Combined 5527 Appex Vol Iv

JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 Robert W. Gaffey Jayant W. Tambe William J. Hine Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re:

Chapter 11

LEHMAN BROTHERS HOLDINGS INC., et al.,

Case No. 08-13555

Debtors.

(Jointly Administered)

APPENDIX TO DEBTOR’S MOTION FOR AN ORDER, PURSUANT TO FED. R. CIV. P. 60 AND FED. R. BANKR. P. 9024, MODIFYING THE SEPTEMBER 20, 2008 SALE ORDER AND GRANTING OTHER RELIEF

APPENDIX VOLUME IV

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97 9/21/08 (1:38 am) email between M. Forrest and A. Blackwell, et al. (Dep. Ex. 48) 98 9/21/08 (4:36 am) email between J. Hraska and M. Forrest, et al., with attachment (Dep. Ex. 145B) 99 9/21/08 (9:16 a.m.) email between M. Forrest and I. Lowitt, et al. (Dep. Ex. 168A) 100 9/21/08 (9:16 am) email between M. Forrest and I. Lowitt, with attachment (excerpt of first four pages of Dep. Ex. 151B) 101 9/21/08 (12:27 pm) email between R. Azerad and J. Hraska (Dep. Ex. 180) 102 9/21/08 (2:17 pm) email between I. Veksler and R. Azerad, et al., with attachment (Dep. Ex. 155A) 103 9/21/08 (2:33 pm) email between S. Sell and D. Joshi, et al., with attachment (BCI 006647 – 653 [Dep. Ex. 83B]) 104 9/21/08 (6:20 pm) email between R. Azerad and G. Romain, et al., with attachment (Dep. Ex. 229) 105 9/21/08 (7:53 pm) email between D. Fleming and P. Tonucci (Dep. Ex. 161A) 106 9/21/08 (8:05 pm) email between F. Pearn and I. Lowitt, et al., with attachment (Dep. Ex. 95B) 107 9/21/08 (8:15 pm) email between R. Azerad and M. Kelly, with attachment (Dep. Ex. 185) 108 9/21/08 (8:29 pm) email between S. King and R. Ricci (BCI-EX-

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re LEHMAN BROTHERS HOLDINGS INC., et al., Debtors Case No. 08-13555 APPENDIX INDEX VOLUME IV App. Tab No.

Description

00080668 [Dep. Ex. 383]) 109 9/21/08 (9:12 pm) email between R. Azerad and M. Kelly, et al., with attachment (Dep. Ex. 186) 110 9/21/08 (10:07 pm) email between J. Potenciano and C. O’Meara, et al., with attachment (Dep. Ex. 187) 111 9/21/08 (10:22 pm) email between R. Azerad and M. Kelly, with attachment (Dep. Ex. 188) 112 9/22/08 (12:37 am) email between M. Lee and M. Kelly (Dep. Ex. 189) 113 9/22/08 (1:07 am) email between M. Kelly and A. Stucchio (Dep. Ex. 173A) 114 9/22/08 (6:45 am) email between J. Yang and R. Azerad, et al., with attachment (BCI 008149 [excerpt of Dep. Ex. 84B, BCI 008150 – 670 intentionally omitted]) 115 9/22/08 (7:17 am) email between R. Azerad and J. Hraska, et al. (Dep. Ex. 146A) 116 9/22/08 (7:19 am) email between R. Azerad and J. Yang, et al. (Dep. Ex. 147A) 117 9/22/08 (10:35 am) email between A. Blackwell and M. Forrest, et al. (Dep. Ex. 152B) 118 9/22/08 (5:48 pm) email between R. Ricci and P. Clackson (BCI-EX 00079307 – 309 [Dep. Ex. 209]) 119 9/22/08 (7:50 pm) email between P. Tonucci and T. Lyons (Dep. Ex. 162A)

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120 9/22/08 (8:57 pm) email between S. Chen and D. Fleming, et al., with attachment (BCI-EX-(S)-00019187 – 194 [Dep. Ex. 305B]) 121 9/23/08 (9:15 am) email between M. Evans and B. Diamond, with attachment (BCI-EX-(S)-00027190 – 197 [Dep. Ex. 284B]) 122 9/24/08 (9:25 am) email between M. Evans and R. Jenkins, et al., with attachment (BCI-EX-(S)-00027258 – 265 [Dep. Ex. 288B]) 123 9/24/08 (11:16 a.m.) email between C. Lucas and J. Varley (BCI-EX(S)-00053947 [Dep. Ex. 353A]) 124 9/25/08 (11:59 am) email between M. Shapiro and J. House (BCI-EX(S)-00002402) 125 9/25/08 (3:58 pm) email between G. Romain and J. Westwood, et al. (BCI-EX-(S)-00052834 – 835) 126 9/28/08 (12:54 pm) email between R. Azerad and J. Hraska, et al., with attachment (BCI-EX(S)-00014389 – 393 [excerpt of Dep. Ex. 146B]) 127 9/30/08 (6:09 pm) email between M. Forrest and A. Blackwell, et al., with attachment (BCI-EX-(S)-00017385 [Dep. Ex. 155B]) 128 10/11/08 letter to Barclays from JPMorgan (BCI-CG00059720 – 726) 129 11/23/08 (10:30 pm) email between J. Hughes and S. Cutler (BCI-CG 00060950 – 953) 130 12/31/08 Barclays PLC Results Announcement, Figures 2008. (Dep. Ex. 22) 131 7/31/09 letter from Boies, Schiller & Flexner LLP to Jones Day enclosing spreadsheets and the Notice of Termination (BCI-EX00082629 – 00109165 [Dep. Ex. 206])

