Exhibit 10.1

 

EXECUTION COPY

 

 

 

 

SEPARATION AGREEMENT

 

by and among

 

SOCIÉTÉ GÉNÉRALE,

 

SG AMERICAS, INC.,

 

SG AMERICAS SECURITIES HOLDINGS, INC.,

 

COWEN AND COMPANY, LLC

 

 

and

 

 

COWEN GROUP, INC.

 

 

Dated as of July 11, 2006

 

 

 

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TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE I

DEFINITIONS

1

SECTION 1.01.

Definitions

1

 

 

 

ARTICLE II

THE SEPARATION

9

SECTION 2.01.

Organization of Cowen Inc.; IPO; Intercompany Transactions

9

SECTION 2.02.

The Separation Transactions

12

SECTION 2.03.

Transaction Documents

18

SECTION 2.04.

Disclaimer of Representations and Warranties; Bulk Sales

18

SECTION 2.05.

Financing Arrangements; Adjustments

19

SECTION 2.06.

Leases

22

SECTION 2.07.

Employee Investment Vehicles

23

SECTION 2.08.

NYSE-Archipelago Merger Proceeds

23

SECTION 2.09.

Termination of Agreements

23

SECTION 2.10.

Settlement of Accounts Between SG and Cowen Inc

24

SECTION 2.11.

Novation of Liabilities

24

SECTION 2.12.

Mixed Contracts; Mixed Accounts

24

SECTION 2.13.

Further Assurances

26

SECTION 2.14.

Transition Committee

26

SECTION 2.15.

Conditions to the Separation

27

 

 

 

ARTICLE III

MUTUAL RELEASES; INDEMNIFICATION

28

SECTION 3.01.

Indemnification Agreement

28

 

 

 

ARTICLE IV

CERTAIN OTHER MATTERS

28

SECTION 4.01.

Insurance Matters

28

SECTION 4.02.

Late Payments

29

SECTION 4.03.

SG Financial Statements

29

SECTION 4.04.

Certain Employee Matters

30

SECTION 4.05.

Compliance with Regulatory Requirements

31

SECTION 4.06.

Tax Treatment

31

SECTION 4.07.

Warrants Held by Cowen LLC

31

SECTION 4.08.

Registration Statement and Prospectus Disclosures

31

 

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Page

 

 

 

ARTICLE V

EXCHANGE OF INFORMATION; CONFIDENTIALITY

32

SECTION 5.01.

Agreement for Exchange of Information

32

SECTION 5.02.

Ownership of Information

32

SECTION 5.03.

Record Retention

32

SECTION 5.04.

Limitations of Liability

32

SECTION 5.05.

Other Agreements Providing for Exchange of Information

32

SECTION 5.06.

Confidentiality

33

SECTION 5.07.

Protective Arrangements

33

 

 

 

ARTICLE VI

DISPUTE RESOLUTION

34

SECTION 6.01.

Disputes

34

 

 

 

ARTICLE VII

TERMINATION

35

SECTION 7.01.

Termination

35

 

 

 

ARTICLE VIII

NON-SOLICITATION; NON-DISPARAGEMENT; EMPLOYEE ARRANGEMENTS; COMPETITION

35

SECTION 8.01.

Non-Solicitation

35

SECTION 8.02.

Non-Disparagement

36

SECTION 8.03.

No Other Business Restrictions

36

 

 

 

ARTICLE IX

MISCELLANEOUS

36

SECTION 9.01.

Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures

36

SECTION 9.02.

Governing Law

37

SECTION 9.03.

Assignability

37

SECTION 9.04.

Third Party Beneficiaries

37

SECTION 9.05.

Notices

38

SECTION 9.06.

Severability

39

SECTION 9.07.

Force Majeure

39

SECTION 9.08.

Responsibility for Expenses

39

SECTION 9.09.

Headings

39

SECTION 9.10.

Survival

39

SECTION 9.11.

Subsidiaries

40

SECTION 9.12.

Waivers

40

 

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Page

 

 

 

SECTION 9.13.

Amendments

40

SECTION 9.14.

Interpretation

40

SECTION 9.15.

Advisors

41

SECTION 9.16.

Mutual Drafting

41

SECTION 9.17.

No Right to Set-Off

41

SECTION 9.18.

Enforcement Costs

41

SECTION 9.19.

Remedies

41

 

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SCHEDULES

 

Schedule 1.01(a)

Cowen Benefit Plans

Schedule 1.01(b)

Cowen’s Knowledge

Schedule 1.01(c)

Excluded Assets

Schedule 1.01(d)

Leases

Schedule 1.01(e)

SG’s Knowledge

Schedule 1.01(f)

Transferred Entities

Schedule 2.02(a)(i)

Scheduled Cowen Assets

Schedule 2.02(a)(ii)

Scheduled Cowen Liabilities

Schedule 2.02(b)

Scheduled SG Liabilities

Schedule 2.06(a)

Lease Guarantees; Fees Payable to SG

Schedule 2.09

Arrangements Not to be Terminated

Schedule 2.10

Intercompany Accounts Not to be Terminated

Schedule 2.14

Transition Committee Members

Schedule 4.01

Insurance Policies

Schedule 4.07

Warrants Held by Cowen LLC

 

EXHIBITS

 

Exhibit A

Amended and Restated By-Laws of Cowen Inc.

Exhibit B

Amended and Restated Certificate of Incorporation of Cowen Inc.

Exhibit C

Cowen Employee Ownership Plan

Exhibit D

Employee Matters Agreement

Exhibit E

Indemnification Agreement

Exhibit F

Stockholders Agreement

Exhibit G

Tax Matters Agreement

Exhibit H

Transition Services Agreement

 

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SEPARATION AGREEMENT

 

THIS SEPARATION AGREEMENT, dated as of July 11, 2006, is made by and among
SOCIÉTÉ GÉNÉRALE, a French banking corporation (“SG”), SG AMERICAS, INC., a
Delaware corporation (“SGAI”), SG AMERICAS SECURITIES HOLDINGS, INC., a Delaware
corporation (“SGASH”), COWEN AND COMPANY, LLC, a Delaware limited liability
company (“Cowen LLC”), and COWEN GROUP, INC., a Delaware corporation (“Cowen
Inc.”).

 

R E C I T A L S:

 

WHEREAS, SG is the sole stockholder of SGAI, SGAI is the sole stockholder of
SGASH and SGASH is the sole member of Cowen LLC and the sole stockholder of
Cowen UK;

 

WHEREAS, Cowen Inc. is a newly-formed corporation and, as of the date hereof, a
wholly-owned Subsidiary of SGASH;

 

WHEREAS, SG, SGAI and SGASH have determined that it is appropriate and advisable
to separate the Cowen Business (as defined herein) from the SG Business (as
defined herein) (the “Separation”); and

 

WHEREAS, each of the Parties hereto has determined that it is necessary and
advisable to set forth the principal transactions required to effect the
Separation and to describe other agreements that will govern certain other
matters prior to and following the Separation.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement (as defined herein), the Parties (as
defined herein) hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.01.  Definitions.  Reference is made to Section 9.14 regarding the
interpretation of certain words and phrases used in this Agreement.  In
addition, for the purpose of this Agreement, the following terms shall have the
meanings set forth below.

 

“AAA” has the meaning set forth in Section 6.01.

 

“Agreement” means this Separation Agreement and each of the Schedules and
Exhibits hereto.

 

“Assets” means assets, rights, claims and properties of all kinds, real and
personal, tangible, intangible and contingent, including rights and benefits
pursuant to any contract, license, permit, indenture, note, bond, mortgage,
agreement, concession, franchise, instrument, undertaking, commitment,
understanding or other arrangement and any rights or benefits pursuant to any
Proceeding.

 

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“BHCA” has the meaning set forth in Section 4.05(a).

 

“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day
on which banks are required or authorized to close in New York, New York.

 

“Business Entity” means any corporation, general or limited partnership, trust,
joint venture, unincorporated organization, limited liability entity or other
entity.

 

“By-Laws” means the amended and restated By-Laws of Cowen Inc., substantially in
the form of Exhibit A.

 

“Certificate of Incorporation” means the amended and restated Certificate of
Incorporation of Cowen Inc., substantially in the form of Exhibit B.

 

“Closing Distribution Amount” has the meaning set forth in Section 2.02(d).

 

“Closing Litigation Reserve” has the meaning set forth in Section 2.05(b).

 

“Closing Statement” has the meaning set forth in Section 2.05(d).

 

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

 

“Consents” means any consents, waivers or approvals from, or notification
requirements to, any Third Parties.

 

“Conveyance and Assumption Instruments” means, collectively, such deeds, bills
of sale, Asset transfer agreements, endorsements, assignments, assumptions
(including Liability assumption agreements), leases, subleases, affidavits and
other instruments of sale, conveyance, contribution, distribution, lease,
transfer and assignment between SG or, where applicable, any SG Subsidiary, on
the one hand, and Cowen Inc. or, where applicable, any Cowen Subsidiary or
designee of Cowen Inc., on the other hand, as may be necessary or advisable
under the laws of the relevant jurisdictions to effect the Separation.

 

“Cowen Assets” has the meaning set forth in Section 2.02(a)(i).

 

“Cowen Balance Sheet” means the audited combined statement of financial
condition of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries, including
the notes thereto, as of December 31, 2005, included in the Prospectus.

 

“Cowen Benefit Plans” means, collectively, the plans and arrangements set forth
on Schedule 1.01(a) and any other benefit plans maintained, sponsored or adopted
by Cowen LLC, Cowen Inc. or the Cowen Subsidiaries, whether before or after the
Separation Date.

 

“Cowen Business” means the businesses and operations conducted prior to the
Separation Date by Cowen LLC and the Transferred Entities, excluding the
Transferred Businesses.

 

“Cowen Common Stock” means the outstanding shares of common stock, par value
$0.01, of Cowen Inc.

 

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“Cowen Contracts” means any contract, agreement or instrument (other than this
Agreement and any Transaction Document) to which Cowen LLC, Cowen Inc. or any
Cowen Subsidiary is a party or by which any of their respective assets are
bound.

 

“Cowen Employee Ownership Plan” means the 2006 Equity and Incentive Plan adopted
by Cowen Inc. as of the Separation Date, substantially in the form attached as
Exhibit C.

 

“Cowen Inc.” has the meaning set forth in the Preamble.

 

“Cowen Indemnitees” means Cowen Inc. and each Cowen Subsidiary and their
respective successors and assigns.

 

“Cowen Indemnity Obligations” has the meaning set forth in the Indemnification
Agreement.

 

“Cowen Liabilities” has the meaning set forth in Section 2.02(a)(ii).

 

“Cowen LLC” has the meaning set forth in the Preamble.

 

“Cowen Subsidiary” means Cowen LLC, Cowen UK and any other Subsidiary of Cowen
Inc.

 

“Cowen UK” means Cowen International Limited, a private limited company
organized in England and Wales.

 

“Cowen UK Purchase Agreement” shall have the meaning set forth in
Section 2.02(c).

 

“Cowen’s Knowledge” means the actual knowledge of the officers and employees
listed on Schedule 1.01(b) as of the IPO Date.

 

“Cowen Sublease” has the meaning set forth in Section 2.06(a).

 

“Employee Matters Agreement” means the Employee Matters Agreement entered into
on or prior to the Separation Date among SG, SGAI, SGASH, Cowen LLC and Cowen
Inc., substantially in the form attached as Exhibit D hereto.

 

“Employment Tax” means withholding, payroll, social security, workers
compensation, unemployment, disability and any similar tax imposed by any Tax
Authority, and any interest, penalties, additions to tax or additional amounts
with respect to the foregoing imposed on any taxpayer or consolidated, combined
or unitary group of taxpayers.

 

“Escrow Agent” means JPMorgan Chase Bank, N.A., or such other financial
institution as mutually agreed upon by the Parties, in its capacity as escrow
agent under the Escrow Agreement.

 

“Escrow Agreement” means the Escrow Agreement entered into on or prior to the
Separation Date among SGASH, Cowen LLC, Cowen Inc. and the Escrow Agent.

 

“Estimated Distribution Amount” has the meaning set forth in Section 2.05(c).

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, together
with the rules and regulations promulgated thereunder.

 

“Excluded Assets” means all of the following assets of the Parties or their
respective Subsidiaries:

 

(i)  all Assets of the Parties or their respective Subsidiaries to the extent
such Assets relate to, arise out of or result from the SG Business;

 

(ii)  all cash and cash equivalents as of the Separation Date of SG, each SG
Subsidiary, Cowen LLC and each Cowen Subsidiary, except (x) any cash and cash
equivalents included in the Initial Capital retained by Cowen LLC pursuant to
Section 2.05(a) and (y) any cash or cash equivalents held for customers pursuant
to Rule 15c3-3 promulgated under the Exchange Act;

 

(iii)  subject to Section 2.13, all Assets that are expressly contemplated by
this Agreement or any Principal Transaction Document to be Assets retained by or
transferred to SG or any SG Subsidiary; and

 

(iv)  all other Assets listed or described on Schedule 1.01(c).

 

“Final Closing Statement”  means (x) the Closing Statement, if no Notice of
Disagreement with respect thereto is duly and timely delivered pursuant to
Section 2.05, or (y) if such a Notice of Disagreement is so delivered, the
Closing Statement as agreed by Cowen Inc. and SG or as prepared by the arbiter,
in each case pursuant to Article VI.

 

“Final Distribution Amount” means the Closing Distribution Amount, as set forth
in the Final Closing Statement.

 

“Firm Public Offering Shares” means the Cowen Common Stock to be sold in the IPO
as contemplated in the Underwriting Agreement, other than Cowen Common Stock to
be sold as a result of the Underwriters’ over-allotment option.

 

“GAAP” means U.S. generally accepted accounting principles, as applied by SGAI
as of the Separation Date.

 

“Governmental Authority” means any supranational, international, national,
federal, state, or local court, government, department, commission, board,
bureau, agency, official or other regulatory, self-regulatory, administrative or
governmental authority, including the NASD, the NYSE and any similar regulatory
or self-regulatory body under applicable securities laws or regulations.

 

“Greenwich Capital Partners” means SG Cowen/Greenwich Street Capital Partners
II, L.P., a Delaware limited partnership.

 

“IAS” means the international financial reporting standards issued by the
International Accounting Standards Board, as applied by SG and SG Subsidiaries.

 

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“Indemnification Agreement” means the Indemnification Agreement entered into on
or prior to the Separation Date among the Parties, substantially in the form
attached as Exhibit E hereto.

