EX-4.01 2 file002.htm WARRANT AGREEMENT


                          LEHMAN BROTHERS HOLDINGS INC.

                                       and

                          CITIBANK, N.A., Warrant Agent

                                       and

                     LEHMAN BROTHERS INC., Calculation Agent

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

                                WARRANT AGREEMENT

                            dated as of May 11, 2005

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

                               2,000,000 Warrants

                       Nikkei 225(SM) Index Call Warrants

                              Expiring May 8, 2007



                                TABLE OF CONTENTS



                                                                                             PAGE

ARTICLE I ISSUANCE OF WARRANTS AND FORM, EXECUTION, DELIVERY AND
            REGISTRATION OF WARRANTS........................................................    1

    SECTION 1.01.   Issuance of Warrants....................................................    1
    SECTION 1.02.   Form, Execution and Delivery of Warrant Certificates....................    1
    SECTION 1.03.   Mutilated or Missing Warrant Certificates...............................    3

ARTICLE II DURATION AND EXERCISE OF WARRANTS................................................    4

    SECTION 2.01.   Duration of Warrants; Exercise Notice...................................    4
    SECTION 2.02.   Exercise and Delivery of Warrants.......................................    5
    SECTION 2.03.   Discontinuance of a Relevant Index; Alteration of Method of
                    Calculating a Relevant Index............................................    8
    SECTION 2.04.   Limit Option............................................................    9
    SECTION 2.05.   Market Disruption Events................................................   10
    SECTION 2.06.   Delisting of Warrants...................................................   11
    SECTION 2.07.   Automatic Exercise of Warrants..........................................   11
    SECTION 2.08.   Denominations; Maximum Number of Exercisable Warrants; Minimum
                    Number of Exercisable Warrants .........................................   12
    SECTION 2.09.   Covenant of the Company.................................................   13
    SECTION 2.10.   Return of Money Held Unclaimed for Two Years............................   13
    SECTION 2.11.   Return of Global Warrant Certificate....................................   13

ARTICLE III OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDERS...........................   13

    SECTION 3.01.   Warrantholder May Enforce Rights........................................   13
    SECTION 3.02.   Merger, Consolidation, Sale, Transfer or Conveyance.....................   13

ARTICLE IV WARRANTS ACQUIRED BY THE COMPANY; PAYMENT OF TAXES; TAXATION OF WARRANTS.........   14

    SECTION 4.01.   Warrants Acquired by the Company........................................   14
    SECTION 4.02.   Payment of Taxes........................................................   14
    SECTION 4.03.   Taxation of Warrants....................................................   14

ARTICLE V CONCERNING THE WARRANT AGENT......................................................   15

    SECTION 5.01.   Warrant Agent...........................................................   15
    SECTION 5.02.   Conditions of Warrant Agent's Obligations...............................   15
    SECTION 5.03.   Resignation and Appointment of Successor................................   17

ARTICLE VI CONCERNING THE CALCULATION AGENT.................................................   18


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    SECTION 6.01.   Calculation Agent.......................................................   18
    SECTION 6.02.   Calculations and Information Provided...................................   18
    SECTION 6.03.   Conditions of Calcuation Agent's Obligations............................   19
    SECTION 6.04.   Resignation and Appointment of Successor................................   19
    SECTION 6.05.   Compensation; Indemnification...........................................   20

ARTICLE VII MISCELLANEOUS...................................................................   20

    SECTION 7.01.   Definitions.............................................................   20
    SECTION 7.02.   Amendment...............................................................   23
    SECTION 7.03.   Notices and Demands to the Company, the Warrant Agent and the
                    Calculation Agent.......................................................   23
    SECTION 7.04.   Addresses for Notices...................................................   23
    SECTION 7.05.   Notices to Holders......................................................   24
    SECTION 7.06.   Obtaining of Approvals..................................................   24
    SECTION 7.07.   Persons Having Rights Under This Agreement..............................   24
    SECTION 7.08.   Inspection of Agreement.................................................   24
    SECTION 7.09.   Headings................................................................   24
    SECTION 7.10.   Counterparts............................................................   24
    SECTION 7.11.   GOVERNING LAW...........................................................   25

TESTIMONIUM

SIGNATURES

EXHIBIT A - Form of Global Warrant Certificate

EXHIBIT B - Exercise Notice

EXHIBIT C - Confirmation of Exercise/Notice of Rejection

EXHIBIT D - Notice of Rejection Relating to Limit Option



                                       ii


     WARRANT AGREEMENT, dated as of May 11, 2005, among LEHMAN BROTHERS HOLDINGS
INC., a Delaware corporation (the "Company"), CITIBANK, N.A., a national banking
association (the "Warrant Agent"), and LEHMAN BROTHERS INC., a Delaware
corporation (the "Calculation Agent").

     WHEREAS the Company proposes to sell warrants (the "Warrants" or,
individually, a "Warrant") representing the right to receive from the Company an
amount, if any, in U.S. dollars determined by reference to any increase in the
value of the Relevant Index on the terms and conditions set forth in this
Agreement; and

     WHEREAS the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer and exercise of the Warrants, and the Company desires to set
forth herein, among other things, the provisions of the Warrants and the terms
and conditions on which they may be issued, transferred and exercised.

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                         ISSUANCE OF WARRANTS AND FORM,
                      EXECUTION, DELIVERY AND REGISTRATION
                                   OF WARRANTS

     SECTION 1.01. Issuance of Warrants. (a) The Warrants will constitute
direct, unconditional and unsecured obligations of the Company and will rank
equally with the Company's other unsecured contractual obligations and with the
Company's unsecured and unsubordinated debt.

     (b) The Warrants will be issued in book-entry form and represented by one
or more global certificates (each a "Global Warrant Certificate"). Each Warrant
shall represent the right, subject to the provisions contained herein, to
receive the Cash Settlement Value of such Warrant upon exercise. In no event
shall a registered or beneficial holder of a Warrant (each a "Warrantholder") be
entitled to receive any interest on any Cash Settlement Value. A Warrant will
not require or entitle a Warrantholder to receive any of the underlying stocks
comprising the Relevant Index (the "Underlying Shares") from the Company. The
Company shall not be under any obligation to, nor will it, sell the Underlying
Shares to, or purchase or take delivery of any such Underlying Share from,
Warrantholders in connection with the exercise of any Warrants.

     (c) Warrantholders shall not be entitled to hold Warrants in certificated
form through Clearstream Banking, societe anonyme ("Clearstream"), or the
Euroclear System operated by Morgan Guaranty Trust's Brussels Office
("Euroclear").

     SECTION 1.02. Form, Execution and Delivery of Warrant Certificates. (a)
Each Global Warrant Certificate shall be evidenced by a certificate in
registered form substantially in the form set forth in Exhibit A hereto, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Agreement, and may represent any



number of whole Warrants. Each Global Warrant Certificate may have imprinted or
otherwise reproduced thereon such letters, numbers or other marks of
identification or designation and such legends or endorsements as the officers
of the Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) and which are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto, or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or of the
Depository, or to conform to usage.

     (b) The Warrant Agent is authorized, upon receipt of a Global Warrant
Certificate from the Company, duly executed on behalf of the Company, and a
written order from the Company, to countersign such Global Warrant Certificate.
The Global Warrant Certificate shall be manually countersigned and dated the
date of its countersignature by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. The Warrant Agent shall deliver the Global
Warrant Certificate to or upon the order of the Company. One or more Global
Warrant Certificates may be executed by the Company and delivered to the Warrant
Agent on or after the date of execution of this Agreement; provided that only
one Global Warrant Certificate shall be outstanding at any one time.

     The Company reserves the right to issue, from time to time after the date
of execution of this Agreement, additional Warrants, and in connection therewith
the Global Warrant Certificate may be exchanged for a new Global Warrant
Certificate to reflect the issuance by the Company of such additional Warrants.
To effect such an exchange the Company shall deliver to the Warrant Agent a new
Global Warrant Certificate duly executed on behalf of the Company and a written
instruction as provided in this Section 1.02. The Warrant Agent shall
authenticate the new Global Warrant Certificate as provided in this Section and
shall deliver the new Global Warrant Certificate to the Depository in exchange
for, and upon receipt of, the Global Warrant Certificate then held by the
Depository. The Warrant Agent shall cancel the Global Warrant Certificate
delivered to it by the Depository, destroy such Global Warrant Certificate and
provide a certificate of destruction to the Company.

     (c) In case any officer of the Company who shall have signed a Global
Warrant Certificate, either manually or by facsimile signature, shall cease to
be such officer before such Global Warrant Certificate shall have been
countersigned and delivered by the Warrant Agent to the Company or delivered by
the Company, such Global Warrant Certificate nevertheless may be countersigned
and delivered as though the person who signed such Global Warrant Certificate
had not ceased to be such officer of the Company; and the Global Warrant
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Global Warrant Certificate, shall be a
proper officer of the Company to sign such Global Warrant Certificate, although
at the date of the execution of this Warrant Agreement any such person was not
such officer.

     (d) The Global Warrant Certificate will initially be registered in the name
of a nominee of The Depository Trust Company (the "Depository", which term, as
used herein, includes any successor securities depository selected by the
Company). The Warrant holdings of the Depository participants (the
"Participants") will be recorded on the books of the Depository. The holdings of
customers of the Participants and the identity of the Warrantholders will be
reflected on the books and records of such Participants and will not be known to
the Warrant


                                       2


Agent, the Company, the Calculation Agent or the Depository. The Global Warrant
Certificate will be held by the Depository or its agent.

     The Company may from time to time select a new entity to act as Depository
with respect to the Warrants and, if such selection is made, the Company shall
promptly give the Warrant Agent written notice to such effect identifying the
new Depository, and the Global Warrant Certificate shall be delivered to the
Warrant Agent and shall be transferred to the new Depository as provided below
as promptly as possible. Appropriate changes may be made in the forms of the
Global Warrant Certificate, the Exercise Notice and the related notices to be
delivered in connection with an exercise to reflect the selection of the new
Depository.

     (e) Except as otherwise provided herein or in the Global Warrant
Certificate, the Warrant Agent shall from time to time register the transfer of
the Global Warrant Certificate in its records (which may be maintained
electronically), subject to such reasonable regulations as the Company or the
Warrant Agent may prescribe, only to the Depository, to another nominee of the
Depository, to a successor Depository or to a nominee of a successor Depository,
upon surrender of such Global Warrant Certificate, duly endorsed, or accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Warrant Agent and the Company, duly executed by the registered holder thereof or
by the duly appointed legal representative thereof, or by its duly authorized
attorney, such signature to be guaranteed by a bank or trust company with a
correspondent office in New York City or by a member of a national securities
exchange. Upon any such registration of transfer, a new Global Warrant
Certificate shall be issued to the transferee and the surrendered Global Warrant
Certificate shall be canceled by the Warrant Agent.

