8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 8-K


                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                Date of Report (date of earliest event reported):
                                  MARCH 3, 2005


                          LEHMAN BROTHERS HOLDINGS INC.
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
                 (State or other jurisdiction of incorporation)


         1-9466                                          13-3216325
(Commission File Number)                       (IRS Employer Identification No.)

   745 SEVENTH AVENUE
   NEW YORK, NEW YORK                                       10019
 (Address of principal                                   (Zip Code)
   executive offices)

               Registrant's telephone number, including area code:
                                 (212) 526-7000

                                 Not Applicable
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ]  Written communications pursuant to Rule 425 under the Securities Act
     (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act
     (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))






Item 9.01         Financial Statements and Exhibits

                  (c) Exhibits

         The following Exhibits are incorporated by reference into Registration
Statement on Form S-3 No. 333-61878 as exhibits thereto and are filed as part of
this Report.

4.01              Global Security representing the Registrant's Index-Plus Notes
                  Due March 3, 2010, Linked to the S&P 500(R) Index (SPX) (filed
                  herewith)

4.02              Calculation Agency Agreement between the Registrant and
                  Lehman Brothers Inc., as calculation agent, relating to the
                  Registrant's Index-Plus Notes Due March 3, 2010, Linked to
                  the S&P 500(R) Index (SPX) (filed herewith)



                                       2




                                    SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.



                                            LEHMAN BROTHERS HOLDINGS INC.
                                                     (Registrant)


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





Date: March 3, 2005




                                       3




                                  EXHIBIT INDEX



Exhibit No.       Exhibit
- -----------       -------

4.01              Global Security representing the Registrant's Index-Plus Notes
                  Due March 3, 2010, Linked to the S&P 500(R) Index (SPX)

4.02              Calculation Agency Agreement between the Registrant and Lehman
                  Brothers Inc., as calculation agent, relating to the
                  Registrant's Index-Plus Notes Due March 3, 2010, Linked to the
                  S&P 500(R) Index (SPX)



                                       4

EX-4.01

                         LEHMAN BROTHERS HOLDINGS INC.

                                    RAPIDS(SM)

       Return Accelerated PortfolIo Debt Securities Due September 3, 2006

                      Linked to the S&P 500(R) Index (SPX)

Number R-1                                                            $4,000,000
ISIN US524908ND85                                                CUSIP 524908ND8


See Reverse for Certain Definitions

THIS SECURITY (THIS "SECURITY") IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

         LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, on the Stated Maturity Date, in such coin or
currency of the United States of America at the time of payment shall be legal
tender for the payment of public and private debts, for each $1,000 principal
amount of the Securities represented hereby, an amount equal to the Maturity
Payment Amount. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

         Any amount payable on the Stated Maturity Date hereon will be paid only
upon presentation and surrender of this Security.


                                                                               2



         REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

         "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.

         This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.

































                                                                               3




                  IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused
this instrument to be signed by its Chairman of the Board, its Vice Chairman,
its President, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.

Dated: March 3, 2005                       LEHMAN BROTHERS HOLDINGS INC.


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

                                           Attest: /s/ Aaron Guth
                                                   -----------------------------
                                                   Aaron Guth
                                                   Assistant Secretary



                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

Dated: March 3, 2005

CITIBANK, N.A.
  as Trustee

By: /s/  Wafaa Orfy
    ------------------------------------
       Name: Wafaa Orfy
       Title: Authorized Signatory


















                                                                               4




                               Reverse of Security

         This Security is one of a duly authorized series of Securities of the
Company designated as RAPIDS(SM), Return Accelerated PortfolIo Debt Securities
Due September 3, 2006 Linked to the S&P 500(R) Index (SPX) (herein called the
"Securities"). The Company may, without the consent of the holders of the
Securities, create and issue additional notes ranking equally with the
Securities and otherwise similar in all respects so that such further notes
shall be consolidated and form a single series with the Securities; provided
that no additional notes can be issued if an Event of Default has occurred with
respect to the Securities. This series of Securities is one of an indefinite
number of series of debt securities of the Company, issued and to be issued
under an indenture, dated as of September 1, 1987, as amended (herein called the
"Indenture"), duly executed and delivered by the Company and Citibank N.A., as
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities.

         The Maturity Payment Amount, at the request of the Trustee, shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

         All percentages resulting from any calculation with respect to the
Securities will be rounded at the Calculation Agent's discretion.

         The Trustee shall fully rely on the determination by the Calculation
Agent of the Maturity Payment Amount and shall have no duty to make any such
determination.

         This Security is not subject to any sinking fund.

         If an Event of Default with respect to the Securities shall occur and
be continuing, the amounts payable on all of the Securities may be declared due
and payable in the manner and with the effect provided in the Indenture. The
amount payable to the Holder hereof upon any acceleration permitted under the
Indenture will be equal to the Maturity Payment Amount calculated as though the
date of acceleration was the Stated Maturity Date and the date three Business
Days prior thereto was the Valuation Date.

