Exhibit 10.2

 

200   STOCK OPTION AWARD

 

AGREEMENT EVIDENCING A GRANT OF A
NON-QUALIFIED STOCK OPTION

 

1.                    GRANT OF OPTION.  Pursuant to the Lehman Brothers Holdings
Inc. (“Holdings”) 1996 Management Ownership Plan (the “Plan”), you are hereby
granted, as of                     , 200  , a nonqualified stock option to
purchase the number of common shares (par value $0.10 per share) of Holdings
(“Shares”) set forth on the award statement delivered to you herewith (the
“Award Statement”) (which number of Shares may be adjusted pursuant to Paragraph
6 below) with an exercise price of $         per Share as specified in the Award
Statement (the “Option Exercise Price”).

 

2.                    ADDITIONAL DOCUMENTS; DEFINITIONS.  You have been provided
with a copy of the Plan, which is incorporated in this instrument by reference
and made a part hereof, and a copy of the Plan prospectus.  The Plan and the
prospectus then in effect should be carefully examined before any decision is
made to exercise the option.  In the event of any conflict or ambiguity between
this instrument and the Plan, the terms of the Plan shall govern.  All
capitalized terms not defined herein or in Annex A attached hereto shall have
the meaning ascribed to such terms under the Plan.

 

3.                    EXERCISABILITY.  Subject to the provisions of this
Agreement and the applicable provisions of the Plan, you may exercise this
option as follows:

 

(a)                No part of this option may be exercised after
                    , 200   (the “Expiration Date”).

 

(b)                You may first exercise this option on the later of (i)
                           or (ii) any date on which the Fair Market Value of a
Share exceeds $        , but this option will first become exercisable in any
event no later than                     , regardless of the Fair Market Value of
a Share.

 

This option may not be exercised for a fraction of a Share.

 

4.                    CONDITIONS TO EXERCISE.  This option may not be exercised
unless all of the following conditions are met:

 

(a)     Legal counsel for Holdings must be satisfied at the time of exercise
that the issuance of Shares upon exercise will be in compliance with the
Securities Act of 1933, as amended, and applicable U.S. federal, state, local
and foreign laws;

 

(b)     You (or your permitted transferee under paragraph 5) must pay at the
time of exercise the full option price for the Shares being acquired hereunder,
by (i) paying in United States dollars by cash (which may be in the form of a
certified check), (ii) subject to Holdings’ prior consent, tendering Shares
owned by you which have a Fair Market Value on the day of exercise equal to the
full purchase price for the Shares being acquired, (iii) subject to Holdings’
prior consent, by delivery of a properly executed

 

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exercise notice together with irrevocable instructions to a securities broker
(or, in the case of pledges, lender) approved by Holdings to (a) sell shares of
Common Stock subject to the option and to deliver promptly to Holdings a portion
of the proceeds of such sale transaction on behalf of the exercising Participant
to pay the option price, or (b) pledge shares of Common Stock subject to the
option to a margin account maintained with such broker or lender, as security
for a loan, and such broker or lender, pursuant to irrevocable instructions,
delivers to Holdings loan proceeds at the time of exercise to pay the option
price, or (iv) by any combination of (i), (ii) or (iii) above; and

 

(c)     You must, unless otherwise provided below, at all times during the
period beginning with                     , 200   and ending on the date of such
exercise, (x) have been employed by Holdings or a Subsidiary thereof or (y) not
have engaged in Detrimental Activity.

 

(i)                       Termination before                      , 200   .  In
the event of your Termination for any reason before                     , 200  ,
this option shall be forfeited and canceled.

 

(ii)                   Voluntary Termination with Competitive Activity.  In the
event of your voluntary Termination with Competitive Activity on or after
                    , 200  , this option shall be forfeited and canceled.

 

(iii)               Voluntary Termination without Competitive Activity.  In the
event of your voluntary Termination without Competitive Activity on or after
                    , 200  , you will be permitted to exercise this option, to
the extent not previously exercised, subject to the approval of the Committee,
until the Expiration Date, provided you enter into an agreement not engage in
Competitive Activity or Detrimental Activity during that period of time.  If you
do not enter into such an agreement, or if you engage in Competitive Activity,
this option, to the extent not previously exercised, shall expire immediately.