     The Global Warrant Certificate may be transferred as provided above at the
option of the holder thereof, when surrendered to the Warrant Agent's Office, or
at the office of any successor Warrant Agent (as provided in Section 5.03
hereof), for another Global Warrant Certificate of like tenor and representing
an equal number of unexercised Warrants.

     (f) Except as provided in Section 1.03 hereof, no service charge shall be
made for any registration of transfer or exchange of Global Warrant
Certificates, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Global Warrant Certificates, other than
exchanges pursuant to this Section 1.02 not involving any transfer.

     SECTION 1.03. Mutilated or Missing Warrant Certificates. (a) If any Global
Warrant Certificate is mutilated, lost, stolen or destroyed, the Company may in
its discretion execute, and the Warrant Agent may countersign and deliver, in
exchange and substitution for and upon cancellation of the mutilated Global
Warrant Certificate, or in lieu of the Global Warrant Certificate lost, stolen
or destroyed, a new Global Warrant Certificate of like tenor and representing an
equal number of unexercised Warrants, bearing an identification number not
contemporaneously outstanding, but only (in case of loss, theft or destruction)
upon receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction of such Global Warrant Certificate, written
direction from the Company, and security or indemnity, if requested, also
satisfactory to them. Applicants for such substitute Global Warrant Certificates


                                       3


shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.

     (b) In case all of the Warrants evidenced by any such mutilated, lost,
stolen or destroyed Global Warrant Certificate have been or are about to be
exercised, or deemed to be exercised, the Company in its absolute discretion
may, instead of issuing a new Global Warrant Certificate, direct the Warrant
Agent in writing to treat the same as if it had received an Exercise Notice in
proper form in respect thereof, as provided herein, or as being subject to
automatic exercise (pursuant to Section 2.07 hereof) , as the case may be.

     (c) Each new Global Warrant Certificate issued pursuant to this Section
1.03 in lieu of any lost, stolen or destroyed Global Warrant Certificate shall
be an original, additional contractual obligation of the Company, whether or not
the lost, stolen or destroyed Global Warrant Certificate shall at any time be
enforceable by anyone, and shall be entitled to the same benefits under this
Agreement equally and proportionately with any and all other Global Warrant
Certificates duly issued hereunder.

     (d) Upon the issuance of any new Global Warrant Certificate in accordance
with this Section 1.03, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Warrant
Agent and the reasonable fees of its counsel) connected therewith.

     (e) The provisions of this Section 1.03 are exclusive and shall preclude
(to the extent lawful) any other rights and remedies with respect to the
replacement or payment of mutilated, lost, stolen or destroyed Global Warrant
Certificates.

                                   ARTICLE II

                        DURATION AND EXERCISE OF WARRANTS

     SECTION 2.01. Duration of Warrants; Exercise Notice. Subject to the
limitations set forth herein and in Sections 2.07 and 2.08(b) hereof, each
Warrant may be irrevocably exercised in whole but not in part on any Business
Day from July 10, 2005 until 3:00 p.m., New York City time, on the earlier of
(i) the Business Day immediately preceding May 8, 2007 (May 8, 2007 being
referred to herein as the "Expiration Date") and (ii) the Business Day
immediately preceding the Delisting Date, if any. Except in the event of
automatic exercise, each Warrant shall be irrevocably exercised upon receipt by
the Warrant Agent of such Warrant delivered free on the records of the
Depository to the Warrant Agent's Depository Participant Account (entitled
Citibank, N.A. Corporate Trust Warrant Agent Account, No. 9082, or such other
account at the Depository as the Warrant Agent shall designate in writing to the
Company) (the "Warrant Account") pursuant to an Exercise Notice to the Warrant
Agent from a Participant, in the case of Warrants held through the facilities of
the Depository, a Clearstream participant, in the case of Warrants held through
Clearstream, or a Euroclear participant, in the case of Warrants held through
Euroclear, acting, directly or indirectly, on behalf of the Warrantholder;
provided, however, that Exercise Notices are subject to rejection by the Warrant
Agent as provided herein. Except with respect to the Limit Option (as described
in Section 2.04 hereof), an Exercise Notice


                                       4


shall be unconditional. Except as provided in Section 2.02(b) hereof, the
Warrant Agent shall be entitled, with no duty of inquiry, to rely conclusively
on any Exercise Notice received by it. "Exercise Notice" means an irrevocable
exercise notice to the Warrant Agent at its address, which notice shall be
substantially in the form set forth in Exhibit B hereto or such other form as
the Company and the Warrant Agent may approve and may be given by facsimile
transmission.

     SECTION 2.02. Exercise and Delivery of Warrants. (a) Except for Warrants
(x) subject to automatic exercise (as described in Section 2.07 hereof), (y) for
which exercise is delayed pursuant to Section 2.08(b) hereof or (z) held through
the facilities of Clearstream or Euroclear, and subject to the Limit Option, the
"Exercise Date" for a Warrant will be (i) the Business Day on which the Warrant
Agent receives the Warrant and Exercise Notice in proper form with respect to
such Warrant, if received at or prior to 3:00 p.m., New York City time, on such
day, or (ii) if the Warrant Agent receives such Warrant and Exercise Notice
after 3:00 p.m., New York City time, on a Business Day, then the Business Day
following such Business Day.

     In the case of Warrants held through the facilities of Clearstream or
Euroclear, except for Warrants subject to automatic exercise, and subject to the
Limit Option, the "Exercise Date" for a Warrant will be (i) the Business Day on
which the Warrant Agent receives the Exercise Notice in proper form with respect
to such Warrant if such Exercise Notice is received at or prior to 3:00 p.m.,
New York City time, on such day; provided that the Warrant is received by the
Warrant Agent by 3:00 p.m., New York City time, on the Valuation Date, or (ii)
if the Warrant Agent receives such Exercise Notice after 3:00 p.m., New York
City time, on a Business Day, then the Business Day following such Business Day;
provided that the Warrant is received by 3:00 p.m., New York City time, on the
Valuation Date relating to exercises of Warrants on the applicable Valuation
Day. In the event that a Warrant is received after 3:00 p.m., New York City
time, on the applicable Valuation Date, then the Exercise Date for such Warrant
will be the day on which such Warrant is received or, if such day is not a
Business Day, the following Business Day. In the case of Warrants held through
the facilities of Euroclear, (a) participants must also transmit, by facsimile,
to the Warrant Agent a copy of the Exercise Notice submitted to Euroclear by
3:00 p.m., New York City time, on the desired Exercise Date and (b) Euroclear
must confirm (a "Euroclear Confirmation") by telex to the Warrant Agent by 9:00
a.m., New York City time, on the applicable Valuation Date that the Warrants
will be received by the Warrant Agent on such date; provided that if such telex
communication is received after 9:00 a.m., New York City time, on the applicable
Valuation Date, the Company will be entitled to direct the Warrant Agent to
reject the related Exercise Notice or waive the requirement for timely delivery
of such telex communication.

     (b) The Warrant Agent shall, in the case of Warrants other than those held
through Clearstream or Euroclear, following receipt of a properly delivered
Warrant in accordance with Section 2.02(a) hereof, accompanied by an Exercise
Notice, and, in the case of Warrants held through Clearstream or Euroclear,
following receipt of a properly delivered Exercise Notice in accordance with
Section 2.02(a) hereof:

          (i) promptly (1) for Warrants not held through Clearstream or
     Euroclear, determine whether such Exercise Notice has been duly completed
     and is in proper form and (2) for Warrants held through Clearstream or
     Euroclear, determine whether such Exercise Notice has been duly completed
     and is in proper form duly executed by


                                       5


     Clearstream or the Euroclear participant tendering such Warrant, as
     applicable; and, in either case, if the Warrant Agent determines that the
     Exercise Notice has not been duly completed or is not in proper form, the
     Warrant Agent promptly shall (X) reject such Exercise Notice and shall send
     to the entity that executed such Exercise Notice a notice of rejection
     substantially in the form set forth in Exhibit C hereto and shall redeliver
     such Warrants (to the extent received in the case of Warrants held through
     Clearstream or Euroclear) free through the facilities of the Depository to
     the account from which they were transferred to the Warrant Agent and (Y)
     shall not take the actions required by clauses (ii)-(ix) below with respect
     to such Exercise Notice or the related Warrants; provided, however, that
     the Warrant Agent shall deliver a copy of the Exercise Notice relating to
     such Warrants to the Company as required by clause (ix) below and the
     Company may waive any defect in the form of such Exercise Notice;

          (ii) with respect to each Warrant held through Euroclear for which an
     Exercise Notice was received, promptly telephone Euroclear to determine
     whether Euroclear anticipates that it will be able to provide a Euroclear
     Confirmation as required by Section 2.02(a) hereof;

          (iii) notify the Company and the Calculation Agent (and such other
     parties (not to exceed two) as the Company shall designate in writing) by
     5:00 p.m., New York City time, on the Business Day that such Exercise
     Notice has been received (or shall be deemed to have been received) of (A)
     the total number of Warrants covered by such Exercise Notice, (B) the
     number of such Warrants subject to the Limit Option, (C) the number of such
     Warrants not subject to the Limit Option and (D) the number of such
     Warrants, if any, as to which Euroclear has not advised the Warrant Agent
     that it anticipates being able to provide a Euroclear Confirmation as
     required by Section 2.02(a) hereof;

          (iv) with respect to Warrants held through Euroclear, determine
     whether the Warrant Agent has received by 9:00 a.m., New York City time, on
     the Valuation Date relating to such Warrants, Euroclear Confirmations with
     respect to such Warrants as required by Section 2.02(a) hereof, and if the
     Warrant Agent has not received any such Euroclear Confirmation by such
     time, notify the Company and the Calculation Agent (and such other parties
     (not to exceed two) as the Company shall designate in writing) by 10:00
     a.m., New York City time, on such Valuation Date of the number of such
     Warrants in respect of which the Warrant Agent has not received such
     Euroclear Confirmations and (except to the extent the Company has notified
     the Warrant Agent that it has waived the requirement of timely delivery of
     such Euroclear Confirmation) send to the Euroclear participant that
     executed such Exercise Notice for which no related Euroclear Confirmation
     was received (at the address specified in such notice) a notice of
     rejection substantially in the form set forth in Exhibit C hereto;

