Exhibit 10.1
ASSET PURCHASE AGREEMENT
AMONG
LEHMAN BROTHERS HOLDINGS INC.
LEHMAN BROTHERS INC.
LB 745 LLC
AND
BARCLAYS CAPITAL INC.
Dated as of September 16, 2008
TABLE OF CONTENTS
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Page
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Article I
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DEFINITIONS
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1
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1.1
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Certain Definitions
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1
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1.2
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Other Definitional and Interpretive
Matters
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10
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Article II
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PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
LIABILITIES
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11
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2.1
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Purchase and Sale of Assets
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11
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2.2
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Excluded Assets
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11
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2.3
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Assumption of Liabilities
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11
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2.4
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Excluded Liabilities
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12
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2.5
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Cure Amounts
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13
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2.6
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Further Conveyances and Assumptions
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13
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2.7
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Bulk Sales Laws
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14
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Article III
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CONSIDERATION
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14
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3.1
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Consideration
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14
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3.2
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Payment of Cash Amount
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14
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3.3
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Adjustment to Cash Amount
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14
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Article IV
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CLOSING AND TERMINATION
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15
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4.1
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Closing Date
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15
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4.2
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Deliveries by Seller
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15
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4.3
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Deliveries by Purchaser
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16
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4.4
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Termination of Agreement
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16
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4.5
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Procedure Upon Termination
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16
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4.6
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Effect of Termination
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16
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Article V
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REPRESENTATIONS AND WARRANTIES OF
SELLER
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18
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5.1
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Organization and Good Standing
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18
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5.2
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Authorization of Agreement
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18
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5.3
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Conflicts; Consents of Third Parties
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18
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5.4
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Title to Purchased Assets
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19
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5.5
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Compliance with Laws; Permits
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19
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5.6
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No Other Representations or Warranties;
Schedules
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20
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i
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Page
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Article VI
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REPRESENTATIONS AND WARRANTIES OF
PURCHASER
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20
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6.1
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Organization and Good Standing
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20
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6.2
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Authorization of Agreement
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21
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6.3
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Conflicts; Consents of Third Parties
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21
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6.4
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Financial Capability
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21
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6.5
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Condition of the Business
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22
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Article VII
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BANKRUPTCY COURT MATTERS
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22
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7.1
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[Reserved]
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22
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7.2
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Bankruptcy Court Filings
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22
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Article VIII
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COVENANTS
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23
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8.1
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Access to Information
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23
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8.2
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Conduct of the Business Pending the
Closing
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23
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8.3
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Consents
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26
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8.4
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Regulatory Approvals
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26
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8.5
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Further Assurances
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27
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8.6
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Confidentiality
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28
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8.7
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Preservation of Records
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28
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8.8
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Publicity
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29
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8.9
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Trademark License
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29
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8.10
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Use of Purchased Intellectual
Property
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30
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8.11
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Deferred Transfers
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31
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8.12
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Release of Guarantees
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32
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8.13
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Transition Services
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33
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8.14
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Subleases
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33
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8.15
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Landlord Notice
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33
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8.16
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Artwork
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33
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Article IX
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EMPLOYEES AND EMPLOYEE BENEFITS
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34
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9.1
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Employee Benefits
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34
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Article X
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CONDITIONS TO CLOSING
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35
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ii
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Page
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10.1
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Conditions Precedent to Obligations of
Purchaser
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35
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10.2
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Conditions Precedent to Obligations of
Seller
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36
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10.3
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Conditions Precedent to Obligations of Purchaser
and Seller
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37
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10.4
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Frustration of Closing Conditions
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37
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Article XI
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[RESERVED]
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37
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Article XII
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TAXES
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37
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12.1
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Transfer Taxes
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37
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12.2
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Prorations
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38
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12.3
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Purchase Price Allocation
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38
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12.4
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Adjustment to Purchase Price
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38
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Article XIII
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MISCELLANEOUS
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38
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13.1
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Expenses
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38
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13.2
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Injunctive Relief
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38
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13.3
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Submission to Jurisdiction; Consent to Service
of Process
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39
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13.4
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Waiver of Right to Trial by Jury
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39
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13.5
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Entire Agreement; Amendments and
Waivers
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39
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13.6
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Governing Law
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40
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13.7
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Notices
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40
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13.8
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Severability
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42
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13.9
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Binding Effect; Assignment
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42
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13.10
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Non-Recourse
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42
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13.11
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Counterparts
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42
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13.12
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Scope of Purchased Assets
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42
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iii
ASSET PURCHASE
AGREEMENT
ASSET PURCHASE AGREEMENT, dated as
of September 16, 2008 (this “ Agreemen t”),
among LEHMAN BROTHERS HOLDINGS INC. , a Delaware corporation
(“ LBHI ”), LEHMAN BROTHERS INC., a
Delaware corporation (“ LBI ” and, together with
LBHI, the “ Seller ”), LB 745 LLC , a
Delaware limited liability company (“ 745 ”),
and BARCLAYS CAPITAL INC. , a Connecticut corporation
(“ Purchaser ”).
