Document:

Exhibit 10.2

 

EXECUTION VERSION

 

FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT

 

This FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Agreement”),
dated as of September 19, 2008, among LEHMAN BROTHERS HOLDINGS INC., a
Delaware corporation (“LBHI”), LEHMAN BROTHERS INC., a Delaware
corporation (“LBI” and, together with LBHI, the “Seller”), LB 745
LLC, a Delaware limited liability company (“745”), and BARCLAYS CAPITAL
INC., a Connecticut corporation (“Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, Seller, 745 and Purchaser are parties to that certain Asset
Purchase Agreement, dated as of September 16, 2008, among Seller, 745 and
Purchaser (as amended and supplemented from time to time, the “Original
Agreement”);

 

WHEREAS, Seller, 745 and Purchaser desire to amend the Original
Agreement as set forth below;

 

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

 

1.             Certain
Definitions.  Each capitalized term
used and not defined herein shall have the meaning ascribed to it in the
Original Agreement.

 

2.             Excluded Assets.
The following language in clause (k) of the definition of Excluded Assets
is in the Original Agreement is hereby deleted in its entirety “50% of each
position in the residential real estate mortgage securities” and is replaced
with “[reserved]”.

 

3.             Purchased Assets.  Clause (e) of the definition of
Purchased Assets in the Original Agreement is hereby amended to delete “50%”
and to insert “100%” in lieu thereof.

 

4.             Holdback and
Adjustment.  Notwithstanding any
other provision of the Original Agreement (including Section 3.2
and Section 12.2 of the Original Agreement), the Purchaser shall
retain a portion of the Purchase Price equal to two hundred fifty million
dollars ($250,000,000) (such amount the “Holdback”) to secure the LBI
obligations that the Purchaser has been required to guaranty (the “Guaranteed
Obligations”) with the Depository Trust Clearing Corporation and its
Subsidiaries (the Depository Trust Company, the National Securities Clearing
Corporation, and the Fixed Income Clearing Corporation).  To the extent that the value of fifty percent
(50%) of the residential real estate mortgage securities transferred as part of
the Agreement (such fifty percent (50%) the “Residential Adjustment”)
plus the Holdback exceeds the amount of the Guaranteed Obligations, Purchaser
shall transfer the Residential Adjustment and the Holdback to the Seller as
promptly as practicable following settlement of all Guaranteed Obligations.  All Assumed Liabilities shall be for the
account of the Purchaser and shall not be charged against the Holdback or to
the Residential Adjustment.  All Guaranteed Obligations shall be
charged against the Holdback and the Residential Adjustment.  For the avoidance of

 

 

doubt, no intercompany liabilities for the account of LBHI and/or any
LBHI Affiliate shall be required to be paid by the Purchaser.

 

5.             Governing
Law.  This Agreement shall be deemed
to be made in and in all respects shall be interpreted, constructed and
governed by and in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely within that state.

 

6.             Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.  Delivery of an
executed signature page of this Agreement by facsimile transmission or
e-mail (PDF) shall be effective as delivery of a manually executed counterpart
hereof.

 

7.             Severability.  If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

 

[Signature pages follow]

 

 

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

 

	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Steven Berkenfeld

  
	
   

  	
   

  	
   Name:
  Steven Berkenfel

  
	
   

  	
   

  	
   Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN BROTHERS
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Steven Berkenfeld

  
	
   

  	
   

  	
   Name:
  Steven Berkenfeld

  
	
   

  	
   

  	
   Title:
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LB 745 LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Mark Marcucci

  
	
   

  	
   

  	
   Name: Mark
  Marcucci

  
	
   

  	
   

  	
   Title:
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BARCLAYS CAPITAL
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Archibald Cox, Jr

  
	
   

  	
   

  	
   Name:
  Archibald Cox, Jr.

  
	
   

  	
   

  	
   Title:
  Chairman, Barclays AmericasExhibit
10.3

 

BARCLAYS CAPITAL INC.

 

As of September 20,
2008

 

Lehman Brothers
Holdings Inc.

Lehman Brothers Inc.

LB 745 LLC

Attn:  Steven Berkenfeld, Esq.