          (v) if any of the Warrants covered by such Exercise Notice constitute
     Warrants subject to the Limit Option, the Warrant Agent shall, by 5:00
     p.m., New York City time, on the applicable Valuation Date for such
     Warrants, (A) obtain from the Calculation Agent the Closing Index Level and
     the applicable Limit Option Index Level for the Scheduled Trading Day that,
     but for the provisions of Section 2.04 hereof, would


                                       6


     be the Valuation Date for such Warrants, (B) determine in accordance with
     Section 2.04 hereof whether such Warrants will be subject to exercise after
     giving effect to the Limit Option and, if such Warrants will not be subject
     to exercise, send to the Participant that submitted such Exercise Notice a
     notice of rejection substantially in the form set forth in Exhibit D hereto
     with respect to such Warrants and (to the extent received in the case of
     Warrants held through Clearstream and Euroclear), redeliver the Warrants
     free through the facilities of the Depository to the account of such
     Participant and (C) notify the Company and the Calculation Agent as to
     whether such Warrants will be subject to exercise;

          (vi) by 5:00 p.m., New York City time, on the Exercise Date for such
     Warrants, (A) determine the sum of (1) the number of such Warrants not
     subject to the Limit Option (that is, the number of Warrants determined
     pursuant to clause (iii)(C) above) plus (2) the number of such Warrants
     with respect to which the Limit Option has been elected but that,
     notwithstanding such election, will be subject to exercise (that is, the
     number of Warrants so identified pursuant to clause (v)(B) above) (all of
     such Warrants determined pursuant to (1) and (2), the "Exercised Warrants")
     and (B) notify the Company and the Calculation Agent of the total number of
     Exercised Warrants so determined (if such number is zero, the Warrant Agent
     shall not take the actions required by clauses (vii) and (viii) below with
     respect to such Exercise Notice or the related Warrants);

          (vii) obtain from the Calculation Agent the calculation of the Cash
     Settlement Value of the Exercised Warrants (excluding any Warrants held
     through Clearstream or Euroclear as to which timely delivery of the related
     Warrant has not been made) as of their Valuation Date in the manner set
     forth in Section 2.02(c) hereof by no later than 5:00 p.m., New York City
     time, on the applicable Valuation Date;

          (viii) notify the Company (and such other parties (not to exceed two)
     as the Company shall designate in writing) by 5:00 p.m., New York City
     time, on the applicable Valuation Date of the aggregate Cash Settlement
     Value payable in respect of the Exercised Warrants, and send notices of
     confirmation substantially in the form included in Exhibit C to the
     appropriate Participant specifying therein the reference number assigned by
     the Warrant Agent to each accepted Exercise Notice; and

          (ix) promptly deliver a copy of each Exercise Notice to the Company
     and advise the Company of such other matters relating to the Exercised
     Warrants as the Company shall reasonably request. Any notice to be given to
     the Company by the Warrant Agent pursuant to this Section 2.02 shall be by
     telephone (promptly confirmed in writing) or telecopy.

     Except in the case of Warrants subject to automatic exercise (as described
in Section 2.07 hereof), if on any applicable Valuation Date the Cash Settlement
Value for any Warrants then exercised would be zero, then the attempted exercise
of such Warrants shall be void and of no effect and such Warrants shall be
transferred by the Warrant Agent back to the Participant (including Clearstream
and Euroclear) that submitted them free to the Warrant Agent on the records of
the Depository (to the extent received in the case of Warrants held through


                                       7


Clearstream or Euroclear) and, in any such case, the Warrants in question shall
remain outstanding and exercisable thereafter.

     (c) The Company shall make available to the Warrant Agent, not later than
3:00 p.m., New York City time, on the third Business Day following the Valuation
Date (the "Settlement Payment Date"), funds in an amount sufficient to pay the
aggregate Cash Settlement Value of the Exercised Warrants. If the Company has
made such funds available as provided in the preceding sentence, the Warrant
Agent will be responsible for making funds available to the Depository in
accordance with procedures agreed upon between the Depository and the Warrant
Agent, against receipt of the Global Warrant Certificate, after 3:00 p.m., New
York City time, but prior to the close of business, on the Settlement Payment
Date, such funds to be in an amount equal to the aggregate Cash Settlement Value
of the Warrants that were delivered to the Warrant Agent (together with the
related Exercise Notice) as provided in Sections 2.01 and 2.02(a) and (b)
hereof. The Depository will be responsible for disbursing such funds to each
appropriate Participant, and such Participant will be responsible for disbursing
such funds to the Warrantholders it represents and to each brokerage firm for
which it acts as agent. Each such brokerage firm will be responsible for
disbursing funds to the Warrantholders it represents.

     (d) The Warrant Agent shall cause its records, which may be kept
electronically, to be marked to reflect the reduction in the number of Warrants
represented by the Global Warrant Certificate by the number of Warrants that
were delivered to the Warrant Agent and for which payment has been made as
provided in Section 2.02(c) hereof promptly after such delivery and payment.
Absent manifest error, the Warrant Agent's records shall be conclusive evidence
of such matters.

     SECTION 2.03. Discontinuance of a Relevant Index; Alteration of Method of
Calculating a Relevant Index.(a) If the publisher of a Relevant Index
discontinues publication of such index and such publisher or another entity
publishes a successor or substitute index that the Calculation Agent determines,
in its sole discretion exercised in good faith, to be comparable to the
discontinued Relevant Index, then that successor or substitute index shall be
deemed to be the Relevant Index and the Calculation Agent shall determine the
Final Index Level to be used for purposes of computing the Cash Settlement Value
by reference to the Final Index Level of such successor or substitute index on
the date that the Final Index Level of the Relevant Index is to be determined.

     If the publisher of a Relevant Index discontinues publication of such index
and the Calculation Agent determines that no successor or substitute index is
available at such time, or if the publisher of such Relevant Index fails to
calculate and publish the closing level for the Relevant Index on the Valuation
Date in accordance with customary practice, then, on such date, the Calculation
Agent shall determine the Final Index Level of the Relevant Index to be used. In
such circumstances, the Final Index Level of the Relevant Index shall be
computed by the Calculation Agent in accordance with the formula for and method
of calculating the Relevant Index last in effect prior to such discontinuance or
failure to publish, using the Closing Price (or, if trading in 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) on such date of each security most recently comprising the
Relevant Index on the Relevant Exchange on which such security trades.


                                       8


     (b) If at any time the Calculation Agent determines that the method of
calculating a Relevant Index, or the Closing Index Level thereof on any
particular day, is changed in a material respect, or if the Relevant Index is in
any other way modified so that such Relevant Index does not, in the opinion of
the Calculation Agent, fairly represent the value of the Relevant 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 Relevant Index are traded, on any date that
the Final Index Level is to be determined, make such calculations and
adjustments as, in its good faith judgment, may be necessary in order to arrive
at a level of a stock index comparable to the Relevant Index as if such changes
or modifications had not been made, and calculate the Final Index Level on any
particular day and the Cash Settlement Value with reference to the Relevant
Index, as adjusted. Accordingly, if the method of calculating the Relevant 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 Relevant Index as if it had not been
modified.

     SECTION 2.04. Limit Option. Except in the event of an automatic exercise
(as described in Section 2.07 hereof), in connection with any exercise of
Warrants, the related Exercise Notice may specify that such exercise is subject
to the condition that the Final Index Level that would otherwise be used to
determine the Cash Settlement Value of such Warrants shall not have declined by
five percent (5%) or more from the Limit Option Index Level for such Warrants.
"Limit Option Index Level", with respect to any Warrants subject to the Limit
Option, means the last available Closing Index Level as of the applicable
Exercise Date. The option of a Warrantholder to condition an exercise of
Warrants as provided in this Section 2.04 is herein referred to as the "Limit
Option". If a Warrantholder elects the Limit Option in connection with any
exercise of Warrants, the following provisions shall apply:

          (i) to be valid, such election must be specified in the related
     Exercise Notice. Each of the Warrant Agent and the Company shall be
     entitled to rely conclusively on such Exercise Notice, as received by the
     Warrant Agent, in determining whether such election has been validly made;

          (ii) the Limit Option Index Level shall be determined by the
     Calculation Agent, which determination shall be conclusive and binding for
     all purposes relating to such exercise;

          (iii) in the event that the Closing Index Level for the first
     Scheduled Trading Day following the applicable Exercise Date (that is, for
     the day that, but for the provisions of this Section 2.04, would be the
     Valuation Date for such Warrants) has declined by five percent (5%) or more
     from the Limit Option Index Level for such Warrants, the Warrant Agent
     shall determine that such Warrants (A) shall not be subject to exercise and
     shall be treated for all purposes of this Agreement and each Global Warrant
     Certificate as if the related Exercise Notice had never been received by
     the Warrant Agent, and (B) shall not constitute "Exercised Warrants" for
     purposes of Section 2.02(b) hereof. If such Closing Index Level has not
     declined by five percent (5%) or more from such Limit Option Index Level,
     the Warrant Agent shall determine that such Warrants shall be subject to
     exercise as provided in Section 2.02 hereof and shall be


                                       9


     deemed to be "Exercised Warrants" for such purposes. The Warrant Agent's
     determination shall be conclusive and binding for all purposes relating to
     such Warrants; and

          (iv) once elected by a Warrantholder in connection an exercise of
     Warrants, the Limit Option will continue to apply, on the basis of the
     Limit Option Index Level as initially determined for such Warrants, even if
     the Valuation Date for such Warrants is postponed, except when such
     Valuation Date is postponed to a date of automatic exercise of Warrants.
     Pursuant to the Limit Option, such Warrants will either (a) be exercised on
     a delayed basis if the Closing Index Level on any applicable postponed
     Valuation Date is not less than the Limit Option Index Level by five
     percent (5%) or more or (b) not be exercised if, on any applicable
     postponed Valuation Date, the Closing Index Level is less than the Limit
     Option Index Level by five percent (5%) or more.

     SECTION 2.05. Market Disruption Events. If the Calculation Agent determines
that on a Scheduled Trading Day that would otherwise be a Valuation Date a
Market Disruption Event has occurred and is continuing, then the Final Index
Level to be used in the calculation of the Cash Settlement Value in respect of
an exercise of Warrants shall be calculated using as the Valuation Date the next
Scheduled Trading Day on which there is not a Market Disruption Event; provided,
however, if a Market Disruption Event occurs on each of the eight Scheduled
Trading Days following the originally scheduled Valuation Date, then (a) that
eighth Scheduled Trading 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 level of the Relevant Index on that eighth Scheduled
Trading Day.

