Document:

LEHMAN BROTHERS HOLDINGS INC.

                    Index-Plus Notes Due November 15, 2009,
          Performance Linked to the Dow Jones STOXX 50(SM) Index (SX5P)

Number R-1                                                    $4,985,000
ISIN US 524908MG26                                            CUSIP 524908MG2

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.
THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

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

                  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.

                  The Dow Jones STOXX 50 Index is proprietary and copyrighted
material. The Dow Jones STOXX 50 Index and the related trademarks have been
licensed for certain purposes by the Lehman Brothers Holdings Inc. The
Securities, based on the performance of the Dow Jones STOXX 50 Index, are not
sponsored, endorsed or promoted by STOXX Limited or Dow Jones & Company, Inc.,
and neither STOXX Limited nor Dow Jones & Company, Inc. makes a representation
regarding the advisability of investing in the Securities.

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

                  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:   November 15, 2004             LEHMAN BROTHERS HOLDINGS INC.

                                         By: ___________________________________
                                             Name:
                                             Title:

                                         Attest: _______________________________
                                             Name:
                                             Title:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

Dated:  November 15, 2004

CITIBANK, N.A.
  as Trustee

By:  __________________________
     Name:
     Title:  Authorized Signatory

                                       3

                               Reverse of Security

                  This Security is one of a duly authorized series of Securities
of the Company designated as Index-Plus Notes Due November 15, 2009,
Performance Linked to the Dow Jones STOXX 50(SM) Index (SX5P) (herein called the
"Securities"). The Company may, without the consent of the holders of the
Securities, create and issue additional notes ranking equally with the
Securities and otherwise similar in all respects so that such further notes
shall be consolidated and form a single series with the Securities; provided
that no additional notes can be issued if an Event of Default has occurred with
respect to the Securities. This series of Securities is one of an indefinite
number of series of debt securities of the Company, issued and to be issued
under an indenture, dated as of September 1, 1987, as amended (herein called the
"Indenture"), duly executed and delivered by the Company and Citibank N.A., as
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities.

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

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

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

                  This Security is not subject to any sinking fund.

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

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

                                       4

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

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

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

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

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

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the Corporate Trust Office or agency in a Place of Payment for this
Security, duly endorsed by, or accompanied by a written instrument of transfer
in form

                                       5

satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Securities of this series or of like tenor and of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

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

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

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

                  "AMEX" shall mean the American Stock Exchange LLC.

                  "Applicable USD/EUR Exchange Rate" shall mean the U.S.
dollar/euro exchange rate (expressed as the number of U.S. dollars per euro), as
of the time the relevant USD Index Level is calculated, as determined by the
Calculation Agent.

                  "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 November 15, 2004, between the Company and the
Calculation Agent, as amended from time to time, or any successor calculation
agency agreement.

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

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

                  "Closing Index Level" of the Index (or any Successor Index) on
any particular day shall mean the official closing level of the Index (or any
Successor Index), as reported by STOXX Limited (or of any Successor Index, as
reported by the publisher of such Successor Index) on such day, or if (a) on
any date prior to and including the Valuation Date, STOXX Limited discontinues
publication of the Index and the Calculation Agent determines that no Successor
Index is available at such time or (b) STOXX Limited or the publisher of any
Successor Index, as the case may be, fails to calculate and announce a Closing
Index Level for

                                       6

the Index or Successor Index, as the case may be, on any date when it would
ordinarily calculate and announce such Closing Index Level in accordance with
its customary practice, then, in the case of either (a) or (b), on such date,
the Calculation Agent shall determine the Closing Index Level to be used for
purposes of (x) determining whether the Closing USD Index Level has fallen below
the Threshold Level on any Exchange Business Day during the Measurement Period
and (y) computing the Maturity Payment Amount, all in accordance with the
Calculation Agency Agreement.

                  "Closing USD Index Level" on any particular day shall mean the
Closing Index Level of the Index on such day, multiplied by the Applicable
USD/EUR Exchange Rate, as determined by the Calculation Agent.

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

                  "Exchange Business Day" shall mean any day on which (a) the
Index or any Successor Index is calculated and announced by its publisher or
(b) if the Calculation Agent has determined that no Successor Index is available
or STOXX Limited or the publisher of any Successor Index, as the case may be,
fails to calculate and announce a Closing Index Level for the Index or Successor
Index, as the case may be, on any date when it would ordinarily calculate and
announce such Closing Index Level in accordance with its customary practice, the
Calculation Agent calculates the Closing Index Level pursuant to Section 3(c)
of Annex A to the Calculation Agency Agreement.

