EXHIBIT 10.12

 

Lehman Brothers Holdings Inc.
SUPPLEMENTAL RETIREMENT PLAN

 

(Effective as of October 19, 1998, amended and restated effective December 10,
2003)

 

PREAMBLE

 

The Lehman Brothers Holdings Inc. Supplemental Retirement Plan (as amended and
restated effective December 10, 2003) (the “Plan”) is established by Lehman
Brothers Holdings Inc. (the “Company”) for the sole purpose of providing the
Chairman and employees of the Company or its subsidiaries who are the Members of
the Company’s non-Board Executive Committee (the “Executive Committee”) and
other key employees of the Company as determined in the sole discretion of the
Committee (as defined below) with supplemental retirement payments.  The Plan
was originally effective as of October 19, 1998, and was amended and restated
effective December 10, 2003.  This document describes the benefits provided
under the Plan.  The Plan reads as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1                                 BENEFIT COMMENCEMENT DATE:  THE DATE ON
WHICH PAYMENT OF FULL OR PRORATA BENEFITS SHALL BEGIN, AS DESCRIBED UNDER
SECTION 4.3.1 OF THE PLAN.

 

1.2                                 BOARD:  THE BOARD OF DIRECTORS OF THE
COMPANY.

 

1.3                                 CAUSE:  A MATERIAL BREACH BY A PARTICIPANT
OF AN EMPLOYMENT CONTRACT OR OTHER AGREEMENT, IF ANY, BETWEEN THE PARTICIPANT
AND THE COMPANY AND ANY OF ITS SUBSIDIARIES, FAILURE BY A PARTICIPANT TO DEVOTE
SUBSTANTIALLY ALL BUSINESS TIME EXCLUSIVELY TO THE PERFORMANCE OF HIS DUTIES FOR
THE COMPANY OR ITS SUBSIDIARIES, WILLFUL MISCONDUCT, DISHONESTY RELATED TO THE
BUSINESS AND AFFAIRS OF THE COMPANY OR ANY SUBSIDIARY, CONVICTION OF, OR A PLEA
OF NOLO CONTENDERE TO, A FELONY OR OF A MISDEMEANOR CONSTITUTING A STATUTORY
DISQUALIFICATION UNDER U.S. SECURITIES LAWS (OR FAILURE TO CONTEST PROSECUTION
FOR SUCH A FELONY OR SUCH A MISDEMEANOR), HABITUAL OR GROSS NEGLIGENCE IN THE
PERFORMANCE OF A PARTICIPANT’S DUTIES, THE VIOLATION OF POLICIES AND PRACTICES
ADOPTED BY THE COMPANY OR ANY SUBSIDIARY INCLUDING, BUT NOT LIMITED TO THE CODE
OF CONDUCT, ENGAGING IN COMPETITIVE ACTIVITY OR DETRIMENTAL ACTIVITY, OR SUCH
OTHER CIRCUMSTANCES AS MAY BE DETERMINED BY THE COMMITTEE IN ITS SOLE
DISCRETION.  FOLLOWING THE OCCURRENCE OF A CHANGE IN CONTROL, “CAUSE” SHALL MEAN
(I) THE SUBSTANTIAL AND CONTINUING FAILURE BY A PARTICIPANT TO PERFORM THE
PARTICIPANT’S DUTIES FOR THE COMPANY (OTHER THAN ANY SUCH FAILURE RESULTING FROM
INCAPACITY DUE TO PHYSICAL OR MENTAL ILLNESS), AT LEAST THIRTY (30) DAYS AFTER A
WRITTEN DEMAND FOR PERFORMANCE IS DELIVERED TO THE PARTICIPANT BY THE BOARD
WHICH SPECIFICALLY IDENTIFIES THE MANNER IN WHICH THE BOARD BELIEVES THAT THE
PARTICIPANT

 

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HAS NOT PERFORMED THE PARTICIPANT’S DUTIES, (II) CONVICTION OF, OR PLEA OF
GUILTY OR NOLO CONTENDERE TO, A FELONY OR OF OR TO A MISDEMEANOR CONSTITUTING A
STATUTORY DISQUALIFICATION UNDER U.S. SECURITIES LAWS OR (III) ENGAGING IN
WILLFUL MISCONDUCT WHICH IS DEMONSTRABLY INJURIOUS TO THE COMPANY.

 

Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chairman or based upon
the advice of counsel for the Company shall be conclusively presumed not to
constitute either willful misconduct or Detrimental Activity.  Following the
occurrence of a Change in Control, the cessation of employment of the
Participant shall not be deemed to be for Cause unless and until there shall
have been duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board (excluding the Participant if the
Participant is a member of the Board) at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Participant and the
Participant is given an opportunity, together with counsel, to be heard before
the Board) a resolution finding that, in the good faith opinion of the Board,
the Participant has committed the conduct described in (i) or (ii) above, and
specifying the particulars thereof in detail.

 

1.4                                 CHAIRMAN:  CHAIRMAN OF THE EXECUTIVE
COMMITTEE AS OF OCTOBER 19, 1998.

 

1.5                                 CHANGE IN CONTROL:  THE OCCURRENCE DURING
THE TERM OF THE PLAN OF:

 

(A)                                  THE COMMENCEMENT (WITHIN THE MEANING OF
RULE 14D-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934 (THE “EXCHANGE ACT”)) OF A
TENDER OFFER FOR MORE THAN 20% OF THE COMPANY’S OUTSTANDING SHARES OF CAPITAL
STOCK HAVING ORDINARY VOTING POWER IN THE ELECTION OF DIRECTORS (THE “VOTING
SECURITIES”);

 

(B)                                 AN ACQUISITION (OTHER THAN DIRECTLY FROM THE
COMPANY) OF ANY VOTING SECURITIES OF THE COMPANY BY ANY “PERSON” (AS THE TERM
PERSON IS USED FOR PURPOSES OF SECTION 13(D) OR 14(D) OF THE EXCHANGE ACT)
IMMEDIATELY AFTER WHICH SUCH PERSON HAS “BENEFICIAL OWNERSHIP” (WITHIN, THE
MEANING OF RULE 13D-3 PROMULGATED UNDER THE EXCHANGE ACT) OF 20% OR MORE OF THE
COMBINED VOTING POWER OF THE COMPANY’S THEN OUTSTANDING VOTING SECURITIES;
PROVIDED, HOWEVER, IN DETERMINING WHETHER A CHANGE IN CONTROL HAS OCCURRED,
VOTING SECURITIES WHICH ARE ACQUIRED IN A “NON-CONTROL ACQUISITION” (AS
HEREINAFTER DEFINED) SHALL NOT CONSTITUTE AN ACQUISITION WHICH WOULD CAUSE A
CHANGE IN CONTROL.  A “NON-CONTROL ACQUISITION” SHALL MEAN AN ACQUISITION BY (I)
AN EMPLOYEE BENEFIT PLAN (OR A TRUST FORMING A PART THEREOF OR A TRUSTEE THEREOF
ACTING SOLELY IN ITS CAPACITY AS TRUSTEE) MAINTAINED BY (A) THE COMPANY OR (B)
ANY CORPORATION OR OTHER PERSON OF WHICH A MAJORITY OF ITS VOTING POWER OR ITS
VOTING EQUITY SECURITIES OR EQUITY INTEREST IS OWNED, DIRECTLY OR INDIRECTLY, BY
THE COMPANY (FOR PURPOSES OF THIS DEFINITION, A “SUBSIDIARY”), (II) THE COMPANY
OR ITS SUBSIDIARIES, OR (III) ANY

 

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PERSON WHO FILES IN CONNECTION WITH SUCH ACQUISITION A SCHEDULE 13D WHICH
EXPRESSLY DISCLAIMS ANY INTENTION TO SEEK CONTROL OF THE COMPANY AND DOES NOT
EXPRESSLY RESERVE THE RIGHT TO SEEK SUCH CONTROL; PROVIDED, HOWEVER, THAT ANY
AMENDMENT TO SUCH STATEMENT OF INTENT WHICH EITHER INDICATES AN INTENTION OR
RESERVES THE RIGHT TO SEEK CONTROL SHALL BE DEEMED AN “ACQUISITION” OF THE
SECURITIES OF THE COMPANY REPORTED IN SUCH FILING AS BENEFICIALLY OWNED BY SUCH
PERSON FOR PURPOSES OF THIS PARAGRAPH (B);

 