Facsimile:  (646) 758-4226

 

Ladies and
Gentlemen:

 

Reference is made to the Asset Purchase Agreement, dated as of September 16,
2008 (the “Original Agreement”) as amended by the First Amendment
thereto dated as of September 19, 2008 (the “First Amendment” and, the
Original Agreement as so amended, the “Agreement”), by and among Lehman
Brothers Holdings Inc. (“LBHI”), Lehman Brothers Inc. (“LBI”), LB
745 LLC (“745”) and Barclays Capital Inc. (“Purchaser”).  Each capitalized term used and not defined
herein shall have the meaning ascribed to it in the Original Agreement.  This letter agreement (this “Letter”)
clarifies the intention of the parties with respect to certain provisions of
the Agreement, supplements in certain respects the agreements of the parties
stated therein and amends the Agreement in certain respects, and is binding on
the parties hereto upon its execution and delivery.  All references herein to the Original
Agreement are to the conformed copy attached hereto of the hand marked Original
Agreement.

 

1.             Purchased Assets; Excluded Assets.

 

(a)           The Purchased Assets means (i) all
of the assets of Seller used primarily in the Business or necessary for the
operation of the Business (in each case, excluding the Excluded Assets) and (ii) none
of the assets of Subsidiaries of LBHI (other than assets of LBI) except as
otherwise specifically provided in the Agreement or this Letter.  Purchased Assets shall include:

 

(i)            the items set forth in clauses (b), (c) and
(f) through (o) and (q) through (s) of the definition of “Purchased
Assets” in the Original Agreement;

 

(ii)           with respect to clauses (a), (d) and
(e) of the definition of “Purchased Assets” in the Original Agreement, instead
of the items referred to in such clauses, (A) the securities owned by LBI
and transferred to Purchaser or its Affiliates under the Barclays Repurchase
Agreement (as defined below) as specified on Schedule A previously delivered by
Seller and accepted by Purchaser, (B) such securities and other assets held
in LBI’s “clearance boxes” as of the time of the Closing, which at the close of
business on September 21, 2008 were as specified on Schedule B previously
delivered by Seller and accepted by Purchaser (provided, however, that Purchaser
in its discretion may 

 

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elect within 60 days
after the Closing to return any such securities to LBI); provided, that no
securities owned by LBHI or any Subsidiary of LBHI (other than LBI and other
than as specified in the Agreement or clause (iii) below) are Purchased
Assets and (C) exchange-traded derivatives (and any property that may be
held to secure obligations under such derivatives) and collateralized
short-term agreements;

 

(iii)          the equity of Lehman Brothers Canada, Inc.,
Lehman Brothers Sudamerica SA and Lehman Brothers Uruguay SA; and

 

(iv)          all prime brokerage business and accounts
and repurchase agreement operations and securities lending operations of the
Business (for the avoidance of doubt, other than those that are part of the IMD
Business); and

 

(v)           any rights or interests Seller may have
with respect to any escrow or other account established in connection with the
Global Research Analyst Settlement entered by the U.S. District Court on October 31,
2003 (the “Research Settlement”), or funds otherwise set aside for the
procurement of independent research pursuant to the Research Settlement, but
only to the extent that Purchaser is required to make payments in accordance
with the Research Settlement as a result of its acquisition of LBI’s investment
banking and research operations.

 

(b)           For the avoidance of doubt, the “Business”
includes LBI’s commodities business, government securities trading operations
and mortgage-backed securities trading operations of LBI (but not any
securities of such nature held by Seller except as otherwise specified herein
or in the Agreement).

 

(c)           The Excluded Assets shall mean the assets
of Seller and its Subsidiaries referred to in clauses (a), (c) through
(j), and (l) through (q) of the definition of “Excluded Assets” in
the Original Agreement and the other assets identified in this Letter as
Excluded Assets Except as otherwise specified in the definition of “Purchased
Assets,” “Excluded Assets” shall include any cash, cash equivalents, bank
deposits or similar cash items of Seller and its Subsidiaries; provided
that “Excluded Assets” shall not include any and all property of any customer,
or maintained by or on behalf of LBI to secure the obligations of any customer,
whose account(s) are being transferred to Purchaser as part of the
Business.  The following shall also be
Excluded Assets:  All of the investments
held by Seller or their Subsidiaries in collateralized debt obligations,
collateralized loan obligations, over-the-counter derivatives, TBA mortgage
notes and similar asset-backed securities and corporate loans, other than those
subject to the Barclays Repurchase Agreement, and until any securities pledged
as collateral under Seller clearing arrangements with JP Morgan Chase &
Co. or its Affiliates (other than those referred to in Section 1(a)(ii) of
the Letter).  Also included in the
Excluded Assets are the mortgage servicing rights for Ginnie Mae guaranteed
securities.  Included in clause (h) of
the definition of “Excluded Assets” in the Original Agreement are life
insurance policies owned by Seller and its Subsidiaries.  For the avoidance of doubt, the equity
interests and assets of Lehman Brothers Commodity Services, Inc.,
including the equity of, as well as the assets of the energy marketing and
services business of Eagle Energy Management LLC, are Excluded Assets (rather
than Purchased Assets).  The 