W I T N E S S E T H:
WHEREAS, LBHI is a
debtor-in-possession under title 11 of the United States Code, 11
U.S.C. § 101 et seq. (the “ Bankruptcy Code
”), and filed voluntary petitions for relief under chapter 11
of the Bankruptcy Code on September 15, 2008 in the United
States Bankruptcy Court for the Southern District of New York
(Manhattan) (the “ Bankruptcy Court ”) (Case
No. [08-13555]) (the “ Bankruptcy Case
”);
WHEREAS, the Seller and its
Subsidiaries presently conduct the Business;
WHEREAS, Seller and 745 desire to
sell, transfer and assign to Purchaser, and Purchaser desires to
purchase, acquire and assume from Seller and 745, pursuant to
Sections 363 and 365 of the Bankruptcy Code, all of the
Purchased Assets and Assumed Liabilities, all as more specifically
provided herein; and
WHEREAS, an Affiliate of Purchaser
has agreed to provide to LBHI a debtor-in-possession facility (the
“ DIP Facility ”) and has agreed to provide to
LBI certain other financing;
NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements hereinafter
contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1
Certain Definitions
.
For purposes of this Agreement, the
following terms shall have the meanings specified in this
Section 1.1 :
“ Affiliate ”
means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and
the term “control” (including the terms
1
“controlled by” and “under
common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership
of voting securities, by contract or otherwise.
“ Breakup Fee and Competing
Bid Order ” means an order of the Bankruptcy Court in the
form attached as Exhibit A hereto.
“ Business ”
means the U.S. and Canadian investment banking and capital markets
businesses of Seller including the fixed income and equities cash
trading, brokerage, dealing, trading and advisory businesses,
investment banking operations and LBI’s business as a futures
commission merchant.
“ Business Day ”
means any day of the year on which national banking institutions in
New York are open to the public for conducting business and are not
required or authorized to close.
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Contract ”
means any contract, indenture, note, bond, lease or other
agreement.
“ Documents ”
means all files, documents, instruments, papers, books, reports,
records, tapes, microfilms, photographs, letters, budgets,
forecasts, ledgers, journals, title policies, customer lists,
regulatory filings, operating data and plans, technical
documentation (design specifications, functional requirements,
operating instructions, logic manuals, flow charts, etc.), user
documentation (installation guides, user manuals, training
materials, release notes, working papers, etc.), marketing
documentation (sales brochures, flyers, pamphlets, web pages,
etc.), and other similar materials related to or necessary for the
conduct of the Business and the Purchased Assets in each case
whether or not in electronic form.
“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as
amended.
“ Excluded Assets
” shall mean the following assets, properties, interests and
rights of Seller and its Subsidiaries:
(a)
the shares of capital stock, limited
liability company membership, general and limited partnership, and
other equity interests, of Seller and its Subsidiaries (other than
(i) the capital stock of Townsend Analytics and (ii) the
capital stock or other equity interests of any other Subsidiary
that Seller and Purchaser may agree prior to the entry of the Sale
Order shall be a Purchased Asset);
(b)
all cash, cash equivalents, bank
deposits or similar cash items of LBI and its Subsidiaries (the
“ Retained Cash ”) other than $1.3 billion in
cash, cash equivalents, bank deposits or similar cash
items;
2
(c)
all intercompany
receivables;
(d)
the Excluded Contracts, including
any accounts receivable to the extent arising out of any Excluded
Contract;
(e)
any Intellectual Property Rights
that do not constitute Purchased Intellectual Property;
(f)
any (i) confidential personnel
and medical records pertaining to any Excluded Employee;
(ii) other books and records that LBI is required by Law to
retain, including, but not limited to, books and records required
to be retained by Rules 17a-3 and 17a-4 of the Exchange Act
with respect to the Purchased Assets or that LBHI reasonably
determines are necessary to retain including, without limitation,
Tax Returns, financial statements, and corporate or other entity
filings; provided , however , that Purchaser shall
have the right to make copies of any portions of such retained
books and records that relate to the Business or any of the
Purchased Assets; and (iv) minute books, stock ledgers and
stock certificates of Subsidiaries..
(g)
any claim, right or interest of LBHI
or any of its Subsidiaries in or to any refund, rebate, abatement
or other recovery for Taxes, together with any interest due thereon
or penalty rebate arising therefrom, for any Tax period (or portion
thereof) ending on or before the Closing Date;
(h)
all insurance policies or rights to
proceeds thereof relating to the assets, properties, business or
operations of Seller or any of its Subsidiaries other than customer
account insurance supplemental to SIPC coverage included in the
Business;
(i)
any rights, claims or causes of
action of Seller or any of its Subsidiaries against third parties
relating to assets, properties, business or operations of Seller or
any of its Subsidiaries (other than those primarily related to
Purchased Assets) arising out of events occurring on or prior to
the Closing Date;
(j)
commercial real estate investments
(including commercial loans, equity investments in such commercial
real estate and other commercial real estate assets and all
Archstone debt and equity positions), private equity investments
and hedge fund investments;
(k)
50% of each position in residential
real estate mortgage securities;
(l)
assets related to the soliciting,
placing, clearing and executing of buy and sell orders for
derivatives contracts by Lehman Brothers Derivative Products Inc.
and all activities related or ancillary thereto;
(m)
all artwork owned by Seller and its
Subsidiaries;
3
(n)
all assets primarily related to the
IMD Business and derivatives contracts;
(o)
any assets set aside, segregated, or
otherwise specifically identified as being held for the purpose of
satisfying Excluded Liabilities referred to in
Section 2.4(e) ;
(p)
all real property leases of Seller
and its Subsidiaries, and all rights and obligations appurtenant
thereto, as set forth on Schedule 1.1(a), other than the
Transferred Real Property Leases; and
(q)
Lehman Commercial Paper, Inc.
and any assets thereof.
“ Excluded Contracts
” means all of the Contracts of Seller and its Subsidiaries,
other than the Purchased Contracts.
