Client Assets Update - Modification of the Claim Resolution Agreement - 29/12/2009

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 minor modifications to the Agreement, which will be made in accordance with Clause 80.3 of the Agreement. These modifications are either to reflect events that have occurred since the date of the Offer or to address concerns of offerees that have arisen from conversations with them.

1    Modifications to the Claim Resolution Agreement

1.1    Modifications

1.1.1 The names of the Joint Administrators on pages III-9 and III-127 shall be amended to reflect the appointment of Derek Howell as an additional administrator on 30 November 2009.

1.1.2 The reference to "in each case in contravention of Clause 8.1" in Clause 45.3.7(i) on page III-69 shall be replaced with "in the case of (b) in contravention of Clause 8.1".

1.1.3 The reference to "fifth Business Day" in Clause 59.3.2 on page III-85 shall be replaced with "fifteenth Business Day".

1.1.4 The reference to "Clause 59.6.1(i)" in Clause 59.6.1(iii) on page III-87 shall be replaced with a reference to "Clause 59.6.1(ii)".

1.1.5 The words "prior to" in the definition of "AssignCo" shall be replaced with the words "as soon as practicable after".

1.1.6 The words "and which was, or ought to have been, held by the Company" shall be inserted at the end of the definition of Client Money on page III-132. This amendment is made to reflect the judgment of Briggs J in the Matter of Lehman Brothers International (Europe) (in administration) Case No 7942 of 2008 [2009] EWHC 3228 (Ch) handed down on 15 December 2009.

1.1.7 The words "that is an Ownership Claim" shall be inserted immediately after the word "(i)" and before the words "for or in respect of Excluded Property", and the words "under paragraph (ii) above" shall be inserted immediately after "provided that no Claim" and before the words "in respect of" in the definition of Excluded Claims on pages III-138 and III-139 in order to make it clear beyond doubt that contractual (i.e. non-proprietary) Claims for or in respect of Excluded Property that arise under Financial Contracts will not be Excluded Claims but that Ownership Claims in respect of Excluded Property will be Excluded Claims, whether or not they arise under Financial Contracts.

1.1.8 A minor formatting correction in the definition of "Non-Custody Asset Claim" on page III-144.

1.1.9 The words "or money" shall be inserted immediately after the words "any Assets" and before the words "held or controlled by the Company" in the first line of the definition of "Non-Trust Assets" on page III-144 in order to make it clear that alleged tracing claims into money held by LBIE in its "house accounts" are not compromised under the Agreement. This amendment is made to reflect the judgment of Briggs J in the Matter of Lehman Brothers International (Europe) (in administration) Case No 7942 of 2008 [2009] EWHC 3228 (Ch) handed down on 15 December 2009.

1.1.10 A reference shall be added for all of LBIE's Affiliates as persons who, for the avoidance of doubt, shall not be Released Parties in the definition of "Released Parties" on page III-150 for the purposes of Clause 4.2 only. This is to remove any residual concerns that Affiliates that become Signatories will not benefit from the releases in Clause 4.2 of the Agreement, whilst recognising that it would still be appropriate for Affiliates to be Released Parties for other purposes.

1.2    Implementation

A copy of the Agreement modified for the above shall be posted on the website in due course.