Exhibit
10.21


 


LEHMAN BROTHERS
HOLDINGS INC.


 


AGREEMENT
EVIDENCING A GRANT OF A


NON-QUALIFIED
STOCK OPTION


 


TO


 


 


	
   

  	
   

  	
  $                                     

  
	
  Number
  of Common Shares

  	
   

  	
  Exercise
  Price

  
	
  Subject
  to Options

  	
   

  	
  Per
  Share

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of
  Grant

  	
   

  	
  Option
  Exercisability Dates

  



 


1)              Grant of Options. Pursuant to the Lehman Brothers Holdings
Inc. Employee Incentive Plan (the “Plan”), Lehman Brothers Holdings Inc. (the “Company”)
hereby grants you, as of the Date of Grant specified above, a nonqualified
stock option to purchase the number of common shares (par value $0.10 per
share) of the Company (“Common Stock” or “Shares”) specified above (which
number of Shares may be adjusted pursuant to Paragraph 8 below) at the price
per Share specified above (the “Option Price”).


 


2)              Additional Documents;
Definitions.
Enclosed you will find 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.  All capitalized
terms not defined herein 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                                  
(the “Expiration Date”).  In addition,
unless otherwise determined by the Board of Directors (the “Board”) of the
Company, no part of this option may be exercised before the Option
Exercisability Dates set forth herein;


 


b)             At any time or times on or after                             
and thereafter through the Expiration Date you may exercise this option as to                            
Shares;


 


c)              At any time or times on or after                               
and thereafter through the Expiration Date you may exercise this option as to
an additional                             
Shares; and


 

















 


d)             At any time or times on or after                             
and thereafter through the Expiration Date, you may exercise this option as to
an additional                       
Shares.


 


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


 


5)              Conditions to Exercise.  This option may not be exercised by you unless all of
the following conditions are met:


 


a)              Legal counsel for the Company 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 must pay, at the time of exercise or
as otherwise permitted by the Committee, the full exercise price for the Shares
being acquired hereunder, by (i) paying by cash in United States dollars
or other currency acceptable to the Committee (which may be in the form of a
certified check), (ii) subject to the Company’s prior consent, tendering
Shares owned by you which have a Fair Market Value on the day of exercise equal
to the full exercise price for the Shares being acquired, (iii) subject to
the Company’s prior consent, by withholding from those Shares that would
otherwise be obtained upon exercise a number of Shares having a Fair Market
Value equal to the option price and/or required withholding taxes, (iv) subject
to the Company’s prior consent, by delivery of a properly executed exercise
notice together with irrevocable instructions to a securities broker (or, in
the case of pledges, lender) approved by the Company to, (a) sell shares
of Common Stock subject to the option and to deliver promptly to the Company a
portion of the proceeds of such sale transaction on your behalf sufficient 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 the Company the loan proceeds, sufficient to pay the option price,
or (v) by any combination of (i), (ii), (iii), or (iv) above.


 


c)              On the date of your termination of
service as a director 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 by reason of your death) may exercise this option for all                             
shares at any time until                         .


 


6)              Limitation on Obligations. 
Holdings’ obligations with respect to the options granted hereunder is
limited to the delivery of shares of Common Stock on the date when you properly
exercise an option granted hereunder and satisfy the Conditions to Exercise
specified in Paragraph 5.


 


7)              Non-Assignment.  This option may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed by you, except to your immediate
family members and except by will or the laws of descent and distribution and
is exercisable during your lifetime only by you or any immediate family members
to whom options are assigned by you.  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 the Company’s obligation to make any further
payments (stock or cash) hereunder shall terminate.


 


8)              Equitable Adjustment.  In the event of any change in the outstanding
shares of Common Stock by reason of any Common Stock dividend or split,
recapitalization, merger, consolidation, spin-off, combination or exchange of
shares or other corporate exchange, or any distribution to stockholders of
Common Stock other than regular cash dividends, occurring after the Date of
Grant specified above 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.


 


9)              Change in Control.  The
option holder has the right to surrender the stock option or any portion
thereof to the Company within 30 days following a Change in Control and to
receive from the Company in exchange therefor a cash payment in an amount equal
to (a) the number of unexercised shares of Common Stock under the option
which are being surrendered multiplied by (b) the excess of (i) the
Fair Market Value per share of Common Stock as of the surrender date, over (ii) the
purchase price of the option as set forth in the underlying option agreement
(the foregoing, a “Limited Right”); provided, however, that if the
Change in Control occurs with the prior approval of a majority of the
independent members of the Incumbent Board, the Limited Right shall be
effective with respect to only one-half of the options which are then not
exercisable.


 


10)        Amendment.  The terms of this Agreement may be amended from time
to time by the Board in its sole discretion in any manner that it deems
appropriate (including, but not limited to, the acceleration provisions).


 


11)        No Right to Continued Service. 
Neither the grant nor the exercise of the option shall confer on you any
right to be retained in the service of the Company or to receive subsequent
options or other Awards under the Plan. 
The right of the Company to terminate your service with it at any time
or as otherwise provided by any agreement between the Company and you is
specifically reserved.


 


12)        No Rights of a Stockholder. 
Neither you (nor, in the event of your assignment to a family member or
your death, any person acting under Paragraph 7 above) 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,
in the event of your assignment to a family member or your death, any person
acting under Paragraph 6 above) upon the exercise of the option.


 


13)        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.


 


14)        Withholding.  The Company shall have the right to deduct from all
amounts payable to you in cash, any taxes required by law to be withheld
therefrom.  It shall be a condition to
the 


 

















 


obligation of the
Company to issue Shares upon exercise of an option hereunder (a) that you
(or, in the event of your death, your beneficiary or any person acting on
behalf of your estate) pay to the Company or its designee, upon its demand, in
accordance with the Plan, such amount as may be required for the purpose of
satisfying its obligation or the obligation of any other person to withhold withholding
taxes incurred by reason of the exercise of the option and (b) that you
(or, in the event of your death, your beneficiary or any person acting on behalf
of your estate) provide the Company with any forms, documents or other
information reasonably required by the Company in connection with the
grant.  If the amount requested for the
purpose of satisfying the withholding obligation is not paid, the Company may
refuse to furnish Shares upon exercise of the option.