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Description

132 Barclays’ spreadsheets (BCI-EX-00099519 – 99521 [Dep. Ex. 86B]) 133 Barclays’ spreadsheet (BCI-EX-00108700 [Dep. Ex. 87B]) 134 Barclays’ spreadsheet (BCI-EX-0009154 – 161 [Dep. Ex. 88B]) 135 Barclays’ spreadsheets (BCI-EX-00115843 – 846 [Dep. Ex. 377A]) 136 7/16/09 letter from Boies, Schiller & Flexner LLP to Jones Day enclosing schedule (BCI-EX-00077272 – 286) 137 Barclays’ spreadsheet regarding compensation (BCI-EX-00115843 [Dep. Ex. 281B]) 138 Letter to Ian Lowitt (BCI-EX-0007735 – 337 [Dep. Ex. 216]) 139 Email between C. Corcoran and A. Collerton, with attachment (Dep. Ex. 101.) 140 Letter to Eric Felder (BCI-EX 00077305 – 307 [Dep. Ex. 13]) 141 Letter to Paolo Tonucci (BCI-EX 00077360 – 00077362 [Dep. Ex. 138A]) 142 Letter to Gerald Donini (BCI-EX-00077302 – 304) 143 Letter to Steven Berkenfeld (BCI-EX-00077288 – 290 [Dep. Ex. 17]) 144 Letter to Martin Kelly (BCI-EX-00077326 – 327 [Dep. Ex. 194]) 145 Letter to Mark Shapiro (BCI-EX-00077347 – 349 [Dep. Ex. 55A]) 146 Letter to Hugh (“Skip”) McGee (BCI-EX-00077338 – 340 [Dep. Ex. 103]) 147 Letter to Martin Kelly (BCI-EX-00077323 – 325 [Dep. Ex. 193])

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Filed Under Seal Pursuant To Protective Order

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Filed Under Seal Pursuant To Protective Order

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From:

Sent: To:

Shapiro, Mark 1. Thu, 25 Sep 2008 14:59:08 GMT House Joseph

Subject: Status

Joe, iller the tumultuous week here at Lehman (now Barclays Capital), ltave finally come up for air and wanted to let you know that was thrust into having to lead the bankruptcy filing and sale to Barclays. which I will tell you about sometime over drinks or dinner, and luckily we were able to save most jobs in the US. Thngs should pretty much continue on for me as I expect to be the Head of the Restructuring and Finance efforts at Barclays once the dust all settles.

I

I

Give me a call \vhen you have a chance. I understand the confi was signed up relating to DeltaINW A and that information should be forthcoming. Regards, Mark

HIGHLY CONFIDENTIAL

BCI-EX-(S )-00002402

A. 125

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FOR SETTLEMENT SETTLEMENT DISCUSSION DISCUSSION PURPOSES PURPOSES ONLY ONLY FOR WITHOUT PREJUDICE PREJUDICE WITHOUT October 11, 11,2008 October 2008

John Varley, John Varley, Group Group CEO CEO Barclays Bank Bank PLC PLC Barclays One Churchill One Churchill Place Place -- Level Level 31 31 London London E145HP E145HP England England Dear Dear John: John:

I thought thought it would would be be useful useful to to communicate communicate directly directly about about the the dispute dispute between our our firms, between firms, in the the hope hope that that we we can can have have an an honest honest and and forthright forthright discussion and what discussion about about what what we we might might do do to to resolve resolve our our differences differences -- and what II think doininlight light of ofthe the potential potential impact impact of of these these matters matters on on the the think we must do Lehman s creditors. Lehman Brothers Brothers Inc. Inc. (LBI) (LBI) estate estate and andLBI' LBI’s creditors. II know know you you are are focused on the movement movement of $7 $7 billion billion of of cash cash out out of of aa cash cash collateral collateral focused account What I do account into into an an LBI LBI clearance clearance account account on on Friday, Friday, September September 19. 19. What do not know is whether you are aware of (1) the context (at least from our not know is whether you are aware of(l) context (at least from our perspective) perspective) in in which which tllat that occurred, occurred, and and (2) (2) the the interests interests that that LBI, LBI, its its creditors, the SIPA SIPA Trustee Trustee and the Bankruptcy Bankruptcy Court may have have in these these creditors, events and events and in in a thorough thorough reconciliation reconciliation and and accounting accounting of of the the relevant relevant cash cash and securities securities movements. movements. Background Background After After the the Lehman Lehman Brothers Brothers holding holding company company filed filed its its bankruptcy bankruptcypetition petitionon on September September 15, 15, JPMorgan JPMorgan continued continued to to act act as as the the clearing clearingbank bankfor forLBI LBI-- i.e., i.e., in order order to to facilitate facilitate an orderly as the the firm's firm’s agentagent- in orderly wind-down wind-downofofthe thefirm firm and the subsequent subsequent sale sale of ofLBI assets to Barclays Capital. We did so at the LBI assets Barclays Capital. We did so at the request of both both the Federal Federal Reserve request Reserve Bank Bank of of New New York York and and Barclays Barclays Capital Capital itself. Even though though we knew itself. Even knew that that aa bankruptcy bankruptcyofofLBI LBIwas wasimminent, imminent,wewe advanced tens tens of billions billions of dollars dollars to LBI to protect protect the markets markets against against the advanced