“ Furniture and
Equipment ” means all furniture, fixtures, furnishings,
equipment, vehicles, leasehold improvements, and other tangible
personal property owned or used by Seller and its Subsidiaries in
the conduct of the Business, including all desks, chairs, tables,
Hardware, copiers, telephone lines and numbers, telecopy machines
and other telecommunication equipment, cubicles and miscellaneous
office furnishings and supplies.
“ GAAP ” means
generally accepted accounting principles in the United States as of
the date hereof.
“ Governmental Body
” means any government or governmental or regulatory,
judicial or administrative, body thereof, or political subdivision
thereof, whether foreign, federal, state, national, supranational
or local, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private) or any self-regulatory
organization, including, but not limited to, the Financial Industry
Regulatory Authority.
“ Hardware ”
means any and all computer and computer-related hardware, networks
and peripherals, including, but not limited to, information and
communication systems, computers, file servers, facsimile servers,
scanners, color printers, laser printers and networks.
“ HSR Act ” means
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
“ IMD Business ”
means the investment management business of Seller and its
Subsidiaries.
“ Intellectual Property
Rights ” means, collectively, all intellectual
property and other similar proprietary rights in any jurisdiction,
whether owned or held for use
4
under license, whether registered or
unregistered, including without limitation such rights in and
to: (i) patents and applications therefor, including
continuations, divisionals, continuations-in-part, reissues,
continuing patent applications, reexaminations, and extensions
thereof, any counterparts claiming priority therefrom and patents
issuing thereon (collectively, “ Patents ”) and
inventions, invention disclosures, discoveries and improvements,
whether or not patentable, (ii) all trademarks, service marks,
trade names, service names, brand names, all trade dress rights,
logos, slogans, Internet domain names and corporate names and
general intangibles of a like nature, together with the goodwill
associated with any of the foregoing, and all applications,
registrations and renewals thereof and all common law rights
thereto (collectively, “ Marks ”),
(iii) copyrights and registrations and applications therefor
and renewals and extensions thereof, and works of authorship,
databases and mask work rights, and all moral rights (collectively,
“ Copyrights ”), (iv) all Software,
Technology, trade secrets and market and other data, and rights to
limit the use or disclosure of any of the foregoing by any Person,
and (v) all claims, causes of action and defenses relating to
the enforcement of any of the foregoing.
“ Intellectual Property
Licenses ” means (i) any grant to a third Person of
any license, immunity, a covenant not to sue or otherwise any right
to use or exploit, any of the Purchased Intellectual Property owned
by Seller or any of its Subsidiaries, and (ii) any grant to
Seller or its Subsidiaries of a license, immunity, a covenant not
to sue or otherwise any right to use or exploit any Purchased
Intellectual Property which is not owned by Seller or any of the
Subsidiaries.
“ Knowledge of Seller
” means the knowledge after due inquiry, as of the date of
this Agreement, of the senior officers and directors of Seller and
its Subsidiaries.
“ Law ” means any
federal, state, local or foreign law, statute, code, ordinance,
rule or regulation (including rules of any
self-regulatory organization).
“ Legal Proceeding
” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or any proceedings
or investigations by or before a Governmental Body.
“ Liability ”
means any debt, liability or obligation (whether direct or
indirect, known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, or due or to become due),
and including all costs and expenses relating thereto.
“ Lien ” means
any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal,
easement, servitude, proxy, voting trust or agreement, transfer
restriction under any shareholder or similar agreement or
encumbrance.
“ Order ”
means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.
5
“ Ordinary Course of
Business ” means the ordinary and usual course of normal
day-to-day operations of the Business through September 14,
2008 consistent with past practice.
“ Permits ” means
any approvals, authorizations, consents, licenses, permits,
registrations or certificates of a Governmental Body.
“ Permitted Exceptions
” means all (i) defects, exceptions, restrictions,
easements, rights of way and encumbrances of record,
(ii) statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity
of which is being contested in good faith by appropriate
proceedings provided an appropriate reserve is established
therefor; (iii) mechanics’, carriers’,
workers’, repairers’ and similar Liens arising or
incurred in the Ordinary Course of Business; (iv) zoning,
entitlement and other land use and environmental regulations by any
Governmental Body provided that such regulations have not been
violated; (v) title of a lessor under a capital or operating
lease; (vi) Liens arising under the DIP Facility; and
(vii) the terms and provisions of the ground lease and related
documents affecting the property located at 745 Seventh Avenue, New
York, NY (the “ 745 Seventh Ground Lease
”).
“ Person ” means
any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other
entity.
