exv10w3



 





Ex. 10.3




JEFFERIES GROUP, INC.

2003 Incentive Compensation Plan

Restricted Stock Units Agreement




     This Restricted Stock Units Agreement (the “Agreement”) confirms the grant on August 25, 2006 (the
“Grant Date”) by Jefferies Group, Inc., a Delaware corporation (the “Company”), to Brian P.
Friedman (“Employee”) of Restricted Stock Units (the “Units”), including rights to Dividend
Equivalents as specified herein, as follows:



	 	 	 
	Number granted:

	 	540,091 Units
	 
	 	 
	How Units Vest:

	 	The Units will not vest and 100% of the Units will be immediately
forfeited in the event the Company’s net earnings for the fiscal year ending December
31, 2007 do not equal or exceed $25 million (the “Performance Criteria”)
	 
	 	 
	 

	 	20% of the Units, if not previously forfeited, will vest on the date
that the Compensation Committee of the Board of Directors of the
Company certifies that the Performance Criteria has been met and 20%
of the Units, if not previously forfeited, will vest on each of
August 25, 2008, August 25, 2009, August 25, 2010 and August 25,
2011, provided that Employee continues to be employed by the Company
or a subsidiary on each vesting date (each, a “Stated Vesting Date”).
	 
	 	 
	 

	 	In addition, if not previously forfeited, the Units will become
vested earlier upon the occurrence of certain events relating to
Termination of Employment to the extent provided in Section 4 of the
Terms and Conditions of Restricted Stock Units attached hereto (the
“Terms and Conditions”). The terms “vest” and “vesting” mean that
the Units have become non-forfeitable, except for forfeitures
specified under Section 7.4 of the Plan and except for forfeitures
provided in Section 4 of the Terms and Conditions. If Employee has a
Termination of Employment prior to the Stated Vesting Date and the
Units are not otherwise deemed vested by that date, the Units will be
immediately forfeited except as otherwise provided in Section 4 of
the Terms and Conditions.
	 
	 	 
	Settlement:

	 	Settlement of vested Units will occur on October 25, 2011, or as promptly as
possible upon the death or Disability of Employee or Termination of Employment by the
Company not for Cause following a Change in Control, except settlement shall be
deferred in certain cases in accordance with Section 8(a) of the Terms and Conditions
(the “Settlement Date”). Units granted hereunder will be settled by delivery of one
Share for each Unit being settled (together with any cash or Shares resulting from
Dividend Equivalents). Any settlement required to be made “promptly” under this
Agreement shall in all cases be made not later than 60 days after the event that
triggers such settlement.






     The Units are subject to the terms and conditions of the 2003 Incentive Compensation Plan (the
“Plan”), and this Agreement, including the Terms and Conditions attached hereto. The number of
Units, the kind of shares deliverable in settlement of Units, and other terms relating to the Units
are subject to adjustment in accordance with Section 5 of the Terms and Conditions and Section 5.3
of the Plan.



     Employee acknowledges and agrees that (i) Units are nontransferable, except as provided in
Section 3 of the Terms and Conditions and Section 9.2 of the Plan, (ii) Units, and certain amounts
of gain



 









 




realized upon settlement of Units, are subject to forfeiture, whether during employment or
following a Termination of Employment, in the event Employee fails to meet applicable requirements
relating to non-solicitation, confidentiality, and related matters with respect to the Company and
its subsidiaries and affiliates (together, “Group,” and each entity included in Group being a
“Group Entity”), as set forth in Section 7.4 of the Plan and (iii) sales of shares delivered in
settlement of Units will be subject to the Company’s policies regulating trading by employees if
the recipient is then an employee of the Company.




     IN WITNESS WHEREOF, JEFFERIES GROUP, INC. has caused this Agreement to be executed by its
officer thereunto duly authorized, and Employee has duly executed this Agreement, by which each has
agreed to the terms of this Agreement.



	 	 	 
	Employee

	 	JEFFERIES GROUP, INC.
	/s/ Brian P. Friedman
	 	/s/ Roland T. Kelly
	 

	 	 
	Brian P. Friedman

	 	Roland T. Kelly
	 

	 	Assistant Secretary







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TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS




     The following Terms and Conditions apply to the Units granted to Employee by JEFFERIES GROUP,
INC. (the “Company”), and Units (if any) resulting from Dividend Equivalents, as specified in the
Restricted Stock Units Agreement to which these Terms and Conditions are attached (and of which
these Terms and Conditions form a part). Certain terms of the Units, including the number of Units
granted, vesting date(s) and Settlement Date, are set forth on the preceding pages, referred to as
the Cover Page in these Terms and Conditions. The Cover Page and these Terms and Conditions are
collectively referred to as the “Agreement.”