     A "Market Disruption Event" with respect to the Relevant Index will occur
on any day if the Calculation Agent determines in its sole discretion that any
of the following have occurred:

          (i) A material suspension of or limitation imposed on trading relating
     to the securities that then comprise 20% or more of the Relevant 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 New York Stock Exchange Rule 80B or
     any applicable rule or regulation enacted or promulgated by the New York
     Stock Exchange, 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;

          (ii) A material suspension of, or limitation imposed on, trading in
     futures or options contracts relating to the Relevant Index by 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, whether by reason of movements in price exceeding
     limits permitted by the exchanges or otherwise;


                                       10


          (iii) 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 Relevant 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;

          (iv) 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
     Relevant 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; or

          (v) The closure of the Relevant Exchanges on which the securities that
     then comprise 20% or more of the Relevant Index are traded or on which
     futures or options contracts relating to the Relevant 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 (1) the actual closing time for the regular trading session on the
     Relevant Exchanges and (2) 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 Relevant
Index will be based on a comparison of (x) the portion of the level of the
Relevant Index attributable to that security and (y) the overall level of the
Relevant Index, in each case immediately before the occurrence of the Market
Disruption Event.

     SECTION 2.06. Delisting of Warrants. In the event the Warrants are delisted
from, or permanently suspended from trading on (within the meaning of the
Securities Exchange Act of 1934, as amended), the AMEX and not accepted at the
same time for listing on another United States national securities exchange,
Warrants not previously exercised will be deemed automatically exercised on the
Delisting Date, and the Cash Settlement Value shall be calculated and settled as
provided in Section 2.02 hereof. The Company will notify the Warrant Agent in
writing, who will notify the Warrantholders as soon as practicable of such
delisting or trading suspension. However, if the Company first receives notice
of the delisting or suspension on the same day on which the Warrants are
delisted or suspended, such day will be deemed the Delisting Date.

     SECTION 2.07. Automatic Exercise of Warrants.(a) All Warrants for
which the Warrant Agent has not received an Exercise Notice in proper form at or
prior to 3:00 p.m., New York City time, on the earlier of (i) the Business Day
immediately preceding the Expiration Date or (ii) the Business Day immediately
preceding the Delisting Date, if any, or for which the Warrant Agent has
received an Exercise Notice in proper form but with respect to which timely
delivery of the relevant Warrants has not been made, will be deemed
automatically exercised on such date without any requirement of an Exercise
Notice to the Warrant Agent. The Exercise Date for such Warrants shall be the
Expiration Date or the Delisting Date, as the case may be, or if such date is
not a Business Day, the following Business Day. The Valuation Date for such
Warrants shall be the Scheduled Trading Day immediately following the date of
automatic


                                       11


exercise, subject to postponement in the event of a Market Disruption Event, as
described in Section 2.05 hereof.

     (b) The Warrant Agent shall by 5:00 p.m., New York City time, on the
Expiration Date or the Delisting Date, as the case may be, notify the Company
and the Calculation Agent (and such other parties (not to exceed two) as the
Company shall designate in writing) of the number of Warrants to be
automatically exercised on such day. The Warrant Agent shall (i) by 5:00 p.m.,
New York City time, on the applicable Valuation Date, obtain from the
Calculation Agent the calculation of the Cash Settlement Value (as determined by
the Calculation Agent in the manner provided in Section 2.02(c) hereof) of the
Warrants to be automatically exercised, (ii) by 5:00 p.m., New York City time,
on the applicable Valuation Date, notify the Company (and such other parties
(not to exceed two) as the Company shall designate in writing) of the aggregate
Cash Settlement Value payable in respect of such automatically exercised
Warrants and (iii) advise the Company of such other matters relating to the
automatically exercised Warrants as the Company shall reasonably request.

     (c) The Company shall make available to the Warrant Agent, not later than
3:00 p.m., New York City time, on the third Business Day after the applicable
Valuation Date for automatically exercised Warrants (the "Automatic Settlement
Payment Date"), funds in an amount sufficient to pay the aggregate Cash
Settlement Value of such Warrants. If the Company has made such funds available
as provided in the preceding sentence, the Warrant Agent will be responsible for
making funds available to the Depository in accordance with procedures agreed
upon between the Depository and the Warrant Agent, against receipt of the Global
Warrant Certificate, after 3:00 p.m., New York City time, but prior to the close
of business, on the Automatic Settlement Payment Date, such funds to be in an
amount equal to the aggregate Cash Settlement Value of the Warrants subject to
such automatic exercise. The Depository will be responsible for disbursing such
funds to each appropriate Participant, and such Participant will be responsible
for disbursing such funds to the Warrantholders it represents and to each
brokerage firm for which it acts as agent. Each such brokerage firm will be
responsible for disbursing funds to the Warrantholders it represents.

     SECTION 2.08. Denominations; Maximum Number of Exercisable Warrants;
Minimum Number of Exercisable Warrants.(a) The Warrants will be issued in
denominations of 100 Warrants and whole multiples of 100.

     (b) All exercises of Warrants (except in the case of automatic exercise of
Warrants as described in Section 2.07 hereof) shall be subject, at the
Calculation Agent's option, to the limitation that not more than 400,000
Warrants in total may be exercised on any Exercise Date. If any Business Day
would otherwise, under the terms of this Agreement, be the Exercise Date in
respect of more than 400,000 Warrants, then at the Calculation Agent's option
(by giving notice thereof to the Warrant Agent not later than 5:00 p.m., New
York City time, on the Business Day immediately following such Exercise Date),
400,000 of such Warrants (selected by the Warrant Agent on a pro rata basis)
shall be deemed exercised on such Exercise Date, and the remainder of such
Warrants (the "Remaining Warrants") shall be deemed exercised on the following
Business Day (subject to successive applications of this Section 2.08).
Remaining Warrants shall be deemed exercised in the order of their respective
initial Exercise Dates, and Remaining Warrants shall be deemed exercised before
any other Warrants initially exercised


                                       12


after such Remaining Warrants. The date on which any Warrant is deemed exercised
under this Section 2.08(b) shall for all purposes of this Agreement be the
"Exercise Date" in respect of such Warrant.

     (c) No fewer than 500 Warrants may be exercised by a Warrantholder at any
one time, except in the case of automatic exercise of Warrants.

     SECTION 2.09. Covenant of the Company. The Company covenants, for the
benefit of the Warrantholders, that (a) it will not seek the delisting of the
Warrants from, or suspension of their trading on, the AMEX unless the Company
has, at the same time, arranged for listing of the Warrants on another United
States national securities exchange and (b) upon written request, it will
furnish any Warrantholder with a list of the then-current Underlying Shares.

     SECTION 2.10. Return of Money Held Unclaimed for Two Years. Except as
otherwise provided herein, any money deposited with or paid to the Warrant Agent
for the payment of the Cash Settlement Value of any Warrants and not applied but
remaining unclaimed for two years after the date upon which such Cash Settlement
Value shall have become due and payable shall be repaid by the Warrant Agent to
the Company and the holders of such Warrants shall thereafter look only to the
Company for any payment which such holders may be entitled to collect and all
liability of the Warrant Agent with respect to such money shall thereupon cease;
provided, however, that the Warrant Agent, before making any such repayment, may
at the expense of the Company notify the Participants concerned, that said money
has not been so applied and remains unclaimed and that after a date named in the
notification any unclaimed balance of said money then remaining will be returned
to the Company.

     SECTION 2.11. Return of Global Warrant Certificate. At such time as all of
the Warrants evidenced by a Global Warrant Certificate have been exercised
(including pursuant to an automatic exercise) and all payments to the
Participants made as provided herein, the Warrant Agent shall, upon written
direction from the Company, destroy the canceled Global Warrant Certificate
(unless instructed by the Company in writing to deliver the Global Warrant
Certificate to the Company) and shall provide a certificate of destruction to
the Company.

                                   ARTICLE III

                          OTHER PROVISIONS RELATING TO
                            RIGHTS OF WARRANTHOLDERS

     SECTION 3.01. Warrantholder May Enforce Rights. Notwithstanding any of the
provisions of this Agreement, any Warrantholder, without the consent of the
Warrant Agent, may, in and for its own behalf, enforce, and may institute and
maintain, any suit, action or proceeding against the Company suitable to
enforce, or otherwise in respect of, its right to exercise, and to receive
payment for, its Warrants as provided in this Agreement.

     SECTION 3.02. Merger, Consolidation, Sale, Transfer or Conveyance. If at
any time there shall be a merger or consolidation involving the Company or a
sale, transfer, conveyance (other than by way of lease) or other disposition of
substantially all of the assets of


                                       13


the Company, then the successor or assuming corporation shall succeed to and be
substituted for the Company under this Agreement and the Warrants, with the same
effect as if it had been named herein and in any Global Warrant Certificate as
the Company. The Company shall thereupon be relieved of any further obligation
hereunder or under the Warrants and may at any time thereafter be dissolved,
wound up or liquidated. In any case of any such consolidation or merger
involving the Company or sale, transfer, conveyance or other disposition of
substantially all of the assets of the Company, any changes in phraseology and
form (but not in substance) that may be appropriate may be made in the Global
Warrant Certificates delivered thereafter.

     The Warrant Agent may rely on a written opinion of counsel as conclusive
evidence that any such consolidation or merger involving the Company or sale,
transfer, conveyance (other than by way of lease) or other disposition of
substantially all of the assets of the Company complies with the provisions of
this Section 3.02.

                                   ARTICLE IV

                        WARRANTS ACQUIRED BY THE COMPANY;
                     PAYMENT OF TAXES; TAXATION OF WARRANTS

     SECTION 4.01. Warrants Acquired by the Company. In the event the Company
shall purchase or otherwise acquire Warrants, such Warrants may, at the option
of the Company, be surrendered free through a Participant to the Depository for
credit to the account of the Warrant Agent maintained at the Depository, and if
so credited, the Warrant Agent shall promptly note the cancellation of such
Warrants by notation on the records of the Warrant Agent. Such Warrants may
also, at the option of the Company, be resold by the Company directly or to or
through any of its affiliates in lieu of being surrendered to the Depository.

     Any canceled Global Warrant Certificate held by the Warrant Agent under
this Agreement shall be destroyed by the Warrant Agent unless otherwise directed
in writing by the Company, and the Warrant Agent shall deliver a certificate of
destruction to the Company evidencing the same.