 

(iv)                  Involuntary Termination with Cause.  In the event of your
involuntary Termination with Cause, this option, to the extent not previously
exercised, shall be forfeited and canceled immediately.

 

(v)                      Involuntary Termination without Cause.  In the event of
your involuntary Termination without Cause on or after                     ,
200  , you will be permitted to exercise this option, to the extent not
previously exercised, until the Expiration Date, subject to the approval of the
Committee, provided you do not engage in Detrimental Activity during that period
of time.  If you engage in Detrimental Activity, the portion of this option, to
the extent not previously exercised, shall expire immediately.

 

(vi)                  Termination Due to Death; Disability.  In the event of the
occurrence on or after                     , 200   of your death or Disability,
you (or in the event of your death, your estate or any person who acquires the
right to exercise this option by bequest or inheritance or otherwise by reason
of your

 

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death) will be permitted to exercise this option, to the extent not previously
exercised, until the Expiration Date.

 

Any remaining portion of this option, which is not exercisable pursuant to the
provisions of this subparagraph 4(c), shall be canceled by Holdings.

 

5.                    NON-ASSIGNMENT.  This option may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of by you, except (a)
by will or the laws of descent and distribution or (b) to members of your
immediate family or to a trust or such other instrument as may be established
for the direct benefit of a member of your immediate family and is exercisable
during your lifetime only by you or such permitted transferee.  If you or anyone
claiming under or through you attempts to violate this Paragraph 5, such
attempted violation shall be null and void and without effect, and Holdings’
obligations hereunder shall terminate.

 

6.                    EQUITABLE ADJUSTMENTS.  In the event of a Change in
Capitalization occurring after the date of grant of this option and prior to the
exercise of the option in full, the number and kind of shares of Common Stock
for which this option may then be exercised and the option price shall be
adjusted so as to reflect such change.

 

7.                    CHANGE IN CONTROL.  Upon the occurrence of a Change in
Control without the prior approval of the majority of the independent members of
the Incumbent Board, all options awarded hereunder will be exercisable in full;
provided however, that if the Change in Control occurs with the prior approval
of a majority of the independent members of the Incumbent Board, one-half of the
options awarded hereunder that are then not exercisable shall become immediately
exercisable and remain exercisable through                     , 200  , and the
remaining one-half of such options, or the difference in value between the
exercise price and the highest price paid by the acquiring entity in such Change
in Control (in such form of consideration as is received by shareholders
generally) for the remaining one-half of such options, shall become exercisable
or be paid, as appropriate, upon the earliest to occur of (a) two years
following such Change in Control, (b) the date such options would become
exercisable by their terms or (c) your involuntary termination without Cause,
provided however, that if such Change in Control occurs within one year after
this grant date, and such Change in Control will be effected by a merger
involving the issuance of equity shares to Holdings’ stockholders, then the
foregoing provisions of this paragraph will not apply and the Committee shall
have total discretion as to the impact of such an event on options granted
hereunder which are not then exercisable.

 

8.                    AMENDMENT.  The terms of this Agreement may be amended
from time to time by the Committee in its sole discretion in any manner that it
deems appropriate (including, but not limited to, the acceleration provisions),
provided, however, that no such amendment shall, without your consent, diminish
your rights under this Agreement.

 

9.                    BINDING ACTIONS.  Any action taken or decision made by the
Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding on you and all persons

 

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claiming under or through you.  By accepting this grant or other benefit under
the Plan, you and each person claiming under or through you shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Committee or its designees.

 

10.             NO RIGHT TO CONTINUED EMPLOYMENT.  Neither the grant nor the
exercise of the option shall confer on you any right to be retained in the
employ of Holdings or its subsidiaries, or to receive subsequent options or
other awards under the Plan.  The right of Holdings or any subsidiary to
terminate your employment with it at any time or as otherwise provided by any
agreement between Holdings or any subsidiary and you is specifically reserved.

