CALCULATION AGENCY AGREEMENT


         CALCULATION AGENCY AGREEMENT, dated as of March 3, 2005 (the
"Agreement"), between Lehman Brothers Holdings Inc. (the "Company") and Lehman
Brothers Inc., as Calculation Agent.

         WHEREAS, the Company has authorized the issuance of up to $4,600,000
aggregate principal amount of RAPIDS(SM), Return Accelerated PortfolIo Debt
Securities Due September 3, 2006 (the "Securities")*;

         WHEREAS, the Securities will be issued under an Indenture, dated as of
September 1, 1987, between the Company and Citibank, N.A., as Trustee (the
"Trustee"), as supplemented and amended by supplemental indentures dated as of
November 25, 1987, November 27, 1990, September 13, 1991, October 4, 1993,
October 1, 1995, and June 26, 1997, and incorporating Standard Multiple Series
Indenture Provisions dated July 30, 1987, as amended November 16, 1987
(collectively, the "Indenture"); and

         WHEREAS, the Company requests the Calculation Agent to perform certain
services described herein in connection with the Securities;

         NOW THEREFORE, the Company and the Calculation Agent agree as follows:

                  1. Appointment of Agent. The Company hereby appoints Lehman
         Brothers Inc., as Calculation Agent, and Lehman Brothers Inc. hereby
         accepts such appointment as the Company's agent for the purpose of
         performing the services hereinafter described upon the terms and
         subject to the conditions hereinafter mentioned.

                  2. Calculations and Information Provided. In response to a
         request made by the Trustee for a determination of the Maturity Payment
         Amount due on the Stated Maturity Date of the Securities, the
         Calculation Agent shall determine such Maturity Payment Amount and
         notify the Trustee of its determination. The Calculation Agent shall
         also determine (a) the Successor Index if publication of the Index is
         discontinued, (b) the Closing Index Level if no Successor Index is
         available or if S&P or the publisher of any Successor Index, as the
         case may be, fails to calculate and publish a Closing Index Level on
         any date, (c) adjustments to the Index, any Successor Index or the
         Closing Index Level if the method of calculating any of these items
         changes in a material respect or if the Index or Successor Index is in
         any other way modified so

---------------
    *    "RAPIDS" is a service mark of Lehman Brothers Inc. "Standard & Poor's,"
         "S&P," "S&P 500," "Standard & Poor's 500," and "500" are trademarks of
         McGraw-Hill, Inc. and have been licensed for use by Lehman Brothers
         Holdings Inc. The Securities, linked to the performance of the S&P 500
         Index, are not sponsored, endorsed, sold or promoted by Standard &
         Poor's and Standard & Poor's makes no representation regarding the
         advisability of investing in the Securities.



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         that it does not, in the opinion of the Calculation Agent, fairly
         represent the level of the Index or such Successor Index, as the case
         may be, had such changes or modifications not been made, (d) whether a
         Market Disruption Event has occurred and (f) any other calculation,
         determination or adjustment specified as being made by the Calculation
         Agent in this Agreement. The Calculation Agent shall notify the Trustee
         of all such adjustments or any such Successor Index, or if a Market
         Disruption Event has occurred. Annex A hereto sets forth the procedures
         the Calculation Agent will use to determine the information described
         in this Section 2.

                  3. Calculations. Any calculation or determination by the
         Calculation Agent pursuant hereto shall be at the sole discretion of
         the Calculation Agent and, in the absence of manifest error, be
         conclusive for all purposes and binding. Any calculation made by the
         Calculation Agent hereunder shall, at the Trustee's request, be made
         available at the Corporate Trust Office.

                  4. Fees and Expenses. The Calculation Agent shall be entitled
         to reasonable compensation for all services rendered by it as agreed to
         between the Calculation Agent and the Company.

                  5. Terms and Conditions. The Calculation Agent accepts its
         obligations herein set out upon the terms and conditions hereof,
         including the following, to all of which the Company agrees:

                  (a) in acting under this Agreement, the Calculation Agent is
             acting solely as an independent expert of the Company and does not
             assume any obligation toward, or any relationship of agency or
             trust for or with, any of the holders of the Securities;

                  (b) unless otherwise specifically provided herein, any order,
             certificate, notice, request, direction or other communication from
             the Company or the Trustee made or given under any provision of
             this Agreement shall be sufficient if signed by any person whom the
             Calculation Agent reasonably believes to be a duly authorized
             officer or attorney-in-fact of the Company or the Trustee, as the
             case may be;

                  (c) the Calculation Agent shall be obliged to perform only
             such duties as are set out specifically herein and any duties
             necessarily incidental thereto;

                  (d) the Calculation Agent, whether acting for itself or in any
             other capacity, may become the owner or pledgee of Securities with
             the same rights as it would have had if it were not acting
             hereunder as Calculation Agent; and

                  (e) the Calculation Agent shall incur no liability hereunder
             except for loss sustained by reason of its gross negligence or
             willful misconduct.