(C)                                  THE INDIVIDUALS WHO, AS OF THE EFFECTIVE
DATE OF THE 1994 INITIAL PUBLIC TRADING IN COMPANY SHARES, ARE MEMBERS OF THE
BOARD (THE “INCUMBENT BOARD”), CEASING FOR ANY REASON TO CONSTITUTE AT LEAST A
MAJORITY OF THE MEMBERS OF THE BOARD; PROVIDED, HOWEVER, THAT IF THE ELECTION,
OR NOMINATION FOR ELECTION BY THE COMPANY’S COMMON STOCKHOLDERS, OF ANY NEW
DIRECTOR WAS APPROVED BY A VOTE OF AT LEAST TWO-THIRDS OF THE INCUMBENT BOARD,
SUCH NEW DIRECTOR SHALL, FOR PURPOSES OF THIS PLAN, BE CONSIDERED AS A MEMBER OF
THE INCUMBENT BOARD; PROVIDED FURTHER, HOWEVER, THAT NO INDIVIDUAL SHALL BE
CONSIDERED A MEMBER OF THE INCUMBENT BOARD IF SUCH INDIVIDUAL INITIALLY ASSUMED
OFFICE AS A RESULT OF EITHER AN ACTUAL OR THREATENED “ELECTION CONTEST” (AS
DESCRIBED IN RULE 14A-11 PROMULGATED UNDER THE EXCHANGE ACT OR OTHER ACTUAL OR
THREATENED SOLICITATION OF PROXIES OR CONSENTS BY OR ON BEHALF OF A PERSON OTHER
THAN THE BOARD (A “PROXY CONTEST”) INCLUDING BY REASON OF ANY AGREEMENT INTENDED
TO AVOID OR SETTLE ANY ELECTION CONTEST OR PROXY CONTEST; OR

 

(D)                                 APPROVAL BY STOCKHOLDERS OF THE COMPANY OF:

 

(I)                                     A MERGER, CONSOLIDATION OR
REORGANIZATION INVOLVING THE COMPANY, UNLESS SUCH MERGER, CONSOLIDATION OR
REORGANIZATION IS A “NON-CONTROL TRANSACTION”; I.E., MEETS EACH OF THE
REQUIREMENTS DESCRIBED IN (A), (B), AND (C) BELOW:

 

(A)                              THE STOCKHOLDERS OF THE COMPANY, IMMEDIATELY
BEFORE SUCH MERGER, CONSOLIDATION OR REORGANIZATION, OWN, DIRECTLY OR INDIRECTLY
IMMEDIATELY FOLLOWING SUCH MERGER, CONSOLIDATION OR REORGANIZATION, AT LEAST
FIFTY PERCENT (50%) OF THE COMBINED VOTING POWER OF THE OUTSTANDING VOTING
SECURITIES OF THE CORPORATION RESULTING FROM SUCH MERGER OR CONSOLIDATION OR
REORGANIZATION (THE “SURVIVING CORPORATION”) IN SUBSTANTIALLY THE SAME
PROPORTION AS THEIR OWNERSHIP OF THE VOTING SECURITIES IMMEDIATELY BEFORE SUCH
MERGER, CONSOLIDATION OR REORGANIZATION;

 

(B)                                THE INDIVIDUALS WHO WERE MEMBERS OF THE
INCUMBENT BOARD IMMEDIATELY PRIOR TO THE EXECUTION OF THE AGREEMENT PROVIDING
FOR SUCH MERGER, CONSOLIDATION OR REORGANIZATION CONSTITUTE AT LEAST A MAJORITY
OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE SURVIVING

 

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CORPORATION IMMEDIATELY FOLLOWING THE CONSUMMATION  OF SUCH MERGER,
CONSOLIDATION OR REORGANIZATION; AND

 

(C)                                NO PERSON OTHER THAN THE COMPANY, ANY
SUBSIDIARY, ANY EMPLOYEE BENEFIT PLAN (OR ANY TRUST FORMING A PART THEREOF OR A
TRUSTEE THEREOF ACTING SOLELY IN ITS CAPACITY AS TRUSTEE) MAINTAINED BY THE
COMPANY, THE SURVIVING CORPORATION, OR ANY SUBSIDIARY, OR ANY PERSON WHO,
IMMEDIATELY PRIOR TO SUCH MERGER, CONSOLIDATION OR REORGANIZATION HAD BENEFICIAL
OWNERSHIP OF 20% OR MORE OF THE THEN OUTSTANDING VOTING SECURITIES HAS
BENEFICIAL OWNERSHIP OF 20% OR MORE OF THE COMBINED VOTING POWER OF THE
SURVIVING  CORPORATION’S THEN OUTSTANDING VOTING SECURITIES IMMEDIATELY 
FOLLOWING THE CONSUMMATION OF SUCH MERGER, CONSOLIDATION OR REORGANIZATION.

 

(II)                                  A COMPLETE LIQUIDATION OR DISSOLUTION OF
THE COMPANY; OR

 

(III)                               AN AGREEMENT FOR THE SALE OR OTHER
DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY TO ANY
PERSON (OTHER THAN A TRANSFER TO A SUBSIDIARY).

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject  Person”) acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result of
the acquisition of Voting Securities by the Company and thereafter such
Beneficial Owner acquires any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.

 

1.6                                 COMMITTEE:  THE COMPENSATION AND BENEFITS
COMMITTEE OF THE BOARD.

 

1.7                                 COMPANY:  LEHMAN BROTHERS HOLDINGS INC. AND
EXCEPT AS OTHERWISE SPECIFIED IN THIS PLAN IN A PARTICULAR CONTEXT, ANY
SUCCESSOR THERETO, WHETHER BY MERGER, CONSOLIDATION OR ACQUISITION OF
SUBSTANTIALLY ALL OF ITS ASSETS.

 

1.8                                 COMPETITIVE ACTIVITY:  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 THE COMPANY OR
ANY OF ITS SUBSIDIARIES ON THE DATE OF TERMINATION OF A PARTICIPANT’S EMPLOYMENT
WITH THE COMPANY AND ANY OF ITS SUBSIDIARIES, AS DETERMINED IN THE SOLE
DISCRETION OF THE COMMITTEE.  FOLLOWING THE OCCURRENCE OF A CHANGE IN CONTROL,
THE DETERMINATION OF WHETHER A PARTICIPANT HAS ENGAGED IN

 

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“COMPETITIVE ACTIVITY” SHALL BE MADE BY A RESOLUTION DULY ADOPTED BY THE
AFFIRMATIVE VOTE OF THREE-QUARTERS (3/4) OF THE ENTIRE MEMBERSHIP OF THE BOARD
(EXCLUDING THE PARTICIPANT IF THE PARTICIPANT IS A MEMBER OF THE BOARD) AT A
MEETING OF THE BOARD CALLED AND HELD FOR SUCH PURPOSE (AFTER REASONABLE NOTICE
IS PROVIDED TO THE PARTICIPANT AND THE PARTICIPANT IS GIVEN AN OPPORTUNITY,
TOGETHER WITH COUNSEL, TO BE HEARD BEFORE THE BOARD) FINDING THAT, IN THE GOOD
FAITH OPINION OF THE BOARD, THE PARTICIPANT HAS COMMITTED THE CONDUCT DESCRIBED
IN THE PRECEDING SENTENCE AND THAT SUCH CONDUCT IS DEMONSTRABLY INJURIOUS TO THE
COMPANY.

