Exhibit 10.16


 


200   RESTRICTED STOCK UNIT AWARD


 


AGREEMENT EVIDENCING A GRANT OF

RESTRICTED STOCK UNITS


 


1.   GRANT OF UNITS.  Pursuant to the Lehman Brothers
Holdings Inc. (“Holdings”) 1996 Management Ownership Plan (the “Plan”), you are
hereby granted, as of                   ,
200   (the “Date of Grant”), the number of Restricted Stock Units (“Units”)
for shares of Holdings’ common stock, par value $.10 per share (the “Common
Stock”), set forth on the award statement with your name on it delivered to you
herewith (which number of Units may be adjusted pursuant to Paragraph 8 below).


 


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 should be
carefully examined.  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 on Annex A attached hereto shall have the meaning
ascribed to such terms under the Plan.


 


3.   VESTING.  Subject to Paragraph 4, Units awarded to you
hereunder shall become vested in accordance with the following vesting
schedule:


 


·                                                    
of the Principal Units (   % of the total award) shall become
vested on                       ,
200   .


 


·                                          The remaining        
Principal Units and all of the Discount Units (   % of the total
award) shall become vested on               ,
200  .


 


4.   ENTITLEMENT TO RECEIVE COMMON STOCK.


 


(a)    General Rule.  Unless otherwise set forth herein, you shall
receive one share of Common Stock for each Unit that you hold on           ,
200    (the “Maturity Date”) and you shall be entitled to
receive freely transferable Shares of Common Stock as soon as practicable after
the Maturity Date.


 


(b)    Effect of Detrimental Activity.  Notwithstanding any other provision of this
Agreement if you engage in Detrimental Activity at any time prior to the Share
Payment Date, all Units held by you shall be forfeited and canceled.


 


(c)    Effect of Termination.  In the event of your Termination for any
reason or notification of Termination prior to                   ,
200   , all Units held by you shall be forfeited and
cancelled.  In the event of any
Termination not described in the preceding sentence, the following rules shall
apply:


 


(i)            Voluntary
Termination with Competitive Activity. 
In the event of your voluntary Termination with Competitive Activity, (i) all
Discount Units shall be forfeited and canceled, (ii) if such Termination
occurs prior to                  ,
200   , all 


 

















 


Principal
Units shall be forfeited and canceled and (iii) if such Termination occurs
on or subsequent to                 ,
200   , you shall be entitled to receive freely transferable
shares of Common Stock for           
of the Principal Units (     % of the total award).


 


(ii)           Voluntary
Termination without Competitive Activity. 
In the event of your voluntary Termination without Competitive Activity,
you shall be entitled to receive (i) freely transferable shares of Common
Stock for the Principal Units and (ii) freely transferable shares of
Common Stock equal to      % of the Discount Units
multiplied by each full year of your employment with Holdings or a Subsidiary
after                  ,
200    and before your Termination.  However, if your Termination is a Full Career
Termination, you will be entitled to receive freely transferable shares of
Common Stock for all the Discount Units provided you do not engage in
Competitive Activity prior to the Share Payment Date.  In the event of Competitive Activity prior to
the Share Payment Date, the provisions specified in Paragraph 4(c)(i) shall
apply.


 


(iii)          Involuntary
Termination with Cause.  In the event
of your involuntary Termination with Cause, all Principal Units and Discount
Units shall be immediately forfeited and canceled.


 


(iv)          Involuntary
Termination without Cause.  In the
event of your involuntary Termination without Cause, you shall be entitled to
receive (i) freely transferable shares of Common Stock for the Principal
Units and (ii) freely transferable shares of Common Stock equal to    %
of the Discount Units multiplied by each full year of your employment with
Holdings or a Subsidiary after                      ,
200    and before your Termination.  However, if your Termination is a Full Career
Termination, you will be entitled to receive freely transferable shares of
Common Stock for all the Discount Units.


 


(v)           Retirement.  Notwithstanding the foregoing provisions of
Paragraph 4(c)(i), (ii), (iii) and (iv), in the event of your Retirement
and provided you do not engage in Competitive Activity or Detrimental Activity,
you shall be entitled to receive freely transferable shares of Common Stock for
all Principal Units and Discount Units as soon as practicable after the end of
the sixth month following your Retirement. 
If you engage in Competitive Activity, the provisions specified in
Paragraph 4(c)(i) shall apply as of the date of your Retirement, and you shall
be obligated to repay to Holdings the full gross amounts or shares received in
excess of those which you would have received under Paragraph 4(c)(i).  If you engage in Detrimental Activity prior
to the Share Payment Date, you shall be obligated to repay to Holdings the full
gross amounts or shares you received under this Agreement.


