Document:

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                                                                    EXHIBIT 4.01

                          LEHMAN BROTHERS HOLDINGS INC.

                                   RAPIDS(SM)

               Return Accelerated PortfolIo Debt Securities Notes

                              Due November 5, 2002

Number R-1                                                            $8,625,000
                                                              CUSIP: 524908 DT 4

See Reverse for Certain Definitions

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

     LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing
under the laws of the State of Delaware (hereinafter called the "Company"), for
value received, hereby promises to pay to CEDE & CO. or registered assigns, at
the office or agency of the Company in the Borough of Manhattan, The City of New
York, at Stated Maturity, in such coin or currency of the United States of
America at the time of payment shall be legal tender for the payment of public
and private debts, for each $1,000 principal amount of the Securities
represented hereby, an amount equal to the Maturity Payment Amount.

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

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

     "RAPIDS" is a servicemark of Lehman Brothers Inc.

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

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

Dated:  October 5, 2001                 LEHMAN BROTHERS HOLDINGS INC.

                                        By:
                                           -------------------------------
                                           Name:  Barrett S. DiPaolo
                                           Title:    Vice President

                                        Attest:
                                               ---------------------------
                                               Name:
                                               Title:  Assistant Secretary

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

Dated:  October 5, 2001

CITIBANK, N.A.,
  as Trustee

By:
   ----------------------------------
   Name:
   Title:   Authorized Signatory

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                              (Reverse of Security)

     This Security is one of a duly authorized series of Securities of the
Company designated as RAPIDS(SM), Return Accelerated PortfolIo Debt Securities
Notes Due November 5, 2002 (herein called the "Securities"). The Company may,
without the consent of the holders of the Securities, create and issue
additional notes ranking equally with the Securities and otherwise similar in
all respects so that such further notes shall be consolidated and form a single
series with the Securities; provided that no additional notes can be issued if
an Event of Default has occurred with respect to the Securities. This series of
Securities is one of an indefinite number of series of debt securities of the
Company, issued and to be issued under an indenture, dated as of September 1,
1987, as amended (herein called the "Indenture"), duly executed and delivered by
the Company and Citibank N.A., as trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities.

     The Maturity Payment Amount shall be determined by the Calculation Agent
pursuant to the Calculation Agency Agreement.

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

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

     This Security is not subject to any sinking fund and is not redeemable
prior to its Stated Maturity Date.

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

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

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

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

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

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

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

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the Corporate
Trust Office or agency in a Place of Payment for this Security, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Securities of

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                                                                               3

this series or of like tenor and of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

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

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

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

     "AMEX" shall mean the American Stock Exchange.

     "Adjusted Value" shall mean, with respect to each Underlying Equity
Security:

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

     (i)   $132; and

     (ii)  the product obtained by multiplying (A) $100 by (B)

                          (  2 x Ending Value    )
                          (  ----------------  -1);
                          (   Starting Value     )

     or

     (b)   if the Ending Value is less than the Starting Value:

     the product obtained by multiplying (A) $100 by (B) the quotient obtained
by dividing the Ending Value by the Starting Value.

     "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 mean the basket composed of the Underlying Equity
Securities.

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

     "Calculation Agency Agreement" shall mean the Calculation Agency Agreement,
dated as of October 5, 2001, between the Company and the Calculation Agent, as
amended from time to time.

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                                                                               4

     "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 three 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 on the face of this Security.

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

     "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 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.

<PAGE>
                                                                               5

     "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 three 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.

     "Ending Value" shall mean the Ending Price, plus any cash or other equity
securities attributable to one share or unit of the Underlying Equity Security
as described in Section 4 of Annex A of the Calculation Agency Agreement,
multiplied by the Ending Multiplier.

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

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

     "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 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:

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                                                                               6

     (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 equal, for each $1,000 principal amount of
Securities, 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.

     "Multiplier", relating to each Underlying Security, shall mean the number
of shares or other units (including ADRs) (or fraction of a share or other unit
expressed as a decimal) of such Underlying Equity Security included in the
Basket.

     "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 October
2, 2001, issued by the Company relating to $7,500,000 aggregate principal amount
of the Securities.

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

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

     "Starting Multiplier" shall mean, for each Underlying Equity Security, the
following:

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                                                                               7

     Underlying Equity Security          Starting Multiplier (number of shares)
     --------------------------          --------------------------------------

     American International Group, Inc.                1.274697
     AOL Time Warner Inc.                              3.039514
     Citigroup Inc.                                    2.366864
     Exxon Mobil Corporation                           2.500625
     General Electric Corporation                      2.628121
     Intel Corporation                                 5.117707
     Internal Business Machines Corporation            1.066439
     Microsoft Corporation                             1.885014
     Pfizer Inc.                                       2.409639
     Wal-Mart Stores, Inc.                             1.923077

     "Starting Value" shall mean $100 for each Underlying Equity Security.

     "Stated Maturity Date" shall mean November 5, 2002.

     "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 on the reverse of this Security.

     "Underlying Equity Securities" shall mean the securities included in the
Basket from time to time and shall initially be the following 10 common stocks:
American International Group, Inc., AOL Time Warner Inc., Citigroup Inc., Exxon
Mobil Corporation, General Electric Corporation, Intel Corporation,
International Business Machines Corporation, Microsoft Corporation, Pfizer Inc.
and Wal-Mart Stores, Inc. The Underlying Equity Securities shall only be
adjusted by the Calculation Agent pursuant to the Calculation Agency Agreement
for certain extraordinary transactions.