                  6. Resignation; Removal; Successor. (a) The Calculation Agent
         may at any time resign by giving written notice to the Company of such
         intention on its part, specifying the date on which its desired
         resignation shall become effective, subject to the appointment of a
         successor Calculation Agent and acceptance of such appointment by such
         successor Calculation


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         Agent, as hereinafter provided. The Calculation Agent hereunder may be
         removed at any time by the filing with it of an instrument in writing
         signed by or on behalf of the Company and specifying such removal and
         the date when it shall become effective. Such resignation or removal
         shall take effect upon the appointment by the Company, as hereinafter
         provided, of a successor Calculation Agent and the acceptance of such
         appointment by such successor Calculation Agent. In the event a
         successor Calculation Agent has not been appointed and has not accepted
         its duties within 90 days of the Calculation Agent's notice of
         resignation, the Calculation Agent may apply to any court of competent
         jurisdiction for the designation of a successor Calculation Agent.

                  (b) In case at any time the Calculation Agent shall resign, or
         shall be removed, or shall become incapable of acting, or shall be
         adjudged bankrupt or insolvent, or make an assignment for the benefit
         of its creditors or consent to the appointment of a receiver or
         custodian of all or any substantial part of its property, or shall
         admit in writing its inability to pay or meet its debts as they mature,
         or if a receiver or custodian of it or all or any substantial part of
         its property shall be appointed, or if any public officer shall have
         taken charge or control of the Calculation Agent or of its property or
         affairs, for the purpose of rehabilitation, conservation or
         liquidation, a successor Calculation Agent shall be appointed by the
         Company by an instrument in writing, filed with the successor
         Calculation Agent. Upon the appointment as aforesaid of a successor
         Calculation Agent and acceptance by the latter of such appointment, the
         Calculation Agent so superseded shall cease to be Calculation Agent
         hereunder.

                  (c) Any successor Calculation Agent appointed hereunder shall
         execute, acknowledge and deliver to its predecessor, to the Company and
         to the Trustee an instrument accepting such appointment hereunder and
         agreeing to be bound by the terms hereof, and thereupon such successor
         Calculation Agent, without any further act, deed or conveyance, shall
         become vested with all the authority, rights, powers, trusts,
         immunities, duties and obligations of such predecessor with like effect
         as if originally named as Calculation Agent hereunder, and such
         predecessor, upon payment of its charges and disbursements then unpaid,
         shall thereupon become obligated to transfer, deliver and pay over, and
         such successor Calculation Agent shall be entitled to receive, all
         moneys, securities and other property on deposit with or held by such
         predecessor, as Calculation Agent hereunder.

                  (d) Any corporation into which the Calculation Agent hereunder
         may be merged or converted or any corporation with which the
         Calculation Agent may be consolidated, or any corporation resulting
         from any merger, conversion or consolidation to which the Calculation
         Agent shall be a party, or any corporation to which the Calculation
         Agent shall sell or otherwise transfer all or substantially all of the
         assets and business of the Calculation Agent shall be the successor
         Calculation Agent under this Agreement without the execution or filing
         of any paper or any further act on the part of any of the parties
         hereto.

                  7. Certain Definitions. Terms not otherwise defined herein or
         in Annex A hereto are used herein as defined in the Indenture or the
         Securities.

                  8. Indemnification. The Company will indemnify the Calculation
         Agent against any losses or liability which it may incur or sustain in
         connection with its appointment or


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         the exercise of its powers and duties hereunder except such as may
         result from the gross negligence or willful misconduct of the
         Calculation Agent or any of its agents or employees. The Calculation
         Agent shall incur no liability and shall be indemnified and held
         harmless by the Company for, or in respect of, any action taken or
         suffered to be taken in good faith by the Calculation Agent in reliance
         upon written instructions from the Company.