 

11.             NO RIGHTS OF A STOCKHOLDER.  Neither you nor your permitted
transferee under Paragraph 5 shall have any of the rights of a stockholder with
respect to Shares subject to the option except to the extent that such Shares of
Common Stock shall have been issued to you or such transferee upon the exercise
of the option.

 

12.             APPLICABLE LAW.  The validity, construction, interpretation,
administration, and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Delaware.

 

13.             WITHHOLDING.  Holdings shall have the right to deduct applicable
taxes from all amounts payable to you.  It shall be a condition to the
obligation of Holdings to issue Shares upon exercise of an option hereunder (a)
that you (or in the event of your death, your estate or any person who acquires
the right to exercise this option by bequest or inheritance or otherwise by
reason of your death) pay to Holdings or its designee upon its demand in
accordance with the Plan, either in the form of cash or Shares (including Shares
otherwise issuable pursuant to exercise this option) such amount as may be
required by law for the purpose of satisfying its obligation or the obligation
of any other person to withhold any taxes required by law which are incurred by
reason of the exercise of the option and (b) that you or your permitted
transferee under Paragraph 5 provide Holdings with any forms, documents or other
information reasonably required in connection with the grant.  If the amount
requested for the purpose of satisfying the withholding obligation is not paid,
Holdings may refuse to furnish Shares upon exercise of the option.  Holdings
shall further have the right to deduct from all amounts remaining payable to you
after satisfaction of the minimum statutory withholding obligations described
above, the amount of any deficit, debt, tax obligation or other liability or
obligation of any kind which you may at that time have with respect to Holdings
or any subsidiary.

 

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ANNEX A

 

DEFINITIONS

 

“Cause” means a material breach by a person of an employment contract between
the person and Holdings or any Subsidiary, failure by a person to devote
substantially all business time exclusively to the performance of his or her
duties for Holdings or any Subsidiary, willful misconduct, dishonesty related to
the business and affairs of Holdings or any Subsidiary, conviction of a felony
or of a misdemeanor constituting a statutory disqualification under U.S.
securities laws (or failure to contest prosecution for a felony or such a
misdemeanor), habitual or gross negligence in the performance of the person’s
duties, solicitation of employees of Holdings or any Subsidiary to work at
another company, improper use or disclosure of confidential information, the
violation of policies and practices adopted by Holdings or any Subsidiary,
including but not limited to the Code of Conduct, a material violation of the
conflict of interest, proprietary information or business ethics policies of
Holdings or any Subsidiary.

 

“Change in Capitalization” means the occurrence of a circumstance described in
Section 14 of the Plan.

 

“Committee” means the Compensation and Benefits Committee of the Incumbent Board
(see definition of Change in Control in the Plan).

 

“Competitive Activity” means involvement (whether as an employee, proprietor,
consultant or otherwise) with any person or entity (including any company and
its affiliates) engaged in any business activity which is materially competitive
with any business carried on by Holdings or any of its Subsidiaries or
affiliates on the date of termination of a person’s employment with Holdings or
any of its Subsidiaries, as determined in the sole discretion of the Committee.

 

“Detrimental Activity” means at any time (i) using confidential information
received during a person’s employment with Holdings or any Subsidiary, their
affiliates or their clients, in breach of such person’s obligations to keep such
information confidential; (ii) directly or indirectly persuading or attempting
to persuade, by any means, any employee of Holdings or any Subsidiary to
terminate employment with any of the foregoing or to breach any of the terms of
his or her employment with the foregoing; (iii) directly or indirectly making
any statement that is, or could be, disparaging of Holdings, its Subsidiaries or
affiliates, or any of their employees (except as necessary to respond truthfully
to any inquiry from applicable regulatory authorities or to provide information
pursuant to legal process); or (iv) directly or indirectly engaging in any
activity that is substantially injurious to the financial condition, reputation
or goodwill of Holdings or its Subsidiaries or affiliates, in each case as
determined in the sole discretion of the Committee.

 

“Disability” means a disability under both the Long-Term Disability Insurance
Plan and the Social Security Act.

 

“Termination” means the end of employment with Holdings or any Subsidiary.  The
date of Termination and the reason for Termination are as determined in the sole
discretion of the Committee.

 

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