CONFIDENTIAL CONFIDENTIAL

BCI-CG00059720 BCl-CG00059720

John Varley, Group John Varley, Group CEO CEO October 11, 11,2008 October 2008 2 of 7 Page 20f7 impact of a disorderly impact disorderly collapse collapse of of LBI LBI and and to to permit permit the the firm firm to to remain remain in in business the asset business pending pending the asset sale. sale. We We had had no no legal legal obligation obligation to to do do that, that, but believed was the the right right thing thing to to do. do. believed it was Throughout this Throughout this period, period, Barclays Barclays Capital Capital assured assured JPMorgan JPMorgan that that itit was was going going to to fully fully repay repay JPMorgan's JPMorgan’s advances advances by bypurchasing purchasingororrefinancing refinancingthe theentire entire LBI securities securities portfolio LBI portfolio that that we we were were financing financingasasLBI's LBI’sagent agentclearing clearingbank. bank. We notes of some some of the conversations conversations between between our We have have contemporaneous contemporaneous notes respective personnel confirming confirming that that Barclays Barclays Capital Capital would would be be succeeding succeeding respective personnel to to all all of of the the assets assetsthat thatwe wewere werefinancing. financing.Consistent Consistentwith withthat that confirmation, confirmation, on on Tuesday, Tuesday, September September 16, 16, Lehman Lehman Brothers Brothers filed filed with withthe the Bankruptcy Bankruptcy Court Court a motion motion to to authorize authorize an an Asset Asset Purchase Purchase Agreement Agreementwith with Barclays Barclays Capital Capital contemplating, contemplating, among among other other things, things, aa purchase purchase by byBarclays Barclays Capital of $70 $70 billion billion in in securities securities and andthe theassumption assumptionofof$69 $69billion billioninin Capital of related debt. related During During the the course course of of that that week, week, aa significant significant amount amount of of the theborrowing borrowingLBI LBI had doing from from the Fed Fed was assumed assumed by Barclays Barclays Capital. Capital. had been been doing Mon, MOD, Sept Sept 15 15 Fed Barclays Barc1ays Fed Securities FRB S~:uriti~s Freddie Freddie Mac Mac &&Fannie FamueMae MacMaS MBS Freddie Mac Mac && Faroie FarmieMae MacREMiCs REMICs Freddie GirlieMaeI~MaS MB8Pools Pool~ Ginnie US Government Agency Agency Securities Securities US Oo~emme~ US and Strips Strips USTreasuries Tre~e~ ~d

12,211 12,211 3,603 3,603 204 553 553 3,%5 3,965 1465

mb~otal sablotal

22.000

Ginnie Mae REMIC.

DTC Securities DTC Securities Securities Asset Back Securities Conunercial Paper Paper Conunercial Corporate Bonds Bonds Corporate Mwlicipal B~ads Bonds Municipal Other Other Private Label C’lvlO CMO Privat~ Label

DTC DTC Equities Equities subtotal subtotal

-

Cash

13,500 13,500

Total Total

65,919 6:~919

9,209 2,835 1,147 1,147 500 5,948 5,948 5760 5760 25,399

5,011 5,011 4,366 4,366 9.376 3.350 3.350 772 772 4,264 4,264

33281 2~1 30,419 30~419

Tues, Sept Sept 16 16 Tues, Barc1ays Fed Barclays Fed 2,613 94 94 1 22 209

--

Wed, Sept 17 Wed, Sept Barc1ays Fed Fed Barclays

~

10,477 2,754 353 50j 50i 1],437 11,437 6 ~7

2,919

32,_ 32,48~

212 212

4,326

4,377 4,377 5,228 5,228 7,329 7,329 451 451 90 9O 4,532 4,532

1,955 3,112 587 587 3~ 3'

2100 2,100 2,100

22886 886 24,894 24,894

2,100 2 I00 8,003 8,003

2,100

50,294 ~0,294

~

--

7,570 7,570 144 144 68 68 1,679 1,679

203 203 5,228 5,228 2,090 3,320 45 45 2,815 2,815

4 445 18,231 18,231

22.887 887 16,590 16,590

50,640

16,590 16,$90

10,922

Indeed, much of of the the collateral collateral financed financedby byBarclays BarclaysCapital Capitalon onWednesday Wednesday Indeed, much night night was was the the very very collateral collateralfinanced financedbybythe theFed FedononMonday Mondayand andTuesday Tuesday nights, (For (For aa very very significant significant amount nights. amountofofthat thatcollateral, collateral,thethemovement movementof of which and the the Barclays Barclays Capital Capital collateral collateral which between between the Fed collateral collateral pool pool and pool was undoubtedly undoubtedly deliberate, deliberate, Barclays Barclays Capital pool Capital assigned assigned a loan loan value value greater than than the the amount amountthat thathad hadbeen beenassigned assignedbybythetheFed.) Fed.) greater

