Document:

Exhibit 10.16

 

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”) 1996 Management Ownership 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.

 

(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)           Retirement.  Notwithstanding the foregoing provisions of
Paragraph 4(c)(i), (ii), (iii) and (iv), in the event of your Retirement
and provided you do not engage in Competitive Activity or Detrimental Activity,
you shall be entitled to receive freely transferable shares of Common Stock for
all Principal Units and Discount Units as soon as practicable after the end of
the sixth month following your Retirement. 
If you engage in Competitive Activity, the provisions specified in
Paragraph 4(c)(i) shall apply as of the date of your Retirement, and you shall
be obligated to repay to Holdings the full gross amounts or shares received in
excess of those which you would have received under Paragraph 4(c)(i).  If you engage in Detrimental Activity prior
to the Share Payment Date, you shall be obligated to repay to Holdings the full
gross amounts or shares you received under this Agreement.

 

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

 

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Any
shares that become payable pursuant to this Paragraph 4(c) (other than
Paragraph (c)(v) or (vi)) 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 provisions of 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 the provisions of Code Section 409A(a)(1).  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 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 paid cash and/or 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.

 

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

 

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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 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 and otherwise pursuant to this Agreement.

 

(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 and otherwise
pursuant to this Agreement.

 

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, 

 

4

 

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.

 

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.

 

5

 

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 at any time (i) using
confidential information received during a person’s employment with Holdings or
any Subsidiary, their affiliates or their clients, in breach of such person’s
obligations to keep such information confidential; (ii) directly or
indirectly persuading or attempting to persuade, by any means, any employee of
Holdings or any Subsidiary 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 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 that is 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).

 

“Retirement” shall mean a Termination of
employment which meets the criteria for retirement under Holdings’ qualified
defined benefit pension plan.

 

“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.

 

“Termination” means the end of employment
with Holdings or a Subsidiary.  The date
of Termination and the reason for Termination are as determined in the sole
discretion of the Committee.

 

2Exhibit 10.17

 

200    STOCK OPTION AWARD

 

AGREEMENT EVIDENCING A GRANT OF A

NON-QUALIFIED STOCK OPTION

 

1.   GRANT OF
OPTION.  Pursuant to
the Lehman Brothers Holdings Inc. (“Holdings”) 1996 Management Ownership Plan
(the “Plan”), you are hereby granted, as of                      ,
200   , a nonqualified stock option to purchase the number of
common shares (par value $0.10 per share) of Holdings (“Shares”) set forth on
the award statement delivered to you herewith (the “Award Statement”) (which
number of Shares may be adjusted pursuant to Paragraph 6 below) with an
exercise price of $      per Share as specified in the
Award Statement (the “Option Exercise Price”).

 

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 then in effect should be carefully examined
before any decision is made to exercise the option.  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
in Annex A attached hereto 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                        ,
200    (the “Expiration Date”).

 

(b)    You may first exercise this option on the
later of (i)                     
or (ii) any date on which the Fair Market Value of a Share exceeds $     ,
but this option will first become exercisable in any event no later than               ,
regardless of the Fair Market Value of a Share.

 

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

 

4.   CONDITIONS
TO EXERCISE.  This option may not be exercised unless all
of the following conditions are met:

 

(a)    Legal counsel for Holdings 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 (or your permitted transferee under
paragraph 5) must pay at the time of exercise the full option price for the
Shares being acquired hereunder, by (i) paying in United States dollars by
cash (which may be in the form of a certified check), (ii) subject to
Holdings’ prior consent, tendering Shares owned by you which have a Fair Market
Value on the day of exercise equal to the full purchase price for the Shares
being acquired, (iii) subject to Holdings’ 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
Holdings to (a) sell shares of Common Stock subject to the option and to
deliver promptly to Holdings a portion of the proceeds of such sale transaction
on behalf of the exercising Participant 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 Holdings loan
proceeds at the time of exercise to pay the option price, or (iv) by any
combination of (i), (ii) or (iii) above; and

 

(c)    You must, unless otherwise provided
below, at all times during the period beginning with                ,
200   and ending on the date of such exercise, (x) have been
employed by Holdings or a Subsidiary thereof or (y) not have engaged in
Detrimental Activity.

 

(i)            Termination before             
   , 200   .  In the event
of your Termination for any reason before                 ,
200   , this option shall be forfeited and canceled.

 

(ii)           Voluntary Termination with
Competitive Activity.  In the event of your voluntary
Termination with Competitive Activity on or after                   ,
200   , this option shall be forfeited and canceled.