 

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reference to “third
parties” in clause (i) of the definition of “Excluded Assets” includes any
person, including Affiliates of Seller. 
Clause (h) of the definition of Excluded Assets in the Original
Agreement is hereby amended to remove the following clause: “other than
customer account insurance supplemental to SIPC coverage included in the
Business.”

 

(d)           Sections 3 and 4 of the First Amendment
are hereby deleted in their entirety and shall be of no effect ab initio.  LBI hereby
instructs Purchaser to pay at the Closing $250 million of the Cash Amount to
the Depository Trust Clearance Corporation (“DTC”) for deposit as
collateral against LBI’s obligations to DTC (including its affiliated clearing organizations).  Such collateral account shall be maintained
in accordance with the agreement among LBI, Purchaser and DTC entered into in
connection with the Closing.

 

(e)           Seller hereby represents and warrants to
Purchaser that LB I Group Inc. has and had as of the date on which LB I Group
Inc. transferred to LBI the equity of Townsend Analytics, Ltd., LB I Group Inc.
no indebtedness.

 

2.             IMD Business. 
For purposes of the Agreement, the IMD Business consists of the asset
management and the alternatives – private equity businesses of Seller and the
Subsidiaries, but not the private investment management business of Seller and
the Subsidiaries (other than the CTS (Corporate Cash) business).  As a result, Excluded Assets include the
asset management business, the alternatives-private equity business and the CTS
(Corporate Cash) business.  The private
investment management business (other than the CTS (Corporate Cash) business)
(the “PIM Business”) is a Purchased Asset and the Purchased Assets shall include
the assets of the Seller used exclusively in the PIM Business.  The forgivable notes issued by PIM employees
to Seller or its Affiliates shall be an Excluded Asset.  Excluded Liabilities shall include any
pre-closing legal, tax or compliance Liabilities associated with IRA accounts
for the benefit of clients of the PIM Business.

 

3.             Assumed and Excluded Liabilities. 
Clause (a) of the definition of “Assumed Liabilities” consists
solely of all Liabilities incurred by Purchaser and arising after the Closing
in connection with the Business.  Clause (d) of
the definition of “Assumed Liabilities” in the Original Agreement is understood
as though it read as follows:  “accounts
payable incurred in the Ordinary Course of Business of Seller after, with
respect to each entity comprising Seller, the date on which such entity
commenced a voluntary case or cases under Chapter 11 or Chapter 7, as the case
may be, of the Bankruptcy Code, associated with the Business (other than
accounts payable arising out of or in connection with any Excluded Contract), including,
for the avoidance of doubt, to the extent arising after such date (i) invoiced
accounts payable and (ii) accrued but uninvoiced accounts payable).”  Consistent with the other provisions of this
Letter, no Liabilities described in clause (i) of the definition of
Assumed Liabilities shall be “Assumed Liabilities.”  For the avoidance of doubt, any Liabilities of
Seller or its Subsidiaries under the $15.8 billion tri-party repurchase
facility dated on or about September 18, 2008 funded by JP Morgan Chase
shall be “Excluded Liabilities.”

 

4.             Consideration. 
The parties, after considering the available appraisal information, have
agreed upon the value of the Lehman headquarters at 745 Seventh Avenue , the
Cranford New Jersey Data Center and the Piscataway New Jersey Data Center shall
be in the aggregate $1,290,000,000 and shall not be subject to reduction with
respect to any commission 

 

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and, accordingly, the
Cash Amount shall be $1,540,000,000 (subject to certain holdback amounts relating
to the real estate being transferred pursuant to the Agreement as provided by Section 12.2
of the Agreement).

