CALCULATION AGENCY AGREEMENT
CALCULATION AGENCY AGREEMENT, dated as of November 10, 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
$2,300,000
aggregate principal amount of Contingent Payout Notes Due November
11, 2007
Linked to the adjusted relative performance of the S&P 100(R)
Index (OEX) vs.
the Russell 2000(R) Index (RTY) (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 or for a determination of the Redemption
Price due on
the Redemption Date, the Calculation Agent shall determine such
Maturity Payment
Amount or Redemption Price and notify the Trustee of its
determination. The
Calculation Agent shall also determine (a) the Successor Index if
publication of
an Index is discontinued, (b) the Closing Index Level if no
Successor Index is
available or if a Publisher or the publisher of any Successor
Index, as the case
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*
"Standard & Poor's," "S&P," "S&P 100," and "100" are
trademarks of McGraw
Hill, Inc. and have been licensed for use by the Company. "Russell
2000
Index" is a trademark of the Frank Russell Company and has been
licensed
for use by the Company. The Securities, linked to the performance
of the
S&P 100 Index relative to the performance of the Russell 2000
Index, are
not sponsored, endorsed, sold or promoted by Standard & Poor's
or the Frank
Russell Company and neither Standard & Poor's nor the Frank
Russell Company
makes any representation regarding the advisability of investing in
the
Securities.
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may be, fails to calculate and publish a Closing Index Level on any
date, (c)
adjustments to an Index, any Successor Index or the Closing Index
Level thereof
if the method of calculating any of these items changes in a
material respect or
if an 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 level
of such
Index, or Successor Index, as the case may be, had such changes or
modifications
not been made, and (d) 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
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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.
(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.
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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 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, 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 Ag
