Exhibit 10.1


 


EXECUTION
VERSION


 


UNIT PURCHASE AGREEMENT


 


BY AND BETWEEN


 


LEHMAN
BROTHERS HOLDINGS INC.


 


AND


 


NBSH
ACQUISITION, LLC


 






 


dated as of December 1,
2008


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Certain Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Other Definitional and Interpretive Matters

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  CONTRIBUTION; ISSUANCE OF UNITS; CLOSING CASH

  	
  21

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  The Contribution

  	
  21

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  [Reserved]

  	
  21

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Amended and Restated Operating Agreement

  	
  21

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Issuance of Units

  	
  22

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Further Conveyances and Assumptions

  	
  22

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Closing Cash and Closing Net Working Capital

  	
  23

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Post-Closing True-Ups

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CLOSING AND TERMINATION

  	
  25

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Closing Date

  	
  25

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Certain Closing Deliveries

  	
  26

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Termination of Agreement

  	
  26

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Procedure Upon Termination

  	
  28

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Effect of Termination

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

  	
  28

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization and Good Standing

  	
  28

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Authorization of Agreement

  	
  28

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Capitalization

  	
  29

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Litigation

  	
  29

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Financial Advisors

  	
  29

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Formation of the Company

  	
  29

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  Arrangement with Employee Members

  	
  30

  
	
   

  	
   

  	
   

  
	
  4.8

  	
  Acknowledgement

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  REPRESENTATIONS AND WARRANTIES REGARDING LBHI

  	
  31

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organization and Good Standing

  	
  31

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Authorization of Agreement

  	
  31

  



 


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TABLE OF
CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Ownership of Interests

  	
  31

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Conflicts and Consents

  	
  31

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Subsidiaries

  	
  32

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Litigation

  	
  32

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Financial Advisors

  	
  32

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Investment Intention

  	
  33

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Disclosure of Information

  	
  33

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  General

  	
  33

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  No General Solicitation

  	
  33

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  Acknowledgement

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  [RESERVED]

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  COVENANTS

  	
  34

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Conduct of the Company Pending the Closing

  	
  34

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Conduct of the Business Pending the Closing

  	
  34

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Preservation of Back Office Support

  	
  35

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Consents

  	
  36

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Regulatory Approvals

  	
  36

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Further Assurances; Etc

  	
  36

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Preservation of Records

  	
  37

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Publicity

  	
  38

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  Employee Benefits

  	
  38

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Tax Matters

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Indemnification of Officers and Employees of the
  Company

  	
  43

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  Client Brokerage Consents

  	
  44

  
	
   

  	
   

  	
   

  
	
  7.13

  	
  Client Investment Advisory Consents

  	
  44

  
	
   

  	
   

  	
   

  
	
  7.14

  	
  Public Fund Investment Advisory Consents

  	
  45

  
	
   

  	
   

  	
   

  
	
  7.15

  	
  Section 15 of the Investment Company Act

  	
  47

  
	
   

  	
   

  	
   

  
	
  7.16

  	
  Administration

  	
  47

  
	
   

  	
   

  	
   

  
	
  7.17

  	
  Qualification of the Public Funds

  	
  48

  
	
   

  	
   

  	
   

  
	
  7.18

  	
  [Reserved]

  	
  48

  
	
   

  	
   

  	
   

  
	
  7.19

  	
  Real Property Leases

  	
  48

  



 


ii

















 


TABLE OF
CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  7.20

  	
  [Reserved]

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.21

  	
  Amended and Restated Operating Agreement

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.22

  	
  Deferred Transfers

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.23

  	
  [Reserved]

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.24

  	
  [Reserved]

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.25

  	
  [Reserved]

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.26

  	
  Withdrawal of LBHI Capital

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.27

  	
  Lehman Commitments to Funds

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.28

  	
  Director Resignations

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.29

  	
  Taxing Authority Notification

  	
  51

  
	
   

  	
   

  	
   

  
	
  7.30

  	
  Employee Securities Company

  	
  52

  
	
   

  	
   

  	
   

  
	
  7.31

  	
  Artwork

  	
  52

  
	
   

  	
   

  	
   

  
	
  7.32

  	
  Transition Services Obligations

  	
  52

  
	
   

  	
   

  	
   

  
	
  7.33

  	
  Intercompany Accounts

  	
  54

  
	
   

  	
   

  	
   

  
	
  7.34

  	
  Excluded Liabilities

  	
  54

  
	
   

  	
   

  	
   

  
	
  7.35

  	
  Assumed Liabilities

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  CONDITIONS TO CLOSING

  	
  54

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Conditions Precedent to Obligation of the Company

  	
  54

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Conditions Precedent to Obligation of LBHI

  	
  55

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Frustration of Closing Conditions

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  INDEMNIFICATION

  	
  56

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Survival of Representations and Warranties

  	
  56

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Indemnification by LBHI

  	
  56

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  [Reserved]

  	
  57

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Certain Limitations on Indemnification

  	
  57

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Survival of Indemnification

  	
  57

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Indemnification Procedures

  	
  58

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Exclusive Remedy for Matters Subject to
  Indemnification

  	
  60

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Treatment of Indemnification Payments by LBHI to the
  Company

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  MISCELLANEOUS

  	
  60

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  [Reserved]

  	
  60

  



 


iii

















 


TABLE OF
CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Expenses

  	
  60

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Entire Agreement; Amendments and Waivers

  	
  60

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Notices

  	
  61

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Binding Effect; No Third-Party Beneficiaries;
  Assignment

  	
  62

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Specific Enforcement

  	
  62

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Counterparts

  	
  63

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  GOVERNING LAW; SUBMISSION TO JURISDICTION; CONSENT
  TO SERVICE OF PROCESS; WAIVER OF JURY TRIAL

  	
  63

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Treatment as Administrative Expenses

  	
  64

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Additional Employee Members

  	
  64

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Amended and Restated Operating Agreement
  Term Sheet

  	
   

  



 


iv

















 


UNIT PURCHASE
AGREEMENT


 


This Unit
Purchase Agreement (this “Agreement”), is made and entered into as of December 1,
2008, by and between Lehman Brothers Holdings Inc., a Delaware corporation (“LBHI”),
and NBSH Acquisition, LLC, a Delaware limited liability company (the “Company”).


 


W I T N E S S E T H:


 


WHEREAS, LBHI
is a debtor-in-possession under title 11 of the United States Code, 11 U.S.C. §
101 et seq. (the “Bankruptcy Code”), and filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code on September 15, 2008 in
the United States Bankruptcy Court for the Southern District of New York;


 


WHEREAS, LBHI
and certain of its Subsidiaries presently conduct the Business;


 


WHEREAS, the
Company is a newly formed Delaware limited liability Company formed by certain
senior managers (other than portfolio managers) of the Business for the purpose
of consummating the transactions contemplated by this Agreement;


 


WHEREAS, LBHI
desires to sell, transfer and assign to the Company, pursuant to Sections 363
and 365 of the Bankruptcy Code and otherwise, the Business, as more
specifically provided herein; and


 


WHEREAS, in
consideration for the transfer to it of the Business, the Company intends to
issue to LBHI certain Units, as more specifically, and on the terms and
conditions, set forth herein.


 


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


 


ARTICLE I



DEFINITIONS


 


1.1           Certain
Definitions.


 


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


 


“Acquired
Subsidiary” means each of the Business Entities and their respective
Subsidiaries, the equity interests of which are, or will be, acquired directly
or indirectly by the Company pursuant to the Contribution.


 


1

















 


“Acquired
Subsidiary Tax Proceedings” has the meaning set forth in Section 7.10(d).


 


“Administered
Assets” has the meaning set forth in Section 7.16.


 


“Administrator”
has the meaning set forth in Section 7.16.


 


“Affiliate”
means, with respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the correlative terms “controlled by” and “under common control with”) means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.  Notwithstanding the foregoing definition of “Affiliate,”
for purposes of this Agreement, (a) no Fund shall be deemed an Affiliate
of LBHI or the Company, (b) from and after the Closing, no member of the
Company Group shall be deemed an Affiliate of LBHI and (c) LBHI and the
Company shall not be deemed Affiliates of each other.


 


“Affiliated
Acquired Subsidiary” shall mean any Acquired Subsidiary that prior to the
Closing was a member of any Affiliated Group of which LBHI or an Affiliate of
LBHI was the common parent.


 


“Affiliated
Group” means an affiliated group within the meaning of Section 1504 of
the Code or any comparable or analogous state, local or foreign consolidated,
combined or unitary Tax group under applicable Law.


 


“Agreement”
has the meaning set forth in the preamble.


 


“Amended
and Restated Operating Agreement” has the meaning set forth in Section 7.21.


 


“Ancillary
Agreements” means the Amended and Restated Operating Agreement, the
agreements and instruments of transfer necessary to complete the Contribution
and any other agreement entered into on or prior to the Closing Date in
connection with the consummation of the transactions contemplated hereby,
including the Company Documents and the LBHI Documents.


 


“Assumed
Liabilities” shall mean all Liabilities incurred by LBHI or its
Subsidiaries, before or after the Closing, that relate primarily to the
ownership or operation of the Business, including the following (but excluding
the Excluded Liabilities):


 


(a)           all
Liabilities under the Purchased Contracts;


 


(b)           [reserved];


 


2

















 


(c)           [reserved];


 


(d)           all
Liabilities under Transferred Real Property Leases;


 


(e)           Liabilities
under the BarCap APA arising from the exploitation or use of the LEHMAN and
LEHMAN BROTHERS names and any logos containing such names in the Business and
other non-Mark intellectual property used in or covering such Business;


 


(f)            Liabilities
under the BarCap TSA, the Nomura Asia TSA and the Nomura India TSA and the LB
Europe TSA arising from the receipt or use of services provided thereunder in
connection with the Business, as well as the obligations as an assignee in part
of the BarCap TSA, the Nomura Asia TSA, the Nomura India TSA and the LB Europe
TSA, respectively, to provide services thereunder and otherwise comply with the
applicable terms of such agreements;


 


(g)           the
unfunded amount of LBHI’s or its Affiliates’ general partner or special limited
partner capital commitments associated with the Funds that are included in the
Business;


 


(h)           all
Liabilities related to the employment or termination of employment of any
Transferred Employee, but excluding any Liabilities with regard to any pension,
welfare or fringe benefit plan, program or arrangement (“Benefit Plans”);
and


 


(i)            all
Liabilities relating to the matters set forth on Schedule 1.1(a).


 


For the avoidance of doubt, Assumed Liabilities shall include all
Liabilities of each Acquired Subsidiary that are not Excluded Liabilities.


 


“Bankruptcy
Case” means any case, now or hereafter, filed under chapter 11 or 7 of the
Bankruptcy Code by LBHI or any Subsidiary of LBHI or any case under SIPA filed
against a Subsidiary of LBHI.


 


“Bankruptcy
Code” has the meaning set forth in the recitals.


 


“Bankruptcy
Court” means the United States Bankruptcy Court for the Southern District
of New York or such other court as has jurisdiction over a Bankruptcy Case.


 


“BarCap”
means Barclays Capital Inc.


 


“BarCap APA”
has the meaning set forth in the definition of “Excluded Assets”.


 


“BarCap TSA”
has the meaning set forth in the definition of “Purchased Assets”.


 


3

















 


“Benefit
Plans” has the meaning set forth in the definition of “Assumed Liabilities.”


 


“Bid
Procedures Order” means the Bid Procedures Order dated October 22,
2008 entered in connection with the Stalking Horse Purchase Agreement.


 


“Bonus
Trust” means the grantor trust established by Neuberger Berman Holdings LLC
to hold cash incentive compensation and/or bonuses for employees of LBHI or its
Subsidiaries employed in the Business.


 


“Business”
means the investment management business conducted by LBHI and its
Subsidiaries, which for purposes of this Agreement includes the businesses and
the Funds set forth on Schedule 1.1(c), but excludes the businesses and
the Funds set forth on Schedule 1.1(d), and which includes the business
of providing asset management, investment advisory services and, where
applicable, brokerage and distribution services, to the Clients, but excludes
any portions of that business represented by the Excluded Assets and the
Excluded Liabilities.


 


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


 


“Business
Entities” means, collectively, the entities listed on Schedule I
hereto.


 


“Cash”
means the amount of cash, bank deposits and cash equivalents, less, to the extent included
therein, deposits, escrowed funds, prepaid charges and expenses or other
restricted cash balances, and less the
amounts of any unpaid checks, drafts and wire transfers issued on or prior to
the date of determination.


 


“Claims”
has the meaning set forth in Section 101(5) of the Bankruptcy Code.


 


“Class A
Common Units” shall have the meaning ascribed to such term in the Amended
and Restated Operating Agreement.


 


“Class B
Common Units” shall have the meaning ascribed to such term in the Amended
and Restated Operating Agreement.


 


“Client”
means any Fund or other Person to which LBHI or any of its Subsidiaries,
directly or indirectly, provides investment advisory services as part of the
Business pursuant to an investment advisory Contract.


 


“Closing”
has the meaning set forth in Section 3.1.


 


“Closing
Cash” has the meaning set forth in Section 2.7(a).


 


4

















 


“Closing
Date” has the meaning set forth in Section 3.1.


 


“Closing
Net Working Capital” means, as of the Closing Date, the sum (which may be a
positive or negative number) of (i) the aggregate current assets of
the Acquired Subsidiaries (other than Cash), minus
(ii) the aggregate current Liabilities of the Acquired Subsidiaries (which
shall not include any income Tax Liabilities), in each case determined in
accordance with GAAP applied on a basis consistent with past practice.


 


“Closing
Schedule” has the meaning set forth in Section 2.7(a).


 


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


 


“Company
Documents” has the meaning set forth in Section 4.2.


 


“Company Group”
means, collectively, the Company and, following the Contribution and the
Closing, its direct and indirect Subsidiaries (including the Acquired
Subsidiaries).


 


“Company
Members” has the meaning set forth in Section 4.3.


 


“Contract”
means any contract, agreement, release, consent, covenant, indenture, bond,
mortgage, loan, lease or license.


 


“Contribution”
has the meaning set forth in Section 2.1.


 


“Debtors”
means LBHI and any Subsidiary of LBHI that is the subject of a proceeding under
chapter 11 or chapter 7 of the Bankruptcy Code or under SIPA at any time prior
to the Closing Date.


 


“Deferred
Transfer Purchased Asset” has the meaning set forth in Section 7.22(a).


 


“Deferred
Transfer Assumed Liability” has the meaning set forth in Section 7.22(b).


 


“Deficit
Amount” has the meaning set forth in Section 2.6(c).


 


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


 


5
















 


“Earn-Out
Cash Amount” means the present value (as mutually agreed upon in good faith
by the parties prior to the Closing) of the earn-out Liabilities set forth on Schedule 1.1(a) (which
earn-out Liabilities were estimated, as of December 1, 2008, to be approximately
$136,000,000), in each case, only to the extent any such earn-out Liability has
not come due in the ordinary course of its terms (i.e., without any
acceleration of any portion thereof) and has not been paid prior to Closing.


 


“Employment
Agreements” means those agreements (each in a form and substance reasonably
satisfactory to LBHI) entered into by and between the Company and each Employee
Member setting forth the terms of employment for each Employee Member and the
number and class of Units issuable to such Employee Member.


 


“Employee
Matters Agreement” means that certain agreement between LBHI and the
Company relating to employees, compensation and employee benefits.


 


“Employee
Member” has the meaning set forth in Section 4.7.


 


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


 


“Estimated
Closing Cash” has the meaning set forth in Section 2.6(a).


 


“Estimated
Closing Cash Target” means the sum (which may not be less than zero) of (i) $100,000,000,
plus  (ii) the Earn-Out Cash
Amount, minus (iii) the Estimated
Closing Net Working Capital.


 


“Estimated
Closing Net Working Capital” has the meaning set forth in Section 2.6(a).


 


“European Persons” means Lehman Brothers Europe Limited (in
administration), Lehman Brothers International Europe (in administration),
Lehman Brothers Holdings Plc (in administration) and Lehman Brothers Ltd (in
administration) companies incorporated in England and Wales and Anthony Victor
Lomas, Steven Anthony Pearson, Dan Yoram Schwarzmann and Michael John Andrew
Jervis.


 


“Excluded Assets” shall mean the following assets, properties,
interests and rights of LBHI and its Subsidiaries (other than the Acquired
Subsidiaries):


 


(a)           the
assets primarily associated with the ICG business of LBHI and its Affiliates
(which provides equities and fixed income capital markets execution services to
midsized institutional clients);


 


(b)           the
assets primarily associated with the CTS business of LBHI and its Affiliates
(which provides cash management services to primarily corporate clients and
some high net worth clients);


 


6

















 


(c)           the
assets primarily associated with the Satori business of LBHI and its Affiliates
(which provides investment advisory services to private investment partnerships
and managed accounts);


 


(d)           the
assets primarily associated with the LibertyView business of LBHI and its
Affiliates (which provides investment advisory services to private investment
partnerships that use the LibertyView brand name);


 


(e)           the
assets that were sold to BarCap pursuant to that certain Asset Purchase
Agreement among LBHI, Lehman Brothers Inc., LB 745 LLC and BarCap, dated as of September 16,
2008 (as amended or modified prior to the Execution Date, the “BarCap APA”),
including the assets described in the BarCap APA relating to the Private
Investment Management business of LBHI and its Affiliates (which provides
traditional brokerage and comprehensive investment, wealth advisory, trust and
capital markets execution services to high net worth individuals and
institutional clients);


 


(f)            the
equity interests in, and business conducted by, the Trust Companies; but for
the avoidance of doubt, this exclusion shall not apply to Purchased Contracts
pursuant to which the Business provides advisory or sub-advisory services to
the Trust Companies or clients of the Trust Companies;


 


(g)           the
assets primarily associated with the private equity business of LBHI and its
Affiliates other than the assets associated with the Funds and related entities
set forth on Schedule 1.1(e) (the “Acquired Private Equity
Business”);


 


(h)           the
assets primarily associated with the asset management business of LBHI and its
Affiliates located in Europe and Asia other than the assets of the business
segments set forth on Schedule 1.1(f);


 


(i)            any
Cash to be withdrawn by LBHI pursuant to Section 2.6;


 


(j)            the
Hedge Fund Minority Stake Investments;


 


(k)           the
funded amount of LBHI’s and/or its Affiliates’ limited partner and side-by-side
capital commitments to the Funds (which for the avoidance of doubt, does not
include funded commitments in respect of special limited partnership interests
and general partnership interests);


 


(l)            seed
capital invested in the Business’ asset management products (which shall be
returned to LBHI pursuant to the terms of the relevant fund documents but
subject to the withdrawal limitations as set forth in Section 7.26);


 


(m)          any
investment by LBHI or any of its Affiliates as principal in, and the funded
amount of LBHI’s and or its Affiliates capital commitments as principal to, any
third-party managed funds;


 


(n)           [reserved];


 


7

















 


(o)           any
Contract to which LBHI or any of its Affiliates is a party, other than the
Purchased Contracts or the Transferred Real Property Leases (each, an “Excluded
Contract”) and any accounts receivable to the extent arising out of any
Excluded Contract;


 


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


 


(q)           any
(i) confidential personnel and medical records pertaining to any employee
of LBHI or any of its Subsidiaries that is not a Transferred Employee; (ii) other
books and records that LBHI or one of its Subsidiaries is required by Law to
retain or that LBHI reasonably determines are necessary to retain including,
without limitation, Tax Returns, financial statements, and corporate or other
entity filings; provided, however, that the Company shall have
the right to make copies of any portions of such retained books and records that
relate to the Business or any of the Purchased Assets; and (iii) minute
books, stock ledgers and stock certificates of Subsidiaries of the LBHI the
equity interests of which are not included in the Purchased Assets;


 


(r)            any
assets of any Benefit Plan;


 


(s)           all
real property leases of LBHI and its Subsidiaries, and all rights and
obligations appurtenant thereto, other than the Transferred Real Property
Leases;


 


(t)            any
margin debit balances in respect of loans advanced by the LBHI or its
Subsidiaries;


 


(u)           any
deposits or prepaid charges and expenses to the extent paid in connection with
or relating to any Excluded Assets;


 


(v)           [reserved];


 


(w)          [reserved];


 


(x)            the
assets and other properties specified on Schedule 1.1(g), which are
under the control or direction of the respective administrator, liquidator,
trustee or similar entity specified thereon;


 


(y)           all
fine art paintings and sculptures owned by LBHI or any of its Affiliates
(including the Business Entities and any of their respective Affiliates);


 


(z)            any
assets exclusively related to Excluded Liabilities described in paragraphs (e),
(f), (g), (h) and (j) of the definition of “Excluded Liabilities”;


 


(aa)         any
rights, claims, choses in action, or other causes of action, against any Person
(other than an Acquired Subsidiary), whether or not asserted or known,  based on facts existing or events occurring
in any period ending on or prior to the Closing, to the extent such rights,
claims, choses in action or other causes of action 


 


8

















 


arise from or relate to any of the foregoing or any Excluded
Liabilities for which no member of the Company Group would be liable after the
Closing by operation of law or otherwise; provided, however, that
nothing in this clause (aa) shall limit the rights of any Company Indemnified
Party to indemnification pursuant to Section 9.2; and


 


(bb)         the
equity interests of any Subsidiary that is not an Acquired Subsidiary.