     1. General. The Units are granted to Employee under the Company’s 2003 Incentive Compensation
Plan (the “Plan”). A copy of the Plan and information regarding the Plan, including documents that
constitute the “Prospectus” for the Plan under the Securities Act of 1933, can be viewed and
printed out from the Company’s secure Intranet website, www.corp.jefco.com (go to People Services,
then to Plan Documents). All of the applicable terms, conditions and other provisions of the Plan
are incorporated by reference herein. Capitalized terms used in this Agreement but not defined
herein shall have the same meanings as in the Plan. If there is any conflict between the
provisions of this document and mandatory provisions of the Plan, the provisions of the Plan
govern, otherwise, the terms of this document shall prevail. By accepting the grant of the Units,
Employee agrees to be bound by all of the terms and provisions of the Plan (as presently in effect
or later amended), the rules and regulations under the Plan adopted from time to time, and the
decisions and determinations of the Company’s Compensation Committee (the “Committee”) made from
time to time, provided that no such Plan amendment, rule or regulation or Committee decision or
determination shall materially and adversely affect the rights of the Employee with respect to the
Units.



     2. Account for Employee. The Company shall maintain a bookkeeping account for Employee (the
“Account”) reflecting the number of Units then credited to Employee hereunder as a result of such
grant of Units and any crediting of additional Units to Employee pursuant to payments equivalent to
dividends paid on Common Stock under Section 5 hereof (“Dividend Equivalents”).



     3. Nontransferability. Until Units are settled in accordance with the terms of this
Agreement, Employee may not sell, transfer, assign, pledge, margin or otherwise encumber or dispose
of Units or any rights hereunder to any third party other than by will or the laws of descent and
distribution, except for transfers to a Beneficiary or as otherwise permitted and subject to the
conditions under Section 9.2 of the Plan.



     4. Termination Provisions. The following provisions will govern the vesting and forfeiture of
the Units in the event of Employee’s Termination of Employment and/or occurrence of a
post-termination Forfeiture Event (as defined below), unless otherwise determined by the Committee
(subject to Section 9(a) hereof):




     (a) Death or Disability. In the event of Employee’s death or Termination of Employment
due to Disability (as defined below), all Units then outstanding, if not previously vested,
will immediately vest, and all Units (if not previously settled) will be settled in
accordance with the settlement terms set out on the Cover Page, giving effect to any valid
deferral election of Employee then in effect. The foregoing notwithstanding, any
distribution resulting from a Disability that does not constitute an “unforeseeable
emergency” under Section 409A(a)(2)(B)(ii) of the Internal Revenue Code (the “Code”) or as
to which Employee became “Disabled” as defined under Code Section 409A(a)(2)(B)(i) will be
subject to the six-month delay rule in Section 8(a)(i), if applicable.




     (b) Retirement. In the event of Employee’s Retirement prior to January 31, 2008, Units
not previously forfeited will be immediately forfeited. In the event of Employee’s
Retirement after January 31, 2008 and before December 31, 2008, one-half of the Units not



 









 






previously forfeited will be immediately forfeited and one-half of the Units not
previously forfeited will not then be forfeited; and in the event of Employee’s Retirement
after December 31, 2008, Units not previously vested shall not then be forfeited; provided
in both cases that Employee executes a settlement agreement and release in such form as may
be requested by the Company, but thereafter all unvested Units shall be forfeited if there
occurs a Forfeiture Event prior to the Settlement Date. Upon such a Retirement, the
then-outstanding Units that are vested at the date of Termination (if not already settled)
and that become vested thereafter will be settled in accordance with the settlement terms
set out on the Cover Page, giving effect to any valid deferral election of Employee then in
effect. A “Forfeiture Event” shall be deemed to occur if, following Employee’s Retirement,
Employee renders services for any organization or engages (either as owner, investor,
partner, stockholder, employer, employee, consultant, advisor, or director) directly or
indirectly, in any business which is or becomes competitive with the Company, its
subsidiaries or affiliates. However, following Employee’s Retirement, Employee shall be
free to purchase stock or other securities of an organization or business so long as it is
listed upon a recognized securities exchange or traded over-the-counter and such investment
does not represent a greater than five percent equity interest in the organization or
business.




