content: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
                         Pursuant to Section 13 or 15(d) of
                         the Securities Exchange Act of 1934
  
  
  
          Date of Report (date of earliest event reported): April 16, 1996
  
                                LEHMAN BROTHERS INC.
               (Exact name of registrant as specified in its charter)
  
                                      Delaware
                   (State or other jurisdiction of incorporation)
  
           1-6817                                13-2518466
  (Commission File Number)            (IRS Employer Identification No.)
  
  
  3 World Financial Center
  New York, New York                                      10285
  (Address of principal                                   (Zip Code)
  executive offices)
  
                      Registrant's telephone number, including
                              area code: (212) 526-7000
  
  
  <PAGE>
  
  Item 7.  Financial Statements and Exhibits
  
           (c)      Exhibits
  
                 The following Exhibits are filed as part of this Report.
  
    4.1 Form of Senior Subordinated Medium-Term Note, Series A (Fixed Rate)
  
    4.2 Form of Senior Subordinated Medium-Term Note, Series A (Floating Rate)
  
    4.3 Form of Senior Subordinated Medium-Term Note, Series A (Currency Indexed)
  
  
  
  
           The Exhibit Index to this Report is incorporated herein by reference.
  
  <PAGE>
  
  
  
                                      SIGNATURE
  
  
  
         Pursuant to the requirements of the Securities  Exchange Act of 1934, the
  Company  has  duly  caused  this  Report  to be  signed  on  its  behalf  by the
  undersigned hereunto duly authorized.
  
  
                                                       LEHMAN BROTHERS INC.
  
  
  
  
                                                       By:  /s/ Karen M. Muller
                                                                Karen M. Muller
                                                                Managing Director
  
  
  
  Date: April 16, 1996
  
  <PAGE>
  
  
  
  
                                    EXHIBIT INDEX
  
  
  
  Exhibit No.                         Exhibit
  
  
  4.1    Form of Senior Subordinated Medium-Term Note, Series A (Fixed Rate)
  
  4.2    Form of Senior Subordinated Medium-Term Note, Series A (Floating Rate)
  
  4.3    Form of Senior Subordinated Medium-Term Note, Series A (Currency Indexed)
  
  
  
  
  
  
  <PAGE>
  
                                                              EXHIBIT 4.1
  
  CUSIP NO. __________
  
  REGISTERED
  No. ___                             FACE AMOUNT:
  
  
  
   If this  Note is an OID  Note  (as  defined  below)  the  following  legend  is
   applicable:
  
   FOR  PURPOSES OF SECTIONS  1272,  1273 AND 1275 OF THE UNITED  STATES  INTERNAL
   REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS NOTE IS _____% OF ITS
   PRINCIPAL  AMOUNT,  AND THE AMOUNT OF  ORIGINAL  ISSUE  DISCOUNT,  THE YIELD TO
   MATURITY COMPOUNDED  ______________,  THE ISSUE DATE AND THE AMOUNT OF ORIGINAL
   ISSUE DISCOUNT  ALLOCABLE TO THE SHORT PERIOD DETERMINED USING THE EXACT METHOD
   WITHIN THE MEANING OF PROPOSED TREASURY  REGULATION SECTION 1.1272-1(c) (2)(ii)
   ARE AS SET FORTH BELOW.
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                    (FIXED RATE)
  
            If the  registered  owner of this  Note (as  indicated  below)  is The
   Depository Trust Company (the "Depository") or a nominee of the Depository,
  this Note is a Note in  global  form (a  "Global  Security")  and the  following
  legends are applicable except as specified on the reverse hereof:
  
  This Note is a Global Security  within the meaning of the Indenture  hereinafter
  referred to and is registered in the name of the  Depository or a nominee of the
  Depository. Unless this certificate is presented by an authorized representative
  of The  Depository  Trust Company (55 Water Street,  New York,  New York) to the
  Company (as defined below) or its agent for  registration of transfer,  exchange
  or payment and any certificate issued is registered in the name of Cede & Co. or
  such other name as requested by an authorized
   representative  of The Depository Trust Company and any payment is made to Cede
   & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
  OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,  Cede & Co., has
  an interest herein.
  
  UNLESS AND UNTIL IT IS EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  CERTIFICATED
  FORM,  THIS  GLOBAL  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
  THE 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.
  
  <PAGE>
  
  
  ISSUE PRICE:  $      AMORTIZING NOTE:              OPTIONAL REPAYMENT PRICES:
                       [ ] YES  [ ] NO
  ISSUE DATE:                                        OPTIONAL INTEREST RATE RESET:
                       SINKING FUND:                 [ ] YES  [ ] NO
  MATURITY DATE:
                       TOTAL AMOUNT OF OID:          OPTIONAL RESET DATES:
  INTEREST RATE:
                       YIELD TO MATURITY:            OPTIONAL REDEMPTION:
  INTEREST PAYMENT                                    [ ] YES  [ ] NO
  DATES:               INITIAL ACCRUAL PERIOD OID:
                                                      INITIAL REDEMPTION DATE:
  REGULAR RECORD       AUTHORIZED DENOMINATIONS:
  DATES:                                              INITIAL REDEMPTION
                       EXTENDIBLE NOTE:               PERCENTAGE:   %
                       [ ] YES  [ ] NO
  DEPOSITORY:                                         APPLICABILITY OF ANNUAL
                                                      REDEMPTION PERCENTAGE
                       EXTENSION PERIOD:                   PERCENTAGE REDUCTION:
                                                           [ ] YES  [ ] NO
                       NUMBER OF EXTENSION PERIODS:If Yes, state Annual Percentage
                                     Reduction:%
  
  OPTION ELECTION      OPTION TO ELECT REPAYMENT:       RENEWABLE NOTE:
  DATES:               [ ] YES  [ ] NO                  [ ] YES  [ ] NO
  
                       OPTIONAL REPAYMENT DATES:        INITIAL MATURITY DATE:
  
                                                        SPECIAL ELECTION INTERVAL:
  
  OPTION VALUE                                          RENEWABLE IN PART:
  CALCULATION AGENT:                                     [ ] YES  [ ] NO
  
  OTHER PROVISIONS:                                  AUTHORIZED RENEWABLE AMOUNTS:
  
                                                          SPECIAL ELECTION PERIOD:
  
  
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under the laws of the State of Delaware (herein called the "Company",
   which term includes any successor  corporation under the Indenture  referred to
  on  the  reverse  hereof),  for  value  received,  hereby  promises  to  pay  to
  ____________below) and, if so specified above, to pay interest thereon from the
   Issue  Date  specified  above or from the most  recent  Interest  Payment  Date
  specified above to which interest has been paid or duly provided for at the
   Interest  Rate  specified  above  until  the  principal  hereof is paid or made
  available for payment and (to the extent that the payment of such interest shall
  be legally  enforceable)  at such rate per annum on any  overdue  principal  and
  premium and on any overdue  instalment of interest.  The  "Principal  Amount" of
  this Note at any time means (i) if this Note is an OID Note (as defined  below),
  the Amortized  Face Amount at such time as described in Section 6 on the reverse
  hereof,  (ii)if this Note is an Amortizing  Note, the Outstanding Face Amount at
  such time as described in Section 3 on the reverse hereof and (iii) in all other
  cases, the Face Amount hereof.
  
           If this Note is subject to an Annual Percentage  Reduction as specified
  above, the Redemption Price shall initially be the Initial Redemption Percentage
  of the Principal  Amount of this Note on the Initial  Redemption  Date and shall
  decline at each  anniversary of the Initial  Redemption  Date (each such date, a
  "Redemption  Date") by the Annual Percentage  Reduction of such Principal Amount
  until the Redemption Price is 100% of such Principal Amount.
  
           In the event of any optional  redemption by the Company,  any repayment
  at the option of the Holder,  acceleration of the maturity of this Note or other
  prepayment of this Note prior to the Maturity  Date  specified  above,  the term
  "Maturity"  when used  herein  shall  refer,  where  applicable,  to the date of
  redemption, repayment, acceleration or other prepayment of this Note.
  
           An "OID  Note" is (a) any Note that has been  issued at an Issue  Price
   lower, by more than a de minimis amount (as determined under United States
  federal income tax rules  applicable to original  issue  discount  instruments),
  than the Face  Amount  thereof and (b) any Note not  identified  in (a) that for
  United States  federal income tax purposes would be considered an original issue
  discount instrument.
  
           Except as provided in the  following  paragraph,  the Company  will pay
  interest semiannually on February 15 and August 15 of each year (unless other
   Interest Payment Dates are specified above) (each an "Interest  Payment Date"),
  commencing with the first Interest  Payment Date next succeeding the Issue Date,
  and at Maturity;  provided,  that any payment of principal,  premium, if any, or
  interest to be made on any Interest Payment Date or on a date of Maturity that
   is not a Business  Day shall be made on the next  succeeding  Business Day with
  the same force and effect as if made on such Interest Payment Date or such date
   of Maturity,  as the case may be, and no additional  interest shall accrue as a
  result of such delayed  payment.  The term  "Business  Day" means any day, other
  than a Saturday or Sunday,  that is not a day on which banking  institutions  in
  the Borough of Manhattan, The City of New York are authorized or required by law
  or regulation to close. Each payment of interest hereon shall include
   interest  accrued  through the day before the Interest  Payment Date or date of
  Maturity, as the case may be. Unless otherwise specified above, interest on this
  Note will be computed on the basis of a 360-day year of twelve 30-day
   months.  In no event shall the interest rate of this Note be higher than
  the maximum rate permitted by applicable law, as the same may be modified by
  United States law of general
  application.
  
         Unless  otherwise  specified  above, the interest payable on any Interest
  Payment Date will, as provided in the Indenture,  be paid to the person in whose
  name this Note (or one or more predecessor  Notes) is registered at the close of
  business on the Regular Record Date  indicated  above (whether or not a Business
  Day) next preceding such Interest Payment Date; provided, that, notwithstanding
   any provision of the Indenture to the contrary, interest payable on any date of
  Maturity shall be payable to the Person to whom principal shall be payable;  and
  provided, further, that, unless otherwise specified above, in the case of a Note
   initially  issued between a Regular  Record Date and the Interest  Payment Date
   relating to such Regular Record Date,  interest for the period beginning on the
   Issue Date and ending on such Interest Payment Date shall be paid on the
  Interest  Payment Date following the next succeeding  Regular Record Date to the
  registered Holder on such next succeeding Regular Record Date.
  
      Unless otherwise  indicated above, and except as provided below if this Note
   is a Global  Security,  all payments of interest on this Note and all principal
   payments hereon if this Note is an Amortizing Note (other than interest and,
  in the case of Amortizing Notes,  principal payable at Maturity) will be made by
  wire transfer or by check provided, that, if the Holder hereof is the Holder of
   U.S. $10,000,000 or more in aggregate Principal Amount of Notes of this series
   of like tenor and term, such Holder shall be entitled to receive interest
   payments (and principal payments, if this Note is an Amortizing Note) in
  immediately  available funds, but only if complete and appropriate  instructions
   have been received in writing by the Trustee (or any such Paying Agent) on or
  prior to the applicable Regular Record Date.
  
         Unless  otherwise  indicated  above, and except as provided below if this
  Note is a Global Security, payments of principal, premium, if any, and interest
   payable at Maturity will be made in immediately  available funds upon surrender
   of this Note at the corporate trust office or agency of the Trustee (or any
  duly  appointed  Paying  Agent)  maintained  for that  purpose in the Borough of
   Manhattan,  The City of New York (the "Corporate Trust Office"),  provided that
   this Note is presented to the Trustee (or any such Paying Agent) in time
  for the Trustee (or any such Paying  Agent) to make such  payments in such funds
  in accordance with its normal procedures.
  
            Unless  otherwise  specified above, if this Note is a Global Security,
   payments of interest hereon and principal  hereon if this Note is an Amortizing
   Note  (in each  case,  other  than at  Maturity),  will be made in  immediately
   available  funds in accordance with existing  arrangements  between the Trustee
   (or any duly  appointed  Paying  Agent) and the  Depository.  Unless  otherwise
   specified above, if this Note is a Global Security, any principal, premium
  and/or  interest  payable  hereon at Maturity  will be paid by wire  transfer in
   immediately available funds to an account specified by the Depository.
  
        The Company will pay any  administrative  costs imposed by banks in making
  payments in immediately available funds, but any tax, assessment or governmental
   charge  imposed upon  payments  hereunder,including,  without  limitation,  any
  withholding tax, will be borne by the Holder hereof.
        REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
  ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
  SAME EFFECT AS IF SET FORTH AT THIS PLACE.
  
          This Note shall not be entitled to any benefit under the Indenture or be
  valid  or  become   obligatory   for  any  purpose  until  the   certificate  of
  authentication hereon shall have been signed by the Trustee under the Indenture.
  
         IN WITNESS WHEREOF, Lehman Brothers Inc. has caused this instrument to be
  signed by its Chairman of the Board,  one of its Vice Chairmen of the Board, its
  President,  its Treasurer or one of its Vice Presidents,  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:
  
  [SEAL]                                      LEHMAN BROTHERS INC.
  
  
                                               By:________________________
                                               Name:
                                               Title:
  
  
                                               Attest:____________________
                                               Name:
                                               Title:
  
  TRUSTEE'S CERTIFICATE OF AUTHENTICATION
  
  This is one of the Securities of the series designated herein referred to in the
  within-mentioned Indenture.
  
  THE FIRST NATIONAL BANK OF CHICAGO
    as Trustee
  
  
  By:______________________
     Authorized Officer
  
  
  <PAGE>
  
  
                                  [REVERSE OF NOTE]
  
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                    (Fixed Rate)
  
  
  
           Section 1.  General.  This Note is one of a duly authorized series of
   Notes of the Company designated as the Senior Subordinated Medium-Term Notes,
   Series A (Fixed Rate) of the Company (herein called the "Notes"), limited in
  aggregate principal amount to $____________________  (or such greater amount, if
   OID Notes are issued, as shall result in aggregate gross proceeds to the
  Company of $______________),  subject to reduction as a result of the sale under
  certain  circumstances  of other debt  securities of the Company.  The foregoing
  limit, however, may be increased by the Company if in the future it determines
   that it may wish to sell additional Notes.  The Notes are one of an indefinite
  number of series of debt securities of the Company (collectively, the
  "Securities") issued or issuable under and pursuant to an indenture, dated as
   of March 1, 1996 (the "Indenture"),  duly executed and delivered by the Company
  and The First National Bank of Chicago, as Trustee (herein called the
   "Trustee"), 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 Trustee, the Company and
  the holders of the Securities  and of the terms upon which the  Securities  are,
  and are to be,  authenticated  and delivered.  The separate series of Securities
  may be issued in various aggregate  principal  amounts,  may mature at different
  times,  may bear  interest  (if  any) at  different  rates,  may be  subject  to
  different redemption  provisions or repayment or repurchase rights (if any), may
  be subject to different  sinking,  purchase or analogous  funds (if any), may be
  subject to different  covenants and Events of Default and may otherwise  vary as
  in the Indenture provided.
  
            Section 2. Redemption. If so specified on the face hereof, the Company
  may at its option  redeem  this Note in whole or from time to time in part on or
  after the date  designated  as the  Initial  Redemption  Date on the face hereof
  (which shall not be prior to the first anniversary date of the original issuance
  hereof) at either a price based on a constant percentage of the Principal Amount
  of this Note as  specified  on the face hereof or at prices  declining  from the
  premium  specified on the face hereof,  if any, to 100% of the Principal  Amount
  hereof,  together,  in each case, with accrued  interest to the Redemption Date;
  provided, that permission of the Exchange for such redemption has been obtained.
  The  Company  may  exercise  such  option  by  causing  the  Trustee  to mail by
  first-class  mail to the Holder  hereof a notice of such  redemption at least 30
  but not  more  than 60 days  prior  to the  Redemption  Date.  In the  event  of
  redemption of this Note in part only, a new Note or Notes of this series for the
  unredeemed portion hereof shall be issued in the name of the Holder hereof
   upon the cancellation hereof in accordance with the terms of the Indenture.
   Unless otherwise specified on the face hereof, if less than all of the Notes
  with  like  tenor and  terms to this  Note are to be  redeemed,  the Notes to be
  redeemed  shall be selected  by the Trustee by such method as the Trustee  shall
  deem fair and appropriate.
  
           Section  3.  Sinking  Funds  and  Amortizing  Notes.  Unless  otherwise
  specified  on the face hereof or unless this Note is an  Amortizing  Note,  this
  Note will not be subject to any sinking  fund.  If it is  specified  on the face
  hereof that this Note is an  Amortizing  Note,  the Company  will make  payments
  combining  principal  and  interest on the dates and in the amounts set forth in
  the table  appearing  in Schedule 1,  attached to this Note.  If this Note is an
  Amortizing Note,  payments made hereon will be applied first to interest due and
  payable on each such payment date and then to the  reduction of the  Outstanding
  Face Amount.  The term  "Outstanding Face Amount" means, at any time, the amount
  of unpaid principal hereof at such time.
  
            Section 4.  Optional  Repayment.  If so  specified on the face hereof,
  this Note will be  repayable  prior to the  Maturity  Date at the  option of the
  Holder on the  Optional  Repayment  Dates  specified  on the face  hereof at the
  Optional  Repayment Prices  specified on the face hereof,  together with accrued
  interest to the applicable  Optional Repayment Date. Unless otherwise  specified
  on the face  hereof,  in order for this Note to be so repaid,  the Company  must
  receive,  at least 30 but not more than 45 days prior to an  Optional  Repayment
  Date,  either  (i) this  Note  with the form  below  entitled  "Option  to Elect
  Repayment" duly completed or (ii) a telegram,  telex,  facsimile transmission or
  letter  from  a  member  of a  national  securities  exchange  or  the  National
  Association of Securities Dealers, Inc. or a commercial bank or trust company in
  the United States setting forth the name of the Holder  hereof,  the Face Amount
  hereof,  the Face  Amount  to be  repaid,  the  certificate  number  hereof or a
  description  of the tenor and terms of this Note, a statement that the option to
  elect repayment is being  exercised  thereby and a guarantee that this Note with
  the form below  entitled  "Option to Elect  Repayment"  duly  completed  will be
  received by the Paying Agent not later than five Business Days after the date of
  such telegram,  telex,  facsimile  transmission or letter and this Note and form
  duly  completed  are  received by the Paying Agent by such fifth  Business  Day.
  Exercise of this  repayment  option  shall be  irrevocable,  except as otherwise
  provided under Section 5 or Section 7. The repayment  option may be exercised by
  the  Holder  of this  Note  with  respect  to less  than  the Face  Amount  then
  outstanding  provided  that the Face  Amount of the Note  remaining  outstanding
  after repayment is an authorized denomination.  Upon such partial repayment this
  Note shall be cancelled  and a new Note or Notes for the  remaining  Face Amount
  hereof shall be issued in the name of the Holder of this Note.
  
                    Section 5.  Optional  Interest  Reset.  If so specified on the
  face hereof,  the  Interest  Rate on this Note may be reset at the option of the
  Company,  in the manner set forth below (unless otherwise  specified on the face
  hereof),  on the Optional  Reset Date or Optional  Reset Dates  specified on the
  face hereof.  The Company may exercise  such option by notifying  the Trustee of
  such  exercise at least 45 but not more than 60 days prior to an optional  Reset
  Date. Not later than five Business Days after receipt thereof,  the Trustee will
  mail by  first-class  mail to the  Holder  of this  Note a  notice  (the  "Reset
  Notice")  setting  forth (i) the  election of the Company to reset the  interest
  rate,  (ii)  such new  interest  rate and  (iii)  the  provisions,  if any,  for
  redemption  during the period from such Optional Reset Date to the next Optional
  Reset Date or, if there is no such next  optional  Reset Date,  to the  Maturity
  Date of this Note (each such period a "Subsequent  Interest Period"),  including
  the date or dates on which or the period or periods  during  which and the price
  or prices at which such  redemption  may occur during such  Subsequent  Interest
  Period. The Reset Notice shall be substantially in the form of Exhibit A to this
  Note.  Upon the  transmittal  by the Trustee of a Reset  Notice to the Holder of
  this Note, such new interest rate shall take effect  automatically,  and, except
  as modified by the Reset  Notice and as described  in the next  paragraph,  this
  Note will have the same terms as prior to the transmittal of such Reset Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  an Optional Reset Date, the Company may, at its option, revoke the interest rate
  provided for in the Reset Notice and  establish an interest  rate that is higher
  than the  interest  rate  provided  for in the Reset  Notice for the  Subsequent
  Interest Period commencing on such Optional Reset Date by causing the Trustee to
  mail by  first-class  mail notice of such higher  interest rate to the Holder of
  this Note.  Such notice shall be irrevocable  and shall be mailed by the Trustee
  within five Business Days after receipt thereof. All Notes with respect to which
  the  interest  rate is reset on an  Optional  Reset  Date will bear such  higher
  interest rate for the Subsequent Interest Period.
  
                    If the Company elects to reset the interest rate of this Note,
  the Holder of this Note will have the option to elect  repayment  by the Company
  of this Note,  or any  portion  hereof,  on any  Optional  Reset Date at a price
  calculated  with  reference  to the Face  Amount  hereof to be repaid,  plus any
  interest  accrued to, such Optional Reset Date. In order to obtain  repayment on
  an Optional Reset Date, the Holder must follow the procedures set forth above in
  Section  4 for  optional  repayment  except  that the  period  for  delivery  or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to such  Optional  Reset Date and except that,  if the Holder has tendered  this
  Note for  repayment  pursuant  to the Reset  Notice,  the Holder may, by written
  notice to the  Trustee,  revoke  such  tender for  repayment  until the close of
  business on the tenth day prior to such Optional Reset Date; provided,  however,
  that if such day is not a  Business  Day,  then such  notice may be given on the
  next succeeding Business Day.
  
                    Section  6. OID  Notes.  If this Note is an OID  Note,  unless
  otherwise  specified  on the face  hereof,  the  amount  payable in the event of
  redemption by the Company, repayment at the option of the Holder or acceleration
  of Maturity  shall be the  Amortized  Face Amount of this Note as of the date of
  such redemption,  repayment or acceleration  rather than the Face Amount hereof.
  The  "Amortized  Face  Amount" of this Note shall be the amount equal to (a) the
  Issue  Price  (as set forth on the face  hereof)  plus (b) that  portion  of the
  difference  between the Issue Price and the Face Amount  hereof that has accrued
  at the Yield to Maturity set forth on the face hereof  (computed  in  accordance
  with generally accepted United States bond yield computation  principles) at the
  date as of which the Amortized Face Amount is calculated,  but in no event shall
  the Amortized Face Amount of this Note exceed the Face Amount.
  
                    Section 7.  Extendible  Notes.  If it is specified on the face
  hereof  that this Note is an  Extendible  Note,  the  Company  has the option to
  extend the Maturity Date hereof for the number of Extension Periods set forth on
  the face hereof,  each of which Extension  Periods shall be a period of from one
  to five  whole  years.  Unless  otherwise  specified  on the  face  hereof,  the
  following procedures shall apply if this Note is an Extendible Note.
  
                    The Company may exercise  its option by notifying  the Trustee
  of such  exercise  at least 45 but not more than 60 days  prior to the  Maturity
  Date hereof in effect prior to the exercise of such option (the "Original Stated
  Maturity"). Not later than five Business Days after receipt thereof, the Trustee
  will mail to the Holder a notice (the "Extension Notice"),  first class, postage
  prepaid,  setting  forth (i) the  election of the Company to extend the Maturity
  Date,  (ii) the new Maturity  Date,  (iii) the Interest  Rate  applicable to the
  Extension  Period and (iv) the  provisions,  if any, for  redemption  during the
  Extension  Period,  including the date on which or the period or periods  during
  which and the price at which such  redemption  may occur  during  the  Extension
  Period.  Upon the mailing by the Trustee of an  Extension  Notice to the Holder,
  the  Maturity  Date  hereof  shall be  extended  automatically,  and,  except as
  modified by the Extension  Notice and as described in the next  paragraph,  this
  Note will have the same terms as prior to the mailing of such Extension Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  the Original Stated Maturity hereof, the Company may, at its option,  revoke the
  interest  rate  provided  for in the  Extension  Notice and  establish  a higher
  interest rate for the Extension  Period by causing the Trustee to mail notice of
  such higher interest rate,  first class,  postage prepaid,  to the Holder.  Such
  notice  shall be  irrevocable  and shall be mailed by the Trustee  within  three
  Business Days after receipt  thereof.  This Note will bear such higher  interest
  rate for the Extension Period, whether or not tendered for repayment.
  
                    If the Company  extends the  Maturity  Date of this Note,  the
  Holder will have the option to elect  repayment by the Company of this Note,  or
  any portion hereof,  on the Original Stated Maturity at a price  calculated with
  reference  to the Face Amount  hereof to be repaid plus any accrued  interest to
  such  date.  In order  for this  Note to be so  repaid  on the  Original  Stated
  Maturity,  the Holder must follow the  procedures  set forth in Section 5 hereof
  for  optional  repayment,  except  that the period for  delivery of this Note or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to the  Original  Stated  Maturity  and except  that the Holder  may, by written
  notice to the Trustee,  revoke any such tender for repayment  until the close of
  business  on the tenth  day prior to the  Original  Stated  Maturity;  provided,
  however,  that if such day is not a Business  Day, then such notice may be given
  on the next succeeding Business Day.
  
                    Section 8.  Renewable  Notes.  If it is  specified on the face
  hereof that this Note is a Renewable  Note, this Note will mature on the Initial
  Maturity  Date  specified  on the face hereof  unless the Maturity of all or any
  portion of this Note is extended in  accordance  with the  procedures  described
  below.
  
                    On the  Interest  Payment  Date  occurring  in the sixth month
  (unless a different  Special Election  Interval is specified on the face hereof)
  prior to the  Initial  Maturity  Date hereof (the  "Initial  Maturity  Extension
  Date") and on the Interest  Payment  Date  occurring in each sixth month (or the
  last  month of each  Special  Election  Interval)  after such  Initial  Maturity
  Extension  Date (each,  together  with the Initial  Maturity  Extension  Date, a
  "Maturity  Extension  Date"),  the Maturity of this Note will be extended to the
  Interest  Payment Date occurring in the twelfth month (or, if a Special Election
  Interval is specified  on the face  hereof,  the last month in a period equal to
  twice the Special Election  Interval) after such Maturity Extension Date, unless
  the Holder elects to terminate the automatic extension of the Maturity hereof or
  any portion hereof as described below.
  
                    If the Holder elects to terminate  the automatic  extension of
  the  Maturity  of any  portion of the  principal  amount of this Note during the
  specified period prior to any Maturity  Extension Date, such portion will become
  due and payable on the Interest  Payment  Date  occurring in the sixth month (or
  the last month in the Special Election  Interval) after such Maturity  Extension
  Date (the "Extended Maturity Date").
  
                    The Holder may elect to terminate the  automatic  extension of
  the Maturity of this Note,  or if so specified  above,  any portion  hereof,  by
  delivering a notice to such effect to the Trustee (or any duly appointed  Paying
  Agent)  at the  Corporate  Trust  Office  not less than 15 nor more than 30 days
  prior to such Maturity Extension Date (unless another period is specified on the
  face hereof as the "Special Election Period"). Such election will be irrevocable
  and will be binding  upon each  subsequent  Holder of this Note.  An election to
  terminate the automatic  extension of the Maturity of this Note may be exercised
  with respect to less than the entire Face Amount  hereof only if so specified on
  the face hereof and only in such Face Amount, or any integral multiple in excess
  thereof, as is specified on the face hereof.  Notwithstanding the foregoing, the
  Maturity of this Note will not be extended beyond the Maturity Date specified on
  the face hereof.
  
                    Unless  otherwise   specified  above,  any  such  election  to
  terminate  will be  effective  only if this  Note,  with  the  "Option  to Elect
  Termination of Automatic Extension" included herein duly executed,  is presented
  to the Trustee (or any duly appointed Paying Agent)  simultaneously  with notice
  of such  election  (or, in the event notice of such  election,  together  with a
  guarantee of delivery within five Business Days, is transmitted on behalf of the
  Holder from a member of a national securities exchange, the National Association
  of Securities Dealers,  Inc. or a commercial bank or trust company in the United
  States,  within  five  Business  Days of the  date of such  notice).  As soon as
  practicable  following  receipt of this Note the Trustee (or any duly  appointed
  Paying  Agent)  shall issue in exchange  herefor in the name of the Holder (i) a
  Note,  in a face  amount  equal to the face  amount  of this  Note for which the
  election to terminate the automatic  extension of Maturity was  exercised,  with
  terms  identical to those  specified  herein  (except for the Issue Date and the
  Initial   Interest   Rate  and  except  that  such  Note  shall  have  a  fixed,
  nonextendable  Maturity on the Extended Maturity Date) and (ii) if such election
  is made with  respect to less than the full Face Amount  hereof,  a  replacement
  Renewable Note, in a face amount equal to the Face Amount of this Note for which
  no election was made, with terms identical to this Note.
  
                    Section 9. Principal  Amount For Indenture  Purposes.  For the
  purpose  of  determining  whether  Holders  of the  requisite  amount  of  Notes
  outstanding under the Indenture have made a demand,  given a notice or waiver or
  taken any other action,  the outstanding  principal  amount of this Note will be
  deemed to be the Principal  Amount,  provided,  however,  if this Note is an OID
  Note, the  outstanding,  principal  amount of this Note will be deemed to be the
  Face Amount set forth above.
  
                    Section 10.  Modification and Waivers.  The Indenture contains
  provisions  permitting  the  Company  and the  Trustee,  with the consent of the
  holders of not less than a majority in aggregate principal amount of each series
  of the Securities at the time  Outstanding  to be affected,  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, (a) change the stated maturity
  of the  principal  of, or any  installment  of  principal of or interest on, any
  Security,  (b)  reduce the  principal  amount  thereof  or the rate of  interest
  thereon or any  premium  payable  upon the  redemption  thereof,  (c) reduce the
  amount of the principal of an OID Security that would be due and payable upon an
  Event of  Acceleration or an Event of Default (both as defined in the Indenture)
  (d)  adversely  affect any right of repayment at the option of the holder of any
  Security,  (e) change any place of payment  where,  or the coin or  currency  in
  which,  any  Security or any  premium or the  interest  thereon is payable,  (f)
  impair the right to institute suit for the enforcement of any such payment on or
  after the stated  maturity  thereof (or, in the case of redemption,  on or after
  the  redemption  date),  (g) reduce the  percentage  in principal  amount of the
  outstanding  Securities of any series,  the consent of whose holders is required
  for any such supplemental indenture, or the consent of whose holders is required
  for any waiver (of  compliance  with  certain  provisions  of the  Indenture  or
  certain  defaults  thereunder  and  their  consequences)  provided  for  in  the
  Indenture,  or (h) modify any of the  provisions  of sections  of the  Indenture
  dealing with supplemental indentures, waivers of certain covenants or waivers of
  past defaults, except to increase any such percentage or to provide that certain
  other  provisions  of the  Indenture  cannot be modified  or waived  without the
  consent of the holder of each outstanding  Security affected thereby. 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 the  principal of, or the premium (if any) or
  interest,  if any, on any of the  Securities of such series,  or in respect of a
  provision  under which the Indenture  cannot be modified  without the consent of
  the holder of each  outstanding  security of such  series.  Any such  consent or
  waiver by the  Holder of this Note shall be  conclusive  and  binding  upon such
  Holder and upon all future  holders  and owners of this Note and any Notes which
  may be issued in exchange or  substitution  herefor,  irrespective of whether or
  not any notation thereof is made upon this Note or such other Notes.
  
