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CALCULATION AGENCY AGREEMENT
AGREEMENT, dated as of October 2, 2001 (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 $21,000,000
aggregate principal amount of Prudential Research Universe Diversified Equity
NotesSM, PRUDENTSSM Due July 2, 2006, Linked to a Basket of Healthcare Stocks
(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 Calculation Agent shall determine the Maturity
Payment Amount and notify the Trustee of its determination. The Calculation
Agent shall also be responsible for (a) the determination of the Level of the
Underlying Basket on each Calculation Date, (b) the determination of the Average
Level of the Underlying Basket, (c) determining if any adjustments to the
Underlying Basket and/or the Multipliers should be made and (d) 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. In addition,
the Calculation Agent shall provide information to the American Stock Exchange
that is necessary for the AMEX's daily calculation and dissemination of the
level of the Underlying Basket if the AMEX is unable to obtain such information.
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.
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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:
(i) in acting under this Agreement, the Calculation Agent is acting
solely as an independent expert and not as agent 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;
(ii) 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;
(iii) the Calculation Agent shall be obliged to perform only such
duties as are set out specifically herein and any duties necessarily
incidental thereto;
(iv) 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
(v) 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
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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
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