CALCULATION AGENCY AGREEMENT
CALCULATION AGENCY AGREEMENT, dated as of December 15, 2005
(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 Limited Principal
Protection RAPIDS(SM)
(Return Accelerated PortfolIo Debt Securities) Due December 15,
2007 Linked to
the S&P 500(R) Index (SPX) (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 S&P 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 modified
so
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*
"RAPIDS" is a service mark of the Company. "Standard &
Poor's," "S&P," "S&P 500," "Standard & Poor's 500" and
"500"
are the service marks of McGraw-Hill, Inc. and have been
licensed for use by the Company. The Securities, linked to the
performance of the S&P 500 Index, are not sponsored, endorsed,
sold or promoted by Standard & Poor's and Standard & Poor's
makes no representation regarding the advisability of
investing in the Securities.
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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 c