“ Purchased Assets
” means all of the assets of Seller and its Subsidiaries used
in connection with the Business (excluding the Excluded Assets),
including;
(a)
the Retained Cash;
(b)
all deposits (including customer
deposits, security deposits for rent, electricity, telephone or
otherwise and required capital deposits) and prepaid charges and
expenses of Seller and its Subsidiaries associated with the
Business, other than any deposits or prepaid charges and expenses
paid in connection with or relating to any Excluded
Assets;
(c)
the Transferred Real Property
Leases, together with all improvements, fixtures and other
appurtenances thereto and rights in respect thereof;
(d)
government securities, commercial
paper, corporate debt, corporate equity, exchange traded
derivatives and collateralized short-term agreements with a book
value as of the date hereof of approximately $70 billion
(collectively, “ Long Positions ”);
(e)
50% of each position in the
residential real estate mortgage securities;
(f)
the Furniture and
Equipment;
6
(g)
the Purchased Intellectual Property
and all income, royalties, damages and payments due or payable at
the Closing or thereafter relating to the Purchased Intellectual
Property (including damages and payments for past or future
infringements or misappropriations thereof), the right to sue and
recover damages for past or future infringements or
misappropriations thereof and the right to fully and entirely stand
in the place of Seller in all matters related thereto;
(h)
the Purchased Contracts;
(i)
all Documents that are used in, held
for use in or intended to be used in, or that arise in connection
with, or are necessary to carry on or are related to the operation
of the Business, including Documents relating to products,
services, marketing, advertising, promotional materials, Purchased
Intellectual Property, personnel files for Transferred Employees
and all files, customer files and documents (including credit
information), account agreements, books and records required to be
maintained in connection with the Business under applicable Law,
compliance manuals, supervisory policies and procedures, customer
lists, supplier lists, records, literature and correspondence,
whether or not physically located on any of the premises referred
to in clause (d) above, but excluding (i) personnel
files for Excluded Employees of Seller or its Subsidiaries who are
not Transferred Employees, (ii) such files as may be required
under applicable Law regarding privacy, (iii) Documents which
Seller is not permitted to transfer pursuant to any contractual
confidentiality obligation owed to any third party, and
(iv) any Documents primarily related toany Excluded
Assets;
(j)
all Permits used by Seller in the
Business to the extent assignable under applicable Law;
(k)
all supplies owned by Seller and
used in connection with the Business;
(l)
all rights of Seller under
non-disclosure or confidentiality, non-compete, or non-solicitation
agreements with employees, contractors and agents of Seller or its
Subsidiaries or with third parties to the extent relating to the
Business or the Purchased Assets (or any portion
thereof);
(m)
rights to “Lehman”
indices and analytics that support the indices and all other
indices and analytics used in the Business;
(n)
general trading tools supporting the
Business;
(o)
the stock of Townsend
Analytics and the stock, equity interests or assets of any other
Subsidiary of LBI that the Seller and Purchaser may mutually agree
on prior of the entry of the Sale Order and of which a notice has
been provided to any statutory committee;
7
(p)
the equity interests or assets (at
the election of Purchaser in its sole discretion prior to the entry
of the Sale Order) of Eagle Energy Management LLC;
(q)
all past and present goodwill and
other intangible assets associated with or symbolized by the
Business, including customer and supplier lists and the goodwill
associated with the Purchased Intellectual Property;
(r)
Mercantile Exchange license
agreements with respect to 335 South LaSalle Street, Chicago, IL
and 400 South LaSalle Street, Chicago, IL; and
(s)
any insurance proceeds from the
occurrence after the date hereof and prior to Closing, of any
casualty or event loss with respect to any Transferred Real
Property Leases or any properties subject thereto.
“ Purchased Contracts
” means all Contracts designated as Purchased Contracts
pursuant to Section 2.5 .
“ Purchased Intellectual
Property ” means the Purchased Marks and all other
Intellectual Property Rights, Software and Technology throughout
the world that are used in, related to, or otherwise necessary for
the Business, including all Intellectual Property Rights embodied
in or arising from the Purchased Assets.
“ Purchased Marks
” means the Mark “LEHMAN” and “LEHMAN
BROTHERS” throughout the world, all other Marks throughout
the world containing or incorporating the name
“LEHMAN,” the Internet domain name www.lehman.com, all
other Internet domain names containing or incorporating any
Purchased Marks, and any other Mark throughout the world that is
used in, related to, or otherwise necessary for the Business; in
each case, together with all of the goodwill associated therewith
and all registrations and applications for the foregoing and all
common law rights thereto.
“ Sale Motion ”
means the motion or motions of Seller, in form and substance
reasonably acceptable to Purchaser and Seller, seeking approval and
entry of the Breakup Fee and Competing Bid Order and Sale
Order.
“ Sale Order ”
shall be an order or orders of the Bankruptcy Court in form and
substance reasonably acceptable to Purchaser and Seller approving
this Agreement and all of the terms and conditions hereof, and
approving and authorizing Seller to consummate the transactions
contemplated hereby. Without limiting the generality of the
foregoing, such order shall find and provide, among other things,
that (i) the Purchased Assets sold to Purchaser pursuant to
this Agreement shall be transferred to Purchaser free and clear of
all Liens (other than Liens created by Purchaser and Permitted
Exceptions) and claims, such Liens and claims to attach to the
Purchase Price; (ii) Purchaser has acted in “good
faith” within the meaning of Section 363(m) of the
Bankruptcy Code; (iii) this Agreement was negotiated, proposed
and entered into by the parties without collusion, in good faith
and from arm’s length bargaining positions; (iv) the
Bankruptcy Court shall
8
retain jurisdiction to resolve any
controversy or claim arising out of or relating to this Agreement,
or the breach hereof as provided in Section 13.3
hereof; and (v) this Agreement and the transactions
contemplated hereby may be specifically enforced against and
binding upon, and not subject to rejection or avoidance by, Seller
or any chapter 7 or chapter 11 trustee of Seller.
“ Software ”
means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies
and application programming interfaces, whether in source code or
object code, (ii) databases and compilations, including any
and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the
foregoing, screens, user interfaces, report formats, firmware,
development tools, templates, menus, buttons and icons, and
(iv) all software-related specifications documentation
including user manuals and other training documentation related to
any of the foregoing.
“ Subsidiary ”
means any Person of which a majority of the outstanding voting
securities or other voting equity interests are owned, directly or
indirectly, by Seller.