                    Section 11. Obligations Unconditional.  No reference herein to
  the Indenture and no provisions of this Note or of the Indenture  shall alter or
  impair the obligation of the Company,  which is absolute and  unconditional,  to
  pay the principal of, premium, if any, and interest, if any, on this Note at the
  place, at the respective  times, at the rate, and in the coin or currency herein
  prescribed.
  
                    Section 12. Defeasance.  The Indenture contains provisions for
  the discharge of the Indenture and defeasance at any time of the indebtedness on
  this Note upon  compliance  by the Company  with  certain  conditions  set forth
  therein, which provisions apply to this Note.
  
                    Section 13.  Authorized Form and  Denominations.  The Notes of
  this series are  issuable  only in  registered  form,  without  coupons.  Unless
  otherwise  set forth on the face  hereof,  Notes  will be issued in Face  Amount
  denominations of U.S. $1,000 and any integral  multiple of U.S. $1,000 in excess
  thereof.  Each Note will be issued  initially  as either a Global  Security or a
  Certificated Note, at the option of the holders thereof, either at the office or
  agency to be  designated  and  maintained by the Company for such purpose in the
  Borough of Manhattan,  The City of New York,  pursuant to the  provisions of the
  Indenture or at any of such other offices or agencies as may be  designated  and
  maintained  by the Company for such purpose  pursuant to the  provisions  of the
  Indenture,  and in the manner and  subject to the  limitations  provided  in the
  Indenture,  but without the payment of any service charge, except for any tax or
  other governmental charges imposed in connection therewith. Notes of this series
  are  exchangeable  for a like aggregate Face Amount of Notes of this series of a
  different  authorized  denomination,  except that Global  Securities will not be
  exchangeable for Certificated Notes.
  
                    Section  14.  Registration  of  Transfer.  As  provided in the
  Indenture and subject to certain  limitations as therein set forth, the transfer
  of this Note is  registrable  in the Security  Register,  upon surrender of this
  Note for registration of transfer,  at the Corporate Trust Office or agency in a
  Place of Payment for this Note,  duly endorsed by, or  accompanied  by a written
  instrument  of transfer  in form  satisfactory  to the Company and the  Security
  Registrar  requiring  such written  instrument of transfer duly executed by, the
  Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
  more new Notes of this  series,  of  authorized  denominations  and for the same
  aggregate  Face  Amount,  will  be  issued  to  the  designated   transferee  or
  transferees.
  
                    If this  Note is a  Global  Security  and if at any  time  the
  Depository  notifies  the Company  that it is unwilling or unable to continue as
  Depository or if at any time the  Depository  shall no longer be eligible  under
  the Indenture, the Company shall appoint a successor Depository.  If a successor
  Depository  for the  Securities  of such series is not  appointed by the Company
  within 90 days after the Company  receives  such notice or becomes aware of such
  ineligibility,  the Company will issue,  and the Trustee will  authenticate  and
  deliver,  Notes in definitive form in an aggregate Face Amount equal to the Face
  Amount hereof.
  
                    No service charge shall be made for any such  registration  of
  transfer or exchange, but the Company may require payment of a sum sufficient to
  cover any tax or other  governmental  charge  that may be imposed in  connection
  therewith.
  
                    Prior to due  presentment  of this  Note for  registration  of
  transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
  may treat the person in whose name this Note is  registered  as the owner hereof
  for all  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.
  
                    Section 15. Events of Default.  In case an Event of Default or
  an Event of Acceleration,  as defined n the Indenture,  with respect to Notes of
  this series shall have occurred and be  continuing,  the principal of all of the
  Notes of this series,  in the case of an Event of Default,  shall become,  or in
  the case of an Event of  Acceleration,  may be declared and in  accordance  with
  such  declaration  shall  become,  due and  payable  and  such  acceleration  or
  declaration may in certain events be rescinded,  in the manner,  with the effect
  and subject to the conditions provided in the Indenture.  In the event that this
  Note is an OID Note,  the amount of  principal of this Note that becomes due and
  payable upon such  acceleration  shall be equal to the amount  calculated as set
  forth in Section 6 hereof. Upon payment (i) of the aggregate  applicable amounts
  of principal of the Notes of this series so declared due and payable and (ii) of
  interest on any overdue  principal  and  overdue  interest  (in each case to the
  extent that the payment of such interest shall be legally  enforceable),  all of
  the  Company's  obligations  in respect of the payment of the  principal  of and
  interest, if any, on the Notes of this series shall terminate.
  
                    Section   16.    Subordination,    Regulatory   Matters.   The
  indebtedness  evidenced by this Note,  together with any interest accrued hereon
  and premium,  if any, is, to the extent  provided in the Indenture,  subordinate
  and  subject  in right of  payment  to the prior  payment  in full of all Senior
  Indebtedness,  as defined in the  Indenture,  and this Note is issued subject to
  the provisions of the Indenture,  and each Holder hereof, by accepting the same,
  agrees to and shall be bound by such  provisions  and authorizes and directs the
  Trustee in his behalf to take such action as may be necessary or  appropriate to
  acknowledge  or effectuate  the  subordination  as provided in the Indenture and
  appoints the Trustee his attorney-in-fact for any and all such purposes.
  
                    As provided in the Indenture,  the Company's obligation to pay
  the principal of the Notes of this series at Stated  Maturity or pursuant to any
  mandatory  sinking  fund shall be  suspended  if,  after  giving  effect to such
  payment and the payment of certain other  subordinated  debt, the Company's "net
  capital" would be reduced below the minimum  amounts of capital to be maintained
  by the Company as required by the various  domestic  exchanges,  boards of trade
  and governmental agencies to which it is subject, all with the effect and to the
  extent  provided in the Indenture.  Optional  redemptions are subject to similar
  suspensions and to the requirement that permission  therefor of the Exchange has
  been  obtained.  If payment is made of the principal of the Notes of this series
  notwithstanding the foregoing,  the Holders of the Notes so paid are required to
  repay to the Company,  its  successors  or assigns,  the sum so paid;  provided,
  however,  that any suit for such recovery must be commenced  within two years of
  the date of such payment.  Each Holder hereof,  by accepting the same, agrees to
  be bound by such provisions.
  
                    Section 17. No Recourse Against Certain  Persons.  No recourse
  for the payment of the principal of, premium,  if any, or interest on this Note,
  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 Note, 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.
  
       Section 18.  Defined Terms.  All terms used but not defined in this Note 
  are used herein as defined in the Indenture.
  
                    Section 19.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY 
  AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
  
  
  <PAGE>
  
  
                              OPTION TO ELECT REPAYMENT
  
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to have the Company  repay the Face Amount of this Note or portion  hereof below
  designated at (i) the Optional Repayment Percentage  multiplied by the Principal
  Amount of this Note to be repaid in respect  of such Face  Amount  plus  accrued
  interest to the Optional  Repayment  Date, if this Note is to be repaid pursuant
  to the Optional Repayment  provision described in Section 4 hereof, or (ii) 100%
  of the Principal Amount of this Note to be repaid in respect of such Face Amount
  plus accrued  interest to the Optional  Reset Date, if this Note is to be repaid
  pursuant to the Optional Interest Reset provision  described in Section 5 hereof
  or the  Extendible  Notes  provision  described  in  Section 7 hereof.  Any such
  election is irrevocable except as provided in Section 5 or Section 7 hereof.
  
  Dated:_________________                   _______________________________
                                            Signature
                                            Sign  exactly  as name appears on the
                                            front   of   this   Note   [SIGNATURE
                                            GUARANTEED  -  required only if Notes
                                            are  to be  issued  and  delivered to
                                            other than the registered Holder]
  
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  
  
  <PAGE>
  
  
                 OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
  
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to terminate the automatic  extension of this Note or of the portion of the Face
  Amount of this Note below designated.  Any such election is irrevocable and will
  be binding on any subsequent Holder hereof.
  
  Dated:_________________         _______________________________
                                  Signature
                                   Sign exactly as name appears on the front of 
                                   this Note[SIGNATURE GUARANTEED - required only
                                   if Notes are to be issued and delivered to
                                   other than the registered Holder]
  
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  
  
  <PAGE>
  
  
                                    ABBREVIATIONS
  
  
                    The following abbreviations, when used in the
  inscription  on the face of this  instrument,  shall be construed as though they
  were written out in full according to applicable laws or regulations:
  
                    TEN COM       -   as tenants in common
                    TEN ENT       -   as tenant by the entireties
                    JT TEN        -   as joint tenants with right of survivorship
                                      and not as tenantsin common
                                     
                    UNIF GIFT
                    MIN ACT       -   _________Custodian___________
                                   (Cust)             (Minor)
                                  Under Uniform Gifts to
                                  Minors Act
  
                                  -----------------------------
                                             (State)
  
  Additional abbreviations may also be used though not in the above list.
  
                         FOR VALUE RECEIVED, the undersigned
                   hereby sell(s), assign(s) and transfer(s) unto
  
  
  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  
  
  
  Please print or type name and address, including zip code of assignee
  
  
  the within Note of LEHMAN BROTHERS INC. and all rights thereunder and does
  hereby irrevocably constitute and appoint
  
  
  <PAGE>
  
  
  
  _____________________________________________________Attorney  to  transfer  the
  said  Note  on the  books  of the  within-named  Company,  with  full  power  of
  substitution in the premises.
  
  Dated:______________________________
  
  SIGNATURE GUARANTEED:__________________________________________
  
  
                                                       NOTICE:  The  signature  to
                                                       this     assignment    must
                                                       correspond with the name as
                                                       it appears upon the face of
                                                       the  within  Note in  every
                                                       particular,         without
                                                       alteration  or  enlargement
                                                       or any change whatsoever.
  
  
  <PAGE>
  
  
                                     Schedule I
  
  
                                 Amortization Table
  
  
                             Date                                Payment
  
                                                                        EXHIBIT A
                                   
  
                                    RESET NOTICE
  
  
                                LEHMAN BROTHERS INC.
                   Senior Subordinated Medium-Term Notes, Series A
                                    (Fixed Rate)
                               CUSIP No. _____________
                               Registered Nos. ___-___
  
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under the laws of the State of Delaware (the "Company"),  is the issuer
  of the above-referenced  Notes (the "Notes").  Capitalized terms used herein and
  not defined are used as defined in the Notes.
  
                    The Company hereby elects to reset the Interest Rate
  set forth on the face of the Notes.  On and after ____________1/, the Interest
  Rate shall be ________________.
  
                    Each Holder of a Note has the option to elect repayment by the
  Company  of such  Note,  or any  portion  thereof,  on any  Optional  Reset Date
  pursuant to the terms of such Note.  The Notes may be repaid on the dates and at
  the prices set forth below:
  
                    Date                                        Redemption Price
  
  
                    IN WITNESS WHEREOF, Lehman Brothers Inc. has caused this Reset
  Notice to be signed by its  Chairman of the Board,  one of its Vice  Chairmen of
  the Board, its President,  its Treasurer or one of its Vice Presidents and to be
  attested by its Secretary or one of its Assistant Secretaries.
  
  Dated:
  
                                                       LEHMAN BROTHERS INC.
  
  
                                                       By:________________________
                                       Title:
  
                                                       Attest:____________________
                                                                  Title:
  
  1/       Insert applicable Optional Reset Date.
  
  <PAGE>
  
                                                                    EXHIBIT 4.2
  CUSIP NO. _____________
  
  REGISTERED                                                    FACE AMOUNT:
  No. ____
  
  
  
                    If this Note is an OID Note (as defined  below) the  following
                    legend is applicable:
  
                    FOR  PURPOSES  OF SECTIONS  1272,  1273 AND 1275 OF THE UNITED
                    STATES  INTERNAL  REVENUE CODE OF 1986, AS AMENDED,  THE ISSUE
                    PRICE OF THIS NOTE IS ____% OF ITS PRINCIPAL  AMOUNT,  AND THE
                    AMOUNT OF  ORIGINAL  ISSUE  DISCOUNT,  THE  YIELD TO  MATURITY
                    COMPOUNDED  __________,  THE  ISSUE  DATE  AND THE  AMOUNT  OF
                    ORIGINAL  ISSUE   DISCOUNT   ALLOCABLE  TO  THE  SHORT  PERIOD
                    DETERMINED  USING THE  EXACT  METHOD  WITHIN  THE  MEANING  OF
                    PROPOSED TREASURY REGULATION SECTION 1.1272-1(c)(2)(ii) ARE AS
                    SET FORTH BELOW.
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                   (FLOATING RATE)
  
                    If the registered  owner of this Note (as indicated  below) is
  The Depository Trust Company (the  "Depository") or a nominee of the Depository,
  this Note is a Note in  global  form (a  "Global  Security")  and the  following
  legends are applicable except as specified on the reverse hereof:
  
  This Note is a Global Security  within the meaning of the Indenture  hereinafter
  referred to and is registered in the name of the  Depository or a nominee of the
  Depository. Unless this certificate is presented by an authorized representative
  of The  Depository  Trust Company (55 Water Street,  New York,  New York) to the
  Company (as defined below) or its agent for  registration of transfer,  exchange
  or payment and any certificate issued is registered in the name of Cede & Co. or
  such other name as requested by an authorized  representative  of The Depository
  Trust  Company and any payment is made to Cede & Co.,  ANY  TRANSFER,  PLEDGE OR
  OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY PERSON IS WRONGFUL  since
  the registered owner hereof, Cede & Co., has an interest herein.
  
  UNLESS AND UNTIL IT IS EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  CERTIFICATED
  FORM,  THIS  GLOBAL  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
  THE 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.
  
  
  <PAGE>
  
  ISSUE          OPTION ELECTION DATES:   OPTIONAL REPAYMENT DATES:
  PRICE:  $
  ISSUE DATE:                             OPTIONAL REPAYMENT PRICES:
  MATURITY                                OPTIONAL SPREAD OR SPREAD
  DATE:                                   MULTIPLIER RESET:
                                          [  ] YES          [  ] NO
  INTEREST       OPTION VALUE             OPTIONAL RESET DATES:
  RATE BASIS:    CALCULATION AGENT:
  MAXIMUM                                 OPTIONAL REDEMPTION:
  INTEREST                                [  ] YES          [  ] NO
  RATE:
  MINIMUM                                 INITIAL REDEMPTION DATE:
  INTEREST
  RATE:
  INTEREST       SINKING FUND:            INITIAL REDEMPTION
  RESET DATES:                            PERCENTAGE:      %
  INTEREST       TOTAL AMOUNT OF OID:     APPLICABILITY OF ANNUAL REDEMPTION
  PAYMENT                                 PERCENTAGE REDUCTION
  DATES:                                  [  ] YES          [  ] NO
                           If yes, state Annual Percentage
                                    Reduction: %
  REGULAR        YIELD TO MATURITY:       RENEWABLE NOTE:
  RECORD DATES:                           [  ] YES          [  ] NO
  INITIAL        INITIAL ACCRUAL PERIOD   INITIAL MATURITY DATE:
  INTEREST       OID:
  RATE:
  INDEX          AUTHORIZED               SPECIAL ELECTION INTERVAL:
  MATURITY:      DENOMINATIONS:
  SPREAD:        EXTENDIBLE NOTE:         RENEWABLE IN PART:
                 [  ] YES          [  ]   [  ] YES          [  ] NO
                                            NO
  SPREAD         EXTENSION PERIOD:        AUTHORIZED RENEWABLE AMOUNTS:
  MULTIPLIER:
  INTEREST       NUMBER OF EXTENSION      SPECIAL ELECTION PERIOD:
  DETERMINATION  PERIODS:
  DATE:
  DEPOSITORY:
  <PAGE>
  
  
  
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing  under the laws of the State of Delaware  (herein called the "Company",
  which term includes any successor corporation under the Indenture referred to on
  the  reverse   hereof),   for  value   received,   hereby  promises  to  pay  to
  ____________________________,  or registered  assigns,  on the Maturity Date the
  Principal  Amount hereof (as defined below) and, if so specified  above,  to pay
  interest  thereon  from the Issue Date  specified  above or from the most recent
  Interest  Payment Date  specified  above to which interest has been paid or duly
  provided for at the rate per annum  determined in accordance with the provisions
  on the reverse  hereof,  depending on the Interest Rate Basis  specified  above,
  until the  principal  hereof is paid or made  available  for payment and (to the
  extent that the payment of such interest shall be legally  enforceable)  at such
  rate  per  annum  on any  overdue  principal  and  premium  and  on any  overdue
  instalment of interest.  The  "Principal  Amount" of this Note at any time means
  (i) if this Note is an OID Note (as defined below), the Amortized Face Amount at
  such time as described in Section 7 on the reverse  hereof and (ii) in all other
  cases, the Face Amount hereof.
  
                    If this Note is  subject  to an Annual  Redemption  Percentage
  Reduction  as  specified  above,  the  Redemption  Price shall  initially be the
  Initial  Redemption  Percentage  of the  Principal  Amount  of this  Note on the
  Initial  Redemption  Date and shall decline at each  anniversary  of the Initial
  Redemption Date (each such date, a "Redemption  Date") by the Annual  Percentage
  Reduction of such Principal  Amount until the  Redemption  Price is 100% of such
  Principal Amount.
  
                    In the event of any optional  redemption  by the Company,  any
  repayment at the option of the Holder, acceleration of the maturity of this Note
  or other prepayment of this Note prior to the Maturity Date specified above, the
  term "Maturity" when used herein shall refer,  where applicable,  to the date of
  redemption, repayment, acceleration or other prepayment of this Note.
  
                    An "OID Note" is (a) any Note that has been issued at an Issue
  Price lower, by more than a de minimis amount (as determined under United States
  federal income tax rules  applicable to original  issue  discount  instruments),
  than the Face  Amount  thereof and (b) any Note not  identified  in (a) that for
  United States  federal income tax purposes would be considered an original issue
  discount instrument.
  
                    Except as provided  in the  following  paragraph,  the Company
  will pay interest on each Interest Payment Date specified above, commencing with
  the first Interest Payment Date next succeeding the Issue Date, and at Maturity;
  provided, that any payment of principal, premium, if any, or interest to be made
  on any Interest Payment Date or on a date of Maturity that is not a Business Day
  shall be made on the next succeeding Business Day with the same force and effect
  as if made on such Interest  Payment Date or such date of Maturity,  as the case
  may be, and no  additional  interest  shall  accrue as a result of such  delayed
  payment,  except  that if this Note is a LIBOR Note (as  defined in Section 2 on
  the reverse  hereof)  and such next  succeeding  Business  Day falls in the next
  calendar month, such payment shall be made on the preceding day that is a London
  Banking Day.  The term  "Business  Day" means any day,  other than a Saturday or
  Sunday, that meets each of the following  applicable  requirements:  such day is
  (a) not a day on which banking  institutions  in the Borough of  Manhattan,  The
  City of New York are  authorized or required by law or regulation to close;  and
  (b) if this Note is a LIBOR Note, a London Banking Day. The term "London Banking
  Day" means any day on which dealings in deposits in U.S.  Dollars are transacted
  in the London interbank market.  Unless otherwise  specified above, the interest
  payable  on each  Interest  Payment  Date or at  Maturity  will be the amount of
  interest  accrued from and  including  the Issue Date or from and  including the
  last Interest  Payment Date to which interest has been paid, as the case may be,
  to, but excluding,  such Interest  Payment Date or the date of Maturity,  as the
  case may be; provided,  however, that if interest on this Note is reset daily or
  weekly,  interest  payable on each  Interest  Payment Date will be the amount of
  interest  accrued from and  including  the Issue Date or from and  excluding the
  last  date to  which  interest  has been  paid,  as the  case  may be,  to,  and
  including,  the Regular Record Date immediately  preceding such Interest Payment
  Date, except that at Maturity the interest payable will include interest accrued
  to, but excluding, the date of Maturity.
  
                    Unless otherwise  specified above, the interest payable on any
  Interest Payment Date will, as provided in the Indenture,  be paid to the person
  in whose name this Note (or one or more predecessor  Notes) is registered at the
  close of business on the Regular Record Date  indicated  above (whether or not a
  Business  Day) next  preceding  such  Interest  Payment  Date;  provided,  that,
  notwithstanding any provision of the Indenture to the contrary, interest payable
  on any date of Maturity shall be payable to the Person to whom  principal  shall
  be payable;  and provided,  further,  that, unless otherwise specified above, in
  the case of a Note  initially  issued  between  a  Regular  Record  Date and the
  Interest  Payment Date  relating to such Regular  Record Date,  interest for the
  period  beginning  on the Issue Date and ending on such  Interest  Payment  Date
  shall be paid on the Interest Payment Date following the next succeeding Regular
  Record Date to the  registered  Holder on such next  succeeding  Regular  Record
  Date.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  all payments of interest on this Note (other
  than  interest  payable at Maturity)  will be made by wire transfer or by check;
  provided,  that, if the Holder hereof is the Holder of U.S.  $10,000,000 or more
  in  aggregate  Principal  Amount of Notes of this series of like tenor and term,
  such  Holder  shall be  entitled to receive  interest  payments  in  immediately
  available  funds,  but only if complete and appropriate  instructions  have been
  received in writing by the Trustee (or any duly  appointed  Paying  Agent) on or
  prior to the applicable Regular Record Date.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  payments of principal,  premium, if any, and
  interest  payable at Maturity will be made in immediately  available  funds upon
  surrender  of this Note at the  corporate  trust office or agency of the Trustee
  (or any duly appointed Paying Agent)  maintained for that purpose in the Borough
  of Manhattan,  The City of New York (the "Corporate  Trust  Office"),  provided,
  that this Note is  presented  to the Trustee (or any such Paying  Agent) in time
  for the Trustee (or any such Paying  Agent) to make such  payments in such funds
  in accordance with its normal procedures.
  
                    Unless  otherwise  specified  above,  if this Note is a Global
  Security,  payments of interest  hereon (other than at Maturity) will be made in
  funds in accordance with existing  arrangements between the Trustee (or any duly
  appointed Paying Agent) and the Depository. Unless otherwise specified above, if
  this Note is a Global Security, any principal,  premium, if any, and/or interest
  payable  hereon  at  Maturity  will  be paid by  wire  transfer  in  immediately
  available funds to an account specified by the Depository.
  
                    The Company will pay any administrative costs imposed by banks
  in making payments in immediately  available funds,  but any tax,  assessment or
  governmental  charge  imposed  upon  payments  hereunder,   including,   without
  limitation, any withholding tax, will be borne by the Holder hereof.
  
                    REFERENCE  IS HEREBY  MADE TO THE FURTHER  PROVISIONS  OF THIS
  NOTE SET FORTH ON THE REVERSE  HEREOF.  SUCH  FURTHER  PROVISIONS  SHALL FOR ALL
  PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
  
                    This  Note  shall not be  entitled  to any  benefit  under the
  Indenture or be valid or become obligatory for any purpose until the certificate
  of  authentication  hereon  shall  have  been  signed by the  Trustee  under the
  Indenture.
  
                    IN WITNESS  WHEREOF,  Lehman  Brothers  Inc.  has caused  this
  instrument  to be signed by its Chairman of the Board,  one of its Vice Chairmen
  of the  Board,  its  President  or one of its  Vice  Presidents,  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:
  
  [SEAL]                              LEHMAN BROTHERS INC.
  
  
  
                           By:____________________________
  Name:
  Title:
  
  
  
                           Attest:________________________
  Name:
  Title:
  
  
  <PAGE>
  
  
  TRUSTEE'S CERTIFICATE OF AUTHENTICATION
  
  This is one of the Securities of the series designated herein referred to in the
  within-mentioned Indenture.
  
  
  THE FIRST NATIONAL BANK OF CHICAGO
    as Trustee
  
  
  By:_________________________
  Authorized Officer
  
  
  <PAGE>
  
  
                                  [REVERSE OF NOTE]
  
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                   (Floating Rate)
  
  
                    Section  1.  General.  This  Note is one of a duly  authorized
  series of Notes of the Company designated as the Senior Subordinated Medium-Term
  Notes,  Series A (Floating  Rate) of the Company  (herein  called the  "Notes"),
  limited in  aggregate  principal  amount to  $________________  (or such greater
  amount,  if OID Notes are issued, as shall result in aggregate gross proceeds to
  the Company of  $__________________),  subject to  reduction  as a result of the
  sale under certain  circumstances  of other debt securities of the Company.  The
  foregoing  limit,  however,  may be increased by the Company if in the future it
  determines  that it may wish to sell additional  Notes.  The Notes are one of an
  indefinite number of series of debt securities of the Company (collectively, the
  "Securities") issued or issuable under and pursuant to an indenture, dated as of
  March 1, 1996 (the "Indenture"),  duly executed and delivered by the Company and
  The First National Bank of Chicago, as Trustee (herein called the "Trustee"), 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  Trustee,  the  Company  and the  holders  of the
  Securities  and of the terms  upon  which  the  Securities  are,  and are to be,
  authenticated and delivered.  The separate series of Securities may be issued in
  various  aggregate  principal  amounts,  may mature at different times, may bear
  interest (if any) at  different  rates,  may be subject to different  redemption
  provisions  or  repayment  or  repurchase  rights  (if any),  may be  subject to
  different  sinking,  purchase  or  analogous  funds (if any),  may be subject to
  different  covenants  and Events of  Accleration  and Events of Default  and may
  otherwise vary as in the Indenture provided.
  
                    Section 2. Determination of Interest Rate. For the period from
  the Issue Date to the first  Interest  Reset Date set forth on the face  hereof,
  the interest  rate hereon shall be the Initial  Interest  Rate  specified on the
  face hereof. Thereafter, the interest rate hereon will be reset on each Interest
  Reset Date; provided, however, that the interest rate in effect for the ten days
  immediately  prior to Maturity will be that in effect on the tenth day preceding
  such Maturity. If any Interest Reset Date would otherwise be a day that is not a
  Business  Day  (or,  if this  Note is a LIBOR  Note,  a day that is not a London
  Banking Day),  such Interest  Reset Date shall be postponed to the next day that
  is a Business  Day (or, if this Note is a LIBOR Note,  to the next day that is a
  London  Banking  Day),  except that if this Note is a LIBOR Note and such London
  Banking Day is in the next succeeding  calendar month,  such Interest Reset Date
  shall  be the  immediately  preceding  London  Banking  Day.  If this  Note is a
  Treasury  Rate Note (as defined  below) and an auction date for  Treasury  bills
  shall fall on any  Interest  Reset  Date,  then such  Interest  Reset Date shall
  instead be the first  Business Day  immediately  following  such  auction  date.
  Subject to applicable  provisions of law and except as specified herein, on each
  Interest  Reset  Date,  the rate of interest on this Note on and after the first
  Interest  Reset  Date  shall  be the  rate  determined  in  accordance  with the
  provisions of the heading  below which has been  designated as the Interest Rate
  Basis on the face hereof plus or minus the Spread, if any, specified on the face
  hereof or multiplied  by the Spread  Multiplier,  if any,  specified on the face
  hereof.
  
           Commercial Paper Rate Notes
  
                    If the Interest Rate Basis is the commercial  Paper Rate, this
  Note is a "Commercial  Paper Rate Note." A Commercial  Paper Rate Note will bear
  interest at the interest rate calculated with reference to the Commercial  Paper
  Rate and the Spread or Spread Multiplier,  if any. Unless otherwise specified on
  the face hereof,  "Commercial  Paper Rate"  means,  with respect to any Interest
  Determination  Date, the Money Market Yield  (calculated as described  below) of
  the rate on that date for commercial  paper having the applicable Index Maturity
  as such rate is  published  in the  publication  entitled  "Statistical  Release
  H.15(519), Selected Interest Rates," or any successor publication,  published by
  the Board of Governors of the Federal  Reserve  System  ("H.15(519)")  under the
  heading "Commercial Paper". If such rate is not published by 9:00 A.M., New York
  City  time,  on the  Calculation  Date (as  defined  below)  pertaining  to such
  Interest  Determination  Date, then the Commercial Paper Rate shall be the Money
  Market  Yield of the rate on such  Interest  Determination  Date for  commercial
  paper having the applicable Index Maturity as published in the daily statistical
  release entitled "Composite 3:30 P.M. Quotations for U.S. Government Securities"
  (or any successor publication) published by the Federal Reserve Bank of New York
  ("Composite  Quotations") under the heading  "Commercial Paper". If such rate is
  not yet published in either H.15(519) or Composite  Quotations by 3:00 P.M., New
  York City time, on such  Calculation  Date,  then the Commercial  Paper Rate for
  such Interest  Determination  Date shall be calculated by the Calculation  Agent
  and shall be the Money Market Yield of the arithmetic  mean of the offered rates
  as of 11:00 A.M.,  New York City time,  on such Interest  Determination  Date of
  three leading  dealers of  commercial  paper in The City of New York selected by
  the Calculation  Agent after  consultation with the Company for commercial paper
  having the applicable Index Maturity,  placed for industrial  issuers whose bond
  rating is "AA",  or the  equivalent,  from a  nationally  recognized  securities
  rating agency;  provided,  however, that if the dealers selected as aforesaid by
  the  Calculation  Agent are not  quoting  as  mentioned  in this  sentence,  the
  Commercial  Paper Rate for the applicable  period will be the  Commercial  Paper
  Rate in effect on such Interest Determination Date.
  
                    "Money Market Yield" shall be a yield calculated in accordance
  with the following formula:
  
                    Money                                Market  Yield = D X 360 x
                                                         100 360 - (D X M)
  
  where "D" refers to the per annum  rate for the  commercial  paper,  quoted on a
  bank  discount  basis and  expressed as a decimal;  and "M" refers to the actual
  number of days in the interest period for which interest is being calculated.
  