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

                  "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.

                  "Index" shall mean the Dow Jones STOXX 50(SM) Index, as
calculated by STOXX Limited.

                  "Initial USD Index Level" shall equal 3576.6688, the Closing
USD Index Level on November 10, 2004.

                  "Market Disruption Event", with respect to the Index, shall
mean the Calculation Agent has determined in its sole discretion that any of the
following events has occurred:

         (a)      A material suspension of, or limitation imposed on, trading
         relating to the securities that then comprise 20% or more of the Index
         or any Successor Index, by the Relevant Exchanges on which those
         securities are traded, at any time during the one-hour period that ends
         at the Close of Trading on such day, whether by reason of movements in
         price exceeding limits permitted by that Relevant Exchange or
         otherwise.

         (b)      A material suspension of, or limitation imposed on, trading in
         futures or options contracts relating to the Index or any Successor
         Index by the primary exchange or

                                       7

         quotation system on which those futures or options contracts are
         traded, at any time during the one-hour period that ends at the close
         of trading for that primary exchange or quotation system on such day,
         whether by reason of movements in price exceeding limits permitted by
         that primary exchange or quotation system or otherwise.

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

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

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

         (f)      The Company, or any of its affiliates, is unable, after using
         commercially reasonable efforts to unwind or dispose of, or realize,
         recover or remit the proceeds of, any transactions or assets it deems
         necessary to hedge the equity price risk of entering into and
         performing its obligations with respect to the Securities.

For purposes of determining whether a Market Disruption Event has occurred, the
relevant percentage contribution of a security to the level of the Index or any
Successor Index will be based on a comparison of (x) the portion of the level of
the Index attributable to that security and (y) the overall level of the Index,
in each case immediately before the occurrence of the Market Disruption Event.

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

                      o    If the Final USD Index Level is greater than or equal
                           to the Initial USD Index Level, the sum of:

                           (1)  $1,000, and

                                       8

                                                              Upside               Final USD             Initial USD
                                     (2)  $1,000     x     Participation     x     Index Level     -     Index Level
                                                               Rate                ---------------------------------
                                                                                        Initial USD Index Level

                      o    If the Final USD Index Level is less than the Initial
                           USD Index Level and the Closing USD Index Level is at
                           or above the Threshold Level on all Exchange Business
                           Days during the Measurement Period, $1,000.

                      o    If the Final USD Index Level is less than the Initial
                           USD Index Level and the Closing USD Index Level has
                           fallen below the Threshold Level on any Exchange
                           Business Day during the Measurement Period, the
                           product of:

                           (1)  $1,000, and

                           (2)   Final USD Index Level
                                -----------------------
                                Initial USD Index Level

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

                  "Measurement Period" shall mean the period from November 10,
2004 to and including the Valuation Date.

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

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

                  "Relevant Exchange" shall mean, at any particular time, for
any security (or any combination thereof) then included in the Index or any
Successor Index or used in determining the Closing Index Level pursuant to the
Calculation Agency Agreement, the primary exchange, quotation system (which
includes bulletin board services) or other market of trading for such security.

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

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

                  "Stated Maturity Date" shall mean November 15, 2009 (or if
November 15, 2009 is not a Business Day, on the next Business Day); provided,
that if the Valuation Date is postponed because of the occurrence of a Market
Disruption Event or because such day is not an Exchange Business Day, the Stated
Maturity Date shall be the third Business Day following the date that the Final
USD Index Level on the postponed Valuation Date is determined.

                  "STOXX Limited" shall mean the joint venture of Deutsche
Boerse AG, Dow Jones & Company, Inc. and the SWX Group, which, among other
things, currently calculates the Index.

                                       9

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

                  "Threshold Level" shall mean 2146.0013, as it may be adjusted
from time to time by the Calculation Agent to the extent it believes
appropriate, in a manner consistent with the adjustments to the method of
calculation of the Index or the Successor Index described in the Calculation
Agency Agreement.

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

                  "Upside Participation Rate" shall mean 114.2%.

                  "Valuation Date" shall mean November 11, 2009; provided that
if a Market Disruption Event occurs on such day or if such day is not an
Exchange Business Day, then the Valuation Date shall be the next Exchange
Business Day on which no Market Disruption Event occurs.