     (c) Involuntary Termination by the Company not for Cause (and not subject to Section
4(d)). In the event of Employee’s Termination of Employment by the Company not for Cause
(other than a Termination not for Cause following a Change in Control), Units not previously
vested shall not then be forfeited provided that Employee executes a settlement agreement
and release in such form as may be requested by the Company, but thereafter all unvested
Units shall be forfeited if there occurs a Forfeiture Event prior to the Settlement Date.
Upon such a Termination of Employment not for Cause, the then-outstanding Units that are
vested at the date of Termination (if not already settled) and that become vested thereafter
will be settled in accordance with the settlement terms set out on the Cover Page, giving
effect to any valid deferral election of Employee then in effect. A “Forfeiture Event” shall
be deemed to occur if, following Employee’s Termination by the Company not for Cause,
Employee renders services for any organization or engages (either as owner, investor,
partner, stockholder, employer, employee, consultant, advisor, or director) directly or
indirectly, in any business which is or becomes competitive with the Company, its
subsidiaries or affiliates. However, following Employee’s Termination by the Company not
for Cause, Employee shall be free to purchase stock or other securities of an organization
or business so long as it is listed upon a recognized securities exchange or traded
over-the-counter and such investment does not represent a greater than five percent equity
interest in the organization or business.




     (d) Termination Following a Change in Control. If, following a Change in Control,
Employee’s employment is terminated not for Cause by the Company or its successor, all of
the then-outstanding Units not vested at the date of Termination will immediately vest and
will be settled promptly thereafter, subject to the six-month delay rule in Section 8(a)(i),
if applicable. If a Change in Control occurs followed by Termination of Employment by the
Company not for Cause and a determination is made by the Company pursuant to Sections 280G
and 4999 of the Code that a “golden parachute” excise tax will be payable in connection with
compensation to Employee hereunder, Employee’s right to accelerated vesting of the Units
upon the Change in Control, to the extent such right results in “parachute payments” (as
such term is defined in Code Section 280G), shall be limited to the extent just necessary to
avoid the excise tax. This limitation shall be applied in a manner that maximizes the
number of Units as to which accelerated vesting can apply (or, stated conversely, any
limitation on acceleration of vesting shall apply first to those Units with the lengthiest
remaining vesting period, which Units would result in the highest “parachute payments”).




     (e) Termination by Employee for any Reason or by the Company for Cause. In the event
of a Termination of Employment by the Employee for any reason (other than due to



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Retirement, death or Disability) or by the Company for Cause, the portion of the
then-outstanding Units not vested at the date of Termination will be forfeited, and the
portion of the then-outstanding Units that is vested at the date of Termination (if not
already settled) will be settled on the Settlement Date specified on the Cover Page unless
forfeited pursuant to the provisions of Section 7.4 of the Plan, except that any valid
deferral election of Employee shall be given effect.




     (f) Certain Definitions. The following definitions apply for purposes of this
Agreement, whether or not Employee has an employment agreement or other agreement with the
Company, or any of its subsidiaries or affiliates (the Company and any subsidiary or
affiliate each being a “Group Entity”) containing the same or similar defined terms:




     (i) “Cause” means Employee’s:




	 	 	 	Neglect, failure or refusal to timely perform the duties of
Employee’s employment (other than by reason of a physical or mental
illness or impairment), or Employee’s gross negligence in the
performance of his or her duties;
	 
	 	 	 	Material breach of any agreements, covenants and representations made
in any employment agreement or other agreement with the Company or
any of its subsidiaries or affiliates or violation of internal
policies or procedures as are in effect as of the date such action is
taken, including but not limited to the Company’s Code of Ethics and
Standards of Employee Conduct, as amended from time to time;
	 
	 	 	 	Violation of any law, rule, regulation or by-law of any governmental
authority (state, federal or foreign), any securities exchange or
association or other regulatory or self-regulatory body or agency
applicable to Employee, the Company, its subsidiaries or affiliates
or any material general policy or directive of the Company, its
subsidiaries or affiliates;
	 
	 	 	 	Conviction of, or plea of guilty or nolo contendere to, a crime
involving moral turpitude, dishonesty, fraud or unethical business
conduct, or any felony of any nature whatsoever;
	 
	 	 	 	Failure to obtain or maintain any registration, license or other
authorization or approval that Employee is required to maintain or
that the Company, its subsidiaries or affiliates reasonably believes
is required in order for Employee to perform his or her duties,
provided, however, that Employee shall be given written notice of any
such registration, license or other authorization or approval that he
or she is required to obtain and a reasonable period of time to
obtain such registration, license, or other authorization or
approval; or
	 
	 	 	 	Willful failure to execute a directive of the board of directors of
the Company or any of its subsidiaries or affiliates, the Executive
Committee of any of the Company’s subsidiaries or affiliates, or
Employee’s supervisor (unless such directive would result in the
commission of an act which is illegal or unethical) or commission of
an act against the directive of such Board, such Executive Committee
or Employee’s supervisor.