“ Tax Authority”
means any state or local government, or agency, instrumentality or
employee thereof, charged with the administration of any law or
regulation relating to Taxes.
“ Taxes ” means
(i) all federal, state, local or foreign taxes, charges or
other assessments, including, without limitation, all net income,
gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes,
and (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any taxing authority in connection
with any item described in clause (i).
“ Tax Return ”
means all returns, declarations, reports, estimates, information
returns and statements required to be filed in respect of any
Taxes.
“ Technology ”
means, collectively, all designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, business and marketing
information, research and development, technical data, programs,
subroutines, tools, materials, specifications, processes,
inventions (whether patentable or unpatentable and whether or not
reduced to practice), apparatus, creations, improvements, works of
authorship and other similar materials, non-public or confidential
information, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other tangible embodiments of the
foregoing, in any form whether or not specifically listed herein,
and all related technology.
9
“ Transferred Real Property
Leases ” means the leases listed on Schedule 1.1(b)
attached hereto and any rights and obligations appurtenant
thereto.
1.2
Other Definitional and
Interpretive Matters
(a)
Unless otherwise expressly provided,
for purposes of this Agreement, the following rules of
interpretation shall apply:
Calculation of Time
Period . When
calculating the period of time before which, within which or
following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period
is a non-Business Day, the period in question shall end on the next
succeeding Business Day.
Dollars . Any reference in this Agreement to $
shall mean U.S. dollars.
Exhibits/Schedules
. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.
Any matter or item disclosed on one schedule shall be deemed to
have been disclosed on each other schedule. Any capitalized
terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this
Agreement.
Gender and Number
. Any reference in this
Agreement to gender shall include all genders, and words imparting
the singular number only shall include the plural and vice
versa.
Headings . The provision of a Table of Contents,
the division of this Agreement into Articles, Sections and other
subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in construing or
interpreting this Agreement. All references in this Agreement
to any “Section” are to the corresponding
Section of this Agreement unless otherwise
specified.
Herein . The words such as “ herein
,” “ hereinafter ,” “ hereof
,” and “ hereunder ” refer to this
Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.
Including . The word “ including
” or any variation thereof means “ including,
without limitation ” and shall not be construed to limit
any general statement that it follows to the specific or similar
items or matters immediately following it.
(b)
The parties hereto have participated
jointly in the negotiation and drafting of this Agreement and, in
the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the
parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of
any provision of this Agreement.
10
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1
Purchase and Sale of
Assets . On the
terms and subject to the conditions set forth in this Agreement, at
the Closing (as defined below), Purchaser shall purchase, acquire
and accept from the Seller and 745, and Seller and 745 shall sell,
transfer, assign, convey and deliver (or cause to be sold,
transferred, assigned, conveyed and delivered) to Purchaser, all of
Seller’s and its applicable Subsidiaries’ right, title
and interest in, to and under the Purchased Assets free and clear
of all Liens pursuant to Section 363(f) of the Bankruptcy
Code.
2.2
Excluded Assets
. Nothing herein contained
shall be deemed to sell, transfer, assign or convey the Excluded
Assets to Purchaser, and Seller (directly and indirectly) shall
retain all right, title and interest to, in and under the Excluded
Assets.
2.3
Assumption of
Liabilities . On
the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall assume, effective as of
the Closing, and shall timely perform and discharge in accordance
with their respective terms, the following Liabilities of
Seller and its Subsidiaries (collectively, the “ Assumed
Liabilities ”):
(a)
all Liabilities of Seller incurred,
after the Closing, in connection with the Business;
(b)
all Liabilities of Seller under the
Purchased Contracts arising after, with respect to each entity
comprising Seller, the date on which such entity commenced a
voluntary case or cases under Chapter 11 or Chapter 7, as the case
may be, of the Bankruptcy Code;
(c)
all Liabilities assumed under
Article IX ;
(d)
accounts payable incurred in the
Ordinary Course of Business of Seller after, with respect to each
entity comprising Seller, the date on which such entity commenced a
voluntary case or cases under Chapter 11 or Chapter 7, as the case
may be, of the Bankruptcy Code, associated with the Business other
than any accounts payable arising out of one in connection with any
Excluded Contract (including, for the avoidance of doubt,
(i) invoiced accounts payable and (ii) accrued but
uninvoiced accounts payable);
(e)
all Transfer Taxes applicable to the
transfer of the Purchased Assets pursuant to this
Agreement;
(f)
all other Liabilities to the extent
related to the Business, the Purchased Assets or the Transferred
Employees arising after the Closing;
11
(g)
all Liabilities under Transferred
Real Property Leases from the date of Closing forward;
(h)
all Liabilities relating to amounts
required to be paid by Purchaser hereunder; and
(i)
all short positions and
“repos” relating to any securities or interests of the
types included in the definition of “Long Positions”
with a book value as of the date hereof of approximately $69
billion (collectively, “ Short Positions ” and,
together with the Long Positions, “ Positions
”).