 

1.9                                 DETRIMENTAL ACTIVITY:  MEANS AT ANY TIME (I)
USING INFORMATION RECEIVED DURING A PERSON’S EMPLOYMENT WITH THE COMPANY OR ANY
SUBSIDIARY , THEIR AFFILIATES OR CLIENTS, IN BREACH OF SUCH PERSON’S
UNDERTAKINGS TO KEEP SUCH INFORMATION CONFIDENTIAL; (II) DIRECTLY OR INDIRECTLY
PERSUADING OR ATTEMPTING TO PERSUADE, BY ANY MEANS, ANY EMPLOYEE OF THE COMPANY
OR ANY SUBSIDIARY TO TERMINATE HIS OR HER EMPLOYMENT WITH 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
THE COMPANY, 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 (OTHER THAN COMPETITIVE
ACTIVITY) THAT IS SUBSTANTIALLY INJURIOUS TO THE FINANCIAL CONDITION,
REPUTATION, OR GOODWILL OF THE COMPANY OR ITS SUBSIDIARIES OR AFFILIATES, IN
EACH CASE AS DETERMINED IN THE SOLE DISCRETION OF THE COMMITTEE.  FOLLOWING THE
OCCURRENCE OF A CHANGE IN CONTROL, THE DETERMINATION OF WHETHER A PARTICIPANT
HAS ENGAGED IN “DETRIMENTAL ACTIVITY” SHALL BE MADE BY A RESOLUTION DULY ADOPTED
BY THE AFFIRMATIVE VOTE OF THREE-QUARTERS (3/4) OF THE ENTIRE MEMBERSHIP OF THE
BOARD (EXCLUDING THE PARTICIPANT IF THE PARTICIPANT IS A MEMBER OF THE BOARD) AT
A MEETING OF THE BOARD CALLED AND HELD FOR SUCH PURPOSE (AFTER REASONABLE NOTICE
IS PROVIDED TO THE PARTICIPANT AND THE PARTICIPANT IS GIVEN AN OPPORTUNITY,
TOGETHER WITH COUNSEL, TO BE HEARD BEFORE THE BOARD) FINDING THAT, IN THE GOOD
FAITH OPINION OF THE BOARD, THE PARTICIPANT HAS COMMITTED THE CONDUCT DESCRIBED
IN (I), (II), (III), OR (IV) ABOVE AND THAT SUCH CONDUCT IS DEMONSTRABLY
INJURIOUS TO THE COMPANY.

 

1.10                           DISABILITY:  A DISABILITY UNDER THE COMPANY’S
LONG-TERM DISABILITY PLAN OR ANY OTHER CONDITION, WHICH IN THE SOLE DISCRETION
OF THE COMMITTEE CONSTITUTES A DISABILITY FOR PURPOSES OF THIS PLAN.

 

1.11                           DOMESTIC PARTNER:  AN INDIVIDUAL IS A “DOMESTIC
PARTNER” WITH RESPECT TO A PARTICIPANT FOR PURPOSES OF THIS PLAN IF SUCH
INDIVIDUAL AND THE PARTICIPANT HAVE A CURRENTLY REGISTERED DOMESTIC PARTNERSHIP
WITH A GOVERNMENTAL BODY PURSUANT TO STATE OR LOCAL LAW AUTHORIZING SUCH
REGISTRATION.  IN THE ABSENCE OF A FORMAL REGISTRATION, A PARTICIPANT CAN
REGISTER HIS OR HER DOMESTIC PARTNERSHIP WITH ANOTHER INDIVIDUAL BY FILING AN
AFFIDAVIT WITH THE LEHMAN BROTHERS BENEFITS SERVICE CENTER, AND SUCH INDIVIDUAL
SHALL QUALIFY AS A DOMESTIC PARTNER OF SUCH PARTICIPANT FOR PURPOSES OF THIS
PLAN FOR SO LONG AS SUCH DOMESTIC PARTNERSHIP SHALL REMAIN IN EFFECT.

 

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1.12                           FULL BENEFITS:  BENEFITS UNDER THE PLAN AS
DESCRIBED UNDER SECTION 4.1 AND PAYABLE PURSUANT TO SECTION 4.3.

 

1.13                           GOOD REASON:  THE OCCURRENCE FOLLOWING A CHANGE
IN CONTROL OF ANY OF THE FOLLOWING WITHOUT EITHER CAUSE OR A PARTICIPANT’S
EXPRESS WRITTEN CONSENT:

 

(A)                                  A MATERIAL ADVERSE CHANGE IN A
PARTICIPANT’S TITLE, POSITION, AUTHORITY OR KEY RESPONSIBILITIES AS COMPARED TO
THE PARTICIPANT’S TITLE, POSITION, AUTHORITY OR KEY RESPONSIBILITIES IMMEDIATELY
PRIOR TO THE CHANGE IN CONTROL, EXCLUDING FOR THIS PURPOSE AN ACTION NOT TAKEN
IN BAD FAITH AND WHICH IS REMEDIED BY THE COMPANY PROMPTLY AFTER RECEIPT OF
NOTICE THEREOF GIVEN BY THE PARTICIPANT;

 

(B)                                 A MATERIAL REDUCTION IN A PARTICIPANT’S
ANNUAL BASE SALARY OR INCENTIVE COMPENSATION OPPORTUNITIES AS COMPARED TO THE
PARTICIPANT’S ANNUAL BASE SALARY AND INCENTIVE COMPENSATION OPPORTUNITIES AS IN
EFFECT IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL; OR

 

(C)                                  ANY REQUIREMENT THAT THE EXECUTIVE (A) BE
BASED ANYWHERE MORE THAN FIFTY (50) MILES FROM THE OFFICE WHERE THE EXECUTIVE
WAS LOCATED IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL OR (B) TRAVEL ON COMPANY
BUSINESS TO AN EXTENT SUBSTANTIALLY GREATER THAN THE EXECUTIVE’S TRAVEL
OBLIGATIONS IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL.

 

1.14                           MEMBER:  ANY PERSON WHO IS SERVING ON THE
EXECUTIVE COMMITTEE AS OF OCTOBER 19, 1998, BUT WHO IS NOT THE CHAIRMAN.

 

1.15                           PARTICIPANT:  EACH MEMBER AND THE CHAIRMAN AND
ANY OTHER PERSON WHO IS SUBSEQUENTLY DESIGNATED AS A PARTICIPANT IN THE PLAN
PURSUANT TO SECTION 3.1.

 

1.16                           PRESENT VALUE:  THE DISCOUNTED PRESENT VALUE OF A
PAYMENT OR STREAM OF PAYMENTS TO BE MADE AT A FUTURE DATE, AS DETERMINED BY THE
ACTUARY OF THE QUALIFIED PLAN USING THE INTEREST RATE APPLICABLE UNDER THE
QUALIFIED PLAN TO DETERMINE LUMP SUM PAYMENTS MADE AT SUCH TIME.

 

1.17                           PRORATA BENEFITS:  BENEFITS UNDER THE PLAN AS
DESCRIBED UNDER SECTION 4.2 AND PAYABLE PURSUANT TO SECTION 4.3.

 

1.18                           QUALIFIED PLAN:  THE LEHMAN BROTHERS HOLDINGS
INC. RETIREMENT PLAN AS FROM TIME TO TIME IN EFFECT.

 

1.19                           SPOUSE:  THE INDIVIDUAL TO WHOM A PARTICIPANT IS
LEGALLY MARRIED ON THE DATE OF HIS DEATH.  AN INDIVIDUAL SHALL BE TREATED AS THE
SPOUSE OF A PARTICIPANT AND AS LEGALLY MARRIED TO SUCH PARTICIPANT FOR SUCH
PERIOD AS SUCH INDIVIDUAL SHALL QUALIFY AS THE DOMESTIC PARTNER OF SUCH
PARTICIPANT.

 

1.20                           TRUST:  THE TRUST OR TRUSTS DESCRIBED IN SECTION
2.3.

 

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1.21                           TRUSTEE:  THE TRUSTEE OF THE TRUST.

 

1.22                           YEARS OF SERVICE:  A PARTICIPANT’S “YEARS OF
VESTING SERVICE” AS DETERMINED UNDER THE QUALIFIED PLAN.

 

Usage.  Whenever applicable, the masculine gender, when used in the Plan, will
include the feminine gender, and the singular will include the plural.

 

ARTICLE 2

 

COMPANY FUNDING OBLIGATIONS

 

2.1                                 IN GENERAL.  THE COMPANY SHALL HAVE NO
OBLIGATION UNDER THE PLAN TO MAKE ANY PAYMENTS OR CAUSE ANY PAYMENTS TO BE MADE
EXCEPT AS EXPLICITLY PROVIDED UNDER THIS PLAN.

 

2.2                                 UNFUNDED PLAN.  THE PLAN IS INTENDED TO
CONSTITUTE AN UNFUNDED PLAN FOR A SELECT GROUP OF MANAGEMENT OR HIGHLY
COMPENSATED EMPLOYEES AS DEFINED IN SECTIONS 201(2), 301(A)(3) AND 401(A)(1) OF 
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”).  ALL
AMOUNTS PAYABLE UNDER THE PLAN SHALL BE PAID OUT OF THE GENERAL ASSETS OF THE
COMPANY, AND ANY INDIVIDUALS ENTITLED TO HAVE PAYMENTS MADE ON THEIR BEHALF
UNDER THE PLAN SHALL HAVE NO RIGHTS TO PAYMENT GREATER THAN THE RIGHTS OF
GENERAL UNSECURED CREDITORS OF THE COMPANY.

