CALCULATION AGENCY AGREEMENT





                  CALCULATION AGENCY AGREEMENT, dated as of December 11, 2002

(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

$11,500,000 aggregate principal amount of 0.625% Notes Due December 11, 2007,

Performance Linked to The Kroger Co. (KR) Common Stock (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 at Stated Maturity of the Securities, the Redemption Payment Amount and the

Repurchase Payment Amount, the Calculation Agent shall determine such Payment

Amount and notify the Trustee of its determination. The Calculation Agent shall

also be responsible for (a) the determination of the Settlement Value, (b)

whether adjustments to the Multipliers should be made and (c) whether a Market

Disruption Event has occurred. The Calculation Agent shall notify the Trustee of

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.



                  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.



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                  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.



                  (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.



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                                                                               3





                  (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

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