 


“Excluded Contract” shall have the meaning set forth in paragraph
(o) of the definition of “Excluded Assets”.


 


“Excluded Liabilities” means any Liabilities of LBHI or any of
its Affiliates other than the Assumed Liabilities, including (i) all
Liabilities of LBHI and its Affiliates to the extent they do not arise out of
the Business and (ii) the following Liabilities:


 


(a)           all
Liabilities arising out of events, occurrences or circumstances occurring on or
prior to the Closing regarding auction rate securities issued, underwritten,
sold or distributed by LBHI or any of its Affiliates, or with respect to which
LBHI or any of its Affiliates acts (or has purported to act) as remarketing
agent or in a similar capacity to provide liquidity support in any market for
such securities;


 


(b)           [reserved];


 


(c)           all
Liabilities with respect to the unfunded amount of LBHI’s and/or its Affiliates’
limited partner and side-by-side capital commitments to the Funds (which, for
the avoidance of doubt, does not include the unfunded capital commitments of
special limited partnership interests and general partnership interests);


 


(d)           all
Liabilities with respect to the unfunded amount of LBHI’s and/or its Affiliates’
capital commitments on a principal basis to any third-party managed funds;


 


(e)           all
Liabilities with respect to any Benefit Plan;


 


(f)            [reserved];


 


(g)           all
Liabilities arising out of or relating to any supplemental executive retirement
plan, program, arrangement or agreement;


 


(h)           [reserved];


 


(i)            all
Liabilities arising under or related to the BarCap APA and the BarCap TSA (each
as amended from time to time) and the transactions contemplated thereby (other
than the Assumed Liabilities specified in paragraphs (e) or (f) of
the definition of “Assumed Liabilities”);


 


9

















 


(j)            all
Liabilities with respect to carried interest plans, phantom carried interest
plans and similar arrangements unless the related assets are transferred to the
Company pursuant to the Contribution;


 


(k)           all
Liabilities for severance (including statutory severance) or separation pay or
benefits arising directly out of the transactions contemplated by this
Agreement and accruing in the period before, on or immediately following the
Closing, including any such Liabilities arising under the Laws of the United
Kingdom, the European Union or Hong Kong;


 


(l)            all
Liabilities with respect to any employee of the LBHI or any of its Affiliates
who does not become a Transferred Employee with respect to any period;


 


(m)          all
Liabilities relating to any Excluded Asset;


 


(n)           [reserved];


 


(o)           all
Liabilities set forth on Schedule 1.1(h);


 


(p)           all
Liabilities arising out of or relating to (i) the Agreement, entered into
on or about October 29, 2003, by and between LBHI and the Office of the
Comptroller of the Currency (the “OCC”), (ii) the Capital
Assurances and Liquidity Maintenance Agreement, dated as of November 4,
2003, by and between Neuberger Berman Trust Company, N.A., and LBHI, and (iii) the
Agreement, entered into on or about October 29, 2003, by and between
Neuberger Berman Trust Company, N.A., and the OCC; and


 


(q)           all
Liabilities for amounts to be paid under the Stalking Horse Purchase Agreement
by any of the Sellers (as defined therein).


 


“Execution
Date” means the date of this Agreement.


 


“Final
Closing Cash” has the meaning set forth in Section 2.7(d).


 


“Final
Closing Cash Target” means the sum (which may not be less than zero) of (i) $100,000,000,
plus  (ii) the Earn-Out Cash
Amount, minus (iii) the Final Closing
Net Working Capital.


 


“Final
Closing Net Working Capital” has the meaning set forth in Section 2.7(e).


 


“FINRA”
means the Financial Industry Regulatory Authority.


 


“Fund”
means any partnership, limited liability company or other investment vehicle to
which LBHI, any subsidiary of LBHI or any of the Acquired Subsidiaries, directly
or indirectly, provides investment advisory services or serves as the general
partner, managing member or in any similar capacity.


 


10

















 


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


 


“GAAP”
means U.S. generally accepted accounting principles as in effect from time to
time.


 


“Governmental
Body” means any government, court, regulatory, investigative or
administrative agency, commission or authority, or other governmental
instrumentality, arbitral body or Self-Regulatory Organization, federal, state
or local, domestic, foreign or multinational.


 


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


 


“Hedge Fund
Minority Stake Investments” means LBHI’s and its Affiliates’ minority stake
investments in the following asset management firms, including LBHI’s and its
Affiliates’ investments on a principal basis in any such firms’ underlying managed
funds:  D.E. Shaw & Co., Ospraie
Management, Spinnaker Capital, R3 Capital Partners, One William Street Capital,
Field Street Capital Management, GLG Partners, BlueBay Asset Management,
Synergy and Integrated Asset Management.


 


“Increase
Amount” has the meaning set forth in Section 2.6(c).


 


“Indemnification
Claim” has the meaning set forth in Section 9.7(b).


 


“Intellectual
Property Licenses” means (a) any grant to a third person of any
license, immunity, a covenant not to sue or otherwise any right to use or
exploit, any of the Purchased Intellectual Property owned by LBHI or any of its
Subsidiaries, controlled by LBHI or any Subsidiary as a sublicensor, or the use
or exploitation of which is otherwise controlled by LBHI or any Subsidiary; and
(b) any grant to LBHI or any of its Subsidiaries of a license, immunity or
covenant not to sue or otherwise any right to exploit any Purchased
Intellectual Property or other Intellectual Property Rights by any third party.


 


“Intellectual
Property Rights” means all of the rights arising from or in respect of
intellectual property rights, however denominated, throughout the world,
whether or not registered, including the following:  (a) patents, patent applications, any
reissues, reexaminations, divisionals, continuations, continuations-in-part and
extensions thereof; (b) trademarks, service marks, trade names, service
names, industrial designs or similar design rights, product configuration,
trade dress rights, Internet domain names, 


 


11

















 


identifying symbols, logos, emblems, slogans, signs, insignia, and
other brand or source identifiers, as well as all goodwill associated with the
foregoing (collectively, “Marks”); (c) copyrights and other
proprietary works of authorship, and registrations and applications therefor; (d) trade
secrets, proprietary data, and other proprietary or protected information,
including data or information that any Person is obligated to treat as
proprietary through Contract, binding policies of any trade or professional
association, or other private or consensual arrangement; (e) rights of
privacy and publicity, and moral rights; and (f) all applications,
registrations, permits, claims and rights of action arising from or relating to
any of the foregoing.


 


“Investment
Advisers Act” means the Investment Advisers Act of 1940 and the rules and
regulations promulgated thereunder, as amended from time to time.


 


“Investment
Company Act” means the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder, as amended from time to time.


 


“IRS”
means the United States Internal Revenue Service and, to the extent relevant,
the United States Department of Treasury.


 


“Landlord
Consent” shall mean any consent or approval from any landlord under an
underlying Transferred Real Property Lease or Subleased Real Property Lease
which is required pursuant to the terms of such Transferred Real Property Lease
or Subleased Real Property Lease in order to effectuate the applicable
assignment or sublease and/or any waivers from any landlord to the extent that
any landlord under an underlying Transferred Real Property Lease or Subleased
Real Property Lease has recapture and/or termination rights that would be
triggered by the proposed assignment or sublease.


 


“Law”
means any law or statute, code, ordinance, common-law doctrine, rule or
regulation having the force of law, issued by any Governmental Body.


 


“LBHI”
has the meaning set forth in the preamble.


 


“LBHI
Documents” has the meaning set forth in Section 5.2.


 


“LBHI
Preferred Units” shall mean ninety-three percent (93%) of the Preferred
Units issued and outstanding as of immediately following the Closing.


 


“Legal
Proceeding” means any judicial or administrative action, suit or proceeding
by or before a Governmental Body.


 


“Liability”
means any debt, liability, commitment or obligation of any kind, whether fixed,
contingent or absolute, matured or unmatured, liquidated or unliquidated,
accrued or not accrued, asserted or not asserted, known or unknown, determined,
determinable or otherwise, whenever or however arising (including, whether
arising out of any Contract or tort based on negligence or strict liability).


 


12

















 


“Lehman
Brothers Pension Scheme (UK)”  means the
Lehman Brothers Pension Scheme, which was established by a deed dated 15 June 1965.


 


“Lien”
means any mortgage, pledge, security interest, adverse claim, right of first
refusal, option, encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Business, any
filing or agreement to file a financing statement as debtor under the uniform
commercial code as in effect in the State of New York or any similar statute
(other than to reflect ownership by a third party of property leased to the
Business under a lease which is not in the nature of a conditional sale or
title retention agreement), or any subordination arrangement in favor of
another Person.


 


“Loss”
or “Losses” has the meaning set forth in Section 9.2.


 


“Mark(s)”
has the meaning ascribed to it in the definition of Intellectual Property
Rights set forth above.


 


“Member”
means any member of the Company, from time to time.


 


“New Public
Fund Investment Advisory Agreement” has the meaning set forth in Section 7.14(a).


 


“Nomura
Asia TSA” has the meaning set forth in paragraph (t) of the definition
of “Purchased Assets”.


 


“Nomura
India TSA” has the meaning set forth in paragraph (u) of the
definition of “Purchased Assets”.


 


“Non-exclusive
Intellectual Property Rights” has the meaning set forth in Section 2.5(e).


 


“Notices”
has the meaning set forth in Section 10.4.


 


“Offeree”
means each active employee of LBHI or any Subsidiary of LBHI (other than an
employee of an Acquired Subsidiary), who has been employed primarily in
connection with the Business as of the Execution Date.


 


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


 


“Other
Public Fund Agreements” has the meaning set forth in Section 7.14(a).


 


“Pensions
Regulator” means the Pensions Regulator established under section 1 of the
UK Pensions Act.


 


13

















 


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


 


“Permitted
Exceptions” means (i) statutory Liens for Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with GAAP, (ii) mechanics’,
carriers’, workers’, repairers’, landlords’, warehouse and similar Liens
arising or incurred in the ordinary course of business not yet delinquent, (iii) zoning,
entitlement and other land use and environmental regulations by any
Governmental Body, (iv) the title and rights of lessors, lessees,
licensors and licensees, as applicable, under leases and licenses executed in
the ordinary course of business, (v) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in any
policies of title insurance and (vi) other imperfections in title,
charges, easements, restrictions and encumbrances which do not impair in any
material respect the existing use of the related assets in the Business
currently conducted.


 


“Person”
means any individual, corporation, limited liability company, general
partnership, limited partnership, trust, Governmental Body or other entity.


 


“Potential
Employee Members” shall have the meaning set forth in Section 10.10(a).


 


“PPF”
means the Board of the Pension Protection Fund established under section 107 of
the UK Pensions Act.


 


“Pre-Closing
Tax Period” shall mean any taxable period ending on or before, and if
ending on, including, the Closing Date.


 


“Pre-Closing
Tax Recovery” has the meaning set forth in Section 7.10(j).


 


“Preferred
Units” shall have the meaning ascribed to such term in the Amended and
Restated Operating Agreement.


 


“Private
Fund” means any Fund other than a Public Fund.


 


“Proposed
Employee Members” shall have the meaning set forth in Section 10.10(b).


 


“Public
Fund” means any Fund, the interests in which are publicly offered and that
is registered or required to be registered with the SEC as an investment
company under the Investment Company Act.


 


“Purchased
Assets” means all of the assets of LBHI and its Subsidiaries (other than
the Acquired Subsidiaries) owned, held or used primarily in connection with the
Business (other than the Excluded Assets), including;


 


14
















 


(a)           the
amount of Cash to be contributed to the Company pursuant to Section 2.6;


 


(b)           all
deposits (including customer deposits, security deposits for rent, electricity,
telephone or otherwise and required capital deposits), escrowed funds for
Assumed Liabilities and prepaid charges and expenses of LBHI and such
Subsidiaries associated with the Business;


 


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


 


(d)           the
Furniture and Equipment;


 


(e)           the
Purchased Intellectual Property and all income, royalties, damages and payments
due or payable at the Closing or thereafter relating to the Purchased
Intellectual Property (including damages and payments for past or future
infringements or misappropriations thereof), the right to register, prosecute,
maintain and defend the Purchased Intellectual Property before any public or
private agency or registrar, the right to sue and recover damages for past of
future infringements or misappropriations thereof and the right to fully and
entirely stand in the place of LBHI or any such Subsidiaries in all matters
related thereto;


 


(f)            the
Purchased Contracts;


 


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


 


(h)           all
books and records of the Business, which shall include (i) all account
statements and all worksheets and other documentation necessary to demonstrate
the calculation of the performance or rate of return of each Client account, as
required by applicable Law, including (x) Rule 204-2(a) (16)
under the Investment Advisers Act, (y) Rule 482 under the Securities
Act and (z) as otherwise required by the SEC or FINRA or the staffs
thereof and (ii) all other book and records of the Business required to be



 


15

















 


maintained under applicable Law, including Rule 204-2 under the
Investment Advisers Act;


 


(i)            all
Permits used by LBHI or any of such Subsidiaries in the Business to the extent
assignable under applicable Law;


 


(j)            all
supplies owned by LBHI or any of such Subsidiaries and used in connection with
the Business;


 


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


 


(l)            all
of the equity interests of the Acquired Subsidiaries;


 


(m)          [reserved;]


 


(n)           all
Cash (other than interest accrued on amounts deposited in to the Bonus Trust)
held in the Bonus Trust as of the Closing for the purpose of paying cash incentive
compensation and/or bonuses to Transferred Employees;


 


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


 


(p)           any
insurance proceeds or rights to insurance proceeds from the occurrence of any
casualty or event with respect to any Purchased Asset except to the extent such
proceeds are in respect of an Excluded Liability or any amount paid by LBHI or
any of its Subsidiaries prior to the Closing;


 


(q)           the
assets primarily used in connection with the portion of the business of LBHI
and its Affiliates that manages, advises and operates the China Long-Short
Fund;


 


(r)            a
non-exclusive sub-license to LBHI’s rights under Section 8.9 of the BarCap
APA with respect to use of the LEHMAN and LEHMAN BROTHERS names, and any logos
or Marks containing such terms and common variations thereof, in the Business
and other non-Mark Intellectual Property Rights used in or covering such
Business, but only to the extent such rights relate to the Business;


 


(s)           LBHI’s
rights under the Transition Services Agreement between LBHI and BarCap dated as
of September 20, 2008 (the “BarCap TSA”) as they relate to services
provided to or by the Business;


 


16

















 


(t)            LBHI’s
rights under the Transition Services Agreement between LBHI and Nomura Holdings
Inc. dated as of September 29, 2008 (the “Nomura Asia TSA”) as they
relate to services provided to or by the Business;


 


(u)           LBHI’s
rights under the Transition Services Agreement between LBHI and Nomura Holdings
Inc. dated as of October 6, 2008 (the “Nomura India TSA”) as they
relate to services provided to or by the Business;


 


(v)           the
general partner and special limited partner interests in the Funds included in
the Business;


 


(w)          any
rights, claims, choses in action, or other causes of action, against third
parties, whether or not asserted or known, existing as of the Closing that
arise from or relate to any of the foregoing;


 


(x)           the
Acquired Private Equity Business;


 


(y)           property
and liability insurance policies, including any fidelity, crime surety or other
similar bonds that are primarily associated with the Business, but only to the
extent permitted by the terms of such policy; provided, however, any right to
bring claims in connection with events prior to the Closing under such claims
made insurance policies that relate to Excluded Liabilities shall not be a
Purchased Asset; and


 


(z)            all
track record and related historical performance data related to the Business.


 


“Purchased
Contracts” means all Contracts of LBHI and its Subsidiaries primarily
related to the conduct of the Business.


 


“Purchased
Intellectual Property” means the Purchased Marks and all other Intellectual
Property Rights, Software and Technology throughout the world that are
primarily used in or related to the Business, including all Intellectual
Property Rights that are owned by LBHI and its Subsidiaries (other than the
Acquired Subsidiaries), used by LBHI or any such Subsidiary pursuant to
transferable license interests, or are otherwise sublicensable or transferable
by LBHI or any such Subsidiary to the Company, to the extent primarily embodied
in or arising from the Purchased Assets (in each case subject to Section 2.5(c)).


 


“Purchased
Marks” means the following:  (i) the
NEUBERGER BERMAN brand, including all
Marks incorporating the brand or embodying the goodwill associated with the
brand, and any variation or version thereof, whether or not registered,
throughout the world; (ii) subject to the terms of the BarCap APA, all
other Marks throughout the world that are used in, related to, or otherwise
necessary for the Business, including Marks used in the Business pursuant to
license, to the extent such license interests are transferable; (iii) all
goodwill arising from or associated with the foregoing; (iv) all 


 


17

















 


documents and materials (in any media format) bearing or embodying the
foregoing; (v) all rights, claims, and causes of action arising from or
relating to the foregoing.