 

2.3                                 RABBI TRUST.  THE COMPANY SHALL ESTABLISH
PROMPTLY A REVOCABLE TRUST TO HOLD ASSETS, SUBJECT TO THE CLAIMS OF THE
COMPANY’S CREDITORS IN THE EVENT OF THE COMPANY’S INSOLVENCY, FOR THE PURPOSE OF
THE PAYMENT OF THE BENEFITS HEREUNDER, WHICH SHALL BECOME IRREVOCABLE UPON THE
FIRST TO OCCUR OF ANY OF THE EVENTS DESCRIBED IN SECTION 1.5(A), (B) OR (C), OR
UPON THE CONSUMMATION OF A MERGER, CONSOLIDATION, REORGANIZATION, COMPLETE
LIQUIDATION OR DISSOLUTION, OR AGREEMENT FOR SALE OR OTHER DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY AS DESCRIBED IN SECTION 1.5(D). 
THE COMPANY SHALL CONTRIBUTE TO THE TRUST CASH IN SUCH AMOUNTS AND AT SUCH TIMES
AS ARE SPECIFIED IN THIS PLAN AND IN THE TRUST.  AMOUNTS PAID TO PARTICIPANTS
FROM THE TRUST SHALL DISCHARGE THE OBLIGATIONS OF THE COMPANY HEREUNDER TO THE
PARTICIPANTS TO THE EXTENT OF THE PAYMENTS SO MADE.

 

ARTICLE 3

 

PARTICIPATION AND ELIGIBILITY

 

3.1                                 PARTICIPATION.  PARTICIPATION IN THE PLAN IS
LIMITED INITIALLY TO THE CHAIRMAN AND THE MEMBERS.  THE COMMITTEE, IN ITS SOLE
DISCRETION, MAY EXTEND THE BENEFITS OF THIS PLAN TO OTHER KEY EMPLOYEES OF THE
COMPANY.

 

3.2                                 ELIGIBILITY FOR FULL BENEFITS.  A
PARTICIPANT IS ELIGIBLE TO RECEIVE FULL BENEFITS AS DESCRIBED IN SECTION 4.1
UNDER THE PLAN IF:

 

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(A)                                  (I)  HE RETIRES ON OR AFTER HE ATTAINS AGE
SIXTY (60) OR THE COMBINATION OF HIS AGE AND NUMBER OF YEARS OF SERVICE EXCEEDS
EIGHTY-FIVE (85), AND (II) HE HAS NOT OTHERWISE FORFEITED HIS BENEFITS UNDER
SECTION 4.5 OF THIS PLAN;

 

(B)                                 (I)  HE IS A PARTICIPANT OTHER THAN A MEMBER
OR THE CHAIRMAN AND RETIRES AFTER FULFILLING ANY COMBINATION OF ELIGIBILITY
CRITERIA OTHER THAN AS SPECIFIED IN PARAGRAPH 3.2(A), IF ANY, THAT HAS BEEN
COMMUNICATED TO SUCH PARTICIPANT IN WRITING BY THE COMMITTEE IN CONNECTION WITH
SUCH PARTICIPANT’S INITIAL PARTICIPATION IN THE PLAN, AND (II) HE HAS NOT
OTHERWISE FORFEITED HIS BENEFITS UNDER SECTION 4.5 OF THIS PLAN; OR

 

(C)                                  (I) WITHIN THREE (3) YEARS FOLLOWING THE
OCCURRENCE OF A CHANGE IN CONTROL, HIS EMPLOYMENT IS TERMINATED BY THE COMPANY
WITHOUT CAUSE OR THE PARTICIPANT TERMINATES HIS EMPLOYMENT WITH GOOD REASON, AND
(II) HE HAS NOT OTHERWISE FORFEITED HIS BENEFITS UNDER SECTION 4.5 OF THIS PLAN.

 

(1)                                  Notwithstanding the foregoing, if all or
any portion of the above payouts, either alone or together with other payments
and benefits a Participant receives or is then entitled to receive from the
Company and its subsidiaries, would constitute a payment described in Section
280G(b)(2) (or its successors) of the Internal Revenue Code of 1986, as amended
(the “Code”), such payments and benefits provided to the Participant shall be
reduced to the extent necessary so that no portion thereof shall be subject to
the excise tax imposed by Section 4999 of the Code; but only if, by reason of
such reduction, the net after tax benefit to the Participant shall exceed the
net after tax benefit if such reduction were not made.  For this purpose, the
determination as to whether such payments and benefits constitute a payment
described in Code Section 280G(b)(2) and as to the amount of such reduction, if
any, necessary to avoid the excise tax shall be based upon the agreement of the
Company and the Participant, or in the absence of such agreement, a
determination by the accounting firm as described in (2) below.  In the event of
a determination that such reduction is to take place, the Participant shall be
entitled to designate which payments and benefits shall be reduced, but in the
event the Participant fails to make such designation within 15 days following
notification of such determination, the Company shall allocate the reduction
among such payments and benefits in its sole discretion; provided, however, that
the payments provided pursuant to the Plan shall be the last payments to be
reduced.

 

(2)                                  “Net after tax benefit” shall mean the sum
of (A) the total payments payable to the Participant hereunder, plus (B) all
other payments and benefits which the Participant receives

 

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or is then entitled to receive from the Company and its subsidiaries that would
constitute a payment described in Section 280G(b)(2) of the Code, less (C) the
amount of federal, state and local income taxes payable with respect to the
foregoing calculated at the maximum marginal income tax rate for each year in
which the foregoing shall be paid to the Participant (based upon the rate in
effect for such year as set forth in the Code at the time of termination of the
Participant’s employment), less (D) the amount of excise taxes imposed with
respect to the payments and benefits described in (A) and (B) above by Section
4999 of the Code.  The foregoing calculations shall be made, at the Company’s
expense, by the Company and the Participant.  If no agreement on the
calculations is reached, the Participant and the Company shall agree to the
selection of an accounting firm to make the calculations.  If no agreement can
be reached regarding the selection of an accounting firm, the Company shall
select a nationally recognized accounting firm other than the Company’s
independent auditors.  The determination of any such firm selected shall be
conclusive and binding on all parties.

 

(3)                                  In the event a determination is made as
described in (1) and (2) above that any such payouts are to be reduced and if
such determination occurs after the Participant has received accelerated awards
as described above without such reduction having been made, the amount by which
such payment is to be reduced as provided above shall be deemed to be a loan
from the Company to the Participant and shall be due and payable by the
Participant to the Company three days following notification by the Company to
the Participant of such determination and the amount owing.  No interest shall
be due on such amount and the Company shall hold the Participant harmless, on an
after-tax basis, from any excise tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such amount or with
respect to any imputed income with respect to such advance.

 

3.3                                 ELIGIBILITY FOR PRORATA BENEFITS.  A
PARTICIPANT IS ELIGIBLE TO RECEIVE PRORATA BENEFITS AS DESCRIBED IN SECTION 4.2
UNDER THE PLAN IF:

 

(A)                                  HE TERMINATES HIS EMPLOYMENT (I) AFTER
ATTAINING AGE FORTY-FIVE (45) OR HAVING COMPLETED FIVE (5) YEARS OF SERVICE (BUT
BEFORE HE ATTAINS AGE SIXTY (60) OR THE COMBINATION OF HIS AGE AND NUMBER OF
YEARS OF SERVICE EXCEED EIGHTY-FIVE (85)) OR (II) IF HE IS A PARTICIPANT OTHER
THAN A MEMBER OR THE CHAIRMAN, AFTER FULFILLING ANY COMBINATION OF ELIGIBILITY
CRITERIA OTHER THAN AS SPECIFIED IN CLAUSE (I) OF THIS PARAGRAPH, IF ANY, THAT
HAS BEEN COMMUNICATED TO

 

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SUCH PARTICIPANT IN WRITING BY THE COMMITTEE IN CONNECTION WITH SUCH
PARTICIPANT’S INITIAL PARTICIPATION IN THE PLAN, AND

 

(B)                                 HE HAS NOT OTHERWISE FORFEITED HIS BENEFITS
UNDER SECTION 4.5 OF THIS PLAN.

