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                                                                    Exhibit 4.02


                          CALCULATION AGENCY AGREEMENT


            CALCULATION AGENCY AGREEMENT, dated as of August 21, 2001 (the
"AGREEMENT"), between Lehman Brothers Holdings Inc. (the "COMPANY") and Lehman
Brothers Inc., as Calculation Agent.

            WHEREAS, the Company has authorized the issuance of $10,100,000
aggregate principal amount of PORTFOLIO RANGERSSM, PORTFOLIO Risk AdjustiNG
Equity Range SecuritiesSM Notes Due August 21, 2003 (the "SECURITIES")*;

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

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

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

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

            2. CALCULATIONS AND INFORMATION PROVIDED. The Calculation Agent
shall determine (a) the Maturity Payment Amount on the Calculation Date, (b) the
Starting Price of each of the Underlying Equity Securities in the Basket, (c)
the Ending Price of each of the Underlying Equity Securities in the Basket, (d)
the Adjusted Value for each of the Underlying Equity Securities in the Basket,
(e) the sum of the Adjusted Values for all of the Underlying Equity Securities
in the Basket, (f) the Starting Multipliers and Ending Multipliers for each of
the Underlying Equity Securities in the Basket, (g) any required adjustments to
the Multipliers of the Underlying Equity Securities in the Basket and (h)
whether a Market Disruption Event has occurred. The Calculation Agent shall
notify the Trustee of all such determinations and any such adjustment or if a
Market Disruption Event has occurred. Annex A hereto sets forth the procedures
the Calculation Agent will use to determine the information described in this
Section 2.

            3. CALCULATIONS. Any calculation or determination by the
Calculation Agent pursuant hereto shall (in the absence of manifest error) be
final and binding. Any calculation




-----------
* "RANGERS" and "Risk AdjustiNG Equity Range Securities" are servicemarks of
Lehman Brothers Inc.
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                                                                               2

made by the Calculation Agent hereunder shall, at the Trustee's request, be made
available at the Corporate Trust Office.

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

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

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

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

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

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

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

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


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                                                                               3


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

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

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

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

                  8. INDEMNIFICATION. The Company will indemnify the Calculation
Agent against any losses or liability which it may incur or sustain in
connection with its appointment or the exercise of its powers and duties
hereunder except such as may result from the gross negligence or wilful
misconduct of the Calculation Agent or any of its agents or employees. The
Calculation Agent shall incur no liability and shall be indemnified and held
harmless by the Company for or in respect of any action taken or suffered to be
taken in good faith by the Calculation Agent in reliance upon written
instructions from the Company.

                  9. NOTICES. Any notice required to be given hereunder shall be
delivered in person, sent (unless otherwise specified in this Agreement) by
letter, telex or facsimile transmission or communicated by telephone (confirmed
in a writing dispatched within two Business Days), (a) in the case of the
Company, to it at Three World Financial Center, New York, New York 10285
(facsimile: (212) 526-3774) (telephone: (212) 526-1936), Attention: Legal
Counsel, (b) in the case of the Calculation Agent, to it at Three World
Financial Center,


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200 Vesey Street, New York, New York 10285-0600 (facsimile: (212) 526-2755)
(telephone: (212) 526-0900), Attention: Equity Derivatives Trading and (c) in
the case of the Trustee, to it at 111 Wall Street, 5th Floor, New York, New York
10043 (facsimile: (212) 657-3836) (telephone: (212) 657-7805), Attention:
Corporate Trust Department or, in any case, to any other address or number of
which the party receiving notice shall have notified the party giving such
notice in writing. Any notice hereunder given by telex, facsimile or letter
shall be deemed to be served when in the ordinary course of transmission or
post, as the case may be, it would be received.

                  10.   GOVERNING LAW.  This Agreement shall be governed by
and continued in accordance with the laws of the State of New York.

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

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


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                                                                               5


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

                                                LEHMAN BROTHERS HOLDINGS INC.