CONFIDENTIAL CONFIDENTIAL

BCI-CG00059721 BCI-CG00059721

John Varley, Varley, Group Group CEO CEO John October 11, October 11, 2008 Page 3 of of77

September 18, JPMorgan On Thursday Thursday morning, morning, September JPMorgan "unwound" "unwound" these these facilities facilities advancing cash and Barclays Again, we we did did so so by advancing cash to to repay repay the the Fed Fed and Barclays Capital. Capital. Again, with the the clear with clear expectation expectation that that Barclays Barclays Capital Capitalwould wouldeither eitherpurchase purchaseoror finance all all of of the the securities securitiesininthese thesefacilities facilitiesand andthat thatJPMorgan's JPMorgan’sintra-day intra-day finance funding would funding would be be fully fully repaid repaid prior prior to to the the commencement commencement ofLBI's of LBI’s SIPA SIPA proceeding. proceeding.

During the the day day on on Thursday, Thursday, you you commenced commenced what what we we thought thought was was the the During assumption of the the entire entire portfolio. portfolio. You billion in in cash cash and andwe we assumption of You sent sent $5 billion released our our lien lien on on securities securitiesvalued valuedatat$5$5billion. billion.InInthe theearly earlyevening, evening,Bob Bob released Diamond Heidi Miller Miller and and several other of of our our senior senior executives executives Diamond spoke spoke to Heidi several other and and asked asked that that we we release release our our lien lien on on additional additional securities securities so sothat thatBarclays Barclays Capital Capital would would receive receive an an aggregate aggregateof$49.7 of $49.7billion billionininsecurities securitiesininexchange exchange for aggregate payments (The Fed has apprised apprised us that for aggregate payments of of $45 $45 billion billion in in cash. cash. (The that the loan amount on the loan amount on the the Fed Fed collateral collateral pool pool was was $46.1 $46.1 billion billion and and we we and andthe the Fed agree agree that Fed that the the loan loan amount amount on on $49.7 $49.7billion billionofofthe thecollateral collateralwas was$45.2 $45.2 billion. Accordingly, Accordingly, we have have difficulty difficulty understanding billion. understandingany anyclaim claimthat thatyou you were were to to receive receive the the entire entire Fed Fed collateral collateralpool poolininexchange exchangefor for$45 $45billion billioninin cash.) As you can appreciate, there would have been absolutely no reason cash.) As you can appreciate, there would have been absolutely reason and lien for us us to to give give up up our our margin margin -- and lien position position -- on the the securities securities financed financed Wednesday night had there been any any chance chance that we would would by the Fed on Wednesday have have been been left left (post-bankruptcy) (post-bankruptcy) unpaid unpaid on on the the securities securitiesthat thatBarclays Barclays Capital financed financed on \Ve understood understood that you you were Capital on \Vednesday Wednesday night. night. We were going going to repay repay all all of of our our intra-day intra-day funding fundingand andrelied reliedon onthat thatunderstanding understandinginin relinquishing our margin. margin. relinquishing our Chaos You sent in another Chaos reigned reigned throughout throughout Thursday Thursday evening. evening. You another $40 $40 billion in cash. cash. Billions were sent sent out outand andmany manywere were billion Billions of of dollars dollars of securities securities were "DK'd" or otherwise otherwise sent back. back. By By about about 11 11o’clock, o'clock, when when DTC DTC shut down, down, "DK’d" you had had apparently received aa net net total totalofofapproximately approximately$42.7 $42.7billion billionofof you apparently received securities. All of any any securities. All of of the the confusion confusion was was heightened heightened by the absence absence of definitive list list of of securities securities that thatyou youwere werepurchasing purchasing- -an anabsence absencethat thatwe we definitive believe further supports supports the the notion notion that that you you were were taking taking all all of the securities securities believe further collateralizing our intraday intraday advances. advances. collateralizing our securities you you received received were were not not limited limited to to the the collateral collateral that that had had been been The securities financed by by the the Fed Fed on Wednesday Wednesday night. night. You amount of of financed You took took a substantial substantial amount securities that had had been been part part of of your your own own "Barclays "Barclays Capital Capitaltri-party N-party securities that financing" on that Wednesday Wednesday night, financing" night, as as well well as as securities securities from fromother other JPMorgan financings. JPMorgan financings.

CONFIDENTIAL CONFIDENTIAL

BCl-CG00059722

BCI-CG00059722:

John Varley, Varley, Group Group CEO John October 11, 2008 October 2008 Page 4 of7 of 7 Activity on Activity onThursday ThursdaySeptember September 18, 2008 Fed FedPro.rams Programs Delivered Received Received Delivered Back Out Back

US Treasuries Treasuries US Agency Agency Securities

~

--

subotal subotal Fed-wire Fed-wire eligihle eligible

ABS ABS CMO CMO Commercial Paper Paper Corporate Equities Equities Muni

549 23 431 23,980

Other Other

BarciaV' Tri-Partv Barcla.vs Tri-Par~ Received Delivered Delivered Received Back Back Out