           Federal Funds Effective Rate Notes
  
                    If the  Interest  Rate Basis is the  Federal  Funds  Effective
  Rate,  this Note is a  "Federal  Funds  Effective  Rate  Note." A Federal  Funds
  Effective  Rate Note will bear  interest at the interest  rate  calculated  with
  reference  to the  Federal  Funds  Effective  Rate  and  the  Spread  or  Spread
  Multiplier,  if any.  Unless  otherwise  specified on the face hereof,  "Federal
  Funds Effective Rate" means,  with respect to any Interest  Determination  Date,
  the rate on that day for  Federal  Funds as  published  in  H.15(519)  under the
  heading  "Federal Funds  (Effective)"  or, if not so published by 9:00 A.M., New
  York  City  time,  on  the   Calculation   Date   pertaining  to  such  Interest
  Determination  Date,  the Federal Funds  Effective Rate will be the rate on such
  Interest  Determination  Date as  published in  Composite  Quotations  under the
  heading  "Federal  Funds/Effective  Rate".  If such rate is not yet published in
  either  H.15(519) or Composite  Quotations by 3:00 P.M.,  New York City time, on
  the Calculation  Date pertaining to such Interest  Determination  Date, then the
  Federal  Funds  Effective  Rate for such  Interest  Determination  Date  will be
  calculated by the Calculation Agent and will be the arithmetic mean of the rates
  as of 11:00 A.M.,  New York City time, on such Interest  Determination  Date for
  the last  transaction  in  overnight  Federal  Funds  arranged by three  leading
  brokers of Federal  Funds  transactions  in The City of New York selected by the
  Calculation Agent after consultation with the Company;  provided,  however, that
  if the brokers selected as aforesaid by the Calculation Agent are not quoting as
  mentioned in this sentence,  the Federal Funds Effective Rate for the applicable
  period  will be the  Federal  Funds  Effective  Rate in effect on such  Interest
  Determination Date.
  
           CD Rate Notes
  
                    If the Interest Rate Basis is the CD Rate,  this Note is a "CD
  Rate Note." A CD Rate Note will bear  interest at the interest  rate  calculated
  with  reference  to the CD Rate and the  Spread  or Spread  Multiplier,  if any.
  Unless otherwise  specified on the face hereof, "CD Rate" means, with respect to
  any  Interest   Determination  Date,  the  rate  on  such  date  for  negotiable
  certificates  of deposit  having the  applicable  Index Maturity as published in
  H.15(519) under the heading "CDs (Secondary  Market)" or, if not so published by
  9:00 A.M.,  New York City  time,  on the  Calculation  Date  pertaining  to such
  Interest  Determination  Date,  the CD Rate  will be the  rate on such  Interest
  Determination  Date for  negotiable  certificates  of deposit of the  applicable
  Index  Maturity  as  published  in  Composite   Quotations   under  the  heading
  "Certificates of Deposit". If such rate is not yet published in either H.15(519)
  or Composite  Quotations by 3:00 P.M.,  New York City time, on such  Calculation
  Date, then the CD Rate for such Interest  Determination  Date will be calculated
  by the Calculation Agent and will be the arithmetic mean of the secondary market
  offered  rates as of the  opening  of  business,  New York  City  time,  on such
  Interest Determination Date, of three leading nonbank dealers in negotiable U.S.
  dollar  certificates  of  deposit  in The  City  of  New  York  selected  by the
  Calculation   Agent  after   consultation   with  the  Company  for   negotiable
  certificates of deposit of major United States money center banks of the highest
  credit  standing (in the market for negotiable  certificates  of deposit) with a
  remaining maturity closest to the applicable Index Maturity in a denomination of
  $5,000,000;  provided, however, that if the dealers selected as aforesaid by the
  Calculation Agent are not quoting as mentioned in this sentence, the CD Rate for
  the  applicable  period  will  be  the  CD  Rate  in  effect  on  such  Interest
  Determination Date.
  
           LIBOR Notes
  
                    If the  Interest  Rate  Basis is LIBOR,  this Note is a "LIBOR
  Note." A LIBOR Note will bear  interest at the  interest  rate  calculated  with
  reference to LIBOR and the Spread or Spread Multiplier, if any. Unless otherwise
  indicated  on  the  face  hereof,  "LIBOR"  means  the  rate  determined  by the
  Calculation Agent as follows:
  
                    (a) With respect to an Interest Determination Date, LIBOR will
  be, as  specified  on the face  hereof,  either (i) the  arithmetic  mean of the
  offered  rates for deposits in U.S.  dollars for the period  (commencing  on the
  Interest  Reset  Date) of the  applicable  Index  Maturity  which  appear on the
  display designated as page "LIBO" on the Reuters Monitor Money Rates Service, or
  such other page as may replace the LIBO page on that  service for the purpose of
  displaying  London  interbank  offered rates of major banks (the "Reuters Screen
  LIBO  Page"),  at  approximately  11:00  A.M.,  London  time,  on such  Interest
  Determination  Date,  if at least two such  offered  rates appear on the Reuters
  Screen LIBO Page  ("LIBOR  Reuters"),  or (ii) the offered  rate for deposits in
  U.S.  dollars  for the period  (commencing  on the  Interest  Reset Date) of the
  applicable  Index  Maturity  which appears on the Telerate Page 3750 (as defined
  below),  as  applicable,  at  approximately  11:00 A.M.,  London  time,  on such
  Interest  Determination  Date ("LIBOR  Telerate").  If neither LIBOR Reuters nor
  LIBOR  Telerate is specified on the face hereof,  LIBOR will be determined as if
  LIBOR Telerate had been specified.
  
                    (b) With  respect to an Interest  Determination  Date on which
  fewer than two offered rates appear on the Reuters Screen LIBO Page as specified
  in (a)(i)  above,  or on which no rate  appears on the  Telerate  Page 3750,  as
  applicable, as specified in (a)(ii) above, as applicable,  the Calculation Agent
  will  request  the  principal  London  office of each of four major banks in the
  London interbank market, as selected by the Calculation Agent after consultation
  with the Company,  to provide the Calculation  Agent with its offered  quotation
  for deposits in U.S.  dollars for the period  (commencing  on the Interest Reset
  Date) of the applicable  Index  Maturity to prime banks in the London  interbank
  market at approximately 11:00 A.M., London time, on such Interest  Determination
  Date and in a principal  amount  equal to an amount of not less than  $1,000,000
  that is representative  of a single  transaction in such market at such time. If
  at least two such  quotations  are  provided,  LIBOR in respect of such Interest
  Determination Date will be the arithmetic mean of such quotations. If fewer than
  two  such   quotations   are  provided,   LIBOR  in  respect  of  such  Interest
  Determination  Date  will  be  the  arithmetic  mean  of  the  rates  quoted  at
  approximately  11:00 A.M.,  New York City time, on such  Interest  Determination
  Date by three  major banks in The City of New York  selected by the  Calculation
  Agent after  consultation with the Company for loans in the applicable  currency
  to leading  European  banks,  for the period  (commencing  on the Interest Reset
  Date) of the  applicable  Index  Maturity and in a principal  amount equal to an
  amount  of  not  less  than  $1,000,000  that  is  representative  of  a  single
  transaction in such market at such time, provided, however, that if the banks in
  The City of New York  selected as  aforesaid  by the  Calculation  Agent are not
  quoting as mentioned in this sentence,  LIBOR for the applicable  period will be
  LIBOR as in effect on such Interest Determination Date.
  
                    The term "Telerate Page 3750" means the display  designated as
  page "3750" on the Telerate Service,  or such other page as may replace the 3750
  page on that  service or such other  service or services as may be  nominated by
  the British Bankers'  Association for the purpose of displaying London interbank
  offered rates for deposits in U.S.  Dollars,  British  Pounds  Sterling,  German
  Deutsche Marks, Swiss Francs, Japanese Yen and ECU.
  
           Prime Rate Notes
  
                    If the Interest  Rate Basis is the Prime Rate,  this Note is a
  "Prime Rate Note." A Prime Rate Note will bear  interest  at the  interest  rate
  calculated with reference to the Prime Rate and the Spread or Spread Multiplier,
  if any. Unless otherwise specified on the face hereof,  "Prime Rate" means, with
  respect to any Interest Determination Date, the rate on that day as published in
  H.15(519)  under the heading  "Bank Prime Loan" or, if not so  published by 9:00
  A.M., New York City time, on the  Calculation  Date  pertaining to such Interest
  Determination  Date, the Prime Rate will be determined by the Calculation  Agent
  and will be the arithmetic mean of the rates of interest  publicly  announced by
  each bank named on the display  designated as page "NYMF" on the Reuters Monitor
  Money  Rates  Service,  or such other page as may  replace the NYMF page on that
  service for the purpose of displaying prime rates or base lending rates of major
  United States banks (the "Reuters Screen NYMF Page"),  as such bank's prime rate
  or base lending rate as in effect for such Interest Determination Date. If fewer
  than four such rates but more than one such rate  appear on the  Reuters  Screen
  NYMF  Page  for  such  Interest  Determination  Date,  the  Prime  Rate  will be
  determined by the Calculation Agent and will be the arithmetic mean of the prime
  rates  quoted on the basis of the actual  number of days in the year  divided by
  360 as of the close of  business  on such  Interest  Determination  Date by four
  major money  center  banks in The City of New York  selected by the  Calculation
  Agent after  consultation with the Company.  If fewer than two such rates appear
  on the  Reuters  Screen  NYMF  Page,  the Prime Rate will be  calculated  by the
  Calculation  Agent and will be the arithmetic  mean of the prime rates in effect
  for such Interest  Determination Date as furnished in The City of New York by at
  least three  substitute  banks or trust  companies  organized and doing business
  under the laws of the United States,  or any state thereof,  in each case having
  total equity capital of at least  $500,000,000  and being subject to supervision
  or examination by federal or state authority,  selected by the Calculation Agent
  after  consultation  with the Company to provide  such rate or rates;  provided,
  however,  that if the banks or trust  companies  selected as  aforesaid  are not
  quoting as mentioned in this sentence,  the Prime Rate for the applicable period
  will be the Prime Rate in effect on such Interest Determination Date.
  
           Treasury Rate Notes
  
                    If the Interest Rate Basis is the Treasury Rate,  this Note is
  a "Treasury  Rate Note." A Treasury Rate Note will bear interest at the interest
  rate  calculated  with  reference to the Treasury  Rate and the Spread or Spread
  Multiplier,  if any.  Unless  otherwise  specified on the face hereof  "Treasury
  Rate" means, with respect to any Interest  Determination  Date, the rate for the
  auction held on such Interest  Determination  Date of direct  obligations of the
  United  States  ("Treasury  bills")  having the  applicable  Index  Maturity  as
  published in H.15(519) under the heading "U.S.  Government  Securities--Treasury
  bills-- auction average  (investment)" or, if not so published by 9:00 A.M., New
  York  City  time,  on  the   Calculation   Date   pertaining  to  such  Interest
  Determination Date, the auction average rate (expressed as a bond equivalent, on
  the basis of a year of 365 or 366 days,  as  applicable,  and applied on a daily
  basis) as otherwise  announced by the United States  Department of the Treasury.
  In the event  that the  results  of the  auction of  Treasury  bills  having the
  applicable  Index  Maturity are not  published or reported as provided  above by
  3:00 P.M., New York City time, on such Calculation Date or if no such auction is
  held on such  Interest  Determination  Date,  then the  Treasury  Rate  shall be
  calculated by the Calculation Agent and shall be a yield to maturity  (expressed
  as a bond equivalent,  on the basis of a year of 365 or 366 days, as applicable,
  and applied on a daily basis) of the arithmetic mean of the secondary market bid
  rates,  as of  approximately  3:30 P.M.,  New York City time,  on such  Interest
  Determination Date, of three leading primary United States government securities
  dealers selected by the Calculation  Agent after  consultation  with the Company
  for the  issue of  Treasury  bills  with a  remaining  maturity  closest  to the
  applicable Index Maturity;  provided,  however,  that if the dealers selected as
  aforesaid  by the  Calculation  Agent  are  not  quoting  as  mentioned  in this
  sentence,  the Treasury Rate for the applicable period will be the Treasury Rate
  in effect on such Interest Determination Date.
  
                    The term  "Calculation  Date"  means  the  date on  which  the
  Calculation Agent is to calculate an interest rate for this Note, which shall be
  the tenth calendar day after the related Interest  Determination Date or if such
  day is not a Business Day, the next succeeding  Business Day,  unless  otherwise
  specified on the face hereof.
  
                    Notwithstanding the foregoing,  the interest rate hereon shall
  not be greater than the Maximum  Interest Rate, if any, or less than the Minimum
  Interest Rate, if any, shown on the face hereof.  The interest rate on this Note
  will in no event be higher than the maximum  rate  permitted  by New York law as
  the same may be modified by United States law of general applicability.
  
                    The Calculation  Agent will, upon the request of the Holder of
  this Note,  provide the  interest  rate then in effect and, if  determined,  the
  interest rate which will become effective as a result of a determination made on
  the most recent Interest Determination Date with respect to this Note.
  
                    Unless  otherwise  specified on the face hereof,  the Interest
  Determination  Date  pertaining  to an  Interest  Reset  Date  will be (a)  such
  Interest  Reset Date for a Prime Rate Note and (b) the  Business  Day  preceding
  such  Interest  Reset Date for a  Commercial  Paper Rate Note,  a Federal  Funds
  Effective Rate Note or a CD Rate Note.  Unless  otherwise  specified on the face
  hereof, the Interest Determination Date pertaining to an Interest Reset Date for
  a LIBOR Note will be the second London Banking Day preceding such Interest Reset
  Date. Unless otherwise specified on the face hereof, the Interest  Determination
  Date  pertaining to an Interest  Reset Date for a Treasury Rate Note will be the
  day of the week in which such Interest  Reset Date falls on which Treasury bills
  of the applicable Index Maturity would normally be auctioned. Treasury bills are
  usually  sold at  auction  on Monday of each  week,  unless  that day is a legal
  holiday,  in which case the auction is usually  held on the  following  Tuesday,
  except that such auction may be held on the preceding Friday.  If, as the result
  of a legal holiday,  an auction is so held on the preceding Friday,  such Friday
  will be the Interest  Determination  Date  pertaining to the Interest Reset Date
  occurring in the next succeeding week.
  
                    Accrued  interest from the Issue Date or from the last date to
  which interest has been paid shall be calculated by multiplying  the face amount
  of this Note by an accrued interest  factor.  This accrued interest factor shall
  be  computed by adding the  interest  factors  calculated  for each day from the
  Issue Date or from the last date to which  interest  has been paid,  to the date
  for which accrued  interest is being  calculated.  The interest  factor for each
  such day is computed by dividing the interest  rate  applicable  to such date by
  360, in the case of Commercial  Paper Rate Notes,  Federal Funds  Effective Rate
  Notes, CD Rate Notes,  LIBOR Notes and Prime Rate Notes, or by the actual number
  of days in the year,  in the case of Treasury  Rate  Notes.  The  interest  rate
  applicable  to any day that is an Interest  Reset Date is the  interest  rate as
  determined,  in accordance with the procedures set forth above,  with respect to
  the Interest  Determination  Date  pertaining to such Interest  Reset Date.  The
  interest  rate  applicable  to any  other  day  is the  interest  rate  for  the
  immediately  preceding  Interest Reset Date (or, if none,  the Initial  Interest
  Rate).
  
                    Unless otherwise specified on the face hereof, all percentages
  resulting  from any  calculation  of the rate of  interest  on this Note will be
  rounded,  if  necessary,  to the  nearest  one  hundred-thousandth  of a percent
  (.0000001),  with five  one-millionths of a percentage point rounded upward, and
  all currency  amounts used in or resulting from such calculation will be rounded
  to the nearest  one-hundredth  of a unit (with five one-  thousandths  of a unit
  being rounded upwards).
  
                    Section 3. Redemption. If so specified on the face hereof, the
  Company may at its option redeem this Note in whole or from time to time in part
  on or after  the date  designated  as the  Initial  Redemption  Date on the face
  hereof (which shall not be prior to the first  anniversary  date of the original
  issuance  hereof)  at  either a price  based  on a  constant  percentage  of the
  Principal  Amount  of this  Note as  specified  on the face  hereof or at prices
  declining from the premium  specified on the face hereof, if any, to 100% of the
  Principal  Amount hereof,  together,  in each case, with accrued interest to the
  Redemption  Date;  provided,  however,  that permission of the Exchange for such
  redemption  has been  obtained.  The Company may exercise such option by causing
  the Trustee to mail by  first-class  mail to the Holder  hereof a notice of such
  redemption at least 30 but not more than 60 days prior to the  Redemption  Date.
  In the event of  redemption  of this Note in part  only,  a new Note or Notes of
  this series for the unredeemed portion hereof shall be issued in the name of the
  Holder hereof upon the  cancellation  hereof in accordance with the terms of the
  Indenture.  Unless otherwise  specified on the face hereof,  if less than all of
  the Notes with like tenor and terms to this Note are to be  redeemed,  the Notes
  to be  redeemed  shall be  selected by the Trustee by such method as the Trustee
  shall deem fair and appropriate.
  
                    Section 4.  Sinking Funds.  Unless otherwise specified on the
   face hereof, this Note will not be subject to any sinking fund.
  
                    Section 5.  Optional  Repayment.  If so  specified on the face
  hereof,  this Note will be repayable prior to the Maturity Date at the option of
  the Holder on the Optional  Repayment  Dates specified on the face hereof at the
  Optional  Repayment Prices  specified on the face hereof,  together with accrued
  interest to the applicable  Optional Repayment Date. Unless otherwise  specified
  on the face  hereof,  in order for this Note to be so repaid,  the Paying  Agent
  must  receive,  at  least  30 but not more  than 45 days  prior  to an  Optional
  Repayment  Date,  either (i) this Note with the form below  entitled  "Option to
  Elect   Repayment"  duly  completed  or  (ii)  a  telegram,   telex,   facsimile
  transmission  or letter from a member of a national  securities  exchange or the
  National  Association of Securities Dealers,  Inc. or a commercial bank or trust
  company in the United States  setting forth the name of the Holder  hereof,  the
  Face Amount hereof,  the Face Amount to be repaid, the certificate number hereof
  or a  description  of the tenor and terms of this  Note,  a  statement  that the
  option to elect repayment is being  exercised  thereby and a guarantee that this
  Note with the form below  entitled  "Option to Elect  Repayment"  duly completed
  will be received by the Paying Agent not later than five Business Days after the
  date of such telegram, telex, facsimile transmission or letter and this Note and
  form duly completed are received by the Paying Agent by such fifth Business Day.
  Exercise of this  repayment  option  shall be  irrevocable,  except as otherwise
  provided under Section 6 or Section 8. The repayment  option may be exercised by
  the  Holder  of this  Note  with  respect  to less  than  the Face  Amount  then
  outstanding  provided  that the Face  Amount of the Note  remaining  outstanding
  after repayment is an authorized denomination.  Upon such partial repayment this
  Note shall be cancelled  and a new Note or Notes for the  remaining  Face Amount
  hereof shall be issued in the name of the Holder of this Note.
  
                    Section 6. Optional Spread or Spread  Multiplier  Reset. If so
  specified on the face hereof, the Spread or Spread Multiplier, if any, set forth
  on the face hereof may be reset at the option of the Company,  in the manner set
  forth below (unless  otherwise  specified on the face  hereof),  on the Optional
  Reset Date or Optional Reset Dates specified on the face hereof. The Company may
  exercise  such option by  notifying  the Trustee in writing of such  exercise at
  least 45 but not more than 60 days prior to an Optional  Reset  Date.  Not later
  than  five  Business  Days  after  receipt  thereof,  the  Trustee  will mail by
  first-class  mail to the  Holder  of this  Note a notice  (the  "Reset  Notice")
  setting  forth (i) the  election  of the  Company  to reset the Spread or Spread
  Multiplier,  (ii) such new Spread or Spread Multiplier and (iii) the provisions,
  if any, for  redemption  during the period from such Optional  Reset Date to the
  next Optional  Reset Date or, if there is no such next  Optional  Reset Date, to
  the  Maturity  Date of this  Note  (each  such  period  a  "Subsequent  Interest
  Period"),  including the date or dates on which or the period or periods  during
  which and the price or prices at which such  redemption  may occur  during  such
  Subsequent  Interest Period. The Reset Notice shall be substantially in the form
  of Exhibit A to this Note. Upon the transmittal by the Trustee of a Reset Notice
  to the Holder of this  Note,  such new  Spread or Spread  Multiplier  shall take
  effect  automatically,  and,  except  as  modified  by the Reset  Notice  and as
  described in the next paragraph,  this Note will have the same terms as prior to
  the transmittal of such Reset Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  an Optional  Reset Date,  the Company  may, at its option,  revoke the Spread or
  Spread  Multiplier  provided for in the Reset  Notice and  establish a Spread or
  Spread  Multiplier  that is higher than the  interest  rate  provided for in the
  Reset Notice for the  Subsequent  Interest  Period  commencing  on such Optional
  Reset Date by causing  the  Trustee to mail by  first-class  mail notice of such
  higher Spread or Spread Multiplier to the Holder of this Note. Such notice shall
  be  irrevocable  and shall be mailed by the Trustee  within five  Business  Days
  after  receipt  thereof.  All Notes  with  respect to which the Spread or Spread
  Multiplier  is reset on an Optional  Reset Date will bear such higher  Spread or
  Spread Multiplier for the Subsequent Interest Period.
  
                    If the Company elects to reset the Spread or Spread Multiplier
  of this Note, the Holder of this Note will have the option to elect repayment by
  the Company of this Note, or any portion hereof, on any Optional Reset Date at a
  price calculated with reference to the Face Amount hereof to be repaid, plus any
  interest accrued to such Optional Reset Date. In order to obtain repayment on an
  Optional  Reset Date,  the Holder must follow the  procedures set forth above in
  Section  5 for  optional  repayment  except  that the  period  for  delivery  or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to such  Optional  Reset Date and except that,  if the Holder has tendered  this
  Note for  repayment  pursuant  to the Reset  Notice,  the Holder may, by written
  notice to the  Trustee,  revoke  such  tender for  repayment  until the close of
  business on the tenth day prior to such Optional Reset Date; provided,  however,
  that if such day is not a  Business  Day,  then such  notice may be given on the
  next succeeding Business Day.
  
                    Section  7. OID  Notes.  If this Note is an OID  Note,  unless
  otherwise  specified  on the face  hereof,  the  amount  payable in the event of
  redemption by the Company, repayment at the option of the Holder or acceleration
  of Maturity  shall be the  Amortized  Face Amount of this Note as of the date of
  such redemption,  repayment or acceleration  rather than the Face Amount hereof.
  The  "Amortized  Face  Amount" of this Note shall be the amount equal to (a) the
  Issue  Price  (as set forth on the face  hereof)  plus (b) that  portion  of the
  difference  between the Issue Price and the Face Amount  hereof that has accrued
  at the Yield to Maturity set forth on the face hereof  (computed  in  accordance
  with generally accepted United States bond yield computation  principles) at the
  date as of which the Amortized Face Amount is calculated,  but in no event shall
  the Amortized Face Amount of this Note exceed the Face Amount.
  
                    Section 8.  Extendible  Notes.  If it is specified on the face
  hereof  that this Note is an  Extendible  Note,  the  Company  has the option to
  extend the Maturity Date hereof for the number of Extension Periods set forth on
  the face hereof,  each of which Extension  Periods shall be a period of from one
  to five  whole  years.  Unless  otherwise  specified  on the  face  hereof,  the
  following procedures shall apply if this Note is an Extendible Note.
  
                    The Company may exercise  its option by notifying  the Trustee
  of such  exercise  at least 45 but not more than 60 days  prior to the  Maturity
  Date hereof in effect prior to the exercise of such option (the "Original Stated
  Maturity"). Not later than five Business Days after receipt thereof, the Trustee
  will mail to the Holder a notice (the "Extension Notice"),  first class, postage
  prepaid,  setting  forth (i) the  election of the Company to extend the Maturity
  Date,  (ii) the new  Maturity  Date,  (iii)  the  Spread  or  Spread  Multiplier
  applicable  to the  Extension  Period  and  (iv)  the  provisions,  if any,  for
  redemption  during  the  Extension  Period,  including  the date on which or the
  period or periods during which and the price at which such  redemption may occur
  during the  Extension  Period.  Upon the mailing by the Trustee of an  Extension
  Notice to the Holder, the Maturity Date hereof shall be extended  automatically,
  and,  except as modified by the  Extension  Notice and as  described in the next
  paragraph,  this Note will have the same  terms as prior to the  mailing of such
  Extension Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  the Original Stated Maturity hereof, the Company may, at its option,  revoke the
  Spread or Spread Multiplier provided for in the Extension Notice and establish a
  higher  Spread or Spread  Multiplier  for the  Extension  Period by causing  the
  Trustee to mail notice of such higher Spread or Spread Multiplier,  first class,
  postage  prepaid,  to the Holder.  Such notice shall be irrevocable and shall be
  mailed by the Trustee  within three  Business Days after receipt  thereof.  This
  Note will bear such higher Spread or Spread Multiplier for the Extension Period,
  whether or not tendered for repayment.
  
                    If the Company  extends the  Maturity  Date of this Note,  the
  Holder will have the option to elect  repayment by the Company of this Note,  or
  any portion hereof,  on the Original Stated Maturity at a price  calculated with
  reference  to the Face Amount  hereof to be repaid plus any accrued  interest to
  such  date.  In order  for this  Note to be so  repaid  on the  Original  Stated
  Maturity,  the Holder must follow the  procedures  set forth in Section 5 hereof
  for  optional  repayment,  except  that the period for  delivery of this Note or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to the  Original  Stated  Maturity  and except  that the Holder  may, by written
  notice to the Trustee,  revoke any such tender for repayment  until the close of
  business  on the tenth  day prior to the  Original  Stated  Maturity;  provided,
  however,  that if such day is not a Business  Day, then such notice may be given
  on the next succeeding Business Day.
  
                    Section 9.  Renewable  Notes.  If it is  specified on the face
  hereof that this Note is a Renewable  Note, this Note will mature on the Initial
  Maturity  Date  specified  on the face hereof  unless the Maturity of all or any
  portion of this Note is extended in  accordance  with the  procedures  described
  below.
  
                    On the  Interest  Payment  Date  occurring  in the sixth month
  (unless a different  Special Election  Interval is specified on the face hereof)
  prior to the  Initial  Maturity  Date hereof (the  "Initial  Maturity  Extension
  Date") and on the Interest  Payment  Date  occurring in each sixth month (or the
  last  month of each  Special  Election  Interval)  after such  Initial  Maturity
  Extension  Date (each,  together  with the Initial  Maturity  Extension  Date, a
  "Maturity  Extension  Date"),  the Maturity of this Note will be extended to the
  Interest  Payment Date occurring in the twelfth month (or, if a Special Election
  Interval is specified  on the face  hereof,  the last month in a period equal to
  twice the Special Election  Interval) after such Maturity Extension Date, unless
  the Holder elects to terminate the automatic extension of the Maturity hereof or
  any portion hereof as described below.
  
                    If the Holder elects to terminate  the automatic  extension of
  the  Maturity  of any  portion of the  principal  amount of this Note during the
  specified period prior to any Maturity  Extension Date, such portion will become
  due and payable on the Interest  Payment  Date  occurring in the sixth month (or
  the last month in the Special Election  Interval) after such Maturity  Extension
  Date (the "Extended Maturity Date").
  
                    The Holder may elect to terminate the  automatic  extension of
  the Maturity of this Note,  or if so specified  above,  any portion  hereof,  by
  delivering a notice to such effect to the Trustee (or any duly appointed  Paying
  Agent)  at the  Corporate  Trust  Office  not less than 15 nor more than 30 days
  prior to such Maturity Extension Date (unless another period is specified on the
  face hereof as the "Special Election Period"). Such election will be irrevocable
  and will be binding  upon each  subsequent  Holder of this Note.  An election to
  terminate the automatic  extension of the Maturity of this Note may be exercised
  with respect to less than the entire Face Amount  hereof only if so specified on
  the face hereof and only in such Face Amount, or any integral multiple in excess
  thereof, as is specified on the face hereof.  Notwithstanding the foregoing, the
  Maturity of this Note will not be extended beyond the Maturity Date specified on
  the face hereof.
  
                    Unless  otherwise   specified  above,  any  such  election  to
  terminate  will be  effective  only if this  Note,  with  the  "Option  to Elect
  Termination of Automatic Extension" included herein duly executed,  is presented
  to the Trustee (or any duly appointed Paying Agent)  simultaneously  with notice
  of such  election  (or, in the event notice of such  election,  together  with a
  guarantee of delivery within five Business Days, is transmitted on behalf of the
  Holder from a member of a national securities exchange, the National Association
  of Securities Dealers,  Inc. or a commercial bank or trust company in the United
  States,  within  five  Business  Days of the  date of such  notice).  As soon as
  practicable  following  receipt of this Note the Trustee (or any duly  appointed
  Paying  Agent)  shall issue in exchange  herefor in the name of the Holder (i) a
  Note,  in a face  amount  equal to the face  amount  of this  Note for which the
  election to terminate the automatic  extension of Maturity was  exercised,  with
  terms  identical to those  specified  herein  (except for the Issue Date and the
  Initial  Interest  Rate and  except  that such  Note  shall  have a fixed,  non-
  extendable  Maturity on the Extended Maturity Date) and (ii) if such election is
  made with  respect  to less  than the full Face  Amount  hereof,  a  replacement
  Renewable Note, in a face amount equal to the Face Amount of this Note for which
  no election was made, with terms identical to this Note.
  
                    Section 10. Principal Amount For Indenture  Purposes.  For the
  purpose  of  determining  whether  Holders  of the  requisite  amount  of  Notes
  outstanding under the Indenture have made a demand,  given a notice or waiver or
  taken any other action,  the outstanding  principal  amount of this Note will be
  deemed to be the Principal  Amount,  provided,  however,  if this Note is an OID
  Note,  the  outstanding  principal  amount of this Note will be deemed to be the
  Face Amount set forth above.
  
                    Section 11.  Modification and Waivers.  The Indenture contains
  provisions  permitting  the  Company  and the  Trustee,  with the consent of the
  holders of not less than a majority in aggregate principal amount of each series
  of the Securities at the time  Outstanding  to be affected,  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, (a) change the stated maturity
  of the  principal  of, or any  installment  of  principal of or interest on, any
  Security,  (b)  reduce the  principal  amount  thereof  or the rate of  interest
  thereon or any  premium  payable  upon the  redemption  thereof,  (c) reduce the
  amount of the principal of an OID Security that would be due and payable upon an
  Event of  Acceleration or an Event of Default (both as defined in the Indenture)
  (d)  adversely  affect any right of repayment at the option of the holder of any
  Security,  (e) change any place of payment  where,  or the coin or  currency  in
  which,  any  Security or any  premium or the  interest  thereon is payable,  (f)
  impair the right to institute suit for the enforcement of any such payment on or
  after the stated  maturity  thereof (or, in the case of redemption,  on or after
  the  redemption  date),  (g) reduce the  percentage  in principal  amount of the
  outstanding  Securities of any series,  the consent of whose holders is required
  for any such supplemental indenture, or the consent of whose holders is required
  for any waiver (of  compliance  with  certain  provisions  of the  Indenture  or
  certain  defaults  thereunder  and  their  consequences)  provided  for  in  the
  Indenture,  or (h) modify any of the  provisions  of sections  of the  Indenture
  dealing with supplemental indentures, waivers of certain covenants or waivers of
  past defaults, except to increase any such percentage or to provide that certain
  other  provisions  of the  Indenture  cannot be modified  or waived  without the
  consent of the holder of each outstanding  Security affected thereby. 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  Acceleration  or Event of Default under the  Indenture  with respect to such
  series and its  consequences,  except a default in the payment of the  principal
  of, or the premium (if any) or  interest,  if any, on any of the  Securities  of
  such series,  or in respect of a provision  under which the Indenture  cannot be
  modified without the consent of the holder of each outstanding  security of such
  series.  Any  such  consent  or  waiver  by the  Holder  of this  Note  shall be
  conclusive  and binding upon such Holder and upon all future  holders and owners
  of this Note and any Notes  which may be  issued  in  exchange  or  substitution
  herefor,  irrespective of whether or not any notation  thereof is made upon this
  Note or such other Notes.
  