                                                By: /s/ Oliver Budde
                                                     Name: Oliver Budde
                                                     Title:   Vice President


                                                LEHMAN BROTHERS INC.,
                                                  as Calculation Agent


                                                By: /s/ Oliver Budde
                                                     Name: Oliver Budde
                                                     Title:   Vice President


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                                     ANNEX A

      1.    THE BASKET.

            The Basket shall be composed of the Underlying Equity Securities
(the "BASKET").

      2.    DETERMINATION OF THE MATURITY PAYMENT AMOUNT.

            The Calculation Agent shall determine the amount payable on
the Stated Maturity Date for each $1,000 principal amount of Securities (the
"MATURITY PAYMENT AMOUNT"). The Maturity Payment Amount shall equal the sum of
the Adjusted Values of each Underlying Equity Security. In the event that the
Calculation Agent makes an Ending Price Adjustment due to the occurrence of a
Market Disruption Event, the payment by the Company of the Maturity Payment
Amount will be postponed until the date three Business Days after the date of
determination of any such Ending Price Adjustment.

      3.    MULTIPLIERS FOR THE COMMON STOCKS IN THE BASKET.

            The multiplier for each Underlying Equity Security in the
Basket shall be the number of shares, or fraction of a share, of each Underlying
Equity Security included in the Basket (the "MULTIPLIER"). The Multiplier shall
be adjusted from time to time during the term of the Securities to give effect
to the extraordinary corporate transactions described below in Section 4. The
price used to determine the Starting Multiplier for each Underlying Equity
Security shall be determined based on the Average Execution Price for each
Underlying Equity Security. The Starting Multiplier for each Underlying Equity
Security in the Basket will remain constant unless adjusted. No adjustment to a
Multiplier will be required unless the adjustment would require a change of at
least 0.1% in the Multiplier then in effect. Each Multiplier, and any
adjustments to a Multiplier, will be rounded at the Calculation Agent's
discretion.

      4.    ADJUSTMENTS TO THE COMMON STOCKS IN THE BASKET.

            Adjustments to the Underlying Equity Securities included in
the Basket will be made (i) by adjusting the Multiplier then in effect for an
Underlying Equity Security in the Basket, (ii) by adding new Underlying Equity
Securities, other securities or cash to the Basket and/or (iii) by removing
Underlying Equity Securities in the Basket, each as described below. For
purposes of these adjustments, except as noted below, ADRs are treated like
Underlying Equity Securities if a comparable adjustment to the foreign shares
underlying the ADRs is made pursuant to the terms of the depositary arrangement
for the ADRs or if holders of ADRs are entitled to receive property in respect
of the underlying foreign shares.

      o     If an Underlying Equity Security is subject to a stock split or
            reverse stock split, then once the split has become effective, the
            Multiplier then in effect relating to that Underlying Equity
            Security will be adjusted. The Multiplier will be adjusted to equal
            the product of the number of shares outstanding after the split with
            respect to each share immediately prior to effectiveness of the
            split and the prior Multiplier.

      o     If an Underlying Equity Security is subject to an extraordinary
            stock dividend or extraordinary stock distribution in common stock
            that is given equally to all holders of shares, then once the
            Underlying Equity Security is trading ex-dividend, the Multiplier


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            will be increased by the product of the number of shares issued with
            respect to one share and the prior Multiplier.

      o     If the issuer of an Underlying Equity Security, or, if an Underlying
            Equity Security is an ADR, the foreign issuer of the underlying
            foreign share, is being liquidated or dissolved or is subject to a
            proceeding under any applicable bankruptcy, insolvency or other
            similar law, the Underlying Equity Security will continue to be
            included in the Basket so long as the primary exchange, trading
            system or market is reporting a market price for the Underlying
            Equity Security. If a market price, including a price on a bulletin
            board service, is no longer available for an Underlying Equity
            Security included in the Basket, then the value of that Underlying
            Equity Security will equal zero for so long as no market price is
            available, and no attempt will be made to find a replacement stock
            or increase the Basket to compensate for the deletion of that
            Underlying Equity Security.