                  9. Notices. Any notice required to be given hereunder shall be
         delivered in person, sent (unless otherwise specified in this
         Agreement) by letter, telex or facsimile transmission or communicated
         by telephone (confirmed in a writing dispatched within two Business
         Days), (a) in the case of the Company, to it at 745 Seventh Avenue, New
         York, New York 10019 (facsimile: (646) 758-3204) (telephone: (212)
         526-7000), Attention: Treasurer, with a copy to 399 Park Avenue, New
         York, New York 10022 (facsimile: (212) 526-0357) (telephone: (212)
         526-7000), Attention: Corporate Secretary, (b) in the case of the
         Calculation Agent, to it at 745 Seventh Avenue, New York, New York
         10019 (facsimile: (646) 758-4942) (telephone: (212) 526-7000),
         Attention: Equity Derivatives Trading and (c) in the case of the
         Trustee, to it at 388 Greenwich Street, 14th Floor, New York, New York
         10013 (facsimile: (212) 816-5527) (telephone: (212) 816-5773),
         Attention: Agency and Trust, or in any case, to any other address or
         number of which the party receiving notice shall have notified the
         party giving such notice in writing. Any notice hereunder given by
         telex, facsimile or letter shall be deemed to be served when in the
         ordinary course of transmission or post, as the case may be, it would
         be received.

                  10. Governing Law. This Agreement shall be governed by, and
         construed in accordance with, the laws of the State of New York.

                  11. Counterparts. This Agreement may be executed in any number
         of counterparts, each of which when so executed shall be deemed to be
         an original and all of which taken together shall constitute one and
         the same agreement.

                  12. Benefit of Agreement. This Agreement is solely for the
         benefit of the parties hereto and their successors and assigns, and no
         other person shall acquire or have any rights under or by virtue
         hereof.




         IN WITNESS WHEREOF, this Calculation Agency Agreement has been entered
into as of the day and year first above written.

                                         LEHMAN BROTHERS HOLDINGS INC.

                                         By:  /s/ Karen Corrigan
                                            ------------------------------------
                                              Karen Corrigan
                                              Vice President


                                         LEHMAN BROTHERS INC.,
                                           as Calculation Agent

                                         By: /s/ Karen Corrigan
                                            ------------------------------------
                                              Karen Corrigan
                                              Vice President



                                     ANNEX A

         1. The Index.
            ----------

         The Index is the S&P 500 Index (the "Index"), as calculated, published
and disseminated by Standard & Poor's, a division of McGraw-Hill, Inc. ("S&P").

         2. Determination of the Maturity Payment Amount.
            ---------------------------------------------

         The Calculation Agent shall, at the request of the Trustee, determine
the amount payable on the Stated Maturity Date for each $1,000 principal amount
of Securities (the "Maturity Payment Amount").

         The Maturity Payment Amount shall be the following:

              o    If the Final Index Level is greater than or equal to the
                   Initial Index Level, the lesser of

                   (1)  $1,150; and

                                               Final Index Level
                   (2)  $1,000 + $3,000  x  ( -------------------  - 1)
                                              Initial Index Level


         or

              o    If the Final Index Level is less than the Initial Index
                   Level,

                   $1,000  x    Final Index Level
                             -----------------------
                               Initial Index Level

         3. Discontinuance of the Index.
            ----------------------------

         (a) If S&P discontinues publication of the Index and S&P or another
entity publishes a successor or substitute index (the "Successor Index") that
the Calculation Agent determines, in its sole discretion exercised in good
faith, to be comparable to the discontinued Index, then the Calculation Agent
shall determine the Closing Index Level to be used for purposes of computing the
Maturity Payment Amount.

         (b) Upon any selection by the Calculation Agent of a Successor Index,
the Company shall promptly give notice to the holders of the Securities.

         (c) If S&P discontinues publication of the Index and the Calculation
Agent determines that no Successor Index is available at such time, or if S&P
(or the publisher of any Successor Index) fails to calculate and publish a
Closing Index Level for the Index (or a Successor Index) on any date when it
would ordinarily do so in accordance with its customary practice, the
Calculation Agent will determine the Closing Index Level to be used for purposes
of computing the Maturity Payment Amount. In such circumstances, the Closing
Index Level will be computed


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by the Calculation Agent in accordance with the formula for and method of
calculating the Index (or any Successor Index) last in effect prior to such
discontinuance or failure to publish, using the Closing Price (or, if trading in
any of the relevant securities has been materially suspended or materially
limited, its good faith estimate of the Closing Price that would have prevailed
but for such suspension or limitation) at the Close of Trading on such date of
each security most recently comprising the Index (or any Successor Index) on the
Relevant Exchange on which such security trades.