     SECTION 4.02. Payment of Taxes. The Company will pay all stamp, withholding
and other duties, if any, attributable to the initial issuance of Warrants;
provided, however, that, anything in this Agreement to the contrary
notwithstanding, the Company shall not be required to pay any tax or other
governmental charge which may be payable in respect of any transfer involving
any beneficial or record interest in, or ownership interest of, any Warrants,
which tax or other governmental charge shall be paid by the appropriate
Warrantholder.

     SECTION 4.03. Taxation of Warrants. The Company intends to treat and, by
purchasing a Warrant, the Warrantholder agrees to treat, for all tax purposes, a
Warrant as a cash settlement option within the meaning of section 1234(c) of the
Internal Revenue Code of 1986, as amended.


                                       14


                                    ARTICLE V

                          CONCERNING THE WARRANT AGENT

     SECTION 5.01. Warrant Agent. (a) The Company hereby appoints Citibank, N.A.
("Citibank") as Warrant Agent of the Company in respect of the Warrants upon the
terms and subject to the conditions set forth herein; and Citibank hereby
accepts such appointment.

     The Warrant Agent shall have the powers and authority granted to and
conferred upon it in this Agreement and such further powers and authority to act
on behalf of the Company as the Company may hereafter grant to or confer upon
it. All of the terms and provisions with respect to such powers and authority
contained in any Global Warrant Certificate are subject to and governed by the
terms and provisions hereof.

     (b) Citibank covenants and agrees to maintain an office, staffed by
qualified personnel, with adequate facilities for the discharge of its
responsibilities under this Agreement, including, without limitation, the
payment of the Cash Settlement Value, as calculated by the Calculation Agent,
and the timely settlement of the Warrants upon exercise thereof.

     SECTION 5.02. Conditions of Warrant Agent's Obligations. The Warrant Agent
accepts its obligations herein set forth upon the terms and conditions hereof,
including the following, to all of which the Company agrees and to all of which
the rights hereunder of the Warrantholders shall be subject:

     (a) The Company agrees promptly to pay the Warrant Agent the compensation
to be agreed upon with the Company for all services rendered by the Warrant
Agent and to reimburse the Warrant Agent for its reasonable out-of-pocket
expenses (including reasonable attorneys' fees and expenses) incurred by the
Warrant Agent without negligence, bad faith or breach of this Agreement on its
part in connection with the services rendered by it hereunder. The Company also
agrees to indemnify the Warrant Agent and its officers, directors, agents and
employees for, and to hold it and them harmless against, any loss, liability or
expense (including reasonable attorneys' fees and expenses) incurred without
negligence, bad faith or breach of this Agreement on the part of the Warrant
Agent, arising out of or in connection with its acting as such Warrant Agent
hereunder, as well as the reasonable costs and expenses of defending against any
claim of liability in the premises. This section shall survive the termination
of this Agreement and the earlier removal or resignation of the Warrant Agent.

     (b) In acting under this Agreement, the Warrant Agent is acting solely as
agent of the Company and does not assume any obligation or relationship of
agency or trust for or with any of the owners or holders of the Warrants.

     (c) The Warrant Agent may consult with counsel satisfactory to it, and the
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion of such counsel.

     (d) The Warrant Agent shall be fully protected and shall incur no liability
for or in respect of any action taken or thing suffered by it in reliance upon
any notice, direction,


                                       15


consent, certificate, affidavit, statement or other paper or document believed
by it to be genuine and to have been presented or signed by the proper parties,
and the Warrant Agent may, if it shall deem it necessary or desirable, request
such papers or documents prior to taking any action hereunder.

     (e) The Warrant Agent, and its officers, directors, agents and employees,
may become the owner of, or acquire any interest in, any Warrants or other
obligations of the Company, with the same rights that it or they would have if
it were not the Warrant Agent hereunder and, to the extent permitted by
applicable law, it or they may engage or be interested in any financial or other
transaction with the Company and may act on, or as depository, trustee or agent
for, any committee or body of holders of Warrants or other obligations of the
Company as freely as if it were not the Warrant Agent hereunder.

     (f) The Warrant Agent shall not be under any liability for interest on any
monies at any time received by it pursuant to any of the provisions of this
Agreement nor shall it be obligated to segregate such monies from other monies
held by it, except as required by law. The Warrant Agent shall not be
responsible for advancing funds on behalf of the Company.

     (g) The Warrant Agent shall not be under any responsibility with respect to
the validity or sufficiency of this Agreement or the execution and delivery
hereof (except the due execution and delivery hereof by the Warrant Agent) or
with respect to the validity or execution of the Global Warrant Certificates
(except its countersignature thereof).

     (h) The recitals contained herein and in the Global Warrant Certificates
(except as to the Warrant Agent's countersignature thereon) shall be taken as
the statements of the Company, and the Warrant Agent assumes no responsibility
for the correctness of the same.

     (i) The Warrant Agent shall be obligated to perform such duties as are
herein specifically set forth, and no implied duties or obligations shall be
read into this Agreement against the Warrant Agent. The Warrant Agent shall not
be under any obligation to take any action hereunder likely to involve it in any
expense or liability, the payment of which is not, in its reasonable opinion,
assured to it. The Warrant Agent shall not be accountable or under any duty or
responsibility for the application by the Company of any proceeds. The Warrant
Agent shall have no duty or responsibility in case of any default by the Company
in the performance of its covenants or agreements contained in any Global
Warrant Certificate or in the case of the receipt of any written demand from a
holder of a Warrant with respect to such default, including, without limiting
the generality of the foregoing, any duty or responsibility to initiate or
attempt to initiate any proceedings at law or otherwise or, except as provided
in Section 7.03 hereof, to make any demand upon the Company.

     (j) The Warrant Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, entitlement order, approval or other
paper or document.

     (k) The Warrant Agent may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or


                                       16


nominees appointed with due care, and shall not be responsible for any
misconduct or negligence on the part of any agent, attorney, custodian or
nominee so appointed.

     SECTION 5.03. Resignation and Appointment of Successor. (a) The Company
agrees, for the benefit of the Warrantholders, that there shall at all times be
a Warrant Agent hereunder until all the Warrants are no longer outstanding or
until monies for the payment of all outstanding Warrants, if any, shall have
been paid to the Warrant Agent and shall have been returned to the Company as
provided in Section 2.10 hereof, whichever occurs earlier.

     (b) The Warrant Agent may at any time resign as such agent 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 Warrant Agent and acceptance of such appointment by
such successor Warrant Agent as hereinafter provided. The Warrant 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 Warrant Agent (which shall be a banking institution organized under
the laws of the United States of America or one of the states thereof and having
an office in the Borough of Manhattan, New York City) and the acceptance of such
appointment by such successor Warrant Agent. In the event a successor Warrant
Agent has not been appointed and accepted its duties within 90 days of the
Warrant Agent's notice of resignation or its removal, the Warrant Agent may
apply to any court of competent jurisdiction for the designation of a successor
Warrant Agent. The obligation of the Company under Section 5.02(a) hereof shall
continue to the extent set forth therein notwithstanding the resignation or
removal of the Warrant Agent.

     (c) In case at any time the Warrant Agent shall give notice of its intent
to resign, or shall be removed, or shall become incapable of acting, or shall be
adjudged a 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 of
all or any substantial part of its property shall be appointed, or if any public
officer shall have taken charge or control of the Warrant Agent or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
promptly appointed by the Company by an instrument in writing, filed with the
successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the latter of such appointment, the Warrant
Agent so superseded shall cease to be Warrant Agent hereunder.

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


                                       17


     (e) Any corporation into which the Warrant Agent hereunder may be merged or
converted or any corporation with which the Warrant Agent may be consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Warrant Agent shall be a party, or any corporation to which the
Warrant Agent shall sell or otherwise transfer all or substantially all the
corporate trust assets and business of the Warrant Agent, provided that it shall
be qualified as aforesaid, shall be the successor Warrant 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.

                                   ARTICLE VI

                        CONCERNING THE CALCULATION AGENT

     SECTION 6.01. Calculation Agent. The Company hereby appoints Lehman
Brothers Inc. to be the Company's Calculation Agent for the purpose of
performing the services described herein upon the terms and subject to the
conditions set forth herein; and Lehman Brothers Inc. hereby accepts such
appointment.

     SECTION 6.02. Calculations and Information Provided. (a) The Calculation
Agent will determine the Cash Settlement Value in respect of an exercise of
Warrants and will be responsible for determining each of the following items:

          (i) the Final Index Level, including any adjustments thereto, and the
     Initial Index Level;

          (ii) whether and what adjustments to any Relevant Index should be
     made;

          (iii) any successor or substitute index if publication of a Relevant
     Index is discontinued;

          (iv) the Final Index Level of the Relevant Index if (1) the publisher
     of the Relevant Index discontinues publication of such index and the
     Calculation Agent determines that no successor or substitute index is
     available at such time, (2) the publisher of such Relevant Index fails to
     calculate and publish a closing level for the Relevant Index on the
     Valuation Date in accordance with customary practice or (3) the
     circumstances described in the proviso of the first paragraph of Section
     2.05 hereof occur;

          (v) whether a particular day is a Scheduled Trading Day;

          (vi) whether a Market Disruption Event has occurred and the applicable
     Valuation Date;

          (vii) whether to limit the number of Warrants exercisable on any date,
     other than automatic exercises, to an aggregate of 400,000 as described in
     Section 2.08 hereof;

          (viii) any Limit Option Index Level; and


                                       18


          (ix) any other calculation, determination or adjustment specified as
     being made by the Calculation Agent in this Agreement or the relevant
     Warrants.

     The Calculation Agent shall timely notify the Warrant Agent of all such
calculations, determinations and adjustment or if a Market Disruption Event with
respect to the Warrants has occurred.

     (b) Any calculation or determination by the Calculation Agent under this
Agreement shall be made at the sole discretion of the Calculation Agent and
shall (in the absence of manifest error) be final and binding on the Company,
the Warrant Agent, the Warrantholders and any Participant. Any such calculations
will be made available to a Warrantholder for inspection at the Warrant Agent's
Office.

     SECTION 6.03. Conditions of Calcuation Agent's Obligations. The Calculation
Agent accepts its obligations herein set forth upon the terms and conditions
hereof, including the following, to all of which the Company agrees and to all
of which the rights hereunder of the Warrantholders shall be subject:

     (a) The Calculation Agent shall act as an independent expert and not as an
agent of the Company and does not assume any obligation toward, or any
relationship of agency or trust for or with, any Warrantholders.