 


“Referee”
has the meaning set forth in Section 2.7(c).


 


“Representatives”
means, with respect to any Person, any authorized officers, directors,
employees, managers, partners, investment bankers, financial advisors,
attorneys, accountants, consultants or other agents or representatives of such
Person.


 


“Residual
Intellectual Property Rights” has the meaning set forth in Section 2.5(d).


 


“Sale Order”
means an Order of the Bankruptcy Court that, among other things, approves the
entry into this Agreement and the Ancillary Agreements by LBHI and any of its
Subsidiaries that becomes subject to the Bankruptcy Case.


 


“Schedules”
means the schedules delivered by the parties hereto, as applicable, on the
Execution Date in connection with the execution and delivery of this Agreement,
as may be amended in accordance with the Agreement.


 


“SEC”
means the United States Securities and Exchange Commission.


 


“Securities
Act” has the meaning set forth in Section 5.8.


 


“Self-Regulatory
Organization” means any domestic or foreign securities exchange,
commodities exchange, registered securities association, the Municipal
Securities Rulemaking Board, National Futures Association, or any domestic or
foreign clearing corporation, securities depository or contract market on which
LBHI or any Acquired Subsidiary does business.


 


“Services”
has the meaning set forth in Section 7.32(a).


 


“SIPA”
means the Securities Investor Protection Act (as amended).


 


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


 


“Stalking
Horse Purchase Agreement” means that certain Amended and Restated Purchase
Agreement, dated as of October 3, 2008, by and between IMD Parent 


 


18

















 


LLC, LBHI and the other sellers named therein, as amended by the letter
agreement, dated as of October 23, 2008.


 


“Straddle
Period” has the meaning set forth in Section 7.10(a).


 


“Sublease”
has the meaning set forth in Section 7.19(b).


 


“Subleased
Real Property Leases” means the real property leases listed on Schedule
1.1(i).


 


“Subsidiary”
means with respect to any Person, any corporation, limited liability company,
partnership, trust or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power (or, in the case of a partnership, limited liability
company or other similar entity, more than 50% of the general partnership,
managing member or similar interests) are owned, directly or indirectly, by
such Person.  For the avoidance of doubt,
no Fund shall be deemed to be a Subsidiary for purposes of this Agreement.


 


“Tax”
or “Taxes” means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security (or similar, including FICA), unemployment, excise,
severance, premium, escheat, windfall profits, environmental, disability,
registration, alternative or add-on minimum, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Taxing Authority in connection with any item
described in clause (i), whether or not disputed, and (iii) any
obligations to indemnify or otherwise assume or succeed to liability for items
in (i) or (ii) of any other Person.


 


“Taxing
Authority” means the IRS and any other Governmental Body responsible for
the administration of any Tax.


 


“Tax Return”
means any declaration, return, report or statement required to be filed with
respect to any Tax (including any attachments thereto, and any amendment
thereof), including any information return, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of entities that
includes LBHI or any of its Subsidiaries.


 


“Technology”
means, collectively, all designs, formulae, algorithms, procedures, methods,
techniques, ideas, know-how, business and marketing information, research and
development, technical data, programs, subroutines, tools, materials, specifications,
processes, inventions (whether patentable or unpatentable and whether or not
reduced to practice), apparatus, creations, improvements, works of authorship
and other similar materials, non-public or confidential information, and all
recordings, graphs, 


 


19

















 


drawings, reports, analyses, and other writings, and other tangible
embodiments of the foregoing, in any form whether or not specifically listed
herein, and all related technology.


 


“Termination
Date” has the meaning set forth in Section 3.3(d).


 


“Transfer
Taxes” means all transfer, real property transfer, gains, stock transfer,
documentary, sales, use, stamp, registration value added, property, recording
and other similar taxes and fees including penalties, interest and additions to
such Taxes.


 


“Transferred
Employee” means each Offeree to whom the Company or one of its Subsidiaries
has extended an offer of employment and who accepts the Company’s, or one of
its Subsidiary’s, offer of employment, together with each person who is
employed immediately following the Contribution by any member of the Company
Group or whose employment transfers to a member of the Company Group
automatically by operation of law as a result of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements (including the
Contribution).


 


“Transferred
Real Property Leases” means the real property leases listed on Schedule
1.1(j).


 


“Transition
Period” has the meaning set forth in Section 7.32(a).


 


“Treasury
Regulations” means the Income Tax Regulations promulgated under the Code,
as amended.


 


“Trust
Companies” means Lehman Brothers Trust Company of Delaware and Lehman
Brothers Trust Company, N.A.


 


“UK
Pensions Act” means the Pensions Act 2004.


 


“Units”
shall mean the Preferred Units, the Class A Common Units and the Class B
Common Units.


 


1.2           Other
Definitional and Interpretive Matters. 
Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:


 


(a)           The
word “including” or any variation thereof means (unless the context of its
usage otherwise requires) “including, without limitation,” and shall not be
construed to limit any general statement that it follows to the specific or
similar items or matters immediately following it.


 


(b)           The
headings contained in this Agreement, in any Exhibit or Schedule hereto
and in the table of contents to this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.  All 


 


20

















 


Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.  Any capitalized or other defined
terms used in any Schedule or Exhibit but not otherwise defined therein,
shall have the respective meanings therefor as defined in this Agreement.  Any reference to a particular gender shall be
deemed to be a reference to any gender.


 


ARTICLE II


 


CONTRIBUTION; ISSUANCE OF UNITS; CLOSING CASH


 


2.1           The
Contribution.  At the Closing, (a) LBHI
shall, and shall cause its Subsidiaries to, sell, transfer and assign to the
Company, pursuant to the Sale Order, (i) all of the outstanding equity interests
of each Business Entity, in each case free and clear of all Liens, and (ii) subject
to Section 7.16,  all of LBHI’s
or such Subsidiary’s right, title and interest in any Purchased Asset that was
not directly or indirectly transferred to the Company pursuant to the preceding
clause (i), in each case free and clear of all Liens other than Permitted
Exceptions, and (b) simultaneous with such sale, transfer and assignment,
the Company shall (or shall cause the applicable members of the Company Group
to) deliver to LBHI an assignment and assumption agreement, in form and
substance reasonably satisfactory to LBHI, pursuant to which such Company Group
members, effective as of the Closing, assume and agree to timely perform and
discharge in accordance with their respective terms the Assumed Liabilities
that are not Liabilities of an Acquired Subsidiary that becomes a direct or
indirect Subsidiary of the Company as a result of the transfer of equity
interests described in clause (a)(i) above (clauses (a) and (b),
collectively, the “Contribution”); provided, however, that
(X) at or prior to the Contribution, LBHI shall, or shall cause its
applicable Subsidiaries to, use commercially reasonable efforts to complete
such transfers of assets and Liabilities necessary such that, upon consummation
of the Contribution, no member of the Company Group is transferred any Excluded
Asset or assumes any Excluded Liability and (Y) LBHI’s obligation
hereunder to assign any Purchased Asset is subject to obtaining the consent of
any Person required to be obtained in order to assign such Purchased
Asset.  Without limiting anything in this
Section 2.1, prior to the Closing in connection with the
Contribution, LBHI shall consider in good faith taking any actions that it
determines is necessary in order to cause the non-U.S. operations of the
Business conducted by Acquired Subsidiaries to be conducted with appropriate
limitations on liability to the Members.


 


2.2           [Reserved].


 


2.3           Amended
and Restated Operating Agreement.  At
the Closing, the Amended and Restated Operating Agreement shall become the
amended and restated operating agreement of the Company.


 


21
















 


2.4           Issuance of Units.


 


(a)           At
the Closing, the Company shall issue to LBHI (i) all of the LBHI Preferred
Units to be issued and outstanding as of immediately following the Closing and (ii) all
of the Class A Common Units to be issued and outstanding as of immediately
following the Closing.


 


(b)           At
the Closing, the Company shall issue Units to each Employee Member in
accordance with such Employee Member’s Employment Agreement.


 


2.5           Further
Conveyances and Assumptions.  Subject
to the terms and conditions hereof:


 


(a)           From
time to time following the Closing, LBHI shall, or shall cause its Subsidiaries
to, make available to the Company such data in personnel records of Transferred
Employees reasonably necessary in connection with the transition of such employees
into the Company’s and its Affiliates records.


 


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


 


(c)           If
any third-party consent or agreement is required for the assignment pursuant to
the Contribution of any Intellectual Property Licenses to the Company and such
consent or agreement cannot be obtained prior to the Closing, then, to the
extent permitted by applicable Law and by Contract, LBHI shall sublicense, on a
fully paid-up, royalty-free basis, to the Company or its applicable Subsidiary
whatever rights they are permitted to sublicense under the respective
Intellectual Property Licenses.  If LBHI
is permitted to assign or sublicense any Intellectual Property License to the
Company only at a one time, fixed payment or an ongoing fee, LBHI shall notify
the Company thereof and, only if the Company or any of its Subsidiaries agrees
in writing to be responsible to pay such payment or fee, as applicable, LBHI
shall assign or shall sublicense whatever rights it is permitted to assign or
sublicense under the respective 


 


22

















 


Intellectual Property Licenses, subject to the payment or fee being
paid by the Company or any of its Subsidiaries.


 


(d)           If,
pursuant to the Contribution, the Company does not acquire Intellectual
Property Rights owned or controlled by LBHI or any of its Affiliates that have
been used or exploited in the Business (“Residual Intellectual Property
Rights”), then (i) LBHI shall and hereby does grant to the Company, or
(ii) LBHI shall cause the applicable Subsidiary of LBHI to grant to the
Company, the perpetual, irrevocable, fully paid up, royalty free, worldwide,
non-exclusive right and license to use or exploit such Residual Intellectual
Property Rights in connection with the Business and other asset management and
investment advisory activities in the manner in which such Residual
Intellectual Property Rights were exploited prior to the Closing Date.  The license granted pursuant to this Section 2.5(d) (or
to be granted hereby by a Subsidiary of LBHI) is assignable and sublicensable
by the Company; provided, however, that it may only be assigned or
sublicensed to a Person who is engaged in (or owns or controls a Person who is
engaged in) the Business, as conducted from time to time, or a portion thereof.


 


(e)           If,
pursuant to the Contribution, the Company acquires Intellectual Property Rights
used or exploited by LBHI or any of its current or former Subsidiaries outside
of the scope of the Business in the ordinary course of LBHI or any of its
Subsidiaries’ operations (“Non-exclusive Intellectual Property Rights”),
the Company shall and hereby does grant to LBHI and its current Subsidiaries,
the perpetual, irrevocable, fully paid up, royalty free, worldwide,
non-exclusive right and license to use or exploit such Non-exclusive
Intellectual Property Rights outside the field of the Business in the manner in
which such Non-exclusive Intellectual Property Rights were used or exploited
prior to the Closing Date.  The license
granted pursuant to this Section 2.5(e) shall be assignable
and sublicensable by LBHI or any of its Subsidiaries, as applicable, in whole
or in part; provided, however, that it may only be assigned or
sublicensed to a Person who is engaged in (or owns or controls a Person who is
engaged in) those aspects of the business in which the relevant Non-exclusive
Intellectual Property Rights were used prior to Closing Date, or a portion
thereof.


 


(f)            Closing
Cash calculations shall be determined after giving effect to any payments at
the Closing made pursuant to Section 7.33.


 


2.6           Closing Cash and Closing Net Working Capital.


 


(a)           Not
later than three (3) Business Days prior to the Closing, LBHI shall
deliver, in writing, to the Company LBHI’s good faith estimate of the amount of
the (i) Closing Cash (such estimate, the “Estimated Closing Cash”),
(ii) the Closing Net Working Capital (such estimate, the “Estimated
Closing Net Working Capital”), and (iii) the Estimated Closing Cash
Target.


 


(b)           At
the Closing, (i) if the Estimated Closing Cash exceeds the Estimated
Closing Cash Target, then LBHI shall be entitled to withdraw an amount of Cash
equal to such excess from the Acquired Subsidiaries, and (ii) if the
Estimated 


 


23

















 


Closing Cash is less than the Estimated Closing Cash Target, then LBHI
shall contribute an amount of Cash equal to such deficiency to the Acquired
Subsidiaries.


 


(c)           The
“Adjustment Amount”, which may be positive or negative, shall mean an
amount equal to the sum of (i) the Final Closing Cash minus
(ii) the Estimated Closing Cash plus (iii) the
Estimated Closing Cash Target minus (iv) the
Final Closing Cash Target.  If the
Adjustment Amount is a positive number (such amount, the “Increase Amount”),
then the Company shall pay to LBHI an amount equal to the Increase Amount by
wire transfer of immediately available funds. 
If the Adjustment Amount is a negative number (the absolute value of
such amount, the “Deficit Amount”), then LBHI shall pay to the Company
an amount equal to the Deficit Amount by wire transfer of immediately available
funds.  The payment determined to be due
under this Section 2.6(c) to the Company or LBHI, as the case may be,
shall be made not more than five (5) Business Days following the date on
which the Final Closing Cash, the Final Closing Net Working Capital and the
Final Closing Cash Target have been determined.


 


(d)           Any
payment made pursuant to Section 2.6(b) or 2.6(c) shall
be made by wire transfer of immediately available funds into an account
specified by LBHI or the Company, as the case may be.


 


(e)           No
payment to LBHI pursuant to this Section 2.6 shall be considered a
distribution in redemption of, or otherwise upon or in respect of, any LBHI
Preferred Unit or Class A Common Unit.


 


2.7           Post-Closing True-Ups.


 


(a)           No
later than thirty (30) days after the Closing Date, the Company shall deliver
to LBHI a schedule (the “Closing Schedule”) that sets forth its
calculations of the (i) actual aggregate amount of Cash held by the
Acquired Subsidiaries or otherwise acquired by the Company and its Subsidiaries
as a Purchased Asset as of the Closing (“Closing Cash”), the Closing Net
Working Capital, the Final Closing Cash Target and the components of Closing
Cash, Closing Net Working Capital and Final Closing Cash Target.


 


(b)           If
LBHI disagrees with any of the Company’s calculations referred to in Section 2.7(a),
then LBHI may, within 30 days after delivery of the Closing Schedule, deliver a
notice to the Company disagreeing with such calculation and setting forth LBHI’s
calculation of any such amount.  Any such
notice of disagreement shall specify in reasonable detail those items or
amounts as to which LBHI disagrees, and LBHI shall be deemed to have agreed
with all other items and amounts contained or otherwise reflected in the
Closing Schedule.


 


(c)           If
a notice of disagreement shall be duly delivered pursuant to Section 2.7(b),
LBHI and the Company shall, during the 20 days following each such delivery,
use their reasonable best efforts to reach agreement on the disputed items or
amounts in order to determine any disputed calculations included in such
delivery.  If, 


 


24

















 


during either such period, the Company and LBHI are unable to reach
such agreement, they shall promptly thereafter cause a local office of an
independent accounting firm of nationally recognized standing reasonably
satisfactory to the Company and LBHI (which local office shall not have any
material relationship with the Company or LBHI or any of their respective
Affiliates) (the “Referee”), promptly to review this Agreement and the
disputed items or amounts for the purpose of calculating any disputed
calculation reflected on the Closing Schedule. 
In making such calculations, the Referee shall consider only those items
or amounts in the Closing Schedule as to which the parties have disagreed.  The Referee shall deliver to the Company and
LBHI, as promptly as practicable, a report setting forth such calculations of
any disputed calculations set forth on the Closing Schedule.  Such report shall be final and binding upon
the parties hereto. The cost of such review and report shall be allocated
between LBHI and the Company in the same proportion that the aggregate amount
of the items unsuccessfully disputed by each (as finally determined by the
Referee) bears to the total amount of the disputed items.


 


(d)           For
purposes of this Agreement, “Final Closing Cash” means the amount of
Closing Cash, (i) as shown in the Company’s calculation delivered pursuant
to Section 2.7(a) if no notice of disagreement with respect
thereto is duly delivered pursuant to Section 2.7(b); or (ii) if
such a notice of disagreement is timely delivered, (A) as agreed by the
Company and LBHI pursuant to Section 2.7(c), or (B) in the
absence of such agreement, as shown in the Referee’s report delivered pursuant
to Section 2.7(c).


 


(e)           For
purposes of this Agreement, “Final Closing Net Working Capital” means
the amount of Closing Net Working Capital, (i) as shown in the Company’s
calculation delivered pursuant to Section 2.7(a) if no notice
of disagreement with respect thereto is duly delivered pursuant to Section 2.7(b);
or (ii) if such a notice of disagreement is timely delivered, (A) as
agreed by the Company and LBHI pursuing to Section 2.7(c), or (B) in
the absence of such agreement, as shown in the Referee’s report delivered
pursuant to Section 2.7(c).


 


(f)            LBHI
and the Company agree that they will reasonably cooperate with one another and
assist in the preparation of the Closing Schedule and in the conduct of the
audits and reviews referred to in this Section 2.7, including the
making available to the extent reasonably necessary of books, records, work
papers and personnel during normal business hours.


 


ARTICLE III




CLOSING AND TERMINATION


 


3.1           Closing
Date.  The closing of the
Contribution and the issuance of Units provided for in Section 2.4
(the “Closing”) shall take place at the offices of Weil, Gotshal &
Manges LLP located at 767 Fifth Avenue, New York, New York 10153 at 10:00 a.m.
(New York City time) on the third Business Day after the satisfaction or waiver
of the conditions set forth in Article VIII (other than conditions
that by their 


 


25

















 


nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions at such time), unless another time,
date or place is agreed to in writing by the parties hereto.  The date on which the Closing is held is
referred to herein as the “Closing Date”.


 


3.2           Certain Closing Deliveries.  At the Closing:


 


(a)           Each
of the Company and LBHI shall deliver, or shall cause to be delivered, to the
other party, each Ancillary Agreement to which it or any of its Affiliates is a
party, duly executed.


 


(b)           LBHI
shall deliver to the Company the following items, each in form and substance reasonably
satisfactory to the Company:


 


(i)            duly
executed copies of such instruments of conveyance and transfer as may be
necessary to effect at the Closing the Contribution;


 


(ii)           a
copy of the Amended and Restated Operating Agreement, executed and delivered by
LBHI and/or its designees; and


 


(iii)          the
certificates signed by an authorized officer of LBHI in accordance with Sections
8.1(a) and 8.1(b).


 


(c)           The
Company shall deliver to LBHI, each in form and substance reasonably
satisfactory to LBHI:


 


(i)            a
copy of each Employment Agreement executed and delivered by an Employee Member;


 


(ii)           a
copy of the Amended and Restated Operating Agreement, executed and delivered by
the Company and any Employee Members; and


 


(iii)          the
certificates signed by the Company in accordance with Sections 8.2(a) and
8.2(b).