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

                                       10

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

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

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

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

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

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

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

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

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

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

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

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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.CALCULATION AGENCY AGREEMENT

                  CALCULATION AGENCY AGREEMENT, dated as of November 15, 2004
(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
$5,732,000 aggregate principal amount of Index-Plus Notes Due November 15,
2009, Performance Linked to the Dow Jones STOXX 50(SM) Index (SX5P) (the
"Securities");*

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

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

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

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

                  2.    Calculations and Information Provided. In response to a
request made by the Trustee for a determination of the Maturity Payment Amount
due on the Stated Maturity Date of the Securities, the Calculation Agent shall
determine such Maturity Payment Amount and notify the Trustee of its
determination. The Calculation Agent shall also be responsible for (a) the
determination of the Applicable USD/EUR Exchange Rate, (b) the determination of
the Successor Index if publication of the Index is discontinued, (c) the
determination of the Closing Index Level if no Successor Index is available or
if STOXX Limited or the publisher of any Successor Index, as the case may be,
fails to calculate and announce a Closing Index Level on any day, (d)
adjustments to the Index, the Successor Index, the Closing Index Level or the
Closing USD Index Level if the method of calculating any of these items changes
in a material respect or if the Index or Successor Index is in any other way
modified so that it does not, in the opinion of the Calculation Agent, fairly
represent the value of the Index or Successor Index, as

---------------------------------
*        The Dow Jones STOXX 50 Index is proprietary and copyrighted material.
         The Dow Jones STOXX 50 Index and the related trademarks have been
         licensed for certain purposes by the Company. Neither STOXX Limited nor
         Dow Jones & Company, Inc. sponsors, endorses or promotes the Securities
         based on the Dow Jones STOXX 50 Index and neither STOXX Limited nor Dow
         Jones & Company, Inc. makes a representation regarding the advisability
         of investing in the Securities.

the case may be, had such changes or modifications not been made, (e)
adjustments to the Threshold Level, if required in order to reflect adjustments
made to the Index or Successor Index, and (f) the determination of whether a
Market Disruption Event has occurred. The Calculation Agent shall notify the
Trustee of all such determinations and adjustments or any such Successor Index,
or if a Market Disruption Event has occurred. Annex A hereto sets forth the
procedures the Calculation Agent will use in making the determinations,
adjustments or calculations 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 made by the Calculation Agent hereunder
shall, at the Trustee's request, be made available at the Corporate Trust
Office.

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

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

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

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

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

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

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

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

                                       2

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

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

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

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

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

                                       3

                  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 willful
misconduct of the Calculation Agent or any of its agents or employees. The
Calculation Agent shall incur no liability and shall be indemnified and held
harmless by the Company for, or in respect of, any action taken or suffered to
be taken in good faith by the Calculation Agent in reliance upon written
instructions from the Company.

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

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

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

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

                                       4

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

                                      LEHMAN BROTHERS HOLDINGS INC.

                                      By: _______________________________
                                          Name:
                                          Title:

                                      LEHMAN BROTHERS INC.,
                                        as Calculation Agent

                                      By: _______________________________
                                          Name:
                                          Title:

                                       5

                                     ANNEX A
                                     -------

         1.       The Index.

                  The Index is the Dow Jones STOXX 50 Index (the "Index"), as
calculated, published and reported by STOXX Limited, a joint venture of Deutsche
Boerse AG, Dow Jones & Company, Inc. and the SWX Group ("STOXX Limited"). Dow
Jones & Company, Inc. compiles and maintains the Index, as well as the
proprietary data contained therein.

The Index is a free-float, market capitalization-weighted index of 50
securities, and it is currently designed to provide a European blue-chip
representation of market sector leaders on the major exchanges of 17 European
countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland
and the United Kingdom. Index components are selected from the Dow Jones
STOXX(SM) 600, which represents the 600 largest securities traded on all major
European exchanges. The Index is calculated and reported, in euros, by STOXX
Limited. The Index does not include the value of dividends paid on shares of the
component securities. As of November 10, 2004, the 50 companies included in the
Index were divided into the following market sectors: Consumer Discretion,
Consumer Staples, Energy, Financial Services, Healthcare, Industrials,
Information Technology, Materials, Telecom Services and Utilities (each company
is classified in only one Dow Jones STOXX market sector, such classification
being based on the company's primary revenue source). As of November 10, 2004,
the components comprising the Index came from only 10 of the potential 17
countries: Belgium, Finland, France, Germany, Italy, the Netherlands, Spain,
Sweden, Switzerland and United Kingdom.

