by Seller and its Affiliates under such marks immediately
prior to the Closing. Any use of the Licensed Marks in connection with the IMD
Business shall include a disclaimer in a form reasonably acceptable to Purchaser
indicating that the IMD Business is not affiliated with Seller. Seller or its
assignee shall be responsible for each Licensee’s compliance with the terms of
this Section 8.9 and shall be liable to Purchaser for any non-compliance by any
such Licensee with any such terms.

 

(b)                                 Purchaser hereby grants to Seller a
perpetual, irrevocable, worldwide, nonexclusive, fully-paid, royalty-free
license under all non-Mark Purchased Intellectual Property used in or covering
any business of the Seller andor its Affiliates other than the Business in the
fields of investment management, investment research, portfolio management and
other fields of the IMD Business as well as the unwinding of any of Seller’s
other operations, solely for use in connection with such business outside of the
Business. The foregoing license as it relates to the IMD Business shall be
assignable without the requirement of further consent by Seller in connection
with a sale of all or substantially all of the assets of the IMD Business and
may be sublicensed to any entity conducting the IMD Business and any successor
of the IMD Business and any contractor providing services to such business or
successor. The foregoing license shall be under Purchased Intellectual Property
acquired by Purchaser hereunder that was previously owned by Seller or its
Affiliates as well as Purchased Intellectual Property owned by third parties as
to which Purchaser shall have after Closing has the right to grant a sublicense
without requirement of additional consent or payment of additional
consideration.

 

8.10                           Use of Purchased Intellectual Property.  Except
as permitted under subsection 8.9 above, after the Closing Date, neither the
Seller nor any of its Subsidiaries will, directly or indirectly, in any
jurisdiction: (i) exploit or make use of, or authorize any third party to
exploit or make use of, any of the Purchased Intellectual Property, or any Marks
confusingly similar to the Purchased Marks; (ii) attempt to register the
Purchased Marks or any mark confusingly similar thereto; or (iii) challenge or
otherwise contest the Purchaser’s efforts to register, or enforce its trademark
registrations for and trademark rights in, the Purchased Marks or its rights in
other Purchased Intellectual Property.

 

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8.11                           Deferred Transfers.

 

(a)                                  If and to the extent that the allocation to
and vesting in Purchaser of any Purchased Assets pursuant to Section 2.1 or
otherwise would be a violation of applicable Law or require any Consent or the
approval of any Governmental Body or the fulfillment of any condition that
cannot be fulfilled by the Purchaser prior to the Closing then, unless the
Parties shall otherwise agree, the allocation to and vesting in Purchaser of
such Purchased Asset shall, without any further action by any Party, be
automatically deferred and any allocation or vesting of such Purchased Asset
pursuant to Section 2.1 or otherwise shall be null and void until such time as
all violations of applicable Law are eliminated, such Consents or approvals of
Governmental Bodies are obtained, and such conditions are fulfilled.  Any such
Purchased Asset shall be deemed a “Deferred Transfer Purchased Asset.”

 

(b)                                 If and to the extent that the allocation to
Purchaser of, and Purchaser’s becoming responsible for, any Assumed Liabilities
pursuant to Section 2.3 or otherwise would be a violation of applicable Law or
require any Consent or approval of any Governmental Body or the fulfillment of
any condition that cannot be fulfilled by Seller prior to the Closing, then,
unless the Parties shall otherwise agree, the allocation to Purchaser of, and
Purchaser’s becoming responsible for, such Assumed Liability shall, without any
further action by any Party, be automatically deferred and any allocation or
responsibility for such Assumed Liability pursuant to Section 2.3 or otherwise
shall be null and void until such time as all violations of applicable Law are
eliminated, such Consents or approvals of Governmental Bodies are obtained, and
such conditions are fulfilled.  Any such Assumed Liability shall be deemed a
“Deferred Transfer Assumed Liability.”

 

(c)                                  With respect to any Deferred Transfer
Purchased Asset or any Deferred Transfer Assumed Liability, insofar as it is
reasonably possible, (i) Seller shall, and shall cause any applicable Subsidiary
to, following the Closing, hold such Deferred Transfer Purchased Asset for the
use and benefit of Purchaser and its Subsidiaries (at the expense of Purchaser)
and (ii) Purchaser shall, or shall cause its applicable Subsidiary to, pay or
reimburse Seller for all amounts paid or incurred in connection with the
retention of such Deferred Transfer Assumed Liability.  In addition, Seller
shall, and shall cause any applicable Subsidiary to, insofar as reasonably
possible and to the extent permitted by applicable Law, hold and treat such
Deferred Transfer Purchased Asset in the Ordinary Course of Business in
accordance with past practice and take such other actions as may be reasonably
requested by Purchaser in order to place Purchaser, insofar as permissible under
applicable Law and reasonably possible, in the same position as if such Deferred
Transfer Purchased Asset had been transferred to and vested in Purchaser or an
applicable Subsidiary at the Closing and so that, to the extent possible, all
the benefits and burdens relating to such Deferred Transfer Purchased Asset,
including possession, use, risk of loss, potential for gain, and dominion,
control and command over such Deferred Transfer Purchased Asset, are to inure
from and after the Closing to Purchaser or its applicable Subsidiary entitled to
the receipt of such Deferred Transfer Purchased Asset.

