Exhibit
10.3


 


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”)
2005 Stock Incentive 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, but no later than the end of the calendar year in which the
Maturity Date occurs.


 


(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)     Termination
Due to Death; Disability. Notwithstanding the foregoing provisions of
Paragraph 4(c)(i), (ii), (iii) and (iv), 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.


 


Any shares that become payable pursuant to this Paragraph 4(c) (other
than Paragraph (c)(v)) 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  tax imposed by 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  such
tax. 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 


 


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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 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 in a
manner consistent with the provisions of Code Section 409A.


 


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
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 


 


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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.


 


(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.


 


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, 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.


 


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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 (i) using information received during a person’s employment with Holdings
or any of its Subsidiaries relating to the business affairs of Holdings or any
of its Subsidiaries, affiliates or clients, in breach of such person’s
undertaking to keep such information confidential; (ii) directly or indirectly
persuading or attempting to persuade, by any means, any employee of Holdings or
any of its Subsidiaries or affiliates 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
affiliates (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, or
could be, 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).


 


“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, but in no event later than the end of the calendar
year in which the earlier of such dates occurs.


 


“Termination” means
the end of your active service with Holdings or a Subsidiary. The reason for
your Termination for purposes of this agreement shall be as determined in the
sole discretion of the Committee.


 


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