         2.       Determination of the Maturity Payment Amount.

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

                  The Maturity Payment Amount shall be the following:

                  o    If the Final USD Index Level is greater than or equal to
                       the Initial USD Index Level, the sum of:

                               (1)  $1,000, and
                                                        Upside               Final USD             Initial USD
                               (2)  $1,000     x     Participation     x     Index Level     -     Index Level
                                                         Rate                ---------------------------------
                                                                                   Initial USD Index Level

                  o    If the Final USD Index Level is less than the Initial USD
                       Index Level and the Closing USD Index Level is at or
                       above the Threshold Level on all Exchange Business Days
                       during the Measurement Period, $1,000.

                  o    If the Final USD Index Level is less than the Initial USD
                       Index Level and the Closing USD Index Level has fallen
                       below the Threshold Level on any Exchange Business Day
                       during the Measurement Period, the product of:

                        (1)  $1,000, and

                        (2)   Final USD Index Level
                             -----------------------
                             Initial USD Index Level

         3.       Discontinuance of the Index.

         (a)      If STOXX Limited discontinues publication of the Index, and
         STOXX Limited and another entity publish a successor or substitute
         index (the "Successor Index") that the Calculation Agent determines,
         in its sole discretion exercised in good faith, to be comparable to
         the discontinued Index, then the Calculation Agent shall determine the
         Closing Index Level to be used for purposes of (x) determining whether
         the Closing USD Index Level has fallen below the Threshold Level on any
         Exchange Business Day during the Measurement Period and (y) computing
         the Maturity Payment Amount by reference to the Closing Index Level of
         such Successor Index on the applicable date.

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

         (c)      If (i) on any date prior to and including the Valuation Date,
         STOXX Limited discontinues publication of the Index and the
         Calculation Agent determines that no Successor Index is available at
         such time or (ii) STOXX Limited or the publisher of any Successor
         Index, as the case may be, fails to calculate and announce a Closing
         Index Level for the Index or Successor Index, as the case may be, on
         any date when it would ordinarily calculate and announce such Closing
         Index Level in accordance with its customary practice, then, in the
         case of either (i) or (ii), on such date, the Calculation Agent shall
         determine the Closing Index Level to be used for purposes of (x)
         determining whether the Closing USD Index Level has fallen below the
         Threshold Level on any Exchange Business Day during the Measurement
         Period and (y) computing the Maturity Payment Amount. The Closing Index
         Level shall be computed by the Calculation Agent in such circumstances
         in accordance with the formula for, and method of, calculating the
         Index or Successor Index, as the case may be, last in effect prior to
         such discontinuance, using the closing price (or, if trading in any of
         the relevant securities has been materially suspended or materially
         limited, its good faith estimate of the closing price that would have
         prevailed but for such suspension or limitation) at the Close of
         Trading on such date of each security most recently comprising the
         Index or Successor Index, as the case may be, on the Relevant Exchange
         for such security.

         4.       Alteration of Method of Calculation.

                  If at any time the method of calculating the Index, a
Successor Index, the Closing Index Level or the Closing USD Index Level is
changed in a material respect, or if the Index or a Successor Index is in any
other way modified so that the Index or such Successor Index does not,

                                      A-2

in the opinion of the Calculation Agent, fairly represent the value of the Index
or such Successor Index had such changes or modifications not been made, then,
from and after such time, the Calculation Agent will make such calculations and
adjustments as, in the good faith judgment of the Calculation Agent, may be
necessary in order to arrive at a level of a stock index comparable to the Index
or such Successor Index, as the case may be, as if such changes or modifications
had not been made. The Calculation Agent will then calculate the Final USD Index
Level (and the Maturity Payment Amount) with reference to the Index or such
Successor Index, as adjusted. Accordingly, if the method of calculating the
Index or a Successor Index is modified so that the level of such index is a
fraction of what it would have been if it had not been modified (for example,
due to a split in the index), then the Calculation Agent shall adjust such index
in order to arrive at a level of the Index or such Successor Index as if it had
not been modified (for example, if such split had not occurred).

         5.       Definitions.

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

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

                  "AMEX" shall mean the American Stock Exchange LLC.

                  "Applicable USD/EUR Exchange Rate" shall mean the U.S.
dollar/euro exchange rate (expressed as the number of U.S. dollars per euro), as
of the time the relevant USD Index Level is calculated, as determined by the
Calculation Agent.

