Exhibit 10.1


 


LEHMAN BROTHERS HOLDINGS INC.


 


SUPPLEMENTAL RETIREMENT PLAN


 


(Effective
as of October 19, 1998, amended and restated effective November 8, 2007)


 


PREAMBLE


 


The Lehman Brothers Holdings Inc. Supplemental
Retirement Plan (as amended and restated effective November 8, 2007) (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, was amended and restated effective December 10, 2003 and was
further amended and restated effective November 8, 2007. 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
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 between the Participant and the Company or any of its
subsidiaries, failure by the Participant to devote substantially all business
time exclusively to the performance of his duties for Company or any
subsidiary, willful misconduct, dishonesty related to the business and affairs
of Company 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 a Participant’s duties, solicitation of
employees of the Company or any subsidiary to work at another company, improper
use or disclosure of confidential information, 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 a material violation of the conflict of interest, proprietary
information or business ethics policies of the Company or any subsidiary, or
such other circumstances as may be determined in the sole discretion of the
Committee. For avoidance of doubt, for purposes of the preceding sentence, a
material breach of an employment contract or violation of policies would
include, as applicable, the Participant’s violation of any policy or employment
agreement relating to the obligation to provide advance notice of resignation from the Company or any
subsidiary.


 

















 


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 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 any of the following events:


 


(i)            An acquisition (other
than directly from the Company, but including any acquisition in connection
with any merger, consolidation, recapitalization or reorganization involving
the Company) of the Company’s outstanding shares of capital stock having
ordinary voting power in the election of directors (“Voting Securities”) 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 50% or more of the combined voting power of the Company’s then
outstanding Voting Securities (or 30% or more of the combined voting power of
the Company’s outstanding Voting Securities acquired in a consecutive twelve
month period); provided, however, in determining whether a Change in Control
has occurred, Voting Securities that are acquired in a “Non-Control Acquisition”
(as hereinafter defined) shall not constitute an acquisition that would cause a
Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (A)
an employee benefit plan (or a trust forming a part thereof or a trustee
thereof acting solely in its capacity as trustee) maintained by (I) the Company
or (II) any corporation or other Person of which a majority of its voting power
or its voting equity securities or equity interest is


 


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owned, directly or
indirectly, by the Company (for purposes of this definition, a “Subsidiary
Entity”), (B) the Company or any of its Subsidiary Entities, or (C) any Person
who files in connection with such acquisition a Schedule 13D that 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 that 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 (i);


 


(ii)           Any merger,
consolidation, recapitalization or reorganization involving the Company, unless
such merger, consolidation, recapitalization or reorganization is a “Non-Control
Transaction”; i.e., meets each of the requirements described in subparagraphs
(A), (B) and (C) below:


 


(A)          the stockholders of the
Company, immediately before such merger, consolidation, recapitalization or
reorganization, own, directly or indirectly, immediately following such merger,
consolidation, recapitalization or reorganization, at least 50% of the combined
voting power of the outstanding voting securities of the Company, the
corporation resulting from such merger, consolidation, recapitalization or
reorganization, or any parent thereof (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, recapitalization or
reorganization;


 


(B)           the individuals who
were members of the Board immediately prior to the execution of the agreement
providing for such merger, consolidation, recapitalization or reorganization
constitute at least 50% of the members of the board of directors of the
Surviving Corporation immediately following the consummation of such merger,
consolidation, recapitalization or reorganization; and


 


(C)           no Person other than
the Company, any Subsidiary Entity, 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 Entity, or any Person who, immediately prior to such merger,
consolidation, recapitalization or reorganization had Beneficial Ownership of
30% or more of the then outstanding Voting Securities has Beneficial Ownership
of 30% or more of the combined voting power of the Surviving Corporation’s then
outstanding voting securities immediately following the consummation of such
merger, consolidation, recapitalization or reorganization;


 


(iii)          Replacement within a
consecutive twelve month period of a majority of the individuals who are
members of the Board with individuals


 


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(“Replacement
Board Members”) who do not receive endorsement by a majority of the Board
before the date of the appointment or election of such Replacement Board
Member; or


 


(iv)          Sale or other
disposition (other than a transfer to a Subsidiary Entity) of all or
substantially all of the assets of the Company to any Person, or any Person
acquires such amount of assets in any consecutive twelve-month period ending on
the most recent acquisition by such Person.


 


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 percentage set forth
in paragraph (i) of the outstanding Voting Securities as a result of the
acquisition of Voting Securities by the Company that, by reducing the number of
Voting Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, 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 Subject
Person 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. In addition, notwithstanding the
foregoing a Change in Control shall not be deemed to occur unless such
transaction or occurrence constitutes a change in ownership or effective
control within the meaning of Section 409A(a)(2)(A)(v) of the Code.


 


1.6           Code:  The Internal Revenue Code of 1986, as
amended.


 


1.7           Committee:  The Compensation and Benefits Committee of
the Board.


 


1.8           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.


 


1.9           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 “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.


 


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1.10         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 employment with the foregoing or to breach
any of the terms of his 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, or could be, 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.


 


1.11         Disability:  A disability as described in Section
409A(a)(2)(C) of the Code.


 


1.12         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 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.


 


1.13         Full
Benefits:  Benefits under the Plan as
described under Section 4.1 and payable pursuant to Section 4.3.


 


1.14         Good
Reason:  The occurrence following a
Change in Control of any of the following without either Cause or a Participant’s
express written consent:


 


(i)            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;


 


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(ii)           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


 


(iii)          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.


 


1.15         Member:  Any person who is serving on the Executive
Committee as of October 19, 1998, but who is not the Chairman.


 


1.16         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.


 


1.17         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.