 

“Information” means information, whether or not patentable or copyrightable, in
written, oral, electronic or other tangible or intangible forms, including
studies, reports, records, books, contracts, instruments, surveys, discoveries,
ideas, concepts, know-how, techniques, designs, specifications, drawings,
blueprints, diagrams, models, prototypes, samples, flow charts, data, computer
data, disks, diskettes, tapes, computer programs or other software, marketing
plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product), and
other technical, financial, employee or business information or data.

 

“Initial Capital” has the meaning set forth in Section 2.05(a).

 

“Insurance Proceeds” means, with respect to any insured party, those monies, net
of any applicable premium adjustments (including reserves and retrospectively
rated premium adjustments) and net of any out-of-pocket costs or expenses
incurred in the collection thereof, which are either:  (i) received by an
insured from an insurance carrier or its estate; or (ii) paid by an insurance
carrier or its estate on behalf of the insured.

 

“IPO” means the initial public offering of shares of Cowen Common Stock pursuant
to the Registration Statement.

 

“IPO Date” means the date of the closing of the IPO.

 

“Leases” means the real property leases and subleases entered into by Cowen LLC
or any of the Cowen Subsidiaries prior to the date hereof, each of which is
listed on Schedule 1.01(d).

 

“Liabilities” means all debts, liabilities, obligations, responsibilities,
response actions, losses, damages (other than punitive, consequential, treble or
other similar damages, except to the extent that the same are paid to Third
Parties), fines, penalties and sanctions, absolute or contingent, matured or
unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or
individual, asserted or unasserted, accrued or unaccrued, known or unknown,
whenever arising, including those arising under or in connection with any law,
statute, ordinance, regulation, rule or other pronouncements of Governmental
Authorities having the effect of law, Proceeding, threatened Proceeding, order
or consent decree of any Governmental Authority or any award of any arbitration
tribunal, those arising under any contract, guarantee, commitment or
undertaking, whether sought to be imposed by a Governmental Authority, private
party, or Party, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, or otherwise, and those, in respect
of Cowen Inc. or any Cowen Subsidiary and SG and any SG Subsidiary, pursuant to
indemnification or contribution arrangements with their respective directors,
officers, employees and agents, and including any costs, expenses, interest,
attorneys’ fees, disbursements and expense of counsel, expert and consulting
fees and costs related thereto (including allocated costs of in-house counsel
and other personnel) or to the investigation, preparation or defense thereof.

 

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“MBF Purchasers” means the purchasers of the partnership interests in the
Merchant Banking Fund identified on Schedule 1.01(g).

 

“Merchant Banking Fund” means SG Merchant Banking Fund L.P., a Delaware limited
partnership.

 

“Mixed Accounts” has the meaning set forth in Section 2.12(b).

 

“Mixed Contract” has the meaning set forth in Section 2.12(a).

 

“NASD” means the National Association of Securities Dealers, Inc.

 

“NASDAQ” means the NASDAQ Stock Market.

 

“Notice of Disagreement” has the meaning set forth in Section 2.05(e).

 

“NYSE” means the New York Stock Exchange, Inc.

 

“NYSE-Archipelago Merger Proceeds” means, collectively, all of Cowen LLC’s
right, title and interest in and to the cash, equity and any other proceeds or
consideration to which the holders of equity or membership interests of the NYSE
are entitled in connection with the merger between the NYSE and Archipelago, as
effected pursuant to the Merger Agreement between the NYSE and Archipelago
Holdings, Inc., dated as of April 20, 2005, as amended.

 

“Parties” means the parties to this Agreement.

 

“Person” means any:  (i) individual; (ii) Business Entity; or (iii) Governmental
Authority.

 

“Prime Rate” means the rate which SG (or its successor or another major money
center commercial bank agreed to by the Parties) announces as its prime lending
rate, as in effect from time to time.

 

“Principal Transaction Documents” means:  (i) the Employee Matters Agreement;
(ii) the Escrow Agreement; (iii) the Indemnification Agreement; (iv) the
Stockholders Agreement; (v) the Tax Matters Agreement; (vi) the Transition
Services Agreement; and (vii) any and all Leases.

 

“Proceeding” means:  (i) any past, present or future suit, countersuit, action,
arbitration, mediation, alternative dispute resolution process, claim,
counterclaim, demand, proceeding; (ii) any inquiry, proceeding or investigation
by or before any Governmental Authority; or (iii) any arbitration or mediation
tribunal, in each case involving SG, any SG Subsidiary, any SG Indemnitee (but
only if in a capacity entitling such Person to the rights of an SG Indemnitee),
Cowen LLC, Cowen Inc., any Cowen Subsidiary or any Cowen Indemnitee (but only if
in a capacity entitling such Person to the rights of a Cowen Indemnitee).

 

“Prospectus” means the prospectus forming a part of the Registration Statement
as the same may be amended or supplemented from time to time.

 

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“Registration Statement” means the registration statement on Form S-1 (File
No. 333-132602) filed under the Exchange Act on March 21, 2006, pursuant to
which the Cowen Common Stock to be sold in the IPO has been registered, together
with all amendments and supplements thereto.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, together with the
rules and regulations promulgated thereunder.

 

“Security Interest” means any mortgage, security interest, pledge, lien, charge,
claim, option, right to acquire, voting or other restriction, right-of-way,
covenant, condition, easement, encroachment, restriction on transfer, or other
encumbrance of any nature whatsoever.

 

“Separation” has the meaning set forth in the Recitals.

 

“Separation Date” means the date as of which the Separation is consummated.

 

“Service Level Agreements” has the meaning set forth in the Transition Services
Agreement.

 

“SG” has the meaning set forth in the Preamble.

 

“SGAI” has the meaning set forth in the Preamble.

 

“SGASH” has the meaning set forth in the Preamble.

 

“SG Business” means all businesses and operations conducted prior to the
Separation Date by SG and any of the SG Subsidiaries, in each case that are not
included in the Cowen Business.  For purposes of this Agreement and the
Transaction Documents only, the SG Business shall also be deemed to include the
Transferred Businesses.

 

“SG Contracts” means any contract, agreement or instrument (other than this
Agreement and any Transaction Document) to which SG or any of the SG
Subsidiaries is a party or by which SG or any SG Subsidiaries, or any of their
respective assets, are bound.

 

“SG Cowen Ventures” means SG Cowen Ventures I, L.P., a Delaware limited
partnership.

 

“SG Indemnitees” means SG and each SG Subsidiary and each of their respective
successors and assigns.

 

“SG Indemnity Obligations” has the meaning set forth in the Indemnification
Agreement.

 

“SG Liabilities” has the meaning set forth in Section 2.02(b).

 

“SG’s Knowledge” means the actual knowledge of the officers and employees listed
on Schedule 1.01(e) as of the IPO Date.

 

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“SG Subsidiary” means any Subsidiary of SG other than Cowen LLC, Cowen Inc. and
any Cowen Subsidiary.

 

“Stockholders Agreement” means the Stockholders Agreement entered into as of the
Separation Date among Cowen Inc. and certain of its stockholders, including
SGASH, substantially in the form attached as Exhibit F hereto.

 

“Subsidiary” of any Person means another Business Entity that is directly or
indirectly controlled by such Person.  As used herein, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Business Entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.  For the avoidance of doubt, Cowen Inc. and the Cowen Subsidiaries
are not Subsidiaries of SG as that term is used in this Agreement.

 

“Tax” means:  (i) any income, net income, gross income, gross receipts, profits,
capital stock, franchise, property, ad valorem, stamp, excise, severance,
occupation, service, sales, use, license, lease, transfer, import, export,
customs duties, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any Tax Authority, and any interest, penalties, additions to
tax or additional amounts with respect to the foregoing imposed on any taxpayer
or consolidated, combined or unitary group of taxpayers; and (ii) any Employment
Tax.

 

“Tax Authority” means, with respect to any Tax, the Governmental Authority or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.

 

“Tax Matters Agreement” means the Tax Matters Agreement entered into on or prior
to the Separation Date among SGAI, SGASH, Cowen LLC and Cowen Inc.,
substantially in the form attached as Exhibit G hereto.

 

“Third Party” means any Person other than SG, any SG Subsidiary, Cowen Inc. and
any Cowen Subsidiary.

 

“Third Party Claim” has the meaning set forth in the Indemnification Agreement.

 

“Transaction Documents” means all written agreements, instruments,
understandings, assignments or other arrangements (other than this Agreement)
entered into by the Parties or any of their respective Subsidiaries in
connection with the Separation and the other transactions contemplated by this
Agreement, including the following:  (i) the Conveyance and Assumption
Instruments; (ii) the Employee Matters Agreement; (iii) the Escrow Agreement;
(iv) the Indemnification Agreement; (v) the Stockholders Agreement; (vi) the Tax
Matters Agreement; (vii) the Transition Services Agreement; (viii) any and all
Leases; and (ix) any other agreements which the Parties determine are necessary
or advisable in connection with the Separation and the other transactions
contemplated by this Agreement and the Transaction Documents.

 

“Transferred Businesses” means (i) the Private Client Group division sold by SG
Cowen Securities Corporation to Lehman Brothers Holdings Inc. in October 2000,
(ii) the bond brokerage business sold by SG Cowen Securities Corporation to
Fimat Futures, USA, Inc. in

 

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2000, (iii) the correspondent clearing operations sold by SG Cowen Securities
Corporation to BNY Clearing Services LLC in January 2000 and (iv) the SG Cowen
Asset Management Business.

 

“Transferred Entities” means the entities set forth on Schedule 1.01(f).

 

“Transition Services Agreement” means the Transition Services Agreement entered
into on or prior to the Separation Date among SG, SGAI, SGASH, Cowen LLC and
Cowen Inc., substantially in the form attached as Exhibit H hereto.

 

“Underwriters” mean the managing underwriters for the IPO.

 

“Underwriting Agreement” means the firm commitment underwriting agreement to be
entered into by and among SGASH, Cowen Inc. and the Underwriters in connection
with the offering of Cowen Common Stock in the IPO.

 

“U.S.” or “United States” means the United States of America, including each of
the 50 states thereof, the District of Columbia and Puerto Rico, but excluding
all other territories and possessions.

 

ARTICLE II

THE SEPARATION

 

SECTION 2.01.  Organization of Cowen Inc.; IPO; Intercompany Transactions.

 

(a)  Incorporation of Cowen Inc.  The Parties acknowledge that: (i) SGASH caused
Cowen Inc. to be incorporated in Delaware on February 15, 2006 under the name
“Cowen Group, Inc.”; and (ii) immediately prior to the IPO, SGASH will be the
sole stockholder of Cowen Inc.

 

(b)  Adoption of Cowen Inc.’s Amended and Restated Charter and By-Laws.  On or
prior to the Separation Date, SGASH and Cowen Inc. shall take all necessary
actions so that, effective immediately prior to the Separation Date, the
Certificate of Incorporation and the By-Laws shall be the certificate of
incorporation and by-laws of Cowen Inc.

 

(c)  Cowen Inc.’s Directors and Officers.  On or prior to the Separation Date,
SGASH and Cowen Inc. shall take all necessary actions so that immediately
following the Separation: (i) the directors and executive officers of Cowen Inc.
shall be those set forth in the Prospectus, unless otherwise agreed by the
Parties; and (ii) Cowen Inc. shall have such other officers as Cowen Inc. shall
desire.

 

(d)  NASDAQ Listing.  Cowen Inc. shall prepare and file, and shall use
commercially reasonable efforts to have approved prior to the Separation Date,
an application for the listing on NASDAQ of the shares of Cowen Common Stock to
be sold pursuant to the IPO.

 

(e)  IPO Procedures.  In connection with the IPO, Cowen LLC and Cowen Inc.:

 

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(i)  shall timely consult with, and cooperate in all respects with, SG and the
SG Subsidiaries in connection with the pricing of the Cowen Common Stock to be
offered in the IPO;

 

(ii)  shall promptly furnish to SG and SGASH copies of reasonably complete
drafts of all such documents prepared to be filed (including exhibits) in
connection with the IPO, provide SG and SGASH with the reasonable opportunity to
object to any information contained therein and make any corrections reasonably
requested by SG and SGASH that are reasonably acceptable to Cowen LLC and Cowen
Inc. with respect to such information prior to filing any such registration
statement or amendment;

 

(iii)  shall timely execute and deliver the Underwriting Agreement in such form
and substance as is satisfactory to Cowen Inc., Cowen LLC, SG and the SG
Subsidiaries;

 

(iv)  shall notify SG and SGASH promptly of any request by the SEC for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information;

 

(v)  shall, during the period when the Prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;

 

(vi)  shall otherwise use their respective reasonable best efforts to comply
with all applicable rules and regulations of the SEC, including the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder,
and make generally available to Cowen Inc.’s security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act no
later than thirty (30) days after the end of the twelve (12) month period
beginning with the first day of Cowen Inc.’s first fiscal quarter commencing
after the effective date of a registration statement, which earnings statement
shall cover said twelve (12) month period, and which requirement will be deemed
to be satisfied if Cowen Inc. timely files complete and accurate information on
Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with
Rule 158 under the Securities Act; and

 

(vii)  shall promptly take any and all other actions reasonably necessary or
desirable to consummate the IPO as contemplated in the Registration Statement
and the Underwriting Agreement.

 

(f)  Representations Regarding Disclosure.

 

(i)  Cowen LLC and Cowen Inc., jointly and severally, hereby represent and
warrant to SG and SGASH that, to Cowen’s Knowledge, the information in the
Prospectus and Registration Statement and any amendments or supplements thereto
does not on the date hereof or on the date of the execution of the Underwriting
Agreement and will not as of the IPO Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;

 

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(ii)  SG hereby represents and warrants to Cowen LLC and Cowen Inc. that, to
SG’s Knowledge, (A) the information in the sections of the Prospectus entitled
“Business—Regulation”, “Business—Legal Proceedings” and “Use of Proceeds” and
the information relating to SG (and not to Cowen LLC or Cowen Inc. or their
respective offices and employees) in the Section of the Prospectus entitled
“Principal and Selling Stockholders” and any amendments or supplements thereto
does not on the date hereof or on the date of the execution of the Underwriting
Agreement and will not as of the IPO Date contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (B) any financial information
furnished in writing by SG to Cowen LLC expressly for use in the combined
statements of financial condition of Cowen Inc. contained in the Prospectus was
true and correct as of the date such financial information was provided (or, if
the information provided related to a prior period or date, was true and correct
as of the end of such prior period or as of such prior date).

 

(iii)  The representations and warranties in this Section 2.01(f) shall survive
until the date eighteen (18) months following the IPO Date, at which date such
representations and warranties shall terminate and cease to be of further force
or effect.