2.4
Excluded Liabilities
. Notwithstanding anything
herein to the contrary, Purchaser will not assume or be liable for
any Excluded Liabilities. “ Excluded Liabilities
” shall mean all Liabilities of Seller and its Subsidiaries
to the extent they do not arise out of the Business and the
following Liabilities:
(a)
all Liabilities arising out of
Excluded Assets, including Contracts that are not Purchased
Contracts;
(b)
except as otherwise provided in
Article XII , all Liabilities for Taxes of Seller for
any Tax periods (or portions thereof) ending on or before the
Closing Date;
(c)
except as otherwise provided in this
Agreement and other than any cure amounts that Purchaser is
required to pay pursuant to Section 2.5 , Liabilities
incurred in the Ordinary Course of Business existing prior to the
filing of the Bankruptcy Case that are subject to compromise under
the Bankruptcy Case (the “ Compromised Liabilities
”);
(d)
except as expressly assumed pursuant
to Article IX hereof, any Liabilities relating to the
employment, potential employment or termination of employment of
any Person relating to or arising out of any period prior to the
Closing, including without limitation any Liability under or
relating to any employee benefit plan, program, agreement or
arrangement, including in respect of equity compensation plans and
tax-qualified or not tax-qualified pension or saving plans as to
which the parties agree there shall be no transfer to or assumption
of Liabilities by the Purchaser;
(e)
all Liabilities relating to amounts
required to be paid by Seller, hereunder, including upon any
breach;
(f)
all Liabilities under Excluded Real
Property Leases and Transferred Real Property Leases other than
Liabilities under Transferred Real Property Leases from the date of
Closing forward; and
(g)
all intercompany
payables.
12
2.5
Cure Amounts
. For a period of 60 days after the
Closing, the Purchaser shall have the right upon notice to Seller
to designate any contract related to the assets purchased from the
Seller by Purchaser or its Affiliates (the “ Related
Contracts ”) as either (1) a Purchased Contract or
(2) a Contract not designated as a Purchase Contract (a
“ Rejected Contract ”). Until a Related
Contract is so designated, Buyer shall be obligated to pay or cause
to be paid ordinary course amounts due under such contracts in
accordance with the terms thereof. If a Related Contract is
designated as a Purchased Contract, such Purchased Contract shall
be assigned to the Purchaser and upon such assignment Purchaser
shall be obligated to pay or cause to be paid the cure amount in
respect of such Purchased Contract. If a Related Contract is
designated as a Rejected Contract, Purchaser shall have no further
obligations in respect thereof. In the event of any dispute
relating to such cure amount, Purchaser shall escrow such funds in
a manner satisfactory to the court. This Section will not
apply to real property leases.
2.6
Further Conveyances and
Assumptions .
(a)
From time to time following the
Closing, Seller shall, or shall cause its Affiliates to, make
available to Purchaser such data in personnel records of
Transferred Employees as is reasonably necessary for Purchaser to
transition such employees into Purchaser’s
records.
(b)
From time to time following the
Closing, without further consideration, Seller and Purchaser shall,
and shall cause their respective Affiliates to, do, execute,
acknowledge and deliver, or cause to be done, executed,
acknowledged or delivered, all such further conveyances, deeds,
assignments, notices, assumptions, releases, acquaintances, powers
of attorney and assurances (including any notarization,
authentication, legalization and consularization of the signatures
of Seller’s and its Subsidiaries’ representatives), and
such other instruments, and shall take such further actions, as may
be reasonably necessary or appropriate to assure fully to Purchaser
and its respective successors or assigns, all of the properties,
rights, titles, interests, estates, remedies, powers and privileges
intended to be conveyed to Purchaser under this Agreement and the
Seller Documents, and to assure fully to Seller and its Affiliates
and their successors and assigns, the assumption of the liabilities
and obligations intended to be assumed by Purchaser under this
Agreement and the Seller Documents, and to otherwise make effective
the transactions contemplated hereby and thereby.
(c)
If any third-party consent is
required for the assignment of any Intellectual Property Licenses
to Purchaser and such consent cannot be obtained, then, to the
extent permitted by Applicable Law, Seller shall sublicense
whatever rights they are permitted to sublicense under the
respective Intellectual Property Licenses, provided such sublicense
is at no cost to Seller. If, however, Seller is permitted to
sublicense only at a one time, fixed payment or an ongoing fee,
Seller shall notify Purchaser thereof and, only if Purchaser agreed
in writing to be responsible to such payment or fee, as applicable,
Seller shall sublicense whatever rights it is permitted to
sublicense under the respective Intellectual Property Licenses,
subject to the payment or fee being paid by Purchaser.
13
2.7
Bulk Sales Laws
. Purchaser hereby waives
compliance by Seller and its Subsidiaries with the requirements and
provisions of any “bulk-transfer” Laws of any
jurisdiction that may otherwise be applicable with respect to the
sale and transfer of any or all of the Purchased Assets to
Purchaser.
ARTICLE III
CONSIDERATION
3.1
Consideration
. The aggregate consideration
for the Purchased Assets shall be (a) the Cash Amount and
(b) the assumption of the Assumed Liabilities by
Purchaser. The “ Cash Amount ” shall equal
an amount in cash equal to the sum of (i) $250 million,
(ii) the appraised value (as reasonably determined by an
independent, recognized appraiser) of the Lehman headquarters at
745 Seventh Avenue in New York City less a reasonable market
commission that would be paid assuming a sale of such property as
of the Closing, (iii) the appraised value (as reasonably
determined by an independent, recognized appraiser) of the Cranford
New Jersey Data Center less a reasonable market commission that
would be paid assuming a sale of such property as of the Closing,
and (iv) the appraised value (as reasonably determined by an
independent, recognized appraiser) of the Piscataway New Jersey
Data Center less a reasonable market commission that would be paid
assuming a sale of such property as of the Closing. For
illustrative purposes only, the parties note that as of the date
hereof they expect that the Cash Amount will be approximately $1.7
billion (less the aforementioned assumed commissions).