Received Received Back Back

18 18 lg 18

--

--

312 312 73 73

1,101 1,101 98

348 348 1,020 1,020 210

1,626 1,626 2,465 2,465 854 854

237

29 29 1,821 1,821 33 ] 85 185 1,444

237

1,451 1,451

6,266 6~66

2,378 Z378 701 701

696 696 1,015 1,015

583 583 430 430 644 644

1,463 1,463 53 53 1,677 1,677 1,858 1.858 1,430 1,430

--1,661 1,661

132 132

95 95

6,613 6,613

1,661 1,661

6,613

Other subtotal DTe subtotal DTC

2,904 2,904

3,055 3,055 4,993 4,993 69 69 131 131 11,328 11,328

ITotal Total

2,904 2,904

35,382 35,382

7

-

7 2

1,094 91 91

4

Total Delivered Delivered Received Back Back Delivered Delivered Out Out Reeeived O~l 5,114 4,565 4,565 23.431 18 I8 23 431 18 28,545 4,565 18 4,565

-

]03 103 6,248 6~48

2,691 2,691 2,237 2,237 53 53 4,761 4,761 8,672 8,672 1,502 1,502 448 448 20,364 20~64 48,910 48,910

(Subsequently, we have have learned that you you may may have have also also received received from fromLBI LBI (Subsequently, we learned that securities that were not financed by JPMorgan at all on Wednesday.) securities that were financed by J-PMorgan at all on Wednesday.) After DTC DTC closed, After closed, in order order to facilitate facilitate the completion completion of the transactions transactions necessary portfolio of of securities securities over over to to Barclays Barclays necessary to transfer transfer the entire entire portfolio Capital, we we agreed Capital, agreed (at LBI’s LBI's request) request) to advance advance LBI LBI the cash necessary necessary for LBI to pledge $7 billion to 13arclays Capital to protect it against overnight LBI pledge billion Barclays Capital to protect it against overnight exposure pending such such completion. completion. Again, would be be exposure pending Again, we understood understood that that we would fully repaid on on the the advances advances made made on on Thursday Thursday morning morning and and the thetransfers transfersofof fully repaid cash LBI’s cash and and securities securities would would be completed completed prior prior to the commencement commencement of ofLBI's SIPA proceeding, proceeding, scheduled SIPA scheduled for Friday Friday afternoon, afternoon, September September 19. 19. Still later later on on Thursday Thursday night, night, and and into into the the early earlyhours hoursofofFriday Fridaymorning, morning, Still LBI personnel told us that LBI needed financing from us because LBI personnel us needed financing because you were were purchasing or financing financing the not purchasing the securities securities that that had had been been part part of of the theBarclays Barclays Capital financing. When we we toldtold LBILBI thatthat thisthis waswas contrary to our Capitaltn-party tri-party financing. When contrary to our understanding, and instructed your personnel, personnel, they they came came understanding, instructed them them to speak speak with with your back on on the the line line and that you you would would take take care care of of the thetn-party tri-partylater lateron on back and said said that that That did not not happen. On Friday, Friday, your your personnel that Friday Friday morning. morning. That happen. On personnel told told ours that they ours that they had "forgotten" "forgotten" about about the the tri-party tri-party and were "confused," "confused," and and simply wanted the the $7 $7 billion billion back. back. At that that point, point, understanding understandingthat thatyou youhad had simply wanted intention of living living by the no intention the assurances assurances that that you you had had given givenus us-- or or of of even even completing the "take-out" "take-out" of of the the "Fed "Fed collateral" collateral"-- we we credited credited the the$7 $7billion billion completing the back back to the LBI clearing clearing account, account, from which which we had advanced advanced the the funds funds in first place. place. the first

CONFIDENTIAL CONFIDENTIAL

BCI-CG00059723 BCl-CG00059723

John Group CEO John Varley, Varley, Group CEO October 11, 11,2008 October 2008 of77 Page 5 of