                    Section 12. Obligations Unconditional.  No reference herein to
  the Indenture and no provisions of this Note or of the Indenture  shall alter or
  impair the obligation of the Company,  which is absolute and  unconditional,  to
  pay the principal of, premium, if any, and interest, if any, on this Note at the
  place, at the respective  times, at the rate, and in the coin or currency herein
  prescribed.
  
                    Section 13. Defeasance.  The Indenture contains provisions for
  the discharge of the Indenture and defeasance at any time of the indebtedness on
  this Note upon  compliance  by the Company  with  certain  conditions  set forth
  therein, which provisions apply to this Note.
  
                    Section 14.  Authorized Form and  Denominations.  The Notes of
  this series are  issuable  only in  registered  form,  without  coupons.  Unless
  otherwise  set forth on the face  hereof,  Notes  will be issued in Face  Amount
  denominations of U.S. $1,000 and any integral  multiple of U.S. $1,000 in excess
  thereof.  Each Note will be issued  initially  as either a Global  Security or a
  Certificated Note, at the option of the holders thereof, either at the office or
  agency to be  designated  and  maintained by the Company for such purpose in the
  Borough of Manhattan,  The City of New York,  pursuant to the  provisions of the
  Indenture or at any of such other offices or agencies as may be  designated  and
  maintained  by the Company for such purpose  pursuant to the  provisions  of the
  Indenture,  and in the manner and  subject to the  limitations  provided  in the
  Indenture,  but without the payment of any service charge, except for any tax or
  other governmental charges imposed in connection therewith. Notes of this series
  are  exchangeable  for a like aggregate Face Amount of Notes of this series of a
  different  authorized  denomination,  except that Global  Securities will not be
  exchangeable for Certificated Notes.
  
                    Section  15.  Registration  of  Transfer.  As  provided in the
  Indenture and subject to certain  limitations as therein set forth, the transfer
  of this Note is  registrable  in the Security  Register,  upon surrender of this
  Note for registration of transfer,  at the Corporate Trust Office or agency in a
  Place of Payment for this Note,  duly endorsed by, or  accompanied  by a written
  instrument  of transfer  in form  satisfactory  to the Company and the  Security
  Registrar  requiring  such written  instrument of transfer duly executed by, the
  Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
  more new Notes of this  series,  of  authorized  denominations  and for the same
  aggregate  Face  Amount,  will  be  issued  to  the  designated   transferee  or
  transferees.
  
                    If this  Note is a  Global  Security  and if at any  time  the
  Depository  notifies  the Company  that it is unwilling or unable to continue as
  Depository or if at any time the  Depository  shall no longer be eligible  under
  the Indenture, the Company shall appoint a successor Depository.  If a successor
  Depository  for the  Securities  of such series is not  appointed by the Company
  within 90 days after the Company  receives  such notice or becomes aware of such
  ineligibility,  the Company will issue,  and the Trustee will  authenticate  and
  deliver,  Notes in definitive form in an aggregate Face Amount equal to the Face
  Amount hereof.
  
                    No service charge shall be made for any such  registration  of
  transfer or exchange, but the Company may require payment of a sum sufficient to
  cover any tax or other  governmental  charge  that may be imposed in  connection
  therewith.
  
                    Prior to due  presentment  of this  Note for  registration  of
  transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
  may treat the person in whose name this Note is  registered  as the owner hereof
  for all  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.
  
                    Section 16. Events of Accleration;  Events of Default. In case
  an Event of Default or an Event of  Acceleration,  as defined in the  Indenture,
  with respect to Notes of this series shall have occurred and be continuing,  the
  principal  of all of the  Notes  of this  series,  in the  case of an  Event  of
  Default,  shall  become,  or in the  case of an Event  of  Acceleration,  may be
  declared and in accordance with such declaration  shall become,  due and payable
  and such acceleration or declaration may in certain events be rescinded,  in the
  manner, with the effect and subject to the conditions provided in the Indenture.
  In the event that this Note is an OID Note, the amount of principal of this Note
  that becomes due and payable upon such acceleration shall be equal to the amount
  calculated  as set forth in Section 7 hereof.  Upon payment (i) of the aggregate
  applicable  amounts of principal of the Notes of this series so declared due and
  payable and (ii) of interest on any overdue  principal and overdue  interest (in
  each case to the  extent  that the  payment  of such  interest  shall be legally
  enforceable),  all of the Company's obligations in respect of the payment of the
  principal of and interest, if any, on the Notes of this series shall terminate.
  
                    Section   17.    Subordination;    Regulatory   Matters.   The
  indebtedness  evidenced by this Note, together with any interest accrued thereon
  and premium,  if any, is, to the extent  provided in the Indenture,  subordinate
  and  subject  in right of  payment  to the prior  payment  in full of all Senior
  Indebtedness,  as defined in the  Indenture,  and this Note is issued subject to
  the provisions of the Indenture,  and each Holder hereof, by accepting the same,
  agrees to and shall be bound by such  provisions  and authorizes and directs the
  Trustee in his behalf to take such action as may be necessary or  appropriate to
  acknowledge  or effectuate  the  subordination  as provided in the Indenture and
  appoints the Trustee his attorney-in-fact for any and all such purposes.
  
                    As provided in the Indenture,  the Company's obligation to pay
  the principal of the Notes of this series at Stated  Maturity or pursuant to any
  mandatory  sinking  fund shall be  suspended  if,  after  giving  effect to such
  payment and the payment of certain other  subordinated  debt, the Company's "net
  capital" would be reduced below the minimum  amounts of capital to be maintained
  by the Company as required by the various  domestic  exchanges,  boards of trade
  and governmental agencies to which it is subject, all with the effect and to the
  extent  provided in the Indenture.  Optional  redemptions are subject to similar
  suspensions and to the requirement that permission  therefor of the Exchange (as
  defined in the Indenture) has been obtained. If payment is made of the principal
  of the Notes of this series  notwithstanding  the foregoing,  the Holders of the
  Notes so paid are required to repay to the Company,  its  successors or assigns,
  the sum so paid;  provided,  however,  that any suit for such  recovery  must be
  commenced within two years of the date of such payment.  Each Holder hereof,  by
  accepting the same, agrees to be bound by such provisions.
  
  
                    Section 18. No Recourse Against Certain  Persons.  No recourse
  for the payment of the principal of, premium,  if any, or interest on this Note,
  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 Note, 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.
  
                    Section 19.  Defined Terms. All terms used but not defined in 
  this Note are used herein as defined in the Indenture.
  
                    Section 20.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY
  AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
  
  
  <PAGE>
  
  
                              OPTION TO ELECT REPAYMENT
  
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to have the Company  repay the Face Amount of this Note or portion  hereof below
  designated at (i) the Optional Repayment Percentage  multiplied by the Principal
  Amount of this Note to be repaid in respect  of such Face  Amount  plus  accrued
  interest to the Optional  Repayment  Date, if this Note is to be repaid pursuant
  to the Optional Repayment  provision described in Section 5 hereof, or (ii) 100%
  of the Principal Amount of this Note to be repaid in respect of such Face Amount
  plus accrued  interest to the Optional  Reset Date, if this Note is to be repaid
  pursuant to the Optional Spread or Spread  Multiplier Reset provision  described
  in Section 6 hereof or the  Extendible  Notes  provision  described in Section 8
  hereof.  Any such  election  is  irrevocable  except as provided in Section 6 or
  Section 8 hereof.
  
  Dated:___________________                        
                                                    _____________________________
                                                    Signature Sign exactly as name
                                                    appears  on the  front of this
                                                    Note  [SIGNATURE  GUARANTEED -
                                                    required  only if Notes are to
                                                    be issued and delivered to 
                                                    other than the registered
                                                    Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  
  
  <PAGE>
  
  
                 OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
  
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to terminate the automatic  extension of this Note or of the portion of the Face
  Amount of this Note below designated.  Any such election is irrevocable and will
  be binding on any subsequent Holder hereof.
  
  Dated:___________________                  ________________________________
                                             Signature
                                             Sign  exactly as name  appears on the
                                             front   of   this   Note   [SIGNATURE
                                             GUARANTEED  - required  only if Notes
                                             are to be  issued  and  delivered  to
                                             other than the registered Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  
  
  
  
  <PAGE>
  
  
                                    ABBREVIATIONS
  
  
                    The following abbreviations, when used in the
  inscription  on the face of this  instrument,  shall be construed as though they
  were written out in full according to applicable laws or regulations:
  
                TEN CON  -  as tenants in common
                TEN ENT  -  as tenant by the entireties
                JT TEN   -   as joint tenants with right of survivorship and not a
                            tenants in common
                UNIF GIFT
                MIN ACT  -       ____________Custodian____________
                                             (Cust)         (Minor)
                                          Under Uniform Gifts to Minors Act
  
                                                ---------------------------------
                                                                         (State)
  
  Additional abbreviations may also be used though not in the above list.
  
  
                         FOR VALUE RECEIVED, the undersigned
                   hereby sell(s), assign(s) and transfer(s) unto
  
  
  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  
  
  - ---------------------------------------------------------------
  Please print or type name and address, including zip code of assignee
  
  - ---------------------------------------------------------------
  the within Note of LEHMAN BROTHERS INC. and all rights thereunder and does
  hereby irrevocably constitute and appoint
  ______________________________________________Attorney to transfer the said 
  Note on the books of the within-named Company, with full power of substitution
  in the premises.
  
  Dated:_________________________
  
  SIGNATURE GUARANTEED:__________________________________________
  
                              NOTICE: The signature to
                                      this assignment must correspond with
                                      the name as it appears upon the face
                                      of  the   within   Note   in   every
                                      particular,  without  alteration  or
                                      enlargement     or    any     change
                                      whatsoever.
  
  
  <PAGE>
  
  
                                                                       EXHIBIT A
  
                                    RESET NOTICE
  
  
                                LEHMAN BROTHERS INC.
                   Senior Subordinated Medium-Term Notes, Series A
                                   (Floating Rate)
                                CUSIP No. __________
                               Registered Nos. ___-___
  
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under the laws of the State of Delaware (the "Company"),  is the issuer
  of the above-referenced  Notes (the "Notes").  Capitalized terms used herein and
  not defined are used as defined in the Notes.
  
                    The  Company  hereby  elects  to reset  the  [Spread]  [Spread
  Multiplier]   set   forth   on  the   face   of   the   Notes.   On  and   after
  ____________________1/,    the   [Spread]    Spread    Multiplier]    shall   be
  _________________.
  
                    Each Holder of a Note has the option to elect repayment by the
  Company  of such  Note,  or any  portion  thereof,  on any  Optional  Reset Date
  pursuant to the terms of such Note.  The Notes may be repaid on the dates and at
  the prices set forth below:
  
                    Date                               Redemption Price
  
  
  
  
                    IN WITNESS WHEREOF, Lehman Brothers Inc. has caused this Reset
  Notice to be signed by its  Chairman of the Board,  one of its Vice  Chairmen of
  the Board,  its President,  its Treasureror one of its Vice Presidents and to be
  attested by its Secretary or one of its Assistant Secretaries.
  
  
  Dated:
  
  
                                                       LEHMAN BROTHERS INC.
  
  
                                                       By:________________________
                                       Title:
  
                                                       Attest:____________________
   1/       Insert applicable Optional Reset Date.
                                                              Title:
  <PAGE>
  
                                                                 EXHIBIT 4.3
  
  
  
  CUSIP NO.__________________
  
  REGISTERED                                                    FACE AMOUNT:
  No. ___
  
  
                    If this Note is an OID Note (as defined  below) the  following
  legend is applicable:
  
                    FOR  PURPOSES  OF SECTIONS  1272,  1273 AND 1275 OF THE UNITED
                    STATES  INTERNAL  REVENUE CODE OF 1986, AS AMENDED,  THE ISSUE
                    PRICE  OF THIS  NOTE IS  _____%  OF ITS FACE  AMOUNT,  AND THE
                    AMOUNT OF  ORIGINAL  ISSUE  DISCOUNT,  THE  YIELD TO  MATURITY
                    COMPOUNDED  _____________,  THE ISSUE  DATE AND THE  AMOUNT OF
                    ORIGINAL  ISSUE   DISCOUNT   ALLOCABLE  TO  THE  SHORT  PERIOD
                    DETERMINED  USING THE  EXACT  METHOD  WITHIN  THE  MEANING  OF
                    PROPOSED TREASURY REGULATION SECTION 1.1272-1(c)(2)(ii) ARE AS
                    SET FORTH BELOW.
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                 (CURRENCY INDEXED)
  
                    If the registered  owner of this Note (as indicated  below) is
  The Depository Trust Company (the  "Depository") or a nominee of the Depository,
  this Note is a Note in  global  form (a  "Global  Security")  and the  following
  legends are applicable except as specified on the reverse hereof:
  
  This Note is a Global Security  within the meaning of the Indenture  hereinafter
  referred to and is registered in the name of the  Depository or a nominee of the
  Depository. Unless this certificate is presented by an authorized representative
  of The  Depository  Trust Company (55 Water Street,  New York,  New York) to the
  Company (as defined below) or its agent for  registration of transfer,  exchange
  or payment and any certificate issued is registered in the name of Cede & Co. or
  such other name as requested by an authorized  representative  of The Depository
  Trust  Company and any payment is made to Cede & Co.,  ANY  TRANSFER,  PLEDGE OR
  OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY PERSON IS WRONGFUL  since
  the registered owner hereof, Cede & Co., has an interest herein.
  
  UNLESS AND UNTIL IT IS EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  CERTIFICATED
  FORM,  THIS  GLOBAL  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
  THE 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.
  
  
  <PAGE>
  
  
  
  ISSUE PRICE:  $     INDEXED CURRENCY:                 OPTION TO ELECT REPAYMENT:
                                                        [  ] YES     [  ] NO
  ISSUE DATE:         BASE EXCHANGE RATE:
                                                        OPTIONAL REPAYMENT DATES:
  MATURITY DATE:      DETERMINATION AGENT:
                                                        OPTIONAL REPAYMENT PRICES:
  INTEREST RATE:      SINKING FUND:
                                                     OPTIONAL INTEREST RATE RESET:
  INTEREST PAYMENT    TOTAL AMOUNT OF OID:              [  ] YES     [  ] NO
  DATES:
                      YIELD TO MATURITY:                OPTIONAL RESET DATES:
  REGULAR RECORD
  DATES:              INITIAL ACCRUAL                   OPTIONAL REDEMPTION:
                      PERIOD OID:                       [  ] YES     [  ] NO
  EXCHANGE RATE
  AGENT:              REFERENCE DEALERS:                INITIAL REDEMPTION DATE:
  
  DEPOSITORY:         AUTHORIZED DENOMINATIONS:         INITIAL REDEMPTION
                                                        PERCENTAGE        %
  OTHER PROVISIONS:
                                              APPLICABILITY OF ANNUAL REDEMPTION
                                                        PERCENTAGE REDUCTION:
                                                        [  ] YES     [  ] NO
                                                  If yes, state Annual Percentage
                                                        Reduction:    %
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing  under the laws of the State of Delaware  (herein called the "Company",
  which term includes any successor corporation under the Indenture referred to on
  the  reverse   hereof),   for  value   received,   hereby  promises  to  pay  to
  ___________________,  or registered  assigns, on the Maturity Date the principal
  sum equal to the Face Amount hereof,  plus or minus an amount  determined by the
  Determination  Agent (as defined below) in accordance with the formula set forth
  below  (the  "Principal  Amount")  and to pay  interest  on the Face  Amount  as
  described below and on the reverse hereof until the Principal  Amount is paid or
  made  available for payment and (to the extent that the payment of such interest
  shall be legally  enforceable)  to pay  interest  on any overdue  principal  and
  premium and on any overdue  instalment  of interest.  All payments in respect of
  this Note will be made in U.S. Dollars.
  
                    The  Principal  Amount of this Note payable at Maturity  shall
  equal:
  
           (a)      if the Spot Rate equals or exceeds the Base Exchange Rate,
  
  
  Face Amount + (Face Amount x  Spot Rate - Base Exchange Rate    Spot Rat); or
                        ------------------------------
  
  
           (b)      if the Base Exchange Rate exceeds the Spot Rate,
  
  
   Face Amount - (Face Amount x  Base Exchange Rate - Spot Rate    Spot Rate); or 
  
  
  ; provided,  however,  that in no event shall such  Principal  Amount be greater
  than  twice  the Face  Amount or less  than  zero.  If this Note is an OID Note,
  unless otherwise  specified above, the term "Face Amount" when used in the above
  formula shall refer to the Amortized  Face Amount,  as described in Section 7 on
  the  reverse  hereof.  An "OID Note" is (a) any Note that has been  issued at an
  Issue Price lower, by more than a de minimis amount (as determined  under United
  States  federal   income  tax  rules   applicable  to  original  issue  discount
  instruments),  than the Face Amount  thereof and (b) any Note not  identified in
  (a) that for United States  federal  income tax purposes  would be considered an
  original issue discount instrument.
  
           The amount of interest, if any, payable on any Interest Payment Date 
  (as defined below) shall equal:
  
  
           Face Amount x Interest Rate2 x        Basic Exchange Rate   Spot Rate
  
  If the  Interest  Rate on this Note may be reset at the option of the Company as
  set forth on the reverse hereof, the term "Interest Rate" when used in the above
  formula shall refer to the interest rate in effect during the relevant period.
  
                    The  terms  used in the  preceding  formulas  shall  have  the
  following meanings:
  
                    "Business Day" means any day, other than a Saturday or Sunday,
                    that meets each of the following applicable requirements: such
                    day is (a)  not a day on  which  banking  institutions  in the
                    Borough of Manhattan,  The City of New York are  authorized or
                    required by law or regulation to close; (x) not a day on which
                    banking  institutions  are  authorized  or  required by law or
                    regulation to close in the principal  financial  center of the
                    country  issuing the Indexed  Currency  and (y) a day on which
                    banking  institutions in such principal  financial  center are
                    carrying out transactions in such Indexed Currency; and (b) if
                    the Indexed Currency  specified above is ECU, (x) not a day on
                    which banking  institutions  are authorized or required by law
                    or regulation  to close in Luxembourg  and (y) an ECU clearing
                    day, as determined by the ECU Banking Association in Paris.
  
                    "Determination  Date" means the second Exchange Rate Day prior
  to the date of Maturity.
  
                    "Exchange  Rate Day" means any day which is a Business  Day in
                    The City of New York and the principal financial center of the
                    country  which  recognizes  the Indexed  Currency as a unit of
                    domestic exchange.
  
                    "Reference  Dealers" means the three banks or firms  specified
                    above  or,  if any of them  shall be  unwilling  or  unable to
                    provide  the  requested  quotations,  such other  major  money
                    center  bank or banks in The City of New York  selected by the
                    Company, in consultation with the Determination  Agent, to act
                    as Reference Dealer or Dealers in replacement therefor.
  
                    "Spot Rate" means the arithmetic  mean of the open market spot
                    offer quotations for the Indexed Currency (spot bid quotations
                    for the U.S. dollars) obtained by the Determination Agent from
                    the Reference Dealers in The City of New York at approximately
                    11:00 A.M., New York City time, on the Determination Date, for
                    an  amount  of  Indexed  Currency  equal  to the  Face  Amount
                    multiplied by the Base Exchange Rate,  with  settlement on the
                    date of Maturity to be in the U.S.  dollars;  provided that if
                    such quotations  from the Reference  Dealers are not available
                    on the  Determination  Date due to  circumstances  beyond  the
                    control of the Company or the  Determination  Agent,  the Spot
                    Rate  will be  determined  on the  basis of the most  recently
                    available quotations from the Reference Dealers. The Spot Rate
                    shall be  expressed  in units of the Indexed  Currency per one
                    U.S. dollar.
  
                    In the absence of manifest  error,  the  determination  by the
  Determination Agent of the Spot Rate and of the amount of principal and interest
  payable in respect of this Note shall be final and  binding on the  Company  and
  the Holder hereof.
  
                    If this Note is subject to an Annual  Percentage  Reduction as
  specified above, the Redemption Price shall initially be the Initial  Redemption
  Percentage of the Principal  Amount of this Note on the Initial  Redemption Date
  and shall decline at each anniversary of the Initial  Redemption Date (each such
  date, a "Redemption Date") by the Annual Percentage  Reduction of such Principal
  Amount until the Redemption Price is 100% of such Principal Amount.
  
                    In the event of any optional  redemption  by the Company,  any
  repayment at the option of the Holder, acceleration of the maturity of this Note
  or other prepayment of this Note prior to the Maturity Date, the term "Maturity"
  when used herein  shall  refer,  where  applicable,  to the date of  redemption,
  repayment, acceleration or other prepayment of this Note.
  
                    Interest shall be payable from the Issue Date specified  above
  or from the most recent Interest Payment Date to which interest has been paid or
  duly  provided  for until the  principal  hereof is paid or made  available  for
  payment.  Except as provided in the  following  paragraph,  the Company will pay
  interest  semiannually  on February 15 and August 15 of each year (unless  other
  Interest Payment Dates are specified  above) (each an "Interest  Payment Date"),
  commencing with the first Interest  Payment Date next succeeding the Issue Date,
  and at Maturity;  provided,  that any payment of principal,  premium, if any, or
  interest to be made on any Interest  Payment Date or on a date of Maturity  that
  is not a Business Day shall be made on the next succeeding Business Day with the
  same  force  and  effect  as if made  on the  Interest  Payment  Date or date of
  Maturity,  as the case may be,  and no  additional  interest  shall  accrue as a
  result of such delayed  payment.  Each payment of interest  hereon shall include
  interest  accrued  through the day before the  Interest  Payment Date or date of
  Maturity, as the case may be. Unless otherwise specified above, interest on this
  Note will be computed on the basis of a 360-day year of twelve 30-day months. In
  no event shall the  interest  rate of this Note be higher than the maximum  rate
  permitted by applicable law, as the same may be modified by United States law of
  general application.
  
                    Unless otherwise  specified above, the interest payable on any
  Interest Payment Date will, as provided in the Indenture,  be paid to the person
  in whose name this Note (or one or more predecessor  Notes) is registered at the
  close of business on the Regular Record Date  indicated  above (whether or not a
  Business  Day) next  preceding  such  Interest  Payment  Date;  provided,  that,
  notwithstanding any provision of the Indenture to the contrary, interest payable
  on any date of Maturity shall be payable to the Person to whom  principal  shall
  be payable;  and provided,  further,  that, unless otherwise specified above, in
  the case of a Note issued between a Regular Record Date and the Interest Payment
  Date relating to such Regular Record Date,  interest for the period beginning on
  the Issue Date and  ending on such  Interest  Payment  Date shall be paid on the
  Interest  Payment Date following the next succeeding  Regular Record Date to the
  registered Holder on such next succeeding Regular Record Date.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  payment of interest on this Note (other than
  interest  payable  at  Maturity)  will be made by  wire  transfer  or by  check;
  provided,  that, if the Holder hereof is the Holder of U.S.  $10,000,000 or more
  in  aggregate  Face Amount of Notes of this series of like tenor and term,  such
  Holder shall be entitled to receive interest  payments in immediately  available
  funds, but only if complete and appropriate  instructions  have been received in
  writing by the Trustee (or any duly  appointed  Paying Agent) on or prior to the
  applicable  Regular  Record  Date.  A Holder may, if so  entitled  (as  provided
  above),  elect to  receive  such  payments  in  immediately  available  funds by
  providing  complete  and  appropriate  instructions  to the Trustee (or any such
  Paying Agent), and all such payments will be made in immediately available funds
  to an account  maintained  by the payee with a bank  located  outside the United
  States or as otherwise provided above.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  payments of principal,  premium, if any, and
  interest  payable at Maturity will be made in immediately  available  funds upon
  surrender  of this Note at the  corporate  trust office or agency of the Trustee
  (or any duly appointed Paying Agent)  maintained for that purpose in the Borough
  of Manhattan,  The City of New York (the "Corporate  Trust  Office"),  provided,
  that this Note is  presented  to the Trustee (or any such Paying  Agent) in time
  for the Trustee (or any such Paying  Agent) to make such  payments in such funds
  in accordance with its normal procedures.
  
                    Unless  otherwise  specified  above,  if this Note is a Global
  Security,  payments  of  interest  (other  than  at  Maturity)  will  be made in
  immediately available funds in accordance with existing arrangements between the
  Trustee  (or  any  duly  appointed  Paying  Agent)  and the  Depository.  Unless
  otherwise  specified  above, if this Note is a Global  Security,  any principal,
  premium and/or interest payable hereon at Maturity will be paid by wire transfer
  in immediately available funds to an account specified by the Depository.
  
                    The Company will pay any administrative costs imposed by banks
  in making payments in immediately  available funds,  but any tax,  assessment or
  governmental  charge  imposed  upon  payments  hereunder,   including,   without
  limitation, any withholding tax, will be borne by the Holder hereof.
  
                    References herein to "U.S. dollars" or "U.S.$" or
  are to the coin or  currency  of the United  States as at the time of payment is
  legal tender for the payment of public and private debts.
  
                    REFERENCE  IS HEREBY  MADE TO THE FURTHER  PROVISIONS  OF THIS
  NOTE SET FORTH ON THE REVERSE  HEREOF.  SUCH  FURTHER  PROVISIONS  SHALL FOR ALL
  PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
  
                    This  Note  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.
  
                    IN WITNESS  WHEREOF,  Lehman  Brothers  Inc.  has caused  this
  instrument  to be signed by its Chairman of the Board,  one of its Vice Chairmen
  of the  Board,  its  President,  or one of its Vice  Presidents,  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:
  
  [SEAL]                              LEHMAN BROTHERS INC.
  
  
                                              By:_________________________________
  Name:
  Title:
  
  
                                              Attest:_____________________________
  Name:
  Title:
  
  
  
  TRUSTEE'S CERTIFICATE OF AUTHENTICATION
  
  This is one of the Securities of the series designated herein referred to in the
  within-mentioned Indenture.
  
  THE FIRST NATIONAL BANK OF CHICAGO
    as Trustee
  
  
  By:_________________________
           Authorized Officer
  
  
  <PAGE>
  
  
                                  [REVERSE OF NOTE]
  
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTES, SERIES A
                                 (Currency Indexed)
  
                    Section  1.  General.  This  Note is one of a duly  authorized
  series of Notes of the Company designated as the Senior Subordinated Medium-Term
  Notes,  Series A (Currency  Indexed) of the Company (herein called the "Notes"),
  limited in  aggregate  principal  amount to  $________________  (or such greater
  amount,  if OID Notes are issued, as shall result in aggregate gross proceeds to
  the Company of $________________),  subject to reduction as a result of the sale
  under  certain  circumstances  of other  debt  securities  of the  Company.  The
  foregoing  limit,  however,  may be increased by the Company if in the future it
  determines  that it may wish to sell additional  Notes.  The Notes are one of an
  indefinite number of series of debt securities of the Company (collectively, the
  "Securities") issued or issuable under and pursuant to an indenture, dated as of
  March 1, 1996 (the "Indenture"),  duly executed and delivered by the Company and
  The First National Bank of Chicago as Trustee (herein called the "Trustee"),  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  Trustee,  the  Company  and the  holders  of the
  Securities  and of the terms  upon  which  the  Securities  are,  and are to be,
  authenticated and delivered.  The separate series of Securities may be issued in
  various  aggregate  principal  amounts,  may mature at different times, may bear
  interest (if any) at  different  rates,  may be subject to different  redemption
  provisions  or  repayment  or  repurchase  rights  (if any),  may be  subject to
  different  sinking,  purchase  or  analogous  funds (if any),  may be subject to
  different  covenants  and Events of  Default  and may  otherwise  vary as in the
  Indenture provided.
  
                    Section 2.  Currency  Exchanges.  If the official  unit of any
  component  currency of a composite  currency is altered by way of combination or
  subdivision,  the  number  of units of that  currency  as a  component  shall be
  divided  or  multiplied  in  the  same  proportion.  If two  or  more  component
  currencies  are  consolidated  into a  single  currency,  the  amounts  of those
  currencies as components  shall be replaced by an amount in such single currency
  equal  to the  sum of the  amounts  of  the  consolidated  component  currencies
  expressed in such single currency. If any component currency is divided into two
  or  more  currencies,  the  amount  of that  original  component  currency  as a
  component shall be replaced by amounts of such two or more currencies  having an
  aggregate  value  on the date of  division  equal to the  amount  of the  former
  component currency immediately before such division.
  
                    In the  event of an  official  redenomination  of the  Indexed
  Currency (including,  without limitation, an official redenomination of any such
  currency that is a composite  currency),  the obligations of the Company to make
  payments  with  reference  to such  currency  shall,  in all  cases,  be  deemed
  immediately  following  such  redenomination  to be obligations to make payments
  with reference to that amount of redenominated  currency representing the amount
  of such currency immediately before such  redenomination.  In no event shall any
  adjustment  be  made  to  any  amount  payable  hereunder  as a  result  of  any
  redenomination of any component  currency of any composite currency (unless such
  composite currency is itself officially redenominated).
  
                    All determinations referred to above made by the Exchange Rate
  Agent shall be at its sole discretion  (except to the extent expressly  provided
  herein that any determination is subject to approval by the Company) and, in the
  absence of manifest  error,  shall be conclusive for all purposes and binding on
  the Holder hereof, and the Exchange Rate Agent shall have no liability therefor.
  
                    Section 3. Redemption. If so specified on the face hereof, the
  Company may at its option redeem this Note in whole or from time to time in part
  on or after  the date  designated  as the  Initial  Redemption  Date on the face
  hereof (which shall not be prior to the first  anniversary  date of the original
  issuance  hereof)  at  either a price  based  on a  constant  percentage  of the
  Principal  Amount  of this  Note as  specified  on the face  hereof or at prices
  declining from the premium  specified on the face hereof, if any, to 100% of the
  Principal  Amount hereof,  together,  in each case, with accrued interest to the
  Redemption Date;  provided,  that permission of the Exchange for such redemption
  has been  obtained.  The Company may exercise such option by causing the Trustee
  to mail by first-class  mail to the Holder hereof a notice of such redemption at
  least 30 but not more than 60 days prior to the Redemption Date. In the event of
  redemption of this Note in part only, a new Note or Notes of this series for the
  unredeemed  portion hereof shall be issued in the name of the Holder hereof upon
  the  cancellation  hereof in accordance with the terms of the Indenture.  Unless
  otherwise  specified on the face hereof, if less than all of the Notes with like
  tenor and terms to this Note are to be redeemed,  the Notes to be redeemed shall
  be selected  by the  Trustee by such  method as the Trustee  shall deem fair and
  appropriate.
  