 

(iv)  Notwithstanding anything to the contrary in Sections 2.01, 2.02,
3.01(a) and 3.02(b) of the Indemnification Agreement), no Person shall be
(A) relinquished, released or discharged pursuant to Section 2.01 or 2.02 of the
Indemnification Agreement from Liabilities arising from any breach of the
representations and warranties in this Section 2.01(f) or (B) entitled to
indemnification for or against any Liabilities to the extent such Liabilities
relate to, arise out of or result from any breach of the representations and
warranties in this Section 2.01(f).

 

(g)  Opinion and Comfort Letter.  Cowen Inc. shall furnish or cause to be
furnished to the Underwriters a signed counterpart of (A) an opinion or opinions
of counsel to Cowen Inc., and (B) a comfort letter or comfort letters from Cowen
Inc.’s independent public accountants, each at the times required by the
Underwriting Agreement, in the form attached to the Underwriting Agreement,
addressed to the Underwriters, and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as the Underwriters
reasonably request.

 

(h)  Self-Regulatory Membership.  Prior to the Separation Date, Cowen Inc. shall
consult with the NYSE, and any other self-regulatory organization of which Cowen
LLC currently is a member, with respect to the transactions contemplated by this
Agreement, and, sufficiently prior to the Separation Date as is required or
appropriate under the circumstances, shall submit to the NYSE or such other
self-regulatory organization such information as the NYSE or such other
self-regulatory organization may require under its rules and regulations by
reason of the transactions contemplated by this Agreement.  SG agrees to
cooperate with Cowen Inc. by furnishing to Cowen Inc. such information as may
reasonably be requested for this purpose by Cowen, the NYSE or other such
self-regulatory organization.

 

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SECTION 2.02.  The Separation Transactions.  The Parties acknowledge that the
Separation is intended to result in Cowen Inc.’s directly or indirectly
operating the Cowen Business, owning the Cowen Assets and assuming the Cowen
Liabilities as set forth below in this Article II.

 

(a)  Transfer of Cowen Assets and Liabilities.

 

(i)  Transfer of Cowen Assets.  Subject to Section 2.02(f) and Section 2.15, on
the Separation Date, and in any event following the transactions described in
Sections 2.01(b), (c) and (d), Sections 2.02(d) and (e), Section 2.05(b) and
Sections 2.15(a)(i) and (a)(ii), SG shall, and shall cause each applicable SG
Subsidiary to, assign, transfer, convey and deliver to Cowen Inc., Cowen LLC or
such other Cowen Subsidiaries as Cowen Inc. may designate, and Cowen Inc. and
Cowen LLC shall, and shall cause Cowen LLC and such Cowen Subsidiaries to,
accept from SG and the SG Subsidiaries, all of SG’s and the SG Subsidiaries’
respective rights, title and interest in and to only the following Assets of the
Parties or their respective Subsidiaries, but excluding any Excluded Assets
(collectively, the “Cowen Assets”):

 

(A)  the outstanding membership interests of Cowen LLC;

 

(B)  the outstanding capital shares of Cowen UK;

 

(C)  the Assets included on the Cowen Balance Sheet after completion of the
transactions contemplated by this Agreement and the Transaction Documents or any
notes or subledger thereto that are owned by any Party or any of their
respective Subsidiaries as of the IPO Date;

 

(D)  the Assets of any Party or any of their respective Subsidiaries as of the
Separation Date that are of a nature or type that would have resulted in such
Assets being included as Assets on a pro forma combined statement of financial
condition of Cowen Inc. or the notes or subledgers thereto as of the IPO Date
(were such statement of financial condition, notes and subledgers to be
prepared) on a basis consistent with the determination of the Assets included on
the Cowen Balance Sheet or any subledger thereto;

 

(E)  the Assets expressly allocated to Cowen Inc. or any Cowen Subsidiary under
this Agreement or any of the Principal Transaction Documents;

 

(F)  the Assets used or held by Cowen Inc. or any Cowen Subsidiary for use in
the Cowen Business and the rights to the Cowen Business;

 

(G)  all right, title and interest to the trade name, trademark and service mark
“Cowen”, together with the goodwill associated therewith;

 

(H)  the trade secrets, know-how, proprietary information (including any
clinical study data and product registrations), any other rights or intellectual
property and any other rights, claims or properties, in each case:  (A) as of
the Separation Date; (B) to the

 

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extent primarily related to the Cowen Business; and (C) that are not otherwise
specifically addressed under any other subsection of this definition; and

 

(I)  the Assets identified on Schedule 2.02(a)(i).

 

(ii)  Transfer of Cowen Liabilities.  Subject to Section 2.02(f) and
Section 2.15, on the Separation Date, and in any event following the
transactions described in Sections 2.01(b), (c) and (d), Sections 2.02(d) and
(e), Section 2.05(b) and Sections 2.15(a)(i) and (a)(ii), Cowen Inc. shall, or
shall cause the applicable Cowen Subsidiaries to accept, assume and agree
faithfully to perform, discharge and fulfill all of the following Liabilities of
the Parties or their respective Subsidiaries (collectively, the “Cowen
Liabilities”) in accordance with their respective terms:

 

(A)  all Liabilities included on the Cowen Balance Sheet or any subledger
thereto that remain outstanding as of the Separation Date after completion of
the transactions contemplated by this Agreement and the Transaction Documents;

 

(B)  all other Liabilities that are incurred or accrued by any Party or any of
their respective Subsidiaries from the date of the Cowen Balance Sheet to the
Separation Date that are of a nature or type that would have resulted in such
Liabilities being included as Liabilities on a pro forma combined statement of
financial condition of Cowen Inc. and the notes or subledgers thereto as of the
Separation Date (were such statement of financial condition, notes or subledgers
to be prepared) on a basis consistent with the determination of the Liabilities
included on the Cowen Balance Sheet or any subledger thereto;

 

(C)  all Liabilities expressly allocated to Cowen Inc. or any Cowen Subsidiary
pursuant to this Agreement or any Transaction Document, and all agreements,
obligations and Liabilities of Cowen Inc. and any Cowen Subsidiaries under this
Agreement or any Transaction Document;

 

(D)  all Liabilities relating to, arising out of or resulting from investment
decisions or the management of portfolio companies relating to SG Cowen Ventures
(including all claims by limited partners of SG Cowen Ventures and other Third
Parties); provided, however, that Liabilities relating to, arising out of or
resulting from the administration of SG Cowen Ventures, including the accuracy
or correctness of disbursements and the distribution of materials by or on
behalf of the general partner of SG Cowen Ventures to limited partners of SG
Cowen Ventures shall be deemed “SG Liabilities” as contemplated in
Section 2.02(b);

 

(E)  all Liabilities relating to, arising out of or resulting from investment
decisions or the management of portfolio companies of or relating to the
Merchant Banking Fund on or after January 1, 2004 (including all claims by
limited partners of the Merchant Banking Fund and other Third Parties);
provided, however, that Liabilities relating to, arising out of or resulting
from (w) the sale and transfer of partnership interests in the Merchant Banking
Fund to the MBF Purchasers (except that any rights of SG or any SG Subsidiaries
in respect of the representations and warranties made to the MBF Purchasers

 

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in the sale and transfer documents shall not be deemed to have been waived
pursuant to this clause (w)), (x) the administration of the Merchant Banking
Fund, including the accuracy or correctness of disbursements and the
distribution of materials by or on behalf of the Merchant Banking Fund to the
partners of the Merchant Banking Fund or participants in the Merchant Banking
Co-investment Plan and (y) any claim by former partners of the Merchant Banking
Fund that do not relate to investment decisions or management of the Merchant
Banking Fund after January 1, 2004 shall be deemed “SG Liabilities” as
contemplated in Section 2.02(b);

 

(F)  all Liabilities relating to, arising out of or resulting from any business
or operations conducted at any time prior to, on or after the IPO Date by the
employees of SG’s London Branch whose employment was primarily associated with
the Cowen Business (including but not limited to those employees who are
“Transferred Employees” as defined in the Cowen UK Purchase Agreement);
provided, however, that any such Liabilities relating to, arising out of or
resulting from claims pending as of the IPO Date shall be added to
Schedule 2.02(b) and shall be deemed “SG Liabilities” as contemplated in
Section 2.02(b);

 

(G)  all Liabilities relating to, arising out of or resulting from any claim in
respect of any period prior to the IPO Date by an employee of Cowen Inc. or any
Cowen Subsidiary who does not execute an Executive Award Agreement and a release
satisfactory to SG and Cowen Inc.; provided, however, that the foregoing shall
exclude any such claim by any employee of Cowen Inc. or any Cowen Subsidiary who
did execute an Executive Award Agreement and release satisfactory to SG and
Cowen Inc., and the Parties acknowledge and agree that each of SG and the SG
Subsidiaries, on the one hand, and Cowen Inc. and the Cowen Subsidiaries, on the
other hand, shall be responsible for any Liabilities arising from claims against
it (or its Subsidiaries) in respect of any period prior to the IPO Date by an
employee who executed an Executive Award Agreement and release satisfactory to
SG and Cowen Inc.;

 

(H)  all Liabilities relating to, arising out of or resulting from the Cowen
Benefit Plans;

 

(I)  all Liabilities relating to, arising out of or resulting from (1) Cowen
Inc.’s adoption of the Cowen Employee Ownership Plan, (2) Cowen Inc.’s adoption
of any directed share program, and (3) any employment agreements, retention
agreements, guaranteed bonuses, bonus plans or payments, deferred compensation
plans and any other agreements, arrangements or understandings between Cowen
LLC, Cowen Inc. or the Cowen Subsidiaries and their respective directors,
officers and employees; provided, however, that Liabilities pertaining to
deferred compensation plans (other than the SG-USA Fidelity Bonus Plan)
maintained by SG for any SG Subsidiary and Cowen LLC prior to the IPO, shall be
deemed “SG Liabilities”;

 

(J)  Cowen Inc.’s portion, determined in accordance with Section 2.12, of
Liabilities associated with Mixed Contracts and Mixed Accounts;

 

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(K)  all Liabilities relating to, arising out of or resulting from Cowen Inc.’s,
Cowen LLC’s or any of their respective Subsidiaries’ breach of or failure to
perform any Cowen Contract;

 

(L)  those specific Liabilities set forth on Schedule 2.02(a)(ii) as of the
Separation Date (which schedule shall be updated from time to time as mutually
agreed in good faith by Cowen Inc. and SG up to the IPO Date), in each case
subject to the limitations set forth in Schedule 2.02(a)(ii); and

 

(M)  except to the extent expressly excluded from the Cowen Liabilities above,
all other known and unknown Liabilities relating to, arising out of or resulting
from the Cowen Business, the Cowen Assets, the other Cowen Liabilities or any
business or operations conducted by Cowen Inc., Cowen LLC or any of their
respective Subsidiaries, at any time prior to, on or after the Separation Date
(whether or not such Liabilities cease being contingent, mature, become known,
are asserted or foreseen, or accrue, in each case, before, on or after the
Separation Date) that are not expressly retained or assumed by SG or the SG
Subsidiaries pursuant to this Agreement or any Transaction Document.

 

Notwithstanding anything to the contrary in this Agreement or any Transaction
Document, Cowen Liabilities shall in no event include any Liabilities
(a) relating to, arising out of or resulting from the Excluded Assets, (b) for
which SG or any of its Affiliates has responsibility pursuant to applicable
provisions of any Service Level Agreements or any Transaction Documents in
connection with the provision of services to Cowen Inc. or any Cowen Subsidiary
thereunder or (c) expressly allocated to or retained by SG or any SG Subsidiary
pursuant to clauses (i) through (v) or (ix) through (xiii) of Section 2.02(b) of
this Agreement.

 

Except as expressly set forth in this Agreement, Cowen Inc., Cowen LLC and such
other Cowen Subsidiaries shall be responsible for all Cowen Liabilities,
regardless of (a) when or where such Cowen Liabilities arose or arise or whether
the facts on which such Cowen Liabilities are based occurred prior to, on or
following the Separation Date, (b) where or against whom such Cowen Liabilities
are asserted or determined or whether asserted or determined prior to, on or
following the Separation Date or the date hereof and (c) whether arising from or
alleged to arise from negligence, recklessness, violation of law, fraud or
misrepresentation.

 

(b)  Retention of SG Liabilities.  SG shall, or shall cause the applicable SG
Subsidiaries to, retain, accept, assume and agree faithfully to perform,
discharge and fulfill all of the following Liabilities of the Parties or their
respective Subsidiaries (collectively, the “SG Liabilities”) in accordance with
their respective terms:

 

(i)  all Liabilities expressly allocated to SG or any SG Subsidiaries pursuant
to this Agreement or any Transaction Document, and all agreements, obligations
and Liabilities of SG and any SG Subsidiaries under this Agreement or any
Transaction Document;

 

(ii)  all Liabilities relating to, arising out of or resulting from the
administration of SG Cowen Ventures, including the accuracy or correctness of
disbursements and the distribution of materials by or on behalf of the general
partner of SG Cowen Ventures to

 

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limited partners of SG Cowen Ventures; provided, however, that Liabilities
relating to, arising out of or resulting from investment decisions or the
management of portfolio companies relating to SG Cowen Ventures (including all
claims by limited partners of SG Cowen Ventures and other Third Parties) shall
be deemed “Cowen Liabilities” as contemplated by Section 2.02(a)(ii);

 

(iii)  all Liabilities relating to, arising out of or resulting from (x) the
administration of the Merchant Banking Fund, including the accuracy or
correctness of disbursements and the distribution of materials by or on behalf
of the Merchant Banking Fund to the partners of the Merchant Banking Fund or
participants in the Merchant Banking Co-investment Plan and (y) investment
decisions or the management of portfolio companies of or relating to the
Merchant Banking Fund prior to January 1, 2004; provided, however, that
Liabilities relating to, arising out of or resulting from investment decisions
or the management of portfolio companies of or relating to the Merchant Banking
Fund on or after January 1, 2004 (including all claims by limited partners of
the Merchant Banking Fund and other Third Parties) shall be deemed “Cowen
Liabilities” as contemplated by Section 2.02(a)(ii);

 

(iv)  all Liabilities relating to, arising out of or resulting from the sale and
transfer of partnership interests in the Merchant Banking Fund to the MBF
Purchasers (except that any rights of SG or any SG Subsidiaries in respect of
the representations and warranties made to the MBF Purchasers in the sale and
transfer documents shall not be deemed to have been waived hereby);

 