 

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(d)                                 If and when the Consents, approvals of
Governmental Bodies and/or conditions, the absence or non-satisfaction of which
caused the deferral or transfer of any Deferred Transfer Purchased Asset or
Deferred Transfer Assumed Liability pursuant to Section 8.12(a), are obtained or
satisfied, the transfer, allocation or novation of the applicable Deferred
Transfer Purchased Asset or Deferred Transfer Assumed Liability shall be
effected in accordance with and subject to the terms of this Agreement.

 

(e)                                  Seller shall not be obligated, in
connection with the foregoing, to expend any money unless the necessary funds
are advanced, assumed or agreed in advance to be reimbursed by Purchaser, other
than reasonable attorney’s fees and recording or similar fees, all of which
shall be promptly reimbursed by Purchaser.

 

(f)                                    For a period of nine months after the
Closing Date, subject to reasonable security procedures and giving due regard to
regulatory considerations (e.g., segregation) including the right to relocate
such employees within the applicable premises, to the extent Excluded Employees
occupied real property subject to a Transferred Real Property Lease prior to
Closing, such Excluded Employees shall be permitted to continue to occupy and
use such real property to the same extent and for the same purposes as such real
property was occupied and used by such Excluded Employees prior to the Closing,
without charge or consideration.

 

(g)                                 For a period of nine months after the
Closing Date, subject to reasonable security procedures and giving due regard to
regulatory considerations (e.g., segregation) including the right to relocate
such employees within the applicable premises,  after the Closing, to the extent
Transferred Employees occupied real property is not subject to a Transferred
Real Property Lease prior to Closing, such Transferred Employees shall be
permitted to continue to occupy and use such real property to the same extent
and for the same purposes as such real property was occupied and used by such
Transferred Employees prior to the Closing, without charge or consideration.

 

8.12                           Release of Guarantees.  Purchaser shall deliver
to the respective beneficiaries of any and all guarantees relating to or arising
under any Purchased Contracts, Transferred Real Property Leases or Assumed
Liabilities (“Seller Guarantees”) such replacement guarantees from Purchaser and
its Affiliates, letters of credit, collateral, or other credit support, as shall
be required pursuant and in accordance with any Purchased Contract, Transferred
Real Property Leases or Assumed Liability.  In the event that the respective
beneficiaries under any of the Seller Guarantees do not agree to release (the
“Guarantee Release”) Seller and its Subsidiaries from any and all liability
arising thereunder after theClosing, prior to the Closing, then Purchaser shall
cause to be delivered to Seller, as beneficiary, at the Closing an
indemnification agreement and guarantee, dated and effective as of the Closing
Date and in form and substance reasonably satisfactory to Seller and from a
creditworthy obligor as shall be satisfactory to Seller (collectively, “Backstop
Documents”), pursuant to which Seller and its Affiliates shall, from and after
the Closing, be indemnified, reimbursed and held harmless from any and all
liabilities, losses, claims, costs and expenses under or arising out of the

 

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relevant Seller Guarantee.  From and after the Closing, Purchaser shall not
permit any Contract to which a Seller Guarantee relates to be renewed, extended,
amended or modified unless the Purchaser obtains and delivers to Seller the
related Guarantee Release duly executed by the beneficiaries of the related
Seller Guarantee.

 

8.13                           Transition Services.  The Purchaser and Seller
shall use commercially reasonable efforts to enter into a Transition Services
Agreement in a form reasonably acceptable to Seller and Purchaser in order for
each of Seller and Purchaser to continue to receive the services provided
between LBI and LBHI on the Closing Date.

 

8.14                           Subleases.

 

(a)                                  For the leased premises located in 555
California Street, San Francisco, CA, Seller shall sublet to Purchaser pursuant
to a sublease agreement (the “Seller Sublease”), reasonably acceptable to both
Purchaser and Seller and subject to the terms of the applicable underlying
lease, a portion of the demised premises in such location subject to the terms
of the applicable lease and obtaining the landlord’s consent to the Sublease or
Bankruptcy Court approval.  Purchaser shall bear its portion of the occupancy
cost for such location based on the relative square footage sublet.  Seller and
Purchaser shall enter into the Seller Sublease at Closing to memorialize the
provisions of this Section.

 

(b)                                 For the leased premises located in 125 High
Street, Boston, MA, 190 S. LaSalle Street, Chicago, IL and 10250 Constellation
Boulevard, Los Angeles, CA Seller shall assume such leases in connection with
Seller’s bankruptcy proceedings and assign such leases to Purchaser.  Purchaser
shall then sublet to Seller or a designee of Seller, in either event with credit
reasonably acceptable to Purchaser, pursuant to three separate subleases (each,
a “Purchaser Sublease”, collectively the “Purchaser Sublease”), reasonably
acceptable to both Purchaser and Seller and subject in all cases to the terms of
the underlying lease, a portion of the demised premises in such locations shall
be subject to obtaining the landlord’s consent to each Sublease or Bankruptcy
Court approval.  Seller shall bear its portion of the occupancy cost for each
such location based on the relative square footage sublet.  Seller and Purchaser
shall enter into each Sublease at Closing to memorialize the provisions of this
Section.