 


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


 


(a)           by
mutual written consent of the Company and LBHI;


 


(b)           by
the Company if the Sale Order has not been entered in the Bankruptcy Case of
LBHI prior to January 31, 2009;


 


(c)           by
the Company, upon notice to LBHI, if at the Auction (as such term is defined in
the Bid Procedures Order) the Company is not selected as the Successful Bidder
(as defined in the Bid Procedures Order) and the Sale Hearing (as defined in
the Bid Procedures Order) has concluded;


 


26

















 


(d)           by
the Company or LBHI in the event that the Closing has not been consummated on
or prior to June 30, 2009 (such date, the “Termination Date”); provided,
however, that the right to terminate this Agreement under this Section 3.3(b) shall
not be available to a party if the failure of the Closing to be consummated on
or before the Termination Date is primarily due to the failure of such party to
perform any of its obligations under this Agreement;


 


(e)           by
the Company or LBHI upon a final non-appealable determination by a Governmental
Body of competent jurisdiction denying an approval that is necessary for the
consummation of the transactions contemplated hereby; provided, however,
that the right to terminate this Agreement under this Section 3.3(c) shall
not be available to a party if such denial is primarily due to the failure of
such party to perform any of its obligations under this Agreement;


 


(f)            by
the Company in the event (i) none of the representations and warranties of
the Company shall have become and continue to be untrue in a manner that would
cause the condition set forth in Section 8.2(a) not to be satisfied
and there has been no failure by the Company to perform its covenants in such a
manner as would cause the condition set forth in Section 8.2(b) not
to be satisfied, and (ii) there shall have been a breach of LBHI’s
representations and warranties in this Agreement or a failure by LBHI to
perform its covenants in this Agreement, in any such case in a manner that the
conditions to the Closing set forth in Section 8.1(a) or Section 8.1(b)
would not be satisfied if such breach or failure occurred or was continuing as
of the date on which the Closing was to occur; provided, however,
that the Company shall provide notice to LBHI as soon as practicable after
becoming aware of any such breach described in clause (ii) above; and provided
further that if such breach is curable by LBHI through the exercise of
its commercially reasonable efforts then, so long as LBHI continues to exercise
such commercially reasonable efforts, the Company may not terminate this
Agreement under this Section 3.3(d) prior to the earlier of (A) the
Termination Date and (B) the 30th day following the date LBHI receives
notice of such breach from the Company and only if such breach or failure by
LBHI remains uncured on such date;


 


(g)           by
LBHI in the event (i) none of the representations and warranties of LBHI
shall have become and continue to be untrue in a manner that would cause the
condition set forth in Section 8.1(a) not to be satisfied and
there has been no failure by LBHI to perform its covenants in such a manner as
would cause the condition set forth in Section 8.1(b) not to
be satisfied, and (ii) there shall have been a breach of the Company’s
representations and warranties in this Agreement or a failure by the Company to
perform its covenants in this Agreement, in any such case in a manner that the
conditions to the Closing set forth in Section 8.2(a) or Section 8.2(b) would
not be satisfied if such breach or failure occurred or was continuing as of the
date on which the Closing was to occur; provided, however, that
LBHI shall provide notice to the Company as soon as practicable after becoming
aware of any such breach described in clause (ii) above; and provided
further that if such breach is curable by the Company through the
exercise of its commercially reasonable efforts then, so long as the Company
continues to exercise such commercially reasonable efforts, LBHI may not
terminate this Agreement 


 


27

















 


under this Section 3.3(e) prior to the earlier of (A) the
Termination Date and (B) the 30th day following the date the Company
receives notice of such breach from LBHI and only if such breach or failure by
the Company remains uncured on such date; or


 


(h)           by
LBHI if, at any time prior to the Closing, fewer than eighty percent (80%) of
the Employee Members are employed by LBHI or its Subsidiaries.


 


3.4           Procedure
Upon Termination.  In the event of a
termination by the Company or LBHI, or both, pursuant to Section 3.3,
written notice thereof shall forthwith be given by the terminating party to the
Company or LBHI, as applicable, and this Agreement shall terminate, and the
Contribution and issuance of the Units hereunder shall be abandoned, without
further action by the Company or LBHI.


 


3.5           Effect
of Termination.  In the event that
this Agreement is validly terminated in accordance with Sections 3.3 and
3.4, then each of the parties shall be relieved of its duties and
obligations arising under this Agreement after the date of such termination and
such termination shall be without liability to each of the Company, LBHI and
their respective Affiliates; provided, however, that the
obligations of the parties set forth in Section 7.11 and Article X
shall survive any such termination and shall be enforceable hereunder.


 


ARTICLE IV




REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY


 


Except as otherwise set forth on the corresponding disclosure schedule
delivered to LBHI by the Company prior to LBHI’s execution of this Agreement
(it being understood that any matter disclosed in a Schedule by the Company
shall be deemed to constitute disclosure with respect to other representations
and warranties of the Company to the extent reasonably apparent on the face of
such disclosure), the Company hereby represents and warrants to LBHI that:


 


4.1           Organization and Good Standing.


 


(a)           The
Company is a limited liability company duly organized, validly existing and in
good standing under the Laws of the State of Delaware and has all limited
liability company power and authority to own, lease and operate its properties
and to carry on its business as conducted at such time.


 


(b)           The
Company is not required to qualify to do business as a limited liability
company in any jurisdiction other than the State of Delaware.


 


4.2           Authorization
of Agreement.  Subject to any approval
required in a Bankruptcy Case, or other insolvency, receivership or similar
proceedings, the Company has all requisite power and authority to execute and
deliver each Contract, document or certificate contemplated by this Agreement
to be executed by the Company in connection 


 


28

















 


with the consummation of the transactions contemplated by this
Agreement (including this Agreement, the Amended and Restated Operating
Agreement and the letter agreements described in Section 4.7, the “Company
Documents”) and to consummate the transactions contemplated hereby.  The execution and delivery of each Company
Document and the consummation of the transactions contemplated hereby and
thereby have been, or will be, duly authorized by all requisite action on the
part of the Company.  Each of the Company
Documents, when executed and delivered (assuming the due authorization,
execution and delivery by the other parties hereto and thereto), will
constitute the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).


 


4.3           Capitalization.  The sole members of the Company are George
Walker and Joseph Amato (the “Company Members”).  The equity interests of the Company (a) are
held as of the date hereof beneficially and of record by the Company Members
free and clear of all Liens except transfer restrictions under applicable
securities Laws and (b) are duly authorized, validly issued, fully paid
and non-assessable.  Except as
contemplated by this Agreement, none of the Company, any of the Company Members
nor any of their respective Affiliates has issued any option or warrant covering,
any right to subscribe for, or any securities convertible into or exchangeable
or exercisable for, any equity interests in the Company.


 


4.4           Litigation.  There are no Legal Proceedings pending or, to
the knowledge of the Company, threatened against the Company that would have a
material adverse effect on the Company’s ability to consummate the transactions
contemplated hereby.


 


4.5           Financial
Advisors.  No Person has acted,
directly or indirectly, as a broker, finder or financial advisor for the Company
or its Affiliates in connection with the transactions contemplated hereby.


 


4.6           Formation
of the Company.  The Company has been
formed solely for the purpose of engaging in the transactions contemplated
hereby and has not carried, and will not carry, on any business or conduct any
operations, other than the execution of Company Documents, the performance of
its obligations under this Agreement and the Company Documents and the
consummation of the transactions contemplated hereby and thereby.  Except as set forth in Schedule 4.6
hereto, the Company is not a party to any contract or obligation other than
this Agreement or the Company Documents, except for assets, liabilities,
contracts and obligations incurred in connection with the formation of the Company
and the negotiation and the consummation of the transactions contemplated by
the Agreement and the Ancillary Agreements. 
The Company has any no assets or liabilities, except as contemplated by
the Company Documents.  The Company is,
and has been since the date of its formation, properly treated as a “disregarded
entity” or 


 


29

















 


“partnership” for U.S. federal income tax purposes.  Neither the Company, nor any Person on behalf
of the Company, has elected pursuant to Treasury Regulations 301.7701-3 to
treat the Company as an “association taxable as a corporation” for U.S. federal
income tax purposes.


 


4.7           Arrangement
with Employee Members.  Each
portfolio manager and member of senior management listed on Schedule 4.7,
as such schedule may be amended, from time to time, pursuant to Section 10.10,
(each, an “Employee Member”) has entered into, or will have entered into
prior to the Closing, a letter agreement with the Company regarding his or her
continued employment with the Business following the Closing (the “Employee
Letter Agreements”), and each such executed Employee Letter Agreement as of
the Execution Date has been provided to LBHI on or prior to the Execution Date.


 


4.8           Acknowledgement.  Notwithstanding anything to the contrary
herein, the Company acknowledges and agrees that:


 


(a)           LBHI
is not making any representations or warranties whatsoever, express or implied,
beyond those expressly given by LBHI in Article V or any
certificates given in connection with the Closing (as modified by the Schedules
referred to in the introductory paragraph to Article V (to the
extent specified therein));


 


(b)           except
for the covenants herein and in the Ancillary Agreements and except for the
representations and warranties contained in Article V or any
certificates given in connection with the Closing, the Business being
contributed hereunder (including all of the Purchased Assets) is being
transferred on a “where is” and, as to condition, “as is” basis;


 


(c)           the
Company has not been induced by, or relied upon, any representations,
warranties or statements (written or oral, express or implied, or otherwise),
made by any Person, that are not expressly set forth in Article V
or any certificates given in connection with the Closing (and, without limiting
the generality of the foregoing, the Company acknowledges that, except for such
representations and warranties, (i) no representations or warranties are
made with respect to any projections, forecasts, estimates, budgets or prospect
information that may have been made available to the Company or any of its
Affiliates or Representatives, and (ii) none of LBHI or its Affiliates
will have or be subject to any liability to the Company or any other Person
resulting from the distribution or making available to the Company or its
Representatives (or their use of) any such information or any information
contained in any confidential memoranda relating to the Company or any
Subsidiary of the Company or contained in any “data rooms” to which the Company
or its Representatives may have been given access); and


 


(d)           the
Company has conducted, to its satisfaction, its own independent investigation
of the condition, operations, business and prospects of the Business, the
Business Entities and their Subsidiaries.


 


30
















 


ARTICLE V


 


REPRESENTATIONS AND WARRANTIES REGARDING LBHI


 


Except as
otherwise set forth on the corresponding disclosure schedule delivered to the
Company by LBHI (it being understood that any matter disclosed in a Schedule by
LBHI shall be deemed to constitute disclosure with respect to other
representations and warranties of LBHI to the extent reasonably apparent on the
face of such disclosure), LBHI hereby represents and warrants to the Company
that:


 


5.1           Organization
and Good Standing.  LBHI is a corporation,
duly organized, validly existing and in good standing under the Laws of the
jurisdiction in which it is currently registered.


 


5.2           Authorization
of Agreement.  Subject to any
approval required in a Bankruptcy Case, LBHI has all requisite power and authority
to execute and deliver this Agreement and each other agreement, document or
certificate contemplated by this Agreement or to be executed by LBHI in
connection with the consummation of the transactions contemplated by this
Agreement (the “LBHI Documents”), and to consummate the transactions
contemplated hereby.  The execution and
delivery of this Agreement and the LBHI Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of LBHI. 
This Agreement has been, and each of the LBHI Documents will be at or
prior to the Closing, duly and validly executed and delivered by LBHI and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes the legal, valid and binding
obligations of LBHI, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).


 


5.3           Ownership
of Interests.  LBHI, directly or
indirectly, owns 100% of the equity interests of each Acquired Subsidiary
outstanding free and clear of any and all Liens (other than transfer
restrictions under applicable Laws).


 


5.4           Conflicts and Consents.


 


(a)           Except
as set forth on Schedule 5.4(a), (and assuming the making of the filings
and notifications, and receipt of the consents, waivers, approvals, Orders,
Permits, Contracts and authorizations contemplated by Section 5.4(b) or
listed on Schedule 5.4(a)(ii)), none of the execution and delivery by
LBHI of the LBHI Documents, the consummation of the transactions contemplated
hereby or thereby, or compliance by LBHI or any applicable Subsidiaries of LBHI
with any of the provisions hereof or thereof, will conflict with, or result in
any violation of or default (with or 


 


31

















 


without notice or lapse of time, or both) under, or give rise to a
right of acceleration, additional payment, termination or cancellation under,
any provision of (i) the certificate of formation or operating agreement,
or comparable charter and organizational documents, of LBHI, any Subsidiary of
LBHI or any Fund, (ii) any Contract to which LBHI, any Subsidiary of LBHI
or any Fund is a party, (iii) any Order of any Governmental Body
applicable to LBHI, any Subsidiary of LBHI, any Fund or by which any of their
respective properties or assets are bound or (iv) any applicable Law,
other than, in the case of clauses (ii), (iii) and (iv), such conflicts,
violations, defaults, terminations or cancellations that would not have a
material adverse effect on LBHI’s ability to consummate the transactions
contemplated hereby.


 


(b)           Subject
to any approval required in a Bankruptcy Case, except as set forth on Schedule
5.4(b), no consent, waiver, approval, Order, Permit, Contract or
authorization of, or declaration or filing with, or notification to, any
Governmental Body is required on the part of LBHI, any Subsidiary of LBHI or
any Fund in connection with the execution and delivery of this Agreement or the
LBHI Documents or the compliance by LBHI, any Subsidiary of LBHI or any Fund
with any of the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby, other than (i) FINRA and
other applicable Self-Regulatory Organization notifications or consents, (ii) filings,
consents, approvals or notices required under the Investment Company Act or the
Investment Advisers Act, (iii) compliance with the applicable requirements
of the HSR Act and (iv) those the failure of which to obtain or make would
not have a material adverse effect on the LBHI’s ability to consummate the
transactions contemplated hereby.


 


5.5           Subsidiaries.  The outstanding shares of capital stock or
comparable equity ownership interests of each of the Business Entities and each
of their respective Subsidiaries are validly issued, fully paid and
non-assessable, and, following the Contribution and the Closing, all such
shares or other equity interests will be wholly-owned, directly or indirectly,
by the Company free and clear of any and all Liens except transfer restrictions
under applicable securities Laws.  None
of LBHI, any Subsidiary of LBHI, any Business Entity or any Subsidiary of any
Business Entity has issued any option or warrant covering, any right to
subscribe for, or any securities convertible into or exchangeable or
exercisable for, any shares of capital stock of, or comparable equity ownership
interests in, any Business Entity or any Subsidiary of a Business Entity.


 


5.6           Litigation.  There are no Legal Proceedings pending or, to
the knowledge of LBHI, threatened against LBHI that would have a material
adverse effect on LBHI’s ability to consummate the transactions contemplated
hereby.


 


5.7           Financial
Advisors.  Except for Barclays
Capital Inc. and Lazard Freres & Co. LLC, the fees and expenses of
which shall be borne by LBHI, no Person has acted, directly or indirectly, as a
broker, finder or financial advisor for LBHI or its Affiliates (including its
Subsidiaries) in connection with the transactions contemplated hereby.


 


32

















 


5.8           Investment
Intention.  LBHI is acquiring all
Units to be issued by the Company to it at the Closing pursuant to the terms of
this Agreement for its own account, for investment purposes and not with a view
to the distribution thereof in contravention of any Law.  LBHI is an “accredited investor,” as such
term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the “Securities Act”), and has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of an investment in the Units.  LBHI understands that the Units have not been
registered under the Securities Act or any other securities or “blue sky” law
and cannot be sold unless subsequently registered or an exemption from
registration is available.


 


5.9           Disclosure
of Information.  LBHI acknowledges
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Units to be
sold pursuant to the terms of this Agreement and the business, properties,
prospects and financial condition of the Company.  LBHI also acknowledges that it (a) has
such knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of its investment in the Company,
and  (b) is able to bear the
financial risks associated with an investment in the Units to be sold pursuant
to the terms of this Agreement.


 


5.10         General.  LBHI understands that the Units to be sold
pursuant to the terms of this Agreement are being offered and sold in reliance
on an exemption from the registration requirements of federal and state
securities laws and the Company is relying upon the truth and accuracy of, and
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of LBHI set forth herein in order to determine the applicability
of such exemptions and the suitability of LBHI to acquire the Units to be sold
pursuant to the terms of this Agreement. LBHI understands that no federal or
state agency or any government or governmental agency has passed upon or made
any recommendation or endorsement of the Units to be sold pursuant to the terms
of this Agreement.


 


5.11         No
General Solicitation.  LBHI
acknowledges that the Units to be sold pursuant to the terms of this Agreement
were not offered to LBHI by means of any form of general or public solicitation
or general advertising, or publicly disseminated advertisements or sales
literature, including (a) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (b) any seminar or meeting to which
LBHI was invited by any of the foregoing means of communications.


 


5.12         Acknowledgement.  Notwithstanding anything to the contrary
herein, LBHI acknowledges and agrees that:


 


(a)           the
Company is not making any representations or warranties whatsoever, express or
implied, beyond those expressly given by the Company in Article IV
or any certificates given in connection with the Closing (as modified by the
Schedules referred to in the introductory paragraph to Article IV
(to the extent specified therein));


 


33

















 


(b)           except
for the covenants herein and in the Ancillary Agreements and except for the
representations and warranties contained in Article IV or any
certificates given in connection with the Closing, the Units being sold  hereunder are being sold on a “where is” and,
as to condition, “as is” basis;


 


(c)           LBHI
has not been induced by, or relied upon, any representations, warranties or
statements (written or oral, express or implied, or otherwise), made by any
Person, that are not expressly set forth in Article IV or any
certificates given in connection with the Closing (and, without limiting the
generality of the foregoing, LBHI acknowledges that, except for such
representations and warranties, (i) no representations or warranties are
made with respect to any projections, forecasts, estimates, budgets or prospect
information that may have been made available to LBHI or any of its Affiliates
or Representatives, and (ii) none of the Company or its Affiliates will
have or be subject to any liability to LBHI or any other Person resulting from
the distribution or making available to LBHI or its Representatives (or their
use of) any such information or any information contained in any confidential
memoranda relating to the Company or any Subsidiary of the Company or contained
in any “data rooms” to which LBHI or its Representatives may have been given
access); and


 


(d)           LBHI
has conducted, to its satisfaction, its own independent investigation of the
condition, operations, business and prospects of the Company, the Business, the
Business Entities and their Subsidiaries.


 


ARTICLE VI


 


[RESERVED]


 


ARTICLE VII


 


COVENANTS


 


7.1           Conduct
of the Company Pending the Closing. 
Prior to the Closing, except as expressly contemplated by this Agreement
(including the actions taken or to be taken in connection with the Contribution
or the consummation of the transactions contemplated hereby), the agreements
set forth on Schedule 4.6 hereto and the matters referred to in Section 4.6,
the Company shall not take any action or conduct any business, or agree to take
any action or conduct any business, without the express written consent of
LBHI, which consent shall not be unreasonably withheld or delayed.