(v)  all Liabilities for expenses payable by SG as provided in Section 9.08;

 

(vi)  SG’s portion, determined in accordance with Section 2.12, of Liabilities
associated with Mixed Contracts and Mixed Accounts;

 

(vii)  all Liabilities relating to, arising out of or resulting from SG’s or any
SG Subsidiary’s breach of or failure to perform any SG Contract;

 

(viii)  except to the extent expressly excluded from the SG Liabilities in this
Section 2.02(b) or included as Cowen Liabilities in Section 2.02(a)(ii), all
Liabilities relating to, arising out of or resulting from any business conducted
by SG or any SG Subsidiary at any time prior to, on or after the Separation
Date;

 

(ix)  all Liabilities relating to, arising out of or resulting from the
Transferred Businesses whether arising prior to, on or after the Separation
Date;

 

(x)  all Liabilities relating to, arising out of or resulting from
employee-related claims made by any current or former employees of SG or any SG
Subsidiary that are asserted by such current or former employees against Cowen
Inc. or any Cowen Subsidiaries in respect of any period prior to the IPO Date;

 

(xi)  all Liabilities (other than Cowen Liabilities) to the extent such
Liabilities relate to, arise out of or result from a claim by any Third Party,
including any Governmental Authority, against Cowen Inc. or any Cowen
Subsidiaries that relate

 

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primarily to the terms, amount or procurement of insurance with respect to the
Cowen Business prior to the Separation Date; provided, however, that the term
“SG Liabilities” shall not include and SG shall have no indemnity obligation in
respect of Liabilities relating to, arising out of or resulting from a claim
(including but not limited to a claim by a Third Party) under or relating to the
insurance policies listed on Schedule 4.01;

 

(xii)  those specific contingent Liabilities set forth on Schedule 2.02(b) as of
the Separation Date (which schedule shall be updated from time to time as
mutually agreed in good faith by Cowen Inc. and SG up to the IPO Date), in each
case solely to the extent that payment in respect of such Liabilities has not
been made out of the escrow therefor pursuant to Section 2.05(b); provided,
however, that, unless otherwise specifically identified on Schedule 2.02(b), any
suit, inquiry, proceeding or investigation (including but not limited to any
such suit, inquiry, proceeding or investigation that relates to, arises out of
or results from the litigation and regulatory matters set forth on
Schedule 2.02(b)) that is not known to SG as of the IPO Date shall not be deemed
an “SG Liability” for purposes of this Agreement; and

 

(xiii)  all Liabilities relating to, arising out of or resulting from the
Excluded Assets.

 

Except as expressly set forth in this Agreement, SG or the applicable SG
Subsidiaries shall be responsible for all SG Liabilities, regardless of (a) when
or where such SG Liabilities arose or arise or whether the facts on which such
SG Liabilities are based occurred prior to, on or following the Separation Date,
(b) where or against whom such SG Liabilities are asserted or determined or
whether asserted or determined prior to, on or following the Separation Date or
the date hereof and (c) whether arising from or alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation.

 

(c)  Separation of U.K. Operations.  Prior to the date hereof, SG’s London
Branch has transferred Cowen Assets related to the London operations of the
Cowen Business to Cowen UK pursuant to and subject to the terms of the
Intra-Group Asset Sale and Purchase Agreement, dated as of May 1, 2006, by and
between SG London Branch and Cowen UK (the “Cowen UK Purchase Agreement”). 
Liabilities relating to, arising out of or resulting from any business or
operations conducted by the employees of SG’s London Branch whose employment was
primarily associated with the Cowen Business (including but not limited to those
employees who are “Transferred Employees” as defined in the Cowen UK Purchase
Agreement) shall be transferred to Cowen UK pursuant to and subject to the terms
of Section 2.02(a)(ii)(F) of this Agreement.

 

(d)  Cash Distribution.  In connection with the Separation, Cowen LLC shall make
a cash distribution to SGASH in an amount (the “Closing Distribution Amount”)
equal to the dollar amount by which Cowen LLC’s group equity exceeds the $207.0
million Initial Capital to be retained by Cowen LLC pursuant to Section 2.05(a),
after giving effect to the transactions contemplated by this Agreement and the
Transaction Documents but without giving effect to the impact of any gain or
loss associated with SGASH’s sale of shares of Cowen Common Stock in the IPO. 
The Closing Distribution Amount shall be paid and, if appropriate, adjusted as
follows:

 

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(i)  On the Separation Date and immediately prior to the Separation, Cowen LLC
shall make a cash distribution to SGASH in an amount equal to the Estimated
Distribution Amount; and

 

(ii)  Upon the determination of the Final Distribution Amount pursuant to
Section 2.05(d) through (j), the Parties shall make any adjustments and payments
required by Section 2.05(g).

 

(e)  Stock Issuance.  On the Separation Date, Cowen Inc. shall, in consideration
of the Separation and the transfers by SGASH of the assets and liabilities
specified in Section 2.02(a), issue to SGASH the number of shares of Cowen
Common Stock that are mutually agreed to by SGASH and the Underwriters, which
shares of Cowen Common Stock, together with such shares of Cowen Common Stock
held by SGASH prior to the Separation Date, shall represent 100% of the shares
of Cowen Common Stock outstanding immediately prior to the IPO.  For purposes of
determining whether SGASH owns shares representing 100% of the shares of Cowen
immediately prior to the IPO in accordance with the preceding sentence, any
shares of Cowen Common Stock issued, effective immediately following the IPO,
under the Cowen Employee Ownership Plan shall not be deemed to be outstanding
immediately prior to the IPO.

 

(f)  Rescission.  Notwithstanding anything to the contrary set forth in this
Agreement, all transactions theretofore contemplated under this Agreement or any
of the Transaction Documents (excluding the transactions set forth in Sections
2.01(a) and 2.02(c), the distribution described in Section 2.02(d) and the
rescission transactions described in this Section 2.02(f)) shall immediately be
rescinded in all respects and this Agreement and all of the Transaction
Documents (other than any Leases) shall terminate and all Assets transferred
pursuant to this Agreement or the Transaction Documents shall be returned to the
entities that transferred such Assets, and all assumptions of liabilities
hereunder and thereunder shall be rescinded and nullified to the maximum extent
possible, if (1) prior to the time as of which the Underwriters and SGASH agree
on the final purchase price per share of Cowen Common Stock to be paid to SGASH
by the Underwriters pursuant to the Underwriting Agreement, SG elects in its
sole discretion, for any reason or no reason, to rescind such transactions and
terminate such Agreements or (2) delivery of the Firm Public Offering Shares to
the Underwriters against payment therefor is not complete within ten
(10) Business Days after the Separation Date.

 

SECTION 2.03.  Transaction Documents.  Prior to the Separation Date, the Parties
shall execute and deliver, or where applicable shall cause their respective
Subsidiaries to execute and deliver, each Transaction Document to which they are
intended to be a party; provided, however, that if this Article II calls for a
Transaction Document to be executed and delivered on or as of a later time, it
shall be executed and delivered on or as of such later time.

 

SECTION 2.04.  Disclaimer of Representations and Warranties; Bulk Sales.

 

(a)  Except as expressly set forth in Sections 2.01(f), 4.08 and 9.01(c) and in
the Underwriting Agreement, the Parties understand and agree that no Party
hereto and no party to any Transaction Document is making any representations or
warranties whatsoever, whether expressed or implied, as to any Cowen Assets,
Cowen Liabilities, SG Liabilities, Assets of SG or the transactions contemplated
by this Agreement or any Transaction Document, including any

 

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representations or warranties as to:  (i) any Consents required in connection
therewith; (ii) the value of or freedom from any Security Interests in, or any
other matter concerning, any Cowen Asset; (iii) the absence of any defenses to
or right of setoff against or freedom from counterclaim with respect to any
claim; (iv) the merchantability or fitness for a particular purpose of any of
the Cowen Assets; (v) the legal sufficiency of any Conveyance and Assumption
Instruments to convey title to any Cowen Asset or thing of value upon the
execution, delivery and filing of such Conveyance and Assumption Instruments; or
(vi) any projections or forecasts of the future financial performance of Cowen
Inc., Cowen LLC and the other Cowen Subsidiaries or SG and the SG Subsidiaries,
in each case, whether referenced in the Registration Statement, the Prospectus
or otherwise.  The Parties further understand and agree that all Cowen Assets
are being transferred on an “as is,” “where is” basis, and Cowen Inc. and its
Subsidiaries shall bear the economic and legal risks that: (a) any Conveyance
and Assumption Instrument may prove to be insufficient to vest in the transferee
good and marketable title, free and clear of any Security Interest; and (b) any
necessary Consents are not obtained or that any requirements of laws,
agreements, Security Interests or judgments are not complied with; provided,
however, that SG agrees that the outstanding membership interests of Cowen LLC
and capital shares of Cowen UK shall be transferred to Cowen Inc. free and clear
of any liens or encumbrances.

 

(b)  Cowen Inc. hereby waives compliance by SG and the SG Subsidiaries with the
“bulk-sale” or “bulk-transfer” laws of any jurisdiction that may otherwise be
applicable to the transfer of any or all of the Cowen Assets to Cowen Inc. and
the Cowen Subsidiaries.

 

SECTION 2.05.  Financing Arrangements; Adjustments.

 

(a)  Cowen Inc.’s Group Equity.  Notwithstanding anything to the contrary in
this Agreement, Cowen Inc.’s group equity immediately following the IPO Date,
after giving effect to the transactions contemplated under this Agreement
(including but not limited to any distribution payable to SGASH under
Section 2.02(d) and any Liabilities and expenses allocated to Cowen Inc. or SG
in connection with this Agreement, the Separation and the IPO) but without
giving effect to the impact of any gain or loss associated with SGASH’s sale of
shares of Cowen Common Stock in the IPO, (“Initial Capital”) shall be $207.0
million.

 

(b)  Litigation Reserve; Cash Escrow Account.

 

(i)  On or prior to the Separation Date, Cowen LLC shall deposit with the Escrow
Agent an amount in cash equal to the cash litigation reserve on its books as of
such time (the “Closing Litigation Reserve”).  The amount of the Closing
Litigation Reserve shall be determined by SG, after consultation with Cowen
Inc.’s outside auditors, in accordance with GAAP.  The dollar amount deposited
with the Escrow Agent pursuant to this Section 2.05(b) shall be held by the
Escrow Agent in accordance with the terms and conditions of the Escrow Agreement
and shall be subject to adjustment from time to time by SG or SGASH in
accordance with the terms and conditions of the Escrow Agreement.

 

(ii)  Notwithstanding anything to the contrary in this Agreement or the
Transaction Documents, each of SGASH and Cowen Inc. agrees that the Closing
Litigation Reserve shall be deemed to be an asset of Cowen Inc. for purposes of
calculating the Initial Capital pursuant to this Section 2.05, which amount
shall be offset

 

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by the SG Liabilities set forth on Schedule 2.02(b).  SGASH covenants that, if
at any time prior to the termination of the Escrow Agreement the amount of the
Closing Litigation Reserve held in escrow by the Escrow Agent is determined by
Cowen Inc.’s outside auditors or a Governmental Entity (a) not to constitute an
allowable asset or (b) to be valued using a discount rate less than that applied
to cash held by an entity, then SGASH shall pay to Cowen Inc. an amount in cash
or other mutually agreed upon qualifying assets equal to the amount then held by
the Escrow Agent (or, in the case of a decrease in the discount rate applied,
the amount by which the funds held by the Escrow Agent is deemed an allowable
asset has decreased).  If such a payment is made, Cowen Inc. covenants to pay to
the Escrow Agent for contribution to the funds held by the Escrow Agent an
amount equal to each payment made from such funds in satisfaction of an SG
Liability set forth on Schedule 2.02(b) (or, in the case of a decrease in the
discount rate, the pro rata amount attributable to any payment made from the
funds held by the Escrow Agent in satisfaction of such Liability); provided,
however, that in no case shall Cowen Inc. be obligated to contribute an
aggregate amount in excess of the amount received from SGASH pursuant to this
paragraph.

 

(c)  Estimated Distribution Amount.  On or prior to the anticipated Separation
Date, SG shall deliver to Cowen LLC:

 

(i)  a statement containing a good faith estimate (the “Estimated Distribution
Amount”) of the Closing Distribution Amount, together with

 

(ii)  a statement confirming that Cowen Inc.’s Initial Capital (after payment of
the Estimated Distribution Amount and any Liabilities and expenses allocated to
Cowen Inc. or SG in connection with this Agreement, the Separation and the IPO)
will be $207.0 million, as required by Section 2.05(a).  Following the
Separation Date, the Estimated Distribution Amount shall be subject to
adjustment as set forth below in this Section 2.05.

 

(d)  Cowen Delivery of Financials; Closing Statement.  As soon as practicable
following the end of the fiscal quarter in which the IPO occurs, Cowen Inc.
shall deliver to SG audited combined statements of financial condition,
operations, cash flow and stockholders’ equity of Cowen Inc., Cowen LLC and the
other Cowen Subsidiaries as of, and for the periods ended on, the IPO Date, all
of which shall have been prepared in accordance with GAAP and present fairly, in
all material respects, the consolidated financial position of Cowen Inc., Cowen
LLC and the other Cowen Subsidiaries at the date specified in such financial
statements and the results of their operations for the periods stated therein. 
The combined statements of financial condition, operations, cash flow and
stockholders’ equity to be delivered hereunder shall be audited unless SG
determines otherwise in its sole discretion, and any such audit shall be
conducted by a nationally-recognized accounting firm.  SG shall reimburse Cowen
Inc. for the reasonable fees and expenses of the accounting firm that are
attributable to such audit.  Within 30 days after the date it receives such
financial statements from or on behalf of Cowen Inc., SG shall prepare and
deliver to Cowen Inc. a statement (the “Closing Statement”) setting forth in
reasonable detail:

 

(i)  a calculation of the Closing Distribution Amount; and

 

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(ii)  Cowen Inc.’s Initial Capital (after payment of the Closing Distribution
Amount and any Liabilities and expenses allocated to Cowen Inc. in connection
with this Agreement, the Separation and the IPO).

 

(e)  Cowen Review of Closing Statement.  During the 15-day period following
Cowen Inc.’s receipt of the Closing Statement, Cowen Inc. and its independent
accountants shall at Cowen Inc.’s expense be permitted to review, and SG shall
make available to Cowen Inc., the supporting schedules, analyses, working papers
and other documentation of SG relating to the Closing Statement and to ask
questions, receive answers and request such other data and information from each
of them as shall be reasonable under the circumstances.  The Closing Statement
shall become final and binding upon the parties at 5:00 p.m. (New York City
time) on the 15th day following delivery thereof (or, if the 15th day is not a
Business Day, on the first Business Day thereafter) and the Closing Distribution
Amount reflected in the Closing Statement shall be deemed to be the Final
Distribution Amount under this Agreement, unless Cowen Inc. gives written notice
of its disagreement with the Closing Statement (a “Notice of Disagreement”) to
SG prior to such time.