                    Section 4.  Sinking Fund.  Unless otherwise specified on the
  face hereof, this Note will not be subject to any sinking fund.
  
                    Section 5.  Optional  Repayment.  If so  specified on the face
  hereof,  this Note will be repayable prior to the Maturity Date at the option of
  the Holder on the Optional  Repayment  Dates specified on the face hereof at the
  Optional  Repayment Prices  specified on the face hereof,  together with accrued
  interest to the applicable  Optional Repayment Date. Unless otherwise  specified
  on the face  hereof,  in order for this Note to be so repaid,  the Company  must
  receive,  at least 30 but not more than 45 days prior to an  Optional  Repayment
  Date,  either  (i) this  Note  with the form  below  entitled  "Option  to Elect
  Repayment" duly completed or (ii) a telegram,  telex,  facsimile transmission or
  letter  from  a  member  of a  national  securities  exchange  or  the  National
  Association of Securities Dealers, Inc. or a commercial bank or trust company in
  the United States setting forth the name of the Holder  hereof,  the Face Amount
  hereof,  the Face  Amount  to be  repaid,  the  certificate  number  hereof or a
  description  of the tenor and terms of this Note, a statement that the option to
  elect repayment is being  exercised  thereby and a guarantee that this Note with
  the form below  entitled  "Option to Elect  Repayment"  duly  completed  will be
  received by the Paying Agent not later than five Business Days after the date of
  such telegram,  telex,  facsimile  transmission or letter and this Note and form
  duly  completed  are  received by the Paying Agent by such fifth  Business  Day.
  Exercise of this  repayment  option  shall be  irrevocable,  except as otherwise
  provided under Section 6. The repayment option may be exercised by the Holder of
  this Note with  respect to less than the Face Amount then  outstanding  provided
  that the Face Amount of the Note  remaining  outstanding  after  repayment is an
  authorized  denomination.  Upon  such  partial  repayment  this  Note  shall  be
  cancelled and a new Note or Notes for the remaining  Face Amount hereof shall be
  issued in the name of the Holder of this Note.
  
                    Section 6.  Optional  Interest  Reset.  If so specified on the
  face hereof,  the  Interest  Rate on this Note may be reset at the option of the
  Company,  in the manner set forth below (unless otherwise  specified on the face
  hereof),  on the Optional  Reset Date or Optional  Reset Dates  specified on the
  face hereof.  The Company may exercise  such option by notifying  the Trustee in
  writing  of such  exercise  at least 45 but not  more  than 60 days  prior to an
  Optional  Reset Date.  Not later than five Business Days after receipt  thereof,
  the Trustee  will mail by  first-class  mail to the Holder of this Note a notice
  (the "Reset Notice")  setting forth (i) the election of the Company to reset the
  interest rate, (ii) such new interest rate and (iii) the provisions, if any, for
  redemption  during the period from such optional Reset Date to the next optional
  Reset Date or, if there is no such next  Optional  Reset Date,  to the  Maturity
  Date of this Note (each such period a "Subsequent  Interest Period"),  including
  the date or dates on which or the period or periods  during  which and the price
  or prices at which such  redemption  may occur during such  Subsequent  Interest
  Period. The Reset Notice shall be substantially in the form of Exhibit A to this
  Note.  Upon the  transmittal  by the Trustee of a Reset  Notice to the Holder of
  this Note, such new interest rate shall take effect  automatically,  and, except
  as modified by the Reset  Notice and as described  in the next  paragraph,  this
  Note will have the same terms as prior to the transmittal of such Reset Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  an Optional Reset Date, the Company may, at its option, revoke the interest rate
  provided for in the Reset Notice and  establish an interest  rate that is higher
  than the  interest  rate  provided  for in the Reset  Notice for the  Subsequent
  Interest Period commencing on such Optional Reset Date by causing the Trustee to
  mail by  first-class  mail notice of such higher  interest rate to the Holder of
  this Note.  Such notice shall be irrevocable  and shall be mailed by the Trustee
  within five Business Days after receipt thereof. All Notes with respect to which
  the  interest  rate is reset on an  Optional  Reset  Date will bear such  higher
  interest rate for the Subsequent Interest Period.
  
                    If the Company elects to reset the interest rate of this Note,
  the Holder of this Note will have the option to elect  repayment  by the Company
  of this Note,  or any  portion  hereof,  on any  Optional  Reset Date at a price
  calculated with reference to the aggregate Face Amount hereof to be repaid, plus
  any interest  accrued to, such Optional Reset Date. In order to obtain repayment
  on an Optional Reset Date, the Holder must follow the procedures set forth above
  in Section 5 for  optional  repayment  except  that the period for  delivery  or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to such  Optional  Reset Date and except that,  if the Holder has tendered  this
  Note for  repayment  pursuant  to the Reset  Notice,  the Holder may, by written
  notice to the  Trustee,  revoke  such  tender for  repayment  until the close of
  business on the tenth day prior to such Optional Reset Date; provided,  however,
  that if such day is not a  Business  Day,  then such  notice may be given on the
  next succeeding Business Day.
  
                    Section  7. OID  Notes.  If this Note is an OID  Note,  unless
  otherwise  specified  on the face  hereof,  the  amount  payable in the event of
  redemption by the Company, repayment at the option of the Holder or acceleration
  of Maturity  shall be calculated  with reference to the Amortized Face Amount of
  this Note as of the date of such  redemption,  repayment or acceleration  rather
  than with  reference to the Face Amount hereof.  The "Amortized  Face Amount" of
  this Note shall be the amount  equal to (a) the Issue Price (as set forth on the
  face hereof) plus (b) that portion of the difference between the Issue Price and
  the Face Amount  hereof  that has accrued at the Yield to Maturity  set forth on
  the face hereof  (computed in accordance  with generally  accepted United States
  bond yield  computation  principles)  at the date as of which the Amortized Face
  Amount is  calculated,  but in no event shall the Amortized  Face Amount of this
  Note exceed the Face Amount.
  
                    Section 8. Principal  Amount For Indenture  Purposes.  For the
  purpose  of  determining  whether  Holders  of the  requisite  amount  of  Notes
  outstanding under the Indenture have made a demand,  given a notice or waiver or
  taken any other action,  the outstanding  principal  amount of this Note will be
  deemed to be the Face Amount.
  
                    Section 9.  Modification and Waivers.  The Indenture  contains
  provisions  permitting  the  Company  and the  Trustee,  with the consent of the
  holders of not less than a majority in aggregate principal amount of each series
  of the Securities at the time  Outstanding  to be affected,  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, (a) change the stated maturity
  of the  principal  of, or any  installment  of  principal of or interest on, any
  Security,  (b)  reduce the  principal  amount  thereof  or the rate of  interest
  thereon or any  premium  payable  upon the  redemption  thereof,  (c) reduce the
  amount of the principal of an OID Security that would be due and payable upon an
  Event of  Acceleration or an Event of Default (both as defined in the Indenture)
  (d)  adversely  affect any right of repayment at the option of the holder of any
  Security,  (e) change any place of payment  where,  or the coin or  currency  in
  which,  any  Security or any  premium or the  interest  thereon is payable,  (f)
  impair the right to institute suit for the enforcement of any such payment on or
  after the stated  maturity  thereof (or, in the case of redemption,  on or after
  the  redemption  date),  (g) reduce the  percentage  in principal  amount of the
  outstanding  Securities of any series,  the consent of whose holders is required
  for any such supplemental indenture, or the consent of whose holders is required
  for any waiver (of  compliance  with  certain  provisions  of the  Indenture  or
  certain  defaults  thereunder  and  their  consequences)  provided  for  in  the
  Indenture,  or (h) modify any of the  provisions  of sections  of the  Indenture
  dealing with supplemental indentures, waivers of certain covenants or waivers of
  past defaults, except to increase any such percentage or to provide that certain
  other  provisions  of the  Indenture  cannot be modified  or waived  without the
  consent of the holder of each outstanding  Security affected thereby. 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  Acceleration  or Event of Default under the  Indenture  with respect to such
  series and its  consequences,  except a default in the payment of the  principal
  of, or the premium (if any) or  interest,  if any, on any of the  Securities  of
  such series,  or in respect of a provision  under which the Indenture  cannot be
  modified without the consent of the holder of each outstanding  security of such
  series.  Any  such  consent  or  waiver  by the  Holder  of this  Note  shall be
  conclusive  and binding upon such Holder and upon all future  holders and owners
  of this Note and any Notes  which may be  issued  in  exchange  or  substitution
  herefor,  irrespective of whether or not any notation  thereof is made upon this
  Note or such other Notes.
  
                    Section 10. Obligations Unconditional.  No reference herein to
  the Indenture and no provisions of this Note or of the Indenture  shall alter or
  impair the obligation of the Company,  which is absolute and  unconditional,  to
  pay the principal of, premium, if any, and interest, if any, on this Note at the
  place, at the respective  times, at the rate, and in the coin or currency herein
  prescribed.
  
                    Section 11. Defeasance.  The Indenture contains provisions for
  the discharge of the Indenture and defeasance at any time of the indebtedness on
  this Note upon  compliance  by the Company  with  certain  conditions  set forth
  therein, which provisions apply to this Note.
  
                    Section 12.  Authorized Form and  Denominations.  The Notes of
  this series are  issuable  only in  registered  form,  without  coupons.  Unless
  otherwise  set forth on the face  hereof,  Notes  will be issued in Face  Amount
  denominations of U.S. $1,000 and any integral  multiple of U.S. $1,000 in excess
  thereof.  Each Note will be issued  initially as either a  Book-Entry  Note or a
  Certificated Note, at the option of the holders thereof, either at the office or
  agency to be  designated  and  maintained by the Company for such purpose in the
  Borough of Manhattan,  The City of New York,  pursuant to the  provisions of the
  Indenture or at any of such other offices or agencies as may be  designated  and
  maintained  by the Company for such purpose  pursuant to the  provisions  of the
  Indenture,  and in the manner and  subject to the  limitations  provided  in the
  Indenture,  but without the payment of any service charge, except for any tax or
  other governmental charges imposed in connection therewith. Notes of this series
  are  exchangeable  for a like aggregate Face Amount of Notes of this series of a
  different  authorized  denomination,  except that  Book-Entry  Notes will not be
  exchangeable for Certificated Notes.
  
                    Section  13.  Registration  of  Transfer.  As  provided in the
  Indenture and subject to certain  limitations as therein set forth, the transfer
  of this Note is  registrable  in the Security  Register,  upon surrender of this
  Note for registration of transfer,  at the Corporate Trust office or agency in a
  Place of Payment for this Note,  duly endorsed by, or  accompanied  by a written
  instrument  of transfer  in form  satisfactory  to the Company and the  Security
  Registrar  requiring  such written  instrument of transfer duly executed by, the
  Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
  more new Notes of this  series,  of  authorized  denominations  and for the same
  aggregate  Face  Amount,  will  be  issued  to  the  designated   transferee  or
  transferees.
  
                    If this  Note is a  Global  Security  and if at any  time  the
  Depository  notifies  the Company  that it is unwilling or unable to continue as
  Depository or if at any time the  Depository  shall no longer be eligible  under
  the Indenture, the Company shall appoint a successor Depository.  If a successor
  Depository  for the  Securities  of such series is not  appointed by the Company
  within 90 days after the Company  receives  such notice or becomes aware of such
  ineligibility,  the Company will issue,  and the Trustee will  authenticate  and
  deliver,  Notes in definitive form in an aggregate Face Amount equal to the Face
  Amount hereof.
  
                    No service charge shall be made for any such  registration  of
  transfer or exchange, but the Company may require payment of a sum sufficient to
  cover any tax or other  governmental  charge  that may be imposed in  connection
  therewith.
  
                    Prior to due  presentment  of this  Note for  registration  of
  transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
  may treat the person in whose name this Note is  registered  as the owner hereof
  for all  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.
  
                    Section 14. Events of Acceleration; Events of Default. In case
  an Event of Default or an Event of  Acceleration,  as defined in the  Indenture,
  with respect to Notes of this series shall have occurred and be continuing,  the
  principal  of all of the  Notes  of this  series,  in the  case of an  Event  of
  Default,  shall  become,  or in the  case of an Event  of  Acceleration,  may be
  declared and in accordance with such declaration  shall become,  due and payable
  and such acceleration or declaration may in certain events be rescinded,  in the
  manner, with the effect and subject to the conditions provided in the Indenture.
  In the event that this Note is an OID Note, the amount of principal of this Note
  that becomes due and payable upon such acceleration shall be equal to the amount
  calculated  as set forth in Section 7 hereof.  Upon payment (i) of the aggregate
  applicable  amounts of principal of the Notes of this series so declared due and
  payable and (ii) of interest on any overdue  principal and overdue  interest (in
  each case to the  extent  that the  payment  of such  interest  shall be legally
  enforceable),  all of the Company's obligations in respect of the payment of the
  principal of and interest, if any, on the Notes of this series shall terminate.
  
                    Section   15.    Subordination;    Regulatory   Matters.   The
  indebtedness  evidenced by this Note, together with any interest accrued thereon
  and premium,  if any, is, to the extent  provided in the Indenture,  subordinate
  and  subject  in right of  payment  to the prior  payment  in full of all Senior
  Indebtedness,  as defined in the  Indenture,  and this Note is issued subject to
  the provisions of the Indenture,  and each Holder hereof, by accepting the same,
  agrees to and shall be bound by such  provisions  and authorizes and directs the
  Trustee in his behalf to take such action as may be necessary or  appropriate to
  acknowledge  or effectuate  the  subordination  as provided in the Indenture and
  appoints the Trustee his attorney-in-fact for any and all such purposes.
  
                    As provided in the Indenture,  the Company's obligation to pay
  the principal of the Notes of this series at Stated  Maturity or pursuant to any
  mandatory  sinking  fund shall be  suspended  if,  after  giving  effect to such
  payment and the payment of certain other  subordinated  debt, the Company's "net
  capital" would be reduced below the minimum  amounts of capital to be maintained
  by the Company as required by the various  domestic  exchanges,  boards of trade
  and governmental agencies to which it is subject, all with the effect and to the
  extent  provided in the Indenture.  Optional  redemptions are subject to similar
  suspensions and to the requirement that permission  therefor of the Exchange (as
  defined in the Indenture) has been obtained. If payment is made of the principal
  of the Notes of this series  notwithstanding  the foregoing,  the Holders of the
  Notes so paid are required to repay to the Company,  its  successors or assigns,
  the sum so paid;  provided,  however,  that any suit for such  recovery  must be
  commenced within two years of the date of such payment.  Each Holder hereof,  by
  accepting the same, agrees to be bound by such provisions.
  
                    Section 16. No Recourse Against Certain  Persons.  No recourse
  for the payment of the principal of, premium,  if any, or interest on this Note,
  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 Note, 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.
  
                    Section 17.  Defined Terms.  All terms used but not defined in
   this Note are used herein as efined in the Indenture.
  
                    Section 18.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY 
  AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
  
  
  <PAGE>
  
  
  
                              OPTION TO ELECT REPAYMENT
  
  
            The undersigned owner of this Note hereby  irrevocably  elects to have
  the  Company  repay  the  Face  Amount  of this  Note or  portion  hereof  below
  designated at (i) the Optional Repayment Percentage  multiplied by the Principal
  Amount of this Note to be repaid in respect  of such Face  Amount  plus  accrued
  interest to the Optional  Repayment  Date, if this Note is to be repaid pursuant
  to the Optional Repayment  provision described in Section 5 hereof, or (ii) 100%
  of the Principal Amount of this Note to be repaid in respect of such Face Amount
  plus accrued  interest to the Optional  Reset Date, if this Note is to be repaid
  pursuant to the Optional Interest Reset provision described in Section 6 hereof.
  Any such election is irrevocable except as provided in Section 6 hereof.
  
  
  Dated: ____________________                    _________________________________
                                                 Signature
                                                 Sign exactly as name appears on 
                                                 the front of this Note
                                                 [SIGNATURE GUARANTEED - required
                                                 only if Notes are to be issued
                                                 and delivered to other than the
                                                 registered Holder]
  
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  
  
  <PAGE>
  
  
                                    ABBREVIATIONS
  
  
                    The following  abbreviations,  when used in the inscription on
  the face of this instrument,  shall be construed as though they were written out
  in full according to applicable laws or regulations:
  
             TEN COM  -  as tenants in common
             TEN ENT  -  as tenant by the entireties
             JT TEN   -  as joint tenants with right of survivorship and not as 
                         tenants in common
  
             UNIF GIFT
             MIN ACT  -     Custodian
                             (Cust)               (Minor)
                            Under Uniform Gifts to Minors Act
  
                           -------------------------------------
                            (State)
  
  Additional abbreviations may also be used though not in the above list.
  
                         FOR VALUE RECEIVED, the undersigned
                   hereby sell(s), assign(s) and transfer(s) unto
  
  
  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  
  
  
  Please print or type name and address, including zip code of assignee
  
  
  
  the within Note of LEHMAN BROTHERS INC. and all rights thereunder and does 
  hereby irrevocably constitute and appoint
  
                                                         Attorney to transfer the
  said Note on the books of the within-named Company, with full power of
  substitution in the premises.
  
  Dated: ________________________________
  
  SIGNATURE GUARANTEED:____________________________________________
  
                                              NOTICE:   The   signature   to  this
                                              assignment  must correspond with the
                                              name as it appears  upon the face of
                                              the within Note in every particular,
                                              without alteration or enlargement or
                                              any change whatsoever.
  
  <PAGE>
  
  
  
                                                          EXHIBIT A
  
  
                                    RESET NOTICE
  
  
                                LEHMAN BROTHERS INC.
                   Senior Subordinated Medium-Term Notes, Series A
                                 (Currency Indexed)
                              CUSIP No. _______________
                              Registered Nos. ____-____
  
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under tho laws of the State of Delaware (the "Company"),  is the issuer
  of the above-referenced  Notes (the "Notes").  Capitalized terms used herein and
  not defined are used as defined in the Notes.
  
                    The Company hereby elects to reset the Interest Rate set forth
  on the face of the Notes. On and after __________1/, the Interest Rate shall be
  - ----------------------------.
  
  
            Each Holder of a Note has the option to elect repayment by the Company
  of such Note, or any portion thereof, on any Optional Reset Date pursuant to the
  terms of such  Note.  The Notes may be repaid on the dates and at the prices set
  forth below:
  
                    Date                     Redemption Price
  
  
  
            IN WITNESS WHEREOF,  Lehman Brothers Inc. has caused this Reset Notice
  to be signed by its  Chairman  of the  Board,  one of its Vice  Chairmen  of the
  Board,  its  President,  its Treasurer or one of its Vice  Presidents  and to be
  attested by its Secretary or one of its Assistant Secretaries.
  
  Dated:
  
                                              LEHMAN BROTHERS INC.
  
  
                                              By:_________________________________
                                              Title:
  
  
                                              Attest:_____________________________
                                                       Title:
  
  
  
  1/       Insert applicable Optional Reset Date.
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "LEHMAN BROTHERS INC.FORM 8-K", "secsgml_size_bytes": 179735}]
metadata_filer: {"company-data": {"conformed-name": "LEHMAN BROTHERS INC//", "cik": "0000728586", "assigned-sic": "6211", "irs-number": "132518466", "state-of-incorporation": "DE", "fiscal-year-end": "1130"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-06817", "film-number": "96547647"}, "business-address": {"street1": "3 WORLD TRADE CENTER", "street2": "WORLD FINANCIAL CTR", "city": "NEW YORK", "state": "NY", "zip": "10285", "phone": "2122982000"}, "mail-address": {"street1": "2 WORLD TRADE CENTER", "street2": "15TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10048"}, "former-company": [{"former-conformed-name": "SHEARSON LEHMAN BROTHERS INC", "date-changed": "19920703"}, {"former-conformed-name": "SHEARSON LEHMAN HUTTON INC /DE/", "date-changed": "19900828"}, {"former-conformed-name": "SHEARSON LEHMAN BROTHERS INC /DE/", "date-changed": "19880323"}]}
text: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
                         Pursuant to Section 13 or 15(d) of
                         the Securities Exchange Act of 1934
  
          Date of Report (date of earliest event reported): April 16, 1996
  
                                LEHMAN BROTHERS INC.
               (Exact name of registrant as specified in its charter)
  
                                      Delaware
                   (State or other jurisdiction of incorporation)
  
           1-6817                                13-2518466
  (Commission File Number)            (IRS Employer Identification No.)
  
  3 World Financial Center
  New York, New York                                      10285
  (Address of principal                                   (Zip Code)
  executive offices)
  
                      Registrant's telephone number, including
                              area code: (212) 526-7000
  Item 7.  Financial Statements and Exhibits
  
           (c)      Exhibits
  
                 The following Exhibits are filed as part of this Report.
  
    4.1 Form of Senior Subordinated Medium-Term Note, Series A (Fixed Rate)
  
    4.2 Form of Senior Subordinated Medium-Term Note, Series A (Floating Rate)
  
    4.3 Form of Senior Subordinated Medium-Term Note, Series A (Currency Indexed)
  
           The Exhibit Index to this Report is incorporated herein by reference.
  SIGNATURE
  
         Pursuant to the requirements of the Securities  Exchange Act of 1934, the
  Company  has  duly  caused  this  Report  to be  signed  on  its  behalf  by the
  undersigned hereunto duly authorized.
  
                                                       LEHMAN BROTHERS INC.
  
                                                       By:  /s/ Karen M. Muller
                                                                Karen M. Muller
                                                                Managing Director
  
  Date: April 16, 1996
  EXHIBIT INDEX
  
  Exhibit No.                         Exhibit
  
  4.1    Form of Senior Subordinated Medium-Term Note, Series A (Fixed Rate)
  
  4.2    Form of Senior Subordinated Medium-Term Note, Series A (Floating Rate)
  
  4.3    Form of Senior Subordinated Medium-Term Note, Series A (Currency Indexed)
  EXHIBIT 4.1
  
  CUSIP NO. __________
  
  REGISTERED
  No. ___                             FACE AMOUNT:
  
   If this  Note is an OID  Note  (as  defined  below)  the  following  legend  is
   applicable:
  
   FOR  PURPOSES OF SECTIONS  1272,  1273 AND 1275 OF THE UNITED  STATES  INTERNAL
   REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS NOTE IS _____% OF ITS
   PRINCIPAL  AMOUNT,  AND THE AMOUNT OF  ORIGINAL  ISSUE  DISCOUNT,  THE YIELD TO
   MATURITY COMPOUNDED  ______________,  THE ISSUE DATE AND THE AMOUNT OF ORIGINAL
   ISSUE DISCOUNT  ALLOCABLE TO THE SHORT PERIOD DETERMINED USING THE EXACT METHOD
   WITHIN THE MEANING OF PROPOSED TREASURY  REGULATION SECTION 1.1272-1(c) (2)(ii)
   ARE AS SET FORTH BELOW.
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                    (FIXED RATE)
  
            If the  registered  owner of this  Note (as  indicated  below)  is The
   Depository Trust Company (the "Depository") or a nominee of the Depository,
  this Note is a Note in  global  form (a  "Global  Security")  and the  following
  legends are applicable except as specified on the reverse hereof:
  
  This Note is a Global Security  within the meaning of the Indenture  hereinafter
  referred to and is registered in the name of the  Depository or a nominee of the
  Depository. Unless this certificate is presented by an authorized representative
  of The  Depository  Trust Company (55 Water Street,  New York,  New York) to the
  Company (as defined below) or its agent for  registration of transfer,  exchange
  or payment and any certificate issued is registered in the name of Cede & Co. or
  such other name as requested by an authorized
   representative  of The Depository Trust Company and any payment is made to Cede
   & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
  OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,  Cede & Co., has
  an interest herein.
  
  UNLESS AND UNTIL IT IS EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  CERTIFICATED
  FORM,  THIS  GLOBAL  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
  THE 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.
  ISSUE PRICE:  $      AMORTIZING NOTE:              OPTIONAL REPAYMENT PRICES:
                       [ ] YES  [ ] NO
  ISSUE DATE:                                        OPTIONAL INTEREST RATE RESET:
                       SINKING FUND:                 [ ] YES  [ ] NO
  MATURITY DATE:
                       TOTAL AMOUNT OF OID:          OPTIONAL RESET DATES:
  INTEREST RATE:
                       YIELD TO MATURITY:            OPTIONAL REDEMPTION:
  INTEREST PAYMENT                                    [ ] YES  [ ] NO
  DATES:               INITIAL ACCRUAL PERIOD OID:
                                                      INITIAL REDEMPTION DATE:
  REGULAR RECORD       AUTHORIZED DENOMINATIONS:
  DATES:                                              INITIAL REDEMPTION
                       EXTENDIBLE NOTE:               PERCENTAGE:   %
                       [ ] YES  [ ] NO
  DEPOSITORY:                                         APPLICABILITY OF ANNUAL
                                                      REDEMPTION PERCENTAGE
                       EXTENSION PERIOD:                   PERCENTAGE REDUCTION:
                                                           [ ] YES  [ ] NO
                       NUMBER OF EXTENSION PERIODS:If Yes, state Annual Percentage
                                     Reduction:%
  
  OPTION ELECTION      OPTION TO ELECT REPAYMENT:       RENEWABLE NOTE:
  DATES:               [ ] YES  [ ] NO                  [ ] YES  [ ] NO
  
                       OPTIONAL REPAYMENT DATES:        INITIAL MATURITY DATE:
  
                                                        SPECIAL ELECTION INTERVAL:
  
  OPTION VALUE                                          RENEWABLE IN PART:
  CALCULATION AGENT:                                     [ ] YES  [ ] NO
  
  OTHER PROVISIONS:                                  AUTHORIZED RENEWABLE AMOUNTS:
  
                                                          SPECIAL ELECTION PERIOD:
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under the laws of the State of Delaware (herein called the "Company",
   which term includes any successor  corporation under the Indenture  referred to
  on  the  reverse  hereof),  for  value  received,  hereby  promises  to  pay  to
  ____________below) and, if so specified above, to pay interest thereon from the
   Issue  Date  specified  above or from the most  recent  Interest  Payment  Date
  specified above to which interest has been paid or duly provided for at the
   Interest  Rate  specified  above  until  the  principal  hereof is paid or made
  available for payment and (to the extent that the payment of such interest shall
  be legally  enforceable)  at such rate per annum on any  overdue  principal  and
  premium and on any overdue  instalment of interest.  The  "Principal  Amount" of
  this Note at any time means (i) if this Note is an OID Note (as defined  below),
  the Amortized  Face Amount at such time as described in Section 6 on the reverse
  hereof,  (ii)if this Note is an Amortizing  Note, the Outstanding Face Amount at
  such time as described in Section 3 on the reverse hereof and (iii) in all other
  cases, the Face Amount hereof.
  
           If this Note is subject to an Annual Percentage  Reduction as specified
  above, the Redemption Price shall initially be the Initial Redemption Percentage
  of the Principal  Amount of this Note on the Initial  Redemption  Date and shall
  decline at each  anniversary of the Initial  Redemption  Date (each such date, a
  "Redemption  Date") by the Annual Percentage  Reduction of such Principal Amount
  until the Redemption Price is 100% of such Principal Amount.
  
           In the event of any optional  redemption by the Company,  any repayment
  at the option of the Holder,  acceleration of the maturity of this Note or other
  prepayment of this Note prior to the Maturity  Date  specified  above,  the term
  "Maturity"  when used  herein  shall  refer,  where  applicable,  to the date of
  redemption, repayment, acceleration or other prepayment of this Note.
  
           An "OID  Note" is (a) any Note that has been  issued at an Issue  Price
   lower, by more than a de minimis amount (as determined under United States
  federal income tax rules  applicable to original  issue  discount  instruments),
  than the Face  Amount  thereof and (b) any Note not  identified  in (a) that for
  United States  federal income tax purposes would be considered an original issue
  discount instrument.
  
           Except as provided in the  following  paragraph,  the Company  will pay
  interest semiannually on February 15 and August 15 of each year (unless other
   Interest Payment Dates are specified above) (each an "Interest  Payment Date"),
  commencing with the first Interest  Payment Date next succeeding the Issue Date,
  and at Maturity;  provided,  that any payment of principal,  premium, if any, or
  interest to be made on any Interest Payment Date or on a date of Maturity that
   is not a Business  Day shall be made on the next  succeeding  Business Day with
  the same force and effect as if made on such Interest Payment Date or such date
   of Maturity,  as the case may be, and no additional  interest shall accrue as a
  result of such delayed  payment.  The term  "Business  Day" means any day, other
  than a Saturday or Sunday,  that is not a day on which banking  institutions  in
  the Borough of Manhattan, The City of New York are authorized or required by law
  or regulation to close. Each payment of interest hereon shall include
   interest  accrued  through the day before the Interest  Payment Date or date of
  Maturity, as the case may be. Unless otherwise specified above, interest on this
  Note will be computed on the basis of a 360-day year of twelve 30-day
   months.  In no event shall the interest rate of this Note be higher than
  the maximum rate permitted by applicable law, as the same may be modified by
  United States law of general
  application.
  
         Unless  otherwise  specified  above, the interest payable on any Interest
  Payment Date will, as provided in the Indenture,  be paid to the person in whose
  name this Note (or one or more predecessor  Notes) is registered at the close of
  business on the Regular Record Date  indicated  above (whether or not a Business
  Day) next preceding such Interest Payment Date; provided, that, notwithstanding
   any provision of the Indenture to the contrary, interest payable on any date of
  Maturity shall be payable to the Person to whom principal shall be payable;  and
  provided, further, that, unless otherwise specified above, in the case of a Note
   initially  issued between a Regular  Record Date and the Interest  Payment Date
   relating to such Regular Record Date,  interest for the period beginning on the
   Issue Date and ending on such Interest Payment Date shall be paid on the
  Interest  Payment Date following the next succeeding  Regular Record Date to the
  registered Holder on such next succeeding Regular Record Date.
  
      Unless otherwise  indicated above, and except as provided below if this Note
   is a Global  Security,  all payments of interest on this Note and all principal
   payments hereon if this Note is an Amortizing Note (other than interest and,
  in the case of Amortizing Notes,  principal payable at Maturity) will be made by
  wire transfer or by check provided, that, if the Holder hereof is the Holder of
   U.S. $10,000,000 or more in aggregate Principal Amount of Notes of this series
   of like tenor and term, such Holder shall be entitled to receive interest
   payments (and principal payments, if this Note is an Amortizing Note) in
  immediately  available funds, but only if complete and appropriate  instructions
   have been received in writing by the Trustee (or any such Paying Agent) on or
  prior to the applicable Regular Record Date.
  