 


(vi)          Termination
Due to Death; Disability. 
Notwithstanding the foregoing provisions of Paragraph 4(c)(i), (ii),
(iii), (iv) and (v), in the event of the occurrence (i) your death or
Disability or (ii) your death or Disability following a Termination
described in Paragraph 4(c)(ii) or (iv) hereof, all outstanding Units
held by you shall become immediately payable and you shall, as soon as
practicable thereafter, receive freely transferable shares of Common Stock.


 


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Any
shares that become payable pursuant to this Paragraph 4(c) (other than
Paragraph (c)(v) or (vi)) shall be issued to you on the Share Payment
Date, subject to the application of Paragraph 4(b).  Notwithstanding any other provisions of this
Agreement, if any payment otherwise due hereunder would have the effect of
making you subject to the provisions of Code Section 409A(a)(1), such
payment shall be postponed until the earliest date upon which the payment could
be made without subjecting you to the provisions of Code Section 409A(a)(1).  Any remaining Units that are not payable
pursuant to the provisions of the Paragraph 4(c) shall be canceled by
Holdings.


 


(d)    Affidavit.  In the event of your Termination on or after                      ,
200   , you may be requested, from time to time after your
Termination, to complete and sign an affidavit with respect to Competitive
Activity or Detrimental Activity, which includes representations and authorizes
Holdings to verify the representations. 
Any failure on your part to complete, sign and return the affidavit
within 60 days may cause you to forfeit all Units held by you at that time.


 


5.   DIVIDEND EQUIVALENTS.  With respect
to each regular cash dividend or distribution paid or made on Common Stock to
holders of record on or after                    ,
200   , you shall be paid cash and/or credited with a number of
additional Units comparable in value to such dividend or distribution.  Such additional Units shall vest and become
payable at the same time as the Units to which they are attributable.


 


6.   LIMITATION ON OBLIGATIONS.  Holdings’ and any Subsidiary’s
obligation with respect to the Units granted hereunder is limited solely to the
delivery to you of shares of Common Stock on the date when such shares are due
to be delivered hereunder, and in no way shall Holdings or any Subsidiary
become obligated to pay cash in respect of such obligation (except for cash paid
pursuant to Paragraphs 5 and 9 hereof).


 


7.   NON-ASSIGNMENT.  Units may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise disposed of by you,
except by will or the laws of descent and distribution.  If you or anyone claiming under or through
you attempts to violate this Paragraph 7, such attempted violation shall be
null and void and without effect, and Holdings’ obligation to issue any Common
Stock hereunder shall terminate.


 


8.   EQUITABLE ADJUSTMENT.  In the event of a Change in Capitalization
occurring on or after the Date of Grant specified above and prior to the Share
Payment Date, the number and kind of shares of Common Stock which may be issued
with respect to Units shall be adjusted so as to reflect such change.


 


9.   CHANGE IN CONTROL.


 


(a)  Vesting upon an
Unapproved Change in Control.  Upon the occurrence of a Change in Control
without the prior approval of a majority of the independent members of the
Incumbent Board, your Units shall vest in full immediately.


 


(b)  Vesting upon an Approved
Change in Control.  Upon the
occurrence of a Change in Control with the prior approval of a majority of the
independent members of the Incumbent


 


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Board, then the Vesting Schedule shall be modified
such that your Units shall represent (i) an immediately vested right to
receive in the same form of consideration as that received by shareholders
generally, the lesser of (A) the “undiscounted market value” (at the time
of grant) of the shares of Common Stock underlying your outstanding Units
(i.e., the fair market value of your Units determined on the date of grant) and
(B) the price paid by an acquirer for such shares of Common Stock in
connection with such Change in Control (such lesser amount, the “Preliminary
Consideration”), and (ii) an additional right to receive the excess, if
any, of the price paid by an acquirer over such “undiscounted market value”
(such excess amount, the “Deferred Consideration”) which right shall become
vested on the earlier of (X) two years following such Change in Control or
(Y) the Maturity Date (such earlier date, the (“Deferred Vesting Date”)),
subject to the potential accelerated vesting and forfeiture provisions set
forth in Paragraph 4 hereof and otherwise pursuant to this Agreement.