 


1.18         Prorata
Benefits:  Benefits under the Plan as
described under Section 4.2 and payable pursuant to Section 4.3.


 


1.19         Qualified
Plan:  The Lehman Brothers Holdings
Inc. Retirement Plan as from time to time in effect.


 


1.20         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.


 


1.21         Trust:  The trust or trusts described in Section 2.3.


 


1.22         Trustee:  The trustee of the Trust.


 


1.23         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.


 


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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(i), (ii) or (iii), 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(iv). 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:


 


(i)            (x) his employment
terminates 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 (y) he has not
otherwise forfeited his benefits under Section 4.5 of this Plan;


 


(ii)           (x) 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(i), if any, that has been communicated to such Participant in writing by
the Committee in connection with such Participant’s initial


 


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participation in the Plan, and (y) he has not
otherwise forfeited his benefits under Section 4.5 of this Plan; or


 


(iii)          (x) 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 (y) he has not otherwise forfeited his
benefits under Section 4.5 of this Plan.


 


(A)          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”), the payments and benefits provided to
the Participant hereunder 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 (B) below.


 


(B)           “Net after tax benefit”
shall mean the sum of (I) the total payments payable to the Participant
hereunder, plus (II) all other payments and benefits which the Participant
receives 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 (III) 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 (IV) the amount of excise
taxes imposed with respect to the payments and benefits described in (I) and
(II) 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.


 


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(C)           In the event a
determination is made as described in (A) and (B) 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:


 


(i)            his employment
terminates (A) 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 (B) 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 (A) of
this paragraph, 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.


 


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 (i) twenty-five (25) annual payments of up to $700,000 for Participants
other than the Chairman and (ii) 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 (i) twenty-five (25) annual payments of up to $700,000 for
Participants other than the Chairman and (ii) 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


 


9

















 


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. Notwithstanding
the foregoing, with respect to Years of Service beginning on or after December
1, 2007, the Committee, in its sole discretion, shall have the ability to
exclude Years of Service for purposes of the immediately foregoing ratio for
any year in which such Participant is no longer a Member or for any year in
which such Participant is no longer serving on the Executive Committee.


 


4.3           Payment of Benefits.
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 (i) the month that a Participant attains age sixty (60),
or (ii) the month a Participant retires or terminates employment with the
Company (the “Benefit Commencement Date”).


 


4.4           Benefits on Death or
Disability. In the event of the death or Disability of a Participant, (i)
the Committee may, in its sole discretion, increase the Participant’s Prorata
Benefit up to a maximum of the Full Benefit and (ii) payment of the Present
Value of the Participant’s Full or Prorata Benefits shall occur as soon as
practicable but in no event more than 90 days following Disability or death, as
applicable, and shall be made 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, or (iv) 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 (A) the date determined by the Committee in connection with such
Participant’s initial participation in the Plan and (B) 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 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


 


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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 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.


 


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:


 


(i)            to make and enforce
rules and regulations and to prescribe the use of forms necessary or advisable
for efficient administration of the Plan;


 


(ii)           to interpret the Plan,
to resolve ambiguities, inconsistencies and omissions and to decide questions
concerning the eligibility of any person to receive benefits under the Plan,
such interpretations, resolutions and decisions to be final and conclusive on
all persons;


 


(iii)          to direct payment of
amounts due with respect to each Participant under the Plan;


 


(iv)          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


 


(v)           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


 


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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, subject to Section 7.10:


 


(i)            accelerate a
Participant’s eligibility for Prorata or Full Benefits under the Plan;


 


(ii)           pay in one lump sum the
Present Value of any Full or Prorata Benefit upon termination of the Plan (to
the extent permitted under Section 409A of the Code);


 


(iii)          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


 


(iv)          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 (iv), the
Committee shall upon the occurrence of a Change in Control determine each
Participant’s Full or Prorata Benefit as


 


12

















 


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 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


 


13

















 


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           Spendthrift Clause.
To the maximum extent permitted by law, (i) 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 (ii) the Plan shall
in no manner be liable for or subject to the debts or liabilities of any
Participant.


 


7.3           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 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.


 


7.4           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.


 


7.5           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.


 


7.6           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.


 


7.7           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.


 


7.8           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


 


14

















 


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.


 


7.9           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 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 (i) the date a final determination denying such benefit, in whole or in
part, is issued under the Plan’s claim review procedure and (ii) 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).


 


7.10         Compliance with the
Provisions of Code Section 409A. Notwithstanding anything in this Plan to
the contrary, payment under the Plan to any Participant shall be deferred, if
necessary, until the first date that such payment could be made without
subjecting the Participant taxes imposed by Code Section 409A. For the
avoidance of doubt, notwithstanding any other provision of this Plan, in the
event that it is determined by the Committee that, as a result of Section 409A
of the Code, a Participant is deemed to be a “specified employee” (within the
meaning of Section 409A(a)(2)(B)(i) of the Code),  payments hereunder shall not be made prior to
the date which is six (6) months after the date of such Participant’s
separation from service from the Company and all its subsidiaries, determined
in accordance with Section 409A of the Code and the regulations promulgated
thereunder, and as soon as practicable, but not later than thirty (30) days
following the expiration of such six (6) month period, the Company will make
such payments required hereunder.


 


15

















 


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 8th day of November, 2007.


 


	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tracy A.
  Binkley

  	
   

  
	
   

  	
  Title:

  	
  Vice President
  and

  
	
   

  	
   

  	
  Director of
  Global Human Resources

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
  /s/ Madeline L. Shapiro

  	
   

  	
   

  
	
  Madeline L. Shapiro

  	
   

  
	
  Assistant Secretary

  	
   

  
					



 


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