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     (ii) A “Change in Control” shall be deemed to have occurred if any of the
following conditions shall have been satisfied after the Grant Date:




	 	 	 	Any person (as defined in section 3(a)(9) of the Securities Exchange
Act of 1934, as such term is modified in Section 13(d)), other than
(i) an employee plan established by the Company or any of its
subsidiaries; or (ii) any group of Company employees holding shares
subject to agreements relating to the voting of such shares becomes a
beneficial owner, directly or indirectly, of more than 51% of the
voting stock of the Company;
	 
	 	 	 	The consummation of a merger or consolidation of the Company with any
other corporation or any other entity, or the issuance of voting
securities in connection with a merger or consolidation of the
Company, if the holders of the Company’s voting securities
immediately prior to such transaction hold in the aggregate less than
a majority of the then outstanding voting securities of the Company
(or any successor company or entity) entitled to vote generally in
the election of the directors of the Company (or such other company
or entity) after such transaction;
	 
	 	 	 	The sale or disposition by the Company of all or substantially all of
its assets in which one person or more than one person acting as a
group acquires assets from the Company that have a total gross fair
market value equal to more than 50% of the total gross fair market
value of all of the assets of the Company immediately prior to such
acquisition; or
	 
	 	 	 	A change in the composition of the Board of Directors of the Company
such that individuals who, as of the date of this agreement,
constitute the Board of Directors of the Company (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board of Directors of the Company; provided, however, that any
individual becoming a member of the Board of Directors of the Company
subsequent to the date of this agreement whose election, or
nomination for election by the shareholders of the Company, was
approved by a vote of at least a majority of the directors then
constituting the Incumbent Board shall be considered as if that
individual were a member of the Incumbent Board.






     (iii) “Disability” means that Employee has commenced receipt of long-term
disability benefits under the Company’s long-term disability policy as in effect at
the date of Employee’s termination of employment.




     (iv) “Retirement” means retirement after attaining the age at which an
Employee’s age plus his years of service equals 62, provided, however, that Employee
has provided a minimum of seven and one-half years of service to the Company, its
subsidiaries or affiliates. For this purpose, years of service shall be credited
for each twelve month period beginning on the date of Employee’s commencement of
employment with the Company and on each anniversary thereof during which the
Employee was in active employment with the Company.




     (v) “Termination” or “Termination of Employment” means the event by which
Employee ceases to be employed by a Group Entity and immediately thereafter is not
employed by any other Group Entity.



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     5. Dividend Equivalents and Adjustments.




     (a) Dividend Equivalents. Subject to Section 5(d), Dividend Equivalents will be
credited on Units (other than Units that, at the relevant record date, previously have been
settled or forfeited) and deemed reinvested in additional Units, to the extent and in the
manner as follows:




     (i) Cash Dividends. If the Company declares and pays a dividend or
distribution on Shares in the form of cash, then a number of additional Units shall
be credited to Employee’s Account as of the last day of the calendar quarter in
which such dividend or distribution was paid equal to the number of Units credited
to the Account as of the record date for such dividend or distribution multiplied by
cash amount of the dividend or distribution paid on each outstanding share of Common
Stock at such payment date, divided by the Fair Market Value of a share of Common
Stock at the date of such crediting; provided, however, that in the case of an
extraordinary cash dividend or distribution the Company may provide for such
crediting at the dividend or distribution payment date instead of the last day of
the calendar quarter.




     (ii) Non-Common Stock Dividends. If the Company declares and pays a dividend
or distribution on Common Stock in the form of property other than shares of Common
Stock, then a number of additional Units shall be credited to Employee’s Account as
of the payment date for such dividend or distribution equal to the number of Units
credited to the Account as of the record date for such dividend or distribution
multiplied by the Fair Market Value of such property actually paid as a dividend or
distribution on each outstanding share of Common Stock at such payment date, divided
by the Fair Market Value of a share of Common Stock at such payment date.