     All terms used but not defined in this Security are used herein as defined
in the Indenture.

<PAGE>

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

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

<TABLE>
<CAPTION>
<S>               <C>                                     <C>
----------------------------------------------------------------------------------------------------------------------
TEN COM -          as tenants in common                   UNIF GIFT MIN ACT - ________ Custodian ________
----------------------------------------------------------------------------------------------------------------------
                                                                                     (Cust)              (Minor)

----------------------------------------------------------------------------------------------------------------------
TEN ENT -          as tenants by the entireties            under Uniform Gifts to Minors
----------------------------------------------------------------------------------------------------------------------
 JT TEN  -         as joint tenants with right of         Act _________________________
----------------------------------------------------------------------------------------------------------------------
                   Survivorship  and not as  tenants  in                (State)
                   common
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

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

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

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

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

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

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

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

     Dated:

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

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

Signature(s) Guaranteed:

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

                                                                    EXHIBIT 4.02

                          CALCULATION AGENCY AGREEMENT

         CALCULATION AGENCY AGREEMENT, dated as of October 5, 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 up to $8,625,000
aggregate principal amount of RAPIDS(SM), Return Accelerated PortfolIo Debt
Securities Notes Due November 5, 2002 (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 Value of each of the Underlying Equity Securities in the Basket, (c)
the Ending Value 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.

--------
*        "RAPIDS" is a servicemark of Lehman Brothers Inc.

<PAGE>

                                                                               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 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.

<PAGE>

                                                                               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) 526-7603) (telephone: (212) 526-0511), Attention: Treasurer,
with copies to (i) 101 Hudson Street, Jersey City, New Jersey 07302 (facsimile:
(201)

<PAGE>

                                                                               4

524-5451) (telephone: (201) 524-4174), Attention: Treasurer, (ii) One World
Financial Center, New York, New York 10281 (facsimile: (646) 836-0627)
(telephone: (646) 836-2150), Attention: Corporate Secretary and (iii) 101 Hudson
Street, Jersey City, New Jersey 07302 (facsimile: (201) 524-4940) (telephone:
(201) 524-5640), Attention: Corporate Secretary, (b) in the case of the
Calculation Agent, to it at Three World Financial Center, 200 Vesey Street, New
York, New York 10285-0600 (facsimile: (212) 526-2755) (telephone: (212)
526-0900), Attention: Equity Derivatives Trading, with a copy to 101 Hudson
Street, Jersey City, New Jersey 07302 (facsimile: (201) 524-5451) (telephone:
(201) 524-2000), 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.

<PAGE>
                                                                               5

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

                                       LEHMAN BROTHERS HOLDINGS INC.

                                       By:
                                          -----------------------------------
                                          Name:  Barrett S. DiPaolo
                                          Title: Vice President

                                       LEHMAN BROTHERS INC.,
                                         as Calculation Agent

                                       By:
                                          -----------------------------------
                                          Name: Barrett S. DiPaolo
                                          Title:   Vice President

<PAGE>

                                     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 other units (including ADRs) (or fraction of a share
or other unit expressed as a decimal) of such 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

<PAGE>

                                                                               2

     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.

<PAGE>

                                                                               3

   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.

<PAGE>
                                                                               4

         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 Value is greater than or equal to the Starting Value,
             the lesser of:

             (i)    $132; and

             (ii)   the product obtained by multiplying (A) $100 by (B)

                        (   2 x Ending Value       )
                        (   ----------------  - 1  );
                        (    Starting Value        )
         or

         (b) if the Ending Value is less than the Starting Value:

             the product obtained by multiplying (A) $100 by (B) the quotient
             obtained by dividing the Ending Value by the Starting Value.

         "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.

                                                                               5
<PAGE>

         "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 three 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 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

<PAGE>

                                                                               6

     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 three 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.

         "Ending Value" shall mean the Ending Price, plus any cash or other
equity securities attributable to one share or unit of the Underlying Equity
Security as described in Section 4 of Annex A of the Calculation Agency
Agreement, multiplied by the Ending Multiplier.

         "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

<PAGE>

                                                                               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
October 2, 2001, issued by the Company relating to $7,500,000 aggregate
principal amount of the Securities.

<PAGE>

                                                                               8

         "Starting Multiplier" shall mean, for each Underlying Equity Security,
the following:

                                                           Starting Multiplier
         Underlying Equity Security                        (number of shares)
         --------------------------                        ------------------

         American International Group, Inc.                     1.274697
         AOL Time Warner Inc.                                   3.039514
         Citigroup Inc.                                         2.366864
         Exxon Mobil Corporation                                2.500625
         General Electric Corporation                           2.628121
         Intel Corporation                                      5.117707
         Internal Business Machines Corporation                 1.066439
         Microsoft Corporation                                  1.885014
         Pfizer Inc.                                            2.409639
         Wal-Mart Stores, Inc.                                  1.923077

         "Starting Value" shall mean $100 for each Underlying Equity Security.

         "Stated Maturity Date" shall mean November 5, 2002.

         "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: American International Group, Inc., AOL Time Warner Inc., Citigroup
Inc., Exxon Mobil Corporation, General Electric Corporation, Intel Corporation,
International Business Machines Corporation, Microsoft Corporation, Pfizer Inc.
and Wal-Mart Stores, Inc. The Underlying Equity Securities shall be adjusted
only by the Calculation Agent pursuant to this Agreement.

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