From: Office of John Havens

Sent: Friday, August 15, 2008 4:41 PM

Subject: New Expense Policies and Procedures

Memorandum

Date: August 15, 2008

To: ICG Employees
From: John Havens
Cc: ICG Management Committee
Re: New Expense Policies and Procedures

Improving our cost structure and creating operating leverage in our business is an
important part of our strategy for the Institutional Clients Group. The same
effort and innovation that we apply toward building our business and growing our
revenue must also be applied to creating a highly efficient and scalable cost
structure.

As you know, we have spent considerable time looking at our headcount and related
expense, and while we have made progress in that area, we still have more work to
do. I recognize that the work around headcount has been challenging, and I
appreciate all of your efforts.

It is equally important that we ensure that every dollar that we spend on third
party goods and services is highly efficient. I ask each of you to carefully
consider every expense that you incur and ensure that it is both necessary and in
accordance with our policies.

To that end, I want to let you know about several new and important expense
policies and pre-approval procedures which take effect immediately. These policies
and procedures apply to all ICG employees and the functional support areas
dedicated to ICG, in all regions.

Managing our expenses is not only a critical aspect of our strategy, it is also an
important part of our jobs. Each of us must do our part to manage our expenses by
challenging every dollar we spend to ensure that it is truly necessary and in
compliance with our policies. The Management Committee and I expect everyone’s
full support for this important effort.

Thank you.

-JPH

I. Expense Policies

Technology Related Purchases - As a general matter, our existing inventory of

hardware and software is adequate to meet our operating needs. While
we fully intend to continue making strategic investments in technology to enhance
our capabilities and competitiveness, we must not waste our available technology
resources on the purchase of unnecessary hardware or software. As a result, all
new purchases of hardware (e.g. PC’s, laptops, printers, peripherals, etc.),
software or any technology services will require pre-approval, and only those
purchases that can be demonstrated to be absolutely critical will be approved.

Market Data - Over the coming months, we will conduct a comprehensive review of
our market data services and related usage. Early analysis suggests that the level
of market data services within ICG is above industry best practices. Therefore, I
ask each of you who use market data to carefully review all the services you
currently consume and cancel any services which are not absolutely necessary to
perform your duties. Going forward, all new market data services will require pre-
approval.

Blackberry Usage - We will also be conducting a review of our blackberry usage. In

the interim, all new blackberries will require pre-approval. For any employee who
is approved to have blackberry messaging, only one device will be eligible for
reimbursement (i.e. no additional pager). A separate pre-approval will also be
required to have the blackberry phone enabled. For any employee who is approved
for reimbursement of a blackberry phone, that phone will be the only device for
which reimbursement is permitted, and only necessary business related calls will
be reimbursed.

Office Space, Moves and Furniture - Real estate represents a significant share of
the expenses of ICG. Going forward, all requests for new office space, office
relocations and/or expansions and lease renewals will require pre-approval.
Additionally, office and workstation moves and furniture purchases will be limited
to only those which are truly essential and will also require pre-approval.

Color Copying and Color Printing - The use of color copying and printing
dramatically increases our copying and printing costs. Color presentations are
unnecessary for internal purposes; therefore going forward color copying and
printing should only be used for client presentations. Also whenever possible,
presentations should be printed double sided to reduce unnecessary paper usage.
Over time, we will be removing color copiers and printers from the locations where
they are not essential for purposes of preparing client presentations.

Non-Client Travel and Entertainment:

Non- Client Travel - We previously asked that non-client travel be limited to

trips which are truly essential. However, it seems that we are not consistently
adhering to that policy. Going forward, all non-client travel will require pre-
approval. As an alternative to non-client travel, I encourage you to make use of
our audio and video conference capabilities.

Non-Client Offsite Meetings - We will no longer be holding “offsite” meetings for

internal purposes. All internal meetings must be held in one of our conference
facilities, in the location that has the greatest number of attendees or via audio
or video conference.

Non-Client Corporate Events - In accordance with our existing policy, employees

will not be reimbursed for non-client outings, summer parties or similar events.
As we get closer to the winter holiday season, we will communicate with you
regarding specific guidelines for holiday events.

Late Night Car Service and Meals - Each of our locations has specific policies
regarding the use and reimbursement of car services and meals for employees who
are required to work late. Here too it appears as though we are not fully
following our policies. Going forward, it is our expectation that we will all
strictly adhere to our car service and meal policies and only those expenses which
are in compliance with policy will be reimbursed.

Non-Client Entertainment and Meals - Except with respect to employees who are
traveling for business, we will no longer reimburse without pre approval any
expenses for internal entertainment or meals with colleagues.

Training and Industry Conferences - The vast majority of training required to

perform your job is available to you through our online training resources. As a
result, external training will be limited to only that which is strictly
necessary, such as that which is required for regulatory or compliance purposes.
No travel expense should be incurred in connection with any external training. All
external training and/or attendance at an industry conference will also now
require pre-approval.

Client Events - We need to carefully evaluate our spending on client events and
ensure that they are good investments of our limited resources. We will be working
with the heads of each business to review all currently scheduled client events,
including the list of proposed attendees (both client and employee) and total cost
of the event (including any travel and client entertainment contemplated as part
of the event). Going forward, all new client events will require pre-approval and
any client event with an expected cost of $5,000 or more must be arranged through
the Global Event Marketing department.

Temporary Employees, Contractors and Systems Consultants - We currently employ a

very substantial temporary workforce. We will be conducting a detailed review of
all of our temporary workforce engagements to understand more efficient ways to
fulfill our needs. In the interim, all new temporary employees, contractors and
systems consultants, as well as the replacement or extension of any such staff
currently on board beyond the scheduled end of their current assignments will
require pre-approval.

Management Consultants - Our current usage of management consultants is too high.

Management consultants should only be engaged for those limited instances where a
specific expertise which does not reside within our organization is absolutely
required. We will be reviewing our existing engagements of management consultants
to determine if there are more efficient sources to fill our needs. Going forward,
all new management consulting engagements will require pre-approval.

Recruiting - The use of external recruiters will now require pre-approval. I am

confident that we can be successful in satisfying the vast majority of our hiring
needs through the use of low and no fee sources (for example job boards, employee
referrals, etc.).

Professional Memberships - Reimbursement for membership in professional

associations is limited to one per employee and only for memberships that are
required for the performance of your duties and which have been pre-approved.

Purchasing & Procurement Services - Citi Procurement Services has established

specific procedures for the purchase of all of our third party supplies, materials
and services. These procedures must be followed in all cases. In addition, I
remind you that none of us is authorized to contract on our own for any third
party goods or services. All such contracts must be entered into through Citi
Procurement Services.

II. New Pre-Approval Procedures:

The written pre-approval of Mark Rufeh, our Chief Administrative Officer, will now
be required for all:

Technology Equipment and Services (Hardware, Software, etc).

Market Data Services
Blackberries and Wireless Devices
Office Space, Moves and Furniture
Temporary Employees, Contractors, Systems Consultants
Management Consultants
The written pre-approval of the respective ICG Management Committee Member for
your business will be required for all:

Non-Client Travel
Training/Industry Conferences
Professional Memberships
Internal Entertainment
Corporate Events Over $2,500 (or the local equivalent spend)

The approval of Bruce Cohen or Diane Arber, our Senior Human Resources Officers,
will be required for all Contingent Searches.

The approval of Hamid Biglari, our Chief Operating Officer, will also be required
for all Retained Searches and Corporate Events over $10,000 or the local
equivalent spend.