3.2
Payment of Cash
Amount . On the
Closing Date, Purchaser shall pay the Cash Amount to Seller, which
shall be paid by wire transfer of immediately available funds into
an account designated by Seller.
3.3
Adjustment to Cash
Amount . Promptly
following the first anniversary of the Closing Date, Purchaser
shall determine with respect to each Position (long or short,
including repos), that was part of the Purchased Assets and was
sold on or prior to such first anniversary, the profit or loss
realized from such sale (such profit or loss determined by
reference to LBI’s mark (book value) for such Position as of
the date hereof). Purchaser shall provide reasonable
supporting information to Seller with respect to such calculation
of profit or loss. If the aggregate amount of all such
profits exceeds the aggregate amount of all such losses (a) by
up to $500 million, Purchaser shall promptly pay Seller such net
amount, or (b) by more than $500 million, Purchaser shall
promptly pay Seller the sum of $500 million plus one-half of the
excess of such net amount over $500 million (but in no event shall
Purchaser pay Seller more than $750 million pursuant to this
Section 3.3 ). For purposes of this
Section 3.3 , the time value of money shall be
disregarded and no interest shall be deemed earned.
14
ARTICLE IV
CLOSING AND TERMINATION
4.1
Closing Date
. Subject to the satisfaction
of the conditions set forth in Sections 10.1 , 10.2
and 10.3 hereof (or the waiver thereof by the party entitled
to waive that condition), the closing of the purchase and sale of
the Purchased Assets and the assumption of the Assumed Liabilities
provided for in Article II hereof (the “
Closing ”) shall take place at the offices of Weil,
Gotshal & Manges LLP located at 767 Fifth Avenue, New
York, New York 10153 (or at such other place as the parties may
designate in writing) at 10 a.m (New York time) on the day of, or
at Purchaser’s election the Business Day following, the
satisfaction or waiver of the conditions set forth in
Article X (other than conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction
or waiver of such conditions), unless another time or date, or
both, are agreed to in writing by the parties hereto. The
date on which the Closing shall be held is referred to in this
Agreement as the “ Closing Date .” Unless
otherwise agreed by the parties in writing, the Closing shall be
deemed effective and all right, title and interest of Seller to be
acquired by Purchaser hereunder shall be considered to have passed
to Purchaser as of 12:01 a.m. (New York time) on the Closing
Date.
4.2
Deliveries by Seller
. At the Closing, Seller shall
deliver to Purchaser:
(a)
a duly executed, reasonably
customary bill of sale in the form of Exhibit A
hereto;
(b)
duly executed, reasonably customary
assignment and assumption agreements (including, with respect to
the 745 Seventh ground lease, all assignments that were entered
into in connection with Seller’s acquisition of such lease)
and duly executed assignments of the U.S. and Canadian trademark
registrations and applications included in the Purchased
Intellectual Property, in a form suitable for recording in the U.S.
and Canadian trademark office, and general assignments of all other
Purchased Intellectual Property;
(c)
a certificate, duly executed by
Seller, that Seller is not a “foreign person” within
the meaning of Section 1445 of the Code;
(d)
duly executed Seller Sublease and
Purchaser Subleases; and
(e)
all other instruments of conveyance
and transfer, in form and substance reasonably acceptable to
Purchaser, as may be necessary to convey the Purchased Assets to
Purchaser or as Purchaser may reasonably request, including such
instruments of conveyance and transfer in form and substance
comparable to the instruments of conveyance and transfer exchanged
in connection with Seller’s acquisition of the 745 Seventh
Ground Lease.
15
4.3
Deliveries by
Purchaser . At the
Closing, Purchaser shall deliver to Seller:
(a)
the Purchase Price, in immediately
available funds, as set forth in Section 3.2
hereof;
(b)
a duly executed, reasonably
customary assignment and assumption agreement; and
(c)
duly executed Purchaser Subleases
and Seller Sublease.
4.4
Termination of
Agreement . This
Agreement may be terminated prior to the Closing as
follows:
(a)
by Purchaser or Seller, if the
Closing shall not have occurred by the close of business on
September 24, 2008 (the “ Termination Date
”);
(b)
by mutual written consent of Seller
and Purchaser;
(c)
by Seller or Purchaser if there
shall be in effect a final nonappealable Order of a Governmental
Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated
hereby; it being agreed that the parties hereto shall promptly
appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence);
(d)
by Purchaser upon the entry of an
order by the Bankruptcy Court authorizing a Competing Transaction;
or
(e)
by Purchaser if the Breakup Fee and
Competing Bid Order is not approved by the Bankruptcy Court in the
form attached hereto as Exhibit A.
4.5
Procedure Upon
Termination . In
the event of termination and abandonment by Purchaser or Seller, or
both, pursuant to Section 4.4 hereof, written notice
thereof shall forthwith be given to the other party or parties, and
this Agreement shall terminate, and the purchase of the Purchased
Assets hereunder shall be abandoned, without further action by
Purchaser or Seller. If this Agreement is terminated as
provided herein each party shall redeliver all documents, work
papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the
same.
4.6
Effect of Termination
.
(a)
In the event that this Agreement is
validly terminated as provided herein, then each of the parties
shall be relieved of its duties and obligations arising under this
Agreement after the date of such termination and such termination
shall be without liability to Purchaser or Seller; provided
, however , that the obligations of the parties
set
16
forth in Sections 4.6 and 8.6
and Article XIII hereof shall survive any such
termination and shall be enforceable hereunder.