     (b) Unless otherwise specifically provided herein, any order, certificate,
notice, request, direction or other communication from the Company or the
Warrant Agent made or given under any provision of this Agreement shall be
sufficient if signed by any person who the Calculation Agent reasonably believes
to be a duly authorized officer or attorney-in-fact of the Company or the
Warrant Agent, 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 Warrants with the same rights as it
would have had if it were not acting hereunder as Calculation Agent.

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

     SECTION 6.04. Resignation and Appointment of Successor.(a) The Company
agrees, for the benefit of the Warrantholders from time to time, that there
shall at all times be a Calculation Agent hereunder until all the Warrants are
no longer outstanding or until monies for the payment of all outstanding
Warrants, if any, shall have been paid to the Warrant Agent and shall have been
returned to the Company as provided in Section 2.10 hereof, whichever occurs
earlier.

     (b) Resignation, removal and appointment of the Calculation Agent shall be
in accordance with the procedures set forth for the resignation, removal and
appointment of the Warrant Agent, as provided in Section 5.03 hereof, except
that a successor Calculation Agent


                                       19


need not be a banking institution with offices in the Borough of Manhattan, New
York City, and may only be appointed if such successor has been nominated by the
Company.

     SECTION 6.05. Compensation; Indemnification The Company agrees promptly to
pay the Calculation Agent the compensation to be agreed upon with the Company
for all services rendered by the Calculation Agent hereunder. The Company also
agrees to indemnify the Calculation Agent for, and to hold it harmless against,
any loss, liability, cost or expense (including reasonable attorneys' fees and
expenses) incurred by the Calculation Agent by reason of its being made a party
to a suit or claim arising out of this Agreement; provided, however, that such
indemnity shall in no event apply to the extent that any such loss, liability,
cost or expense is a result of 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. The
indemnity obligation of the Company shall continue notwithstanding the
termination of this Agreement or the resignation or removal of the Calculation
Agent.

                                  ARTICLE VII

                                  MISCELLANEOUS

     SECTION 7.01. Definitions. Set forth below are certain defined terms used
in this agreement.

     "AMEX" shall mean the American Stock Exchange LLC.

     "Automatic Settlement Payment Date" shall have the meaning set forth in
Section 2.07(c) hereof.

     "Average Execution Price" means, for a security or other property, the
average per unit 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 Warrants.

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

     "Calculation Agent" shall have the meaning set forth in the preamble
hereto.

     "Cash Settlement Value" of a Warrant shall equal an amount in U.S. dollars
(rounded down to the nearest one-hundredth of a cent) that is the greater of (A)
zero and (B) the product of (i) the quotient obtained by dividing (x) the
amount, if any, by which the Final Index Level for the applicable Valuation Date
exceeds the Strike Price by (y) the Initial Index Level and (ii) the Notional
Amount.


                                       20


     "Citibank" shall have the meaning set forth in Section 5.01(a) hereof.

     "Clearstream" shall have the meaning set forth in Section 1.01(c) hereof.

     "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 Relevant Exchange or other 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 Relevant Index on any
particular day, (a) the closing level of the Relevant Index as reported by the
publisher of the Relevant Index 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 Relevant Index has been
discontinued or in the circumstances described in the proviso of the first
paragraph of Section 2.05 hereof.

     "Closing Price" shall mean, for any security underlying a Relevant Index,
as determined by the Calculation Agent on any particular day, based on
information reasonably available to it: (1) 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; (2) if the security is not listed
on a Relevant Exchange, and is listed or traded on a bulletin board, the Average
Execution Price per share of the security; or (3) as otherwise determined by the
Calculation Agent pursuant to this Agreement in the circumstances described in
the proviso of the first paragraph of Section 2.05 hereof.

     "Company" shall have the meaning set forth in the preamble hereto.

     "Delisting Date" shall mean, if the Warrants are delisted, the effective
date of their delisting from, or permanent suspension from trading on, the AMEX
or another United States national securities exchange and failure to list the
Warrants on another United States national securities exchange.

     "Depository" shall have the meaning set forth in Section 1.02(d) hereof.

     "Euroclear" shall have the meaning set forth in Section 1.01(b) hereof.

     "Euroclear Confirmation" shall have the meaning set forth in Section
2.02(a) hereof.

     "Exercise Date" shall have the meaning set forth in Section 2.02(a) hereof.

     "Exercise Notice" shall have the meaning set forth in Section 2.01 hereof.

     "Exercised Warrants" shall have the meaning set forth in Section
2.02(b)(vi) hereof.

     "Expiration Date" shall have the meaning set forth in Section 2.01 hereof.


                                       21


     "Final Index Level" shall mean the Closing Index Level on the applicable
Valuation Date, subject to postponement if a Market Disruption Event occurs as
described in Section 2.05 hereof.

     "Global Warrant Certificate" shall have the meaning set forth in Section
1.01(b) hereof.

     "Initial Index Level" shall mean 11192.17, the Closing Index Level on May
6, 2005.

     "Limit Option" shall have the meaning set forth in Section 2.04 hereof.

     "Limit Option Index Level" shall have the meaning set forth in Section 2.04
hereof.

     "Market Disruption Event" shall have the meaning set forth in Section 2.05
hereof.

     "Notional Amount" shall equal $66.00.

     "Participants" shall have the meaning set forth in Section 1.02(d) hereof.

     "Relevant Exchange" shall mean, for each security included in a Relevant
Index, the primary exchange, quotation system (which includes bulletin board
services) or other market of trading for such security.

     "Relevant Index" shall mean any stock index designated as such by the
Calculation Agent in accordance with this Agreement, including any successor or
substitute index selected by the Calculation Agent in accordance with this
Agreement upon discontinuance of an index. The Relevant Index shall initially be
the Nikkei 225(SM) Index.

     "Remaining Warrants" shall have the meaning set forth in Section 2.08(b)
hereof.

     "Scheduled Trading Day" shall mean any day on which a Relevant Index is
published by its publisher or otherwise determined by the Calculation Agent
pursuant to this Agreement.

     "Settlement Payment Date" shall have the meaning set forth in Section
2.02(c) hereof.

     "Strike Price" shall equal the Initial Index Value.

     "Underlying Shares" shall have the meaning set forth in Section 1.01(b)
hereof.

     "Valuation Date" for a Warrant shall mean the first Scheduled Trading Day
following the Exercise Date, subject to postponement as a result of a Market
Disruption Event as described in Section 2.05 hereof.


                                       22


     "Warrant" shall have the meaning set forth in the recitals hereto. The term
"Warrants" has a corresponding meaning.

     "Warrant Account" shall have the meaning set forth in Section 2.01 hereof.

     "Warrant Agent" shall have the meaning set forth in the preamble hereto.

     "Warrant Agent's Office" shall mean 111 Wall Street, 15th Floor, New York,
New York 10043, or such other address as shall be specified in writing by the
Warrant Agent.

     "Warrantholder" shall have the meaning set forth in Section 1.01(b) hereof.

     SECTION 7.02. Amendment. (a) This Agreement and the terms of the Warrants
may be amended by the Company, the Warrant Agent and the Calculation Agent,
without the consent of the Warrantholders, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, to maintain the Warrants'
listing on the AMEX or any other national securities exchange or securities
association on which they are then listed, to reflect the issuance by the
Company of additional warrants or in any other manner which the Company may deem
necessary or desirable and which, as determined by the Company in its sole
discretion, will not adversely affect the interests of the holders of the
Warrants.

     (b) The Company, the Warrant Agent and the Calculation Agent may modify or
amend this Agreement, with the consent of Warrantholders holding not less than a
majority in number of the then outstanding Warrants affected by such
modification or amendment, for any purpose; provided, however, that no such
modification or amendment that changes the determination of the Cash Settlement
Value of a Warrant (or any aspects of such determination) so as to reduce the
amount receivable upon exercise of a Warrant, shortens the period of time during
which the Warrants may be exercised, or otherwise materially and adversely
affects the exercise rights of the Warrantholders or reduces the percentage of
the number of outstanding Warrants, the consent of whose holders is required for
modification or amendment of this Agreement, may be made without the consent of
each Warrantholder affected thereby. The Warrant Agent may, but shall not be
obligated to, enter into any amendment of this Agreement that affects its
rights, duties, immunities or indemnities hereunder.

     SECTION 7.03. Notices and Demands to the Company, the Warrant Agent and the
Calculation Agent. If the Warrant Agent or the Calculation Agent shall receive
any notice or demand addressed to the Company by any Warrantholder pursuant to
the provisions of this Agreement, the Warrant Agent or the Calculation Agent, as
the case may be, shall promptly forward such notice or demand to the Company.

     SECTION 7.04. Addresses for Notices. (a) Any communications to the Warrant
Agent with respect to this Agreement shall be addressed to Citibank, N.A., 111
Wall Street, 15th Floor, New York, New York 10043, Attention: Peggy Everett
(telephone: (212) 657-5316; facsimile: (212) 657-2762), (b) any communications
to the Company with respect to this Agreement shall be addressed to Lehman
Brothers Holdings Inc., 745 Seventh Avenue, New York, New York 10019, Attention:
Treasurer (telephone: (212) 526-7000; facsimile: (646) 758-3204), with a copy to
399 Park Avenue, New York, New York 10022, Attention: Corporate


                                       23


Secretary (telephone: (212) 526-7000; facsimile: (212) 526-0357), and (c) any
communications to the Calculation Agent with respect to this Agreement shall be
addressed to Lehman Brothers Inc., 745 Seventh Avenue, New York, New York 10019,
Attention: Equity Derivatives Trading (telephone: (212) 526-7000; facsimile:
(646) 758-4942) (or such other address as shall be specified in writing by the
Warrant Agent, the Company or the Calculation Agent, respectively).

     SECTION 7.05. Notices to Holders. The Company may cause to have notice
given to the Warrantholders by providing the Warrant Agent with a form of notice
to be distributed by the Depository to Participants in accordance with the
custom and practices of the Depository.

     SECTION 7.06. Obtaining of Approvals. The Company will from time to time
take all action which may be necessary to obtain and keep effective (a) any and
all permits, consents and approvals of governmental agencies and authorities and
the AMEX or any successor United States national securities exchange and (b) any
and all filings or notices under United States Federal and state securities
laws, which may be or become required in connection with the issuance, sale,
trading, transfer or delivery of the Global Warrant Certificates or the exercise
of the Warrants.