 


7.2           Conduct
of the Business Pending the Closing. 
Prior to the Closing, except (a) as required by applicable Law or (b) as
otherwise expressly contemplated by this Agreement (including the actions taken
or to be taken in connection with the Contribution or the consummation of the
transactions contemplated hereby), (1) LBHI shall, and shall cause its
Subsidiaries to, conduct the Business in all material respects in 


 


34

















 


the ordinary course of business consistent with past practice, and (2) LBHI
(with respect to the Business) shall not, and shall cause each of its
Subsidiaries not to:


 


(i)            declare or pay any
dividend or other cash distribution to the extent doing so would impair the ability
of the Business to operate in the ordinary course;


 


(ii)           issue, transfer,
sell, encumber, or authorize the issuance, transfer, sale or encumbrance of,
any shares of capital stock, limited liability company membership interests or
other equity interests of any class, or any options, warrants, pay-in-kind
securities, convertible or exchangeable securities or other rights of any kind
thereto to acquire any shares of capital stock or equity interests (including
any phantom interest), of any Acquired Subsidiary to any Person;


 


(iii)          sell or license any
of its material properties or assets, except (A) sales and licenses in the
ordinary course of business consistent with past practice, (B) pursuant to
any Contract in effect on the Execution Date, (C) dispositions of obsolete
or worthless assets, and (D) transfers between the Acquired Subsidiaries;


 


(iv)          subject any of its
material properties or assets to a Lien, except in the case of properties or
assets that are not securities for Permitted Exceptions;


 


(v)           enter into any
merger or consolidation or similar transaction with or involving any Person;


 


(vi)          adopt a plan or
agreement of complete or partial liquidation or dissolution;


 


(vii)         incur any
indebtedness for borrowed money having an outstanding principal amount in
excess of $5,000,000 (excluding intercompany transactions with Affiliates that
will be settled prior to the Closing);


 


(viii)        fail to make any
filing, pay any fee, or take any other action necessary to maintain the
ownership, validity and enforceability of any 
material Intellectual Property Rights related to the Business; or


 


(ix)           agree to do
anything prohibited by this Section 7.2.


 


7.3           Preservation
of Back Office Support.  LBHI will
use all commercially reasonable efforts to preserve prior to the Closing the
functionality of its and its Affiliates back offices and the availability of
its personnel and systems that have historically provided services to the
Business.


 


35

















 


7.4           Consents.  LBHI shall use, and shall cause its
Subsidiaries to use, commercially reasonable efforts, and the Company shall
cooperate with LBHI, to obtain at the earliest practicable date all consents
(other than with respect to brokerage and investment advisory agreements, the subject
matter of which is covered in Sections 7.12, 7.13 and 7.14)
and approvals required to consummate the transactions contemplated by this
Agreement (including the Contribution); provided, however, that
no party shall be obligated to pay any consideration (or grant any financial
accommodation) to any third party from whom consent or approval is requested.


 


7.5           Regulatory
Approvals.  Subject to all of the
terms and conditions hereof (including the proviso in the last sentence of Section 7.6(b)):


 


(a)           Each
of the parties hereto shall cooperate with the other parties and use their
respective commercially reasonable efforts to promptly (i) take, or cause
to be taken, all actions, and do, or cause to be done, all things within its
control that are necessary, proper or advisable to cause the other party’s
conditions to Closing to be satisfied as promptly as practicable and to
consummate the Closing in the most expeditious manner practicable, and (ii) to
the extent it is within its control, obtain all approvals, consents,
registrations, permits, authorizations and other confirmations from any
Governmental Body or third party required to be obtained by it and which are
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement.  In furtherance and not
in limitation of the foregoing, each party hereto agrees to cooperate to make
any appropriate application to FINRA.


 


(b)           Each
of the parties hereto shall use its commercially reasonable efforts to (i) cooperate
in all respects with each other in connection with any filing or submission
with a Governmental Body in connection with the transactions contemplated by
this Agreement and in connection with any investigation or other inquiry by or
before a Governmental Body relating to the transactions contemplated by this
Agreement, including any such proceeding initiated by a private party, and (ii) keep
the other party reasonably informed in all material respects and on a
reasonably timely basis of any material communication received by such party
from, or given by such party to, the FTC, FINRA, the SEC or any other
Governmental Body, in each case regarding any of the transactions contemplated
by this Agreement.


 


7.6           Further Assurances; Etc.


 


(a)           Subject
to all of the terms and conditions hereof, each of the parties shall use its
commercially reasonable efforts (i) to take all actions, both prior to and
after the Closing, necessary or appropriate to consummate and implement the
transactions contemplated by this Agreement (including the Contribution) and (ii) to
the extent it is within its control, to cause the fulfillment at the earliest
practicable date of all of the conditions to the other party’s obligations to
consummate the transactions contemplated by this Agreement.  Without limiting the generality of the
foregoing, from the Execution Date until the Closing, LBHI shall not, and shall
cause its Affiliates not to, (A) assign or otherwise transfer from the
Business to any Person any asset, right, property 


 


36

















 


or interest of the Business or any Purchased Asset, or (B) assign
or otherwise transfer to the Business any Liability other than any Assumed
Liability.


 


(b)           Without
limiting the foregoing, on and after the Closing Date, each party shall cooperate
with the other party, without any further consideration, to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, under any permit, license, agreement, indenture or other instrument,
and to take all such other actions as either party may request to take by any
other party from time to time, consistent with the terms of this Agreement, in
order to effectuate the provisions and purposes of this Agreement and the
Ancillary Agreements and, to the extent necessary, (i) the transfer to the
Company or any Subsidiary of the Company of any Purchased Asset and (ii) the
transfer of any Excluded Asset from the Company or any Subsidiary of the Company
to LBHI; provided, however, that neither party shall be obligated
to make any payment, incur any obligation or grant any concession to any
Governmental Body in connection therewith, other than the payment of ordinary
and customary fees.


 


(c)           In
the event that at any time and from time to time after the Closing, LBHI or any
of its Affiliates shall receive or otherwise possess any Purchased Asset or any
asset that is the property of the Company or any of its Subsidiaries (other
than by reason of a distribution by the Company to LBHI or such Affiliate
pursuant to the Amended and Restated Operating Agreement), LBHI shall or shall
cause such Affiliate to promptly transfer such asset in the form received to
the Company or its applicable Subsidiaries.


 


(d)           In
the event that at any time and from time to time after the Closing, the Company
or any Subsidiary of the Company shall receive or otherwise possess any
Excluded Asset, the Company shall or shall cause such Subsidiary to promptly
transfer such asset in the form received to LBHI.  No transfer to LBHI pursuant to this Section 7.6(d) shall
be considered a distribution in redemption of, or otherwise upon or in respect
of, any LBHI Preferred Unit or Class A Common Unit.


 


7.7           Preservation
of Records.  Each of LBHI and the
Company agree to preserve and keep the business records held by them relating
to the Business for a period of seven years (or such longer period as may be
required under applicable Law) from the Closing Date and shall make such
business records available to the other as may be reasonably required by such
party in connection with, among other things, any insurance claims by, Legal
Proceedings or Tax audits against or governmental investigations of LBHI, the
Company or any of their respective Affiliates (which for the purposes of this Section 7.7
shall include the Funds) to the extent required to enable LBHI or the Company,
as the case may be, to comply with their respective obligations under this
Agreement and each other agreement, document or instrument contemplated hereby
or thereby; provided, however, that LBHI shall notify the Company
if it intends to wind down its affairs prior to the end of such seven-year
period and shall deliver such business records to the Company at its request.


 


37

















 


7.8           Publicity.  Except in connection with any Bankruptcy
Case, neither LBHI nor the Company shall issue, or permit any of its respective
Affiliates (which for the purposes of this Section 7.8 shall
include the Funds) to issue, any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of, in the case of LBHI, the Company and,
in the case of the Company, LBHI, which approval will not be unreasonably
withheld or delayed, unless, in the sole judgment of LBHI or the Company, as
applicable, disclosure is otherwise required by applicable Law or by the
applicable rules of any stock exchange on which LBHI, the Company or any
of their respective Affiliates lists securities.


 


7.9           Employee Benefits.


 


(a)           [Reserved]


 


(b)           LBHI
agrees to use reasonable commercial efforts to reach agreement as soon as
practicable with the trustees of the Lehman Brothers Pension Scheme (UK), the
Pensions Regulator and the PPF, to obtain a clearance statement in favor of the
members of the Company Group from the Pensions Regulator, under section 42 of
the UK Pensions Act in respect of the transactions governed by this Agreement
(including the Contribution) under which the Pensions Regulator confirms (on a
basis that is not conditional upon any member of the Company Group or any
associated or connected company fulfilling any obligations, other than a
one-off payment to the Lehman Brothers Pension Scheme (UK) or the PPF) that it
will not issue to any member of the Company Group or any of its directors,
officers or employees a contribution notice under section 38 of the UK Pensions
Act or (to the extent the Pensions Regulator is willing to provide such
confirmation) under forthcoming amendments to the UK Pensions Act (or any other
legislation) made in connection with the announcement by the UK Department for
Work and Pensions dated 14 April 2008.


 


(c)           It
is agreed that LBHI and its advisers shall prepare and submit the clearance
application to the Pensions Regulator and shall have principal conduct of all
matters relating to the clearance application and correspondence with the
Pensions Regulator, provided that LBHI shall keep the Company reasonably
informed with respect to such matters and provide periodic updates.  The Company agrees to reasonably cooperate
with LBHI in all matters relating to the process described in Section 7.9(b)
above, including without limitation by:


 


(i)            providing
any such information as may be within the control of the Company and is
necessary to respond to questions raised by the trustees, the Pensions
Regulator or the PPF; and


 


(ii)           keeping
LBHI promptly informed of any communications received from the Pensions
Regulator, the PPF and the trustees of the Lehman Brothers Pension Scheme (UK)
in relation to the clearance application and providing LBHI with draft copies
of all communications relevant to the trustee discussions and clearance
application at such time as will allow LBHI a reasonable opportunity to comment
on such 


 


38

















 


submission or communication before it is submitted; take into account
any reasonable comments and promptly provide LBHI with a copy of all such
communication in the form submitted except that confidential information
contained in such submission or communication may be redacted.


 


(d)           At
the Company’s option and to such extent as the Company may reasonably specify,
the Company may directly or through one or more designated parties participate
in the process referred to in Section 7.9(b), and for these
purposes hold discussions with the trustees of the Lehman Brothers Pension
Scheme (UK), the Pensions Regulator and the PPF, provided that the Company (or
any party designated by the Company) will not hold or initiate any independent
discussions with such trustees, the Pensions Regulator or the PPF without
inviting and giving the LBHI a reasonable opportunity to join such discussions.


 


(e)           For
Transferred Employees, service with the Company shall be counted for vesting
purposes under the Lehman Brothers Holdings Inc. Retirement Plan and Lehman
Brothers Savings Plan in accordance with the terms of such plans.


 


(f)            LBHI
shall, and shall cause its Subsidiaries to, use reasonable efforts to consult
with the Company with respect to the allocation and timing of the payment of
bonuses to be paid to any employee who is employed primarily in connection with
the Business by LBHI or any of its Subsidiaries.


 


(g)           LBHI
shall have sole responsibility for “continuation coverage” obligations under
the employee benefit plans that are group health plans to all Company employees
and “qualified beneficiaries” of such employees for whom a “qualifying event”
occurs on or prior to the Closing Date, but the Company shall have
responsibility for “continuation coverage” obligations to all Company employees
and “qualified beneficiaries” to the extent that a “qualifying event” occurs
after the Closing Date.  The phrases “continuation
coverage”, “qualified beneficiaries” and “qualifying event” shall have the
respective meanings ascribed to them in Section 4980B of the Code and
Sections 601-608 of ERISA.


 


7.10         Tax Matters.


 


(a)           LBHI
and the Company shall, to the extent permitted by applicable Law (or to the
extent applicable Law does not so require), elect with the relevant Taxing
Authority to treat for all purposes the Closing Date as the last day of a
taxable period of each Acquired Subsidiary (including any Acquired Subsidiary
that is treated as a partnership for U.S. federal income tax purposes).  If applicable Law does not require or permit
the parties to close any federal state, local or foreign Tax period of any
Acquired Subsidiary as of the Closing Date, or for any other taxable period of
such Acquired Subsidiary that includes, but does not end on, the Closing Date
(any of the foregoing, a “Straddle Period”), the allocation of Taxes as
between the portion of such Straddle Period ending on and including the Closing
Date and the portion of such Straddle Period beginning after the Closing Date
shall be made as follows: (i) in the case of Taxes based 


 


39

















 


upon income, gross receipts (such as sales Taxes) or specific
transactions involving Taxes other than Taxes based upon income or gross
receipts, the amount of Taxes attributable to any Straddle Period shall be
determined by closing the books of such Acquired Subsidiary as of the close
of  the Closing Date and by treating the
portion of such Straddle Period ending on and including the Closing Date and
the portion beginning after the Closing Date as, respectively, separate taxable
years (provided that any exemptions, allowances or deductions that are
calculated on an annual basis (including but not limited to depreciation and
amortization deductions) shall be allocated between the period ending on the
Closing Date and the period ending after the Closing Date in proportion to the
number of days in each such period); and (ii) in the case of Taxes that
are determined on a basis other than income, gross receipts or specific
transactions, the amount of Taxes shall be allocable to the portion of the
Straddle Period ending on and including the Closing Date and the portion of the
Straddle Period beginning after the Closing Date based on a pro ration of days
in such Straddle Period.


 


(b)           (i)            After the Closing, except as
otherwise provided in this Section 7.10(b), the Company shall
endeavor to timely prepare and file or cause to be prepared and filed all Tax
Returns of the Acquired Subsidiaries and to timely pay or cause to be paid to
the applicable Taxing Authority any amounts shown as due thereon.


 


(ii)           Prior
to the Company filing, or causing to be filed, any Tax Return of an Acquired
Subsidiary for (A) a Pre-Closing Tax Period or (B) a Straddle Period,
the Company shall provide to LBHI, at least thirty (30) days prior to the
filing deadline for such Tax Return (taking into account any applicable
extensions), a draft of such Tax Return, which shall be completed in a manner
consistent with the past practices of such Acquired Subsidiary, except as
otherwise required by a change in applicable Law or this Agreement.  Within ten (10) days of delivery to LBHI
of any such draft Tax Return, LBHI shall inform the Company of any objections
LBHI has to such draft Tax Return, and if LBHI has no such objections, then the
Company shall cause to be timely filed such Tax Return completed on the basis
of the draft provided to LBHI.  If within
ten (10) days of delivery to LBHI of any such draft Tax Return, LBHI
informs the Company of LBHI’s objection(s) to such draft Tax Return, then
LBHI and the Company shall negotiate in good faith to resolve such
objection(s).  If LBHI and the Company
are able to resolve such objection(s) within ten (10) days of the
filing deadline for such Tax Return (taking into account any applicable
extensions), then the Company shall cause to be timely filed such Tax Return on
the basis agreed upon by LBHI and the Company. 
If despite such good faith efforts, LBHI and the Company are unable to
resolve such objection(s) within such period of time, then the matter
shall be submitted to an independent accounting firm acceptable to LBHI and the
Company for review and resolution by such accounting firm, which review and
resolution shall (i) occur no later than five (5) days prior to the
filing deadline of such Tax Return (taking into account any applicable
extensions), and (ii) be limited to the basis of LBHI’s objection(s); and,
thereafter, the Company shall cause to be timely filed such Tax Return on the
basis of the draft provided to LBHI, as modified to reflect such accounting
firm’s resolution of LBHI’s objection(s) thereto.  The fees and expenses of the independent
accounting firm 


 


40

















 


shall be paid one-half by LBHI and one-half by the Company.  LBHI shall, not less than three (3) days
prior to the due date (without regard to extensions) of any income Tax Return
referred to in this Section 7.10(b)(ii), provide the Company with
an amount of cash equal to the amount of Tax payable by such Acquired
Subsidiary that is allocable to the Pre-Closing Tax Period, including the
portion of any Straddle Period ending on the Closing Date, as determined
pursuant to Section 7.10(a)). 
In the case of a Tax Return filed pursuant to an extension, appropriate
adjustments will be made between LBHI and the Company if, at the time the Tax
Return is actually filed, the Taxes due and attributable to a Pre-Closing Tax
Period, including the portion of any Straddle Period ending on the Closing
Date, with respect to such Tax Return are more or less than the amount, if any,
previously paid by LBHI.


 


(iii)          In
the case of any Affiliated Acquired Subsidiary, LBHI shall prepare and file the
Tax Returns for the Affiliated Group that included such Affiliated Acquired
Subsidiary for any Pre-Closing Tax Period or Straddle Period.  Any such Tax Return shall be prepared in a
manner consistent with the past practices with respect to such Affiliated
Acquired Subsidiary, except as otherwise required by a change in applicable Law
or this Agreement.  At least thirty (30)
days prior to filing, LBHI shall provide the Company with a copy of the portion
of such Tax Returns that relate to the Affiliated Acquired Subsidiaries.  Within ten (10) days of delivery to the
Company of the portions of any such draft Tax Returns, the Company shall inform
LBHI of any objections the Company has to the portion of such draft Tax Return,
and if the Company has no such objections, then LBHI shall cause to be timely
filed such Affiliated Group Tax Return completed on the basis of the draft
provided to the Company.  If within ten (10) days
of delivery to the Company of any such portion of any such draft Tax Return,
the Company informs the LBHI of the Company’s objection(s) to such portion
of such draft Tax Return, then LBHI and the Company shall negotiate in good
faith to resolve such objection(s).  If
LBHI and the Company are able to resolve such objection(s) within ten (10) days
of the filing deadline for such Tax Return (taking into account any applicable
extensions), then LBHI shall cause to be timely filed such Tax Return on the
basis agreed upon by LBHI and the Company. 
If despite such good faith efforts, LBHI and the Company are unable to
resolve such objection(s) within such period of time, then the matter
shall be submitted to an independent accounting firm acceptable to LBHI and the
Company for review and resolution by such accounting firm, which review and
resolution shall (i) occur no later than five (5) days prior to the
filing deadline of such Tax Return (taking into account any applicable
extensions) and (ii) be limited to the basis of the Company’s
objection(s); and, thereafter, LBHI shall cause to be timely filed such Tax
Return on the basis of the draft provided to the Company, as modified to
reflect such accounting firm’s resolution of the Company’s objection(s) thereto.  The fees and expenses of the independent
accounting firm shall be paid one-half by LBHI and one-half by the
Company.  The Company shall provide LBHI
with any powers of attorney necessary in connection with the discharge by LBHI
of its obligations pursuant to this Section 7.10(b)(iii).


 


41
















 


(c)           LBHI
and the Company shall cooperate fully, as and to the extent reasonably
requested by each other, in connection with the filing of Tax Returns and any
audit, inquiry, litigation or other proceeding with respect to Taxes.  Such cooperation shall include the retention
and (upon the other party’s request) the provision of records and information
which are reasonably relevant to any such audit, inquiry, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.