         Unless  otherwise  indicated  above, and except as provided below if this
  Note is a Global Security, payments of principal, premium, if any, and interest
   payable at Maturity will be made in immediately  available funds upon surrender
   of this Note at the corporate trust office or agency of the Trustee (or any
  duly  appointed  Paying  Agent)  maintained  for that  purpose in the Borough of
   Manhattan,  The City of New York (the "Corporate Trust Office"),  provided that
   this Note is presented to the Trustee (or any such Paying Agent) in time
  for the Trustee (or any such Paying  Agent) to make such  payments in such funds
  in accordance with its normal procedures.
  
            Unless  otherwise  specified above, if this Note is a Global Security,
   payments of interest hereon and principal  hereon if this Note is an Amortizing
   Note  (in each  case,  other  than at  Maturity),  will be made in  immediately
   available  funds in accordance with existing  arrangements  between the Trustee
   (or any duly  appointed  Paying  Agent) and the  Depository.  Unless  otherwise
   specified above, if this Note is a Global Security, any principal, premium
  and/or  interest  payable  hereon at Maturity  will be paid by wire  transfer in
   immediately available funds to an account specified by the Depository.
  
        The Company will pay any  administrative  costs imposed by banks in making
  payments in immediately available funds, but any tax, assessment or governmental
   charge  imposed upon  payments  hereunder,including,  without  limitation,  any
  withholding tax, will be borne by the Holder hereof.
        REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
  ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
  SAME EFFECT AS IF SET FORTH AT THIS PLACE.
  
          This Note shall not be entitled to any benefit under the Indenture or be
  valid  or  become   obligatory   for  any  purpose  until  the   certificate  of
  authentication hereon shall have been signed by the Trustee under the Indenture.
  
         IN WITNESS WHEREOF, Lehman Brothers Inc. has caused this instrument to be
  signed by its Chairman of the Board,  one of its Vice Chairmen of the Board, its
  President,  its Treasurer or one of its Vice Presidents,  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:
  
  [SEAL]                                      LEHMAN BROTHERS INC.
  
                                               By:________________________
                                               Name:
                                               Title:
  
                                               Attest:____________________
                                               Name:
                                               Title:
  
  TRUSTEE'S CERTIFICATE OF AUTHENTICATION
  
  This is one of the Securities of the series designated herein referred to in the
  within-mentioned Indenture.
  
  THE FIRST NATIONAL BANK OF CHICAGO
    as Trustee
  
  By:______________________
     Authorized Officer
  [REVERSE OF NOTE]
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                    (Fixed Rate)
  
           Section 1.  General.  This Note is one of a duly authorized series of
   Notes of the Company designated as the Senior Subordinated Medium-Term Notes,
   Series A (Fixed Rate) of the Company (herein called the "Notes"), limited in
  aggregate principal amount to $____________________  (or such greater amount, if
   OID Notes are issued, as shall result in aggregate gross proceeds to the
  Company of $______________),  subject to reduction as a result of the sale under
  certain  circumstances  of other debt  securities of the Company.  The foregoing
  limit, however, may be increased by the Company if in the future it determines
   that it may wish to sell additional Notes.  The Notes are one of an indefinite
  number of series of debt securities of the Company (collectively, the
  "Securities") issued or issuable under and pursuant to an indenture, dated as
   of March 1, 1996 (the "Indenture"),  duly executed and delivered by the Company
  and The First National Bank of Chicago, as Trustee (herein called the
   "Trustee"), 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 Trustee, the Company and
  the holders of the Securities  and of the terms upon which the  Securities  are,
  and are to be,  authenticated  and delivered.  The separate series of Securities
  may be issued in various aggregate  principal  amounts,  may mature at different
  times,  may bear  interest  (if  any) at  different  rates,  may be  subject  to
  different redemption  provisions or repayment or repurchase rights (if any), may
  be subject to different  sinking,  purchase or analogous  funds (if any), may be
  subject to different  covenants and Events of Default and may otherwise  vary as
  in the Indenture provided.
  
            Section 2. Redemption. If so specified on the face hereof, the Company
  may at its option  redeem  this Note in whole or from time to time in part on or
  after the date  designated  as the  Initial  Redemption  Date on the face hereof
  (which shall not be prior to the first anniversary date of the original issuance
  hereof) at either a price based on a constant percentage of the Principal Amount
  of this Note as  specified  on the face hereof or at prices  declining  from the
  premium  specified on the face hereof,  if any, to 100% of the Principal  Amount
  hereof,  together,  in each case, with accrued  interest to the Redemption Date;
  provided, that permission of the Exchange for such redemption has been obtained.
  The  Company  may  exercise  such  option  by  causing  the  Trustee  to mail by
  first-class  mail to the Holder  hereof a notice of such  redemption at least 30
  but not  more  than 60 days  prior  to the  Redemption  Date.  In the  event  of
  redemption of this Note in part only, a new Note or Notes of this series for the
  unredeemed portion hereof shall be issued in the name of the Holder hereof
   upon the cancellation hereof in accordance with the terms of the Indenture.
   Unless otherwise specified on the face hereof, if less than all of the Notes
  with  like  tenor and  terms to this  Note are to be  redeemed,  the Notes to be
  redeemed  shall be selected  by the Trustee by such method as the Trustee  shall
  deem fair and appropriate.
  
           Section  3.  Sinking  Funds  and  Amortizing  Notes.  Unless  otherwise
  specified  on the face hereof or unless this Note is an  Amortizing  Note,  this
  Note will not be subject to any sinking  fund.  If it is  specified  on the face
  hereof that this Note is an  Amortizing  Note,  the Company  will make  payments
  combining  principal  and  interest on the dates and in the amounts set forth in
  the table  appearing  in Schedule 1,  attached to this Note.  If this Note is an
  Amortizing Note,  payments made hereon will be applied first to interest due and
  payable on each such payment date and then to the  reduction of the  Outstanding
  Face Amount.  The term  "Outstanding Face Amount" means, at any time, the amount
  of unpaid principal hereof at such time.
  
            Section 4.  Optional  Repayment.  If so  specified on the face hereof,
  this Note will be  repayable  prior to the  Maturity  Date at the  option of the
  Holder on the  Optional  Repayment  Dates  specified  on the face  hereof at the
  Optional  Repayment Prices  specified on the face hereof,  together with accrued
  interest to the applicable  Optional Repayment Date. Unless otherwise  specified
  on the face  hereof,  in order for this Note to be so repaid,  the Company  must
  receive,  at least 30 but not more than 45 days prior to an  Optional  Repayment
  Date,  either  (i) this  Note  with the form  below  entitled  "Option  to Elect
  Repayment" duly completed or (ii) a telegram,  telex,  facsimile transmission or
  letter  from  a  member  of a  national  securities  exchange  or  the  National
  Association of Securities Dealers, Inc. or a commercial bank or trust company in
  the United States setting forth the name of the Holder  hereof,  the Face Amount
  hereof,  the Face  Amount  to be  repaid,  the  certificate  number  hereof or a
  description  of the tenor and terms of this Note, a statement that the option to
  elect repayment is being  exercised  thereby and a guarantee that this Note with
  the form below  entitled  "Option to Elect  Repayment"  duly  completed  will be
  received by the Paying Agent not later than five Business Days after the date of
  such telegram,  telex,  facsimile  transmission or letter and this Note and form
  duly  completed  are  received by the Paying Agent by such fifth  Business  Day.
  Exercise of this  repayment  option  shall be  irrevocable,  except as otherwise
  provided under Section 5 or Section 7. The repayment  option may be exercised by
  the  Holder  of this  Note  with  respect  to less  than  the Face  Amount  then
  outstanding  provided  that the Face  Amount of the Note  remaining  outstanding
  after repayment is an authorized denomination.  Upon such partial repayment this
  Note shall be cancelled  and a new Note or Notes for the  remaining  Face Amount
  hereof shall be issued in the name of the Holder of this Note.
  
                    Section 5.  Optional  Interest  Reset.  If so specified on the
  face hereof,  the  Interest  Rate on this Note may be reset at the option of the
  Company,  in the manner set forth below (unless otherwise  specified on the face
  hereof),  on the Optional  Reset Date or Optional  Reset Dates  specified on the
  face hereof.  The Company may exercise  such option by notifying  the Trustee of
  such  exercise at least 45 but not more than 60 days prior to an optional  Reset
  Date. Not later than five Business Days after receipt thereof,  the Trustee will
  mail by  first-class  mail to the  Holder  of this  Note a  notice  (the  "Reset
  Notice")  setting  forth (i) the  election of the Company to reset the  interest
  rate,  (ii)  such new  interest  rate and  (iii)  the  provisions,  if any,  for
  redemption  during the period from such Optional Reset Date to the next Optional
  Reset Date or, if there is no such next  optional  Reset Date,  to the  Maturity
  Date of this Note (each such period a "Subsequent  Interest Period"),  including
  the date or dates on which or the period or periods  during  which and the price
  or prices at which such  redemption  may occur during such  Subsequent  Interest
  Period. The Reset Notice shall be substantially in the form of Exhibit A to this
  Note.  Upon the  transmittal  by the Trustee of a Reset  Notice to the Holder of
  this Note, such new interest rate shall take effect  automatically,  and, except
  as modified by the Reset  Notice and as described  in the next  paragraph,  this
  Note will have the same terms as prior to the transmittal of such Reset Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  an Optional Reset Date, the Company may, at its option, revoke the interest rate
  provided for in the Reset Notice and  establish an interest  rate that is higher
  than the  interest  rate  provided  for in the Reset  Notice for the  Subsequent
  Interest Period commencing on such Optional Reset Date by causing the Trustee to
  mail by  first-class  mail notice of such higher  interest rate to the Holder of
  this Note.  Such notice shall be irrevocable  and shall be mailed by the Trustee
  within five Business Days after receipt thereof. All Notes with respect to which
  the  interest  rate is reset on an  Optional  Reset  Date will bear such  higher
  interest rate for the Subsequent Interest Period.
  
                    If the Company elects to reset the interest rate of this Note,
  the Holder of this Note will have the option to elect  repayment  by the Company
  of this Note,  or any  portion  hereof,  on any  Optional  Reset Date at a price
  calculated  with  reference  to the Face  Amount  hereof to be repaid,  plus any
  interest  accrued to, such Optional Reset Date. In order to obtain  repayment on
  an Optional Reset Date, the Holder must follow the procedures set forth above in
  Section  4 for  optional  repayment  except  that the  period  for  delivery  or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to such  Optional  Reset Date and except that,  if the Holder has tendered  this
  Note for  repayment  pursuant  to the Reset  Notice,  the Holder may, by written
  notice to the  Trustee,  revoke  such  tender for  repayment  until the close of
  business on the tenth day prior to such Optional Reset Date; provided,  however,
  that if such day is not a  Business  Day,  then such  notice may be given on the
  next succeeding Business Day.
  
                    Section  6. OID  Notes.  If this Note is an OID  Note,  unless
  otherwise  specified  on the face  hereof,  the  amount  payable in the event of
  redemption by the Company, repayment at the option of the Holder or acceleration
  of Maturity  shall be the  Amortized  Face Amount of this Note as of the date of
  such redemption,  repayment or acceleration  rather than the Face Amount hereof.
  The  "Amortized  Face  Amount" of this Note shall be the amount equal to (a) the
  Issue  Price  (as set forth on the face  hereof)  plus (b) that  portion  of the
  difference  between the Issue Price and the Face Amount  hereof that has accrued
  at the Yield to Maturity set forth on the face hereof  (computed  in  accordance
  with generally accepted United States bond yield computation  principles) at the
  date as of which the Amortized Face Amount is calculated,  but in no event shall
  the Amortized Face Amount of this Note exceed the Face Amount.
  
                    Section 7.  Extendible  Notes.  If it is specified on the face
  hereof  that this Note is an  Extendible  Note,  the  Company  has the option to
  extend the Maturity Date hereof for the number of Extension Periods set forth on
  the face hereof,  each of which Extension  Periods shall be a period of from one
  to five  whole  years.  Unless  otherwise  specified  on the  face  hereof,  the
  following procedures shall apply if this Note is an Extendible Note.
  
                    The Company may exercise  its option by notifying  the Trustee
  of such  exercise  at least 45 but not more than 60 days  prior to the  Maturity
  Date hereof in effect prior to the exercise of such option (the "Original Stated
  Maturity"). Not later than five Business Days after receipt thereof, the Trustee
  will mail to the Holder a notice (the "Extension Notice"),  first class, postage
  prepaid,  setting  forth (i) the  election of the Company to extend the Maturity
  Date,  (ii) the new Maturity  Date,  (iii) the Interest  Rate  applicable to the
  Extension  Period and (iv) the  provisions,  if any, for  redemption  during the
  Extension  Period,  including the date on which or the period or periods  during
  which and the price at which such  redemption  may occur  during  the  Extension
  Period.  Upon the mailing by the Trustee of an  Extension  Notice to the Holder,
  the  Maturity  Date  hereof  shall be  extended  automatically,  and,  except as
  modified by the Extension  Notice and as described in the next  paragraph,  this
  Note will have the same terms as prior to the mailing of such Extension Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  the Original Stated Maturity hereof, the Company may, at its option,  revoke the
  interest  rate  provided  for in the  Extension  Notice and  establish  a higher
  interest rate for the Extension  Period by causing the Trustee to mail notice of
  such higher interest rate,  first class,  postage prepaid,  to the Holder.  Such
  notice  shall be  irrevocable  and shall be mailed by the Trustee  within  three
  Business Days after receipt  thereof.  This Note will bear such higher  interest
  rate for the Extension Period, whether or not tendered for repayment.
  
                    If the Company  extends the  Maturity  Date of this Note,  the
  Holder will have the option to elect  repayment by the Company of this Note,  or
  any portion hereof,  on the Original Stated Maturity at a price  calculated with
  reference  to the Face Amount  hereof to be repaid plus any accrued  interest to
  such  date.  In order  for this  Note to be so  repaid  on the  Original  Stated
  Maturity,  the Holder must follow the  procedures  set forth in Section 5 hereof
  for  optional  repayment,  except  that the period for  delivery of this Note or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to the  Original  Stated  Maturity  and except  that the Holder  may, by written
  notice to the Trustee,  revoke any such tender for repayment  until the close of
  business  on the tenth  day prior to the  Original  Stated  Maturity;  provided,
  however,  that if such day is not a Business  Day, then such notice may be given
  on the next succeeding Business Day.
  
                    Section 8.  Renewable  Notes.  If it is  specified on the face
  hereof that this Note is a Renewable  Note, this Note will mature on the Initial
  Maturity  Date  specified  on the face hereof  unless the Maturity of all or any
  portion of this Note is extended in  accordance  with the  procedures  described
  below.
  
                    On the  Interest  Payment  Date  occurring  in the sixth month
  (unless a different  Special Election  Interval is specified on the face hereof)
  prior to the  Initial  Maturity  Date hereof (the  "Initial  Maturity  Extension
  Date") and on the Interest  Payment  Date  occurring in each sixth month (or the
  last  month of each  Special  Election  Interval)  after such  Initial  Maturity
  Extension  Date (each,  together  with the Initial  Maturity  Extension  Date, a
  "Maturity  Extension  Date"),  the Maturity of this Note will be extended to the
  Interest  Payment Date occurring in the twelfth month (or, if a Special Election
  Interval is specified  on the face  hereof,  the last month in a period equal to
  twice the Special Election  Interval) after such Maturity Extension Date, unless
  the Holder elects to terminate the automatic extension of the Maturity hereof or
  any portion hereof as described below.
  
                    If the Holder elects to terminate  the automatic  extension of
  the  Maturity  of any  portion of the  principal  amount of this Note during the
  specified period prior to any Maturity  Extension Date, such portion will become
  due and payable on the Interest  Payment  Date  occurring in the sixth month (or
  the last month in the Special Election  Interval) after such Maturity  Extension
  Date (the "Extended Maturity Date").
  
                    The Holder may elect to terminate the  automatic  extension of
  the Maturity of this Note,  or if so specified  above,  any portion  hereof,  by
  delivering a notice to such effect to the Trustee (or any duly appointed  Paying
  Agent)  at the  Corporate  Trust  Office  not less than 15 nor more than 30 days
  prior to such Maturity Extension Date (unless another period is specified on the
  face hereof as the "Special Election Period"). Such election will be irrevocable
  and will be binding  upon each  subsequent  Holder of this Note.  An election to
  terminate the automatic  extension of the Maturity of this Note may be exercised
  with respect to less than the entire Face Amount  hereof only if so specified on
  the face hereof and only in such Face Amount, or any integral multiple in excess
  thereof, as is specified on the face hereof.  Notwithstanding the foregoing, the
  Maturity of this Note will not be extended beyond the Maturity Date specified on
  the face hereof.
  
                    Unless  otherwise   specified  above,  any  such  election  to
  terminate  will be  effective  only if this  Note,  with  the  "Option  to Elect
  Termination of Automatic Extension" included herein duly executed,  is presented
  to the Trustee (or any duly appointed Paying Agent)  simultaneously  with notice
  of such  election  (or, in the event notice of such  election,  together  with a
  guarantee of delivery within five Business Days, is transmitted on behalf of the
  Holder from a member of a national securities exchange, the National Association
  of Securities Dealers,  Inc. or a commercial bank or trust company in the United
  States,  within  five  Business  Days of the  date of such  notice).  As soon as
  practicable  following  receipt of this Note the Trustee (or any duly  appointed
  Paying  Agent)  shall issue in exchange  herefor in the name of the Holder (i) a
  Note,  in a face  amount  equal to the face  amount  of this  Note for which the
  election to terminate the automatic  extension of Maturity was  exercised,  with
  terms  identical to those  specified  herein  (except for the Issue Date and the
  Initial   Interest   Rate  and  except  that  such  Note  shall  have  a  fixed,
  nonextendable  Maturity on the Extended Maturity Date) and (ii) if such election
  is made with  respect to less than the full Face Amount  hereof,  a  replacement
  Renewable Note, in a face amount equal to the Face Amount of this Note for which
  no election was made, with terms identical to this Note.
  
                    Section 9. Principal  Amount For Indenture  Purposes.  For the
  purpose  of  determining  whether  Holders  of the  requisite  amount  of  Notes
  outstanding under the Indenture have made a demand,  given a notice or waiver or
  taken any other action,  the outstanding  principal  amount of this Note will be
  deemed to be the Principal  Amount,  provided,  however,  if this Note is an OID
  Note, the  outstanding,  principal  amount of this Note will be deemed to be the
  Face Amount set forth above.
  
                    Section 10.  Modification and Waivers.  The Indenture contains
  provisions  permitting  the  Company  and the  Trustee,  with the consent of the
  holders of not less than a majority in aggregate principal amount of each series
  of the Securities at the time  Outstanding  to be affected,  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, (a) change the stated maturity
  of the  principal  of, or any  installment  of  principal of or interest on, any
  Security,  (b)  reduce the  principal  amount  thereof  or the rate of  interest
  thereon or any  premium  payable  upon the  redemption  thereof,  (c) reduce the
  amount of the principal of an OID Security that would be due and payable upon an
  Event of  Acceleration or an Event of Default (both as defined in the Indenture)
  (d)  adversely  affect any right of repayment at the option of the holder of any
  Security,  (e) change any place of payment  where,  or the coin or  currency  in
  which,  any  Security or any  premium or the  interest  thereon is payable,  (f)
  impair the right to institute suit for the enforcement of any such payment on or
  after the stated  maturity  thereof (or, in the case of redemption,  on or after
  the  redemption  date),  (g) reduce the  percentage  in principal  amount of the
  outstanding  Securities of any series,  the consent of whose holders is required
  for any such supplemental indenture, or the consent of whose holders is required
  for any waiver (of  compliance  with  certain  provisions  of the  Indenture  or
  certain  defaults  thereunder  and  their  consequences)  provided  for  in  the
  Indenture,  or (h) modify any of the  provisions  of sections  of the  Indenture
  dealing with supplemental indentures, waivers of certain covenants or waivers of
  past defaults, except to increase any such percentage or to provide that certain
  other  provisions  of the  Indenture  cannot be modified  or waived  without the
  consent of the holder of each outstanding  Security affected thereby. 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 the  principal of, or the premium (if any) or
  interest,  if any, on any of the  Securities of such series,  or in respect of a
  provision  under which the Indenture  cannot be modified  without the consent of
  the holder of each  outstanding  security of such  series.  Any such  consent or
  waiver by the  Holder of this Note shall be  conclusive  and  binding  upon such
  Holder and upon all future  holders  and owners of this Note and any Notes which
  may be issued in exchange or  substitution  herefor,  irrespective of whether or
  not any notation thereof is made upon this Note or such other Notes.
  
                    Section 11. Obligations Unconditional.  No reference herein to
  the Indenture and no provisions of this Note or of the Indenture  shall alter or
  impair the obligation of the Company,  which is absolute and  unconditional,  to
  pay the principal of, premium, if any, and interest, if any, on this Note at the
  place, at the respective  times, at the rate, and in the coin or currency herein
  prescribed.
  
                    Section 12. Defeasance.  The Indenture contains provisions for
  the discharge of the Indenture and defeasance at any time of the indebtedness on
  this Note upon  compliance  by the Company  with  certain  conditions  set forth
  therein, which provisions apply to this Note.
  
                    Section 13.  Authorized Form and  Denominations.  The Notes of
  this series are  issuable  only in  registered  form,  without  coupons.  Unless
  otherwise  set forth on the face  hereof,  Notes  will be issued in Face  Amount
  denominations of U.S. $1,000 and any integral  multiple of U.S. $1,000 in excess
  thereof.  Each Note will be issued  initially  as either a Global  Security or a
  Certificated Note, at the option of the holders thereof, either at the office or
  agency to be  designated  and  maintained by the Company for such purpose in the
  Borough of Manhattan,  The City of New York,  pursuant to the  provisions of the
  Indenture or at any of such other offices or agencies as may be  designated  and
  maintained  by the Company for such purpose  pursuant to the  provisions  of the
  Indenture,  and in the manner and  subject to the  limitations  provided  in the
  Indenture,  but without the payment of any service charge, except for any tax or
  other governmental charges imposed in connection therewith. Notes of this series
  are  exchangeable  for a like aggregate Face Amount of Notes of this series of a
  different  authorized  denomination,  except that Global  Securities will not be
  exchangeable for Certificated Notes.
  
                    Section  14.  Registration  of  Transfer.  As  provided in the
  Indenture and subject to certain  limitations as therein set forth, the transfer
  of this Note is  registrable  in the Security  Register,  upon surrender of this
  Note for registration of transfer,  at the Corporate Trust Office or agency in a
  Place of Payment for this Note,  duly endorsed by, or  accompanied  by a written
  instrument  of transfer  in form  satisfactory  to the Company and the  Security
  Registrar  requiring  such written  instrument of transfer duly executed by, the
  Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
  more new Notes of this  series,  of  authorized  denominations  and for the same
  aggregate  Face  Amount,  will  be  issued  to  the  designated   transferee  or
  transferees.
  
                    If this  Note is a  Global  Security  and if at any  time  the
  Depository  notifies  the Company  that it is unwilling or unable to continue as
  Depository or if at any time the  Depository  shall no longer be eligible  under
  the Indenture, the Company shall appoint a successor Depository.  If a successor
  Depository  for the  Securities  of such series is not  appointed by the Company
  within 90 days after the Company  receives  such notice or becomes aware of such
  ineligibility,  the Company will issue,  and the Trustee will  authenticate  and
  deliver,  Notes in definitive form in an aggregate Face Amount equal to the Face
  Amount hereof.
  
                    No service charge shall be made for any such  registration  of
  transfer or exchange, but the Company may require payment of a sum sufficient to
  cover any tax or other  governmental  charge  that may be imposed in  connection
  therewith.
  
                    Prior to due  presentment  of this  Note for  registration  of
  transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
  may treat the person in whose name this Note is  registered  as the owner hereof
  for all  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.
  
                    Section 15. Events of Default.  In case an Event of Default or
  an Event of Acceleration,  as defined n the Indenture,  with respect to Notes of
  this series shall have occurred and be  continuing,  the principal of all of the
  Notes of this series,  in the case of an Event of Default,  shall become,  or in
  the case of an Event of  Acceleration,  may be declared and in  accordance  with
  such  declaration  shall  become,  due and  payable  and  such  acceleration  or
  declaration may in certain events be rescinded,  in the manner,  with the effect
  and subject to the conditions provided in the Indenture.  In the event that this
  Note is an OID Note,  the amount of  principal of this Note that becomes due and
  payable upon such  acceleration  shall be equal to the amount  calculated as set
  forth in Section 6 hereof. Upon payment (i) of the aggregate  applicable amounts
  of principal of the Notes of this series so declared due and payable and (ii) of
  interest on any overdue  principal  and  overdue  interest  (in each case to the
  extent that the payment of such interest shall be legally  enforceable),  all of
  the  Company's  obligations  in respect of the payment of the  principal  of and
  interest, if any, on the Notes of this series shall terminate.
  
                    Section   16.    Subordination,    Regulatory   Matters.   The
  indebtedness  evidenced by this Note,  together with any interest accrued hereon
  and premium,  if any, is, to the extent  provided in the Indenture,  subordinate
  and  subject  in right of  payment  to the prior  payment  in full of all Senior
  Indebtedness,  as defined in the  Indenture,  and this Note is issued subject to
  the provisions of the Indenture,  and each Holder hereof, by accepting the same,
  agrees to and shall be bound by such  provisions  and authorizes and directs the
  Trustee in his behalf to take such action as may be necessary or  appropriate to
  acknowledge  or effectuate  the  subordination  as provided in the Indenture and
  appoints the Trustee his attorney-in-fact for any and all such purposes.
  
                    As provided in the Indenture,  the Company's obligation to pay
  the principal of the Notes of this series at Stated  Maturity or pursuant to any
  mandatory  sinking  fund shall be  suspended  if,  after  giving  effect to such
  payment and the payment of certain other  subordinated  debt, the Company's "net
  capital" would be reduced below the minimum  amounts of capital to be maintained
  by the Company as required by the various  domestic  exchanges,  boards of trade
  and governmental agencies to which it is subject, all with the effect and to the
  extent  provided in the Indenture.  Optional  redemptions are subject to similar
  suspensions and to the requirement that permission  therefor of the Exchange has
  been  obtained.  If payment is made of the principal of the Notes of this series
  notwithstanding the foregoing,  the Holders of the Notes so paid are required to
  repay to the Company,  its  successors  or assigns,  the sum so paid;  provided,
  however,  that any suit for such recovery must be commenced  within two years of
  the date of such payment.  Each Holder hereof,  by accepting the same, agrees to
  be bound by such provisions.
  
                    Section 17. No Recourse Against Certain  Persons.  No recourse
  for the payment of the principal of, premium,  if any, or interest on this Note,
  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 Note, 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.
  
       Section 18.  Defined Terms.  All terms used but not defined in this Note 
  are used herein as defined in the Indenture.
  
                    Section 19.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY 
  AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
  OPTION TO ELECT REPAYMENT
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to have the Company  repay the Face Amount of this Note or portion  hereof below
  designated at (i) the Optional Repayment Percentage  multiplied by the Principal
  Amount of this Note to be repaid in respect  of such Face  Amount  plus  accrued
  interest to the Optional  Repayment  Date, if this Note is to be repaid pursuant
  to the Optional Repayment  provision described in Section 4 hereof, or (ii) 100%
  of the Principal Amount of this Note to be repaid in respect of such Face Amount
  plus accrued  interest to the Optional  Reset Date, if this Note is to be repaid
  pursuant to the Optional Interest Reset provision  described in Section 5 hereof
  or the  Extendible  Notes  provision  described  in  Section 7 hereof.  Any such
  election is irrevocable except as provided in Section 5 or Section 7 hereof.
  
  Dated:_________________                   _______________________________
                                            Signature
                                            Sign  exactly  as name appears on the
                                            front   of   this   Note   [SIGNATURE
                                            GUARANTEED  -  required only if Notes
                                            are  to be  issued  and  delivered to
                                            other than the registered Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to terminate the automatic  extension of this Note or of the portion of the Face
  Amount of this Note below designated.  Any such election is irrevocable and will
  be binding on any subsequent Holder hereof.
  
  Dated:_________________         _______________________________
                                  Signature
                                   Sign exactly as name appears on the front of 
                                   this Note[SIGNATURE GUARANTEED - required only
                                   if Notes are to be issued and delivered to
                                   other than the registered Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  ABBREVIATIONS
  
                    The following abbreviations, when used in the
  inscription  on the face of this  instrument,  shall be construed as though they
  were written out in full according to applicable laws or regulations:
  
                    TEN COM       -   as tenants in common
                    TEN ENT       -   as tenant by the entireties
                    JT TEN        -   as joint tenants with right of survivorship
                                      and not as tenantsin common
                                     
                    UNIF GIFT
                    MIN ACT       -   _________Custodian___________
                                   (Cust)             (Minor)
                                  Under Uniform Gifts to
                                  Minors Act
  
                                  -----------------------------
                                             (State)
  
  Additional abbreviations may also be used though not in the above list.
  
                         FOR VALUE RECEIVED, the undersigned
                   hereby sell(s), assign(s) and transfer(s) unto
  
  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  
  Please print or type name and address, including zip code of assignee
  
  the within Note of LEHMAN BROTHERS INC. and all rights thereunder and does
  hereby irrevocably constitute and appoint
  _____________________________________________________Attorney  to  transfer  the
  said  Note  on the  books  of the  within-named  Company,  with  full  power  of
  substitution in the premises.
  
  Dated:______________________________
  
  SIGNATURE GUARANTEED:__________________________________________
  
                                                       NOTICE:  The  signature  to
                                                       this     assignment    must
                                                       correspond with the name as
                                                       it appears upon the face of
                                                       the  within  Note in  every
                                                       particular,         without
                                                       alteration  or  enlargement
                                                       or any change whatsoever.
  Schedule I
  
                                 Amortization Table
  
                             Date                                Payment
  
                                                                        EXHIBIT A
                                   
  
                                    RESET NOTICE
  
                                LEHMAN BROTHERS INC.
                   Senior Subordinated Medium-Term Notes, Series A
                                    (Fixed Rate)
                               CUSIP No. _____________
                               Registered Nos. ___-___
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under the laws of the State of Delaware (the "Company"),  is the issuer
  of the above-referenced  Notes (the "Notes").  Capitalized terms used herein and
  not defined are used as defined in the Notes.
  
                    The Company hereby elects to reset the Interest Rate
  set forth on the face of the Notes.  On and after ____________1/, the Interest
  Rate shall be ________________.
  