      o     If the issuer of an Underlying Equity Security, or, if an Underlying
            Equity Security is an ADR, the foreign issuer of the underlying
            foreign share, has been subject to a merger or consolidation and is
            not the surviving entity and holders of the issuer's common stock
            are entitled to receive cash, securities, other property or a
            combination of those in exchange for their common stock, then the
            following will be included in the Basket:

            o     To the extent cash is received, the Basket will include the
                  amount of the cash consideration at the time holders are
                  entitled to receive the cash consideration, plus accrued
                  interest. Interest will accrue beginning on the first London
                  Business Day after the day on which holders receive the cash
                  consideration until the Stated Maturity Date. Interest will
                  accrue at a rate equal to LIBOR with a term corresponding to
                  the interest accrual period stated in the preceding sentence.

            o     To the extent that equity securities that are traded or listed
                  on an exchange, trading system or market are received, once
                  the exchange for the new securities has become effective, the
                  former Underlying Equity Security will be removed from the
                  Basket and the new securities will be added to the Basket. The
                  Multiplier for the new securities will equal the product of
                  the last value of the Multiplier of the original Underlying
                  Equity Security and the number of securities of the new
                  security exchanged with respect to one share of the original
                  Underlying Equity Security.

            o     To the extent that equity securities that are not traded or
                  listed on an exchange, trading system or market or non-equity
                  securities or other property (other than cash) is received,
                  the calculation agent will determine the fair market value of
                  the securities or other property received and the Basket will
                  include an amount of cash equal to the product of the
                  Multiplier and the fair market value. The Basket will also
                  include accrued interest on that amount. Interest will accrue
                  beginning on the first London Business Day after the day that
                  an affiliate of the Company sells the securities or other
                  property used to hedge the Company's obligations under the
                  notes until the Stated Maturity Date. Interest will accrue at
                  a rate equal to LIBOR with a term corresponding to the
                  interest accrual period stated in the preceding sentence.


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      o     If all of the shares of the class of common stock of which an
            Underlying Equity Security is a part are converted into or exchanged
            for the same or a different number of shares of any class or classes
            of common stock other than that class of common stock of which the
            Underlying Equity Security is a part, whether by capital
            reorganization, recapitalization or reclassification, then, once the
            conversion has become effective, the former Underlying Equity
            Security will be removed from the Basket and the new common stock
            will be added to the Basket as an Underlying Equity Security. The
            Multiplier for each new Underlying Equity Security added to the
            Basket will equal the product of the last value of the Multiplier of
            the original Underlying Equity Security and the number of shares of
            the new Underlying Equity Security issued with respect to one share
            of the original Underlying Equity Security.

      o     If the issuer of an Underlying Equity Security in the Basket, or if
            an Underlying Equity Security is an ADR, the issuer of the
            underlying foreign share, issues to all of its shareholders common
            stock or another equity security that is traded or listed on an
            exchange, trading system or market of an issuer other than itself,
            then the new common stock or other equity security will be added to
            the Basket as an Underlying Equity Security. The Multiplier for the
            new Underlying Equity Security will equal the product of the last
            value of the Multiplier with respect to the original Underlying
            Equity Security and the number of shares of the new Underlying
            Equity Security issued with respect to one share of the original
            Underlying Equity Security.

      o     If an ADR is no longer listed or admitted to trading on a United
            States securities exchange registered under the Securities Exchange
            Act of 1934 or is no longer a security quoted on the Nasdaq, then
            the foreign share underlying the ADR will be deemed to be a new
            common stock included in the Basket. The initial Multiplier for that
            new Underlying Equity Security will equal the last value of the
            Multiplier for the ADR multiplied by the number of underlying
            foreign shares represented by a single ADR.