 


(d)           The
Company shall have the sole right to control any audit or examination by any
Governmental Body, initiate any claim for refund, and contest, resolve and
defend against any assessment for additional Taxes, notice of Tax deficiency or
other adjustment of Taxes of, or relating to, the income, assets or operations
of any Acquired Subsidiary (collectively, “Acquired Subsidiary Tax
Proceedings”); provided, however, if any Acquired Subsidiary
Tax Proceeding could reasonably be expected to materially affect the amount of
Taxes of LBHI for any Pre-Closing Tax Period (including the pre-closing portion
of any Straddle Period), the Company will not enter into any settlement or
compromise with respect to such Acquired Subsidiary Tax Proceedings without the
prior written consent of LBHI (such consent not to be unreasonably conditioned,
withheld or delayed).


 


(e)           Prior
to the Closing, LBHI shall cancel or cause to be cancelled any tax sharing,
allocation, indemnity or similar agreement or arrangement  to which any Acquired Subsidiary is a party,
and if pursuant to any such agreement or arrangement, any Acquired Subsidiary
is required to make any payment thereunder after the Closing in respect of any
Taxes described in Section 9.2(b), then prior to such payment, LBHI
shall pay to the Company an amount of cash equal to such payment.


 


(f)            Except
as required by Law, without the prior written consent of LBHI (such consent not
to be unreasonably withheld or delayed), the Company may not amend, refile,
revoke or otherwise modify or cause or permit to be amended, refiled, revoked
or otherwise modified any Tax Return or Tax election of any Acquired Subsidiary
that reasonably can be expected to affect the Tax liability of LBHI for any
Pre-Closing Tax Period (including the pre-Closing portion of any Straddle
Period).


 


(g)           All
Transfer Taxes arising out of or in connection with the transactions affected
pursuant to this Agreement, as well all out-of-pocket costs associated with the
preparation and filing of the Tax Returns under this Section 7.10(g),
shall be borne one-half by LBHI and one-half by the Company.  The Company shall timely file or cause to be
filed all necessary documentation and Tax Returns with respect to such Transfer
Taxes and LBHI will cooperate with the Company in connection therewith.


 


(h)           Unless
otherwise required by applicable Law, the parties hereto agree that the
Contribution shall be a transaction governed by Section 721 of the Code,
and no party shall take any action or make any statement inconsistent with such
treatment.


 


42

















 


(i)            As
requested by the Company, LBHI and the Company shall cooperate to restructure
or reorganize any Acquired Subsidiary prior to Closing in order to affect a tax
efficient ownership structure for the Company, including without limitation the
conversion of any U.S. Acquired Subsidiary that is a corporation for U.S. tax
purposes into a limited liability company (treated as a partnership or
disregarded entity for U.S. tax purposes) under applicable Law or electing on
behalf any non-U.S. Acquired Subsidiary that is treated as a corporation for
U.S. tax purposes to be treated as a partnership or disregarded entity for U.S.
tax purposes (and with respect to any non-U.S. Acquired Subsidiary that is a “per
se” corporation within the meaning of the Treasury Regulations issued under
Code Section 7701 to convert under applicable Law such Acquired Subsidiary
to an “eligible entity” within the meaning of such Treasury Regulations prior
to such election, if necessary); provided, however, LBHI shall
not be required to implement any such restructuring or reorganization or make
any such election if doing so would be reasonably likely to result in an
adverse consequence to LBHI or any of its Affiliates.


 


(j)            If
the Company or any Acquired Subsidiary receives any refund, rebate, abatement,
credit or other recovery of any income Taxes, together with any interest due
thereon or penalty rebate arising therefrom, for any Pre-Closing Tax Period (or
portion thereof) (a “Pre-Closing Tax Recovery”), then the Company shall
pay or cause to be paid to LBHI within three (3) days of receipt thereof an
amount of cash equal to such Pre-Closing Tax Recovery.  LBHI shall have the right, at its expense, to
request that the Company pursue any Pre-Closing Tax Recovery; provided,
however, the Company shall not be required to pursue any Pre-Closing Tax
Recovery if the Company shall determine in its reasonable discretion that
pursuing such Pre-Closing Tax Recovery will likely have an adverse effect on
the Company or any Acquired Subsidiary. 
No payment to LBHI pursuant to this Section 7.10(i) shall be
considered a distribution in redemption of, or otherwise upon or in respect of,
any LBHI Preferred Unit of Class A Common Unit.


 


7.11         Indemnification of Officers and Employees of the Company.


 


(a)           LBHI
agrees to indemnify and hold harmless (and to advance expenses to) each officer
of the Company against any and all Losses incurred prior to the Closing or
relating to any event, fact or circumstance occurring prior to the Closing
(including without limitation the formation of the Company), in each case for
actions taken or omitted to be taken in such person’s capacity as an officer of
the Company to the same extent that such person would be indemnified and held
harmless (and would be advanced expenses) against Losses were such person
deemed to be an officer of LBHI as described on Schedule 7.11(a) and
were such person’s actions deemed to have been taken or omitted to have been
taken as an officer of LBHI.


 


(b)           LBHI
agrees to indemnify and hold harmless (and to advance expenses to) each
Employee Member against any and all Losses incurred as a result of any alleged breach
of any covenant or agreement of such person referred to on Schedule 7.11(b) to
the same extent that such person would be indemnified and held 


 


43

















 


harmless (and would be advanced expenses) against Losses were such
person deemed to be an officer of LBHI as described on Schedule 7.11(a) and
were such person’s actions deemed to have been taken or omitted to have been
taken as an officer of LBHI, but only to the extent such Loss arises solely as
a result of such person’s execution of the Employee Letter Agreement.


 


7.12         Client
Brokerage Consents.  Promptly and in
any event within 30 Business Days following the Execution Date, to the extent
required by applicable Law or pursuant to a brokerage agreement, LBHI shall and
shall cause each applicable Acquired Subsidiary, as applicable, to inform each
of its applicable brokerage clients in writing of the transactions contemplated
by this Agreement by sending such client a notice thereof, and, other than with
respect to the Public Funds (which are addressed in Section 7.14 of
this Agreement), shall use its reasonable best efforts to seek such client’s
consent to the continuation of its brokerage agreement with the applicable
Subsidiary of the Company following consummation of the transactions
contemplated hereby, which notice shall comply with applicable Law.  To the extent consistent with applicable Law
or SEC or FINRA pronouncements or unless affirmative consent is required by the
applicable agreement, such consent may take the form of a so-called implied or
negative consent.  The Company will
provide to LBHI all information regarding the Company and its Affiliates
reasonably required in connection therewith. 
LBHI shall deliver drafts of all such consents and related materials to
the Company a reasonable time prior to the mailing or other distribution of
such documents to any Client in order to afford the Company an opportunity to
fully review and comment on such documents, and the Company shall have the
right to so review and comment on such documents.  The Company will provide to LBHI all
information regarding the Company and its Affiliates reasonably required to be
included in the consents and related materials and the Company covenants that
any information related to it that is provided by it or its Affiliates or its
respective operations or plans will not contain, at the time such materials are
furnished to LBHI, any untrue statement of material fact or omit to state any
material fact required to be stated therein, where necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.  LBHI covenants
that all other information contained in the consents and related materials will
not contain, at the time such materials are furnished to any client, any untrue
statement of material fact or omit to state any material fact required to be
stated therein, where necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.


 


7.13         Client
Investment Advisory Consents. 
Promptly and in any event within 30 Business Days following the
Execution Date, to the extent required by applicable Law or pursuant to an
investment advisory agreement, LBHI shall, or shall cause the Business Entities
or their Subsidiaries, as applicable, to, inform each Client in writing of the
transactions contemplated by this Agreement by sending such Client a notice
thereof, and, other than with respect to the Public Funds (which are addressed
in Section 7.14 of this Agreement), shall use its reasonable best
efforts to seek such Client’s consent to the continuation of its investment
advisory agreement with a member of the 


 


44

















 


Company Group, as applicable, following consummation of the
transactions contemplated hereby, which notice shall comply with applicable
Law.  To the extent consistent with
applicable Law or SEC pronouncements or unless affirmative consent is required
by the applicable agreement, such consent may take the form of a so-called
implied or negative consent; provided that, in seeking any such Client
consent through such implied or negative consent, LBHI or its applicable
Subsidiary shall provide, no less than 45 days prior to the Closing, written
notice to the Client that the applicable Subsidiary will continue to provide
investment advice to the Client, pursuant to the Client’s existing investment
advisory agreement, after the Closing. LBHI shall deliver drafts of all such
consents and related materials to the Company a reasonable time prior to the
mailing or other distribution of such documents to any Client in order to
afford the Company an opportunity to fully review and comment on such
documents, and the Company shall have the right to so review and comment on
such documents.  The Company will provide
to LBHI all information regarding it and its Affiliates reasonably required to
be included in the consents and related materials and the Company covenants
that any information related to the Company that is provided by it or its
Affiliates or their respective operations or plans will not contain, at the
time such materials are furnished to LBHI, any untrue statement of material
fact or omit to state any material fact required to be stated therein, where
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.  LBHI covenants that all other information
contained in the consents and related materials will not contain, at the time
such materials are furnished to any client, any untrue statement of material
fact or omit to state any material fact required to be stated therein, where
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.


 


7.14         Public Fund
Investment Advisory Consents.


 


(a)           As
soon as practicable after the Execution Date, to the extent required by
applicable Law or pursuant to an investment advisory agreement, LBHI shall, or
shall cause each applicable Acquired Subsidiary to, use its reasonable best
efforts to, in accordance with applicable Law, (i) obtain, with respect to
each Public Fund, the approval by the relevant Public Fund’s board of directors
or board of trustees acting in accordance with Section 15(c) of the
Investment Company Act of a new investment advisory agreement with the
applicable Acquired Subsidiary on terms that are no less favorable to the
applicable Acquired Subsidiary than the terms of the existing investment
advisory agreement with such Public Fund (each such new investment advisory
agreement, a “New Public Fund Investment Advisory Agreement”); and (ii) obtain,
with respect to each Public Fund, the approval by the relevant Public Fund’s
board of directors or board of trustees of the continuation after the Closing,
or the replacement, of any other existing agreement with the applicable
Acquired Subsidiary, on terms that are no less favorable to the applicable
Acquired Subsidiary than the terms of such existing agreement with such Public
Fund, but only to the extent any such other contract will terminate as a result
of the consummation of the transactions contemplated by this Agreement (the “Other
Public Fund Agreements”).


 


45

















 


(b)           Promptly
after obtaining the approvals set forth in Section 7.14(a) above,
to the extent required by applicable Law, LBHI shall, or shall cause each
applicable Acquired Subsidiary to, use its reasonable best efforts to cause to
be prepared and filed with the SEC proxy materials for meetings of the
shareholders of each of the Public Funds and to cause proxy solicitations to be
undertaken in order that such meetings be held and concluded as early as
practicable prior to the Closing.  At
such shareholder meetings, the approval of the applicable shareholders will be
sought, to the extent required by Law to be approved by shareholder vote, for (i) the
New Public Fund Investment Advisory Agreements; (ii) the Other Public Fund
Agreements; and (iii) such other matters related to the transactions
contemplated by this Agreement.  LBHI
shall deliver drafts of such proxy materials to the Company a reasonable time
prior to filing any such documents with the SEC and prior to mailing such
documents to shareholders of the Public Funds in order to afford the Company an
opportunity to fully review and comment on such documents, and the Company
shall have the right to so review and comment on such documents.


 


(c)           LBHI
covenants that any such proxy materials for each of the Public Funds will
comply as to form in all material respects with the applicable rules of
the SEC.


 


(d)           Each
party covenants that any information describing such party or its Affiliates or
their respective operations or plans or provided by such party or its
Affiliates that is contained in any proxy materials will not contain, at the
time such materials are furnished or at the time of the shareholder meeting
contemplated thereby, any untrue statement of material fact or omit to state
any material fact required to be stated therein, where necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.


 


(e)           In
the event that, with respect to a Public Fund, LBHI or any of its Subsidiaries
expects that it will be unable to obtain any required approvals of the
shareholders of the Public Fund in accordance with Section 7.14(b) hereof
prior to the Closing, (i) LBHI shall use its reasonable best efforts to
seek such approvals, together with the applicable members of the Company Group,
as soon as possible following the Closing (but in no event later than 150 days
following the Closing), and shall request the board of directors or board of
trustees of such Public Fund to approve, before the Closing and in conformity
with Rule 15a-4 under the Investment Company Act, an interim investment
advisory agreement to be effective immediately following the Closing, for such
Public Fund, containing the same terms and conditions as the existing
investment advisory agreement (except as required under Rule 15a-4 under
the Investment Company Act) with such Public Fund (each, a “New Public Fund
Interim Investment Advisory Agreement”).


 


(f)            LBHI
shall use its reasonable best efforts to cause the Public Funds to timely amend
the Public Funds’ Registration Statements on Form N-1A or Form N-2,
as applicable, pursuant to Rule 485(a) under the Securities Act to
reflect the 


 


46

















 


consummation of the transactions contemplated by this Agreement and the
approval of the New Public Fund Investment Advisory Agreements.


 


(g)           For
purposes of this Agreement, any New Public Fund Investment Advisory Agreement,
New Public Fund Interim Investment Advisory Agreement and Other Public Fund
Agreement may, upon the mutual agreement of LBHI and the Company prior to
seeking the relevant approvals of such agreement, be with a different
Subsidiary on terms at least as favorable to such Subsidiary as would have been
the case if such agreement had been with the applicable member of the Company
Group.


 


7.15         Section 15
of the Investment Company Act.  The
parties each agree to use all commercially reasonable efforts to ensure
compliance with the requirements of Section 15(f) of the Investment
Company Act in respect of this Agreement and the transactions contemplated
hereunder.  In that regard, the parties
shall cause the Company from and after the Closing to conduct its business and
shall, subject to applicable fiduciary duties in relation to any Public Fund,
use its commercially reasonable efforts to cause each of its Subsidiaries to
conduct their business, so as (i) to enable (i) for a period of three
years after the Closing Date, at least 75% of the members of each board of
directors/trustees of each Public Fund not to be (A) “interested persons”
(as that term is defined in the Investment Company Act) of the investment
adviser of the relevant Fund after the Closing, or (B) “interested persons”
(as that term is defined in the Investment Company Act) of the investment
adviser of the relevant Fund immediately prior to the Closing and (ii) there
not to be imposed an “unfair burden” (as that term is defined in the Investment
Company Act) on any Public Fund as a result of the transactions contemplated
hereby, or any express or implied terms, conditions or understandings
applicable thereto; provided, however, that if the Company shall
have obtained an order from the SEC exempting it from the provisions of Section 15(f),
while still maintaining the “safe harbor” provided by Section 15(f), then
this covenant shall be deemed to be modified to the extent necessary to permit
the Company to act in any manner consistent with such SEC exemptive order.


 


7.16         Administration.  Promptly after the Execution Date, the
parties will use their commercially reasonable efforts to structure and
document an arrangement whereby Pricewaterhouse Coopers LLP (in its capacity as
the administrator of Lehman Brothers International (Europe), Lehman Brothers
Holdings plc, Lehman Brothers UK RE Holdings Limited and Lehman Brothers
Limited, and in the case of any other assets intended to be part of the
Purchased Assets subject to or under administration, receivership, bankruptcy
or other similar insolvency proceeding in any non-U.S. jurisdiction, any Person
appointed to manage such asset, the “Administrator”) would be asked to
agree to (a) transfer any of the Purchased Assets that are subject to the
dominion and control of the Administrator (the “Administered Assets”)
pursuant to the Contribution and (b) a transitional operating plan to
maintain the ordinary course operations of the relevant operations of the
Business (at the expense of LBHI if requested by the Administrator) under the
dominion and control of such Administrator in exchange for receipt from LBHI
(or its applicable Subsidiary) of an amount mutually agreed by LBHI and the
Administrator.  To facilitate the
transfer of the Administered Assets, LBHI 


 


47

















 


(i) shall organize one or more wholly-owned entities as Acquired
Subsidiaries into which the Administered Assets would be transferred at
Closing, and (ii) shall use its commercially reasonable efforts to obtain,
on or prior to Closing, any consents, licenses or other authorizations
necessary to own and operate the Administered Assets from each relevant
Governmental Body, including the Financial Services Authority and the Irish
Financial Regulator, as applicable.


 


7.17         Qualification
of the Public Funds.  LBHI will prior
to the Closing use its reasonable best efforts to cause each of the Public
Funds to continue to qualify as a “regulated investment company” within the
meaning of Section 851 of the Code, and will not take any action prior to
the Closing that would reasonably be expected to prevent any of the Public
Funds from qualifying as such a “regulated investment company.”  In addition, LBHI will use its best efforts
to cause the Public Funds to take no action prior to the Closing that would be
inconsistent with any Public Fund’s prospectus and statements of additional
information or other offering, advertising or marketing materials.


 


7.18         [Reserved].


 


7.19         Real Property Leases.


 


(a)           On
or prior to the Closing Date, the Subleased Real Property Leases shall be
assumed by LBHI and each Subleased Real Property Lease shall be assigned to
BarCap.


 


(b)           With
respect to each Subleased Real Property Lease, LBHI shall use commercially
reasonable efforts to cause BarCap to (i) on or prior to the Closing Date,
negotiate in good faith, in accordance with, and limited by LBHI’s rights under
the BarCap APA, with LBHI, on behalf of the Company Group, a sublease agreement
(a “Sublease”) on mutually agreeable terms, pursuant to which a portion
of the demised premises under such underlying Subleased Real Property Lease
(such portion of the premises to be agreed upon by the parties) shall be
subleased after the Closing to a member of the Company Group, and (ii) execute
and deliver on the Closing Date such mutually acceptable Sublease. The Sublease
shall be subject to the terms of the applicable underlying Subleased Real
Property Lease.


 


(c)           LBHI’s
obligation to enter into, or to cause BarCap to enter into, Subleases in
accordance with this Section 7.19 is subject to the receipt by LBHI
or BarCap, as applicable, of all applicable Landlord Consents. BarCap or LBHI,
as applicable and the Company will cooperate and use commercially reasonable
efforts in obtaining such Landlord Consents with respect to the Subleases; provided,
however, that LBHI shall not be obligated to incur any expenses in
connection with obtaining such Landlord Consents.  BarCap or LBHI, as applicable and the
applicable member of the Company Group shall otherwise comply in all respects
with the terms and provisions of the underlying Subleased Real Property Lease in
connection with the execution and delivery of the applicable Sublease.


 


48

















 


(d)           (i) 
Notwithstanding the above, in the event that, following the Closing, BarCap,
through an assignment from LBHI, obtains a leasehold interest that continues to
be used or occupied by an employee of a member of the Company Group, and such
leasehold interest is not subleased by BarCap to such member of the Company
Group or its designees, then, to the extent permitted under the terms and
conditions of the BarCap APA, LBHI shall use commercially reasonable efforts to
cause BarCap to permit the Company or another member of the Company Group to
continue to occupy or use such property to the same extent and in the same
manner as prior to the Closing for a period commencing on the Closing Date and
expiring on June 10, 2009.