 

(f)  Dispute Resolution.  Following the delivery of any Notice of Disagreement,
Cowen Inc. and SG shall resolve any differences that they may have with respect
to the matters specified in the Notice of Disagreement in accordance with
Article VI.  In resolving any such disputed matters and determining the
appropriate Closing Distribution Amount, the Parties and any individual,
mediator, arbiter or other party designated pursuant to Article VI shall (i) be
bound by the principles set forth in this Section 2.05 and (ii) limit their
review to matters set forth in the Notice of Disagreement.  Any Closing
Distribution Amount determined pursuant to this Section 2.05(f) shall be deemed
to be the Final Distribution Amount under this Agreement

 

(g)  Adjustments Following Determination of Final Distribution Amount.  Upon
determination of the Final Distribution Amount pursuant to Section 2.05(e) or
Section 2.05(f), as applicable, the Parties shall make the following
adjustments, as applicable:

 

(i)  If the Final Distribution Amount is less than the Estimated Distribution
Amount, then SG shall pay or cause an SG Subsidiary to pay Cowen Inc. a dollar
amount equal to the difference;

 

(ii)  If the Final Distribution Amount is greater than the Estimated
Distribution Amount, then Cowen Inc. shall pay to SG or a SG Subsidiary
designated by SG a dollar amount equal to the difference; or

 

(iii)  If the Final Distribution Amount equals the Estimated Distribution
Amount, then there shall be no adjustment pursuant to this Section 2.05.

 

Within five (5) Business Days after the Final Distribution Amount is determined,
any amount payable under Section 2.05(g)(i) or (ii) shall be paid by wire
transfer of immediately available funds to an account designated in writing by
the payee.

 

(h)  Cooperation.  Each of the Parties agrees that it will, and will use
commercially reasonable efforts to cause its respective Subsidiaries, agents and
representatives to, cooperate and assist in obtaining any requisite regulatory
consent in respect of any capital

 

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distribution, preparing the Closing Statement, calculating the Closing
Distribution Amount and Final Distribution Amount and conducting the reviews and
dispute resolution process referred to in this Section 2.05.

 

(i)  Purpose of Adjustments.  The provisions of this Section 2.05, including but
not limited to the post-Separation adjustment provisions of Sections 2.05(d),
(e), (f) and (g), are solely intended to allocate and adjust capital as of the
IPO Date between SG and the SG Subsidiaries, on the one hand, and Cowen Inc.,
Cowen LLC and the other Cowen Subsidiaries, on the other hand, as agreed by the
Parties.  Nothing in this Section 2.05, including but not limited to Sections
2.05(d), (e), (f) and (g), shall operate to modify the other provisions of this
Agreement, the Indemnification Agreement or the Principal Transaction Documents,
including the Parties’ allocation of Cowen Assets, SG Assets, Cowen Liabilities,
SG Liabilities, Cowen Indemnity Obligations and SG Indemnity Obligations
hereunder and thereunder.

 

(j)  Tax Treatment of Adjustments.  Any payment by SGAI or Cowen Inc. under this
Section 2.05 shall be treated for Tax purposes as an adjustment to the
Acquisition Price (as defined in the Tax Matters Agreement).

 

SECTION 2.06.  Leases.

 

(a)  Guarantees.  If SG or any SG Subsidiary has guaranteed (whether pursuant to
a formal guarantee or by a similar arrangement such as agreeing to act as
co-lessee) the obligations of Cowen LLC, Cowen Inc. or any of their respective
Subsidiaries under any Lease (other than the sublease by and between SG and
Cowen LLC dated December 19, 2005 for certain premises located at 1221 Avenue of
the Americas, New York, New York 10020 (the “Cowen Sublease”), then Cowen LLC,
Cowen Inc. and the applicable Cowen Subsidiary shall (a) as of the Separation
Date, unconditionally terminate and release such guarantees (or equivalent
arrangements), and obtain, or cause to be obtained, any Consent, substitution,
or amendment required to obtain in writing any Third Party’s unconditional
termination and release of SG and any SG Subsidiary from such guarantees (or
equivalent arrangements), or (b) commencing as of the Separation Date, pay SG or
the applicable SG Subsidiary a fee equal to the fair market value of providing
such guarantees (or equivalent arrangements), in accordance with the
arrangements and fee structure set forth on Schedule 2.06(a) and subject to
adjustment from time to time upon mutual agreement by SG and Cowen Inc.  Any
post-Separation guarantee (or equivalent arrangement), provided by SG or any SG
Subsidiary pursuant to the foregoing clause (b) shall remain in effect only
until the expiration or termination of the initial or base term of the
applicable Lease and not during any renewal or extension thereof.

 

(b)  Leasehold Improvements.  Cowen LLC acknowledges that (i) as of December 31,
2005, SG had incurred costs in the amount of $9,277,854.00 for leasehold
improvements made to the premises subject to the Cowen Sublease and (ii) prior
to the execution of this Agreement it agreed to pay SG for the cost of such
improvements in equal monthly installments in the amount of $99,762.00.  SG
acknowledges that Cowen LLC has made all monthly payments required starting in
January of 2006 until the date of this Agreement.  Cowen Inc. or a Cowen
Subsidiary shall continue to make such monthly payments to SG on the first day
of each month after the date of this Agreement until September 1, 2013 or such
other date when the aggregate amount specified in the first sentence of this
Section 2.06(b) is fully paid to SG.

 

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SECTION 2.07.  Employee Investment Vehicles.

 

(a)  Merchant Banking Fund.  On or prior to the Separation Date, (i) SG Capital
Partners L.L.C. will resign as the general partner of the Merchant Banking Fund
and transfer its 0.15% ownership interest in the Merchant Banking Fund to the
entity and in the manner designated by SG and (ii) Cowen LLC and Cowen Inc. will
cause any officer or employee of Cowen LLC, Cowen Inc. and their respective
Subsidiaries who is a member of the Administrative Committee of the SG Merchant
Banking Coinvestment Plan or otherwise responsible for managing or administering
the SG Merchant Banking Coinvestment Plan or the Merchant Banking Fund to resign
from such Administrative Committee or such management or administrative
position.  Notwithstanding the foregoing, (x) Cowen LLC or Cowen Inc. and any of
their respective Subsidiaries may enter into an agreement with the MBF
Purchasers regarding management by Cowen Inc. and/or any of its Subsidiaries,
following such sale, of the assets acquired by the MBF Purchasers and (y) SG or
a SG Subsidiary will, pursuant to a service level agreement, engage Cowen LLC or
Cowen Inc. to act as the investment advisor for any assets of the Merchant
Banking Fund that are not transferred or sold by SG to the MBF Purchasers.

 

(b)  Greenwich Capital Partners.  On or prior to the Separation Date, (i) Cowen
LLC will resign as the general partner of Greenwich Capital Partners and be
replaced by an entity designated by SG and (ii) Cowen LLC and Cowen Inc. will
cause any officer or employee of Cowen LLC, Cowen Inc. and their respective
Subsidiaries who is a member of the Investment Committee of Greenwich Capital
Partners or otherwise responsible for managing or administering Greenwich
Capital Partners to resign from such Investment Committee or such management or
administrative position.

 

SECTION 2.08.  NYSE-Archipelago Merger Proceeds.  The Parties agree that the
NYSE-Archipelago Merger Proceeds are an “Excluded Asset”.  Prior to the date
hereof, Cowen LLC has transferred all of its right, title and interest in and to
the NYSE-Archipelago Merger Proceeds to SGASH.

 

SECTION 2.09.  Termination of Agreements.

 

(a)  Termination of Agreements between SG and Cowen.  Except as set forth in
Section 2.09(b), Cowen Inc. and each Cowen Subsidiary, on the one hand, and SG
and each SG Subsidiary, on the other hand, hereby terminate and agree to cause
to be terminated all agreements, arrangements, commitments or understandings,
whether or not in writing, entered into prior to the Separation Date between or
among Cowen LLC, Cowen Inc. or any Cowen Subsidiaries, on the one hand, and SG
or any SG Subsidiaries, on the other hand, effective as of immediately prior to
the consummation of the IPO; provided that the provisions of this
Section 2.09(a) shall not terminate any rights or obligations between SG and any
SG Subsidiary or between any SG Subsidiaries.

 

(b)  Exceptions.  The provisions of Section 2.09 (a) shall not apply to any of
the following agreements, arrangements, commitments or understandings (or to any
of the provisions thereof):  (i) this Agreement and the Transaction Documents;
(ii) any agreements, arrangements, commitments or understandings listed or
described on Schedule 2.09; (iii) any agreements, arrangements, commitments or
understandings to which any Third Party is a party;

 

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and (iv) any agreements, arrangements, commitments or understandings to which
any non-wholly owned Subsidiary of SG or Cowen Inc., as the case may be, is a
party (it being understood that directors’ qualifying shares or similar
interests shall be disregarded for purposes of determining whether a Subsidiary
is wholly owned).  To the extent that the rights and obligations of SG or any SG
Subsidiaries under any agreements, arrangements, commitments or understandings
not terminated under this Section 2.09 constitute Cowen Assets or Cowen
Liabilities, they shall be assigned or assumed pursuant to this Agreement.

 

SECTION 2.10.  Settlement of Accounts Between SG and Cowen Inc.  All
intercompany receivables, payables and loans (other than in respect of balances
under clearing arrangements or intercompany receivables, payables and loans
otherwise specifically provided for in this Agreement or any Transaction
Document as described on Schedule 2.10), including in respect of any cash
balances, any cash balances representing deposited checks or drafts for which
only a provisional credit has been allowed or any cash held in any centralized
cash management system, between SG or any SG Subsidiary, on the one hand, and
Cowen LLC, Cowen Inc. or any Cowen Subsidiary, on the other hand, and to which
there are no Third Parties, shall, immediately prior to the consummation of the
IPO, be settled, capitalized, cancelled, assigned or assumed by SG or one or
more SG Subsidiaries, in each case in the manner determined prior to the
consummation of the IPO by duly authorized representatives of SG and Cowen Inc.

 

SECTION 2.11.  Novation of Liabilities.  Each of SG and Cowen Inc., and their
respective Subsidiaries, at the request of the other, shall use commercially
reasonable efforts to: (a) obtain, or cause to be obtained, any Consent,
substitution, or amendment required to novate or assign all Cowen Liabilities
and obtain in writing the unconditional release of SG and any SG Subsidiary that
is a party to any such arrangements, so that, in any such case, Cowen Inc. and
its designated Subsidiaries shall be solely responsible for such Cowen
Liabilities; (b) obtain, or cause to be obtained, any Consent, substitution, or
amendment required to novate or assign all SG Liabilities and obtain in writing
the unconditional release of Cowen Inc. and any Cowen Subsidiary that is a party
to any such arrangements, so that, in any such case, SG and its designated
Subsidiaries shall be solely responsible for such SG Liabilities;
(c) unconditionally terminate and release any guarantees by SG or any SG
Subsidiary of any Cowen Liabilities, provided, however, that a guarantee by SG
or any SG Subsidiary of any Lease shall be subject to Section 2.06(a); and
(d) unconditionally terminate and release any guarantees by Cowen Inc. or any
Cowen Subsidiary of any SG Liabilities; provided, however, that nothing herein
shall require any attempt to substitute Cowen Inc. or any Cowen Subsidiary for
SG or any SG Subsidiary as a party in any Proceeding.

 

SECTION 2.12.  Mixed Contracts; Mixed Accounts.

 

(a)  Mixed Contracts.  Unless the Parties agree otherwise (including but not
limited to the Parties’ agreement in Section 4.01 regarding insurance matters),
any agreement to which SG, Cowen Inc., Cowen LLC or any of their respective
Subsidiaries is a party prior to the Separation Date that inures to the benefit
or burden of each of the SG Business and the Cowen Business (a “Mixed Contract”)
shall be assigned in part to Cowen Inc. or its Subsidiaries, if so assignable,
prior to, on or after the Separation Date, so that each Party or their
respective

 

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Subsidiaries shall be entitled to the rights and benefits and shall assume the
related portion of any obligations and Liabilities inuring to their respective
businesses; provided, however, that in no event shall SG, Cowen Inc, Cowen LLC
or any of their respective Subsidiaries be required to assign any Mixed Contract
in its entirety.  If any Mixed Contract cannot be so partially assigned, SG and
Cowen Inc. shall, and shall cause each of their respective Subsidiaries to, take
such other reasonable and permissible actions to cause:  (i) the Assets
associated with that portion of each Mixed Contract that relates to the Cowen
Business to be enjoyed by Cowen Inc. or a Cowen Subsidiary; (ii) the Liabilities
associated with that portion of each Mixed Contract that relates to the Cowen
Business to be borne by Cowen Inc. or a Cowen Subsidiary; (iii) the Assets
associated with that portion of each Mixed Contract that relates to the SG
Business to be enjoyed by SG or an SG Subsidiary; and (iv) the Liabilities
associated with that portion of each Mixed Contract that relates to the SG
Business to be borne by SG or an SG Subsidiary.  If any Liability associated
with the Mixed Contracts cannot be allocated as set forth in the preceding
sentence, such Liability shall be allocated to SG and Cowen Inc. based on the
relative proportions of total benefit received (over the term of the Mixed
Contract, measured as of the date of the allocation) under the relevant Mixed
Contract as mutually determined by SG and Cowen Inc.  Notwithstanding the
foregoing, each party shall be responsible for any or all Liabilities arising
out of or resulting from its breach of the relevant Mixed Contract by reason of
any failure to properly perform its obligations thereunder.