 

8.15                           Landlord Notice. Seller shall give notice, on the
date hereof , to Rock-Forty-Ninth LLC in accordance with the terms of the 745
Seventh Ground Lease, regarding the transactions contemplated hereunder and
shall provide Rock-Forty-Ninth LLC with the appropriate bankruptcy filings in
order to provide adequate notice thereof under applicable Law.

 

8.16                           Artwork. Purchaser shall have the right to
possess, for a period of one-year after the closing, all of the artwork at the
Seller’s headquarters located at 745 Seventh Avenue, New York, New York. At any
time during such period, Purchaser shall have the option to purchase any or all
of the artwork for a price equal to its appraised value (as

 

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determined by an independent, recognized appraiser). To the extent Purchaser
does not exercise such option on any or all of the artwork by the first
anniversary of the Closing, the Purchaser shall return such artwork to the
Seller.

 

ARTICLE IX

EMPLOYEES AND EMPLOYEE BENEFITS

 

9.1                                 Employee Benefits.

 

(a)                                  Effective as of the Closing Date, Purchaser
shall, or shall cause one of Purchaser’s Subsidiaries to, continue to employ
(where employment continues or is transferred to Purchaser or a Subsidiary of
Purchaser automatically by operation of Law), or offer employment to (where
employment does not continue or transfer automatically by operation of Law),
each Offeree.  For purposes of this Agreement, the term “Offeree” means each
active employee employed primarily in connection with the Business at the
Closing, other than such employees who are identified by Purchaser to Seller
prior to Closing, such identified persons shall not include any person who is in
the targeted population referred to in Section 10.1(b).  Each Offeree who
accepts Purchaser’s or one of its subsidiaries’ offer of employment, together
with each person whose employment transfers to Purchaser or a subsidiary of
Purchaser automatically by operation of law, shall be referred to herein as a
“Transferred Employee.”  Each Person who is not a Transferred Employee shall be
referred to herein as an “Excluded Employee”.  An Offeree who performs work at
his then applicable place of employment on the first Business Day immediately
following the Closing shall be deemed for all purposes of this Agreement to have
accepted Purchaser’s or one of its subsidiaries’ offer of employment and shall
be deemed to be a Transferred Employee for all purposes of this Agreement.

 

(b)                                 Without limiting any additional rights that
each Transferred Employee may have, Purchaser shall, or shall cause its
Subsidiaries, for a period commencing at the Closing and ending on December 31,
2008, to provide to each Transferred Employee whose employment is terminated
during such period by the Purchaser by reason of a “reduction in force” or a
“job elimination” (as those terms are customarily applied in good faith,
consistent with past practice) severance payments and benefits at levels that
are no less favorable than such levels as the Transferred Employee would have
been entitled to receive pursuant to the provisions of the Seller’s severance
plans or agreements covering such Transferred Employee as in effect immediately
prior to the Closing.  Nothing contained in this Section 9.1 or elsewhere in the
Agreement shall be construed to prevent, from and after the Closing, the
termination of employment of any individual Transferred Employee or any change
in the employee benefits available to any Transferred Employee.

 

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(c)                                  On or after the Closing, Purchaser shall,
or shall cause its Subsidiaries to, pay each Transferred Employee an annual
bonus (“08 Annual Bonuses”), in respect of the 2008 Fiscal Year that, in the
aggregate, are equal in amount to 100 percent of the bonus pool amounts accrued
in respect of amounts payable for incentive compensation (but not base salary)
and reflected on the financial schedule delivered to Purchaser on September 16,
2008 and initialed by an officer of each of Holdings and Purchaser (the “Accrued
08 FY Liability”).  Such 08 Annual Bonuses shall be awarded on or before
March 15, 2009 in such forms and proportions as are consistent with Purchaser’s
customary practices, so that the aggregate amount awarded shall equal the
Accrued 08 FY Liability.  Any amounts that would have been allocated in respect
of any Transferred Employee who voluntarily terminates employment before such
award is made shall instead be allocated among the remaining Transferred
Employees (who include, for this purpose, those Transferred Employees who are
terminated without cause by Purchaser or its affiliates prior to the time the
awards are made) (collectively, the “Remaining Transferred Employees”). 
However, the Accrued 08 FY Liability shall be reduced if, prior to the time such
awards are made, both (x) 10% of the Transferred Employees have voluntarily
terminated their employment with the Purchaser and (y) such terminated
Transferred Employees would have been expected to receive at least 10% of the 08
Annual Bonuses had no such Transferred Employee’s employment in fact
terminated.  In that case, Purchaser may adjust the Accrued 08 FY Liability
proportionately from its initial level, in the same proportion as the reduction
in Transferred Employees below 90% of the initial number of Transferred
Employees compared to 90% of the initial number of Transferred Employees, in a
good faith and reasonably equitable manner to account for the Transferred
Employees to whom 08 Annual Bonuses will not be payable, and thereby to reduce
the aggregate 08 Annual Bonuses.  Any such reduction shall take into account the
length of service, seniority within the Business and contribution of the
Remaining Transferred Employees, relative to the allocation of the Accrued 08 FY
Liability, in accordance with the principles enumerated herein.