 

5.             License.  All marks
containing the words “LEHMAN” or “LEHMAN BROTHERS” assigned under the Agreement
shall be considered Licensed Marks under Section 8.9 of the
Agreement.  The license to use the
Licensed Marks granted pursuant to Section 8.9 of the Agreement with
respect to the investment banking and capital markets businesses of Seller and
its Subsidiaries is limited to a term of 2 years from the Closing Date (without
limiting the perpetual term of the license granted for use in connection with
the IMD Business (including in respect of any one or more of the private equity
or other investment funds within the IMD Business) or in connection with
winding up of any operations or businesses of Seller or any of its
Subsidiaries).  The licenses pursuant to Section 8.9
are not assignable or sublicensable, except that such licenses are assignable
and sublicensable (i) for use in connection with IMD Business or any
portion of the IMD Business and (ii) to Seller’s Subsidiaries or to a
purchaser of any business of Seller and its Subsidiaries solely for use by such
Subsidiaries or purchaser in connection with the winding up of such business.

 

6.             Subordinated Notes of LBI. 
The outstanding subordinated notes of LBI are not Assumed Liabilities,
and such subordinated notes and any Liabilities associated with such
subordinated notes therefore are Excluded Liabilities.

 

7.             Breakup Fee. 
745 is jointly and severally liable with LBHI and LBI for Seller’s
obligations under the Agreement to pay the Breakup Fee and Expense
Reimbursement (each of which has the meaning ascribed to it in the Breakup Fee
and Competing Bid Order).

 

8.             Transfer of Customer Accounts.  All
customer accounts of LBI (other than customer who are Affiliates of LBI) shall
be transferred to Purchaser.  In
connection therewith, Purchaser shall receive (i) for the account of the
customer, any and all property of any customer, including any held by or on
behalf of LBI to secure the obligations of any customer, whose account(s) are
being transferred to Purchaser as part of the Business and (ii) to the
extent permitted by applicable law, and as soon as practicable after the
Closing, $769 million of securities, as held by or on behalf of LBI on the date
hereof pursuant to Rule 15c3-3 of the Securities Exchange Act of 1934, as
amended, or securities of substantially the same nature and value.  Liabilities arising under Seller’s
arrangements with DTC and its affiliated clearing organizations shall be
Excluded Liabilities.

 

9.             Deletion of Purchase Price Adjustment
Provisions.  Section 3.3 of the Original Agreement is
hereby deleted in its entirety and shall be of no effect ab initio.

 

10.           Payables, Deposits and Receivables. 
No payables or deposits of a Seller or Subsidiary shall be Assumed
Liabilities, except to the extent resulting from a Purchased Contract and
except as provided in Section 8.  No
receivables shall be Purchased Assets, except to the extent resulting from a
Purchased Contract.

 

11.           Intercompany Obligations. 
Except as expressly contemplated by this Letter, the Agreement or the
Transition Services Agreement, Purchased Assets and Assumed Liabilities shall
not include any intercompany receivables or payables or other obligations 

 

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between or among any
Seller and any of LBHI or any Subsidiary of LBHI.  It is understood that nothing contained in
this Letter shall affect the rights or obligations of the parties to the
Transition Services Agreement contemplated by the Agreement.

 

12.           Schedule 12.3. 
Following the Closing, the parties shall reasonably agree to an
allocation of the purchase price (including the Assumed Liabilities) among the
Purchased Assets for tax purposes and set forth such allocation on a Schedule
12.3 to be signed by the parties.

 

13.           Barclays
Repurchase Agreement.  Effective at
Closing, (i) all securities and other assets held by Purchaser under the
September 18, 2008 repurchase arrangement among Purchaser and/or its Affiliates
and LBI and/or its Affiliates and Bank of New York as collateral agent (the “Barclays
Repurchase Agreement”) shall be deemed to constitute part of the Purchased
Assets in accordance with Paragraph 1(a)(ii) above, (ii) Seller and Purchaser
shall be deemed to have no further obligations to each other under the Barclays
Repurchase Agreement (including, without limitation, any payment or delivery
obligations), and (iii) the Barclays Repurchase Agreement shall terminate.
Additionally, the Notice of Termination relating to the Barclays Repurchase
Agreement dated September 19, 2008 is hereby deemed rescinded and void ab
initio in all respects.