 

ARTICLE 4

 

BENEFITS

 

4.1                                 AMOUNT OF FULL BENEFIT.  IN ACCORDANCE WITH
THE PAYMENT PROVISIONS OF SECTION 4.3, A PARTICIPANT WHO MEETS THE ELIGIBILITY
REQUIREMENTS UNDER SECTION 3.2 SHALL BE ELIGIBLE TO RECEIVE FULL BENEFITS UNDER
THE PLAN.  FULL BENEFITS SHALL BE EQUAL TO (A) TWENTY-FIVE (25) ANNUAL PAYMENTS
OF $700,000 FOR PARTICIPANTS OTHER THAN THE CHAIRMAN AND (B) TWENTY-FIVE (25)
ANNUAL PAYMENTS OF $1,250,000 FOR THE CHAIRMAN.

 

4.2                                 AMOUNT OF PRORATA BENEFIT.  IN ACCORDANCE
WITH THE PAYMENT PROVISIONS OF SECTION 4.3, A PARTICIPANT WHO MEETS THE
ELIGIBILITY REQUIREMENTS UNDER SECTION 3.3 SHALL BE ELIGIBLE TO RECEIVE PRORATA
BENEFITS UNDER THE PLAN.  PRORATA BENEFITS SHALL BE EQUAL TO (A) TWENTY-FIVE
(25) ANNUAL PAYMENTS OF $700,000 FOR PARTICIPANTS OTHER THAN THE CHAIRMAN AND
(B) TWENTY-FIVE (25) ANNUAL PAYMENTS OF $1,250,000 FOR THE CHAIRMAN, MULTIPLIED
BY THE RATIO OF (A) THE PARTICIPANT’S YEARS OF SERVICE AT TERMINATION OR
RETIREMENT TO (B) THE PROJECTED YEARS OF SERVICE THE PARTICIPANT WOULD HAVE HAD
AT AGE SIXTY (60) (OR, IF THE PARTICIPANT IS OTHER THAN A MEMBER OR THE
CHAIRMAN, AT SUCH OTHER AGE FOR ELIGIBILITY FOR FULL BENEFITS THAT IS
COMMUNICATED TO SUCH PARTICIPANT IN WRITING BY THE COMMITTEE AT THE TIME OF SUCH
PARTICIPANT’S INITIAL PARTICIPATION IN THE PLAN) HAD HIS EMPLOYMENT NOT
TERMINATED.

 

4.3                                 PAYMENT OF BENEFITS.

 

4.3.1                        EXCEPT AS PROVIDED IN SECTION 4.4, FULL AND PRORATA
BENEFITS UNDER THE PLAN SHALL COMMENCE THE FIRST DAY OF THE FIRST MONTH
COINCIDENT WITH OR NEXT FOLLOWING THE LATER OF (A) THE MONTH THAT A PARTICIPANT
ATTAINS AGE SIXTY (60), OR (B) THE MONTH A PARTICIPANT RETIRES OR TERMINATES
EMPLOYMENT WITH THE COMPANY (THE “BENEFIT COMMENCEMENT DATE”).

 

4.3.2                        PRIOR TO THE OCCURRENCE OF A CHANGE IN CONTROL,
EACH PARTICIPANT SHALL BE ENTITLED TO MAKE AN ELECTION PURSUANT TO WHICH, IN THE
EVENT SUCH PARTICIPANT’S EMPLOYMENT IS TERMINATED WITHIN THREE (3) YEARS
FOLLOWING A CHANGE IN CONTROL EITHER BY THE COMPANY WITHOUT CAUSE OR BY THE
PARTICIPANT FOR GOOD REASON, HE SHALL BE ENTITLED TO RECEIVE IN ONE LUMP SUM
PAYMENT THE PRESENT VALUE OF HIS FULL OR PRORATA BENEFITS, AS APPLICABLE, AS
SOON AS PRACTICABLE AFTER SUCH TERMINATION OF EMPLOYMENT.

 

 

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4.4                                 BENEFITS ON DEATH OR DISABILITY.

 

4.4.1                        IN THE EVENT OF THE DEATH OF THE PARTICIPANT AFTER
THE BENEFIT COMMENCEMENT DATE, HIS SPOUSE, IF ANY, SHALL RECEIVE ANNUALLY THE
REMAINDER OF THE PARTICIPANT’S ANNUAL PAYMENTS UNDER THE PLAN.  IF THE SPOUSE
SHALL DIE BEFORE ALL ANNUAL PAYMENTS HAVE BEEN PAID (OR IF THE PARTICIPANT HAS
NO SPOUSE ON THE DATE OF HIS DEATH), THE PRESENT VALUE OF THE REMAINING PAYMENTS
SHALL BE PAID IN ONE LUMP SUM TO SUCH SPOUSE’S ESTATE (OR THE PARTICIPANT’S
ESTATE, AS THE CASE MAY BE) AS SOON AS PRACTICABLE FOLLOWING THE DATE OF DEATH
OF SUCH SPOUSE (OR OF THE PARTICIPANT, AS THE CASE MAY BE).

 

4.4.2                        IN THE EVENT OF THE DEATH OF A PARTICIPANT PRIOR TO
THE BENEFIT COMMENCEMENT DATE, PAYMENTS OF ANY FULL BENEFITS (IF THE PARTICIPANT
HAD THEN SATISFIED THE REQUIREMENTS OF SECTION 3.2) OR PRORATA BENEFITS (IF THE
PARTICIPANT HAD THEN SATISFIED THE REQUIREMENTS OF SECTION 3.3) SHALL BE PAID
ANNUALLY TO THE PARTICIPANT’S SPOUSE COMMENCING ON THE LATER OF (I) THE FIRST
DAY OF THE MONTH IMMEDIATELY FOLLOWING THE PARTICIPANT’S DEATH OR (II) THE FIRST
DAY OF THE MONTH COINCIDENT WITH OR NEXT FOLLOWING THE MONTH DURING WHICH THE
PARTICIPANT WOULD HAVE ATTAINED AGE SIXTY (60).  IF THE SPOUSE SHALL DIE BEFORE
ALL ANNUAL PAYMENTS HAVE BEEN PAID OR BEFORE BENEFIT PAYMENT COMMENCES (OR IF
THE PARTICIPANT HAS NO SPOUSE ON THE DATE OF HIS DEATH), THE PRESENT VALUE OF
THE REMAINING PAYMENTS SHALL BE PAID IN ONE LUMP SUM TO SUCH SPOUSE’S ESTATE (OR
THE PARTICIPANT’S ESTATE, AS THE CASE MAY BE) AS SOON AS PRACTICABLE FOLLOWING
THE DATE OF DEATH OF SUCH SPOUSE (OR OF THE PARTICIPANT, AS THE CASE MAY BE).

 

4.4.3                        IN THE EVENT OF THE DEATH OR DISABILITY OF A
PARTICIPANT, THE COMMITTEE MAY, IN ITS SOLE DISCRETION, (I) INCREASE THE
PARTICIPANT’S PRORATA BENEFIT UP TO A MAXIMUM OF THE FULL BENEFIT, (II)
ACCELERATE THE DATE ON WHICH PAYMENT OF FULL OR PRORATA BENEFITS COMMENCES TO
ANY DATE PRIOR TO THE OTHERWISE APPLICABLE BENEFIT COMMENCEMENT DATE, AND (III)
PROVIDE THAT THE PRESENT VALUE OF THE PARTICIPANT’S PRORATA OR FULL BENEFIT (OR
THE PRESENT VALUE OF THE REMAINING PAYMENTS, AS APPLICABLE) SHALL BE PAID
IMMEDIATELY IN ONE LUMP SUM.

 

4.5                                 FORFEITURE AND CESSATION OF PAYMENTS.  A
PARTICIPANT SHALL FORFEIT ALL RIGHTS TO FULL OR PRORATA BENEFITS (INCLUDING THE
RIGHT TO ANY SUCH BENEFITS AFTER THE BENEFIT COMMENCEMENT DATE) IF (I) HE
ENGAGES IN COMPETITIVE ACTIVITY AT ANY TIME OTHER THAN FOLLOWING TERMINATION OF
HIS EMPLOYMENT (A) BY THE COMPANY WITHOUT CAUSE WITHIN THREE (3) YEARS FOLLOWING
A CHANGE IN CONTROL OR (B) BY THE PARTICIPANT WITH GOOD REASON WITHIN THREE (3)
YEARS FOLLOWING A CHANGE IN CONTROL, (II) HE ENGAGES IN DETRIMENTAL ACTIVITY AT
ANY TIME, (III) HIS EMPLOYMENT IS TERMINATED WITH CAUSE, (IV) HE IS A MEMBER OR
THE CHAIRMAN AND HIS EMPLOYMENT TERMINATES ON OR BEFORE JULY 1, 2001, OR (V) HE
IS A PARTICIPANT OTHER THAN A MEMBER OR THE CHAIRMAN AND HIS EMPLOYMENT
TERMINATES FOR A REASON OTHER THAN DEATH OR DISABILITY BEFORE THE EARLIER OF (X)
THE DATE DETERMINED BY THE COMMITTEE IN CONNECTION WITH SUCH PARTICIPANT’S
INITIAL PARTICIPATION IN THE PLAN AND (Y) A CHANGE IN CONTROL.

