Client Assets Update - Modification of the Claim Resolution Agreement - 27/1/2011

This update relates to the Claim Resolution Agreement (the "Agreement"), which was declared effective on 29 December 2009 by Lehman Brothers International (Europe) (in administration) ("LBIE") in respect of certain of its clients and counterparties.  Further background information in relation to the Offer and the Agreement is set out in our update of 24 November 2009.  Capitalised terms not defined in this update shall have the meaning given to them in the Agreement.

The Joint Administrators hereby notify you of the following modifications to the Agreement, which are being made in accordance with Clause 80.3 of the Agreement.  These modifications separate the issuance of Claim Amount Notices (“CANs”) from the timetable for disputes relating to them.  This will speed up the process of sending CANs as the Company will be free to send CANs without triggering the process that crystallises Disputes. The rights of the Signatories to raise Disputes are preserved by the introduction of the Counterclaim Notice.

1. The process under the Claim Resolution Agreement prior to the modifications

• LBIE will notify each Signatory of its Individual Claim Amount on a Stock Line by way of a CAN.
• Each Signatory who receives a CAN has 25 Business Days (the Dispute Notice Deadline) to respond to LBIE disputing its Individual Claim Amount by submitting a Dispute Notice and specifying its Alleged Individual Claim Amount in the Dispute Notice, thereby starting the Dispute Resolution Mechanism.
• Provisional Allocation Percentage in respect of each Stock Line to be calculated after all Individual Claim Amounts are calculated, CANs are sent and Dispute Notice Deadline has expired.

2. Modifications to the process under the Claim Resolution Agreement

• LBIE will notify each Signatory of its Individual Claim Amount on a Stock Line by way of a CAN.
• Each Signatory who receives a CAN has 25 Business Days (the Counterclaim Notice Deadline) to respond to LBIE disputing its Individual Claim Amount by submitting a Counterclaim Notice and specifying its Alleged Individual Claim Amount in the notice. This quantifies the claim.
• The Provisional Allocation Percentage in respect of each Stock Line is to be calculated after all Individual Claim Amounts are calculated, the CANs are sent and the Counterclaim Notice Deadline has expired.
• LBIE will then send a Dispute Trigger Notice to Signatories who have submitted a Counterclaim Notice whose disputes can not be resolved. The Signatory can then start the Dispute Resolution Mechanism by submitting a Dispute Notice within 25 Business Days.
• There is flexibility for LBIE to send a CAN and Dispute Trigger Notice at the same time, in which case, the Signatory only has to send back a Dispute Notice.
• A Signatory who submits a Counterclaim Notice cannot assert an Individual Claim Amount in its Dispute Notice higher than the Alleged Individual Claim Amount set out in the Counterclaim Notice.
• A Signatory who does not submit a Counterclaim Notice loses its right to submit a Dispute Notice subsequently.

3. Further minor amendments

• A proviso has been added to make it clear beyond doubt that the nature of the Determination Notice as final and binding is subject to LBIE becoming aware of any new Relevant Information.
• The registered address of AssignCo has changed since the notice of 15 March 2010. The definition in the Agreement has been modified to conform with the new address.

4. Modified Agreement

A copy of the Agreement modified for the above is available here. A comparison of the Agreement against the version released on 24 November 2009, as modified in accordance with updates posted on 29 December 2009 and 15 March 2010 (and subsequent change of address) can also be viewed here.

5. Further information

In the event that you require further information with regard to the above, please send an email to generalqueries@lbia-eu.com.

Please continue to check this website for information on matters relating to the administration of LBIE.