On On Friday Friday night, night, for for the the first first time time as as far far as as we we know, know, the the Bankruptcy Bankruptcy Court Court was apprised apprised of of aa different different "deal" "deal" between Barclays Capital Capital and and Lehman Lehman was between Barclays Brothers that Barclays Barclays Capital Capital was Brothers -- and that was no no longer longerpurchasing purchasing$70 $70billion billioninin assets and assuming assuming $69 $69 billion billion in in related relateddebt. debt. But But the the Court Court was wasnot not assets and apprised of the purchase purchase that Barclays Barclays Capital Capital now says says it agreed agreed to make. make. apprised Instead of the Instead the Court Court being being told told that that Barclays Barclays Capital Capital was was purchasing purchasing approximately $49.7 billion billion in in securities securitiesfor for$45 $45billion billioninincash, cash,the theCourt Court approximately $49.7 was told was told that that Barclays Barclays Capital Capital was was purchasing purchasing$47.4 $47.4billion billionininsecurities securitiesfor for $45.5 addition, the Court Court was $45.5 billion billion in in cash. cash. In addition, was told told that that the thereason reasonfor forthe the change change was was aa deterioration deterioration in in market marketprices, prices,ananexplanation explanationthat thatwe wenow now know incorrect. know to be incorrect. Proposal Proposal know that that many I know many mistakes mistakes were were made made during during the the course course of of the the week weekleading leading up up to to the the LBI LBI bankruptcy bankruptcyfiling filing- - including includingby byBarclays BarclaysCapital. Capital.(You (Youhave have pointed pointed out out aa number number of of mistakes mistakes that thatyou youbelieve believewe wemade.) made.)While Whileofof course we can can litigate litigate about about these these mistakes mistakes (in (in which which case casewe we are are confident confident course we our position in our position that that Barclays Barclays Capital Capital released released its its claims claimswith withrespect respecttotothe the $7 $7 billion billion pursuant pursuant toto the the mutual mutualrelease releasecontained containedininthe theServices Servicesand and Settlement Settlement Agreement Agreement signed signed on on September September 22), 22),and andsee seeourselves ourselvestied tiedup upinin court next several several years, court proceedings proceedings over over the the next years, I do think think there there is a more more sensible course: sensible course: 1. Subject Trustee and Bankruptcy Bankruptcy Court Court approval, approval, we we do do think think Subject to to SIPA Trustee you should - you should get get from from LBI LBIthe the"Fed "Fedcollateral" collateral"still stillremaining remainingat atLBI LB! which the ascribed a market to which the Fed Fed ascribed market value value of of approximately approximately $6 $6billion billion on on that that Wednesday Wednesday night/Thursday night/Thursday morning. morning. (We (We assume assume for for these these purposes certainly a different purposes -- but certainly different view viewwould wouldbe bereasonable reasonable- -that that you you had had contemplated contemplated the the purchase purchase of of $49.7 $49.7billion billionininsecurities securitiesfor for $45 billion in in cash cash rather rather than than(1) (1)the thepurchase purchaseofof$47.4 $47.4billion billioninin $45 billion securities for for $45.5 $45.5 billion billion in cash, cash, as as described described to to the the Bankruptcy Bankruptcy securities Court, or or (2) (2) the the purchase purchase of $49.7 $49.7 billion billion in in securities securities for for $45.2 $45.2 Court, billion in cash, cash, the amount assigned billion the loan loan amount assigned totothe thesecurities securitiesby bythe theFed Fed and JPMorgan.) JPMorgan.) We and We understand understand that that the the Fed, Fed, you you and and we we agree agree that, that, even if you only contemplated contemplated a "take-out" even you had had only "take-out" of the the Fed Fed on that that Thursday night, Thursday night, this this is is collateral collateral you you would wouldhave havereceived receivedand andthat thatthe the Fed Fed (and (and LBI) LBI) did did indeed indeed value valueititatatapproximately approximately$6$6billion. billion.IfIfthe the collateral had aa market market value value of ofless lessthan than$6$6billion billionthat thatnight, night,you you collateral had nevertheless would nevertheless would have have been beenobliged obligedtototake takeit.it.You Youare arenot notentitled entitled

CONFIDENTIAL CONFIDENTIAL

BCI-CGO0059724 BCI-CG00059724

John Varley, Varley, Group Group CEO John October 11, 11, 2008 2008 October of77 Page 66 of

to a windfallwindfall - to to the the detriment detriment ofLBI of LBI (or (orJPMorgan) JPMorgan)- -simply simply because the because the securities securities may may have have been been worth worthless. less. Neither Neither the the SIPA SIPA Trustee, Court nor LBI’s LBI's creditors creditors would would accept accept such such Trustee, the the Bankruptcy Bankruptcy Court a result. If the value of the securities has diminished during the time result. If the value of the securities has diminished during the time of this dispute, we are prepared prepared to discuss discuss that with you. you. But But to tobe be this dispute, we are clear, in clear, in our our view, view, any any differences differences between betweenthe themarket marketvalue valueofofthe the securities securities on on September September 18 18 and and the the value value that that was was being beingused usedfor fortheir their financing on September September 18 18 should should be be for for Barclays Barclays Capital’s Capital's account. account. financing 2. Also subject to the approval approval of the SIPA Trustee Trustee and the Bankruptcy Bankruptcy Also subject Court, the "completion" of the transaction you have said you Court, the "completion" of the transaction you have said contemplated on contemplated on Thursday Thursday evening evening may may entitle entitle you you to to approximately approximately $1 billion billion of of additional additional"Fed "Fedcollateral" collateral"from fromLBI. LBI.(Again, (Again,we weare are assuming assuming for for these these purposes purposes that that you you were were purchasing purchasingaa$49.7 $49.7billion billion pool of securities securities for for $45 $45 billion pool billion in in cash cash and and not not either either (1) (1) aa $47.4 $47.4 billion pool pool of securities securities for $45.5 billion billion for $45.5 billion in in cash, cash, or or (2) (2) aa $49.7 $49.7 billion billion pool pool of of securities securities for for $45.2 $45.2billion billioninincash.) cash.) Because Becausethat that collateral has collateral has already already been been liquidated, liquidated, we we would would suggest suggestthat thataacash cash payment payment be substituted. substituted. 3.o In and 2, and inasmuch inasmuch as you In connection connection with with items items 1 and you ended ended up up taking taking securities securities that that had had not notbeen beenpart partofofthe the"Fed "Fedcollateral" collateral"- -again, again, some were part of the "Barclays Capital tri-party collateral" and still some were part of the "Barclays Capital tri-party collateral" and still others were others were not not financed financed by byJPMorgan JPMorganatatall all- - we webelieve believethat thataafull full accounting should should be altogether possible possible that that the accounting be done. done. ItIt isis altogether the LBI LBI estate creditors gave estate and and its creditors gave you you more more or less less value value than than you you were were entitled Moreover, the the Bankruptcy Bankruptcy Court Court was entitled to to receive. receive. Moreover, was told told that that Barclays Barclays Capital Capital was was to to receive receive $47.4 $47.4billion billion(not (not$49.7 $49.7billion) billion)inin securities and to pay $45.5 billion (not $45 or $45.2 billion) securities and to pay $45.5 billion (not $45 or $45.2 billion)inincash. cash. duty-bound to ensure ensure that LBI LBI received We are both duty-bound received the the value value itit was was supposed supposed to to receive receive in in exchange exchange for for your your $45 $45billion. billion. We We have have offered several times times to offered several to do do this this accounting accounting with with you you (and, (and, as as appropriate, entirely possible appropriate, the Fed), Fed), and and it is entirely possible that that the the SIPA SIPA Trustee Trustee and the Bankruptcy Court Court would such an accounting, accounting, but and the Bankruptcy would want want such but your your personnel have have declined, personnel declined, citing citing the the amount amount of oftime timeand andeffort effortititwould would take. We should do this accounting and should do it now. We would take. We should do this accounting and should now. We would be willing while such such willing to discuss discuss the concept concept of an escrow escrow while reconciliation was taking taking place. place. reconciliation was