     (iii) Common Stock Dividends and Splits. If the Company declares and pays a
dividend or distribution on Common Stock in the form of additional shares of Common
Stock, or there occurs a forward split of Common Stock, then a number of additional
Units shall be credited to Employee’s Account as of the payment date for such
dividend or distribution or forward split equal to the number of Units credited to
the Account as of the record date for such dividend or distribution or split
multiplied by the number of additional shares of Common Stock actually paid as a
dividend or distribution or issued in such split in respect of each outstanding
share of Common Stock.




     (b) Adjustments. The number of Units credited to Employee’s Account shall be
appropriately adjusted, in order to prevent dilution or enlargement of Employee’s rights
with respect to Units or to reflect any changes in the number of outstanding shares of
Common Stock resulting from any event referred to in Section 5.3 of the Plan, taking into
account any Units credited to Employee in connection with such event under Section 5(a)
hereof, and any performance conditions relating to the Units may be likewise adjusted in the
discretion of the Committee.



     (c) Risk of Forfeiture and Settlement of Units Resulting from Dividend Equivalents and
Adjustments. Units which directly or indirectly result from Dividend Equivalents on or
adjustments to a Unit granted hereunder and which do not result from a dividend or
distribution on Shares in the form of cash shall be subject to the same risk of forfeiture
(including Section 7.4 of the Plan) as applies to the granted Unit and, if not forfeited,
will be settled at the same time as the granted Unit. Units which directly or indirectly
result from Dividend Equivalents on or adjustments to a Unit granted hereunder and which
result from an ordinary dividend or distribution on Shares in the form of cash shall not be
subject to forfeiture and will be settled at



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the same time as the granted Unit (or if the granted Unit is forfeited, then at the
time the granted Unit would have been settled if it were not forfeited). Units which
directly or indirectly result from Dividend Equivalents on or adjustments to a Unit granted
hereunder and which result from an extraordinary dividend or distribution on Shares in the
form of cash shall, unless otherwise determined by the Company at the time of such
extraordinary dividend or distribution, be subject to the same risk of forfeiture (including
additional forfeiture terms of Section 7.4 of the Plan) as applies to the granted Unit and,
if not forfeited, will be settled at the same time as the granted Unit.




     (d) Changes to Manner of Crediting Dividend Equivalents. The provisions of Section
5(a) notwithstanding, the Company may vary the manner and timing of crediting dividend
equivalents for administrative convenience, including, for example, by crediting cash
dividend equivalents rather than additional Units.



     6. Additional Forfeiture Provisions. Employee agrees that, by signing this Agreement and
accepting the grant of the Units, the forfeiture conditions set forth in Section 7.4 of the Plan
shall apply to all Units hereunder and to gains realized upon the settlement of the Units.



     7. Employee Representations and Warranties and Release. As a condition to any non-forfeiture
of the Units at or after Termination of Employment and to any settlement of the Units, the Company
may require Employee (i) to make any representation or warranty to the Company as may be required
under any applicable law or regulation, to make a representation and warranty that no Forfeiture
Event has occurred or is contemplated, and that otherwise the requirements of Section 7.4(d) of the
Plan and Section 7 above have been met, and (ii) to execute a release of claims against the Company
arising before the date of such release, in such form as may be specified by the Company.



     8. Other Terms Relating to Units.




     (a) Deferral of Settlement; Compliance with Code Section 409A. Settlement of any Unit,
which otherwise would occur at the Settlement Date, will be deferred in certain cases if and
to the extent Employee is permitted to participate in the Stock Option Gain and Stock Award
Deferral Program or otherwise permitted to defer the Units and Employee makes a valid
deferral election relating to the Units. Deferrals, whether elective or mandatory under the
terms of this Agreement, shall comply with requirements under Code Section 409A. Deferrals
will be subject to such other restrictions and terms as may be specified by the Company
prior to deferral. It is understood that Code Section 409A and regulations thereunder may
require any elective deferral to comply with Section 409A(a)(4)(C). Other provisions of this
Agreement notwithstanding, under U.S. federal income tax laws and Treasury Regulations
(including proposed regulations) as presently in effect or hereafter implemented, (i) a
distribution in settlement of Units to Employee triggered by a Termination of Employment
will occur only if the Termination constitutes a “separation from service” within the
meaning of Code Section 409A(a)(2)(A)(i) and, if at the time of such separation from service
Employee is a “specified employee” under Code Section 409A(a)(2)(B)(i) and a delay in
distribution is required in order that Employee will not be subject to a tax penalty under
Code Section 409A, such distribution in settlement of Units will occur at the date six
months after Termination of Employment; and (ii) any rights of Employee or retained
authority of the Company with respect to Units hereunder shall be automatically modified and
limited to the extent necessary so that Employee will not be deemed to be in constructive
receipt of income relating to the Units prior to the distribution and so that Employee shall
not be subject to any penalty under Code Section 409A.