 

4.6                                 WITHHOLDING.  ALL PAYMENTS AND BENEFITS
UNDER THE PLAN SHALL BE SUBJECT TO ANY APPLICABLE WITHHOLDING REQUIREMENTS
IMPOSED BY ANY TAX OR OTHER LAW. THE

 

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COMPANY SHALL HAVE THE RIGHT TO SATISFY ANY WITHHOLDING OBLIGATION AGAINST ANY
OTHER PAYMENTS, INCLUDING REGULAR WAGES, DUE THE PARTICIPANT.

 

ARTICLE 5

 

AMENDMENT AND TERMINATION

 

5.1                                 AMENDMENT AND TERMINATION.  SUBJECT TO
SECTION 5.2, THE COMPANY, BY ACTION OF THE COMMITTEE, MAY AT ANY TIME AMEND THE
PLAN, RETROACTIVELY OR OTHERWISE, IN ANY RESPECT OR TERMINATE THE PLAN;
PROVIDED, HOWEVER, THAT NO SUCH AMENDMENT OR TERMINATION SHALL REDUCE THE AMOUNT
OF  FULL OR PRORATA BENEFIT FOR WHICH A PARTICIPANT WAS ELIGIBLE UNDER THE PLAN
IN EFFECT IMMEDIATELY PRIOR TO THE DATE OF SUCH AMENDMENT OR TERMINATION
(DETERMINED AS THOUGH THE PARTICIPANT’S EMPLOYMENT WITH THE COMPANY HAD THEN
TERMINATED BUT WITHOUT REGARD TO THE REQUIREMENT OF SECTION 4.5 RELATING TO
EMPLOYMENT ON JULY 1, 2001, OR SUCH LATER DATE, AS SPECIFIED BY THE COMMITTEE
WITH RESPECT TO A PARTICIPANT WHO IS NEITHER A MEMBER NOR THE CHAIRMAN); AND
FURTHER PROVIDED THAT NO AMENDMENT MADE WITHIN SIX (6) MONTHS BEFORE A CHANGE IN
CONTROL OR AT ANY TIME AFTER A CHANGE IN CONTROL THAT REDUCES OR OTHERWISE
ADVERSELY AFFECTS A PARTICIPANT’S RIGHTS WITH RESPECT TO FULL OR PRORATA
BENEFITS SHALL BE GIVEN EFFECT.

 

5.2                                 RESTRICTIONS ON COMPANY’S ACTION.  WITHOUT
THE EXPRESS WRITTEN CONSENT OF THE PARTICIPANT, NO ACTION TAKEN BY THE COMPANY
SHALL ADVERSELY AFFECT A PARTICIPANT’S (OR HIS SPOUSE’S) RIGHT TO RECEIVE A FULL
OR PRORATA BENEFIT UPON SATISFACTION BY THE PARTICIPANT OF THE CONDITIONS
PRECEDENT TO ENTITLEMENT TO SUCH A BENEFIT AS THEY EXIST UNDER THE TERMS OF THE
PLAN IN EFFECT IMMEDIATELY PRIOR TO SUCH ACTION, AND AT THE TIME AND ON THE
TERMS THEN IN EFFECT.  NOTWITHSTANDING THE FOREGOING, THE COMPANY RESERVES THE
RIGHT TO PAY IN ONE LUMP SUM THE PRESENT VALUE OF ANY FULL OR PRORATA BENEFIT
UPON TERMINATION OF THE PLAN.

 

5.3                                 NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THE PROVISIONS OF THIS ARTICLE 5 MAY NOT BE AMENDED WITHOUT THE
EXPRESS WRITTEN CONSENT OF EACH PARTICIPANT.

 

ARTICLE 6

 

ADMINISTRATION; FUNDING OF TRUST

 

6.1                                 COMMITTEE.  THE PLAN SHALL BE ADMINISTERED
BY THE COMMITTEE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
COMMITTEE SHALL HAVE THE POWER AND DISCRETION:

 

(A)                                  TO MAKE AND ENFORCE RULES AND REGULATIONS
AND TO PRESCRIBE THE USE OF FORMS NECESSARY OR ADVISABLE FOR EFFICIENT
ADMINISTRATION OF THE PLAN;

 

(B)                                 TO INTERPRET THE PLAN, TO RESOLVE
AMBIGUITIES, INCONSISTENCIES AND OMISSIONS AND TO DECIDE QUESTIONS CONCERNING
THE ELIGIBILITY OF ANY PERSON TO

 

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RECEIVE BENEFITS UNDER THE PLAN, SUCH INTERPRETATIONS, RESOLUTIONS AND DECISIONS
TO BE FINAL AND CONCLUSIVE ON ALL PERSONS;

 

(C)                                  TO DIRECT PAYMENT OF AMOUNTS DUE WITH
RESPECT TO EACH PARTICIPANT UNDER THE PLAN;

 

(D)                                 TO DELEGATE AUTHORITY TO AGENTS AND OTHER
PERSONS TO ACT ON ITS OR HIS BEHALF IN CARRYING OUT THE PROVISIONS AND
ADMINISTRATION OF THE PLAN AND TO TAKE OR DIRECT ANY ACTION REQUIRED OR
ADVISABLE WITH RESPECT TO THE ADMINISTRATION OF THE PLAN AND TRUST; AND

 

(E)                                  TO PERFORM ANY OTHER ACTS AS THE COMMITTEE
DEEMS NECESSARY OR APPROPRIATE FOR THE PROPER ADMINISTRATION OF THIS PLAN.

 

6.2                                 CLAIMS PROCEDURE.  IF ANY CLAIM FOR BENEFITS
UNDER THE PLAN IS DENIED, THE COMMITTEE SHALL FOLLOW PROCEDURES SIMILAR TO THOSE
THEN IN EFFECT UNDER THE QUALIFIED PLAN FOR NOTIFYING THE APPLICANT OF SUCH
DENIAL AND FOR AFFORDING THE APPLICANT AN OPPORTUNITY TO APPEAL SUCH DENIAL.

 

6.3                                 SERVICE OF PROCESS.  THE COMPANY OR SUCH
OTHER PERSON AS MAY FROM TIME TO TIME BE DESIGNATED BY THE COMMITTEE SHALL BE
THE AGENT FOR SERVICE OF PROCESS UNDER THE PLAN.

 

6.4                                 NO BOND REQUIRED.  NO BOND OR OTHER SECURITY
SHALL BE REQUIRED OF ANY INDIVIDUAL OR THE COMMITTEE EXCEPT AS MAY BE REQUIRED
BY LAW.

 

6.5                                 LIMITATION OF LIABILITY; INDEMNITY.  EXCEPT
TO THE EXTENT OTHERWISE PROVIDED BY LAW, IF ANY DUTY OR RESPONSIBILITY OF THE
COMMITTEE HAS BEEN ALLOCATED OR DELEGATED TO ANY OTHER PERSON IN ACCORDANCE WITH
ANY PROVISION OF THE PLAN, THEN THE COMMITTEE SHALL NOT BE LIABLE FOR ANY ACT OR
OMISSION OF SUCH PERSON IN CARRYING OUT SUCH DUTY OR RESPONSIBILITY.  THE
COMPANY SHALL INDEMNIFY AND SAVE EACH PERSON WHO IS A MEMBER OF THE COMMITTEE
AND EACH EMPLOYEE OR DIRECTOR OF THE COMPANY HARMLESS AGAINST ANY AND ALL LOSS,
LIABILITY, CLAIM, DAMAGE, COST AND EXPENSE WHICH MAY ARISE BY REASON OF, OR BE
BASED UPON, ANY MATTER CONNECTED WITH OR RELATED TO THE PLAN OR THE
ADMINISTRATION OF THE PLAN (INCLUDING, BUT NOT LIMITED TO, ANY AND ALL EXPENSES
WHATSOEVER REASONABLY INCURRED IN INVESTIGATING, PREPARING OR DEFENDING AGAINST
ANY LITIGATION, COMMENCED OR THREATENED, OR IN SETTLEMENT OF ANY SUCH CLAIM
WHATSOEVER) TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW.