         4. Alteration of Method of Calculation.
            ------------------------------------

         If at any time the method of calculating the Index, any Successor Index
or the Closing Index Level thereof on any particular day is changed in a
material respect, or if the Index or any Successor Index is in any other way
modified so that such index does not, in the opinion of the Calculation Agent,
fairly represent the level of the Index or such Successor Index had such changes
or modifications not been made, then, from and after such time, the Calculation
Agent will, at the Close of Trading of the Relevant Exchanges on which the
securities comprising the Index or such Successor Index traded on any date the
Closing Index Level thereof is to be determined, make such calculations and
adjustments as, in the good faith judgment of the Calculation Agent, may be
necessary in order to arrive at a level of a stock index comparable to the Index
or such Successor Index, as the case may be, as if such changes or modifications
had not been made. The Calculation Agent will calculate the Closing Index Level
on any particular day and the Maturity Payment Amount with reference to the
Index or such Successor Index, as adjusted. Accordingly, if the method of
calculating the Index or a Successor Index is modified so that the level of such
index is a fraction of what it would have been if it had not been modified, then
the Calculation Agent shall adjust such index in order to arrive at a level of
the Index or such Successor Index as if it had not been modified.

         5. Definitions.
            ------------

         Set forth below are the terms used in the Agreement and in this Annex
A.

         "Agreement" shall have the meaning set forth in the preamble to this
Agreement.

         "AMEX" shall mean the American Stock Exchange LLC.

         "Average Execution Price" shall mean, for a security or other property,
the average execution price that an affiliate of the Company receives or pays
for such security or property, as the case may be, to hedge the Company's
obligations under the Securities.

         "Business Day", notwithstanding any provision in the Indenture, shall
mean any day that is not a Saturday, a Sunday or a day on which the NYSE, Nasdaq
or AMEX is not open for trading or banking institutions or trust companies in
the City of New York are authorized or obligated by law or executive order to
close.

         "Calculation Agent" shall mean the person that has entered into an
agreement with the Company providing for, among other things, the determination
of the Maturity Payment Amount, which term shall, unless the context otherwise
requires, include its successors and assigns. The initial Calculation Agent
shall be Lehman Brothers Inc.

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         "Close of Trading" shall mean, in respect of any Relevant Exchange or
other exchange or quotation system, the scheduled weekday closing time on a day
on which the exchange or quotation system is scheduled to be open for trading
for its respective regular trading session, without regard to after hours or any
other trading outside of the regular trading session hours.

         "Closing Index Level" shall mean, with respect to any day, in
the case of the Index or any Successor Index, (a) the closing level of the Index
or such Successor Index, as the case may be, as reported by S&P or the publisher
of such Successor Index, as the case may be, on such day, as determined and
adjusted by the Calculation Agent pursuant to this Agreement, or (b) as
otherwise determined by the Calculation Agent pursuant to this Agreement if the
Index or Successor Index has been discontinued or in the circumstances described
in the definition of "Valuation Date" herein.

         "Closing Price" shall mean, for each security (or any combination
thereof then included in the Index or any Successor Index or used by the
Calculation Agent in calculating the Closing Index Level), as determined by the
Calculation Agent pursuant to this Agreement, based on information reasonably
available to it, on any particular day:

         (i) if the security is listed on a Relevant Exchange, the last reported
    sale price per share at the Close of Trading on such day on the Relevant
    Exchange;

         (ii) if the security is not listed on a national securities exchange or
    quotation system or is not a Nasdaq security, and is listed or traded on a
    bulletin board, the Average Execution Price per share of the security; and

         (iii) in the case of both (i) and (ii) above, if the security is listed
    or quoted on a non-United States Relevant Exchange or on a non-United States
    bulletin board, the Closing Price will then be converted into U.S. dollars
    using the Official W.M. Reuters Spot Closing Rate at 11:00 a.m., New York
    City time. If there are several quotes for the Official W.M. Reuters Spot
    Closing Rate at that time, the first quoted rate starting at 11:00 a.m.
    shall be the rate used. If there is no such Official W.M. Reuters Spot
    Closing Rate for a country's currency at 11:00 a.m., New York City time, the
    Closing Price shall be converted into U.S. dollars using the last available
    U.S. dollar cross-rate quote before 11:00 a.m., New York City time.

         "Company" shall have the meaning set forth in the preamble to this
Agreement.

         "Exchange Business Day" shall mean any day on which the Index or the
Successor Index is published by its publisher or is otherwise determined by the
Calculation Agent.

         "Final Index Level" shall equal the Closing Index Level on the
Valuation Date.

         "Indenture" shall have the meaning set forth in the preamble to this
Agreement.

         "Index" shall have the meaning set forth in Section 1 of this Annex A.

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         "Initial Index Level" shall equal 1203.60, the Closing Index Level on
February 28, 2005.