     (b) Fractional Units and Shares. The number of Units credited to Employee’s Account
shall include fractional Units calculated to at least three decimal places, unless otherwise
determined by the Committee. Unless settlement is effected through a broker or agent that
can



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accommodate fractional shares (without requiring issuance of a fractional share by the
Company), upon settlement of the Units Employee shall be paid, in cash, an amount equal to
the value of any fractional share that would have otherwise been deliverable in settlement
of such Units.




     (c) Tax Withholding. Employee shall make arrangements satisfactory to the Company, or,
in the absence of such arrangements, a Group Entity may deduct from any payment to be made
to Employee any amount necessary, to satisfy requirements of federal, state, local, or
foreign tax law to withhold taxes or other amounts with respect to the lapse of the risk of
forfeiture (including FICA due upon such lapse) or the settlement of the Units. Unless
Employee has made separate arrangements satisfactory to the Company, the Company may elect
to withhold shares deliverable in settlement of the Units having a fair market value (as
determined by the Committee) equal to the amount of such tax liability required to be
withheld in connection with the settlement of the Units, but the Company shall not be
obligated to withhold such Shares. The Company may specify a reasonable deadline (for
example, 90 days before the Settlement Date) by which separate arrangements must be made for
payment of withholding taxes other than through withholding of shares.




     (d) Statements. An individual statement of Employee’s Account will be issued to
Employee at such times as may be determined by the Company. Such a statement shall reflect
the number of Units credited to Employee’s Account, transactions therein during the period
covered by the statement, and other information deemed relevant by the Committee. Such a
statement may be combined with or include information regarding other plans and compensatory
arrangements for employees. Employee’s statements shall be deemed a part of this Agreement,
and shall evidence the Company’s obligations in respect of Units, including the number of
Units credited as a result of Dividend Equivalents (if any). Any statement containing an
error shall not, however, represent a binding obligation to the extent of such error,
notwithstanding the inclusion of such statement as part of this Agreement.



     9. Miscellaneous.




     (a) Binding Agreement; Written Amendments. This Agreement shall be binding upon the
heirs, executors, administrators, and successors of the parties. This Agreement and the
Plan, and any deferral election separately filed with the Company relating to this Award,
constitute the entire agreement between the parties with respect to the Units, and supersede
any prior agreements or documents with respect thereto. No amendment, alteration,
suspension, discontinuation, or termination of this Agreement which may impose any
additional obligation upon the Company or materially impair the rights of Employee with
respect to the Units shall be valid unless in each instance such amendment, alteration,
suspension, discontinuation, or termination is expressed in a written instrument duly
executed in the name and on behalf of the Company and, if Employee’s rights are being
materially impaired, by Employee.




     (b) No Promise of Employment. The Units and the granting thereof shall not constitute
or be evidence of any agreement or understanding, express or implied, that Employee has a
right to continue as an officer or employee of the Company for any period of time, or at any
particular rate of compensation.




     (c) Unfunded Plan. Any provision for distribution in settlement of Employee’s Account
hereunder shall be by means of bookkeeping entries on the books of the Company and shall not
create in Employee or any Beneficiary any right to, or claim against any, specific assets of
the Company, nor result in the creation of any trust or escrow account for Employee. With
respect to any entitlement of Employee or any Beneficiary to any distribution hereunder,
Employee or such Beneficiary shall be a general creditor of the Company.



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     (d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES.




     (e) Legal Compliance. Employee agrees to take any action the Company reasonably deems
necessary in order to comply with federal and state laws, or the rules and regulations of
the New York Stock Exchange, the NASD, or any other stock exchange, or any other obligation
of the Company or Employee relating to the Units or this Agreement.




     (f) Notices. Any notice to be given the Company under this Agreement shall be
addressed to the Company at 520 Madison Avenue, 12th Floor, New York, NY 10022, attention:
Corporate Secretary, and any notice to the Employee shall be addressed to the Employee at
Employee’s address as then appearing in the records of the Company.




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