 

ARTICLE X

 

CONDITIONS TO CLOSING

 

10.1                           Conditions Precedent to Obligations of
Purchaser.  The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, on or prior to the
Closing Date, of each of the following conditions (any or all of which may be
waived by Purchaser in whole or in part to the extent permitted by applicable
Law):

 

(a)                                  Seller shall have performed and complied in
all material respects with all obligations and agreements required in this
Agreement to be performed or complied with by it prior to the Closing Date, and
Purchaser shall have received a certificate signed by an authorized officer of
Seller, dated the Closing Date, to the forgoing effect;

 

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(b)                                 at least 70% of the U.S. and Canadian
Persons identified by Seller and reasonably accepted by Purchaser, acting in
good faith, not later than two Business Days after the date hereof as the
targeted population are actively employed in the Business immediately prior to
the Closing and as to whom management of Seller has made a good faith assessment
that they will continue in employment with the Business as of the Closing Date;

 

(c)                                  the Bankruptcy Court shall have entered a
final order permitting Seller to sell the premises at 745 Seventh Avenue, New
York, New York to Purchaser;

 

(d)                                 the mortgage in favor of the Seller’s
Affiliate with respect to the premises at 745 Seventh Avenue, New York, New York
shall have been fully repaid and extinguished;

 

(e)                                  Seller shall have delivered, or caused to
be delivered, to Purchaser all of the items set forth in Section 4.2;

 

(f)                                    Purchaser shall have obtained
confirmation from the SEC and CFTC that Purchaser will be eligible, following
the Closing, to compute its net capital under Appendix E to SEC Rule 15c3-1 and
adjusted net capital in accordance with the provisions of CFTC Rule 1.17(c)(6);

 

(g)                                 Purchaser shall have obtained from the SEC
confirmation reasonably satisfactory to Purchaser regarding (i) the transition
period during which Purchaser will be permitted to come into compliance with the
consolidated holding company supervisory framework applicable to ultimate
holding companies that have a principal regulator under SEC Rule 15c3-1e and g,
and (ii) the scope of the deference to be extended by the SEC to the Federal
Reserve and/or the home country consolidated supervisor of Purchaser’s ultimate
parent company in connection with the SEC’s administration of the framework
described in clause (i) of this subsection 10.1(g); and

 

(h)                                 the Sellers headquarters building at 745
Seventh Avenue, New York, New York shall be substantially habitable.

 

10.2                           Conditions Precedent to Obligations of Seller. 
The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived by Seller in
whole or in part to the extent permitted by applicable Law):

 

(a)                                  Purchaser shall have performed and complied
in all material respects with all obligations and agreements required by this
Agreement to be performed or complied with by Purchaser on or prior to the
Closing Date, and Seller shall have received a certificate signed by an
authorized officer of Purchaser, dated the Closing Date, to the foregoing
effect; and

 

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(b)                                 Purchaser shall have delivered, or caused to
be delivered, to Seller all of the items set forth in Section 4.3.

 

10.3                           Conditions Precedent to Obligations of Purchaser
and Seller.  The respective obligations of Purchaser and Seller to consummate
the transactions contemplated by this Agreement are subject to the fulfillment,
on or prior to the Closing Date, of each of the following conditions (any or all
of which may be waived by Purchaser and Seller in whole or in part to the extent
permitted by applicable Law):

 

(a)                                  there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;

 

(b)                                 the Bankruptcy Court shall have entered the
Breakup Fee and Competing Bid Order, in form and substance reasonably acceptable
to Seller and Purchaser;

 

(c)                                  the Bankruptcy Court shall have entered the
Sale Order and any stay period applicable to the Sale Order shall have expired
or shall have been waived by the Bankruptcy Court;

 

(d)                                 LBI shall have commenced a case under
Chapter 7 of the Bankruptcy Code in the Bankruptcy Court; and

 

(e)                                  Purchaser shall have obtained regulatory
approval under the HSR Act and all other material regulatory, self-regulatory,
exchange, clearing organization and governmental approvals, authorizations,
waivers and/or licenses required to conduct the transferred Business following
the Closing substantially in the manner as it was conducted immediately prior to
the Closing and, after giving effect to the Closing (subject to such exceptions
as shall not, in the aggregate, be material).

 

10.4                           Frustration of Closing Conditions.  Neither
Seller nor Purchaser may rely on the failure of any condition set forth in
Section 10.1, 10.2 or 10.3, as the case may be, if such failure was caused by
such party’s failure to comply with any provision of this Agreement.

 

ARTICLE XI

 

[RESERVED]

 

ARTICLE XII

 

TAXES

 

12.1                           Transfer Taxes.  Purchaser shall be responsible
for (and shall indemnify and hold harmless Seller and its directors, officers,
employees, Affiliates, agents,

 

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successors and permitted assigns against) any sales, use, stamp, documentary
stamp, filing, recording, transfer or similar fees or taxes or governmental
charges (including any interest and penalty thereon) payable in connection with
the transactions contemplated by this Agreement (“Transfer Taxes”).  Seller
shall, however, seek to include in the Sales Order a provision that provides
that the transfer of the Purchased Assets shall be free and clear of any stamp
or similar taxes under Bankruptcy Code Section 1146(c).  Seller and Purchaser
shall cooperate and otherwise take commercially reasonable efforts to obtain any
available refunds for Transfer Taxes.