 


(c)  Delivery of Shares or
Other Consideration Following any Change in Control.  Following the occurrence of
any Change in Control that constitutes a change in ownership or effective
control within the meaning of Section 409A(a)(2)(A)(v) of the Code,
you shall be immediately entitled to receive the Preliminary Consideration and,
to the extent not earlier paid or forfeited pursuant to Paragraph 4 hereof, you
shall be entitled to receive the Deferred Consideration (if any) upon the Deferred
Vesting Date.  Following the occurrence
of any Change in Control that does not constitute a change in ownership or
effective control within the meaning of Section 409A(a)(2)(A)(v) of
the Code, you shall be entitled to receive both the Preliminary Consideration
and the Deferred Consideration (if any) upon the Maturity Date, to the extent
not earlier paid or forfeited pursuant to Paragraph 4 hereof and otherwise
pursuant to this Agreement.


 


10.   TREATMENT IN BANKRUPTCY.  (a) If you are an employee
of Holdings, Holdings agrees to deliver, and (b) if you are an employee of
a Subsidiary, Holdings agrees to deliver to (or at the direction of) such
Subsidiary, shares of Common Stock on the date when such shares are due to be
delivered under this Agreement in satisfaction of each Unit granted to you
hereunder.  If you are an employee of a
Subsidiary, Holdings’ obligation in clause (b) of the preceding sentence
is created expressly for the benefit of you, and you shall have the full right
to enforce Holdings’ obligation to deliver Common Stock as if such obligation
were made directly in favor of you.  All
of your claims arising from, in connection with, or in any way relating to, any
failure of Holdings to deliver to you, or to a Subsidiary for delivery by such
Subsidiary to you, shares of Common Stock on the date when such shares are due
to be delivered under this Agreement in satisfaction of each Unit granted to
you shall be deemed, in the event of a bankruptcy of Holdings, to be claims for
damages arising from the purchase or sale of Common Stock of Holdings, within
the meaning of section 510(b) of the Bankruptcy Code and shall have in
such bankruptcy the same priority as, and no greater priority than, common
stock interests in Holdings.


 


11.   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, provided, however, that no such amendment shall, without
your consent, diminish your rights under this Agreement.


 


12.   BINDING ACTIONS.  Any action taken or decision
made by the Committee or its designees arising out of or in connection with the
construction, administration, 


 


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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 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.


 


13.   NO RIGHT TO CONTINUED EMPLOYMENT.  The grant of Units shall not
confer on you any right to be retained in the employ of Holdings or a
subsidiary, or to receive subsequent Units 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.


 


14.   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.


 


15.   WITHHOLDING/DEDUCTIONS.  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 of Common Stock hereunder (a) that you (or, in
event of your death, your estate or any person who acquires the right to this
award 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 freely transferable shares of Common Stock 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 issuance of such shares of Common Stock, and (b) that
you (or, in the event of your death, your estate or any person who acquires the
right to this award by bequest or inheritance or otherwise by reason of your
death) provide Holdings with any forms, documents or other information
reasonably required by Holdings in connection with the grant.  If the amount requested for the purpose of
satisfying the withholding obligation is not paid, Holdings may refuse to issue
shares of Common Stock and/or related dividend equivalents or take any other
action it deems necessary to fulfill the withholding obligation.  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;
provided, however, that no such right to deduct or offset shall arise or
otherwise be deemed to arise until the date upon which shares of Common Stock
are deliverable hereunder.


 


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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, or 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” shall mean 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 and 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.


 


“Discount Units” shall mean the number of
Units (and any dividend equivalents related thereto) related to the     %
discount upon issuance of the award.


 


“Full Career Termination” means a
Termination when (i) a person has at least 20 years of service or (ii) a
person meets all of the following criteria: (x) the person’s age plus 


 

















 


years
of service with Holdings or any subsidiary equals at least 65, (y) the
person is at least 45 years old, and (z) the person has at least 10 years
of service with Holdings or any subsidiary.


 


“Principal Units” shall mean the number of
Units (and any dividend equivalents related thereto) related to the
undiscounted base portion of the award (     % of the
total number of units awarded).


 


“Retirement” shall mean a Termination of
employment which meets the criteria for retirement under Holdings’ qualified
defined benefit pension plan.


 


“Share Payment Date” means as soon as
practicable after the earlier of (a) the Maturity Date or (b) the
completion of the fiscal quarter following the one-year anniversary of
termination of employment.


 


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


 


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