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John Group CEO John Varley, Varley, Group October October 11, 2008 Page 7 of7 of 7 4.o We are prepared submit to arbitration arbitration or mediation prepared to submit mediation to to resolve resolve any any remaining differencesbetween betweenusus- -including including(l)(1)whether whetherthethe remaining differences provision of securities securities and and cash cash contemplated contemplated by by items items 11and and 22 above above provision is a fair proxy proxy for the "completion" you "completion" of the transaction transaction that that you you say say you agreed and (2) agreed to to complete, complete, and (2) our our claim claim that that you you were were obliged obliged to to take takeall all of of the the securities securities that that were were part part of of the theBarclays Barclaystri-party N-party collateral. collateral. Again, the SIPA Trustee and and Bankruptcy Bankruptcy Again, we think think the LBI estate estate (and (and the SIPA Trustee Court) may may have have aa keen keen interest interest inin these thesematters mattersasaswell. well. Court)

the September and Services Services Agreement, Agreement, you you agreed agreed 5. In the September 22, Settlement Settlement and that drop your your lawsuit lawsuit concerning that you you would would drop concerning the the Bear Bear Stearns Stearns hedge hedge funds. funds. That That agreement agreement should should remain remain part part of any any resolution resolution we we reach. reach. John, John, we are prepared prepared to to sit sit down down and and discuss discuss these these issues issues this thisweekend. weekend. If we we have to litigate them, so be it, but it would be a shame if we didnot not have litigate them, be but it would be a shame if we did expend every expend every effort now now to to avoid avoid such such an an outcome outcome and and cooperate cooperate to to fashion aa result result that that isis fair fairtotoall allparties. parties.Please Pleaselet letme meknow knowwhen whenyou you fashion can meet. can meet. Sincerely, Sincerely,

Jamie Dimon Jamie Dimon

Cc:

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Robert Robert Diamond, Diamond, President President Bill Winters Bill Winters

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From: From: Hughes, Hughes,Jonathan: Jonathan:Legal Legal(NYK) (NYK) Sent: 23 November 200822:30 November 2008 22:30 To: '[email protected]' ’stephen.m.cutler@j pmorgan.com’ Subject: Subject: Fw: Fw: JPMlTrusteelBarclays JPM/Trustee/Barclays Settlement SettlementAgreement Agreement

Stephen, Stephen, This prejudicial to our interests. Hal'sHal’s This looks looksasasthough thoughit itwas wasactively actively prejudicial to our interests. explanation insufficient. explanation isisinsufficient. Jonathan. Jonathan. ----Original Message ..... Original Message----..... From: LindseeGRANFIELD GRANFIELD From: Lindsee To: Jonathan Schiller To: mhuang mhuang<[email protected]>; <[email protected]>; Jonathan Schiller <[email protected]>; Hughes, Jonathan: Legal (NYK); Robert DAVIS <[email protected]>; Hughes, Jonathan: Legal (NYK); Robert DAVIS Sent: Fri Fri Nov Nov 21 21 20:26:07 20:26:072008 2008 Subject: Fw: JPMlTrusteelBarclays JPlVUTrustee/Barclays Settlement Agreement Subject: Fw: Settlement Agreement

******************************** Contact Information Information Contact Lindsee P. Granfield Granfield Lindsee P. Cleary GottliebSteen Steen&&Hamilton Hamilton LLP Cleary Gottlieb LLP One Liberty One LibertyPlaza Plaza New 10006 New York, York, New New York York 10006 Tel: Tel: 212-225-2738 212-225-2738 Fax: 212-225-3999 212-225-3999 Fax: E-mail: [email protected] E-mail: [email protected]

..... Message----..... ----- Original Original Message From: HSNovikoff From: HSNovikoff Sent: 11/21/2008 08:19 PMEST EST Sent 11/21/2008 08: 19 PM To: To: Lindsee LindseeGRANFIELD GRANFIELD