      o     If an Underlying Equity Security is subject to an extraordinary
            dividend or an extraordinary distribution (including upon
            liquidation or dissolution) of cash, equity securities that are not
            traded or listed on an exchange, trading system or market,
            non-equity securities or other property of any kind which is
            received equally by all holders of the class of common stock of
            which the Underlying Equity Security is a part, then the Basket will
            include the following:

            o     To the extent cash is entitled to be received, the Basket will
                  include on each day after the time that the Underlying Equity
                  Security trades ex-dividend until the date the cash
                  consideration is entitled to be received, the present value of
                  the cash to be received, discounted at a rate equal to LIBOR,
                  with a term beginning that day and ending on the date that the
                  cash is entitled to be received. When the cash consideration
                  is received, the Basket will include the amount of the cash
                  consideration, plus accrued interest. Interest will accrue
                  beginning the first London Business Day after the day that
                  holders receive the cash consideration until the Stated
                  Maturity Date. Interest will accrue at a rate equal to LIBOR
                  with a term corresponding to the interest accrual period
                  stated in the preceding sentence.


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            o     To the extent that equity securities that are not traded or
                  listed on an exchange, trading system or market or non-equity
                  securities or other property (other than cash) are received,
                  the Calculation Agent will determine the fair market value of
                  the securities or other property received and the Basket will
                  include an amount of cash equal to the product of the
                  Multiplier and the fair market value. The Basket will also
                  include accrued interest on that amount. Interest will accrue
                  beginning on the first London Business Day after the day that
                  an affiliate of the Company sells the securities or other
                  property used to hedge the Company's obligations under the
                  notes until the Stated Maturity Date. Interest will accrue at
                  a rate equal to LIBOR with a term corresponding to the
                  interest accrual period stated in the preceding sentence.

      o     If similar corporate events occur with respect to the issuer of an
            equity security other than an Underlying Equity Security that is
            included in the Basket, adjustments similar to the above will be
            made for that equity security. In addition, if any other corporate
            events occur with respect to the issuer of an Underlying Equity
            Security included in the Basket, adjustments will be made to reflect
            the economic substance of those events.

The payment of an ordinary cash dividend from current income or retained
earnings will not result in an adjustment to the Multiplier.

      5.    DEFINITIONS.

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

            "ADR" shall mean American depositary receipt.

            "AMEX" shall mean the American Stock Exchange.

            "ADJUSTED VALUE" shall mean, with respect to each Underlying
Equity Security:

            (a)   if the Ending Price is greater than or equal to the Starting
                  Price, the lesser of:

                        (i)   $175; and

                        (ii)  the product obtained by multiplying (A) $100 by
                              (B) the quotient obtained by dividing the Ending
                              Price by the Starting Price by (C) the quotient
                              obtained by dividing the Ending Multiplier by the
                              Starting Multiplier;

             or

            (b)   if the Ending Price is less than the Starting Price, the
                  lesser of:

                        (i)   $100; and

                        (ii)  the product obtained by multiplying (A) $100 by
                              (B) the quotient obtained by dividing the Ending
                              Price by 75% of the Starting Price by (C) the
                              quotient obtained by dividing the Ending
                              Multiplier by the Starting Multiplier.


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

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

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

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

                  "CALCULATION DATE" shall mean five Business Days prior to the
Stated Maturity Date; PROVIDED that if a Market Disruption Event occurs on such
date, the Calculation Date shall be the previous Business Day on which there was
not a Market Disruption Event.

                  "CLOSE OF TRADING" shall mean 4:00 p.m., New York City time.

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

                  "ENDING MULTIPLIER" shall mean, for each Underlying Equity
Security, the Starting Multiplier for such Underlying Equity Security adjusted
for the occurrence from time to time, prior to the Close of Trading on the
Calculation Date, of any of the extraordinary corporate transactions described
in Section 4 of this Annex A.