                    Each Holder of a Note has the option to elect repayment by the
  Company  of such  Note,  or any  portion  thereof,  on any  Optional  Reset Date
  pursuant to the terms of such Note.  The Notes may be repaid on the dates and at
  the prices set forth below:
  
                    Date                                        Redemption Price
  
                    IN WITNESS WHEREOF, Lehman Brothers Inc. has caused this Reset
  Notice to be signed by its  Chairman of the Board,  one of its Vice  Chairmen of
  the Board, its President,  its Treasurer or one of its Vice Presidents and to be
  attested by its Secretary or one of its Assistant Secretaries.
  
  Dated:
  
                                                       LEHMAN BROTHERS INC.
  
                                                       By:________________________
                                       Title:
  
                                                       Attest:____________________
                                                                  Title:
  
  1/       Insert applicable Optional Reset Date.
  EXHIBIT 4.2
  CUSIP NO. _____________
  
  REGISTERED                                                    FACE AMOUNT:
  No. ____
  
                    If this Note is an OID Note (as defined  below) the  following
                    legend is applicable:
  
                    FOR  PURPOSES  OF SECTIONS  1272,  1273 AND 1275 OF THE UNITED
                    STATES  INTERNAL  REVENUE CODE OF 1986, AS AMENDED,  THE ISSUE
                    PRICE OF THIS NOTE IS ____% OF ITS PRINCIPAL  AMOUNT,  AND THE
                    AMOUNT OF  ORIGINAL  ISSUE  DISCOUNT,  THE  YIELD TO  MATURITY
                    COMPOUNDED  __________,  THE  ISSUE  DATE  AND THE  AMOUNT  OF
                    ORIGINAL  ISSUE   DISCOUNT   ALLOCABLE  TO  THE  SHORT  PERIOD
                    DETERMINED  USING THE  EXACT  METHOD  WITHIN  THE  MEANING  OF
                    PROPOSED TREASURY REGULATION SECTION 1.1272-1(c)(2)(ii) ARE AS
                    SET FORTH BELOW.
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                   (FLOATING RATE)
  
                    If the registered  owner of this Note (as indicated  below) is
  The Depository Trust Company (the  "Depository") or a nominee of the Depository,
  this Note is a Note in  global  form (a  "Global  Security")  and the  following
  legends are applicable except as specified on the reverse hereof:
  
  This Note is a Global Security  within the meaning of the Indenture  hereinafter
  referred to and is registered in the name of the  Depository or a nominee of the
  Depository. Unless this certificate is presented by an authorized representative
  of The  Depository  Trust Company (55 Water Street,  New York,  New York) to the
  Company (as defined below) or its agent for  registration of transfer,  exchange
  or payment and any certificate issued is registered in the name of Cede & Co. or
  such other name as requested by an authorized  representative  of The Depository
  Trust  Company and any payment is made to Cede & Co.,  ANY  TRANSFER,  PLEDGE OR
  OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY PERSON IS WRONGFUL  since
  the registered owner hereof, Cede & Co., has an interest herein.
  
  UNLESS AND UNTIL IT IS EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  CERTIFICATED
  FORM,  THIS  GLOBAL  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
  THE 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.
  ISSUE          OPTION ELECTION DATES:   OPTIONAL REPAYMENT DATES:
  PRICE:  $
  ISSUE DATE:                             OPTIONAL REPAYMENT PRICES:
  MATURITY                                OPTIONAL SPREAD OR SPREAD
  DATE:                                   MULTIPLIER RESET:
                                          [  ] YES          [  ] NO
  INTEREST       OPTION VALUE             OPTIONAL RESET DATES:
  RATE BASIS:    CALCULATION AGENT:
  MAXIMUM                                 OPTIONAL REDEMPTION:
  INTEREST                                [  ] YES          [  ] NO
  RATE:
  MINIMUM                                 INITIAL REDEMPTION DATE:
  INTEREST
  RATE:
  INTEREST       SINKING FUND:            INITIAL REDEMPTION
  RESET DATES:                            PERCENTAGE:      %
  INTEREST       TOTAL AMOUNT OF OID:     APPLICABILITY OF ANNUAL REDEMPTION
  PAYMENT                                 PERCENTAGE REDUCTION
  DATES:                                  [  ] YES          [  ] NO
                           If yes, state Annual Percentage
                                    Reduction: %
  REGULAR        YIELD TO MATURITY:       RENEWABLE NOTE:
  RECORD DATES:                           [  ] YES          [  ] NO
  INITIAL        INITIAL ACCRUAL PERIOD   INITIAL MATURITY DATE:
  INTEREST       OID:
  RATE:
  INDEX          AUTHORIZED               SPECIAL ELECTION INTERVAL:
  MATURITY:      DENOMINATIONS:
  SPREAD:        EXTENDIBLE NOTE:         RENEWABLE IN PART:
                 [  ] YES          [  ]   [  ] YES          [  ] NO
                                            NO
  SPREAD         EXTENSION PERIOD:        AUTHORIZED RENEWABLE AMOUNTS:
  MULTIPLIER:
  INTEREST       NUMBER OF EXTENSION      SPECIAL ELECTION PERIOD:
  DETERMINATION  PERIODS:
  DATE:
  DEPOSITORY:
  LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing  under the laws of the State of Delaware  (herein called the "Company",
  which term includes any successor corporation under the Indenture referred to on
  the  reverse   hereof),   for  value   received,   hereby  promises  to  pay  to
  ____________________________,  or registered  assigns,  on the Maturity Date the
  Principal  Amount hereof (as defined below) and, if so specified  above,  to pay
  interest  thereon  from the Issue Date  specified  above or from the most recent
  Interest  Payment Date  specified  above to which interest has been paid or duly
  provided for at the rate per annum  determined in accordance with the provisions
  on the reverse  hereof,  depending on the Interest Rate Basis  specified  above,
  until the  principal  hereof is paid or made  available  for payment and (to the
  extent that the payment of such interest shall be legally  enforceable)  at such
  rate  per  annum  on any  overdue  principal  and  premium  and  on any  overdue
  instalment of interest.  The  "Principal  Amount" of this Note at any time means
  (i) if this Note is an OID Note (as defined below), the Amortized Face Amount at
  such time as described in Section 7 on the reverse  hereof and (ii) in all other
  cases, the Face Amount hereof.
  
                    If this Note is  subject  to an Annual  Redemption  Percentage
  Reduction  as  specified  above,  the  Redemption  Price shall  initially be the
  Initial  Redemption  Percentage  of the  Principal  Amount  of this  Note on the
  Initial  Redemption  Date and shall decline at each  anniversary  of the Initial
  Redemption Date (each such date, a "Redemption  Date") by the Annual  Percentage
  Reduction of such Principal  Amount until the  Redemption  Price is 100% of such
  Principal Amount.
  
                    In the event of any optional  redemption  by the Company,  any
  repayment at the option of the Holder, acceleration of the maturity of this Note
  or other prepayment of this Note prior to the Maturity Date specified above, the
  term "Maturity" when used herein shall refer,  where applicable,  to the date of
  redemption, repayment, acceleration or other prepayment of this Note.
  
                    An "OID Note" is (a) any Note that has been issued at an Issue
  Price lower, by more than a de minimis amount (as determined under United States
  federal income tax rules  applicable to original  issue  discount  instruments),
  than the Face  Amount  thereof and (b) any Note not  identified  in (a) that for
  United States  federal income tax purposes would be considered an original issue
  discount instrument.
  
                    Except as provided  in the  following  paragraph,  the Company
  will pay interest on each Interest Payment Date specified above, commencing with
  the first Interest Payment Date next succeeding the Issue Date, and at Maturity;
  provided, that any payment of principal, premium, if any, or interest to be made
  on any Interest Payment Date or on a date of Maturity that is not a Business Day
  shall be made on the next succeeding Business Day with the same force and effect
  as if made on such Interest  Payment Date or such date of Maturity,  as the case
  may be, and no  additional  interest  shall  accrue as a result of such  delayed
  payment,  except  that if this Note is a LIBOR Note (as  defined in Section 2 on
  the reverse  hereof)  and such next  succeeding  Business  Day falls in the next
  calendar month, such payment shall be made on the preceding day that is a London
  Banking Day.  The term  "Business  Day" means any day,  other than a Saturday or
  Sunday, that meets each of the following  applicable  requirements:  such day is
  (a) not a day on which banking  institutions  in the Borough of  Manhattan,  The
  City of New York are  authorized or required by law or regulation to close;  and
  (b) if this Note is a LIBOR Note, a London Banking Day. The term "London Banking
  Day" means any day on which dealings in deposits in U.S.  Dollars are transacted
  in the London interbank market.  Unless otherwise  specified above, the interest
  payable  on each  Interest  Payment  Date or at  Maturity  will be the amount of
  interest  accrued from and  including  the Issue Date or from and  including the
  last Interest  Payment Date to which interest has been paid, as the case may be,
  to, but excluding,  such Interest  Payment Date or the date of Maturity,  as the
  case may be; provided,  however, that if interest on this Note is reset daily or
  weekly,  interest  payable on each  Interest  Payment Date will be the amount of
  interest  accrued from and  including  the Issue Date or from and  excluding the
  last  date to  which  interest  has been  paid,  as the  case  may be,  to,  and
  including,  the Regular Record Date immediately  preceding such Interest Payment
  Date, except that at Maturity the interest payable will include interest accrued
  to, but excluding, the date of Maturity.
  
                    Unless otherwise  specified above, the interest payable on any
  Interest Payment Date will, as provided in the Indenture,  be paid to the person
  in whose name this Note (or one or more predecessor  Notes) is registered at the
  close of business on the Regular Record Date  indicated  above (whether or not a
  Business  Day) next  preceding  such  Interest  Payment  Date;  provided,  that,
  notwithstanding any provision of the Indenture to the contrary, interest payable
  on any date of Maturity shall be payable to the Person to whom  principal  shall
  be payable;  and provided,  further,  that, unless otherwise specified above, in
  the case of a Note  initially  issued  between  a  Regular  Record  Date and the
  Interest  Payment Date  relating to such Regular  Record Date,  interest for the
  period  beginning  on the Issue Date and ending on such  Interest  Payment  Date
  shall be paid on the Interest Payment Date following the next succeeding Regular
  Record Date to the  registered  Holder on such next  succeeding  Regular  Record
  Date.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  all payments of interest on this Note (other
  than  interest  payable at Maturity)  will be made by wire transfer or by check;
  provided,  that, if the Holder hereof is the Holder of U.S.  $10,000,000 or more
  in  aggregate  Principal  Amount of Notes of this series of like tenor and term,
  such  Holder  shall be  entitled to receive  interest  payments  in  immediately
  available  funds,  but only if complete and appropriate  instructions  have been
  received in writing by the Trustee (or any duly  appointed  Paying  Agent) on or
  prior to the applicable Regular Record Date.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  payments of principal,  premium, if any, and
  interest  payable at Maturity will be made in immediately  available  funds upon
  surrender  of this Note at the  corporate  trust office or agency of the Trustee
  (or any duly appointed Paying Agent)  maintained for that purpose in the Borough
  of Manhattan,  The City of New York (the "Corporate  Trust  Office"),  provided,
  that this Note is  presented  to the Trustee (or any such Paying  Agent) in time
  for the Trustee (or any such Paying  Agent) to make such  payments in such funds
  in accordance with its normal procedures.
  
                    Unless  otherwise  specified  above,  if this Note is a Global
  Security,  payments of interest  hereon (other than at Maturity) will be made in
  funds in accordance with existing  arrangements between the Trustee (or any duly
  appointed Paying Agent) and the Depository. Unless otherwise specified above, if
  this Note is a Global Security, any principal,  premium, if any, and/or interest
  payable  hereon  at  Maturity  will  be paid by  wire  transfer  in  immediately
  available funds to an account specified by the Depository.
  
                    The Company will pay any administrative costs imposed by banks
  in making payments in immediately  available funds,  but any tax,  assessment or
  governmental  charge  imposed  upon  payments  hereunder,   including,   without
  limitation, any withholding tax, will be borne by the Holder hereof.
  
                    REFERENCE  IS HEREBY  MADE TO THE FURTHER  PROVISIONS  OF THIS
  NOTE SET FORTH ON THE REVERSE  HEREOF.  SUCH  FURTHER  PROVISIONS  SHALL FOR ALL
  PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
  
                    This  Note  shall not be  entitled  to any  benefit  under the
  Indenture or be valid or become obligatory for any purpose until the certificate
  of  authentication  hereon  shall  have  been  signed by the  Trustee  under the
  Indenture.
  
                    IN WITNESS  WHEREOF,  Lehman  Brothers  Inc.  has caused  this
  instrument  to be signed by its Chairman of the Board,  one of its Vice Chairmen
  of the  Board,  its  President  or one of its  Vice  Presidents,  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:
  
  [SEAL]                              LEHMAN BROTHERS INC.
  
                           By:____________________________
  Name:
  Title:
  
                           Attest:________________________
  Name:
  Title:
  TRUSTEE'S CERTIFICATE OF AUTHENTICATION
  
  This is one of the Securities of the series designated herein referred to in the
  within-mentioned Indenture.
  
  THE FIRST NATIONAL BANK OF CHICAGO
    as Trustee
  
  By:_________________________
  Authorized Officer
  [REVERSE OF NOTE]
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                   (Floating Rate)
  
                    Section  1.  General.  This  Note is one of a duly  authorized
  series of Notes of the Company designated as the Senior Subordinated Medium-Term
  Notes,  Series A (Floating  Rate) of the Company  (herein  called the  "Notes"),
  limited in  aggregate  principal  amount to  $________________  (or such greater
  amount,  if OID Notes are issued, as shall result in aggregate gross proceeds to
  the Company of  $__________________),  subject to  reduction  as a result of the
  sale under certain  circumstances  of other debt securities of the Company.  The
  foregoing  limit,  however,  may be increased by the Company if in the future it
  determines  that it may wish to sell additional  Notes.  The Notes are one of an
  indefinite number of series of debt securities of the Company (collectively, the
  "Securities") issued or issuable under and pursuant to an indenture, dated as of
  March 1, 1996 (the "Indenture"),  duly executed and delivered by the Company and
  The First National Bank of Chicago, as Trustee (herein called the "Trustee"), 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  Trustee,  the  Company  and the  holders  of the
  Securities  and of the terms  upon  which  the  Securities  are,  and are to be,
  authenticated and delivered.  The separate series of Securities may be issued in
  various  aggregate  principal  amounts,  may mature at different times, may bear
  interest (if any) at  different  rates,  may be subject to different  redemption
  provisions  or  repayment  or  repurchase  rights  (if any),  may be  subject to
  different  sinking,  purchase  or  analogous  funds (if any),  may be subject to
  different  covenants  and Events of  Accleration  and Events of Default  and may
  otherwise vary as in the Indenture provided.
  
                    Section 2. Determination of Interest Rate. For the period from
  the Issue Date to the first  Interest  Reset Date set forth on the face  hereof,
  the interest  rate hereon shall be the Initial  Interest  Rate  specified on the
  face hereof. Thereafter, the interest rate hereon will be reset on each Interest
  Reset Date; provided, however, that the interest rate in effect for the ten days
  immediately  prior to Maturity will be that in effect on the tenth day preceding
  such Maturity. If any Interest Reset Date would otherwise be a day that is not a
  Business  Day  (or,  if this  Note is a LIBOR  Note,  a day that is not a London
  Banking Day),  such Interest  Reset Date shall be postponed to the next day that
  is a Business  Day (or, if this Note is a LIBOR Note,  to the next day that is a
  London  Banking  Day),  except that if this Note is a LIBOR Note and such London
  Banking Day is in the next succeeding  calendar month,  such Interest Reset Date
  shall  be the  immediately  preceding  London  Banking  Day.  If this  Note is a
  Treasury  Rate Note (as defined  below) and an auction date for  Treasury  bills
  shall fall on any  Interest  Reset  Date,  then such  Interest  Reset Date shall
  instead be the first  Business Day  immediately  following  such  auction  date.
  Subject to applicable  provisions of law and except as specified herein, on each
  Interest  Reset  Date,  the rate of interest on this Note on and after the first
  Interest  Reset  Date  shall  be the  rate  determined  in  accordance  with the
  provisions of the heading  below which has been  designated as the Interest Rate
  Basis on the face hereof plus or minus the Spread, if any, specified on the face
  hereof or multiplied  by the Spread  Multiplier,  if any,  specified on the face
  hereof.
  
           Commercial Paper Rate Notes
  
                    If the Interest Rate Basis is the commercial  Paper Rate, this
  Note is a "Commercial  Paper Rate Note." A Commercial  Paper Rate Note will bear
  interest at the interest rate calculated with reference to the Commercial  Paper
  Rate and the Spread or Spread Multiplier,  if any. Unless otherwise specified on
  the face hereof,  "Commercial  Paper Rate"  means,  with respect to any Interest
  Determination  Date, the Money Market Yield  (calculated as described  below) of
  the rate on that date for commercial  paper having the applicable Index Maturity
  as such rate is  published  in the  publication  entitled  "Statistical  Release
  H.15(519), Selected Interest Rates," or any successor publication,  published by
  the Board of Governors of the Federal  Reserve  System  ("H.15(519)")  under the
  heading "Commercial Paper". If such rate is not published by 9:00 A.M., New York
  City  time,  on the  Calculation  Date (as  defined  below)  pertaining  to such
  Interest  Determination  Date, then the Commercial Paper Rate shall be the Money
  Market  Yield of the rate on such  Interest  Determination  Date for  commercial
  paper having the applicable Index Maturity as published in the daily statistical
  release entitled "Composite 3:30 P.M. Quotations for U.S. Government Securities"
  (or any successor publication) published by the Federal Reserve Bank of New York
  ("Composite  Quotations") under the heading  "Commercial Paper". If such rate is
  not yet published in either H.15(519) or Composite  Quotations by 3:00 P.M., New
  York City time, on such  Calculation  Date,  then the Commercial  Paper Rate for
  such Interest  Determination  Date shall be calculated by the Calculation  Agent
  and shall be the Money Market Yield of the arithmetic  mean of the offered rates
  as of 11:00 A.M.,  New York City time,  on such Interest  Determination  Date of
  three leading  dealers of  commercial  paper in The City of New York selected by
  the Calculation  Agent after  consultation with the Company for commercial paper
  having the applicable Index Maturity,  placed for industrial  issuers whose bond
  rating is "AA",  or the  equivalent,  from a  nationally  recognized  securities
  rating agency;  provided,  however, that if the dealers selected as aforesaid by
  the  Calculation  Agent are not  quoting  as  mentioned  in this  sentence,  the
  Commercial  Paper Rate for the applicable  period will be the  Commercial  Paper
  Rate in effect on such Interest Determination Date.
  
                    "Money Market Yield" shall be a yield calculated in accordance
  with the following formula:
  
                    Money                                Market  Yield = D X 360 x
                                                         100 360 - (D X M)
  
  where "D" refers to the per annum  rate for the  commercial  paper,  quoted on a
  bank  discount  basis and  expressed as a decimal;  and "M" refers to the actual
  number of days in the interest period for which interest is being calculated.
  
           Federal Funds Effective Rate Notes
  
                    If the  Interest  Rate Basis is the  Federal  Funds  Effective
  Rate,  this Note is a  "Federal  Funds  Effective  Rate  Note." A Federal  Funds
  Effective  Rate Note will bear  interest at the interest  rate  calculated  with
  reference  to the  Federal  Funds  Effective  Rate  and  the  Spread  or  Spread
  Multiplier,  if any.  Unless  otherwise  specified on the face hereof,  "Federal
  Funds Effective Rate" means,  with respect to any Interest  Determination  Date,
  the rate on that day for  Federal  Funds as  published  in  H.15(519)  under the
  heading  "Federal Funds  (Effective)"  or, if not so published by 9:00 A.M., New
  York  City  time,  on  the   Calculation   Date   pertaining  to  such  Interest
  Determination  Date,  the Federal Funds  Effective Rate will be the rate on such
  Interest  Determination  Date as  published in  Composite  Quotations  under the
  heading  "Federal  Funds/Effective  Rate".  If such rate is not yet published in
  either  H.15(519) or Composite  Quotations by 3:00 P.M.,  New York City time, on
  the Calculation  Date pertaining to such Interest  Determination  Date, then the
  Federal  Funds  Effective  Rate for such  Interest  Determination  Date  will be
  calculated by the Calculation Agent and will be the arithmetic mean of the rates
  as of 11:00 A.M.,  New York City time, on such Interest  Determination  Date for
  the last  transaction  in  overnight  Federal  Funds  arranged by three  leading
  brokers of Federal  Funds  transactions  in The City of New York selected by the
  Calculation Agent after consultation with the Company;  provided,  however, that
  if the brokers selected as aforesaid by the Calculation Agent are not quoting as
  mentioned in this sentence,  the Federal Funds Effective Rate for the applicable
  period  will be the  Federal  Funds  Effective  Rate in effect on such  Interest
  Determination Date.
  
           CD Rate Notes
  
                    If the Interest Rate Basis is the CD Rate,  this Note is a "CD
  Rate Note." A CD Rate Note will bear  interest at the interest  rate  calculated
  with  reference  to the CD Rate and the  Spread  or Spread  Multiplier,  if any.
  Unless otherwise  specified on the face hereof, "CD Rate" means, with respect to
  any  Interest   Determination  Date,  the  rate  on  such  date  for  negotiable
  certificates  of deposit  having the  applicable  Index Maturity as published in
  H.15(519) under the heading "CDs (Secondary  Market)" or, if not so published by
  9:00 A.M.,  New York City  time,  on the  Calculation  Date  pertaining  to such
  Interest  Determination  Date,  the CD Rate  will be the  rate on such  Interest
  Determination  Date for  negotiable  certificates  of deposit of the  applicable
  Index  Maturity  as  published  in  Composite   Quotations   under  the  heading
  "Certificates of Deposit". If such rate is not yet published in either H.15(519)
  or Composite  Quotations by 3:00 P.M.,  New York City time, on such  Calculation
  Date, then the CD Rate for such Interest  Determination  Date will be calculated
  by the Calculation Agent and will be the arithmetic mean of the secondary market
  offered  rates as of the  opening  of  business,  New York  City  time,  on such
  Interest Determination Date, of three leading nonbank dealers in negotiable U.S.
  dollar  certificates  of  deposit  in The  City  of  New  York  selected  by the
  Calculation   Agent  after   consultation   with  the  Company  for   negotiable
  certificates of deposit of major United States money center banks of the highest
  credit  standing (in the market for negotiable  certificates  of deposit) with a
  remaining maturity closest to the applicable Index Maturity in a denomination of
  $5,000,000;  provided, however, that if the dealers selected as aforesaid by the
  Calculation Agent are not quoting as mentioned in this sentence, the CD Rate for
  the  applicable  period  will  be  the  CD  Rate  in  effect  on  such  Interest
  Determination Date.
  
           LIBOR Notes
  
                    If the  Interest  Rate  Basis is LIBOR,  this Note is a "LIBOR
  Note." A LIBOR Note will bear  interest at the  interest  rate  calculated  with
  reference to LIBOR and the Spread or Spread Multiplier, if any. Unless otherwise
  indicated  on  the  face  hereof,  "LIBOR"  means  the  rate  determined  by the
  Calculation Agent as follows:
  
                    (a) With respect to an Interest Determination Date, LIBOR will
  be, as  specified  on the face  hereof,  either (i) the  arithmetic  mean of the
  offered  rates for deposits in U.S.  dollars for the period  (commencing  on the
  Interest  Reset  Date) of the  applicable  Index  Maturity  which  appear on the
  display designated as page "LIBO" on the Reuters Monitor Money Rates Service, or
  such other page as may replace the LIBO page on that  service for the purpose of
  displaying  London  interbank  offered rates of major banks (the "Reuters Screen
  LIBO  Page"),  at  approximately  11:00  A.M.,  London  time,  on such  Interest
  Determination  Date,  if at least two such  offered  rates appear on the Reuters
  Screen LIBO Page  ("LIBOR  Reuters"),  or (ii) the offered  rate for deposits in
  U.S.  dollars  for the period  (commencing  on the  Interest  Reset Date) of the
  applicable  Index  Maturity  which appears on the Telerate Page 3750 (as defined
  below),  as  applicable,  at  approximately  11:00 A.M.,  London  time,  on such
  Interest  Determination  Date ("LIBOR  Telerate").  If neither LIBOR Reuters nor
  LIBOR  Telerate is specified on the face hereof,  LIBOR will be determined as if
  LIBOR Telerate had been specified.
  
                    (b) With  respect to an Interest  Determination  Date on which
  fewer than two offered rates appear on the Reuters Screen LIBO Page as specified
  in (a)(i)  above,  or on which no rate  appears on the  Telerate  Page 3750,  as
  applicable, as specified in (a)(ii) above, as applicable,  the Calculation Agent
  will  request  the  principal  London  office of each of four major banks in the
  London interbank market, as selected by the Calculation Agent after consultation
  with the Company,  to provide the Calculation  Agent with its offered  quotation
  for deposits in U.S.  dollars for the period  (commencing  on the Interest Reset
  Date) of the applicable  Index  Maturity to prime banks in the London  interbank
  market at approximately 11:00 A.M., London time, on such Interest  Determination
  Date and in a principal  amount  equal to an amount of not less than  $1,000,000
  that is representative  of a single  transaction in such market at such time. If
  at least two such  quotations  are  provided,  LIBOR in respect of such Interest
  Determination Date will be the arithmetic mean of such quotations. If fewer than
  two  such   quotations   are  provided,   LIBOR  in  respect  of  such  Interest
  Determination  Date  will  be  the  arithmetic  mean  of  the  rates  quoted  at
  approximately  11:00 A.M.,  New York City time, on such  Interest  Determination
  Date by three  major banks in The City of New York  selected by the  Calculation
  Agent after  consultation with the Company for loans in the applicable  currency
  to leading  European  banks,  for the period  (commencing  on the Interest Reset
  Date) of the  applicable  Index  Maturity and in a principal  amount equal to an
  amount  of  not  less  than  $1,000,000  that  is  representative  of  a  single
  transaction in such market at such time, provided, however, that if the banks in
  The City of New York  selected as  aforesaid  by the  Calculation  Agent are not
  quoting as mentioned in this sentence,  LIBOR for the applicable  period will be
  LIBOR as in effect on such Interest Determination Date.
  
                    The term "Telerate Page 3750" means the display  designated as
  page "3750" on the Telerate Service,  or such other page as may replace the 3750
  page on that  service or such other  service or services as may be  nominated by
  the British Bankers'  Association for the purpose of displaying London interbank
  offered rates for deposits in U.S.  Dollars,  British  Pounds  Sterling,  German
  Deutsche Marks, Swiss Francs, Japanese Yen and ECU.
  
           Prime Rate Notes
  
                    If the Interest  Rate Basis is the Prime Rate,  this Note is a
  "Prime Rate Note." A Prime Rate Note will bear  interest  at the  interest  rate
  calculated with reference to the Prime Rate and the Spread or Spread Multiplier,
  if any. Unless otherwise specified on the face hereof,  "Prime Rate" means, with
  respect to any Interest Determination Date, the rate on that day as published in
  H.15(519)  under the heading  "Bank Prime Loan" or, if not so  published by 9:00
  A.M., New York City time, on the  Calculation  Date  pertaining to such Interest
  Determination  Date, the Prime Rate will be determined by the Calculation  Agent
  and will be the arithmetic mean of the rates of interest  publicly  announced by
  each bank named on the display  designated as page "NYMF" on the Reuters Monitor
  Money  Rates  Service,  or such other page as may  replace the NYMF page on that
  service for the purpose of displaying prime rates or base lending rates of major
  United States banks (the "Reuters Screen NYMF Page"),  as such bank's prime rate
  or base lending rate as in effect for such Interest Determination Date. If fewer
  than four such rates but more than one such rate  appear on the  Reuters  Screen
  NYMF  Page  for  such  Interest  Determination  Date,  the  Prime  Rate  will be
  determined by the Calculation Agent and will be the arithmetic mean of the prime
  rates  quoted on the basis of the actual  number of days in the year  divided by
  360 as of the close of  business  on such  Interest  Determination  Date by four
  major money  center  banks in The City of New York  selected by the  Calculation
  Agent after  consultation with the Company.  If fewer than two such rates appear
  on the  Reuters  Screen  NYMF  Page,  the Prime Rate will be  calculated  by the
  Calculation  Agent and will be the arithmetic  mean of the prime rates in effect
  for such Interest  Determination Date as furnished in The City of New York by at
  least three  substitute  banks or trust  companies  organized and doing business
  under the laws of the United States,  or any state thereof,  in each case having
  total equity capital of at least  $500,000,000  and being subject to supervision
  or examination by federal or state authority,  selected by the Calculation Agent
  after  consultation  with the Company to provide  such rate or rates;  provided,
  however,  that if the banks or trust  companies  selected as  aforesaid  are not
  quoting as mentioned in this sentence,  the Prime Rate for the applicable period
  will be the Prime Rate in effect on such Interest Determination Date.
  
           Treasury Rate Notes
  
                    If the Interest Rate Basis is the Treasury Rate,  this Note is
  a "Treasury  Rate Note." A Treasury Rate Note will bear interest at the interest
  rate  calculated  with  reference to the Treasury  Rate and the Spread or Spread
  Multiplier,  if any.  Unless  otherwise  specified on the face hereof  "Treasury
  Rate" means, with respect to any Interest  Determination  Date, the rate for the
  auction held on such Interest  Determination  Date of direct  obligations of the
  United  States  ("Treasury  bills")  having the  applicable  Index  Maturity  as
  published in H.15(519) under the heading "U.S.  Government  Securities--Treasury
  bills-- auction average  (investment)" or, if not so published by 9:00 A.M., New
  York  City  time,  on  the   Calculation   Date   pertaining  to  such  Interest
  Determination Date, the auction average rate (expressed as a bond equivalent, on
  the basis of a year of 365 or 366 days,  as  applicable,  and applied on a daily
  basis) as otherwise  announced by the United States  Department of the Treasury.
  In the event  that the  results  of the  auction of  Treasury  bills  having the
  applicable  Index  Maturity are not  published or reported as provided  above by
  3:00 P.M., New York City time, on such Calculation Date or if no such auction is
  held on such  Interest  Determination  Date,  then the  Treasury  Rate  shall be
  calculated by the Calculation Agent and shall be a yield to maturity  (expressed
  as a bond equivalent,  on the basis of a year of 365 or 366 days, as applicable,
  and applied on a daily basis) of the arithmetic mean of the secondary market bid
  rates,  as of  approximately  3:30 P.M.,  New York City time,  on such  Interest
  Determination Date, of three leading primary United States government securities
  dealers selected by the Calculation  Agent after  consultation  with the Company
  for the  issue of  Treasury  bills  with a  remaining  maturity  closest  to the
  applicable Index Maturity;  provided,  however,  that if the dealers selected as
  aforesaid  by the  Calculation  Agent  are  not  quoting  as  mentioned  in this
  sentence,  the Treasury Rate for the applicable period will be the Treasury Rate
  in effect on such Interest Determination Date.
  