 

14.           Risk of Loss of Artwork. 
During such period that Purchaser has the right to possess the artwork
following the Closing pursuant to Section 8.16 of the Agreement, Purchaser
shall bear the risk of loss for such artwork. 
In the event that any artwork is damaged or lost during such period,
Purchaser shall pay to Seller an amount equal to the damage or loss, consistent
with the insured appraised value (as determined by an independent, recognized
appraiser) for such artwork, assuming such artwork had not been lost or damaged.

 

15.           Records.  The records
referred to in Section 8.7 include all Documents that are Purchased Assets
and shall be considered to include all electronic documents, including
e-mail.  The joint administrators of the
Lehman European entities are parties to which records and personnel shall be
made available in accordance with the terms of Section 8.7.

 

16.           Subleases. 
Notwithstanding anything to the contrary contained in Sections 4.2(d),
4.3(c), 8.14 or any other provision of the Agreement, with respect to the
leased premises located in (i) 555 California Street, San Francisco,
California (“SF Property”), (ii) 125 High Street, Boston,
Massachusetts (“Boston Property”), (iii) 190 S. LaSalle Street,
Chicago, Illinois (“Chicago Property”), and (iv) 10250 Constellation
Boulevard, Los Angeles, California (“LA Property” and together with the
SF Property, Boston Property and Chicago Property, the “Sublease Properties”),
the parties agree as follows:

 

(a)           As contemplated in the
Agreement, on the Closing Date, (i) the underlying leases affecting the
Chicago Property, the LA Property and the Boston Property shall be assumed by
LBHI or LBI in connection with its bankruptcy proceeding and each of such
leases shall be assigned by Seller to Purchaser and Purchaser shall assume all
of Seller’s obligations thereunder pursuant to assignment and assumption
agreements mutually acceptable to Seller and Purchaser, and (ii) the
underlying lease affecting the SF Property shall be assumed by Seller in
connection with the bankruptcy proceedings.

 

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(b)           With respect to each Sublease Property, Seller and
Purchaser shall, within a commercially reasonable period of time following the
Closing Date, negotiate in good faith, and thereafter execute and deliver, a
sublease agreement reasonably acceptable to both Purchaser and Seller and
subject to the terms of the applicable underlying lease, pursuant to which a
portion of the demised premises under such underlying lease (such portion of
the premises to be agreed upon by the parties) shall be subleased to (A) with
respect to the SF Property, the Purchaser, and (B) with respect to the LA
Property, Chicago Property and Boston Property, the Seller (regardless of the
creditworthiness of Seller) or any person who purchases the IMD Business
(provided that any such purchaser entering into the sublease agreement as a
subtenant shall be reasonably acceptable to the Purchaser) (the landlord under
such sublease being referred to as the “Sublandlord” and the tenant
under such sublease being referred to as the “Subtenant”), in each case,
upon such terms as shall be mutually acceptable to the Sublandlord and
Subtenant provided that (1) the Subtenant shall pay rent and other charges
under such sublease agreement equal to its proportionate share of the rent and
other charges payable by the Sublandlord to the landlord under the underlying
lease (which proportionate share shall be based upon the relative square
footage of the subleased space in proportion to the square footage of the
overall demised space under the underlying lease), (2) the term of the
sublease agreement shall be a period commencing on the Closing Date and ending
on the day immediately preceding the expiration date of the underlying lease
(as the same may be extended pursuant to the terms of the underlying lease), (3) any
alterations or modifications which the Sublandlord and Subtenant mutually agree
need to be made to the demised premises in order to segregate the subleased
space from the remainder of the demised premises under the underlying lease
shall be performed by the Sublandlord and the cost thereof (including the cost
of any plans and specifications, drawings, permits, licenses, and other “soft”
costs related thereto) shall be shared by the Sublandlord and Subtenant in
proportion to the square footage of their respective spaces.  Prior to the execution and delivery of the
sublease agreement for a particular Sublease Property, subject to reasonable
premises security procedures and giving due regard to regulatory considerations
(e.g., segregation) including the right to relocate such employees within the
applicable premises, and for a commercially reasonable period after the Closing
Date, (i) with respect to the SF Property, to the extent that Transferred
Employees occupied any portion of the SF Property prior to Closing, such
Transferred Employees shall be permitted to continue to occupy and use the SF
Property to the same extent and for the same purposes as the SF Property was
occupied by such Transferred Employees prior to the Closing; provided, that the
foregoing shall be subject to Purchaser’s ability to substitute a substantially
similar number of new employees of Purchaser for any such Transferred Employees
as provided in Paragraph 18 below, and (ii) with respect to each Sublease
Property other than the SF Property, to the extent that Excluded Employees
occupied any portion of such Sublease Property prior to Closing, such Excluded
Employees shall be permitted to continue to occupy and use such Sublease
Property to the same extent and for the same purposes as such Sublease Property
was occupied by such Excluded Employees prior to the Closing; provided, that
the foregoing shall be subject to Seller’s ability to substitute a
substantially similar number of new employees of Seller for any such Excluded
Employees as provided in Paragraph 18 below. 
In each case described in clauses (i) and (ii) above, no rent
or other payments shall be made to the 