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Cc: Robert Robert DAVIS; DAVIS;[email protected] [email protected] Subject: Re: Subject: Re: JPM/Trustee/Barclays JPM/Trustee/Barclays Settlement SettlementAgreement Agreement

Also, just just to be clear, clear, none none of of the the securities securities set set aside asidewere were identified. Hal Harold S. S. Novikoff Novikoff Harold Wachtell, Wachtell, Lipton, Lipton, Rosen Rosen&&Katz Katz [email protected] [email protected] Direct 212-403-1249 Direct Dial: 212-403-1249 Direct Fax: 212-403-2249 Direct Fax: 212-403-2249 ..... Original Message----..... ----Original Message From: From: Novikoff, Novikoff,Harold HaroldS.S. To: Granfield, Gottlieb Steen & Hamilton LLP)LLP) To: Granfield,Lindsee LindseeP.P.(Cleary (Cleary Gottlieb Steen & Hamilton && Hamilton LLP); Novikoff, Cc: Davis, Davis, Robert RobertP.P.(Cleary (ClearyGottlieb GottliebSteen Steen Hamilton LLP); Novikoff, Harold S. Harold Sent: Fri Sent: Fri Nov Nov 2120:07:002008 21 20:07:00 2008 Subject: RE: Settlement Agreement Subject: RE:JPM/Trustee/Barclays JPNVTrustee/Barclays Settlement Agreement JPMorgan has JPMorgan has been been seeking seekinginformation informationfrom fromLBHI LBHIasastotothetheloans loansand and other in in thethe other assets assets underlying underlyingsome somevery verylarge largeABCP ABCPand andABS ABSpositions positions collateral collateral pool pool for for the the clearance clearance advances advances(including (includingthe theRACERS RACERS instruments). JPMorgan has instruments). JPMorgan has been been stymied stymied ininbeing beingable abletotorealize realizeonon those position due to to this this lack lack of of information. information. In order to to demonstrate demonstrate the bebe in in a a the importance importance to toLBHI LBHIon onits itsguarantee guaranteeliability liabilitythat thatJPMorgan JPMorgan position to favorably position favorably realize realize on on those those position, position,we wemade madeaahighly highly confidential presentation confidential presentation to to Weil Weil and and A&M A&Mon onNovember November66asastotothen then current current state state of ofthe thecollateral collateralliquidations liquidationsatatLBI. LBI.Unfortunately, Unfortunately,thethe fact that that we we have have held held aside asideapprox approx$6 $6billion billioncollateral collateralvalue valueofof securities securities from from the the liquidations liquidations stuck stuckout outlike likeaasore sorethumb. thumb.We We disclosed disclosed that that they they were werebeing being held heldfor foraaproposed proposedsettlement, settlement,but butdid did not give give any of the the terms terms or or background backgroundinformation. information. Hal Hal Harold S. Harold S.Novikoff Novikoff Wachtell, Lipton, Wachtell, Lipton,Rosen Rosen&&Katz Katz [email protected] hsnovikoff@wlrk, corn Direct Direct Dial: Dial: 212-403-1249 212-403-1249 Direct 212-403-2249 Direct Fax: Fax: 212-403-2249

From: Lindsee Lindsee GRANFIELD GRANFIELD[mailto:[email protected]] [mailto:[email protected]] From: Sent: Friday, Friday, November November 21,20087:50 21, 2008 7:50 PM PM Sent

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To: To: Novikoff, Novikoff,Harold HaroldS.S. Cc: Davis, Steen & Hamilton LLP)LLP) Cc: Davis,Robert RobertP.P.(Cleary (ClearyGottlieb Gottlieb Steen & Hamilton Subject: RE: JPMJTrusteelBarc1ays Settlement Agreement Subject: RE: JPM/Trustee/Barclays Settlement Agreement

Hal: very disturbing. James Kobak, counsel for for I have havejust justheard heardsomething something very disturbing. James Kobak, counsel the Trustee, thatthat he was having with with the Trustee,said saidthat thatat ata meeting a meeting he was having representatives today, thatthat LBHI brought up up whether therethere was was representativesofLBID of LB!-II today, LBHI brought whether some settlement with JPM andand Barc1ays, saying that JPM had had some settlementininthetheoffing offing with JPM Barclays, saying that JPM told them of a settlement (Kobak said the Trustee did not reveal that a told them of a settlement (Kobak said the Trustee did not reveal that a settlement was before LHBI asked the the question). When did did settlement wasininthetheoffing offing before LHBI asked question). When JPM tell what waswas saidsaid andand whywhy was was this this done? JPM tell LHBI LHBIofofa asettlement, settlement, what done? This as as to to Barc1ays Capital. This could couldbebequite quiteexplosive explosive Barclays Capital. Lindsee Lindsee Lindsee LindseeP.P.Granfield Granfield Cleary LLP Cleary Gottlieb GottliebSteen Steen&&Hamilton Hamilton LLP One One Liberty LibertyPlaza, Plaza,New NewYork YorkNY NY10006 10006 t: t: +121222527381 +1 212 225 2738 If:f:+1 +12122253999 212 225 3999 www.c1earygottlieb.com www.clearygottlieb, corn [email protected] <mailto: [email protected]> [email protected] <mailto: [email protected]>

I

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