UNIT PURCHASE AGREEMENT

 

TABLE OF CONTENTS

 

		Page
ARTICLE I	DEFINITIONS	1
1.1	Certain Definitions	1
1.2	Other Definitional and Interpretive Matters	20
ARTICLE II	CONTRIBUTION; ISSUANCE OF UNITS; CLOSING CASH	21
2.1	The Contribution	21
2.2	[Reserved]	21
2.3	Amended and Restated Operating Agreement	21
2.4	Issuance of Units	22
2.5	Further Conveyances and Assumptions	22
2.6	Closing Cash and Closing Net Working Capital	23
2.7	Post-Closing True-Ups	24
ARTICLE III	CLOSING AND TERMINATION	25
3.1	Closing Date	25
3.2	Certain Closing Deliveries	26
3.3	Termination of Agreement	26
3.4	Procedure Upon Termination	28
3.5	Effect of Termination	28
ARTICLE IV	REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY	28
4.1	Organization and Good Standing	28
4.2	Authorization of Agreement	28
4.3	Capitalization	29
4.4	Litigation	29
4.5	Financial Advisors	29
4.6	Formation of the Company	29
4.7	Arrangement with Employee Members	30
4.8	Acknowledgement	30
ARTICLE V	REPRESENTATIONS AND WARRANTIES REGARDING LBHI	31
5.1	Organization and Good Standing	31
5.2	Authorization of Agreement	31

 

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TABLE OF CONTENTS

(continued)

 

		Page
5.3	Ownership of Interests	31
5.4	Conflicts and Consents	31
5.5	Subsidiaries	32
5.6	Litigation	32
5.7	Financial Advisors	32
5.8	Investment Intention	33
5.9	Disclosure of Information	33
5.10	General	33
5.11	No General Solicitation	33
5.12	Acknowledgement	33
ARTICLE VI	[RESERVED]	34
ARTICLE VII	COVENANTS	34
7.1	Conduct of the Company Pending the Closing	34
7.2	Conduct of the Business Pending the Closing	34
7.3	Preservation of Back Office Support	35
7.4	Consents	36
7.5	Regulatory Approvals	36
7.6	Further Assurances; Etc	36
7.7	Preservation of Records	37
7.8	Publicity	38
7.9	Employee Benefits	38
7.10	Tax Matters	39
7.11	Indemnification of Officers and Employees of the Company	43
7.12	Client Brokerage Consents	44
7.13	Client Investment Advisory Consents	44
7.14	Public Fund Investment Advisory Consents	45
7.15	Section 15 of the Investment Company Act	47
7.16	Administration	47
7.17	Qualification of the Public Funds	48
7.18	[Reserved]	48
7.19	Real Property Leases	48

 

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TABLE OF CONTENTS

(continued)

 

		Page
7.20	[Reserved]	49
7.21	Amended and Restated Operating Agreement	49
7.22	Deferred Transfers	49
7.23	[Reserved]	51
7.24	[Reserved]	51
7.25	[Reserved]	51
7.26	Withdrawal of LBHI Capital	51
7.27	Lehman Commitments to Funds	51
7.28	Director Resignations	51
7.29	Taxing Authority Notification	51
7.30	Employee Securities Company	52
7.31	Artwork	52
7.32	Transition Services Obligations	52
7.33	Intercompany Accounts	54
7.34	Excluded Liabilities	54
7.35	Assumed Liabilities	54
ARTICLE VIII	CONDITIONS TO CLOSING	54
8.1	Conditions Precedent to Obligation of the Company	54
8.2	Conditions Precedent to Obligation of LBHI	55
8.3	Frustration of Closing Conditions	56
ARTICLE IX	INDEMNIFICATION	56
9.1	Survival of Representations and Warranties	56
9.2	Indemnification by LBHI	56
9.3	[Reserved]	57
9.4	Certain Limitations on Indemnification	57
9.5	Survival of Indemnification	57
9.6	Indemnification Procedures	58
9.7	Exclusive Remedy for Matters Subject to Indemnification	60
9.8	Treatment of Indemnification Payments by LBHI to the Company	60
ARTICLE X	MISCELLANEOUS	60
10.1	[Reserved]	60

 

iii

 

TABLE OF CONTENTS

(continued)

 

		Page
10.2	Expenses	60
10.3	Entire Agreement; Amendments and Waivers	60
10.4	Notices	61
10.5	Binding Effect; No Third-Party Beneficiaries; Assignment	62
10.6	Specific Enforcement	62
10.7	Counterparts	63
10.8	GOVERNING LAW; SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY TRIAL	63
10.9	Treatment as Administrative Expenses	64
10.10	Additional Employee Members	64
Exhibit A	Amended and Restated Operating Agreement Term Sheet

 

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UNIT PURCHASE AGREEMENT

 

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

 

W I T N E S S E T H:

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

DEFINITIONS

 

1.1           Certain Definitions .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           all Liabilities under the Purchased Contracts;

 

(b)           [reserved];

 

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(c)           [reserved];

 

(d)           all Liabilities under Transferred Real Property Leases;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ BarCap ” means Barclays Capital Inc.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            the Hedge Fund Minority Stake Investments;

 

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

 

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

 

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

 

(n)           [reserved];

 

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

 

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

 

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

 

(r)            any assets of any Benefit Plan;

 

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

 

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

 

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

 

(v)           [reserved];

 

(w)          [reserved];

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           [reserved];

 

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

 

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

 

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

 

(f)            [reserved];

 

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

 

(h)           [reserved];

 

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

 

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

 

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

 

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

 

(m)          all Liabilities relating to any Excluded Asset;

 

(n)           [reserved];

 

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

 

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

 

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

 

“ Execution Date ” means the date of this Agreement.

 

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

 

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

 

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

 

“ FINRA ” means the Financial Industry Regulatory Authority.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           the Furniture and Equipment;

 

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

 

(f)            the Purchased Contracts;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)          [reserved;]

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(x)            the Acquired Private Equity Business;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ UK Pensions Act ” means the Pensions Act 2004.

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

CONTRIBUTION; ISSUANCE OF UNITS; CLOSING CASH

 

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

 

2.2           [Reserved].

 

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

 

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2.4           Issuance of Units .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.6           Closing Cash and Closing Net Working Capital .

 

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

 

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

 

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

 

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

 

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

 

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

 

2.7           Post-Closing True-Ups .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE III

CLOSING AND TERMINATION

 

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

 

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

 

3.2           Certain Closing Deliveries .  At the Closing:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

 

Except as otherwise set forth on the corresponding disclosure schedule delivered to LBHI by the Company prior to LBHI’s execution of this Agreement (it being understood that any matter disclosed in a Schedule by the Company shall be deemed