CALCULATION AGENCY AGREEMENT

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                          CALCULATION AGENCY AGREEMENT

          CALCULATION AGENCY AGREEMENT, dated as of October 25, 2006 (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 $5,709,000

aggregate principal amount of Absolute Buffer Notes Due October 25, 2009, Linked

to the Dow Jones EURO STOXX 50(SM) Index (SX5E) (the "Securities")*;

          WHEREAS, the Securities will be issued under an Indenture, dated as of

September 1, 1987, between the Company and Citibank, N.A., as Trustee (the

"Trustee"), as supplemented and amended by supplemental indentures dated as of

November 25, 1987, November 27, 1990, September 13, 1991, October 4, 1993,

October 1, 1995, and June 26, 1997, and incorporating Standard Multiple Series

Indenture Provisions dated July 30, 1987, as amended November 16, 1987

(collectively, the "Indenture"); and

          WHEREAS, the Company requests the Calculation Agent to perform certain

services described herein in connection with the Securities;

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

          1. Appointment of Agent. The Company hereby appoints Lehman Brothers

Inc., as Calculation Agent, and Lehman Brothers Inc. hereby accepts such

appointment as the Company's agent for the purpose of performing the services

hereinafter described upon the terms and subject to the conditions hereinafter

mentioned.

          2. Calculations and Information Provided. In response to a request

made by the Trustee for a determination of the Maturity Payment Amount due on

the Stated Maturity Date of the Securities, the Calculation Agent shall

determine such Maturity Payment Amount and notify the Trustee of its

determination. The Calculation Agent shall also determine (a) the Successor

Index if publication of the Index is discontinued, (b) the Closing Index Level

if no Successor Index is available or if STOXX or the publisher of any Successor

Index, as the case may be, fails to calculate and publish a Closing Index Level

on any date, (c) adjustments to the Index, Successor Index or Closing Index

Level thereof 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

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*    "EURO STOXX" and "EURO STOXX 50" are trademarks of STOXX Limited and "Dow

     Jones EURO STOXX 50 Index" is a service mark of Dow Jones & Company, Inc.

     and have been licensed for use by the Company. The Securities, linked to

     the performance of the Dow Jones EURO STOXX 50 Index, are not sponsored,

     endorsed, sold or promoted by STOXX Limited or Dow Jones & Company, Inc.

     and STOXX Limited and Dow Jones & Company, Inc. make no representation

     regarding the advisability of investing in the Securities.

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modified so that it does not, in the opinion of the Calculation Agent, fairly

represent the level of the Index, or Successor Index, as the case may be, had

such changes or modifications not been made, (d) adjustments to the Threshold

Level, if required in order to reflect adjustments made in the Index or

Successor Index and (e) whether a Market Disruption Event has occurred. The

Calculation Agent shall notify the Trustee of all such adjustments or any such

Successor Index, or if a Market Disruption Event has occurred. Annex A hereto

sets forth the procedures the Calculation Agent will use to determine the

information described in this Section 2.

          3. Calculations. Any calculation or determination by the Calculation

Agent pursuant hereto shall (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

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by the filing with it of an instrument in writing signed by or on behalf of the

Company and specifying such removal and the date when it shall become effective.

Such resignation or removal shall take effect upon the appointment by the

Company, as hereinafter provided, of a successor Calculation Agent and the

acceptance of such appointment by such successor Calculation Agent. In the event

a successor Calculation Agent has not been appointed and has not accepted its

duties within 90 days of the Calculation Agent's notice of resignation, the

Calculation Agent may apply to any court of competent jurisdiction for the

designation of a successor Calculation Agent.

          (b) In case at any time the Calculation Agent shall resign, or shall

be removed, or shall become incapable of acting, or shall be adjudged bankrupt

or insolvent, or make an assignment for the benefit of its creditors or consent

to the appointment of a receiver or custodian of all or any substantial part of

its property, or shall admit in writing its inability to pay or meet its debts

as they mature, or if a receiver or custodian of it or all or any substantial

part of its property shall be appointed, or if any public officer shall have

taken charge or control of the Calculation Agent or of its property or affairs,

for the purpose of rehabilitation, conservation or liquidation, a successor

Calculation Agent shall be appointed by the Company by an instrument in writing,

filed with the successor Calculation Agent. Upon the appointment as aforesaid of

a successor Calculation Agent and acceptance by the latter of such appointment,

the Calculation Agent so superseded shall cease to be Calculation Agent

hereunder.

          (c) Any successor Calculation Agent appointed hereunder shall execute,

acknowledge and deliver to its predecessor, to the Company and to the Trustee an

instrument accepting such appointment hereunder and agreeing to be bound by the

terms hereof, and thereupon such successor Calculation Agent, without any

further act, deed or conveyance, shall become vested with all the authority,

rights, powers, trusts, immunities, duties and obligations of such predecessor

with like effect as if originally named as Calculation Agent hereunder, and such

predecessor, upon payment of its charges and disbursements then unpaid, shall

thereupon become obligated to transfer, deliver and pay over, and such successor

Calculation Agent shall be entitled to receive, all moneys, securities and other

property on deposit with or held by such predecessor, as Calculation Agent

hereunder.

          (d) Any corporation into which the Calculation Agent hereunder may be

merged or converted or any corporation with which the Calculation Agent may be

consolidated, or any corporation resulting from any merger, conversion or

consolidation to which the Calculation Agent shall be a party, or any

corporation to which the Calculation Agent shall sell or otherwise transfer all

or substantially all of the assets and business of the Calculation Agent shall

be the successor Calculation Agent under this Agreement without the execution or

filing of any paper or any further act on the part of any of the parties hereto.

          7. Certain Definitions. Terms not otherwise defined herein or in Annex

A hereto are used herein as defined in the Indenture or the Securities.

          8. Indemnification. The Company will indemnify the Calculation Agent

against any losses or liability which it may incur or sustain in connection with

its appointment or the exercise of its powers and duties hereunder except such

as may result from the gross

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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 1301

Avenue of the Americas, New York, New York 10019 (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, N