 


(ii)           In addition, with regard to leasehold
interests held by LBHI or its Subsidiaries which are used in the operation of
the Business (including, but not limited to, the lease of 399 Park Avenue, New
York, New York) and not subleased to a member of the Company Group pursuant to
this Section 7.19, LBHI, to the extent reasonably practicable,
shall provide reasonable prior notice to the Company before rejecting or otherwise
acting to terminate the underlying lease prior to March 19, 2008, and
shall not reject or take other action resulting in the rejection or termination
of such lease.


 


7.20         [Reserved].


 


7.21         Amended
and Restated Operating Agreement. 
Prior to the Closing, LBHI and the Company shall negotiate in good faith
the definitive terms of an amended and restated operating agreement for the
Company having the terms and conditions set forth in the term sheet attached
hereto as Exhibit A (the “Amended and Restated Operating
Agreement”), which shall be in effect as of the Closing.


 


7.22         Deferred Transfers.


 


(a)           If
and to the extent that the allocation to and vesting in any member of the
Company Group of any Purchased Assets pursuant to the Contribution or otherwise
would be a violation of applicable Law or require any consent or the approval
of any Governmental Body or any other Person or the fulfillment of any
condition that cannot be fulfilled by any party prior to the Closing then,
unless the parties shall otherwise agree, the allocation to and vesting in such
Acquired Subsidiary of such Purchased Asset shall be, without any further
action by any party hereto, automatically deferred and any allocation or
vesting of such Purchased Asset pursuant to the Contribution or otherwise shall
be null and void until such time as all violations of applicable Law are
eliminated, such consents or approvals of Governmental Bodies or other Persons
are obtained, and such conditions are fulfilled, which in all cases shall be no
later than twelve (12) months from the Closing Date unless otherwise agreed to
by the parties hereto.  Any such
Purchased Asset shall be deemed a “Deferred Transfer Purchased Asset.”


 


(b)           If
and to the extent that the allocation to an Acquired Subsidiary of, and such
Acquired Subsidiary’s becoming responsible for, any Assumed Liabilities
pursuant to the Contribution or otherwise would be a violation of applicable
Law or 


 


49

















 


require any consent or approval of any Governmental Body or other
Person or the fulfillment of any condition that cannot be fulfilled by any
party prior to the Closing, then, unless the parties hereto shall otherwise
agree, the allocation to such Acquired Subsidiary and such Acquired Subsidiary
becoming responsible for, such Assumed Liability shall, without any further
action by any party, be automatically deferred and any allocation or
responsibility for such Assumed Liability pursuant to the Contribution or
otherwise shall be null and void until such time as all violations of
applicable Law are eliminated, such consents or approvals of Governmental
Bodies or other Persons are obtained, and such conditions are fulfilled.  Any such Assumed Liability shall be deemed a “Deferred
Transfer Assumed Liability.”


 


(c)           With
respect to any Deferred Transfer Purchased Asset or any Deferred Transfer
Assumed Liability, insofar as it is reasonably possible, (i) LBHI shall,
and shall cause any applicable Subsidiary of LBHI to, following the Closing,
hold such Deferred Transfer Purchased Asset for the use and benefit of the
Company (at the expense of the Company) and (ii) the Company shall, or
shall cause its applicable Subsidiary to, pay or reimburse LBHI for all amounts
paid or incurred in connection with the retention of such Deferred Transfer
Assumed Liability, to the extent that any such amount would otherwise be an
Assumed Liability.  In addition, LBHI
shall, and shall cause any applicable Subsidiary of LBHI to, insofar as reasonably
possible and to the extent permitted by applicable Law, hold and treat such
Deferred Transfer Purchased Asset in the ordinary course of business in
accordance with past practice and take such other actions as may be reasonably
requested by the Company in order to place the Company or any of its
Subsidiaries, insofar as permissible under applicable Law and reasonably
possible, in the same position as if such Deferred Transfer Purchased Asset had
been transferred to and vested in the Company or an applicable Subsidiary of
the Company at the Closing and so that, to the extent possible, all the
benefits and burdens relating to such Deferred Transfer Purchased Asset,
including possession, use, risk of loss, potential for gain, and dominion,
control and command over such Deferred Transfer Purchased Asset, are to inure
from and after the Closing to the Company or its applicable Subsidiary entitled
to the receipt of such Deferred Transfer Purchased Asset; provided, that in no
event shall any such liabilities or obligations include any Excluded Liabilities.


 


(d)           If
and when the consents, approvals of Governmental Bodies or other Persons and/or
conditions, the absence or non-satisfaction of which caused the deferral or
transfer of any Deferred Transfer Purchased Asset or Deferred Transfer Assumed
Liability pursuant to Section 7.22(a) and Section 7.22(b),
are obtained or satisfied, the transfer, allocation or novation of the
applicable Deferred Transfer Purchased Asset or Deferred Transfer Assumed
Liability shall be effected in accordance with and subject to the terms of this
Agreement.


 


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


 


50
















 


7.23         [Reserved].


 


7.24         [Reserved].


 


7.25         [Reserved].


 


7.26         Withdrawal
of LBHI Capital.  With respect to the
seed capital amounts listed on Schedule 7.26, LBHI shall, and shall
causes its Affiliates to, maintain such seed capital according to the timeline and
other requirements specified on Schedule 7.26.


 


7.27         Lehman
Commitments to Funds.


 


(a)           From
the Execution Date until the Closing Date, LBHI shall, or shall cause its
Affiliates to, honor all existing capital commitments made by LBHI and each of
its Affiliates both (i) in their capacity as general partner or similar
controlling member, shareholder, trustee or other entity, including any
interest as a special limited partner, and (ii) as a limited partner or in
respect of any side by side commitment, in each case, in any Fund that is
included in the Purchased Assets.


 


(b)           From
the Execution Date until the Closing Date, LBHI shall not and shall cause its
Affiliates not to, sell, transfer, pledge or otherwise directly or indirectly
dispose of any side by side interest or interest as a limited partner,
shareholder or member of any Fund unless LBHI shall have, prior to any such
transfer, received written confirmation from the transferee that the transferee
will (i) vote in favor of any proposed amendments to any Fund documents
and grant the consents (in whatever capacity) or approvals (in whatever
capacity), in each case, applicable to such Fund in support of the transactions
contemplated hereby (in whatever capacity); (ii) not solicit and not vote
in favor of any liquidation or termination of any such Fund, or the removal of
the general partner, investment advisor or comparable entity for such Fund or
similar event, other than any such action taken in support of the transactions
contemplated by this Agreement; and (iii) refrain from transferring such
interest until the earlier of the Closing or the termination of this Agreement;
provided, however, that LBHI or its Affiliates may permit such transferee to
transfer such interest if the subsequent transferee provides written
confirmation to the Company and LBHI that such transferee will comply with the
terms set forth in this Section 7.27(b).


 


7.28         Director
Resignations.  Prior to the Closing,
at the Company’s request, LBHI shall cause all directors, trustees, officers
and managers of any Acquired Subsidiary and of any Fund (other than independent
directors or trustees of a Public Fund) advised by any Acquired Subsidiary to
resign from their offices, effective no later than the Closing.


 


7.29         Taxing
Authority Notification.  If any
Person that files Tax Returns on a consolidated, combined or unitary basis with
LBHI or any of its Affiliates files a Bankruptcy Case, as permitted by this
Agreement, LBHI shall cause such Person 


 


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to notify, in accordance with applicable law, the IRS and any other
applicable Taxing Authority in the jurisdiction, in which such case was filed,
of the commencement of such case.


 


7.30         Employee
Securities Company.  In connection
with any “employee securities company” (as such term is defined in the
Investment Company Act), the management contract of which will be held by the
Company or a Subsidiary of the Company following the Contribution, LBHI agrees
to use its commercially reasonable efforts to (and the Company agrees to use
its commercially reasonable efforts to assist LBHI’s efforts to) (i) obtain
an amendment to that certain Order pursuant to Section 6(c) of the
Investment Company Act that sets forth the conditions of operation of such “employee
securities company” (or other regulatory approval), to permit an Affiliate of
the Company to manage and control such “employee securities company” or (ii) arrange
alternative means by which such “employee securities company” may continue to
operate in accordance with the existing conditions set forth in the Order, in
either case, as soon as practicable, but, in any event, no later than five
Business Days prior to the Closing.


 


7.31         Artwork.  The Company shall have the right to possess,
for a period of one-year after the Closing, all of the artwork located, as of
the Execution Date, in the premises used by the Business, including 605 Third
Avenue, New York, New York but excluding 399 Park Avenue, New York, New
York.  At any time during such period, the
Company shall have the option to purchase any or all of such artwork and any or
all other artwork identified prior to the Execution Date as being part of the
Neuberger Berman art collection, wherever located, for a price equal to its
then appraised value (as determined by an independent, mutually acceptable,
recognized appraiser). To the extent the Company does exercise such option on
any or all of the artwork by the first anniversary of the Closing that is not
located on premises occupied by the Company or any of its Subsidiaries, the
Company shall be responsible for crating and moving such artwork after its
purchase.  To the extent the Company does
not exercise such option on any or all of such artwork by the first anniversary
of the Closing that is located on premises occupied by the Company or any of
its Subsidiaries, LBHI shall be responsible for crating and moving such
artwork.  During such period that the
Company has the right to possess the artwork following the Closing, the Company
shall bear the risk of loss for such artwork located in premises used by the
Business other than 399 Park Avenue, New York, New York.  In the event that any artwork located in
premises used by the Business other than 399 Park Avenue, New York, New York is
damaged or lost during such period, the Company shall pay to LBHI an amount
equal to the damage or loss, consistent with the insured appraised value (as
determined by such appraisal) for such artwork, assuming such artwork had not
been lost or damaged.


 


7.32         Transition
Services Obligations.


 


(a)           LBHI
and the Company acknowledge that prior to the Closing, the Business has been
operated by LBHI as an integrated division of a larger organization, and that
the successful operation of the business in the ordinary course of its operations
and the operation by LBHI and its Affiliates of the businesses retained by it
and its 


 


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Affiliates has depended, and will continue to depend, on the
uninterrupted receipt by the Business and such retained businesses of rights,
information, goods, and services (collectively “Services”) from: (i) those
portions of LBHI’s and its Affiliates’ businesses that are not being acquired
by the Company pursuant to the Contribution; and (ii) those portions of
LBHI’s and its Affiliates’ businesses that are being acquired by the Company
pursuant to the Contribution, respectively. 
Except as set forth below regarding Services that may be provided by
others, LBHI covenants that it shall provide the Company, and to the Company’s
Affiliates, successors, assigns, sublicensees, and transferees, for the
Transition Period, (as defined below) all Services that have been previously
provided by LBHI or any Affiliate of LBHI, to the Business, and that are
necessary to allow the Company to continue to operate the Business in the
ordinary course, at the level and in such manner as LBHI or its Affiliates have
provided such Service during the period from July 1, 2007 through June 30,
2008.  Similarly, the Company covenants
that it shall provide LBHI and its Subsidiaries, and to LBHI and its
Subsidiaries’ successors, assigns, sublicensees, and transferees, for the
Transition Period, (as defined below) all Services that have been previously
provided by the portions of LBHI’s and its Affiliates’ businesses that are
being acquired by the Company pursuant to the Contribution, and that are
necessary to allow LBHI and its Subsidiaries to continue to their ordinary
course of business as conducted prior to Closing and/or unwind their operations,
at the level and in such manner as the portions of LBHI’s business that are
being acquired by the Company pursuant to the Contribution have provided such
Service during the period from January 1, 2008 through June 30, 2008.
The “Transition Period” means the period commencing on the Closing Date
and continuing for two (2) years. 
LBHI and the Company shall each be reasonably compensated for such
Services pursuant to the terms of the mutually agreed transition services more
fully described in Section 7.32(c) below.


 


(b)           Notwithstanding
LBHI’s and the Company’s obligations to provide Services pursuant to Section
7.32(a) above, LBHI and the Company shall not be obligated to provide
Services directly and may contract for the provision of necessary Services by
others and “Services” shall not include those Services to be provided by or to
BarCap under the BarCap TSA, by Nomura Holdings Inc. under the Nomura India TSA
or the Nomura Asia TSA or by the European Persons under the Transition Services
Agreement dated November 12, 2008 among the European Persons, LBHI and
certain Affiliates of LBHI.  In addition,
LBHI shall not be obligated to provide any services that were previously
provided by an entity that is not under the direct or indirect control of LBHI
such as by reason of the appointment of an administrator, liquidator or the
like.  Without limitation, in the event
LBHI or the Company disposes of or transfers facilities, systems, or other
assets upon which material Services are based or are necessary for the
rendering of Services, LBHI or the Company, as applicable, shall require all
assignees and transferees to such assets to become contractually bound to LBHI
or the Company, and LBHI’s or the Company’s successors and assigns, as
applicable, to provide Services utilizing such assets up to the level and in
the manner that LBHI or the Company would have been obligated to provide
hereunder had such assets not been assigned or transferred.


 


53

















 


(c)           Commencing
as of the Execution Date, the authorized representatives of the parties shall
meet and confer on a regular basis to draft and reach mutual agreement upon a
detailed transition services agreement consistent with the obligations of LBHI
and the Company set forth above which sets forth, through mutually agreed
schedules and exhibits the specific services to be provided, the service level
commitments, service pricing, and other commercially reasonable provisions and
details.  If any person that is not now
an Affiliate of LBHI (other than BarCap, PricewaterhouseCoopers or, with
respect to Asia or India, Nomura Holdings Inc.) controls assets that were
controlled by LBHI or its Affiliates prior to September 15, 2008 and such
Person is providing transitional services to the Business as of the date hereof
using such assets, LBHI shall use reasonable efforts to facilitate an
arrangement pursuant to which such entity enters into an agreement with the
Company for the continuation of such services following the Closing.


 


7.33         Intercompany
Accounts.  Except as otherwise
mutually agreed by the parties, at or prior to the Closing, LBHI shall, and
shall cause its Acquired Subsidiaries to, settle all intercompany transactions
between any Acquired Subsidiary (on the one hand) and LBHI or any other
Subsidiary of LBHI (other than any other Acquired Subsidiary (on the other
hand), such that, from and after the Closing, there will be no intercompany
Liabilities between LBHI and its Subsidiaries (on the one hand) and any member
of the Company Group (on the other hand).


 


7.34         Excluded
Liabilities.  From and after the
Closing, LBHI shall be responsible for, and shall pay, discharge and satisfy
(or shall cause to be paid, discharged and satisfied), when due, all Excluded
Liabilities.


 


7.35         Assumed
Liabilities.  From and after the
Closing, the Company shall be responsible for, and shall pay, discharge and
satisfy (or shall cause to be paid, discharged and satisfied), when due, all
Assumed Liabilities.


 


ARTICLE VIII



CONDITIONS TO CLOSING


 


8.1           Conditions
Precedent to Obligation of the Company. 
The obligation of the Company to consummate the Closing is subject to
the fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by the Company in whole or in
part to the extent permitted by applicable Law):


 


(a)           the
representations and warranties of LBHI set forth in this Agreement shall be
true and correct in all material respects when made and, at and as of the
Closing as though made at and as of such time (other than any such
representations and warranties that relate to an earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date), and the Company shall have received a
certificate signed by an authorized officer of LBHI, dated the Closing Date, to
the foregoing effect;


 


54

















 


(b)           LBHI
shall have performed and complied in all material respects with all material
obligations and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date (it being acknowledged that
the failure to obtain any consents or approvals sought under this Agreement
shall not be considered to be a failure to perform or comply with any of LBHI’s
obligations or agreements so long as LBHI has complied in all material respects
with Section 7.4, Section 7.5, Section 7.6,
Section 7.10, Section 7.12, Section 7.13, Section 7.14
and Section 7.19), and the Company shall have received a
certificate signed by an authorized officer of LBHI, dated the Closing Date, to
the foregoing effect;


 


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


 


(d)           all
approvals required from, or the expiration of any waiting period with respect
to, any Governmental Body of competent jurisdiction, FINRA and other
Self-Regulatory Organizations with respect to the transactions contemplated by
this Agreement will have been obtained or occurred;


 


(e)           LBHI
shall have delivered, or caused to be delivered, to the Company, duly executed
copies of the Ancillary Agreements and the documents referenced in Section 3.2(b) to
which LBHI or any Affiliate thereof is a party;


 


(f)            the
Contribution shall have been consummated subject to the terms of this
Agreement; and


 


(g)           the
Bankruptcy Court shall have entered a Sale Order in form and substance
reasonably satisfactory to the Company, and such Sale Order shall not have been
stayed, reversed, amended, or vacated.


 


8.2           Conditions
Precedent to Obligation of LBHI.  The
obligation of LBHI to consummate the Closing is subject to the fulfillment, on
or prior to the Closing Date, of each of the following conditions (any or all
of which may be waived by LBHI in whole or in part to the extent permitted by
applicable Law):


 


(a)           the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects when made and at and as of the
Closing as though made at and as of such time (other than such representations
and warranties that relate to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date), and LBHI shall have received a certificate
signed by the Company, dated the Closing Date, to the foregoing effect;


 


(b)           the
Company shall have performed and complied in all material respects with all
material obligations and agreements required by this Agreement to be performed
or complied with by the Company on or prior to the Closing Date, and LBHI 


 


55

















 


shall have received a certificate signed by the Company, dated the
Closing Date, to the foregoing effect;


 


(c)           all
approvals required from, or the expiration of any waiting period with respect
to, any Governmental Body of competent jurisdiction, FINRA and other
Self-Regulatory Organizations with respect to the transactions contemplated by
this Agreement will have been obtained or occurred;


 


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


 


(e)           the
Company shall have delivered, or caused to be delivered, to LBHI, duly executed
Ancillary Agreements and the documents referenced in Section 3.2(c) to
which the Company or any Affiliate thereof is a party;


 


(f)            each
Employee Member shall have (i) executed and delivered an Employment
Agreement, and (ii) become a member of the Company by executing and
delivering a copy of the Amended and Restated Operating Agreement; and


 


(g)           the
Bankruptcy Court shall have entered a Sale Order in form and substance
reasonably satisfactory to LBHI, and such Sale Order shall not have been
stayed, reversed, amended, or vacated.


 


8.3           Frustration
of Closing Conditions.  Neither the
Company nor LBHI may rely on the failure of any condition set forth in Sections
8.1 or 8.2, as the case may be, if such failure was primarily due to
the failure of such party (or, in the case of LBHI, a failure by any Business
Entity) to perform any of its obligations under this Agreement.


 


ARTICLE IX



INDEMNIFICATION


 


9.1           Survival
of Representations and Warranties. 
All representations and warranties contained in this Agreement shall
terminate on the Closing Date and shall not be subject to any claim after the
Closing Date.