 

(b)  Mixed Accounts.  Except as may otherwise be agreed by the Parties, the
Parties shall not seek to assign any accounts receivable or accounts payable
relating to both the SG Business and the Cowen Business (“Mixed Accounts”).  SG
and Cowen Inc. shall, and shall cause each of their respective Subsidiaries to,
take such other reasonable and permissible actions to cause:  (i) the Assets
associated with that portion of each Mixed Account that relates to the SG
Business to be enjoyed by SG or an SG Subsidiary; (ii) the Liabilities
associated with that portion of each Mixed Account that relates to the SG
Business to be borne by SG or an SG Subsidiary; (iii) the Assets associated with
that portion of each Mixed Account that relates to the Cowen Business to be
enjoyed by Cowen Inc. or a Cowen Subsidiary; and (iv) the Liabilities associated
with that portion of each Mixed Account that relates to the Cowen Business to be
borne by Cowen Inc. or a Cowen Subsidiary. If any Liability associated with the
Mixed Accounts cannot be allocated as set forth in the preceding sentence, such
Liability shall be allocated to SG and Cowen Inc. based on the on the relative
proportions of total benefit received (over the life of the Mixed Account,
measured as of the date of the allocation) under the relevant Mixed Account as
mutually determined by SG and Cowen Inc.  Notwithstanding the foregoing, each
party shall be responsible for any or all Liabilities arising out of or
resulting from its breach of the relevant Mixed Account by reason of any failure
to properly perform its obligations thereunder.

 

(c)  Misdirected Benefits.  If SG or an SG Subsidiary, on the one hand, or Cowen
Inc. or a Cowen Subsidiary, on the other hand, receives any benefit or payment
under any Mixed Contract or Mixed Account that was intended for the other party,
SG or an SG Subsidiary, on the one hand, or Cowen Inc. or a Cowen Subsidiary, on
the other hand, will use their respective reasonable best efforts to deliver,
transfer or otherwise afford such benefit or payment to the other party.

 

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(d)  No Payments.  Nothing in this Section 2.12 shall require SG, Cowen Inc. or
any of their respective Subsidiaries to make any payment, incur any obligation
or grant any concession to any Third Party, other than ordinary and customary
fees to Governmental Authorities, in order to effect any transaction
contemplated by this Section 2.12.

 

SECTION 2.13.  Further Assurances.

 

(a)  Additional Actions.  Except as set forth in Section 2.15, in addition to
the actions specifically provided for elsewhere in this Agreement, each Party
shall, and shall cause each of its respective Subsidiaries to, use commercially
reasonable efforts, prior to, at and after the Separation Date to take, or cause
to be taken, all actions, and to do, or cause to be done, all things, necessary
or advisable under applicable laws, regulations and agreements to consummate the
transactions contemplated by this Agreement and the Transaction Documents;
provided, however, that neither SG nor Cowen Inc. (nor any of their respective
Subsidiaries) shall be obligated under this Section 2.13 to pay any
consideration, grant any concession or incur any additional Liability to any
Third Party other than ordinary and customary fees paid to a Governmental
Authority.

 

(b)  Cooperation.  Without limiting the foregoing, prior to, at and after the
Separation Date, each Party shall, and shall cause each of its Subsidiaries to,
cooperate with the other Party without any further consideration to execute and
deliver, or use commercially reasonable efforts to cause to be executed and
delivered, all Conveyance and Assumption Instruments and to make all filings
with, and to obtain all Consents of, any Governmental Authority or any other
Person under any permit, license, agreement, indenture or other instrument
(including any Consents), and to take all such other actions as such Party may
reasonably be requested to take by the other Party from time to time, consistent
with the terms of this Agreement and the Transaction Documents, in order to
effectuate the provisions and purposes of this Agreement and the Transaction
Documents and the transfers of the Cowen Assets and the assignment and
assumption of the Cowen Liabilities and the other transactions contemplated
hereby and thereby.

 

(c)  Misallocations.  In the event that at any time or from time to time
(whether prior to, on or after the Separation Date), a Party or any of its
Subsidiaries shall receive or otherwise possess any Asset that is allocated to
any other Person pursuant to this Agreement or any Transaction Document, such
Party shall promptly transfer, or cause its Subsidiary to transfer, such Asset
to the Person so entitled thereto or such Party’s Subsidiary or designee.

 

SECTION 2.14.  Transition Committee.  To facilitate an orderly separation and
transition of the Cowen Business from the SG Business, each of SG and Cowen Inc.
has designated two key transition contacts on Schedule 2.14, who shall be
primarily responsible for cooperation and coordination between the Parties
regarding the matters contemplated by this Agreement and the Principal
Transaction Documents.  SG and Cowen Inc. shall cause their respective key
transition contacts to meet with their counterparts to establish procedures for
such cooperation and coordination within 30 days after the Separation Date.  The
key transition contacts shall designate such other contacts in specific
functional areas as they agree from time to time are necessary or appropriate. 
The key transition contacts and such other contacts may be

 

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removed or replaced at any time by the Party (or key transition contacts) who
designated them pursuant to this Section 2.14.

 

SECTION 2.15.  Conditions to the Separation.

 

(a)  The Conditions.  Subject to Section 7.01, the satisfaction or waiver by SG
of the following shall be conditions to SG’s obligation to effect the
Separation:

 

(i)  Cowen Inc. shall have duly authorized the issuance, pursuant to
Section 2.02(e), of the number and classes of shares of Cowen Common Stock that
are mutually agreed to by SGASH and the Underwriters, which shares shall
represent 100% of the shares of Cowen Common Stock outstanding immediately prior
to the IPO;

 

(ii)  the Underwriting Agreement shall have been executed and delivered by each
of the parties thereto and shall be in full force and effect;

 

(iii)  the Registration Statement shall have been declared effective by the SEC,
and there shall be no stop-order in effect with respect thereto and no
Proceeding for that purpose shall have been instituted by the SEC;

 

(iv)  the actions and filings with regard to state securities and blue sky laws
of the United States (and any comparable laws under any foreign jurisdictions)
shall have been taken and, where applicable, shall have become effective or been
accepted;

 

(v)  no order, injunction or decree issued by any Governmental Authority or
court of applicable jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
or any Transaction Document shall have been threatened or in effect;

 

(vi)  any Consents necessary to consummate the Separation and the transactions
contemplated by this Agreement to be consummated on or prior to the Separation
Date shall have been obtained and be in full force and effect;

 

(vii)  no events or developments shall have occurred subsequent to the date
hereof that SG believes, in its sole discretion, could result in an adverse
effect on SG, any SG Subsidiary, or on their respective shareholders;

 

(viii)  the Parties shall have performed and complied with all of their
respective covenants, obligations and agreements contained in this Agreement and
required to be performed or complied with by them on or prior to the Separation
Date; and

 

(ix)  the Parties shall have executed and delivered or, where applicable, shall
have caused their respective Subsidiaries to execute and deliver, the
Transaction Documents that are contemplated by this Agreement to be executed and
delivered on or prior to the Separation Date.

 

(b)  Conditions for Benefit of SG.  The foregoing conditions are for the sole
benefit of SG and the SG Subsidiaries and shall not give rise to or create any
duty on the part of

 

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SG, the SG Subsidiaries or their respective boards of directors to waive or not
waive such conditions or in any way limit SG’s right to terminate this Agreement
as set forth in Article VII or alter the consequences of any such termination
from those specified in such Article.  Any determination made by SG prior to the
Separation concerning the satisfaction or waiver of any or all of the conditions
set forth in this Section 2.15 shall be conclusive; provided, however, that SG’s
determination concerning the satisfaction or waiver of Section 2.15(a)(i), (vi),
(vii), (viii) and (ix) shall be made as of the time as of which the Underwriters
and SGASH agree on the final purchase price per share of Cowen Common Stock to
be paid to SGASH by the Underwriters pursuant to the Underwriting Agreement, and
SG may not thereafter terminate this Agreement due to a failure of such
conditions.

 

ARTICLE III

MUTUAL RELEASES; INDEMNIFICATION

 

SECTION 3.01.  Indemnification Agreement.  The Parties agree that the mutual
releases and indemnification in respect of the Liabilities of SG, Cowen Inc. and
their respective Subsidiaries, including those that relate to, arise out of or
result from the Separation or the IPO, shall be as set forth in the
Indemnification Agreement.  Any indemnification by Cowen Inc. of the SG
Indemnitees or by SG of the Cowen Indemnitees in respect of Liabilities for
Taxes shall be as set forth in the Tax Matters Agreement.

 

ARTICLE IV

CERTAIN OTHER MATTERS

 

SECTION 4.01.  Insurance Matters.

 

(a)  Insurance Policies.  Prior to the Separation Date, duly authorized
representatives of Cowen Inc. and SG and its Subsidiaries shall enter into
arrangements with their insurance providers to separate their insurance
coverages effective as of the consummation of the IPO, including any pre-
Separation Date and other obligations related thereto, in a manner consistent
with this Section 4.01.

 

(b)  Termination of Cowen Coverage.  Effective as of the consummation of the
IPO, Cowen Inc. Cowen LLC and the other Cowen Subsidiaries will be removed as
insureds from all insurance policies of SG and its Subsidiaries under which
Cowen Inc., Cowen LLC or the other Cowen Subsidiaries are then covered.  Cowen
Inc., Cowen LLC and the other Cowen Subsidiaries shall, as of and following the
consummation of the IPO, procure and maintain such policies of general,
liability, worker’s compensation, directors’ and officers’ liability, employment
practices liability and such other forms of insurance as are customary, in the
good faith judgment of Cowen Inc.’s board of directors, for businesses of the
type of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries.  As of and
following the consummation of the IPO, Cowen Inc. and its Subsidiaries shall be
responsible for the payment of all premiums and any other costs or expenses
associated with such insurance policies.  Nothing herein shall affect any rights
of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries with respect to any
claims made under any such insurance policy prior to the Separation Date.

 

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(c)  Cowen LLC Coverage Prior to IPO Date.  Until the consummation of the IPO,
SG shall be responsible for the payment of all premiums and any other costs or
expenses associated with insurance policies that SG maintains for Cowen Inc.,
Cowen LLC, their respective Subsidiaries and the Cowen Business. 
Notwithstanding the foregoing, until the consummation of the IPO, SG shall
allocate the cost of all such policies, and Cowen Inc. and Cowen LLC shall
reimburse SG therefor, in accordance with SG’s policies and customary practices.

 

(d)  Future Insured Claims.  After the consummation of the IPO, Cowen Inc. and
the Cowen Subsidiaries shall have no right to make an insurance claim on or
under any insurance contract to which SG or any SG Subsidiary is a party other
than in respect of any occurrence-based insurance policies set forth on
Schedule 4.01 under the caption “Section 4.01(d)” that covered Cowen Inc. or any
Cowen Subsidiary prior to the IPO.  In respect of each occurrence-based
insurance policy set forth on Schedule 4.01, Cowen Inc. and the Cowen
Subsidiaries shall only make claims in accordance with the terms and conditions
of such policy and shall provide SG with prompt written notice of any such
claims (even where such notice is not required by the applicable policy).

 

(e)  No Liability.  In respect of each of the insurance policies set forth on
Schedule 4.01 under the caption “Section 4.01(e)”, Cowen Inc. does hereby, for
itself and each of its Subsidiaries, agree that none of SG, any SG Subsidiary or
any SG Indemnitee shall have any Liability whatsoever, and Cowen Inc. shall make
no claim or demand, or commence any Proceeding asserting any claim or demand,
alleging such Liability, as a result of the policies, practices and procedures
regarding insurance matters of SG or any SG Subsidiary as in effect at any time
prior to the Separation Date, including as a result of the limits or scope of
any insurance, the creditworthiness of any insurance carrier, the collectibility
of Insurance Proceeds, the terms and conditions of any policy, the handling or
disposition of any claims, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.

 

SECTION 4.02.  Late Payments.  Except as provided in any Transaction Document,
any amount not paid when due pursuant to this Agreement or any Transaction
Document (and any amounts billed or otherwise invoiced or demanded and properly
payable that are not paid within 30 days of the date of such bill, invoice or
other demand) shall accrue interest at a rate per annum equal to the Prime Rate
plus 2%.

 

SECTION 4.03.  SG Financial Statements.  Cowen Inc. agrees that if SG and the SG
Subsidiaries (including SGASH) are required during any fiscal year, in
accordance with IAS, to consolidate Cowen Inc.’s financial statements with its
financial statements), then in respect of such fiscal year:

 

(a)  Auditors.  Cowen Inc. shall provide SG and any SG Subsidiary, and their
respective auditors and representatives, access upon reasonable notice during
normal business hours to Cowen Inc.’s and the Cowen Subsidiaries’ books and
records so that SG and any applicable SG Subsidiary may conduct reasonable
audits relating to the financial statements of Cowen Inc., as well as to the
internal accounting controls and operations of Cowen Inc. and the Cowen
Subsidiaries.

 

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(b)  Cooperation.  Cowen Inc. will (i) provide to SG and any SG Subsidiary on a
timely basis and in a manner consistent with past practice all information that
SG or any SG Subsidiary reasonably requires in order to meet its schedule for
the timely preparation, printing, and, if applicable, public filing and
dissemination of their respective financial statements, (ii) when reasonably
requested by SG or any SG Subsidiary, to provide such information within five
Business Days following the end of the calendar month to which such information
relates and (iii) in the event of a consolidation involving Cowen Inc., provide
SG with prompt written notice of any reported or expected material inadequacies
during the course of such consolidation.

 

(c)  Accounting Estimates and Principles.  Cowen Inc. will give SG reasonable
prior notice of any proposed material change in accounting principles from those
in effect with respect to Cowen LLC and the Cowen Subsidiaries immediately prior
to the Separation Date, and will give SG notice immediately following the
adoption of any such changes that are mandated or required by the SEC, the
Financial Accounting Standards Board or the Public Company Accounting Oversight
Board.  In connection therewith, Cowen Inc. will consult with SG and, if
requested by SG, SG’s auditors with respect thereto.  As to material changes in
accounting principles that could affect SG or any SG Subsidiary, Cowen Inc. will
not make or permit any such changes without SG’s prior written consent if such a
change would be sufficiently material to be required to be disclosed in Cowen
Inc.’s financial statements as filed with the SEC or otherwise publicly
disclosed therein, unless such changes are mandated or required by the SEC, the
Financial Accounting Standards Board, the Public Company Accounting Oversight
Board or Cowen Inc.’s auditors, provided, however, that Cowen Inc. shall provide
prior written notice to SG in respect of any such mandated or required material
change that does not require SG’s prior written consent.  If SG so requests,
Cowen Inc. will be required to obtain the concurrence of Cowen Inc.’s auditors
as to such material change prior to its implementation.  Notwithstanding the
foregoing, accounting principles applied in calculating the Estimated
Distribution Amount, the Final Distribution Amount or any other amounts paid or
payable under Section 2.05 of this Agreement shall not be changed without the
Parties’ written mutual agreement.  Any dispute among the Parties in connection
with the immediately preceding sentence shall be settled in accordance with
Article VI.