 

12.2                           Prorations.  Seller and Purchaser shall enter
into customary prorations for the Purchased Assets as of the Closing.

 

12.3                           Purchase Price Allocation.  Seller and Purchaser
shall allocate the purchase price (including the Assumed Liabilities) among the
Purchased Assets as specified in Schedule 12.3 and, in accordance with such
allocation, Purchaser shall prepare and deliver to Seller copies of Form 8594
and any required exhibits thereto (the “Asset Acquisition Statement”). 
Purchaser shall prepare and deliver to Seller from time to time revised copies
of the Asset Acquisition Statement (the “Revised Statements”) so as to report
any matters on the Asset Acquisition Statement that need updating (including
purchase price adjustments, if any) consistent with the agreed upon allocation. 
The purchase price for the Purchased Assets shall be allocated in accordance
with the Asset Acquisition Statement or, if applicable, the last Revised
Statements, provided by Purchaser to Seller, and all income Tax Returns and
reports filed by Purchaser and Seller shall be prepared consistently with such
allocation.

 

12.4                           Adjustment to Purchase Price.  The parties agree
that any payment made under this Article XII shall be treated by such parties as
an adjustment to the Purchase Price.

 

ARTICLE XIII

 

MISCELLANEOUS

 

13.1                           Expenses.  Except as otherwise provided in this
Agreement, each of Seller and Purchaser shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.

 

13.2                           Injunctive Relief.  Damages at law may be an
inadequate remedy for the breach of any of the covenants, promises and
agreements contained in this Agreement, and, accordingly, any party hereto shall
be entitled to injunctive relief with respect to any such breach, including
without limitation specific performance of such covenants, promises or
agreements or an order enjoining a party from any threatened, or from the
continuation of any actual, breach of the covenants, promises or agreements
contained in

 

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this Agreement.  The rights set forth in this Section 13.2 shall be in addition
to any other rights which a Party may have at law or in equity pursuant to this
Agreement.

 

13.3                           Submission to Jurisdiction; Consent to Service of
Process.

 

(a)                                  Without limiting any party’s right to
appeal any order of the Bankruptcy Court, (i) the Bankruptcy Court shall retain
exclusive jurisdiction to enforce the terms of this Agreement and to decide any
claims or disputes which may arise or result from, or be connected with, this
Agreement, any breach or default hereunder, or the transactions contemplated
hereby, and (ii) any and all proceedings related to the foregoing shall be filed
and maintained only in the Bankruptcy Court, and the parties hereby consent to
and submit to the jurisdiction and venue of the Bankruptcy Court and shall
receive notices at such locations as indicated in Section 13.7 hereof; provided,
however, that if the Bankruptcy Case has closed, the parties agree to
unconditionally and irrevocably submit to the exclusive jurisdiction of the
United States District Court for the Southern District of New York sitting in
New York County or the Commercial Division, Civil Branch of the Supreme Court of
the State of New York sitting in New York County and any appellate court from
any thereof, for the resolution of any such claim or dispute.  The parties
hereby irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute.  Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

 

(b)                                 Each of the parties hereto hereby consents
to process being served by any party to this Agreement in any suit, action or
proceeding by delivery of a copy thereof in accordance with the provisions of
Section 13.7.

 

13.4                           Waiver of Right to Trial by Jury.  Each party to
this Agreement waives any right to trial by jury in any action, matter or
proceeding regarding this Agreement or any provision hereof.

 

13.5                           Entire Agreement; Amendments and Waivers.  This
Agreement (including the schedules and exhibits hereto), the transition services
agreements, the Dip Facility, the Interim Support and Cooperation Agreement,
Master Repurchase Agreement and the Confidentiality Agreement represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof.  This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is
sought.  No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein.  The waiver by
any party hereto of a breach of any provision of this

 

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Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach.  No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy.  All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law.

 

13.6                           Governing Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and performed in such State.

 

13.7                           Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed given (i) when
delivered personally by hand (with written confirmation of receipt), (ii) when
sent by facsimile (with written confirmation of transmission) or (iii) one
business day following the day sent by overnight courier (with written
confirmation of receipt), in each case at the following addresses and facsimile
numbers (or to such other address or facsimile number as a party may have
specified by notice given to the other party pursuant to this provision):

 

If to Seller, to:

 

Lehman Brothers Holdings Inc.

745 Seventh Avenue

New York, NY 10019

Facsimile: (646) 758-4226

Attention: Steven Berkenfeld, Esq.

