LEHMAN BROTHERS HOLDINGS INC.

                     Absolute Buffer Notes Due July 7, 2008,
                 Linked to the Dow Jones EURO STOXX 50(SM) Index


Number R-1                                                           $14,730,000
ISIN US 524908NJ55                                               CUSIP 524908NJ5


See Reverse for Certain Definitions

THIS SECURITY (THIS "SECURITY") IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

         LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, on the Stated Maturity Date, in such coin or
currency of the United States of America at the time of payment shall be legal
tender for the payment of public and private debts, for each $1,000 principal
amount of the Securities represented hereby, an amount equal to the Maturity
Payment Amount. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

         Any amount payable on the Stated Maturity Date hereon will be paid only
upon presentation and surrender of this Security.




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         REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

         "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. This Security shall not be valid or become
obligatory for any purpose until the certificate of authentication hereon shall
have been signed by the Trustee under the Indenture referred to on the reverse
hereof.





                                                                               3



         IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused this
instrument to be signed by its Chairman of the Board, its Vice Chairman, its
President, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.


Dated:   July 7, 2005                   LEHMAN BROTHERS HOLDINGS INC.


                                        By:   /s/ James J. Killerlane III
                                            --------------------------------
                                            James J. Killerlane III
                                            Vice President


                                        Attest:   /s/ Jin Lee
                                                ----------------------------
                                                Jin Lee
                                                Assistant Secretary




                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.


Dated: July 7, 2005

CITIBANK, N.A.
  as Trustee


By:   /s/  Wafaa Orfy
    --------------------------------
    Name: Wafaa Orfy
    Title:  Authorized Signatory




                                                                               4


                               Reverse of Security

         This Security is one of a duly authorized series of Securities of the
Company designated as Absolute Buffer Notes Due July 7, 2008, Linked to the Dow
Jones EURO STOXX 50(SM) Index (herein called the "Securities"). The Company may,
without the consent of the holders of the Securities, create and issue
additional notes ranking equally with the Securities and otherwise similar in
all respects so that such further notes shall be consolidated and form a single
series with the Securities; provided that no additional notes can be issued if
an Event of Default has occurred with respect to the Securities. This series of
Securities is one of an indefinite number of series of debt securities of the
Company, issued and to be issued under an indenture, dated as of September 1,
1987, as amended (herein called the "Indenture"), duly executed and delivered by
the Company and Citibank N.A., as trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities.

         The Maturity Payment Amount, at the request of the Trustee, shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

         All percentages resulting from any calculation with respect to the
Securities will be rounded at the Calculation Agent's discretion.

         The Trustee shall fully rely on the determination by the Calculation
Agent of the Maturity Payment Amount and shall have no duty to make any such
determination.

         This Security is not subject to any sinking fund.

         If an Event of Default with respect to the Securities shall occur and
be continuing, the amounts payable on all of the Securities may be declared due
and payable in the manner and with the effect provided in the Indenture. The
amount payable to the Holder hereof upon any acceleration permitted under the
Indenture will be equal to the Maturity Payment Amount calculated as though the
date of acceleration was the Stated Maturity Date and the date five Business
Days prior thereto was the Valuation Date.

         The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than 66 2/3% in aggregate
principal amount of each series of Securities at the time Outstanding to be
affected (each series voting as a class), evidenced as in the Indenture
provided, to execute supplemental indentures adding any provisions to, or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) change the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, if any, or reduce any premium
payable on redemption, or make the principal thereof, or premium, if any, or
interest thereon, if any, payable in any coin or currency other than that
hereinabove provided, without the consent of



                                                                               5


the holder of each Security so affected, or (ii) change the place of payment on
any Security, or impair the right to institute suit for payment on any Security,
or reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of each Security so affected. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of any series of
Securities, the holders of a majority in aggregate principal amount of the
Securities of such series Outstanding may on behalf of the holders of all the
Securities of such series waive any past default or Event of Default under the
Indenture with respect to such series and its consequences, except a default in
the payment of interest, if any, or the principal of, or premium, if any, on any
of the Securities of such series, or in the payment of any sinking fund
installment or analogous obligation with respect to Securities of such series.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future holders and owners of this
Security and any Securities which may be issued in exchange or substitution
hereof, irrespective of whether or not any notation thereof is made upon this
Security or such other Securities.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal amount with respect to this
Security.

         The Securities are issuable in denominations of $1,000 and any whole
multiples of $1,000.