     SECTION 7.07. Persons Having Rights Under This Agreement. Nothing in this
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent, the
Calculation Agent, the registered holder of the Global Warrant Certificates and
the Warrantholders any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
hereof; and all covenants, conditions, stipulations, promises and agreements
contained in this Agreement shall be for the sole and exclusive benefit of the
Company, the Warrant Agent, the Calculation Agent, and their respective
successors, the registered holder of the Global Warrant Certificates and of the
Warrantholders.

     SECTION 7.08. Inspection of Agreement. A copy of this Agreement shall be
available during the Warrant Agent's normal business hours at the Warrant
Agent's Office, which is located at 111 Wall Street, 15th Floor, New York, New
York 10043, for inspection by the Warrantholders, Participants or any person
certified by any Participant to be an indirect participant of the Depository or
any person certified by any Participant to be a Warrantholder, in each case, on
behalf of whom such Participant holds Warrants.

     SECTION 7.09. Headings.The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

     SECTION 7.10. Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original, but all such
counterparts taken together shall constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.


                                       24


     SECTION 7.11. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                       25


     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.

                                      LEHMAN BROTHERS HOLDINGS INC.


                                      By: /s/  James J. Killerlane III
                                          -------------------------------------
                                          Name:  James J. Killerlane III
                                          Title: Vice President


                                      CITIBANK, N.A., as Warrant Agent


                                      By: /s/  John W. Reasor
                                          -------------------------------------
                                          Name:  John W. Reasor
                                          Title: Vice President


                                      LEHMAN BROTHERS INC., as Calculation Agent


                                      By: /s/  James J. Killerlane III
                                          -------------------------------------
                                          Name:  James J. Killerlane III
                                          Title: Vice President


                                       26


                                                                       EXHIBIT A

                      [FORM OF GLOBAL WARRANT CERTIFICATE]

No. 1                                                        CUSIP No. 524908456
          LEHMAN BROTHERS HOLDINGS INC.
          _________Warrants
          Nikkei 225(SM) Index Call Warrants
          Expiring May 8, 2007

     This certifies that CEDE & Co., or registered assigns, is the registered
holder of _________ Nikkei 225(SM) Index Call Warrants Expiring May 8, 2007 (the
"Warrants"). Each Warrant entitles the beneficial owner thereof (each a
"Warrantholder") to receive, subject to the conditions set forth herein and in
the Warrant Agreement (as defined below), from Lehman Brothers Holdings Inc.
(the "Company") an amount in U.S. dollars (rounded down to the nearest
one-hundredth of a cent) (the "Cash Settlement Value") that is the greater of
(A) zero and (B) the product of (i) the quotient obtained by dividing (x) the
amount, if any, by which the Final Index Level for the applicable Valuation Date
exceeds the Strike Price by (y) the Initial Index Level and (ii) the Notional
Amount. In no event shall a Warrantholder be entitled to any interest on any
Cash Settlement Value. Capitalized terms included herein but not defined herein
have the meanings assigned thereto in the Warrant Agreement.

     The "Final Index Level" shall mean the Closing Index Level on the
applicable Valuation Date, subject to postponement if a Market Disruption Event
occurs. If the Calculation Agent determines that on a Scheduled Trading Day that
would otherwise be a Valuation Date a Market Disruption Event has occurred and
is continuing, then the Final Index Level to be used in the calculation of the
Cash Settlement Value in respect of an exercise of Warrants shall be calculated
using as the Valuation Date the next Scheduled Trading Day on which there is not
a Market Disruption Event; provided, however, if a Market Disruption Event
occurs on each of the eight Scheduled Trading Days following the originally
scheduled Valuation Date, then (a) that eighth Scheduled Trading 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 level of the
Relevant Index on that eighth Scheduled Trading Day.

     The "Valuation Date" for a Warrant will be the first Scheduled Trading Day
following the Exercise Date, subject to postponement as a result of a Market
Disruption Event as described in the Warrant Agreement.

     A "Scheduled Trading Day" shall mean any day on which a Relevant Index is
published by its publisher or otherwise determined by the Calculation Agent
pursuant to this Agreement.

     "Closing Index Level" shall mean, with respect to any Relevant Index on any
particular day, (a) the closing level of the Relevant Index as reported by the
publisher of the Relevant Index on such day, as determined and adjusted by the
Calculation Agent pursuant to the Warrant Agreement, or (b) as otherwise
determined by the Calculation Agent pursuant to the


                                      A-1



Warrant Agreement if the Relevant Index has been discontinued or in the
circumstances described in the proviso in the definition of "Final Index Level"
above.

     The "Strike Price" shall equal the Initial Index Value.

     The "Initial Index Level" shall mean 11192.17, the Closing Index Level on
May 6, 2005.

     "Notional Amount" shall equal $66.00.

     Subject to the terms of the Warrant Agreement, each Warrant may be
irrevocably exercised in whole but not in part on any Business Day from July 10,
2005 until 3:00 p.m., New York City time, on the earlier of (i) the Business Day
immediately preceding May 8, 2007 (May 8, 2007 being referred to herein as the
"Expiration Date") and (ii) the Business Day immediately preceding the Delisting
Date, if any. Except in the event of automatic exercise (as described in the
Warrant Agreement), each Warrant shall be irrevocably exercised upon receipt by
the Warrant Agent of such Warrant delivered free on the records of the
Depository to the Warrant Agent's Depository Participant Account (entitled
Citibank, N.A. Corporate Trust Warrant Agent Account, No. 9082, or such other
account at the Depository as the Warrant Agent shall designate in writing to the
Company) (the "Warrant Account") pursuant to an Exercise Notice to the Warrant
Agent from a Participant, in the case of Warrants held through the facilities of
the Depository, a Clearstream participant, in the case of Warrants held through
Clearstream, or a Euroclear participant, in the case of Warrants held through
Euroclear, acting, directly or indirectly, on behalf of the Warrantholder;
provided, however, that Exercise Notices are subject to rejection by the Warrant
Agent as provided in the Warrant Agreement. Except with respect to the Limit
Option, an Exercise Notice shall be unconditional.

     This Global Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.

     The Warrants evidenced by this Global Warrant Certificate are part of a
duly authorized issue of Warrants issued by the Company pursuant to a Warrant
Agreement, dated as of May 11, 2005 (the "Warrant Agreement"), among the
Company, Citibank, N.A. (the "Warrant Agent") and Lehman Brothers Inc. (the
"Calculation Agent"), and is subject to the terms and provisions contained in
the Warrant Agreement, to all of which terms and provisions the Warrantholders,
the entities through which such Warrantholders hold their beneficial interests
in the Warrants and the registered holder of this Global Warrant Certificate
consent by acceptance of this Global Warrant Certificate by the Depository and
which Warrant Agreement is hereby incorporated by reference in and made a part
of this Global Warrant Certificate. A copy of the Warrant Agreement is on file
at the Warrant Agent's Office, which is located at 111 Wall Street, 15th Floor,
New York, New York 10043.

     The Warrants constitute direct, unconditional and unsecured obligations of
the Company and rank equally with the Company's other unsecured contractual
obligations and with the Company's unsecured and unsubordinated debt.

     Subject to the terms of the Warrant Agreement and this Global Warrant
Certificate, and except for Warrants (x) subject to automatic exercise, (y) for
which exercise is


                                      A-2


delayed pursuant to the Warrant Agreement or (z) which are held through the
facilities of Clearstream or Euroclear, and subject to the Limit Option, the
"Exercise Date" for a Warrant will be (i) the Business Day on which the Warrant
Agent receives the Warrant and Exercise Notice in proper form with respect to
such Warrant, if received at or prior to 3:00 p.m., New York City time, on such
day, or (ii) if the Warrant Agent receives such Warrant and Exercise Notice
after 3:00 p.m., New York City time, on a Business Day, then the Business Day
following such Business Day.

     In the case of Warrants held through the facilities of Clearstream or
Euroclear, except for Warrants subject to automatic exercise, and subject to the
Limit Option, the "Exercise Date" for a Warrant will be (i) the Business Day on
which the Warrant Agent receives the Exercise Notice in proper form with respect
to such Warrant if such Exercise Notice is received at or prior to 3:00 p.m.,
New York City time, on such day; provided that the Warrant is received by the
Warrant Agent by 3:00 p.m., New York City time, on the Valuation Date, or (ii)
if the Warrant Agent receives such Exercise Notice after 3:00 p.m., New York
City time, on a Business Day, then the Business Day following such Business Day;
provided that the Warrant is received by 3:00 p.m., New York City time, on the
Valuation Date relating to exercises of Warrants on the applicable Valuation
Day. In the event that a Warrant is received after 3:00 p.m., New York City
time, on the applicable Valuation Date, then the Exercise Date for such Warrant
will be the day on which such Warrant is received or, if such day is not a
Business Day, the following Business Day. In the case of Warrants held through
the facilities of Euroclear, (a) participants must also transmit, by facsimile,
to the Warrant Agent a copy of the Exercise Notice submitted to Euroclear by
3:00 p.m., New York City time, on the desired Exercise Date and (b) Euroclear
must confirm by telex to the Warrant Agent by 9:00 a.m., New York City time, on
the applicable Valuation Date that the Warrants will be received by the Warrant
Agent on such date; provided that if such telex communication is received after
9:00 a.m., New York City time, on the applicable Valuation Date, the Company
will be entitled to direct the Warrant Agent to reject the related Exercise
Notice or waive the requirement for timely delivery of such telex communication.

     Subject to the terms of the Warrant Agreement and except in the event of
automatic exercise, in connection with any exercise of Warrants, the related
Exercise Notice may specify that such exercise is subject to the condition that
the Final Index Level that would otherwise be used to determine the Cash
Settlement Value of such Warrants shall not have declined by five percent (5%)
or more from the Limit Option Index Level for such Warrants. "Limit Option Index
Level", with respect to any Warrants subject to the Limit Option, means the last
available Closing Index Level as of the applicable Exercise Date. The option of
a Warrantholder to condition an exercise of Warrants as provided in the Warrant
Agreement is herein referred to as the "Limit Option". To be valid, such
election must be specified in the related Exercise Notice. Each of the Warrant
Agent and the Company shall be entitled to rely conclusively on such Exercise
Notice, as received by the Warrant Agent, in determining whether such election
has been validly made.