                  "ENDING PRICE" shall mean, for each Underlying Equity
Security, as determined by the Calculation Agent based on information reasonably
available to it, subject to any Ending Price Adjustment:

                  (i) If the Underlying Equity Security is listed on a United
         States national securities exchange or trading system or is a Nasdaq
         security, the last reported sale price at the Close of Trading, regular
         way, on such day, on the primary securities exchange registered under
         the Securities Exchange Act of 1934 on which such Underlying Equity
         Security is listed or admitted to trading or on Nasdaq, as the case may
         be.

                  (ii) If the Underlying Equity Security is listed on a
         non-United States securities exchange, trading system (other than a
         bulletin board) or market, the last reported sale price at the Close of
         Trading, regular way, on such day, on the primary exchange, trading
         system or market on which such Underlying Equity Security is listed or
         admitted to trading, as the case may be. The Ending Price shall then be
         converted into U.S. dollars using the Official W.M. Reuters Spot
         Closing Rate.

                  (iii) If the Underlying Equity Security is not listed on a
         national securities exchange or trading system or is not a Nasdaq
         security, and is listed or traded on a bulletin board, the Average
         Execution Price of the Underlying Equity Security. If such Underlying
         Equity Security is listed or traded on a non-United States bulletin
         board, the


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                                                                               6

         Ending Price will then be converted into U.S. dollars using the
         Official W.M. Reuters Spot Closing Rate.

                    (iv) If a Market Disruption Event has occurred for an
         Underlying Equity Security on a day on which the Ending Price for such
         Underlying Equity Security is to be calculated, the Ending Price for
         such Underlying Equity Security shall initially be determined using the
         Ending Price for such Underlying Equity Security on the next preceding
         Trading Day on which a Market Disruption Event did not occur. Once the
         Market Disruption Event has ceased, the Ending Price of such Underlying
         Equity Security shall then be adjusted to equal the Average Execution
         Price of the Underlying Equity Security.

                  "ENDING PRICE ADJUSTMENT" shall mean an adjustment made by the
Calculation Agent to an Underlying Equity Security's initial Ending Price due to
the occurrence of a Market Disruption Event five Business Days prior to the
Stated Maturity Date. An Ending Price Adjustment shall adjust such initial
Ending Price, once such Market Disruption Event ceases to exist, to equal the
Average Execution Price received upon the sale of that Underlying Equity
Security.

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

                  "LIBOR" shall mean London Interbank Offered Rate.

                  "LONDON BUSINESS DAY" shall mean shall mean any day in the
United Kingdom that is not a Saturday, a Sunday or a day on which the London
Stock Exchange is not open for trading or banking institutions or trust
companies in the City of London are authorized or obligated by law or
parliamentary order to close.

                  "MARKET DISRUPTION EVENT", on any day, shall mean any of the
following events as determined by the Calculation Agent:

                  (i) A suspension, absence or material limitation of trading in
         an Underlying Equity Security has occurred on that day, in each case,
         for more than two hours of trading or during the one-half hour period
         preceding the Close of Trading on the primary organized U.S. exchange
         or trading system on which that security is traded or, in the case of
         an Underlying Equity Security not listed or quoted in the United
         States, on the primary exchange, trading system or market for that
         security. Limitations on trading during significant market fluctuations
         imposed pursuant to the rules of any primary organized U.S. exchange or
         trading system similar to NYSE Rule 80B or any applicable rule or
         regulation enacted or promulgated by the NYSE, any other exchange,
         trading 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. Notwithstanding the first
         sentence of this paragraph, a Market Disruption Event for a security
         traded on a bulletin board means a suspension, absence or material
         limitation of trading of that security for more than two hours or
         during the one-hour period preceding the Close of Trading.

                  (ii) A suspension, absence or material limitation has occurred
         on that day, in each case, for more than two hours of trading or during
         the one-half hour period preceding the Close of Trading in options
         contracts related to an Underlying Equity


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                                                                               7

         Security, whether by reason of movements in price exceeding levels
         permitted by an exchange, trading system or market on which such
         options contracts are traded or otherwise.