         The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than 66 2/3% in aggregate
principal amount of each series of Securities at the time Outstanding to be
affected (each series voting as a class), evidenced as in the Indenture
provided, to execute supplemental indentures adding any provisions to, or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) change the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, if any, or reduce any premium
payable on redemption, or make the principal thereof, or premium, if any, or
interest thereon, if any, payable in any coin or currency other than that
hereinabove provided, without the consent of the holder of each Security so
affected, or (ii) change the place of payment on any Security, or impair the
right to institute suit for payment on any Security, or reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture,


                                                                               5


without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or Event
of Default under the Indenture with respect to such series and its consequences,
except a default in the payment of interest, if any, or the principal of, or
premium, if any, on any of the Securities of such series, or in the payment of
any sinking fund installment or analogous obligation with respect to Securities
of such series. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future holders and
owners of this Security and any Securities which may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is made
upon this Security or such other Securities.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal amount with respect to this
Security.

         The Securities are issuable in denominations of $1,000 and any whole
multiples of $1,000.

         The Company, the Trustee, and any agent of the Company or of the
Trustee may deem and treat the registered holder (the "Holder") hereof as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment hereof, or on account hereof, and for all other
purposes and neither the Company nor the Trustee nor any agent of the Company or
of the Trustee shall be affected by any notice to the contrary. All such
payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, effectually satisfy and discharge liability for
moneys payable on this Security.

         No recourse for the payment of the principal of, premium, if any, or
interest on this Security, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office or agency in a Place of Payment for this Security, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Securities of this series or of like tenor and of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

                                                                               6


         The Company intends to treat, and by purchasing this Security, the
holder agrees to treat, for all tax purposes, this Security as a financial
contract for cash settlement, rather than as a debt instrument.

         THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         Set forth below are definitions of the terms used in this Security.

         "AMEX" shall mean the American Stock Exchange LLC.

         "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 Agency Agreement" shall mean the Calculation Agency
Agreement, dated as of March 3, 2005, between the Company and the Calculation
Agent, as amended from time to time, or any successor calculation agency
agreement.

         "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.

         "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 the Calculation Agency Agreement, or (b) as
otherwise determined by the Calculation Agent pursuant to the Calculation Agency
Agreement if the Index or Successor Index has been discontinued or in the
circumstances described in the definition of "Valuation Date" herein.

         "Company" shall have the meaning set forth on the face of this
Security.

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

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

         "Holder" shall have the meaning set forth on the reverse of this
Security.

                                                                               7


         "Indenture" shall have the meaning set forth on the reverse of this
Security.

         "Index" shall mean the S&P 500(R) Index, as calculated by S&P.

         "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 its sole discretion:

         (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.

                                                                               8


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

         "Maturity Payment Amount" for each $1,000 principal amount of
Securities, 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,

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

         If requested by the Trustee, the Maturity Payment Amount shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

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

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

         "Place of Payment" shall mean the place or places where the principal
of (and premium, if any) and interest, if any, on the Securities are payable.

         "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 mean Standard & Poor's, a division of McGraw-Hill, Inc.

         "Securities" shall have the meaning set forth on the reverse of this
Security.

         "Security" shall have the meaning set forth on the face of this
Security.

         "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 pursuant to
the Calculation Agency Agreement.

                                                                               9


         "Successor Index" shall mean such successor or substitute index as the
Calculation Agent may select pursuant to the Calculation Agency Agreement upon
discontinuance of the Index.

         "Trustee" shall have the meaning set forth on the reverse of this
Security.

         "Valuation Date" shall mean August 30, 2006; provided, that if a Market
Disruption Event occurs on such day, as determined by the Calculation Agent
pursuant to the Calculation Agency Agreement, 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, pursuant to the
Calculation Agency Agreement, 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.

         All terms used, but not defined, in this Security are used herein as
defined in the Calculation Agency Agreement or the Indenture.





















                        --------------------------------

         The following abbreviations, when used in the inscription on the face
of the within Security, shall be construed as though they were written out in
full according to applicable laws or regulations:




TEN COM -   as tenants in common                   UNIF GIFT MIN ACT - ______ Custodian ______
                                                                       (Cust)           (Minor)
TEN ENT -   as tenants by the entireties           under Uniform Gifts to Minors
JT TEN  -   as joint tenants with right of         Act ______________________________________
            Survivorship and not as tenants in                       ( State)
            common


     Additional abbreviations may also be used though not in the above list.

                        --------------------------------

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

- --------------------------------

- --------------------------------


- ------------------------------------------------------------------------------
(Name and Address of Assignee, including zip code, must be printed or
typewritten.)

- ------------------------------------------------------------------------------
the within Security, and all rights thereunder, hereby irrevocably constituting
and appointing

- ------------------------------------------------------------------------------
to transfer the said Security on the books of the Company, with full power of
substitution in the premises.

         Dated:
                                       -----------------------------------------

         NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Security in every particular, without
alteration or enlargement or any change whatever.

Signature(s) Guaranteed:

- ---------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.

EX-4.02

                          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.



                                                                               2


         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


                                                                               3


         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


                                                                               4


         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


                                                                               2


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.

                                                                               3


         "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.

                                                                               4


         "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


                                                                               5


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.