 

6.6                                 POWERS OF THE COMMITTEE.  NOTWITHSTANDING
ANY OTHER PROVISIONS OF THIS PLAN OR THE TRUST TO THE CONTRARY, THE COMMITTEE
MAY:

 

(A)                                  ACCELERATE A PARTICIPANT’S ELIGIBILITY FOR
PRORATA OR FULL BENEFITS UNDER THE PLAN;

 

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(B)                                 PAY THE PRESENT VALUE OF ANY FULL OR PRORATA
BENEFIT IN ONE LUMP SUM CASH PAYMENT;

 

(C)                                  ESTABLISH ELIGIBILITY CRITERIA FOR ANY
PARTICIPANT OTHER THAN A MEMBER OR THE CHAIRMAN TO RECEIVE FULL AND PRORATA
BENEFITS, PROVIDED SUCH CRITERIA ARE COMMUNICATED TO EACH SUCH PARTICIPANT IN
WRITING BY THE COMMITTEE AT THE TIME OF SUCH PARTICIPANT’S INITIAL PARTICIPATION
IN THE PLAN; AND

 

(D)                                 CAUSE THE COMPANY TO FUND THE TRUST AT ANY
TIME BY DETERMINING EACH PARTICIPANT’S FULL OR PRORATA BENEFIT AND CAUSING THE
COMPANY TO CONTRIBUTE TO A SEPARATE ACCOUNT MAINTAINED FOR EACH PARTICIPANT
UNDER THE TRUST, IN CASH, AN AMOUNT EQUAL TO THE PRESENT VALUE OF SUCH
PARTICIPANT’S FULL OR PRORATA BENEFIT (OR, IF ANNUAL PAYMENTS HAVE ALREADY
COMMENCED, THE PRESENT VALUE OF THE REMAINING BENEFIT) LESS ANY AMOUNT CREDITED
TO SUCH PARTICIPANT’S ACCOUNT UNDER THE TRUST AS OF THE DATE OF THE
CONTRIBUTION.

 

Notwithstanding the provisions of paragraph (d), the Committee shall upon the
occurrence of a Change in Control determine each Participant’s Full or Prorata
Benefit as of the end of such Participant’s latest completed month of service. 
Within five (5) days following such a Change in Control (or, if later, on the
date when every Participant’s Full or Prorata Benefit has been determined), the
Company shall contribute to a separate account maintained for each Participant
under the Trust, in cash, an amount equal to 110% of the Present Value of each
such Participant’s Full or Prorata Benefit (or, if annual payments have already
been made, the Present Value of the remaining payments) less any amount credited
to such Participant’s account under the Trust as of the date of the
contribution.  Within five (5) days of each anniversary of the Change in Control
(or, if later, on the date when each Participant’s benefit that has accrued as
of the date of such anniversary has been determined), the Company shall make an
additional contribution to the Trust, in cash, such that the amount maintained
in each Participant’s account shall equal at least 110% of the then Present
Value of each such Participant’s Full or Prorata Benefit (or, if annual payments
have already been made, the Present Value of the remaining payments) less any
amount credited to such Participant’s account under the Trust as of the date of
such additional contribution.  Notwithstanding anything in this Plan to the
contrary, as of each anniversary of the Change in Control, the Company shall be
entitled to receive, if it so elects, a payment from the Trust such that after
such payment, the assets credited to each Participant’s account equal at least
120% of the then Present Value of the Participant’s Full or Prorata Benefit (or,
if annual payments have already been made, the Present Value of the remaining
payments).  For purposes of determining the Present Value of amounts described
in this paragraph for Participants who have not commenced receiving benefits
under the Plan, the Company shall assume that each Participant’s Benefit
Commencement Date will occur at age sixty (60), or if a Participant has already
attained age sixty (60), will occur immediately.

 

6.7                                 LEGAL FEES AND INTEREST.  IF AFTER THE
OCCURRENCE OF A CHANGE IN CONTROL, (I) A DISPUTE ARISES WITH RESPECT TO THE
ENFORCEMENT OF A PARTICIPANT’S RIGHTS UNDER

 

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THIS PLAN, OR (II) ANY LEGAL OR ARBITRATION PROCEEDING SHALL BE BROUGHT TO
ENFORCE OR INTERPRET ANY PROVISION CONTAINED HEREIN OR TO RECOVER DAMAGES FOR
BREACH HEREOF AND THE PARTICIPANT PREVAILS IN WHOLE OR IN PART, IN EITHER CASE
SO LONG AS THE PARTICIPANT IS NOT ACTING IN BAD FAITH, THE PARTICIPANT SHALL
RECOVER FROM THE COMPANY ANY REASONABLE ATTORNEYS’ FEES AND NECESSARY COSTS AND
DISBURSEMENTS INCURRED AS A RESULT OF SUCH DISPUTE, LEGAL OR ARBITRATION
PROCEEDING (“EXPENSES”), AND PREJUDGMENT INTEREST ON ANY MONEY JUDGMENT OR
ARBITRATION AWARD OBTAINED BY THE PARTICIPANT CALCULATED AT THE PRIME RATE OF
INTEREST AS REPORTED BY THE WALL STREET JOURNAL FROM THE DATE THAT PAYMENTS TO
THE PARTICIPANT SHOULD HAVE BEEN MADE UNDER THIS PLAN.  WITHIN TEN (10) DAYS
AFTER THE PARTICIPANT’S WRITTEN REQUEST THEREFOR, THE COMPANY SHALL PAY TO SUCH
PARTICIPANT, OR SUCH OTHER PERSON OR ENTITY AS SUCH PARTICIPANT MAY DESIGNATE IN
WRITING TO THE COMPANY, THE PARTICIPANT’S EXPENSES.

 

ARTICLE 7

 

MISCELLANEOUS

 

7.1                                 PAYMENT TO INCOMPETENT.  IF ANY PERSON
ENTITLED TO BENEFITS UNDER THIS PLAN SHALL BE A MINOR OR SHALL BE EITHER
PHYSICALLY OR MENTALLY INCOMPETENT IN THE JUDGMENT OF THE COMMITTEE, SUCH
BENEFITS MAY BE PAID PURSUANT TO THE SAME PROCEDURES AS SPECIFIED FROM TIME TO
TIME UNDER THE QUALIFIED PLAN.  IN THE EVENT OF SUCH PAYMENT THE COMPANY AND THE
TRUST SHALL BE DISCHARGED FROM ALL FURTHER LIABILITY FOR SUCH PAYMENT.

 

7.2                                 DOUBT AS TO RIGHT TO PAYMENT.  IF ANY DOUBT
EXISTS AS TO THE RIGHT OF ANY PERSON TO ANY BENEFITS UNDER THIS PLAN OR THE
AMOUNT OF TIME OF PAYMENT OF SUCH BENEFITS (INCLUDING, WITHOUT LIMITATION, ANY
CASE OF DOUBT AS TO IDENTITY, OR ANY CASE IN WHICH ANY NOTICE HAS BEEN RECEIVED
FROM ANY OTHER PERSON CLAIMING ANY INTEREST IN AMOUNTS PAYABLE HEREUNDER, OR ANY
CASE IN WHICH A CLAIM FROM OTHER PERSONS MAY EXIST BY REASON OF COMMUNITY
PROPERTY OR SIMILAR LAWS), THE COMMITTEE WILL BE ENTITLED, IN ITS DISCRETION, TO
DIRECT THAT PAYMENT OF SUCH BENEFITS BE DEFERRED UNTIL SUCH RIGHT OR AMOUNT OR
TIME IS DETERMINED OR UNTIL ORDER OF A COURT OF COMPETENT JURISDICTION, OR TO
PAY SUCH SUM INTO COURT IN ACCORDANCE WITH APPROPRIATE RULES OF LAW IN SUCH CASE
THEN PROVIDED, OR TO MAKE PAYMENT ONLY UPON RECEIPT OF A BOND OR SIMILAR
INDEMNIFICATION (IN SUCH AMOUNT AND IN SUCH FORM AS IS SATISFACTORY TO THE
COMMITTEE).