 

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With a copy (which shall not constitute notice) to:

 

 

 

Weil, Gotshal & Manges LLP

 

767 Fifth Avenue

 

New York, NY 10153

 

Facsimile: (212) 310-8007

 

Attention:

Thomas Roberts

 

 

Michael Lubowitz

 

 

 

and a copy (which shall not constitute notice) to:

 

 

 

Simpson Thacher & Bartlett LLP

 

425 Lexington Avenue

 

New York, NY 10017

 

Facsimile: (212) 455-2502

 

Attention:

John Finley

 

 

Andrew Keller

 

 

 

If to Purchaser, to:

 

 

 

Barclays Capital Inc.

 

200 Park Avenue

 

New York, NY 10166

 

Facsimile: (212) 412-7519

 

Attention:

Jonathan Hughes, Esq.

 

 

 

With a copy to:

 

 

 

Cleary Gottlieb Steen & Hamilton LLP

 

One Liberty Plaza

 

New York, NY 10006

 

Facsimile: (212) 225-3999

 

Attention:

Victor I. Lewkow

 

 

David Leinwand

 

 

Duane McLaughlin

 

 

 

and

 

 

 

Sullivan & Cromwell LLP

 

125 Broad St.

 

New York, NY 10004

 

Facsimile: (212) 558-3580

 

Attention:

Mitchell S. Eitel

 

 

Jay Clayton

 

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13.8                           Severability.  If any term or other provision of
this Agreement is invalid, illegal, or incapable of being enforced by any law or
public policy, all other terms or provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

 

13.9                           Binding Effect; Assignment.  This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.  Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any Person or entity not
a party to this Agreement except as provided below.  No assignment of this
Agreement or of any rights or obligations hereunder may be made by either Seller
or Purchaser (by operation of law or otherwise) without the prior written
consent of the other parties hereto and any attempted assignment without the
required consents shall be void, provided that Purchaser shall be entitled to
assign its rights and obligations in whole or in part to its Affiliates or to
designate its rights to acquire any assets hereunder to its Affiliates.  No
assignment of any obligations hereunder shall relieve the parties hereto of any
such obligations.  Upon any such permitted assignment, the references in this
Agreement to Purchaser shall also apply to any such assignee unless the context
otherwise requires.

 

13.10                     Non-Recourse.  No past, present or future director,
officer, employee, incorporator, member, partner or equityholder of Seller shall
have any liability for any obligations or liabilities of Seller under this
Agreement or the Seller Documents of or for any claim based on, in respect of,
or by reason of, the transactions contemplated hereby and thereby.

 

13.11                     Counterparts.  This Agreement may be executed in one
or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.

 

13.12                     Scope of Purchased Assets.  This Agreement is not
intended to convey and does not convey assets and liabilities from the non-U.S.
and non-Canadian operations of Seller.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

 

 

LEHMAN BROTHERS HOLDINGS INC.

 

 

 

 

 

By:

/s/ Steven Berkenfeld

 

 

Name:

Steven Berkenfeld

 

 

Title:

Vice President

 

 

 

 

 

 

 

LEHMAN BROTHERS INC.

 

 

 

 

 

By:

/s/ Steven Berkenfeld

 

 

Name:

Steven Berkenfeld

 

 

Title:

Vice President

 

 

 

 

 

 

 

LB 745 LLC

 

 

 

 

 

By:

/s/ Paolo Tonucci

 

 

Name:

Paolo Tonucci

 

 

Title:

Managing Director

 

 

 

 

 

 

 

BARCLAYS CAPITAL INC.

 

 

 

 

 

By:

/s/ Gerard LaRocca

 

 

Name:

Gerard LaRocca

 

 

Title:

Chief Executive Officer

 

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Exhibit A

 

LEHMAN BROTHERS HOLDINGS INC.

 

By order of the Bankruptcy Court, set forth below are certain matters to be
employed with respect to the proposed sale (the “Sale”) of the Purchased Assets
of the Debtors as set forth in the Purchase Agreement (as defined below).  On
September 16, 2008 the Debtors executed that certain Asset Purchase Agreement
(the “Purchase Agreement”) with Barclays Capital, Inc. (the “Purchaser”).  The
transaction contemplated by the Purchase Agreement is subject to competitive
bidding as set forth herein and approval by the Bankruptcy Court (as defined
below) pursuant to sections 105(a), 363 and 365 of title 11 of the United States
Code, 11 U.S.C. §§ 101-1330, as amended (the “Bankruptcy Code”), and certain
other closing conditions.

 

On September 17, 2008, the Debtors filed the Sale Motion seeking entry of the
Orders: ((I)(A) authorizing a Break-Up Fee and Expense Reimbursement,
(B) approving certain matters relating to competing bids, if any, (C) the form
and manner of sale notices and (D) a date for the Sale Hearing, and
(II) (A) authorizing and approving the Sale of certain of the Debtors’ assets
free and clear of all liens, claims and encumbrances, (B) authorizing and
approving the assumption and assignment of certain prepetition executory
contracts and unexpired leases (the “Contracts”) to the Purchaser or the
Successful Bidder(s) and (C) granting related relief.  On September     , 2008,
the United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”) entered an Order: (I) authorizing a Break-Up Fee and Expense
Reimbursement, (B) approving certain matters relating to competing bids, if any,
as set forth in the Purchase Agreement, (C) approving the form and manner of
sale notices and (D) fixing a date for the Sale Hearing (such order, the
“Break-Up Fee and Competing Bid Order”).  Terms used but not defined herein
shall have the meanings ascribed to them in the Break-Up Fee and Competing Bid
Order.  The Break-Up Fee and Competing Bid Order set [September     ], 2008 as
the date when the Bankruptcy Court will conduct a hearing (the “Sale Hearing”)
to authorize the Debtors to enter into the Purchase Agreement.