 


9.2           Indemnification
by LBHI.  Subject to the provisions
of this Article IX, LBHI hereby agrees, from and after the Closing,
to indemnify and hold each member of the Company Group, and their permitted
successors and assigns, harmless from and against any and all losses,
liabilities, claims, demands, judgments, damages, fines, suits, actions,
penalties, obligations, charges, deficiencies, interest, settlement payments,
awards, lost profits, diminution in value, costs and expenses of every kind
whatsoever, including without limitation, costs and expenses of investigation,
court costs, expert witness fees, consulting fees, accountants’ and attorney’s
fees and expenses 


 


56

















 


(individually, a “Loss” and, collectively, “Losses”)
arising or resulting from, or relating to:


 


(a)           the
Liabilities described on Schedule 9.2(a);


 


(b)           all
Liabilities for (i) any and all income Taxes of LBHI, any of its
Affiliates or any of the Acquired Subsidiaries (A) for any Pre-Closing Tax
Period or (B) that are allocable to the pre-Closing portion of any
Straddle Period (as determined pursuant to Section 7.10(a)) and (ii) any
and all Taxes, other than income Taxes, other than such Taxes attributable to
the business or operations of any Acquired Subsidiary or otherwise attributable
to the Business;


 


(c)           all
Liabilities arising out of or related to defined benefit pension plans,
including the Lehman Brothers Holdings Inc. Retirement Plan and the Lehman
Brothers Pension Scheme (UK), or individual account-based savings plans including
the Lehman Brothers Savings Plan or the Lehman Brothers UK Savings Plan,
including any liability related to the common stock of LBHI held under any such
plan; and


 


(d)           all
Liabilities arising under Section 412 or 430 of the Code, Section 302
or Title IV of ERISA, any other section of the Code or ERISA  or otherwise with respect to or by reason of,
any Benefit Plan (i) of LBHI or any related entity, including but not
limited to any Acquired Subsidiary, through the Closing Date, whether or not as
a result of any member of the Company Group being treated, before or after the
Closing Date, as a member of a group under common control (or similar concept)
under Section 4001(a)(3) of ERISA, Section 414 of the Code or
any other law or regulation, and (ii) of LBHI or any related entity,
including but not limited to an Acquired Subsidiary, as a result of any member
of the Company Group being treated after the Closing Date as a member of a
group under common control (or similar concept) under Section 4001(a)(3) of
ERISA, Section 414 of the Code or any other law or regulation.


 


9.3           [Reserved].


 


9.4           Certain
Limitations on Indemnification.  The
amount of any Losses for which indemnification is provided under this Article IX
shall be net of any amounts actually recovered by the indemnified party under
insurance policies or otherwise with respect to such Losses (net of any
expenses incurred in connection with such recovery and net of the amount of any
increased insurance premiums or other costs for such indemnified party).  Each party shall use its commercially
reasonable efforts to recover under insurance policies for any Losses
concurrently with seeking indemnification under this Agreement.


 


9.5           Survival
of Indemnification.


 


(a)           All
Liabilities for indemnification pursuant to Section 9.2(a) shall
survive until the date that is the nine-month anniversary of the Closing Date; provided,
however, that if written notice of a claim for indemnification under Section 9.2(a)
has 


 


57

















 


been given prior to the expiration of the applicable time period set
forth above for such Liability, then LBHI’s indemnification obligations in
respect of such claim under Section 9.2(a) shall survive as to
such claim until such claim has been finally resolved.  Any claim for indemnification not made by the
Company pursuant to Section 9.2(a) on or prior to such date
will be irrevocably and unconditionally released and waived.


 


(b)           All
Liabilities for indemnification pursuant to Section 9.2(b), Section 9.2(c) and
Section 9.2(d) shall survive until the date that is 30 days
following the expiration of the applicable statute of limitations; provided,
however, that if written notice of a claim for indemnification under Section 9.2(b),
Section 9.2(c) or Section 9.2(d) has been
given prior to the expiration of the applicable time period set forth above for
such Liability, then the Company’s indemnification obligations in respect of
such claim under Section 9.2(b), Section 9.2(c) or
Section 9.2(d) shall survive as to such claim until such claim
has been finally resolved.  Any claim for
indemnification not made by the Company pursuant to Section 9.2(b),
Section 9.2(c) or Section 9.2(d) on or prior
to such date will be irrevocably and unconditionally released and waived.


 


(c)           No
Liability for indemnification under Section 9.2 shall be subject to
objection or disallowance under section 502(e) of the Bankruptcy Code.


 


9.6           Indemnification
Procedures.


 


(a)           A
claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.


 


(b)           In
the event that any Legal Proceedings shall be instituted or that any claim or
demand shall be asserted by any third party in respect of which payment may be
sought under Section 9.2 hereof (regardless of the limitations set
forth in Section 9.4) (an “Indemnification Claim”), the
indemnified party shall promptly cause written notice of the assertion of any
Indemnification Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the indemnifying party.  The failure of the indemnified party to give
reasonably prompt notice of any Indemnification Claim shall not release, waive
or otherwise affect the indemnifying party’s obligations with respect thereto
except to the extent that the indemnifying party is actually and materially
prejudiced as a result of such failure. 
The indemnifying party shall have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Indemnification Claim which relates to any Losses
indemnified against by it hereunder.  If
the indemnifying party elects to defend against, negotiate, settle or otherwise
deal with any Indemnification Claim which relates to any Losses indemnified
against by it hereunder, it shall within 30 days (or sooner, if the nature of
the Indemnification Claim so requires) notify the indemnified party in writing
of its intent to do so.  If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Indemnification Claim which relates to any Losses indemnified
against hereunder, the indemnified party may (at the indemnifying party’s sole
cost and expense) defend against, negotiate, settle or otherwise deal with such
Indemnification 


 


58

















 


Claim.  If the indemnifying party
shall assume the defense of any Indemnification Claim, the indemnified party
may participate, at his or its own expense, in the defense of such
Indemnification Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party only if (i) so requested by the indemnifying
party to participate or (ii) in the reasonable opinion of counsel to the
indemnified party a conflict or potential conflict exists between the
indemnified party and the indemnifying party that would make representation of
both the indemnified party and the indemnifying party by the same legal counsel
inadvisable; and provided, further, that the indemnifying party shall not be
required to pay for more than one such counsel (plus any appropriate local
counsel) for all indemnified parties in connection with any Indemnification
Claim.  The parties hereto agree to
cooperate fully with each other in connection with the defense, negotiation or
settlement of any such Indemnification Claim. 
Notwithstanding anything in this Section 9.6 to the
contrary, neither the indemnifying party nor the indemnified party shall,
without the written consent of the other party, settle or compromise any
Indemnification Claim or permit a default or consent to entry of any judgment
unless (A) the claimant(s) and such party provide to such other party
an unqualified release from all liability in respect of the Indemnification
Claim and (B) in the case of any such settlement, compromise, consent to
default or to entry of any judgment by the indemnifying party, such settlement,
compromise or judgment otherwise provides solely for payment of monetary
damages for which the indemnified party will be indemnified in full.  Notwithstanding the foregoing, if a
settlement offer solely for money damages is made by the applicable third party
claimant for which the indemnified party will be indemnified in full, and the
indemnifying party notifies the indemnified party in writing of the
indemnifying party’s willingness to accept the settlement offer and, subject to
the applicable limitations of Sections 9.4 and 9.5, pay the
amount called for by such offer, and the indemnified party declines to accept
such offer, the indemnified party may continue to contest such Indemnification
Claim, free of any participation by the indemnifying party, and the amount of
any ultimate liability with respect to such Indemnification Claim that the
indemnifying party has an obligation to pay hereunder shall be limited to the
lesser of (A) the amount of the settlement offer that the indemnified
party declined to accept plus the Losses of the indemnified party relating to
such Indemnification Claim through the date of its rejection of the settlement
offer or (B) the aggregate Losses of the indemnified party with respect to
such Indemnification Claim.  If the
indemnifying party makes any payment on any Indemnification Claim, the
indemnifying party shall be subrogated, to the extent of such payment, to all
rights and remedies of the indemnified party to any insurance benefits or other
claims of the indemnified party with respect to such Indemnification Claim.


 


(c)           After
any final decision, judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to an Indemnification Claim hereunder, the
indemnified party 


 


59

















 


shall forward to the indemnifying party notice of any sums due and
owing by the indemnifying party pursuant to this Agreement with respect to such
matter.


 


9.7           Exclusive
Remedy for Matters Subject to Indemnification.  The sole and exclusive remedy relating to any
matter for which indemnification is provided pursuant to Section 9.2
hereof shall be indemnification in accordance with this Article IX.  In furtherance of the foregoing, each of the
parties hereby waives, to the fullest extent permitted by applicable Law, any
and all other rights, claims and causes of action (including rights of
contributions, if any) known or unknown, foreseen or unforeseen, which exist or
may arise in the future, that it may have against LBHI or the Company, as the
case may be, arising under or based upon any federal, state or local Law
(including any such Law relating to environmental matters or arising under or
based upon any securities Law, tort, breach of contract, common Law or
otherwise) arising from, or relating to, any of the matters and Liabilities
described in Section 9.2(a), Section 9.2(b), Section 9.2(c) or
Section 9.2(d). 
Notwithstanding the foregoing, this Section 9.7 shall not
operate to interfere with or impede the operation of the provisions of Section 2.7,
providing for the resolution of certain disputes between the parties relating
to the Closing Cash, or Section 10.6.


 


9.8           Treatment
of Indemnification Payments by LBHI to the Company.  Upon the payment of any amount by LBHI to the
Company pursuant to Section 9.2, LBHI and the Company shall
negotiate in good faith to determine the Tax characterization of such payment,
and, unless otherwise required by applicable Law, neither LBHI nor the Company
shall take any Tax reporting position with respect to such payment that is
inconsistent with such characterization.


 


ARTICLE X



MISCELLANEOUS


 


10.1         [Reserved].


 


10.2         Expenses.  Except as otherwise provided in this
Agreement, each of LBHI and the Company shall bear its own and its respective
Affiliates’ expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby; provided, that LBHI shall reimburse the
Company for the fees and expenses of legal counsel (including local counsel)
for the Company (whether or not the Closing occurs); and provided  further,
that, at the Closing, LBHI shall pay any and all termination and/or expense
reimbursement fees that may be payable to any buyer under any other agreement
previously entered into by LBHI to acquire the Business, including the buyer
under the Stalking Horse Agreement.


 


10.3         Entire
Agreement; Amendments and Waivers. 
This Agreement (including the schedules and exhibits hereto) and the
Ancillary Agreements represent the 


 


60

















 


entire understanding and agreement between the parties hereto and their
respective Affiliates with respect to the subject matter hereof and supersede
all prior agreements and understandings between the parties hereto and their
respective Affiliates with respect to such subject matter.  This Agreement can be amended, supplemented
or changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is
sought.  The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any other or subsequent breach. 
No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.


 


10.4         Notices.  All notices, waivers, approvals, consents and
other communications (each a “Notice”) under this Agreement shall be in
writing and shall be (i) delivered personally by hand (with written
confirmation of receipt), (ii) sent by facsimile (with written
confirmation of transmission, provided that the original Notice also is sent or
delivered contemporaneously by the method specified in clause (i) or
(iii), or (iii) sent by overnight courier (with written confirmation of
receipt), in each case at the following addresses and facsimile numbers (or to
such other address or facsimile number as a party may have specified by Notice
given to the other party pursuant to this provision):


 


If to the
Company to:


 


NBSH Acquisition, LLC


c/o Neuberger Berman


605 Third Avenue


New York, New York 10158


Facsimile:
(646) 758-3297


Attention:       George Walker


Joseph Amato


 


In each case,
with a copy (which shall not constitute Notice) to:


 


Proskauer Rose LLP


1585 Broadway


New York, New York  10036


Facsimile: (212) 969-2900


Attention:  Peter G. Samuels, Esq.


 


61
















 


If to LBHI,
to:


 


Lehman Brothers Holdings Inc.


1241 Sixth Avenue


New York, New York 10020


Facsimile: 646 758 2652


Attention: Chief Restructuring Officer


 


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


 


Weil, Gotshal & Manges LLP


767 Fifth Avenue


New York, New York 10153


Facsimile: (212) 310-8007


Attention:                               Michael E. Lubowitz, Esq.


David P. Murgio, Esq.


 


Each Notice be
deemed duly given and effective upon actual receipt (or refusal of receipt).


 


10.5                           Binding Effect; No
Third-Party Beneficiaries; Assignment. 
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.  Except as set forth in Section 7.11
with respect to officers of the Company and Employee Members and Article IX
with respect to members of the Company Group, nothing in this Agreement shall
create or be deemed to create any third party beneficiary rights in any Person
not a party to this Agreement.  No
assignment of this Agreement or of any rights or obligations hereunder may be
made by either LBHI or the Company, directly or indirectly (by operation of law
or otherwise), without the prior written consent of the other party hereto and
any attempted assignment without the required consents shall be void.  No assignment of any obligations hereunder
shall relieve the parties hereto of any such obligations.  Upon any such permitted assignment, the
references in this Agreement to the assigning party shall also apply to any
such assignee unless the context otherwise requires.


 


10.6                           Specific
Enforcement.


 


(a)                                  The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached.  It is
accordingly agreed that, except as expressly provided in Section 9.7,
each of the parties shall be entitled to equitable relief to prevent or remedy
any breach of any provision of this Agreement, without the proof of actual
damages, including in the form of an injunction or injunctions or orders for
specific performance in respect of such breaches, the payment of monetary
damages, the satisfaction of contractual obligations and the reimbursement of
Losses.  Each party agrees to waive any
requirement for the security or posting of any bond in connection with any such
equitable remedy.  Each party further
agrees that the only permitted 


 


62

















 


objection that it may raise in response to any such action for
equitable relief is that it contests the existence of a breach or threatened
breach of the provisions of this Agreement.


 


(b)                                 Notwithstanding any
other provision of this Agreement, except as expressly provided in Section 9.2,
the sole and exclusive remedy of the Company, LBHI, their respective Affiliates
and any other Person for any breach or threatened breach of this Agreement
(including with respect to the allocation of Excluded Assets, Excluded
Liabilities, Purchased Assets and Assumed Liabilities among the parties) shall
be the right of LBHI or the Company, as the case may be, to seek an injunction
or injunctions against any such breach or to specifically enforce the other
party’s obligations hereunder (including the payment of money, the satisfaction
of contractual obligations and the reimbursement of Losses) or the right to
terminate this Agreement in accordance with, and subject to, the terms and
conditions of Section 3.3.  Each
party agrees, to the extent the other party is successful on the merits, to pay
all reasonable costs, expenses and fees, including, without limitation, all
reasonable attorneys’ fees which may be incurred by such successful party in
enforcing its rights under Section 10.6(a).  All other claims, rights and causes of action
solely with respect to this Agreement, including any right to seek monetary
damages, by the Company, LBHI, their respective Affiliates or any other Person
against the Company, LBHI, any of their respective Affiliates or any of their
or their respective Affiliates’ Representatives or former, current or future
general or limited partners, members or stockholders is hereby fully waived,
released and forever discharged, except for any claims, rights or causes of
action permitted pursuant to Article IX.


 


10.7                           Counterparts.  This Agreement may be executed (including by
facsimile transmission) with counterpart signature page or in multiple
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.


 


10.8                           GOVERNING
LAW; SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY
TRIAL.


 


(a)                                  THIS AGREEMENT, AND
ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE
BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT (INCLUDING ANY AMENDMENT,
SUPPLEMENT OR WAIVER OF THIS AGREEMENT), OR THE NEGOTIATION, EXECUTION OR
PERFORMANCE OF THIS AGREEMENT (INCLUDING ANY AMENDMENT, SUPPLEMENT OR WAIVER OF
THIS AGREEMENT) AND THE TRANSACTIONS CONTEMPLATED HEREBY, SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK.


 


(b)                                 EACH
OF THE PARTIES:


 


(i)                                     SUBMITS
TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT LOCATED WITHIN THE
BOROUGH OF 


 


63

















 


MANHATTAN OF
THE CITY, COUNTY AND STATE OF NEW YORK OVER ANY DISPUTE ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH DISPUTE OR ANY SUIT, ACTION
PROCEEDING RELATED THERETO MAY BE HEARD AND DETERMINED IN SUCH COURTS; PROVIDED,
HOWEVER, THAT DURING THE PENDENCY OF THE BANKRUPTCY CASE AND UPON
CLOSING OF THE BANKRUPTCY CASE, TO THE EXTENT PERMITTED BY ORDER OF THE
BANKRUPTCY COURT, THE BANKRUPTCY COURT SHALL HAVE AND RETAIN EXCLUSIVE
JURISDICTION TO ENFORCE THE TERMS OF THIS AGREEMENT AND TO DECIDE ANY CLAIMS OR
DISPUTES WHICH MAY ARISE OR RESULT FROM, OR BE CONNECTED WITH, THIS
AGREEMENT, ANY BREACH OR DEFAULT HEREUNDER, OR THE TRANSACTIONS CONTEMPLATED
HEREBY;


 


(ii)                                  WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH SUCH
PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH DISPUTE
BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE
OF SUCH DISPUTE;


 


(iii)                               AGREES
THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER JURISDICTIONS
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW;


 


(iv)                              IRREVOCABLY
WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT; AND


 


(v)                                 CONSENTS
TO PROCESS BEING SERVED BY ANY PARTY TO THIS AGREEMENT IN ANY SUIT, ACTION OR
PROCEEDING BY THE DELIVERY OF A COPY THEREOF IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 10.4.


 


10.9                           Treatment as
Administrative Expenses.  Any amounts
at any time payable under any other provision of this Agreement shall be deemed
allowed administrative claims in the Bankruptcy Case of LBHI that is a Debtor,
with priority over any and all claims of the kind specified in 11 U.S.C. §§ 503(b) and
507(b) pursuant to 11 U.S.C. § 364(c)(1), which claim shall be senior
to, and have priority over, all other claims.


 


10.10                     Additional Employee Members.


 


(a)                                  At any time following
the date hereof but prior to the Closing, the Persons listed on Schedule 10.10
(the “Potential Employee Members”) may become 


 


64

















 


Employee Members upon the receipt by LBHI of a written notice thereof
from the Company; provided, however, that any Potential Employee
Member may become an Employee Member pursuant to this Section 10.10(a)
only if on the same terms as the Employee Members as of the date of this
Agreement.  In the event that a Potential
Employee Member becomes an Employee Member, Schedule 4.7 hereto
shall be deemed to be amended accordingly.


 


(b)                                 At any time following
the date hereof but prior to the Closing, either party may submit a notice to
the other party setting forth the names of any additional Persons (other than
the Potential Employee Members) that such party recommends be permitted to
become Employee Members under this Agreement (each, a “Proposed Employee
Member”); provided, however, that no Proposed Employee Member
shall become an Employee Member unless both the Company and LBHI consent
thereto.  In the event that any Proposed
Employee Member becomes an Employee Member pursuant to this Section 10.10(b),
Schedule 4.7 hereto shall be deemed to be amended accordingly.


 


[Signature Page Follows]


 


65

















 


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


 


	
   

  	
  LEHMAN
  BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ David J.
  Coles

  
	
   

  	
   

  	
  Name: David
  J. Coles

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NBSH
  ACQUISITION, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ George
  Walker

  
	
   

  	
   

  	
  Name: George
  Walker

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Joseph
  Amato

  
	
   

  	
   

  	
  Name: Joseph
  Amato

  
	
   

  	
   

  	
  Title: Vice
  President