 

7.3                                 SPENDTHRIFT CLAUSE.  TO THE MAXIMUM EXTENT
PERMITTED BY LAW, (A) NO BENEFIT, DISTRIBUTION OR PAYMENT UNDER THE PLAN MAY BE
ANTICIPATED, ASSIGNED (EITHER AT LAW OR IN EQUITY), ALIENATED OR SUBJECT TO
ATTACHMENT, GARNISHMENT, LEVY, EXECUTION OR OTHER LEGAL OR EQUITABLE PROCESS,
WHETHER PURSUANT TO A “QUALIFIED DOMESTIC RELATIONS ORDER”, AS DEFINED IN
SECTION 414(P) OF THE CODE, OR OTHERWISE; AND (B) THE PLAN SHALL IN NO MANNER BE
LIABLE FOR OR SUBJECT TO THE DEBTS OR LIABILITIES OF ANY PARTICIPANT.

 

7.4                                 DATA.  ANY PARTICIPANT OR SPOUSE ENTITLED TO
BENEFITS UNDER THE PLAN MUST FURNISH TO THE COMMITTEE SUCH DOCUMENTS, EVIDENCE
OR INFORMATION AS THE COMMITTEE CONSIDERS NECESSARY OR DESIRABLE FOR THE PURPOSE
OF ADMINISTERING THE PLAN, OR

 

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TO PROTECT THE COMMITTEE; AND IT IS A CONDITION OF THE PLAN THAT EACH SUCH
PARTICIPANT OR SPOUSE MUST FURNISH PROMPTLY TRUE AND COMPLETE DATA, EVIDENCE OR
INFORMATION AND SIGN SUCH DOCUMENTS AS THE COMMITTEE MAY REQUIRE BEFORE ANY
BENEFITS BECOME PAYABLE UNDER THE PLAN.

 

7.5                                 SEPARABILITY.  IF ANY PROVISION OF THE PLAN
IS HELD INVALID OR UNENFORCEABLE, ITS INVALIDITY OR UNENFORCEABILITY WILL NOT
AFFECT ANY OTHER PROVISIONS OF THE PLAN, AND THE PLAN WILL BE CONSTRUED AND
ENFORCED AS IF SUCH PROVISION HAD NOT BEEN INCLUDED THEREIN.

 

7.6                                 CAPTIONS.  THE CAPTIONS CONTAINED HEREIN ARE
INSERTED ONLY AS A MATTER OF CONVENIENCE AND FOR REFERENCE AND IN NO WAY DEFINE,
LIMIT, ENLARGE OR DESCRIBE THE SCOPE OR INTENT OF THE PLAN NOR SHALL, IN ANY
WAY, AFFECT THE PLAN OR THE CONSTRUCTION OF ANY PROVISION THEREOF.

 

7.7                                 RIGHT OF DISCHARGE RESERVED.  THE
ESTABLISHMENT OF THE PLAN SHALL NOT BE CONSTRUED TO CONFER UPON ANY PARTICIPANT
ANY LEGAL RIGHT TO BE RETAINED IN THE EMPLOY OF THE COMPANY OR GIVE ANY
PARTICIPANT OR ANY OTHER PERSON ANY RIGHT TO BENEFITS, EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED FOR HEREUNDER.  ALL PARTICIPANTS WILL REMAIN SUBJECT TO
DISCHARGE TO THE SAME EXTENT AS IF THE PLAN HAD NEVER BEEN ADOPTED, AND MAY BE
TREATED WITHOUT REGARD TO THE EFFECT SUCH TREATMENT MIGHT HAVE UPON THEM UNDER
THE PLAN.

 

7.8                                 NOT COMPENSATION FOR OTHER PLANS.  NO
COMPENSATION PAYABLE AS A CONSEQUENCE OF PARTICIPATION IN THE PLAN SHALL BE
CONSIDERED IN CALCULATING OR DETERMINING BENEFITS, COVERAGE OR CONTRIBUTIONS
UNDER ANY OTHER EMPLOYEE BENEFIT PLAN OR PROGRAM, UNLESS OTHERWISE EXPLICITLY
PROVIDED UNDER SUCH PLAN OR PROGRAM OR AS OTHERWISE REQUIRED BY APPLICABLE LAW.

 

7.9                                 ARBITRATION.  PRIOR TO A CHANGE IN CONTROL,
ANY DISPUTE, CONTROVERSY OR CLAIM BETWEEN A PARTICIPANT AND THE COMPANY ARISING
OUT OF OR RELATING TO OR CONCERNING THE PROVISIONS OF THE PLAN SHALL BE FINALLY
SETTLED BY ARBITRATION IN THE CITY OF NEW YORK BEFORE, AND IN ACCORDANCE WITH,
THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION
(“AAA”).  IF, AFTER THE OCCURRENCE OF A CHANGE IN CONTROL, ANY DISPUTE,
CONTROVERSY OR CLAIM ARISES BETWEEN A PARTICIPANT AND THE COMPANY OUT OF OR
RELATING TO OR CONCERNING THE PROVISIONS OF THE PLAN, SUCH DISPUTE, CONTROVERSY
OR CLAIM SHALL BE FINALLY SETTLED BY A COURT OF COMPETENT JURISDICTION IN THE
CITY OF NEW YORK WHICH, NOTWITHSTANDING THE PROVISIONS OF ARTICLE 6 OR ANY OTHER
PROVISION OF THE PLAN, SHALL APPLY A DE NOVO STANDARD OF REVIEW TO ANY
DETERMINATION MADE BY THE COMPANY, THE BOARD OR THE COMMITTEE.

 

7.10                           GOVERNING LAW AND LIMITATIONS ON ACTIONS.  THE
PLAN IS INTENDED TO CONSTITUTE AN ARRANGEMENT THAT IS UNFUNDED AND MAINTAINED
PRIMARILY FOR THE PURPOSE OF PROVIDING DEFERRED COMPENSATION FOR A SELECT GROUP
OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES, ALL WITHIN THE MEANING OF  ERISA,
AS AMENDED.  TO THAT EXTENT, RIGHTS UNDER THIS PLAN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH RULES OF FEDERAL LAW APPLICABLE TO SUCH PLANS.  TO
THE EXTENT THAT SUCH RULES OF FEDERAL LAW ARE NOT

 

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APPLICABLE, THE PLAN SHALL BE CONSTRUED, AND ALL PROVISIONS HEREOF SHALL BE
ENFORCED AND ADMINISTERED, ACCORDING TO THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAW; PROVIDED, HOWEVER, THAT ANY
DETERMINATION OF WHETHER A CHANGE IN CONTROL HAS OCCURRED FOR PURPOSES OF THIS
PLAN SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAW.  NO ACTION (WHETHER AT LAW, IN
EQUITY OR OTHERWISE) OR ARBITRATION CLAIM SHALL BE BROUGHT BY OR ON BEHALF OF
ANY PARTICIPANT OR SPOUSE FOR OR WITH RESPECT TO BENEFITS DUE UNDER THIS PLAN
UNLESS THE PERSON BRINGING SUCH ACTION HAS TIMELY EXHAUSTED THE PLAN’S CLAIM
REVIEW PROCEDURE.  ANY ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) OR
ARBITRATION CLAIM MUST BE COMMENCED WITHIN THREE YEARS.  THIS THREE YEAR PERIOD
SHALL BE COMPUTED FROM THE EARLIER OF (A) THE DATE A FINAL DETERMINATION DENYING
SUCH BENEFIT, IN WHOLE OR IN PART, IS ISSUED UNDER THE PLAN’S CLAIM REVIEW
PROCEDURE AND (B) THE DATE SUCH INDIVIDUAL’S CAUSE OF ACTION FIRST ACCRUED (AS
DETERMINED UNDER THE LAWS OF THE STATE OF NEW YORK OR THE STATE OF DELAWARE, AS
APPLICABLE, WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAWS).

 

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IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused this instrument to
be executed by its duly authorized officers, and its corporate seal to be
hereunto affixed, this 10th   day of December, 2003.

 

 

LEHMAN BROTHERS HOLDINGS INC.

 

 

 

 

 

By:

/s/ Tracy Binkley

 

 

 

 

 

Title:

Vice President and
Director of Global Human Resources

ATTEST:

 

/s/ Madeline L. Shapiro

 

 

Assistant Secretary

 

 

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