                  "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.

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

                  "Closing Index Level" of the Index (or any Successor Index) on
any particular day shall mean the official closing level of the Index (or any
Successor Index), as reported by STOXX Limited (or of any Successor Index, as
reported by the publisher of such Successor Index) on such day, or in the
circumstances described in Section 3(c) of this Annex A, the Closing Index Level
computed as described in Section 3(c) of this Annex, all as determined by the
Calculation Agent pursuant to this Agreement.

                                      A-3

                  "Closing USD Index Level" on any particular day shall mean the
Closing Index Level of the Index on such day, multiplied by the Applicable
USD/EUR Exchange Rate, as determined by the Calculation Agent.

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

                  "Exchange Business Day" shall mean any day on which (a) the
Index or any Successor Index is calculated and announced by its publisher or
(b) if the Calculation Agent has determined that no Successor Index is available
or STOXX Limited or the publisher of any Successor Index, as the case may be,
fails to calculate and announce a Closing Index Level for the Index or Successor
Index, as the case may be, on any date when it would ordinarily calculate and
announce such Closing Index Level in accordance with its customary practice, the
Calculation Agent calculates the Closing Index Level pursuant to Section 3(c) of
this Annex A.

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

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

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

                  "Initial USD Index Level" shall equal 3576.6688, the Closing
USD Index Level on November 10, 2004.

                  "Market Disruption Event", with respect to the Index, shall
mean the Calculation Agent has determined in its sole discretion that any of the
following events has occurred:

         (a)      A material suspension of, or limitation imposed on, trading
         relating to the securities that then comprise 20% or more of the Index
         or any Successor Index, by the Relevant Exchanges on which those
         securities are traded, at any time during the one-hour period that ends
         at the Close of Trading on such day, whether by reason of movements in
         price exceeding limits permitted by that Relevant Exchange or
         otherwise.

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

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

         (d)      Any event, other than an early closure, that disrupts or
         impairs the ability of market participants in general to effect
         transactions in, or obtain market values for, the

                                      A-4

         futures or options contracts relating to the Index or any Successor
         Index on the primary exchange or quotation system on which those
         futures or options contracts are traded at any time during the one-hour
         period that ends at the close of trading for that primary exchange or
         quotation system on such day.

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

         (f)      The Company, or any of its affiliates, is unable, after using
         commercially reasonable efforts to unwind or dispose of, or realize,
         recover or remit the proceeds of, any transactions or assets it deems
         necessary to hedge the equity price risk of entering into and
         performing its obligations with respect to the Securities.

For purposes of determining whether a Market Disruption Event has occurred, the
relevant percentage contribution of a security to the level of the Index or any
Successor Index will be based on a comparison of (x) the portion of the level of
the Index attributable to that security and (y) the overall level of the Index,
in each case immediately before the occurrence of the Market Disruption Event.

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

                  "Measurement Period" shall mean the period from November 10,
2004 to and including the Valuation Date.

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

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

                  "Relevant Exchange" shall mean, at any particular time, for
any security (or any combination thereof) then included in the Index or any
Successor Index or used in determining the Closing Index Level in the
circumstances described in Section 3(c) of this Annex A, the primary exchange,
quotation system (which includes bulletin board services) or other market of
trading for such security.

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

                  "Stated Maturity Date" shall mean November 15, 2009 (or if
November 15, 2009 is not a Business Day, on the next Business Day); provided,
that if the Valuation Date is postponed because of the occurrence of a Market
Disruption Event or because such day is not an Exchange Business Day, the Stated
Maturity Date shall be the third Business Day following the date that the Final
USD Index Level on the postponed Valuation Date is determined.

                                      A-5

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

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

                  "Threshold Level" shall mean 2146.0013, as it may be
adjusted from time to time by the Calculation Agent to the extent it believes
appropriate, in a manner consistent with the adjustments to the method of
calculation of the Index or a Successor Index described in Sections 3 and 4 of
this Annex A and under the circumstances described in Sections 3 and 4 of this
Annex A.

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

                  "Upside Participation Rate" shall mean 114.2%.

                  "Valuation Date" shall mean November 11, 2009; provided that
if a Market Disruption Event occurs on such day or if such day is not an
Exchange Business Day, then the Valuation Date shall be the next Exchange
Business Day on which no Market Disruption Event occurs.

                                      A-6

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