         The Company, the Trustee, and any agent of the Company or of the
Trustee may deem and treat the registered holder (the "Holder") hereof as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment hereof, or on account hereof, and for all other
purposes and neither the Company nor the Trustee nor any agent of the Company or
of the Trustee shall be affected by any notice to the contrary. All such
payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, effectually satisfy and discharge liability for
moneys payable on this Security.

         No recourse for the payment of the principal of, premium, if any, or
interest on this Security, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office or agency in a Place of Payment for this Security, duly
endorsed by, or accompanied by a written instrument of transfer in form


                                                                               6


satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Securities of this series or of like tenor and of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

         The Company intends to treat, and by purchasing this Security, the
holder agrees to treat, for all tax purposes, this Security as a financial
contract for cash settlement, rather than as a debt instrument.

         THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         Set forth below are definitions of the terms used in this Security.

         "AMEX" shall mean the American Stock Exchange LLC.

         "Business Day", notwithstanding any provision in the Indenture, shall
mean any day that is not a Saturday, a Sunday or a day on which the NYSE, Nasdaq
or AMEX is not open for trading or banking institutions or trust companies in
the City of New York are authorized or obligated by law or executive order to
close.

         "Calculation Agency Agreement" shall mean the Calculation Agency
Agreement, dated as of July 7, 2005, between the Company and the Calculation
Agent, as amended from time to time, or any successor calculation agency
agreement.

         "Calculation Agent" shall mean the person that has entered into an
agreement with the Company providing for, among other things, the determination
of the Maturity Payment Amount, which term shall, unless the context otherwise
requires, include its successors and assigns. The initial Calculation Agent
shall be Lehman Brothers Inc.

         "Close of Trading" shall mean, in respect of any Relevant Exchange, the
scheduled weekday closing time on a day on which the Relevant Exchange is
scheduled to be open for trading for its respective regular trading session,
without regard to after hours or any other trading outside of the regular
trading session hours.

         "Closing Index Level" shall mean, with respect to any day, in the case
of the Index or the Successor Index, the closing level of the Index or the
Successor Index, as the case may be, as reported by STOXX Limited or the
publisher of the Successor Index, as the case may be, on such day or as
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

         "Company" shall have the meaning set forth on the face of this
Security.

         "Exchange Business Day" shall mean any day on which the Index or the
Successor Index is published by its publisher or is otherwise determined by the
Calculation Agent pursuant to the Calculation Agency Agreement.


                                                                               7


         "Final Index Level" shall equal the Closing Index Level on the
Valuation Date.

         "Final Index Return" shall equal the following:

                     Final Index Level - Initial Index Level
                     ---------------------------------------
                               Initial Index Level

         "Holder" shall have the meaning set forth on the reverse of this
Security.

         "Indenture" shall have the meaning set forth on the reverse of this
Security.

         "Index" shall mean the Dow Jones EURO STOXX 50(SM) Index, as
calculated, published and disseminated by STOXX Limited.

         "Initial Index Level" shall equal 3178.56, the Closing Index Level on
June 29, 2005.

         "Market Disruption Event", with respect to the Index or any Successor
Index shall mean any of the following events has occurred on any day as
determined by the Calculation Agent in its sole discretion:

     (1) A material suspension of or limitation imposed on trading relating to
     the securities that then comprise 20% or more of the Index or any Successor
     Index, by the Relevant Exchanges on which those securities are traded, at
     any time during the one-hour period that ends at the Close of Trading on
     such day, whether by reason of movements in price exceeding limits
     permitted by that Relevant Exchange or otherwise.

     (2) A material suspension of, or limitation imposed on, trading in futures
     or options contracts relating to the Index or any Successor Index by the
     primary exchange on which those futures or options contracts are traded, at
     any time during the one-hour period that ends at the Close of Trading on
     such day, whether by reason of movements in price exceeding limits
     permitted by the exchanges or otherwise.

     (3) Any event, other than an early closure, that disrupts or impairs the
     ability of market participants in general to effect transactions in, or
     obtain market values for, the securities that then comprise 20% or more of
     the Index or any Successor Index on the Relevant Exchanges on which those
     securities are traded, at any time during the one-hour period that ends at
     the Close of Trading on that day.

     (4) Any event, other than an early closure, that disrupts or impairs the
     ability of market participants in general to effect transactions in, or
     obtain market values for, the futures or options contracts relating to the
     Index or any Successor Index on the primary exchange or quotation system on
     which those futures or options contracts are traded at any time during the
     one-hour period that ends at the Close of Trading on that day.