 

(iii)         Voluntary Termination without
Competitive Activity.  In the event of your voluntary
Termination without Competitive Activity on or after                  ,
200   , you will be permitted to exercise this option, to the
extent not previously exercised, subject to the approval of the Committee,
until the Expiration Date, provided you enter into an agreement not engage in
Competitive Activity or Detrimental Activity during that period of time.  If you do not enter into such an agreement,
or if you engage in Competitive Activity, this option, to the extent not
previously exercised, shall expire immediately.

 

(iv)          Involuntary Termination with Cause. 
In the event of your involuntary Termination with Cause, this option, to
the extent not previously exercised, shall be forfeited and canceled
immediately.

 

(v)            Involuntary Termination without
Cause.  In the event of your involuntary Termination
without Cause on or after                          ,
200   , you will be permitted to exercise this option, to the
extent not previously exercised, until the Expiration Date, subject to the
approval of the Committee, provided you do not engage in Detrimental Activity
during that period of time.  If you
engage in Detrimental Activity, the portion of this option, to the extent not
previously exercised, shall expire immediately.

 

(vi)          Termination Due to Death;
Disability.  In the
event of the occurrence on or after                    ,
200   of your death or Disability, 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 otherwise by reason of your 

 

2

 

death) will be permitted to exercise this option, to
the extent not previously exercised, until the Expiration Date.

 

Any
remaining portion of this option, which is not exercisable pursuant to the
provisions of this subparagraph 4(c), shall be canceled by Holdings.

5.   NON-ASSIGNMENT.  This option may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of by you, except (a) by
will or the laws of descent and distribution or (b) to members of your
immediate family or to a trust or such other instrument as may be established
for the direct benefit of a member of your immediate family and is exercisable
during your lifetime only by you or such permitted transferee.  If you or anyone claiming under or through
you attempts to violate this Paragraph 5, such attempted violation shall be
null and void and without effect, and Holdings’ obligations hereunder shall
terminate.

 

6.   EQUITABLE ADJUSTMENTS.  In the event of a Change in Capitalization
occurring after the date of grant of this option 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.

 

7.   CHANGE IN CONTROL.  Upon the occurrence of a Change in Control
without the prior approval of the majority of the independent members of the
Incumbent Board, all options awarded hereunder that are then not exercisable
will become exercisable in full and all options shall remain exercisable
through                  ,
200  ; provided however, that if the Change in Control occurs with
the prior approval of a majority of the independent members of the Incumbent
Board, one-half of the options awarded hereunder that are then not exercisable
shall become immediately exercisable and all exercisable options shall remain
exercisable through                    ,
200   , and the remaining one-half of such options shall become
exercisable upon the earliest to occur of (a) two years following such
Change in Control, (b) the date such options would become exercisable by
their terms or (c) your involuntary termination without Cause, provided
however, that if such Change in Control occurs within one year after this grant
date, and such Change in Control will be effected by a merger involving the
issuance of equity shares to Holdings’ stockholders, then the foregoing
provisions of this paragraph will not apply and the Committee shall have total
discretion as to the impact of such an event on options granted hereunder which
are not then exercisable.

 

8.   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 (including, but not limited to, the acceleration provisions),
provided, however, that no such amendment shall, without your consent, diminish
your rights under this Agreement.

 

9.   BINDING ACTIONS.  Any action taken or decision made by the
Committee or its delegates 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 

 

3

 

acceptance
and ratification of, and consent to, any action taken under the Plan by the
Committee or its designees.

 

10.   NO RIGHT TO CONTINUED EMPLOYMENT.  Neither the grant nor the exercise of the
option shall confer on you any right to be retained in the employ of Holdings
or its subsidiaries, or to receive subsequent options 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.

 

11.   NO RIGHTS OF A STOCKHOLDER.  Neither you nor your permitted transferee
under Paragraph 5 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 such transferee upon the exercise of the
option.

 

12.   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.

 

13.   WITHHOLDING.  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 upon exercise of an option hereunder (a) that 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 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 Shares (including Shares otherwise
issuable pursuant to exercise this option) 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 exercise of the option and (b) that you or your permitted transferee
under Paragraph 5 provide Holdings with any forms, documents or other
information reasonably required in connection with the grant.  If the amount requested for the purpose of
satisfying the withholding obligation is not paid, Holdings may refuse to
furnish Shares upon exercise of the option. 
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.

 

4

 

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, 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” means 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 or any of its Subsidiaries, as determined in the sole
discretion of the Committee.

 

“Detrimental Activity” means at any time (i) using
confidential information received during a person’s employment with Holdings or
any Subsidiary, their affiliates or their clients, in breach of such person’s
obligations to keep such information confidential; (ii) directly or
indirectly persuading or attempting to persuade, by any means, any employee of
Holdings or any Subsidiary 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 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 that is 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.

 

“Termination” means the end of employment
with Holdings or any Subsidiary.  The
date of Termination and the reason for Termination are as determined in the
sole discretion of the Committee.

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