 

SECTION 4.04.  Certain Employee Matters.  Subject to the consummation of the IPO
and the terms of the Cowen Employee Ownership Plan:

 

(a)  Initial Awards.  Upon the consummation of the IPO, Cowen Inc. will issue
shares of Cowen Common Stock and options to purchase Cowen Common Stock only to
the employees and officers of Cowen Inc. set forth in the notice delivered by
Cowen Inc. to SG immediately prior to the Parties’ execution of this Agreement,
and in each case only up to the respective amounts set forth next to each
employee’s or officer’s name on such notice, which schedule may be amended at
any time and from time to time with the consent of SG until the date that is one
(1) Business Day prior to the anticipated Separation Date.

 

(b)  Consummation of IPO.  If the IPO is not consummated for any reason or no
reason, the Employee Ownership Plan and any shares or options issued thereunder
shall be null and void and of no force and effect.

 

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SECTION 4.05.  Compliance with Regulatory Requirements.

 

(a)  General.  Cowen Inc. understands and agrees that, subject to
subsection (b) of this Section 4.05, so long as SG owns or controls, directly or
indirectly, 5% or more of any class of voting stock of Cowen Inc. or 25% or more
of Cowen Inc.’s total voting and nonvoting equity, or SG determines, in its sole
discretion, that it otherwise “controls” Cowen Inc. for purposes of the Bank
Holding Company Act of 1956, as amended (“BHCA”), it shall:

 

(i)  limit its activities to those activities that are permissible for financial
holding companies under section 4(k) of the BHCA and implementing regulations
and orders of the Board of Governors of the Federal Reserve System (“Federal
Reserve Board”) promulgated thereunder;

 

(ii)  make available, upon SG’s reasonable prior request, to any Governmental
Authority with jurisdiction over the activities of SG any and all information
concerning the business and activities of Cowen Inc., and its dealings and
relationships with SG, to which such Government Authority is entitled under
applicable law;

 

(iii)  comply with applicable requirements of federal, state and foreign
financial institutions laws and regulations as required by SG’s “continued
relationship” with Cowen Inc. within the meaning of such laws and regulations;
and

 

(iv)  provide SG and any SG Subsidiary, and their respective representatives,
access upon reasonable notice during normal business hours to Cowen Inc.’s and
the Cowen Subsidiaries’ books and records, so that SG and any applicable SG
Subsidiary may conduct reasonable reviews relating to the matters set forth in
this Section 4.05.

 

(b)  Termination.  The requirements of subsection (a) above shall cease to be
applicable with respect to U.S. laws and regulations at such time that: (i) SG
neither owns or controls, directly or indirectly, 5% or more of any class of
voting stock of Cowen Inc. nor 25% or more of Cowen Inc.’s total voting and
nonvoting equity and (ii) SG determines, in its sole discretion, that it does
not otherwise “control” Cowen Inc. for purposes of the BHCA.

 

SECTION 4.06.  Tax Treatment.  The Parties intend that the transactions
constituting the Separation shall for United States federal income tax purposes
be treated as a taxable asset transfer to Cowen Inc. for consideration equal to
the Acquisition Price (as defined in the Tax Matters Agreement) and shall not
take any position on any Tax Return or any action inconsistent with such
treatment.

 

SECTION 4.07.  Warrants Held by Cowen LLC.  Each of Cowen Inc. and Cowen LLC
represents and warrants as of the Separation Date that set forth on
Schedule 4.07 hereto is a true, correct and complete list of the warrants held
by Cowen LLC.

 

SECTION 4.08.  Registration Statement and Prospectus Disclosures.  Each of the
representations and warranties made by Cowen Inc. to the Underwriters in
Sections 2(a)(ii) through 2(a)(iv) and Section 2(a)(xii) of the Underwriting
Agreement is hereby incorporated by reference herein and made a part hereof, as
though directly made by Cowen Inc. to SG and SGASH hereunder; provided that such
representations and warranties shall be deemed made hereunder as of the date
they are deemed made under the Underwriting Agreement.

 

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ARTICLE V

EXCHANGE OF INFORMATION; CONFIDENTIALITY

 

SECTION 5.01.  Agreement for Exchange of Information.

 

(a)  Exchange of Information.  Each of SG and Cowen Inc., on behalf of itself
and its Subsidiaries, shall provide, or cause to be provided, to the other, at
any time before or after the Separation Date, as soon as reasonably practicable
after written request therefor, any Information in its possession or under its
control to the extent that:  (i) such Information relates to the Cowen Business,
or any Cowen Asset or Cowen Liability, if Cowen Inc. is the requesting Party, or
to the SG Business, or any Assets of SG (other than the Cowen Assets) or SG
Liability, if SG is the requesting Party; or (ii) such Information is required
by the requesting Party to comply with any obligation imposed by any
Governmental Authority; provided, however, that in the event that any Party
determines that any such provision of Information could be commercially
detrimental, violate any law or agreement, compromise client confidentiality or
waive any applicable privilege, the Parties shall use commercially reasonable
efforts to permit the compliance with such obligations in a manner that avoids
any such harm or consequence.  The Party providing Information pursuant to this
subsection (a) shall only be obligated to provide such Information in the form,
condition and format in which it then exists and in no event shall such Party be
required to perform any improvement, modification, conversion, updating or
reformatting of any such Information.  The Parties acknowledge that the Tax
Matters Agreement shall exclusively govern the exchange of Information with
respect to Taxes.

 

(b)  Compensation for Providing Information.  The Party requesting Information
agrees to reimburse the other Party for the reasonable costs, if any, of
creating, gathering, copying and transporting such Information.

 

SECTION 5.02.  Ownership of Information.  The provision of any Information
pursuant to Section 5.01 shall not affect the ownership of such Information
(which shall be determined solely in accordance with the terms of this Agreement
and the Principal Transaction Documents), or constitute the grant of rights of
license in any such Information.

 

SECTION 5.03.  Record Retention.  The Parties agree to use their reasonable best
efforts to retain all books, records and other Information in their respective
possession or control as of the Separation Date in accordance with applicable
law and regulatory requirements.

 

SECTION 5.04.  Limitations of Liability.  No Party shall have any Liability to
another Party in the event that any Information exchanged or provided pursuant
to this Agreement is found to be inaccurate in the absence of gross negligence
or willful misconduct by the Party providing such Information.  No Party shall
have any Liability to any other Party if any Information is destroyed after
commercially reasonable efforts by such Party to comply with the provisions of
this Article V.

 

SECTION 5.05.  Other Agreements Providing for Exchange of Information.  The
rights and obligations granted under this Article V are subject to any specific
limitations,

 

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qualifications or additional provisions on the sharing, exchange, retention or
confidential treatment of Information set forth in any Principal Transaction
Document.

 

SECTION 5.06.  Confidentiality.

 

(a)  Confidentiality.  Subject to Section 5.07, SG, on behalf of itself and each
SG Subsidiary, and Cowen Inc., on behalf of itself and each Cowen Subsidiary,
agrees to hold, and to cause its respective directors, officers, employees,
agents, accountants, counsel and other advisors and representatives to hold, in
strict confidence, with at least the same degree of care that applies to SG’s
confidential and proprietary information pursuant to policies in effect as of
the Separation Date, all Information concerning the other (or its business) and
the other’s Subsidiaries (or their respective businesses) that is either in its
possession (including Information in its possession prior to the Separation
Date) or furnished by the other or the other’s Subsidiaries or their respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives at any time pursuant to this Agreement or any Transaction
Document, and shall not use any such Information other than for such purposes as
may be expressly permitted hereunder or thereunder, except, in each case, to the
extent that such Information has been: (i) in the public domain through no fault
of such Party or its Subsidiaries or any of their respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives; (ii) later lawfully acquired from other sources by such Party
(or any of its Subsidiaries) which sources are not themselves bound by a
confidentiality obligation; or (iii) independently generated without reference
to any proprietary or confidential Information of the other Party.

 

(b)  No Release; Return or Destruction.  Each Party agrees not to release or
disclose, or permit to be released or disclosed, any Information addressed in
Section 5.06(a) to any other Person, except its directors, officers, employees,
agents, accountants, counsel and other advisors and representatives who need to
know such Information, and except in compliance with this Section 5.06 and
Section 5.07.  Without limiting the foregoing, when any Information furnished by
the other Party after the Separation Date pursuant to this Agreement or any
Transaction Document is no longer needed for the purposes contemplated by this
Agreement or any Transaction Document, each Party shall, at such Party’s option,
promptly after receiving a written request from the other Party either return to
the other Party all such Information in a tangible form (including all copies
thereof and all notes, extracts or summaries based thereon) or certify to the
other Party that it has destroyed such Information (and such copies thereof and
such notes, extracts or summaries based thereon); provided, however, that each
Party may retain copies of such Information if necessary to satisfy applicable
regulatory requirements.

 

SECTION 5.07.  Protective Arrangements.  In the event that SG or Cowen Inc. or
any of their respective Subsidiaries either determines on the advice of its
counsel that it is required or advisable to disclose any Information pursuant to
applicable law or the rules or regulations of any Governmental Authority or
receives any demand under lawful process or from any Governmental Authority to
disclose or provide Information of another Party (or such other Party’s
Subsidiaries) that is subject to the confidentiality provisions hereof, the
Party contemplating the disclosure shall notify the other Party a reasonable
time prior to disclosing or providing the other Party’s Information and shall
cooperate in seeking any reasonable protective arrangements requested in a
reasonably timely manner by the other Party.  The reasonable out-of-pocket

 

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costs and expenses incurred by the Parties in connection with seeking any such
protective arrangements shall be borne by the Party or Parties requesting the
protective arrangements for its Information (solely to the extent the protective
arrangement applies to its Information).  Without limiting the generality of the
foregoing, to the extent that any disclosure contemplated pursuant to this
Section 5.07 would consist of Information of the disclosing Party that is
“bundled” with Information of the other Party, the Party required to disclose
such “bundled” Information shall notify the other Party a reasonable time prior
to such disclosure and such other Party shall as promptly as practicable either
(i) arrange for the unbundling of such Information at its sole cost and expense
(including any out-of-pocket costs and expenses incurred by the disclosing
Party) or (ii) consent to the disclosure of such “bundled” Information.  Subject
to the satisfaction of the foregoing provisions of this Section 5.07, the Party
that received a request for any such protective arrangements, or its
Subsidiaries, may thereafter disclose or provide Information to the extent
required by or advisable under such law (as so advised by counsel) or by lawful
process or such Governmental Authority.

 

ARTICLE VI

DISPUTE RESOLUTION

 

SECTION 6.01.  Disputes.

 

(a)  Agreement to Arbitrate Disputes.  The Parties acknowledge that, from time
to time after the Separation Date, a controversy, dispute or claim may arise
relating to a Party’s rights or obligations under this Agreement.  The Parties
agree that any controversy, dispute or claim (whether arising in contract, tort
or otherwise) arising out of or in connection with the performance or breach of
this Agreement, including any question regarding its enforcement, existence,
validity, interpretation or termination shall be resolved by binding
arbitration.

 

(b)  Conduct of the Arbitration.  An arbitration conducted pursuant to this
provision shall be administered by and held before the American Arbitration
Association (“AAA”) in accordance with the laws of the State of New York and the
AAA’s then current Commercial Arbitration Rules.  Notwithstanding the foregoing,
no pre-hearing discovery shall be permitted unless specifically authorized by
the arbitration panel, provided, however, that unless the Parties agree
otherwise, there shall be no pre-hearing depositions or interrogatories.  Any
hearing or authorized discovery shall take place in New York City, unless the
Parties agree otherwise.

 

(c)  Composition and Selection of Panel:  Unless the Parties agree otherwise,
the arbitration panel shall consist of three persons appointed by the AAA from
its National Roster pursuant to Rule R-11 of the AAA’s Commercial Arbitration
Rules.

 

(d)  Limitations on Available Relief.  The arbitration panel shall have no
authority or jurisdiction to award consequential, exemplary or punitive damages.

 

(e)  Confidentiality.  The Parties agree that any arbitration commenced pursuant
to this provision shall be and remain confidential, and the Parties shall not
make any public

 

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statements concerning any arbitration, except to the extent that disclosure of
or any statement concerning any arbitration is, in the opinion of counsel for
one of the Parties, required by law.

 

(f)  Final and Binding Nature of Arbitration Award.  Any award rendered by the
arbitrators shall be final and binding between the Parties and judgment thereon
may be entered in any court of competent jurisdiction.  If a Party seeks to
vacate or to appeal an award rendered by the arbitration panel and such Party’s
motion to vacate is denied or its appeal is unsuccessful, then that Party shall
pay the costs and expenses, including reasonable attorneys’ fees, of the
prevailing Party.

 

ARTICLE VII

TERMINATION

 

SECTION 7.01.  Termination.  This Agreement and all Transaction Documents may be
terminated or abandoned at any time prior to the Separation Date by and in the
sole discretion of SG without the approval of Cowen Inc.  In the event of such
termination, no Party shall have any Liability of any kind to any other Party. 
After the Separation Date, this Agreement may not be terminated except pursuant
to Section 2.02(f) or Section 2.15 or by an agreement in writing signed by all
of the Parties.

 

ARTICLE VIII

NON-SOLICITATION; NON-DISPARAGEMENT;
EMPLOYEE ARRANGEMENTS; COMPETITION

 

SECTION 8.01.  Non-Solicitation.  For a period of one year commencing on the IPO
Date:

 

(a)  SG and the SG Subsidiaries will not, directly or indirectly, in one or a
series of transactions, (i) solicit or recruit for the purpose of hiring, or
hire, any individual who was employed by Cowen Inc. or a Cowen Subsidiary within
the twelve (12) month period preceding the date of the incident in question or
(ii) otherwise induce or influence any such individual to discontinue, reduce or
modify his or her employment with Cowen Inc. or a Cowen Subsidiary; and

 

(b)  Cowen Inc. and the Cowen Subsidiaries will not, directly or indirectly, in
one or a series of transactions, (i) solicit or recruit for the purpose of
hiring, or hire, any individual who was employed by SG or a SG Subsidiary within
the twelve (12) month period preceding the date of the incident in question or
(ii) otherwise induce or influence any such individual to discontinue, reduce or
modify his or her employment with SG or a SG Subsidiary.

 

Notwithstanding the foregoing provisions of this Section 8.01, nothing herein
shall prevent SG and the SG Subsidiaries or Cowen Inc. and the Cowen
Subsidiaries, from:  (i) using an independent employment agency, so long as such
agency is not directed to contact a specific employee of the other party,
(ii) placing general advertisements not targeted at a specific employee of the
other party or (iii) engaging in discussions with or hiring employees of the
other party regarding employment when discussions are initiated by such
employee.