     (5) The closure of the Relevant Exchanges on which securities that then
     comprise 20% or more of the Index or any Successor Index are traded or on
     which futures or


                                                                               8


     options contracts relating to the Index or any Successor Index are traded
     prior to its scheduled closing time unless the earlier closing time is
     announced by the Relevant Exchanges at least one hour prior to the earlier
     of (i) the actual closing time for the regular trading session on the
     Relevant Exchanges and (ii) the submission deadline for orders to be
     entered into the Relevant Exchanges for execution at the Close of Trading
     on that day.

For purposes of determining whether a Market Disruption Event has occurred, the
relevant percentage contribution of a security to the level of the Index or any
Successor Index will be based on a comparison of (x) the portion of the level of
the Index or Successor Index attributable to that security and (y) the overall
level of the Index or Successor Index, in each case immediately before the
occurrence of the Market Disruption Event.

         "Maturity Payment Amount" for each $1,000 principal amount of
Securities, shall equal:

          o    If the Final Index Return is not negative, $1,000 + ($1,000 x the
               Upside Participation Rate x the Final Index Return).

          o    If the Final Index Return is negative and the Final Index Level
               is equal to or greater than the Threshold Level, $1,000 + ($1,000
               x the absolute value of the Final Index Return).

          o    If the Final Index Return is negative and the Final Index Level
               is less than the Threshold Level, $1,000 + ($1,000 x the Final
               Index Return).

         If requested by the Trustee, the Maturity Payment Amount shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

         "Nasdaq" shall mean The Nasdaq Stock Market, Inc.

         "NYSE" shall mean The New York Stock Exchange, Inc.

         "Place of Payment" shall mean the place or places where the principal
of (and premium, if any) and interest, if any, on the Securities are payable.

         "Relevant Exchange" shall mean, for any security (or any combination
thereof then underlying the Index or any Successor Index), the primary exchange,
quotation system (which includes bulletin board services) or other market of
trading for such security.

         "Securities" shall have the meaning set forth on the reverse of this
Security.

         "Security" shall have the meaning set forth on the face of this
Security.

         "Stated Maturity Date" shall mean July 7, 2008 (or if July 7, 2008 is
not a Business Day, on the next Business Day); provided, that if a Market
Disruption Event occurs on


                                                                               9


the Valuation Date, the Stated Maturity Date shall be the fifth Business Day
following the date that the Final Index Level on the postponed Valuation Date is
determined.

         "Successor Index" shall mean such successor or substitute index as the
Calculation Agent may select pursuant to the Calculation Agency Agreement upon
discontinuance of the Index.

         "Threshold Level" shall mean 2542.848, as it may be adjusted from time
to time by the Calculation Agent to the extent it believes appropriate, in a
manner consistent with the adjustments to the method of calculation of the Index
or a Successor Index described in the Calculation Agency Agreement.

         "Trustee" shall have the meaning set forth on the reverse of this
Security.

         "Upside Participation Rate" shall mean 130%.

         "Valuation Date" shall mean June 27, 2008; provided, that if a Market
Disruption Event occurs on such day, then the Valuation Date shall be the next
following Exchange Business Day on which no Market Disruption Event occurs;
provided, however, if a Market Disruption Event occurs on each of the eight
Exchange Business Days following the originally scheduled Valuation Date, then
(a) that eighth Exchange Business Day shall be deemed the Valuation Date and (b)
the Calculation Agent shall determine the Final Index Level based upon its good
faith estimate of the level of the Index on that eighth Exchange Business Day.

         All terms used but not defined in this Security are used herein as
defined in the Calculation Agency Agreement or the Indenture.






                        --------------------------------

         The following abbreviations, when used in the inscription on the face
of the within Security, shall be construed as though they were written out in
full according to applicable laws or regulations:

<TABLE>


TEN COM -   as tenants in common                UNIF GIFT MIN ACT - ______ Custodian ______
                                                                    (Cust)          (Minor)
TEN ENT -   as tenants by the entireties        under Uniform Gifts to Minors
JT TEN  -   as joint tenants with right         Act
            of Survivorship and not as              --------------------------------------
            tenants in common                                      (State)
</TABLE>

         Additional abbreviations may also be used though not in the above list.

                        --------------------------------

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto


PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

--------------------------------

--------------------------------


--------------------------------------------------------------------------------
(Name and Address of Assignee, including zip code, must be printed or
typewritten.)


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the within Security, and all rights thereunder, hereby irrevocably constituting
and appointing


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to transfer the said Security on the books of the Company, with full power of
substitution in the premises.


         Dated:
                                     -----------------------------------------

         NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Security in every particular, without
alteration or enlargement or any change whatever.

Signature(s) Guaranteed:


---------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.