 

6

 

party which is the tenant under the underlying lease
until execution and delivery of the applicable sublease agreement at which time
all rent calculated under the sublease agreement for the period from the
Commencement Date (which date shall be the Closing Date) through end of the
month in which the sublease agreement is executed shall be paid to the
Sublandlord contemporaneously with the execution and delivery of the sublease
agreement.

 

(c)           If any consent or approval from any landlord under an
underlying lease is required pursuant to the terms of the underlying lease in
order to effectuate the applicable sublease agreement and/or to the extent that
any landlord under an underlying lease has recapture and/or termination rights
that would be triggered by the proposed sublease arrangement to be reflected in
the applicable sublease agreement, Seller and Purchaser will cooperate and use
commercially reasonable efforts in obtaining such consent to the applicable
sublease agreement and/or obtaining waivers from the landlord with respect to
any such recapture and/or termination rights and shall otherwise comply in all
respects with the terms and provisions of the underlying lease in connection
with the execution and delivery of the applicable sublease agreement.

 

17.           Deferred Transfers. 
Notwithstanding anything to the contrary contained in the Agreement, (a) the
parties agree that during the nine month period after the Closing Date that
Excluded Employees are permitted to occupy and use real property subject to a
Transferred Real Property Lease in accordance with Section 8.11(f) of
the Agreement, that the Seller and its Affiliates shall also be permitted to
substitute a substantially similar number of new employees of Seller or its
Affiliates for any such Excluded Employees, and that any such new employees of
Seller or its Affiliates shall be permitted to occupy and use such real
property to the same extent and on the same basis as the Excluded Employees in
accordance with Section 8.11(f), and (b) the parties agree that
during the nine month period after the Closing Date that Transferred Employees
are permitted to occupy and use real property is not subject to a Transferred
Real Property Lease in accordance with Section 8.11(g) of the
Agreement, that the Purchaser and its Affiliates shall also be permitted to
substitute a substantially similar number of new employees of Purchaser or its
Affiliates for any such Transferred Employees, and that any such new employees
of Purchaser or its Affiliates shall be permitted to occupy and use such real
property to the same extent and on the same basis as the Transferred Employees
in accordance with Section 8.11(g).

 

18.           745 Seventh Avenue. 
The parties acknowledge that there is no mortgage encumbering 745’s
interest in the premises at 745 Seventh Avenue, New York, New York and that,
notwithstanding Section 10.1(d) of the Agreement, only the
$500,000,000 promissory note made by 745 in favor of LW-LLP Inc. will be fully
repaid and extinguished.

 

19.           Prorations. 
Notwithstanding Section 12.2 of the Agreement, to the extent that
the parties are unable to agree upon all customary prorations for the Purchased
Assets as of the Closing, they shall cooperate in finalizing all such
prorations within thirty (30) days following the Closing Date.

 

20.           Schedules.  Corrected
Schedules 1.1(a) and 1.1(b) are attached hereto.

 

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21.           Definition of Excluded Contract. 
As used in the Agreement, the term “Excluded Contract” shall include any
ISDA Master Agreement and any master swap agreement and any schedule thereto or
supplement or amendment thereto.