 

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SECTION 8.02.  Non-Disparagement.  For a period of one year commencing on the
IPO Date, Cowen Inc. agrees, on behalf of itself and the Cowen Subsidiaries,
that it shall not, and shall not cause or permit any of its officers or
directors (or the officers or directors of Cowen Subsidiaries) to make any
false, defamatory or disparaging statements about SG or SG Subsidiaries, or the
officers or directors of SG or any SG Subsidiaries.  For so long as SGASH owns
any shares of Cowen Common Stock, SG agrees, on behalf of itself and the SG
Subsidiaries, that it shall not, and shall not cause or permit any of its
officers or directors (or the officers or directors of any SG Subsidiaries) to
make any false, defamatory or disparaging statements about Cowen Inc. or the
officers or directors of Cowen Inc. or any Cowen Subsidiaries.

 

SECTION 8.03.  No Other Business Restrictions.  Except as expressly provided to
the contrary in this Agreement or in any Principal Transaction Document, nothing
in this Agreement or any Transaction Document shall require SG or Cowen Inc. or
any of their respective Subsidiaries to refrain from:  (a) engaging in the same
or similar activities or lines of business as the other Party or any of its
Subsidiaries; (b) doing business with any potential or actual supplier or
customer of the other Party or any of its Subsidiaries; or (c) engaging in, or
refraining from, any other activities whatsoever relating to any of the
potential or actual suppliers or customers of the other Party or any of its
Subsidiaries.

 

ARTICLE IX

MISCELLANEOUS

 

SECTION 9.01.  Counterparts; Entire Agreement; Corporate Power; Facsimile
Signatures.

 

(a)  Counterparts.  This Agreement and each Transaction Document may be executed
in two or more counterparts, each of which when executed shall be deemed to be
an original but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be as effective as delivery of an executed original
of such counterpart to this Agreement.

 

(b)  Entire Agreement.  This Agreement, the Transaction Documents and the
exhibits, schedules and annexes hereto and thereto contain the entire agreement
between the Parties with respect to the subject matter hereof and supersede all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter, and there are
no agreements or understandings between the Parties other than those set forth
or referred to herein or therein.  Notwithstanding any other provisions in this
Agreement to the contrary, in the event and to the extent that there is a
conflict between the provisions of this Agreement and the provisions of any
Principal Transaction Document, the provisions of such Principal Transaction
Document shall control.

 

(c)  Corporate Power.  SG represents on behalf of itself and, to the extent
applicable, each SG Subsidiary, and Cowen Inc. represents on behalf of itself
and, to the extent applicable, each Cowen Subsidiary, as follows:

 

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(i)  each such Person has the requisite corporate or other power and authority
and has taken all corporate or other action necessary in order to execute,
deliver and perform this Agreement and each Principal Transaction Document to
which it is a party and to consummate the transactions contemplated hereby and
thereby; and

 

(ii)  this Agreement and each Principal Transaction Document to which it is a
party has been duly executed and delivered by it and constitutes a valid and
binding agreement of it enforceable in accordance with the terms thereof.

 

(d)  Facsimile Signatures.  Each Party acknowledges that it and the other
Parties may execute this Agreement and certain of the Transaction Documents by
facsimile, stamp or mechanical signature.  Each Party expressly adopts and
confirms each such facsimile, stamp or mechanical signature made in its
respective name as if it were a manual signature, agrees that it shall not
assert that any such signature is not adequate to bind such Party to the same
extent as if it were signed manually and agrees that at the reasonable request
of the other Party at any time it shall as promptly as reasonably practicable
cause each such Transaction Document to be manually executed (any such execution
to be as of the date of the initial date thereof).

 

SECTION 9.02.  Governing Law.  This Agreement and, unless otherwise expressly
provided therein, each Transaction Document, shall be governed by and construed
and interpreted in accordance with the laws of the State of New York,
irrespective of the choice of laws principles of the State of New York, as to
all matters, including matters of validity, construction, effect,
enforceability, performance and remedies.

 

SECTION 9.03.  Assignability.  Except as set forth in any Transaction Document,
this Agreement and each Transaction Document shall be binding upon and inure to
the benefit of the Parties hereto and the parties thereto, respectively, and
their respective successors and permitted assigns; provided, however, that no
Party hereto nor any party thereto may assign its rights or delegate its
obligations under this Agreement or any Transaction Document without the express
prior written consent of the other Parties hereto or the other parties thereto. 
Notwithstanding the foregoing, this Agreement and the Transaction Documents
(except as may be otherwise provided in any such Transaction Document) shall be
assignable in whole in connection with a merger or consolidation or the sale of
all or substantially all of the Assets of a Party so long as the resulting,
surviving or transferee Person assumes all the obligations of the relevant party
thereto by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other Party.

 

SECTION 9.04.  Third Party Beneficiaries.  Except for the indemnification rights
under this Agreement and any Principal Transaction Documents of any SG
Indemnitee or Cowen Indemnitee in their respective capacities as such and for
the releases under Article II of the Indemnification Agreement of any Person
provided therein: (a) the provisions of this Agreement and each Transaction
Document are solely for the benefit of the Parties and their respective
Subsidiaries, after giving effect to the Separation, and are not intended to
confer upon any Person except the Parties and their respective Subsidiaries,
after giving effect to the Separation, any rights or remedies hereunder; and
(b) there are no other Third Party beneficiaries of this Agreement or any
Transaction Document and neither this Agreement nor any Transaction Document
shall provide any other Third Party with any remedy, claim, liability,
reimbursement,

 

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claim of action or other right in excess of those existing without reference to
this Agreement or any Transaction Document.

 

SECTION 9.05.  Notices.  All notices or other communications under this
Agreement or any Transaction Document (except as otherwise provided therein)
must be in writing and shall be deemed to be duly given: (a) when delivered in
person; (b) upon transmission via confirmed facsimile transmission, provided
that such transmission is followed by delivery of a physical copy thereof in
person, via U.S. first class mail, or via a private express mail courier; or
(c) two days after deposit with a private express mail courier, in any such case
addressed as follows:

 

If to SG:

 

Société Générale

1221 Avenue of the Americas
New York, New York 10020
Attn:  General Counsel, SG Americas

Facsimile:  (212) 278-7432

 

With a copy to:

 

Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, New York  10019
Attn:  James B. Carlson
Facsimile:  (212) 262-1910

 

If to Cowen Inc.:

 

Cowen Group, Inc.
1221 Avenue of the Americas
New York, New York 10020
Attn:  General Counsel
Facsimile:  (646) 562-1861

 

With a copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY  10036-6522
Attn: Lou R. Kling

Thomas W. Greenberg

Facsimile: (212) 735-2000

 

Any Party may, by notice to the other Party, change the address to which such
notices are to be given.

 

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SECTION 9.06.  Severability.  If any provision of this Agreement or any
Transaction Document or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby or thereby, as the case may be, is not affected in any
manner adverse to any Party.  Upon such determination, the Parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
provision to effect the original intent of the Parties.

 

SECTION 9.07.  Force Majeure.  No Party shall be deemed in default of this
Agreement or any Transaction Document to the extent that any delay or failure in
the performance of its obligations under this Agreement or any Transaction
Document results from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of Governmental Authority,
embargoes, epidemics, war, riots, insurrections, acts of terrorism, fires,
explosions, earthquakes, floods, unusually severe weather conditions, labor
problems or unavailability of parts, or, in the case of computer systems, any
failure in electrical or air conditioning equipment.  In the event of any such
excused delay, the time for performance shall be extended for a period equal to
the time lost by reason of the delay.

 

SECTION 9.08.  Responsibility for Expenses.

 

(a)  Expenses Incurred on or Prior to the Consummation of the IPO.  Except as
otherwise expressly set forth in this Agreement or any Principal Transaction
Document, SG shall bear each of the Parties’ and their affiliates’ costs and
expenses incurred or accrued prior to the consummation of the IPO in connection
with the Separation or the IPO; provided, however, that SG shall not be required
to pay (or reimburse) any such expenses attributable to Cowen Inc. or any Cowen
Subsidiary to the extent that SG is prohibited by law from paying (or
reimbursing) such expenses.

 

(b)  Expenses Incurred or Accrued after the Separation Date.  Except as
otherwise expressly set forth in this Agreement or any Principal Transaction
Document, each Party shall bear its own costs and expenses incurred or accrued
after the consummation of the IPO.

 

SECTION 9.09.  Headings.  The article, section and paragraph headings contained
in this Agreement and in the Transaction Documents are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement or any Transaction Document.

 

SECTION 9.10.  Survival.  Except as expressly set forth in this Agreement
(including but not limited to Section 2.01(f)(iii)) or any other Principal
Transaction Document, the covenants, releases, indemnities, representations and
warranties contained in this Agreement and each Transaction Document, and
liability for the breach of any obligations contained herein or therein, shall
survive the Separation Date and shall remain in full force and effect for the
periods therein indicated (as of the end of which period they shall terminate
and cease to be of further force or effect) or, where not indicated, without
limitation as to time.

 

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SECTION 9.11.  Subsidiaries.  SG shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by any SG Subsidiary and Cowen Inc. shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Cowen Subsidiary.

 

SECTION 9.12.  Waivers.  The observance of any term of this Agreement or any
Transaction Document may be waived (either generally or in a particular instance
and either retroactively or prospectively) by the Party hereto or the party
thereto entitled to enforce such term, but such waiver shall be effective only
if it is in a writing signed by the Party hereto or the party thereto against
whom the existence of such waiver is asserted.  Unless otherwise expressly
provided in this Agreement or any Transaction Document, no delay or omission on
the part of any Party hereto or party thereto in exercising any right or
privilege under this Agreement or such Transaction Document shall operate as a
waiver thereof, nor shall any waiver on the part of any Party hereto or party
thereto of any right or privilege under this Agreement or any Transaction
Document operate as a waiver of any other right or privilege under this
Agreement or such Transaction Document nor shall any single or partial exercise
of any right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement or such
Transaction Document.  No failure by any Party or any party to any Transaction
Document to take any action or assert any right or privilege hereunder or
thereunder shall be deemed to be a waiver of such right or privilege in the
event of the continuation or repetition of the circumstances giving rise to such
right unless expressly waived in writing by the Party hereto or party thereto,
as the case may be, against whom the existence of such waiver is asserted.

 

SECTION 9.13.  Amendments.  No provisions of this Agreement or any Transaction
Document shall be deemed amended, supplemented or modified unless such
amendment, supplement or modification is in writing and signed by an authorized
representative of each of the Parties.

 

SECTION 9.14.  Interpretation.  Words in the singular shall be deemed to include
the plural and vice versa and words of one gender shall be deemed to include the
other genders as the context requires.  The terms “hereof,” “herein,” and
“herewith” and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto and thereto) and not to any particular provision of this
Agreement.  Article, Section, Exhibit and Schedule references are to the
Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise
specified.  Unless otherwise stated, all references to any agreement shall be
deemed to include the exhibits, schedules and annexes to such agreement.  The
word “including” and words of similar import when used in this Agreement shall
mean “including, without limitation,” unless the context otherwise requires or
unless otherwise specified.  The word “or” shall not be exclusive.  Unless
otherwise specified in a particular case, the word “days” refers to calendar
days.  References herein to this Agreement or any Transaction Document shall be
deemed to refer to this Agreement or such Transaction Document as of the
Separation Date and as it may be amended thereafter, unless otherwise
specified.  References to the performance, discharge or fulfillment of any
Liability in accordance with its terms shall have meaning only to the extent
such Liability

 

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has terms; if the Liability does not have terms, the reference shall mean
performance, discharge or fulfillment of such Liability.

 

SECTION 9.15.  Advisors.  Cowen Inc. acknowledges, for itself and each Cowen
Subsidiary, that Mayer, Brown, Rowe & Maw LLP, has acted only in the capacity as
counsel to SG, and not as counsel to Cowen LLC, Cowen Inc. or any Cowen
Subsidiary, in connection with this Agreement and the Transaction Documents and
the documents and transactions contemplated herein or therein.

 

SECTION 9.16.  Mutual Drafting.  This Agreement and the Transaction Documents
shall be deemed to be the joint work product of the Parties and any rule of
construction that a document shall be interpreted or construed against a drafter
of such document shall not be applicable.

 

SECTION 9.17.  No Right to Set-Off.  Each Party shall pay the full amount of any
payments, costs and disbursements required under this Agreement or any
Transaction Document, and shall not set off, counterclaim or otherwise withheld
any other amount owed by such Party to other Persons on account of any
obligation owed by other Persons to such Party.

 

SECTION 9.18.  Enforcement Costs.  In the event that a Party breaches any
provision of this Agreement or any of the Transaction Documents, such Party
agrees to reimburse the non-breaching Parties for all expenses related to the
enforcement by the non-breaching Parties of their respective legal rights under
this Agreement or any of the Transaction Documents, including but not limited to
the non-breaching Parties’ respective attorneys’ fees, court costs,
administrative fees and all other costs, fees and expenses incurred by the
non-breaching Parties that are associated with enforcing their respective legal
rights under this Agreement or any of the Transaction Documents.

 

SECTION 9.19.  Remedies.  In the event of a breach by a Party of its obligations
under this Agreement, each other Party, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.  Each Party
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any provision of this Agreement and
hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it will waive the defense that a remedy at law would
be adequate.

 

* * * * *

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives.

 

 

SOCIÉTÉ GÉNÉRALE

 

 

 

 

 

By:

  /s/ Jean-Philippe Coulier

 

 

 

Name: Jean-Philippe Coulier

 

 

Title:   Chief Operating Officer, Americas

 

 

 

 

 

SG AMERICAS, INC.

 

 

 

 

 

By:

  /s/ Jean-Philippe Coulier

 

 

 

Name: Jean-Philippe Coulier

 

 

Title:   Vice President

 

 

 

SG AMERICAS SECURITIES HOLDINGS,
INC.

 

 

 

 

 

By:

  /s/ Jean-Philippe Coulier

 

 

 

Name: Jean-Philippe Coulier

 

 

Title:   President

 

 

 

 

 

COWEN AND COMPANY, LLC

 

 

 

 

 

By:

  /s/ Christopher A. White

 

 

 

Name: Christopher A. White

 

 

Title:   Chief Administrative Officer

 

 

 

 

 

COWEN GROUP, INC.

 

 

 

 

 

By:

  /s/ Christopher A. White

 

 

 

Name: Christopher A. White

 

 

Title:   Vice President

 

 

Separation Agreement

 

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