Exhibit 10.1


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
                        ,
2006

















 


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

  	
  25

  
	
  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

  	
  32

  



 


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  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

  	
  33

  
	
  SECTION 5.05.

  	
  Other Agreements Providing for Exchange of
  Information

  	
  33

  
	
  SECTION 5.06.

  	
  Confidentiality

  	
  33

  
	
  SECTION 5.07.

  	
  Protective Arrangements

  	
  34

  
	
  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

  	
  35

  
	
  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

  	
  38

  
	
  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

  	
  39

  
	
  SECTION 9.12.

  	
  Waivers

  	
  40

  



 


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  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 4.01

  	
  Insurance Policies

  
	
  Schedule 4.04

  	
  Issuances and Grants under
  Employee Ownership Plan

  
	
  Schedule 4.07

  	
  Warrants Held by Cowen LLC

  
	
  Schedule 5.03

  	
  Record Retention

  



 


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

  



 


iv

















SEPARATION
AGREEMENT


THIS SEPARATION AGREEMENT, dated as of
                            ,
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.

















 


“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.


 


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


“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.


 


3

















 


“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).


“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.


 


4

















 


“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.


“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 


 


5

















 


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.


“MBF Purchaser”
means the purchaser of the partnership interests in the Merchant Banking Fund identified
on Schedule     .


“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), 


 


6

















 


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.


“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.


 


7

















 


“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.


“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 


 


8

















 


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 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 upon the consummation of the IPO, 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 


 


9

















 


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 and shares of Cowen Common Stock to be
reserved for issuance pursuant to any director or employee benefit plan or
arrangement, including the Cowen Employee Ownership Plan.


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


(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


 


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(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;


(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.  On or prior to the Separation Date, 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 in the form attached to the Underwriting Agreement, 


 


11

















 


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.


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;


 


12

















 


(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 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 


 


13

















 


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 Purchaser (except that any rights of SG or any SG Subsidiaries in
respect of the representations and warranties made to the MBF Purchaser 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, 


 


14

















 


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;


(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 


 


15

















 


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
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 Purchaser (except that any
rights of SG or any SG Subsidiaries in respect of the representations and
warranties made to the MBF Purchaser 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;


 


16

















 


(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 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 


 


17

















 


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:


(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.


 


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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 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.


 


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(i)  On 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 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.  No fewer than three Business Days 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 


 


20

















 


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


(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;


 


21

















 


(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 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 


 


22

















 


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.


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) if SG or any SG Subsidiary sells or
executes a definitive agreement to sell all or substantially all of the
membership interests the Merchant Banking Fund owns in SGC Partners I LLC or
all or substantially all of the assets of the Merchant Banking Fund to a Third
Party, Cowen LLC or Cowen Inc. and any of their respective Subsidiaries may
enter into an agreement with the Third Party purchaser regarding Cowen Inc.’s
management, following such sale, of the assets acquired by such Third Party
purchaser and (y) it is currently anticipated that 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 not
transferred or sold by SG to a Third Party purchaser.


(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 


 


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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; 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 


 


24

















 


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 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 


 


25

















 


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.


(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.


 


26

















 


(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 Party shall
designate, prior to the Separation Date, a key transition contact and such
other contacts in specific functional areas as the Parties may agree to be
responsible for communication and coordination between the Parties regarding
the matters contemplated by this Agreement and the Principal Transaction Documents.  The Parties shall cause their respective key
transition contacts to meet with their counterparts to establish procedures for
such cooperation within 30 days after the Separation Date.


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;


 


27

















 


(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 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 


 


28

















 


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.


(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%.


 


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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.


(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.


 


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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 on Schedule
4.04 hereto, and in each case only up to the respective amounts set forth
next to each employee’s or officer’s name on such schedule, which schedule may
be amended at any time and from time to time with the consent of SG until the
date that is three (3) Business Days 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.


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.


 


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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.


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 


 


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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. 
Subject to the foregoing sentence, the Parties agree to use commercially
reasonable efforts to retain all other Information in their respective
possession or control as of the Separation Date in accordance with the policies
and procedures set forth in Schedule 5.03 and such other policies
and retention schedules as may be reasonably adopted by the relevant Party
after the Separation Date that are not inconsistent with Schedule 5.03.


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, 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 


 


33

















 


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 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 


 


34

















 


(“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 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 


 


35

















 


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.


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 


 


36

















 


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:


(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.  


 


37

















 


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, 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


 


38

















 


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.


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.


 


39

















 


(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.


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.


 


40

















 


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 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 


 


41

















 


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.


* * * *
*


 


42

















 


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


	
   

  	
  SOCIÉTÉ
  GÉNÉRALE

   

   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

   

  SG
  AMERICAS, INC.

   

   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

   

  SG
  AMERICAS SECURITIES HOLDINGS, INC.

   

   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

   

  COWEN
  AND COMPANY, LLC

   

   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

   

  COWEN
  GROUP, INC.

   

   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title