 

22.           PIM Business Leases.

 

(a)  Notwithstanding anything to the contrary contained in the
Agreement, Purchaser shall have a period of ten (10) days following the
Closing Date to perform due diligence on the leases listed on Schedule 1(c) attached
hereto (the “PIM Leases”).  At any
time during such period, Purchaser and its Affiliates shall have the option to
cause Seller to assume and assign any or all of such PIM Leases to Purchaser,
and Seller agrees to assume and assign such PIM Leases to Purchaser.  Upon assignment of a PIM Lease to Purchaser,
such PIM Lease shall become a Transferred Real Property Lease.  With respect to any PIM Lease that becomes a
Transferred Real Property Lease, during the nine month period after the Closing
Date, to the extent that Excluded Employees occupied real property subject to
such Transferred Real Property Leases prior to Closing, such Excluded
Employees, and a substantially similar number of new employees of Seller or its
Affiliates that may be substituted for any such Excluded Employees, shall be
permitted to occupy and use such real property on the same basis as provided in
Section 8.11(f) of the Agreement.

 

(b)  Notwithstanding the
foregoing or anything to the contrary contained in Section 22(a) or any other
provision of the Agreement, with respect to the PIM Lease for the premises
located at 399 Park Avenue, New York, New York (the “New York Property”),
the underlying lease shall not be subject to assignment to Purchaser and the
Purchaser shall only have the option to require that Seller sublease to
Purchaser or its Affiliates the sixth floor of the New York Property (or a
portion of the sixth floor) (the “NY Sublease Premises”), and Seller
agrees to sublease the NY Sublease Premises, subject to the parties’ compliance
with the terms of the underlying lease including, without limitation, any
notice or consent requirements set forth therein.  If Purchaser elects to sublease the NY Sublease
Premises as provided herein, all of the terms and conditions set forth in this
letter agreement applicable to the SF Property shall also apply to the sublease
of the NY Sublease Premises.

 

23.           No Overseas Assets. 
Although LBI has been part of a global business and Purchaser remains
interested in potentially acquiring other portions thereof and obtaining the
services of the employees thereof, all assets and rights of the Lehman
companies that would otherwise be Purchased Assets (other than Seller, 745 and
any Subsidiaries sold pursuant to the Original Agreement or the Letter) that cannot
be sold pursuant to Section 2.1 of the Original Agreement as a result of
being subject to governmental conservatorship or administration shall be
considered “Excluded Assets,” except as notified by the administrator to LBI
from time to time or until such assets and rights can be so sold.  Except with respect to Purchased Intellectual
Property, no assets owned (in whole or in part) by any Subsidiary of LBHI
(other than LBI, 745 and any Subsidiaries sold pursuant to the Original
Agreement or the Letter) organized under the laws of a jurisdiction other than
the United States of America or a state thereof are included among the
Purchased Assets; provided, however, that to the extent any such asset is
jointly owned by any such Subsidiary and Seller and used primarily in or
necessary for the operation of the Business, Seller and Purchaser shall each use
its commercially reasonable efforts to cause such Subsidiary to enter into
arrangements reasonably acceptable to Purchaser to permit 

 

8

 

Purchaser to acquire the
interest of such Subsidiary in such asset or to have the use thereof (provided
that neither Seller nor Purchaser shall be required to make any payment in
order to establish such arrangement).

 

The representations and warranties of the parties contained in this
Letter and in the Agreement shall not survive the Closing.  This Letter shall be deemed to be made in and
in all respects shall be interpreted, construed and governed by and in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within that state. 
This Letter may be executed in any number of counterparts (including by
facsimile), each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.

 

[Remainder of page left blank.]

 

9

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  BARCLAYS CAPITAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Gerard LaRocca

  
	
   

  	
  Name: Gerard LaRocca

  
	
   

  	
  Title:   Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to and accepted as of the date first written
  above:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LEHMAN
  BROTHERS HOLDINGS INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
      /s/ Steven Berkenfeld

  	
   

  	
   

  
	
  Name: Steven Berkenfeld

  	
   

  
	
  Title: Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LEHMAN
  BROTHERS INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
        /s/ Anson B.
  Frelinghuysen

  	
   

  	
   

  
	
  Name: Anson B. Frelinghuysen

  	
   

  
	
  Title: Counsel for James W. Giddens, Trustee

  	
   

  
	
              For
  the SIPA Liquidation of Lehman Brothers Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LB
  745 LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
      /s/ Mark Marcucci

  	
   

  	
   

  
	
  Name: Mark Marcucci

  	
   

  
	
  Title:   President

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