         "Market Disruption Event", with respect to the Index or any Successor
Index, shall mean any of the following events has occurred on any day as
determined by the Calculation Agent in accordance with this Agreement:

    (1) A material suspension of or limitation imposed on trading relating to
    the securities that then comprise 20% or more of the Index or any Successor
    Index, by the Relevant Exchanges on which those securities are traded, at
    any time during the one-hour period that ends at the Close of Trading on
    such day, whether by reason of movements in price exceeding limits permitted
    by that Relevant Exchange or otherwise. Limitations on trading during
    significant market fluctuations imposed pursuant to NYSE Rule 80B or any
    applicable rule or regulation enacted or promulgated by the NYSE, any other
    exchange, quotation system or market, any other self regulatory organization
    or the Securities and Exchange Commission of similar scope or as a
    replacement for Rule 80B may be considered material.

    (2) A material suspension of, or limitation imposed on, trading in futures
    or options contracts relating to the Index or any Successor Index by the
    primary exchange on which those futures or options contracts are traded, at
    any time during the one-hour period that ends at the Close of Trading on
    such day, whether by reason of movements in price exceeding limits permitted
    by the exchanges or otherwise.

    (3) Any event, other than an early closure, that disrupts or impairs the
    ability of market participants in general to effect transactions in, or
    obtain market values for, the securities that then comprise 20% or more of
    the Index or any Successor Index, on the Relevant Exchanges on which those
    securities are traded, at any time during the one hour period that ends at
    the Close of Trading on such day.

    (4) Any event, other than an early closure, that disrupts or impairs the
    ability of market participants in general to effect transactions in, or
    obtain market values for, the futures or options contracts relating to the
    Index or any Successor Index on the primary exchange or quotation system on
    which those futures or options contracts are traded at any time during the
    one hour period that ends at the Close of Trading on such day.

    (5) The closure of the Relevant Exchanges on which securities that then
    comprise 20% or more of the Index or any Successor Index are traded or on
    which futures or options contracts relating to the Index or any Successor
    Index are traded prior to its scheduled closing time unless the earlier
    closing time is announced by the Relevant Exchanges at least one hour prior
    to the earlier of (i) the actual closing time for the regular trading
    session on the Relevant Exchanges and (ii) the submission deadline for
    orders to be entered into the Relevant Exchanges for execution at the Close
    of Trading on such day.

For purposes of determining whether a Market Disruption Event has occurred the
relevant percentage contribution of a security to the level of the Index or any
Successor Index will be


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based on a comparison of (x) the portion of the level of the Index or any
Successor Index attributable to that security and (y) the overall level of the
Index or any Successor Index, in each case immediately before the occurrence of
the Market Disruption Event.

         "Maturity Payment Amount" shall have the meaning set forth in Section 2
of this Annex A.

         "Nasdaq" shall mean The Nasdaq Stock Market, Inc.

         "NYSE" shall mean The New York Stock Exchange, Inc.

         "Official W.M. Reuters Spot Closing Rate" shall mean the closing spot
rate published on Reuters page "WMRA".

         "Relevant Exchange" shall mean, for any security (or any combination
thereof then underlying the Index or any Successor Index), the primary exchange,
quotation system, including any bulletin board service, or other market of
trading for such security.

         "S&P" shall have the meaning set forth in Section 1 of this Annex A.

         "Securities" shall have the meaning set forth in the preamble to this
Agreement.

         "Stated Maturity Date" shall mean September 3, 2006 (or if September 3,
2006 is not a Business Day, on the next Business Day); provided, that if a
Market Disruption Event occurs on the Valuation Date, the Stated Maturity Date
shall be the third Business Day following the date that the Final Index Level on
the postponed Valuation Date is determined by the Calculation Agent.

         "Successor Index" shall have the meaning set forth in Section 3(a) of
this Annex A.

         "Trustee" shall have the meaning set forth in the preamble to this
Agreement.

         "Valuation Date" shall mean August 30, 2006; provided, that if a Market
Disruption Event occurs on such day, as determined by the Calculation Agent,
then the Valuation Date shall be postponed to the next following Exchange
Business Day on which no Market Disruption Event occurs; provided, however, if a
Market Disruption Event occurs on each of the eight Exchange Business Days
following the originally scheduled Valuation Date, then (a) that eighth Exchange
Business Day shall be deemed the Valuation Date and (b) the Calculation Agent
shall determine the Final Index Level based upon its good faith estimate of the
value of the Index (or Successor Index, if applicable) on that eighth Exchange
Business Day.