(b)
Nothing in this
Section 4.6 shall relieve Purchaser or Seller of any
liability for a material breach of this Agreement prior to the date
of termination, The damages recoverable by the non-breaching party
shall include all attorneys’ fees reasonably incurred by such
party in connection with the transactions contemplated
hereby.
(c)
The Confidentiality Agreement shall
survive any termination of this Agreement and nothing in this
Section 4.6 shall relieve Purchaser or Seller of their
obligations under the Confidentiality Agreement; provided ,
that upon the termination of this Agreement, the non-solicitation
obligations of Purchaser and its Affiliates under the
Confidentiality Agreement shall be of no further force and effect;
provided further that upon the Closing, the non-solicitation
obligation of Purchaser and its Affiliates under the
Confidentiality Agreement with respect to non-U.S. employees of the
broker-dealer and investment banking business shall be of no
further force and effect.
(d)
In the event that Purchaser
terminates this Agreement pursuant to Section 4.4(d) ,
Sellers shall pay to Purchaser (i) the Break-Up Fee promptly
upon such termination and (ii) the Expense Reimbursement as
provided in the Breakup Fee and Competing Bid Order.
(e)
In the event that Purchaser or
Seller terminates this Agreement pursuant to
Section 4.4(a) and at any time after the date of
this Agreement and prior to such termination a bona fide proposal
for a Competing Transaction shall have been publicly disclosed or
otherwise communicated to the Sellers and shall not have been
irrevocably withdrawn, then if a Qualified Bid shall be consummated
within twelve months after such termination Sellers shall pay to
Purchaser (i) the Break-Up Fee and (ii) the Expense
Reimbursement as provided in the Breakup Fee and Competing Bid
Order on the date of such consummation.
(f)
The parties hereto acknowledge that
the agreements contained in this Section 4.6 are an
integral part of the transactions contemplated by this Agreement.
The Sellers shall be jointly and severally liable for any amount
due to Purchaser pursuant to this Section 4.6 .
In the event that the Sellers shall fail to pay any amounts due
pursuant to this Section 4.6 , the Sellers shall
reimburse Purchaser for all reasonable costs and expenses actually
incurred or accrued by Purchaser (including reasonable fees and
expenses of counsel) in connection with the collection under and
enforcement of this Section 4.6 .
17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and
warrants to Purchaser that:
5.1
Organization and Good
Standing . Seller
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now conducted.
Seller is duly qualified or authorized to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property and each
other jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified,
authorized or in good standing would not have a material adverse
effect.
5.2
Authorization of
Agreement . Except
for such authorization as is required by the Bankruptcy Court (as
hereinafter provided for), Seller has all requisite power,
authority and legal capacity to execute and deliver this Agreement
and Seller has all requisite power, authority and legal capacity to
execute and deliver each other agreement, document, or instrument
or certificate contemplated by this Agreement or to be executed by
Seller in connection with the consummation of the transactions
contemplated by this Agreement (the “ Seller Documents
”), to perform their respective obligations hereunder and
thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and
the Seller Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of Seller. This
Agreement has been, and each of the Seller Documents will be at or
prior to the Closing, duly and validly executed and delivered by
Seller which is a party thereto and (assuming the due
authorization, execution and delivery by the other parties hereto
and thereto, the entry of the Sale Order, and, with respect to
Seller’s obligations under Section 4.4 , the
entry of the Breakup Fee and Competing Bid Order) this Agreement
constitutes, and each of the Seller Documents when so executed and
delivered will constitute, legal, valid and binding obligations of
Seller enforceable against Seller or, as the case may be, its
Subsidiary in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
5.3
Conflicts; Consents of Third
Parties .
(a)
None of the execution and delivery
by Seller of this Agreement or by Seller and its Subsidiaries of
the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by Seller and its
Subsidiaries with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination or cancellation under any provision of
(i) the certificate of incorporation and by-laws or comparable
organizational documents of Seller or any Subsidiary;
(ii) subject
18
to entry of the Sale Order, any Order of any
Governmental Body applicable to Seller or any of the properties or
assets of Seller as of the date hereof; other than, in the case of
clause (ii), such conflicts, violations, defaults, terminations or
cancellations that would not have a material adverse
effect.
(b)
No consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the
part of Seller or any Subsidiary in connection with the execution
and delivery of this Agreement or the Seller Documents, the
compliance by Seller or any Subsidiary with any of the provisions
hereof or thereof, the consummation of the transactions
contemplated hereby or thereby or the taking by Seller or any
Subsidiary of any other action contemplated hereby or thereby,
except for (i) compliance with the applicable requirements of
the HSR Act, (ii) the entry of the Sale Order, (iii) the
entry of the Breakup Fee and Competing Bid Order with respect to
Seller’s obligations under Section 4.6 ,
(iv) filings of applications and notices with, and receipt of
consents, authorizations, approvals, exemptions or non-objections
from, the Securities and Exchange Commission (the “
SEC ”), foreign and state securities authorities, the
Financial Industry Regulatory Authority (“ FINRA
”), the Commodity Futures Trading Commission (“
CFTC ”), National Futures Association (“
NFA ”) applicable securities, commodities and futures
exchanges, the Financial Services Authority (“ FSA
”) and other industry self-regulatory organizations (“
SRO ”), (v) the filing of any other required
applications, filings or notices with the Board of Governors of the
Federal Reserve System (the “ Federal Reserve
”), any foreign, federal or state banking, other regulatory,
self-regulatory or enforcement authorities or any courts,
administrative agen