 

1.                                       NO COMPETING BIDS TO BE EVALUATED BY
THE DEBTORS OTHER THAN QUALIFIED BIDS

 

The Debtors shall not consider or evaluate putative competing bids for the
Purchased Assets except in accordance with the provisions set forth below (such
bids meeting the criteria set forth herein, “Qualified Bids”).  The manner in
which bidders and bids become Qualified Bidders (as defined below) and Qualified
Bids, respectively, the provision of confidential information to bidders, the
receipt and negotiation of bids received, the ultimate selection of the
Successful Bidder(s), and the Bankruptcy Court’s approval thereof (the “Bid
Matters”) are discussed below.  In the event that the Debtors and any party
disagree as to any Bid Matters, the Bankruptcy Court will have jurisdiction to
hear and resolve such dispute.

 

2.                                       DEBTORS SHALL NOT SOLICIT OR ENGAGE IN
DISCUSSIONS REGARDING PROPOSALS FOR COMPETING TRANSACTIONS

 

From the date of execution of the Purchase Agreement until the earlier of
(i) the Closing and (ii) the termination of the Purchase Agreement in accordance
with its terms, none of Debtors, any of the Debtors’ direct or indirect
subsidiaries, or any agent or advisor to the Debtors

 

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or any of the Debtors’ direct or indirect subsidiaries shall, directly or
indirectly, through any officer, director, employee, agent, professional,
advisor, other representative (“Representatives”) or otherwise, (A) solicit,
initiate, encourage or facilitate any proposal or offer from any Person (other
than the Purchaser) relating to any financing, refinancing, acquisition,
divestiture, business combination or reorganization or similar transaction
involving a material portion the Business, the Purchased Assets or the business,
assets or operations of LBI or any of its subsidiaries or the equity securities
of LBI or any of its subsidiaries (a “Competing Transaction”), (B) enter into
discussions or negotiations regarding a Competing Transaction, (C) furnish any
information with respect to, enter into any agreement or understanding with
respect to, otherwise assist or participate in, or facilitate in any other
manner any Competing Transaction (including, without limitation, executing any
confidentiality agreement with any other Person with respect to a Competing
Transaction), (D) waive any rights under any existing standstill or waiver
agreements, or (E) seek or support Bankruptcy Court approval of a motion
regarding bid procedures or expense reimbursement or break up fee for the
benefit of any party with respect to a Competing Transaction or take any action
inconsistent in any way with the Purchase Agreement or achieving the Closing by
5:00 p.m. (New York time) on September 24, 2008 (any action described in clauses
(A) through (E), a “Prohibited Action”).

 

3.                                       DEBTORS PERMITTED TO TAKE CERTAIN
PROHIBITED ACTIONS IN CERTAIN CIRCUMSTANCES

 

Notwithstanding the foregoing provisions of Section 2, in the event Debtors
receive an unsolicited bona fide offer or proposal for a Competing Transaction
prior to the entry of the Sale Order and Debtors’ Boards of Directors conclude
in good faith (after consultation with its outside financial and legal advisors)
that such offer or proposal constitutes or is reasonably likely to result in a
Superior Proposal, then, prior to the entry of the Sale Order, Debtors may, and
may permit their subsidiaries and Representatives to, take any Prohibited Action
described in clause (B) or (C) (other than enter into any agreement) of
Section 2; provided that (x) prior to providing any nonpublic information
permitted to be provided pursuant to this sentence, Debtors shall have entered
into a confidentiality agreement with such third party on customary terms and
which in any event is no less favorable to Debtors than the Confidentiality
Agreement, and (y) concurrently with providing such information, Debtors shall
also furnish to Purchaser a copy of any confidential data or information that it
is furnishing to any third party pursuant to the Section 3 to the extent not
previously furnished to Purchaser.  “Superior Proposal” means any bona fide
written proposal or offer with respect to a Competing Transaction made by a
Qualified Bidder (A) to acquire, directly or indirectly, 100% of the Business
for consideration consisting of cash and/or securities (with a value of at least
$1,875,000,000) and the assumption of substantially all liabilities required to
be assumed by Purchaser under the Purchase Agreement, and (B) which is otherwise
on terms which the Boards of Directors of the Debtors determine in its
reasonable good faith judgment (after consultation with its financial advisor
and outside counsel), taking into account, among other things, all legal,
financial, regulatory and other aspects of the proposal or offer, (1) if
consummated, would result in a transaction that is more favorable, from a
financial point of view, to the Debtors’ stakeholders than the transactions
contemplated by the Purchase Agreement and (2) is reasonably capable of being
promptly consummated, including with respect to receipt of all required
regulatory approvals.  “Qualified Bidder” means a third party that (i) enters
into or arranges for one or more credit or liquidity facilities with respect to
the obligations of Debtors and the Business that are at least equivalent to the
financing facilities to be provided to Debtors and their Affiliates by Purchaser
and its Affiliates (which credit or

 

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liquidity facilities shall take effect simultaneously with the termination of,
and shall supersede, and the proceeds of which shall be used to repay in full,
such facilities to be provided by Purchaser and its Affiliates) and
(ii) arranges for the termination of any Master Repurchase Agreement, Master
Securities Lending Agreement, Master Open Market Agreement or any other
financing between any of the Debtors and FRBNY, no later than the opening of
business, New York time, on Monday, September 22, 2008 and provides adequate
assurance of performance of such obligations in a manner satisfactory to FRBNY.