                  (iii) Information is unavailable on that date, through a
         recognized system of public dissemination of transaction information,
         for more than two hours of trading or during the one-half hour period
         preceding the Close of Trading, of accurate price, volume or related
         information in respect of an Underlying Equity Security or in respect
         of options contracts related to an Underlying Equity Security, in each
         case traded on any major U.S. exchange or trading system or, in the
         case of securities of a non-U.S. issuer, traded on the primary non-U.S.
         exchange, trading system or market.

                  For purposes of determining whether a Market Disruption Event
has occurred:

                  (i) a limitation on the hours or number of days of trading
         shall not constitute a Market Disruption Event if it results from an
         announced change in the regular business hours of the relevant
         exchange, trading system or market;
                  (ii) any suspension in trading in an options contract on an
         Underlying Equity Security by a major securities exchange, trading
         system or market by reason of (a) a price change violating limits set
         by such securities market, (b) an imbalance of orders relating to those
         contracts, or (c) a disparity in bid and ask quotes relating to those
         contracts, shall constitute a Market Disruption Event notwithstanding
         that the suspension or material limitation is less than two hours;

                  (iii) a suspension or material limitation on an exchange,
         trading system or in a market shall include a suspension or material
         limitation of trading by one class of investors provided that the
         suspension continues for more than two hours of trading or during the
         last one-half hour period preceding the Close of Trading on the
         relevant exchange, trading system or market, but shall not include any
         time when the relevant exchange, trading system or market is closed for
         trading as part of that exchange's, trading system's or market's
         regularly scheduled business hours; and

                  (iv)     "trading systems" include bulletin board services.

                  "MATURITY PAYMENT AMOUNT" shall have the meaning set forth in
Section 2 of this Annex A.

                  "MULTIPLIER" shall have the meaning set forth in Section 3 of
this Annex A.

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

                  "NYSE" shall mean the New York Stock Exchange.

                  "OFFICIAL W.M. REUTERS SPOT CLOSING RATE" shall mean the
closing spot rate published on Reuters page "WMRA" relevant for an Underlying
Equity Security.

                  "PROSPECTUS SUPPLEMENT" shall mean the prospectus supplement,
dated August 14, 2001, issued by the Company relating to $10,100,000 aggregate
principal amount of the Securities.


<Page>

                                                                               8

                  "STARTING MULTIPLIER" shall mean, for each Underlying Equity
Security, the Multiplier required so that such Underlying Equity Security
represented on August 14, 2001 approximately 10.0% of the Basket on a U.S.
dollar weighted basis, which Multiplier shall be the Multiplier set forth
opposite the name of such Underlying Equity Security in the table under the
caption "The Basket" on page S-18 of the Prospectus Supplement.

                  "STARTING PRICE" shall mean, for each Underlying Equity
Security, the price set forth opposite the name of such Underlying Equity
Security in the table under the caption "The Basket" on page S-18 of the
Prospectus Supplement.

                  "STATED MATURITY DATE" shall mean August 21, 2003.

                  "TRADING DAY" shall mean a day on which trading generally is
conducted on the NYSE, AMEX and Nasdaq and in the over-the-counter market for
equity securities, as determined by the Calculation Agent.

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

                  "UNDERLYING EQUITY SECURITIES" shall mean the securities
included in the Basket from time to time and shall initially be the following 10
common stocks: Amgen Inc., Cisco Systems, Inc., Dell Computer Corporation,
Gemstar--TV Guide International, Inc., Intel Corporation, Maxim Integrated
Products, Inc., Microsoft Corporation, Oracle Corporation, QUALCOMM Incorporated
and Sun Microsystems, Inc. The Underlying Equity Securities shall be adjusted
only by the Calculation Agent pursuant to this Agreement.