Exhibit 10.4


 


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. 
This option is entitled to the right described in Section 6(d) of
the Plan which have been granted by the Committee; 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 Rights shall be
effective with respect to only one-half of the options which are then not
exercisable, and if applicable, in substitution of the remaining one-half of
the options which are then not exercisable, an amount of cash or equity equal
to the highest price paid by an acquirer in excess of the option exercise price
shall be deferred for the shorter of two years or the term of any remaining
restrictions but such cash or equity shall remain otherwise subject to all
issuance restrictions during such period.


 


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.