 

4.                                       BIDDER REQUIRED TO PROVIDE CERTAIN
INFORMATION IN CONNECTION WITH OTHER COMPETING BIDS

 

Debtors will within 24 hours advise Purchaser orally and in writing following
receipt of (1) any offer or proposal for a Competing Transaction or indication
by any person that it is considering making an offer or proposal relating to a
Competing Transaction, (2) any request for nonpublic information relating to
Debtors or its subsidiaries or access to the properties, books or records of
Debtors of any of its subsidiaries, other than requests in the ordinary course
of business and unrelated to an offer or proposal relating to a Competing
Transaction, or (3) any inquiry or request for discussions or negotiations
regarding an offer or proposal relating to a Competing Transaction.  Debtors
will promptly (within 24 hours) provide Purchaser with a copy (if in writing)
and summary of the related material terms of any such offer or proposal or
request (including the identity of the person making or considering such offer
or proposal or making such request) and will keep Purchaser apprised of any
material developments, discussions and negotiations on a reasonably current
basis (and in any event within 24 hours).

 

5.                                       DEBTORS OBLIGATED TO NEGOTIATE

 

Notwithstanding anything herein to the contrary, prior to entering into an
agreement in connection with any Competing Transaction, Debtors shall have
provided prior written notice to Purchaser, at least 48 hours in advance (the
“Notice Period”), of its intention to take such action with respect to such
Competing Transaction, specifying the material terms and conditions of any such
Competing Transaction (including the identity of the party proposing to effect
such Competing Transaction) and furnishing to Purchaser a copy of the relevant
proposed transaction agreements with the party proposing to effect such
Competing Transaction and other material documents) and (B) during the Notice
Period, and in any event prior to taking such action, Debtors have negotiated,
and have caused its financial and legal advisors to negotiate, with Purchaser in
good faith (to the extent Purchaser desires to negotiate) to make such
adjustments in the terms and conditions of the Purchase Agreement so that such
proposal or offer for a Competing Transaction ceases to constitute a Superior
Proposal.

 

6.                                       BREAK-UP FEE AND EXPENSE REIMBURSEMENT

 

Recognizing the Purchaser’s expenditure of time, energy, and resources, the
Debtors have agreed that if the Purchaser is not the Successful Bidder, the
Debtors will, in certain circumstances, pay to the Purchaser a fee in the amount
of $100,000,000 (the “Break-Up Fee”) and reimbursement for the Purchaser’s
expenses (including the fees and expenses of Purchaser’s legal counsel and
financial advisors) incurred in connection with the Purchase Agreement, the Sale
Motion, Sale Order, and the Bid Matters or the Break-Up Fee and Competing Bid
Order and

 

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financings or proposed financings (the “Expense Reimbursement”), subject to the
Expense Reimbursement Cap.  The payment of the Break-Up Fee and Expense
Reimbursement will be governed by the provisions of the Purchase Agreement and
the Break-Up Fee and Competing Bid Order.  Under no circumstances will a
break-up fee, expense reimbursement or other similar bid protections be provided
by the Debtors to any potential bidder or bidder other than the Purchaser that
submits a Qualified Bid.

 

7.                                       ADDITIONAL BIDS BY QUALIFIED BIDDERS
WITH AN INITIAL QUALIFIED BID AND THE PURCHASER

 

With respect to additional bids by the Purchaser and any Qualified Bidder which
makes a Qualified Bid, subsequent or otherwise higher or better offers shall be
in minimum incremental bids with a purchase price of at least an additional $100
million in cash consideration over the last highest offer, with any subsequent
bid increases of bids to be made in minimum increments of at least $100 million
in cash consideration.  The Debtors shall notify the Purchaser of the bid and
the value of such bid that their Boards of Directors believe to be the highest
offer.

 

8.                                       THE SALE HEARING

 

The Sale Hearing will be held before the Honorable Judge James M. Peck on
September 19, 2008 at 11:00 a.m. (New York time) in the United States Bankruptcy
Court for the Southern District of New York, One Bowling Green, New York, NY. 
The Sale Hearing may be adjourned or rescheduled with the consent of the
Purchaser without further notice by an announcement of the adjourned date at the
Sale Hearing.  If the Debtors do not receive any Qualified Bids (other than the
Qualified Bid of the Purchaser), the Debtors will report the same to the
Bankruptcy Court at the Sale Hearing and will proceed with a sale of the
Purchased Assets to the Purchaser following entry of the Sale Order.

 

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