     The valuation of and payment for any exercised Warrant may be postponed as
a result of a Market Disruption Event or as a result of the exercise of a number
of Warrants exceeding the maximum permissible amount as described herein, in
which case the Warrantholder will receive the Cash Settlement Value determined
as of a later date.


                                      A-3


     Subject to the terms of the Warrant Agreement, in the event the Warrants
are delisted from, or permanently suspended from trading on (within the meaning
of the Securities Exchange Act of 1934, as amended), the AMEX and not accepted
at the same time for listing on another United States national securities
exchange, Warrants not previously exercised will be deemed automatically
exercised on the Delisting Date, in which case the Warrantholder will receive
the Cash Settlement Value.

     All Warrants for which the Warrant Agent has not received an Exercise
Notice in proper form at or prior to 3:00 p.m., New York City time, on the
earlier of (i) the Business Day immediately preceding the Expiration Date or
(ii) the Business Day immediately preceding the Delisting Date, if any, or for
which the Warrant Agent has received an Exercise Notice in proper form but with
respect to which timely delivery of the relevant Warrants has not been made,
will be deemed automatically exercised on such date without any requirement of
an Exercise Notice to the Warrant Agent.

     The Warrants will be issued in denominations of 100 Warrants and whole
multiples of 100.

     Subject to the terms of the Warrant Agreement, all exercises of Warrants
(except in the case of automatic exercise of Warrants) shall be subject, at the
Calculation Agent's option, to the limitation that not more than 400,000
Warrants in total may be exercised on any Exercise Date. No fewer than 500
Warrants may be exercised by a Warrantholder at any one time, except in the case
of automatic exercise of Warrants.

     The Company intends to treat and, by purchasing a Warrant, the
Warrantholder agrees to treat, for all tax purposes, a Warrant as a cash
settlement option within the meaning of section 1234(c) of the Internal Revenue
Code of 1986, as amended.

     Prior to due presentment for registration of transfer, the Company, the
Warrant Agent, and any agent of the Company or the Warrant Agent, may deem and
treat the registered owner hereof as the absolute owner of the Warrants
evidenced hereby (notwithstanding any notation of ownership or other writing
hereon) for any purpose whatsoever, and as the person entitled to exercise the
rights represented by the Warrants evidenced hereby, and neither the Company nor
the Warrant Agent, nor any agent of the Company or the Warrant Agent, shall be
affected by any notice to the contrary.

     The Warrant Agent shall, in accordance with the Warrant Agreement, from
time to time register the transfer of this Global Warrant Certificate in its
records (which may be maintained electronically) to be maintained by it for that
purpose at the Warrant Agent's Office upon surrender hereof, duly endorsed, or
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered holder hereof
or by the duly appointed legal representative or duly authorized attorney
thereof, such signature to be guaranteed by a bank or trust company with a
correspondent office in New York City or by a member of a national securities
exchange. Upon any such registration of transfer, a new Global Warrant
Certificate shall be issued to the transferee.


                                      A-4


     The Warrant Agreement and the terms of the Warrants are subject to
amendment, as provided in the Warrant Agreement.

     THIS GLOBAL WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                      A-5


     IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
instrument to be duly executed.



Dated:                                 LEHMAN BROTHERS HOLDINGS INC.

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

[Corporate Seal]

Attest:


--------------------------------------
Assistant Secretary

Countersigned for authentication
purposes only as of the
date above written:

CITIBANK, N.A.
as Warrant Agent,


By:
    ----------------------------------
    Authorized Officer


                                      A-6


                                                                       EXHIBIT B

                             FORM OF EXERCISE NOTICE

For Warrants Represented by the Global Warrant Certificate
CUSIP No.: 524908456
Citibank, N.A.
111 Wall Street, 15th Floor Zone 8
New York, New York 10043
Attn: Sebastian Andrieszyn
Telephone No.: (212) 657-9055
Facsimile No.: (212) 657-1020


Attention:

     1. We refer to the Warrant Agreement dated as of May 11, 2005 (the "Warrant
Agreement"), among Lehman Brothers Holdings Inc. (the "Company"), Citibank,
N.A., as Warrant Agent (the "Warrant Agent"), and Lehman Brothers Inc., as
Calculation Agent (the "Calculation Agent"). On behalf of certain beneficial
owners, each of whose Warrants have been, or will be, transferred to the Warrant
Agent in accordance with the provisions of the Representations Letter relating
to the Warrants, we hereby irrevocably exercise Warrants (the "Tendered
Warrants"). We hereby acknowledge that the Tendered Warrants and this Exercise
Notice must be received by you by 3:00 p.m., New York City time, on a Business
Day in order for the Valuation Date for the Tendered Warrants to be the
Scheduled Trading Day following such Business Day and that, if the Tendered
Warrants and this Exercise Notice are received by you after 3:00 p.m., New York
City time, on a Business Day (or, in the case of Warrants held through
Clearstream or Euroclear, if the Warrants are not received by 3:00 p.m., New
York City time, on the first Scheduled Trading Day following such Business Day),
the Valuation Date of the Tendered Warrants shall be the following Scheduled
Trading Day, in each case subject to certain provisions of the Warrant
Agreement.

     2. If you determine that this Exercise Notice has not been duly completed
or is not in proper form, this Exercise Notice will be void and of no effect and
will be deemed not to have been delivered.

     3. We hereby direct you to make payment to us of amounts payable to our
clients as a result of the exercise of the Warrants hereunder as follows:

     By cashier's check or an official bank check;
     By wire transfer to the following U.S. Dollar
     bank account in the United States:

     (Minimum payments of $100,000 only) Bank:

     Account No.:
                  --------------------------------------


                                      B-1


     ABA Routing No.:
                      -----------------------------------

     Reference:
                -----------------------------------------

     4. The Tendered Warrants covered hereby [ARE/ARE NOT] subject to the Limit
Option.(1)

     FOR DEPOSITORY PARTICIPANTS ONLY

     5. We hereby certify that we are a Participant of The Depository Trust
Company (the "Depository") with the present right to use and receive its
services.

     Capitalized terms used but not defined herein have the meanings assigned
thereto in the Warrant Agreement.

Dated:

     NAME OF DEPOSITORY PARTICIPANT
     Participant Number


     NAME OF EUROCLEAR PARTICIPANT
     Participant Number


     NAME OF CLEARSTREAM PARTICIPANT
     Participant Number


     By:
         ------------------------------------------------
     Authorized Signature
     Address:
     Telephone:  (                                )


---------------
(1) Separate Exercise Notices shall be submitted with respect to Warrants
subject to the Limit Option and Warrants not subject to the Limit Option.


                                      B-2


                                                                       EXHIBIT C

                            CONFIRMATION OF EXERCISE

[Name of Depository Participant]
[Name of Euroclear Participant]
[Name of Clearstream Participant]
[Address]

     We hereby confirm receipt of your Exercise Notice with respect to
_______________ Warrants (the "Tendered Warrants") which were transferred by you
to our Depository Participant Account No. ______________. We have found such
Notice to be duly completed and in proper form, and we have verified, in the
manner provided in the Warrant Agreement, dated as of May 11, 2005 (the "Warrant
Agreement"), among Lehman Brothers Holdings Inc., Citibank, N.A. and Lehman
Brothers Inc., that you are a Depository Participant. The Valuation Date of the
Tendered Warrants was on ____________ in New York City.

     [As set forth in your Exercise Notice, none of the Warrants covered thereby
is subject to the Limit Option. Accordingly, for purposes hereof, all such
Warrants shall constitute Tendered Warrants, which number we hereby confirm to
be __________________.] [Your Exercise Notice stated that the Warrants covered
thereby are subject to the Limit Option. The Initial Index Level for such
Warrants is _______; the Strike Price is _______; and the Final Index Level for
the date that would otherwise be the Valuation Date for such Warrants is
________________. Such Final Index Level is not less than the Limit Option Index
Level by five percent (5%) or more. Accordingly, for purposes hereof, all such
Warrants shall constitute Tendered Warrants. We hereby confirm the number of
such Tendered Warrants to be __________.]

     We hereby confirm that the aggregate Cash Settlement Value of the Tendered
Warrants is $_____________ ($_____ per Warrant), which will be made available to
[you] as designated in your Exercise Notice.

     Capitalized terms included herein but not defined have the meanings
assigned thereto in the Warrant Agreement.

Dated:

                                       CITIBANK, N.A., as Warrant Agent,


                                       By:
                                           ------------------------------------
                                           Authorized Signature


                                      C-1


                               NOTICE OF REJECTION

[Name of Depository Participant]
[Name of Euroclear Participant]
[Name of Clearstream Participant]
[Address]

Dated:

     You are hereby notified that the Exercise Notice delivered by you was
determined by us not to have been [duly completed] [in proper form]] [such
Warrants were not transferred to our Depository Participant Account No.
___________ on a timely basis as provided in the Warrant Agreement] [we did not
receive from Euroclear a Euroclear Confirmation that proper delivery of the
Warrants to which the Exercise Notice delivered by you relates would be made on
a timely basis], as set forth in the Warrant Agreement, dated as of May 11, 2005
(the "Warrant Agreement"), among Lehman Brothers Holdings Inc., Citibank, N.A.
and Lehman Brothers Inc. Accordingly, we have rejected your Exercise Notice as
being unsatisfactory as to form.

     Capitalized terms included herein but not defined have the meanings
assigned thereto in the Warrant Agreement.


                                       CITIBANK, N.A., as Warrant Agent,



                                       By:
                                           ------------------------------------
                                           Authorized Signature


                                      C-2


                                                                       EXHIBIT D

                               NOTICE OF REJECTION


RELATING TO LIMIT OPTION
[Name of Depository Participant]
[Name of Euroclear Participant]
[Name of Clearstream Participant]
[Address]

     We refer to your Exercise Notice dated ____________, _____, with respect to
__________ Warrants that were subject to the Limit Option. The Initial Index
Level and Strike Price for such Warrants are _____ and _____, respectively, and
the Final Index Level for the date that would otherwise be the Valuation Date
for such Warrants is ______. Such Final Index Level is less than the Limit
Option Index Level for such Warrants by five percent (5%) or more. Accordingly,
we have rejected such Exercise Notice pursuant to the Limit Option.

     Capitalized terms included herein but not defined have the meanings
assigned thereto in the Warrant Agreement, dated as of May 11, 2005, among
Lehman Brothers Holdings Inc, Citibank, N.A. and Lehman Brothers Inc.

Dated:

                                       CITIBANK, N.A., as Warrant Agent,


                                       By:
                                           ------------------------------------
                                           Authorized Signature



                                      D-1