                    The term  "Calculation  Date"  means  the  date on  which  the
  Calculation Agent is to calculate an interest rate for this Note, which shall be
  the tenth calendar day after the related Interest  Determination Date or if such
  day is not a Business Day, the next succeeding  Business Day,  unless  otherwise
  specified on the face hereof.
  
                    Notwithstanding the foregoing,  the interest rate hereon shall
  not be greater than the Maximum  Interest Rate, if any, or less than the Minimum
  Interest Rate, if any, shown on the face hereof.  The interest rate on this Note
  will in no event be higher than the maximum  rate  permitted  by New York law as
  the same may be modified by United States law of general applicability.
  
                    The Calculation  Agent will, upon the request of the Holder of
  this Note,  provide the  interest  rate then in effect and, if  determined,  the
  interest rate which will become effective as a result of a determination made on
  the most recent Interest Determination Date with respect to this Note.
  
                    Unless  otherwise  specified on the face hereof,  the Interest
  Determination  Date  pertaining  to an  Interest  Reset  Date  will be (a)  such
  Interest  Reset Date for a Prime Rate Note and (b) the  Business  Day  preceding
  such  Interest  Reset Date for a  Commercial  Paper Rate Note,  a Federal  Funds
  Effective Rate Note or a CD Rate Note.  Unless  otherwise  specified on the face
  hereof, the Interest Determination Date pertaining to an Interest Reset Date for
  a LIBOR Note will be the second London Banking Day preceding such Interest Reset
  Date. Unless otherwise specified on the face hereof, the Interest  Determination
  Date  pertaining to an Interest  Reset Date for a Treasury Rate Note will be the
  day of the week in which such Interest  Reset Date falls on which Treasury bills
  of the applicable Index Maturity would normally be auctioned. Treasury bills are
  usually  sold at  auction  on Monday of each  week,  unless  that day is a legal
  holiday,  in which case the auction is usually  held on the  following  Tuesday,
  except that such auction may be held on the preceding Friday.  If, as the result
  of a legal holiday,  an auction is so held on the preceding Friday,  such Friday
  will be the Interest  Determination  Date  pertaining to the Interest Reset Date
  occurring in the next succeeding week.
  
                    Accrued  interest from the Issue Date or from the last date to
  which interest has been paid shall be calculated by multiplying  the face amount
  of this Note by an accrued interest  factor.  This accrued interest factor shall
  be  computed by adding the  interest  factors  calculated  for each day from the
  Issue Date or from the last date to which  interest  has been paid,  to the date
  for which accrued  interest is being  calculated.  The interest  factor for each
  such day is computed by dividing the interest  rate  applicable  to such date by
  360, in the case of Commercial  Paper Rate Notes,  Federal Funds  Effective Rate
  Notes, CD Rate Notes,  LIBOR Notes and Prime Rate Notes, or by the actual number
  of days in the year,  in the case of Treasury  Rate  Notes.  The  interest  rate
  applicable  to any day that is an Interest  Reset Date is the  interest  rate as
  determined,  in accordance with the procedures set forth above,  with respect to
  the Interest  Determination  Date  pertaining to such Interest  Reset Date.  The
  interest  rate  applicable  to any  other  day  is the  interest  rate  for  the
  immediately  preceding  Interest Reset Date (or, if none,  the Initial  Interest
  Rate).
  
                    Unless otherwise specified on the face hereof, all percentages
  resulting  from any  calculation  of the rate of  interest  on this Note will be
  rounded,  if  necessary,  to the  nearest  one  hundred-thousandth  of a percent
  (.0000001),  with five  one-millionths of a percentage point rounded upward, and
  all currency  amounts used in or resulting from such calculation will be rounded
  to the nearest  one-hundredth  of a unit (with five one-  thousandths  of a unit
  being rounded upwards).
  
                    Section 3. Redemption. If so specified on the face hereof, the
  Company may at its option redeem this Note in whole or from time to time in part
  on or after  the date  designated  as the  Initial  Redemption  Date on the face
  hereof (which shall not be prior to the first  anniversary  date of the original
  issuance  hereof)  at  either a price  based  on a  constant  percentage  of the
  Principal  Amount  of this  Note as  specified  on the face  hereof or at prices
  declining from the premium  specified on the face hereof, if any, to 100% of the
  Principal  Amount hereof,  together,  in each case, with accrued interest to the
  Redemption  Date;  provided,  however,  that permission of the Exchange for such
  redemption  has been  obtained.  The Company may exercise such option by causing
  the Trustee to mail by  first-class  mail to the Holder  hereof a notice of such
  redemption at least 30 but not more than 60 days prior to the  Redemption  Date.
  In the event of  redemption  of this Note in part  only,  a new Note or Notes of
  this series for the unredeemed portion hereof shall be issued in the name of the
  Holder hereof upon the  cancellation  hereof in accordance with the terms of the
  Indenture.  Unless otherwise  specified on the face hereof,  if less than all of
  the Notes with like tenor and terms to this Note are to be  redeemed,  the Notes
  to be  redeemed  shall be  selected by the Trustee by such method as the Trustee
  shall deem fair and appropriate.
  
                    Section 4.  Sinking Funds.  Unless otherwise specified on the
   face hereof, this Note will not be subject to any sinking fund.
  
                    Section 5.  Optional  Repayment.  If so  specified on the face
  hereof,  this Note will be repayable prior to the Maturity Date at the option of
  the Holder on the Optional  Repayment  Dates specified on the face hereof at the
  Optional  Repayment Prices  specified on the face hereof,  together with accrued
  interest to the applicable  Optional Repayment Date. Unless otherwise  specified
  on the face  hereof,  in order for this Note to be so repaid,  the Paying  Agent
  must  receive,  at  least  30 but not more  than 45 days  prior  to an  Optional
  Repayment  Date,  either (i) this Note with the form below  entitled  "Option to
  Elect   Repayment"  duly  completed  or  (ii)  a  telegram,   telex,   facsimile
  transmission  or letter from a member of a national  securities  exchange or the
  National  Association of Securities Dealers,  Inc. or a commercial bank or trust
  company in the United States  setting forth the name of the Holder  hereof,  the
  Face Amount hereof,  the Face Amount to be repaid, the certificate number hereof
  or a  description  of the tenor and terms of this  Note,  a  statement  that the
  option to elect repayment is being  exercised  thereby and a guarantee that this
  Note with the form below  entitled  "Option to Elect  Repayment"  duly completed
  will be received by the Paying Agent not later than five Business Days after the
  date of such telegram, telex, facsimile transmission or letter and this Note and
  form duly completed are received by the Paying Agent by such fifth Business Day.
  Exercise of this  repayment  option  shall be  irrevocable,  except as otherwise
  provided under Section 6 or Section 8. The repayment  option may be exercised by
  the  Holder  of this  Note  with  respect  to less  than  the Face  Amount  then
  outstanding  provided  that the Face  Amount of the Note  remaining  outstanding
  after repayment is an authorized denomination.  Upon such partial repayment this
  Note shall be cancelled  and a new Note or Notes for the  remaining  Face Amount
  hereof shall be issued in the name of the Holder of this Note.
  
                    Section 6. Optional Spread or Spread  Multiplier  Reset. If so
  specified on the face hereof, the Spread or Spread Multiplier, if any, set forth
  on the face hereof may be reset at the option of the Company,  in the manner set
  forth below (unless  otherwise  specified on the face  hereof),  on the Optional
  Reset Date or Optional Reset Dates specified on the face hereof. The Company may
  exercise  such option by  notifying  the Trustee in writing of such  exercise at
  least 45 but not more than 60 days prior to an Optional  Reset  Date.  Not later
  than  five  Business  Days  after  receipt  thereof,  the  Trustee  will mail by
  first-class  mail to the  Holder  of this  Note a notice  (the  "Reset  Notice")
  setting  forth (i) the  election  of the  Company  to reset the Spread or Spread
  Multiplier,  (ii) such new Spread or Spread Multiplier and (iii) the provisions,
  if any, for  redemption  during the period from such Optional  Reset Date to the
  next Optional  Reset Date or, if there is no such next  Optional  Reset Date, to
  the  Maturity  Date of this  Note  (each  such  period  a  "Subsequent  Interest
  Period"),  including the date or dates on which or the period or periods  during
  which and the price or prices at which such  redemption  may occur  during  such
  Subsequent  Interest Period. The Reset Notice shall be substantially in the form
  of Exhibit A to this Note. Upon the transmittal by the Trustee of a Reset Notice
  to the Holder of this  Note,  such new  Spread or Spread  Multiplier  shall take
  effect  automatically,  and,  except  as  modified  by the Reset  Notice  and as
  described in the next paragraph,  this Note will have the same terms as prior to
  the transmittal of such Reset Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  an Optional  Reset Date,  the Company  may, at its option,  revoke the Spread or
  Spread  Multiplier  provided for in the Reset  Notice and  establish a Spread or
  Spread  Multiplier  that is higher than the  interest  rate  provided for in the
  Reset Notice for the  Subsequent  Interest  Period  commencing  on such Optional
  Reset Date by causing  the  Trustee to mail by  first-class  mail notice of such
  higher Spread or Spread Multiplier to the Holder of this Note. Such notice shall
  be  irrevocable  and shall be mailed by the Trustee  within five  Business  Days
  after  receipt  thereof.  All Notes  with  respect to which the Spread or Spread
  Multiplier  is reset on an Optional  Reset Date will bear such higher  Spread or
  Spread Multiplier for the Subsequent Interest Period.
  
                    If the Company elects to reset the Spread or Spread Multiplier
  of this Note, the Holder of this Note will have the option to elect repayment by
  the Company of this Note, or any portion hereof, on any Optional Reset Date at a
  price calculated with reference to the Face Amount hereof to be repaid, plus any
  interest accrued to such Optional Reset Date. In order to obtain repayment on an
  Optional  Reset Date,  the Holder must follow the  procedures set forth above in
  Section  5 for  optional  repayment  except  that the  period  for  delivery  or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to such  Optional  Reset Date and except that,  if the Holder has tendered  this
  Note for  repayment  pursuant  to the Reset  Notice,  the Holder may, by written
  notice to the  Trustee,  revoke  such  tender for  repayment  until the close of
  business on the tenth day prior to such Optional Reset Date; provided,  however,
  that if such day is not a  Business  Day,  then such  notice may be given on the
  next succeeding Business Day.
  
                    Section  7. OID  Notes.  If this Note is an OID  Note,  unless
  otherwise  specified  on the face  hereof,  the  amount  payable in the event of
  redemption by the Company, repayment at the option of the Holder or acceleration
  of Maturity  shall be the  Amortized  Face Amount of this Note as of the date of
  such redemption,  repayment or acceleration  rather than the Face Amount hereof.
  The  "Amortized  Face  Amount" of this Note shall be the amount equal to (a) the
  Issue  Price  (as set forth on the face  hereof)  plus (b) that  portion  of the
  difference  between the Issue Price and the Face Amount  hereof that has accrued
  at the Yield to Maturity set forth on the face hereof  (computed  in  accordance
  with generally accepted United States bond yield computation  principles) at the
  date as of which the Amortized Face Amount is calculated,  but in no event shall
  the Amortized Face Amount of this Note exceed the Face Amount.
  
                    Section 8.  Extendible  Notes.  If it is specified on the face
  hereof  that this Note is an  Extendible  Note,  the  Company  has the option to
  extend the Maturity Date hereof for the number of Extension Periods set forth on
  the face hereof,  each of which Extension  Periods shall be a period of from one
  to five  whole  years.  Unless  otherwise  specified  on the  face  hereof,  the
  following procedures shall apply if this Note is an Extendible Note.
  
                    The Company may exercise  its option by notifying  the Trustee
  of such  exercise  at least 45 but not more than 60 days  prior to the  Maturity
  Date hereof in effect prior to the exercise of such option (the "Original Stated
  Maturity"). Not later than five Business Days after receipt thereof, the Trustee
  will mail to the Holder a notice (the "Extension Notice"),  first class, postage
  prepaid,  setting  forth (i) the  election of the Company to extend the Maturity
  Date,  (ii) the new  Maturity  Date,  (iii)  the  Spread  or  Spread  Multiplier
  applicable  to the  Extension  Period  and  (iv)  the  provisions,  if any,  for
  redemption  during  the  Extension  Period,  including  the date on which or the
  period or periods during which and the price at which such  redemption may occur
  during the  Extension  Period.  Upon the mailing by the Trustee of an  Extension
  Notice to the Holder, the Maturity Date hereof shall be extended  automatically,
  and,  except as modified by the  Extension  Notice and as  described in the next
  paragraph,  this Note will have the same  terms as prior to the  mailing of such
  Extension Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  the Original Stated Maturity hereof, the Company may, at its option,  revoke the
  Spread or Spread Multiplier provided for in the Extension Notice and establish a
  higher  Spread or Spread  Multiplier  for the  Extension  Period by causing  the
  Trustee to mail notice of such higher Spread or Spread Multiplier,  first class,
  postage  prepaid,  to the Holder.  Such notice shall be irrevocable and shall be
  mailed by the Trustee  within three  Business Days after receipt  thereof.  This
  Note will bear such higher Spread or Spread Multiplier for the Extension Period,
  whether or not tendered for repayment.
  
                    If the Company  extends the  Maturity  Date of this Note,  the
  Holder will have the option to elect  repayment by the Company of this Note,  or
  any portion hereof,  on the Original Stated Maturity at a price  calculated with
  reference  to the Face Amount  hereof to be repaid plus any accrued  interest to
  such  date.  In order  for this  Note to be so  repaid  on the  Original  Stated
  Maturity,  the Holder must follow the  procedures  set forth in Section 5 hereof
  for  optional  repayment,  except  that the period for  delivery of this Note or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to the  Original  Stated  Maturity  and except  that the Holder  may, by written
  notice to the Trustee,  revoke any such tender for repayment  until the close of
  business  on the tenth  day prior to the  Original  Stated  Maturity;  provided,
  however,  that if such day is not a Business  Day, then such notice may be given
  on the next succeeding Business Day.
  
                    Section 9.  Renewable  Notes.  If it is  specified on the face
  hereof that this Note is a Renewable  Note, this Note will mature on the Initial
  Maturity  Date  specified  on the face hereof  unless the Maturity of all or any
  portion of this Note is extended in  accordance  with the  procedures  described
  below.
  
                    On the  Interest  Payment  Date  occurring  in the sixth month
  (unless a different  Special Election  Interval is specified on the face hereof)
  prior to the  Initial  Maturity  Date hereof (the  "Initial  Maturity  Extension
  Date") and on the Interest  Payment  Date  occurring in each sixth month (or the
  last  month of each  Special  Election  Interval)  after such  Initial  Maturity
  Extension  Date (each,  together  with the Initial  Maturity  Extension  Date, a
  "Maturity  Extension  Date"),  the Maturity of this Note will be extended to the
  Interest  Payment Date occurring in the twelfth month (or, if a Special Election
  Interval is specified  on the face  hereof,  the last month in a period equal to
  twice the Special Election  Interval) after such Maturity Extension Date, unless
  the Holder elects to terminate the automatic extension of the Maturity hereof or
  any portion hereof as described below.
  
                    If the Holder elects to terminate  the automatic  extension of
  the  Maturity  of any  portion of the  principal  amount of this Note during the
  specified period prior to any Maturity  Extension Date, such portion will become
  due and payable on the Interest  Payment  Date  occurring in the sixth month (or
  the last month in the Special Election  Interval) after such Maturity  Extension
  Date (the "Extended Maturity Date").
  
                    The Holder may elect to terminate the  automatic  extension of
  the Maturity of this Note,  or if so specified  above,  any portion  hereof,  by
  delivering a notice to such effect to the Trustee (or any duly appointed  Paying
  Agent)  at the  Corporate  Trust  Office  not less than 15 nor more than 30 days
  prior to such Maturity Extension Date (unless another period is specified on the
  face hereof as the "Special Election Period"). Such election will be irrevocable
  and will be binding  upon each  subsequent  Holder of this Note.  An election to
  terminate the automatic  extension of the Maturity of this Note may be exercised
  with respect to less than the entire Face Amount  hereof only if so specified on
  the face hereof and only in such Face Amount, or any integral multiple in excess
  thereof, as is specified on the face hereof.  Notwithstanding the foregoing, the
  Maturity of this Note will not be extended beyond the Maturity Date specified on
  the face hereof.
  
                    Unless  otherwise   specified  above,  any  such  election  to
  terminate  will be  effective  only if this  Note,  with  the  "Option  to Elect
  Termination of Automatic Extension" included herein duly executed,  is presented
  to the Trustee (or any duly appointed Paying Agent)  simultaneously  with notice
  of such  election  (or, in the event notice of such  election,  together  with a
  guarantee of delivery within five Business Days, is transmitted on behalf of the
  Holder from a member of a national securities exchange, the National Association
  of Securities Dealers,  Inc. or a commercial bank or trust company in the United
  States,  within  five  Business  Days of the  date of such  notice).  As soon as
  practicable  following  receipt of this Note the Trustee (or any duly  appointed
  Paying  Agent)  shall issue in exchange  herefor in the name of the Holder (i) a
  Note,  in a face  amount  equal to the face  amount  of this  Note for which the
  election to terminate the automatic  extension of Maturity was  exercised,  with
  terms  identical to those  specified  herein  (except for the Issue Date and the
  Initial  Interest  Rate and  except  that such  Note  shall  have a fixed,  non-
  extendable  Maturity on the Extended Maturity Date) and (ii) if such election is
  made with  respect  to less  than the full Face  Amount  hereof,  a  replacement
  Renewable Note, in a face amount equal to the Face Amount of this Note for which
  no election was made, with terms identical to this Note.
  
                    Section 10. Principal Amount For Indenture  Purposes.  For the
  purpose  of  determining  whether  Holders  of the  requisite  amount  of  Notes
  outstanding under the Indenture have made a demand,  given a notice or waiver or
  taken any other action,  the outstanding  principal  amount of this Note will be
  deemed to be the Principal  Amount,  provided,  however,  if this Note is an OID
  Note,  the  outstanding  principal  amount of this Note will be deemed to be the
  Face Amount set forth above.
  
                    Section 11.  Modification and Waivers.  The Indenture contains
  provisions  permitting  the  Company  and the  Trustee,  with the consent of the
  holders of not less than a majority in aggregate principal amount of each series
  of the Securities at the time  Outstanding  to be affected,  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, (a) change the stated maturity
  of the  principal  of, or any  installment  of  principal of or interest on, any
  Security,  (b)  reduce the  principal  amount  thereof  or the rate of  interest
  thereon or any  premium  payable  upon the  redemption  thereof,  (c) reduce the
  amount of the principal of an OID Security that would be due and payable upon an
  Event of  Acceleration or an Event of Default (both as defined in the Indenture)
  (d)  adversely  affect any right of repayment at the option of the holder of any
  Security,  (e) change any place of payment  where,  or the coin or  currency  in
  which,  any  Security or any  premium or the  interest  thereon is payable,  (f)
  impair the right to institute suit for the enforcement of any such payment on or
  after the stated  maturity  thereof (or, in the case of redemption,  on or after
  the  redemption  date),  (g) reduce the  percentage  in principal  amount of the
  outstanding  Securities of any series,  the consent of whose holders is required
  for any such supplemental indenture, or the consent of whose holders is required
  for any waiver (of  compliance  with  certain  provisions  of the  Indenture  or
  certain  defaults  thereunder  and  their  consequences)  provided  for  in  the
  Indenture,  or (h) modify any of the  provisions  of sections  of the  Indenture
  dealing with supplemental indentures, waivers of certain covenants or waivers of
  past defaults, except to increase any such percentage or to provide that certain
  other  provisions  of the  Indenture  cannot be modified  or waived  without the
  consent of the holder of each outstanding  Security affected thereby. 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  Acceleration  or Event of Default under the  Indenture  with respect to such
  series and its  consequences,  except a default in the payment of the  principal
  of, or the premium (if any) or  interest,  if any, on any of the  Securities  of
  such series,  or in respect of a provision  under which the Indenture  cannot be
  modified without the consent of the holder of each outstanding  security of such
  series.  Any  such  consent  or  waiver  by the  Holder  of this  Note  shall be
  conclusive  and binding upon such Holder and upon all future  holders and owners
  of this Note and any Notes  which may be  issued  in  exchange  or  substitution
  herefor,  irrespective of whether or not any notation  thereof is made upon this
  Note or such other Notes.
  
                    Section 12. Obligations Unconditional.  No reference herein to
  the Indenture and no provisions of this Note or of the Indenture  shall alter or
  impair the obligation of the Company,  which is absolute and  unconditional,  to
  pay the principal of, premium, if any, and interest, if any, on this Note at the
  place, at the respective  times, at the rate, and in the coin or currency herein
  prescribed.
  
                    Section 13. Defeasance.  The Indenture contains provisions for
  the discharge of the Indenture and defeasance at any time of the indebtedness on
  this Note upon  compliance  by the Company  with  certain  conditions  set forth
  therein, which provisions apply to this Note.
  
                    Section 14.  Authorized Form and  Denominations.  The Notes of
  this series are  issuable  only in  registered  form,  without  coupons.  Unless
  otherwise  set forth on the face  hereof,  Notes  will be issued in Face  Amount
  denominations of U.S. $1,000 and any integral  multiple of U.S. $1,000 in excess
  thereof.  Each Note will be issued  initially  as either a Global  Security or a
  Certificated Note, at the option of the holders thereof, either at the office or
  agency to be  designated  and  maintained by the Company for such purpose in the
  Borough of Manhattan,  The City of New York,  pursuant to the  provisions of the
  Indenture or at any of such other offices or agencies as may be  designated  and
  maintained  by the Company for such purpose  pursuant to the  provisions  of the
  Indenture,  and in the manner and  subject to the  limitations  provided  in the
  Indenture,  but without the payment of any service charge, except for any tax or
  other governmental charges imposed in connection therewith. Notes of this series
  are  exchangeable  for a like aggregate Face Amount of Notes of this series of a
  different  authorized  denomination,  except that Global  Securities will not be
  exchangeable for Certificated Notes.
  
                    Section  15.  Registration  of  Transfer.  As  provided in the
  Indenture and subject to certain  limitations as therein set forth, the transfer
  of this Note is  registrable  in the Security  Register,  upon surrender of this
  Note for registration of transfer,  at the Corporate Trust Office or agency in a
  Place of Payment for this Note,  duly endorsed by, or  accompanied  by a written
  instrument  of transfer  in form  satisfactory  to the Company and the  Security
  Registrar  requiring  such written  instrument of transfer duly executed by, the
  Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
  more new Notes of this  series,  of  authorized  denominations  and for the same
  aggregate  Face  Amount,  will  be  issued  to  the  designated   transferee  or
  transferees.
  
                    If this  Note is a  Global  Security  and if at any  time  the
  Depository  notifies  the Company  that it is unwilling or unable to continue as
  Depository or if at any time the  Depository  shall no longer be eligible  under
  the Indenture, the Company shall appoint a successor Depository.  If a successor
  Depository  for the  Securities  of such series is not  appointed by the Company
  within 90 days after the Company  receives  such notice or becomes aware of such
  ineligibility,  the Company will issue,  and the Trustee will  authenticate  and
  deliver,  Notes in definitive form in an aggregate Face Amount equal to the Face
  Amount hereof.
  
                    No service charge shall be made for any such  registration  of
  transfer or exchange, but the Company may require payment of a sum sufficient to
  cover any tax or other  governmental  charge  that may be imposed in  connection
  therewith.
  
                    Prior to due  presentment  of this  Note for  registration  of
  transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
  may treat the person in whose name this Note is  registered  as the owner hereof
  for all  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.
  
                    Section 16. Events of Accleration;  Events of Default. In case
  an Event of Default or an Event of  Acceleration,  as defined in the  Indenture,
  with respect to Notes of this series shall have occurred and be continuing,  the
  principal  of all of the  Notes  of this  series,  in the  case of an  Event  of
  Default,  shall  become,  or in the  case of an Event  of  Acceleration,  may be
  declared and in accordance with such declaration  shall become,  due and payable
  and such acceleration or declaration may in certain events be rescinded,  in the
  manner, with the effect and subject to the conditions provided in the Indenture.
  In the event that this Note is an OID Note, the amount of principal of this Note
  that becomes due and payable upon such acceleration shall be equal to the amount
  calculated  as set forth in Section 7 hereof.  Upon payment (i) of the aggregate
  applicable  amounts of principal of the Notes of this series so declared due and
  payable and (ii) of interest on any overdue  principal and overdue  interest (in
  each case to the  extent  that the  payment  of such  interest  shall be legally
  enforceable),  all of the Company's obligations in respect of the payment of the
  principal of and interest, if any, on the Notes of this series shall terminate.
  
                    Section   17.    Subordination;    Regulatory   Matters.   The
  indebtedness  evidenced by this Note, together with any interest accrued thereon
  and premium,  if any, is, to the extent  provided in the Indenture,  subordinate
  and  subject  in right of  payment  to the prior  payment  in full of all Senior
  Indebtedness,  as defined in the  Indenture,  and this Note is issued subject to
  the provisions of the Indenture,  and each Holder hereof, by accepting the same,
  agrees to and shall be bound by such  provisions  and authorizes and directs the
  Trustee in his behalf to take such action as may be necessary or  appropriate to
  acknowledge  or effectuate  the  subordination  as provided in the Indenture and
  appoints the Trustee his attorney-in-fact for any and all such purposes.
  
                    As provided in the Indenture,  the Company's obligation to pay
  the principal of the Notes of this series at Stated  Maturity or pursuant to any
  mandatory  sinking  fund shall be  suspended  if,  after  giving  effect to such
  payment and the payment of certain other  subordinated  debt, the Company's "net
  capital" would be reduced below the minimum  amounts of capital to be maintained
  by the Company as required by the various  domestic  exchanges,  boards of trade
  and governmental agencies to which it is subject, all with the effect and to the
  extent  provided in the Indenture.  Optional  redemptions are subject to similar
  suspensions and to the requirement that permission  therefor of the Exchange (as
  defined in the Indenture) has been obtained. If payment is made of the principal
  of the Notes of this series  notwithstanding  the foregoing,  the Holders of the
  Notes so paid are required to repay to the Company,  its  successors or assigns,
  the sum so paid;  provided,  however,  that any suit for such  recovery  must be
  commenced within two years of the date of such payment.  Each Holder hereof,  by
  accepting the same, agrees to be bound by such provisions.
  
                    Section 18. No Recourse Against Certain  Persons.  No recourse
  for the payment of the principal of, premium,  if any, or interest on this Note,
  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 Note, 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.
  
                    Section 19.  Defined Terms. All terms used but not defined in 
  this Note are used herein as defined in the Indenture.
  
                    Section 20.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY
  AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
  OPTION TO ELECT REPAYMENT
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to have the Company  repay the Face Amount of this Note or portion  hereof below
  designated at (i) the Optional Repayment Percentage  multiplied by the Principal
  Amount of this Note to be repaid in respect  of such Face  Amount  plus  accrued
  interest to the Optional  Repayment  Date, if this Note is to be repaid pursuant
  to the Optional Repayment  provision described in Section 5 hereof, or (ii) 100%
  of the Principal Amount of this Note to be repaid in respect of such Face Amount
  plus accrued  interest to the Optional  Reset Date, if this Note is to be repaid
  pursuant to the Optional Spread or Spread  Multiplier Reset provision  described
  in Section 6 hereof or the  Extendible  Notes  provision  described in Section 8
  hereof.  Any such  election  is  irrevocable  except as provided in Section 6 or
  Section 8 hereof.
  
  Dated:___________________                        
                                                    _____________________________
                                                    Signature Sign exactly as name
                                                    appears  on the  front of this
                                                    Note  [SIGNATURE  GUARANTEED -
                                                    required  only if Notes are to
                                                    be issued and delivered to 
                                                    other than the registered
                                                    Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
  
                    The undersigned owner of this Note hereby  irrevocably  elects
  to terminate the automatic  extension of this Note or of the portion of the Face
  Amount of this Note below designated.  Any such election is irrevocable and will
  be binding on any subsequent Holder hereof.
  
  Dated:___________________                  ________________________________
                                             Signature
                                             Sign  exactly as name  appears on the
                                             front   of   this   Note   [SIGNATURE
                                             GUARANTEED  - required  only if Notes
                                             are to be  issued  and  delivered  to
                                             other than the registered Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  ABBREVIATIONS
  
                    The following abbreviations, when used in the
  inscription  on the face of this  instrument,  shall be construed as though they
  were written out in full according to applicable laws or regulations:
  
                TEN CON  -  as tenants in common
                TEN ENT  -  as tenant by the entireties
                JT TEN   -   as joint tenants with right of survivorship and not a
                            tenants in common
                UNIF GIFT
                MIN ACT  -       ____________Custodian____________
                                             (Cust)         (Minor)
                                          Under Uniform Gifts to Minors Act
  
                                                ---------------------------------
                                                                         (State)
  
  Additional abbreviations may also be used though not in the above list.
  
                         FOR VALUE RECEIVED, the undersigned
                   hereby sell(s), assign(s) and transfer(s) unto
  
  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  
  - ---------------------------------------------------------------
  Please print or type name and address, including zip code of assignee
  
  - ---------------------------------------------------------------
  the within Note of LEHMAN BROTHERS INC. and all rights thereunder and does
  hereby irrevocably constitute and appoint
  ______________________________________________Attorney to transfer the said 
  Note on the books of the within-named Company, with full power of substitution
  in the premises.
  
  Dated:_________________________
  
  SIGNATURE GUARANTEED:__________________________________________
  
                              NOTICE: The signature to
                                      this assignment must correspond with
                                      the name as it appears upon the face
                                      of  the   within   Note   in   every
                                      particular,  without  alteration  or
                                      enlargement     or    any     change
                                      whatsoever.
  EXHIBIT A
  
                                    RESET NOTICE
  
                                LEHMAN BROTHERS INC.
                   Senior Subordinated Medium-Term Notes, Series A
                                   (Floating Rate)
                                CUSIP No. __________
                               Registered Nos. ___-___
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under the laws of the State of Delaware (the "Company"),  is the issuer
  of the above-referenced  Notes (the "Notes").  Capitalized terms used herein and
  not defined are used as defined in the Notes.
  
                    The  Company  hereby  elects  to reset  the  [Spread]  [Spread
  Multiplier]   set   forth   on  the   face   of   the   Notes.   On  and   after
  ____________________1/,    the   [Spread]    Spread    Multiplier]    shall   be
  _________________.
  
                    Each Holder of a Note has the option to elect repayment by the
  Company  of such  Note,  or any  portion  thereof,  on any  Optional  Reset Date
  pursuant to the terms of such Note.  The Notes may be repaid on the dates and at
  the prices set forth below:
  
                    Date                               Redemption Price
  
                    IN WITNESS WHEREOF, Lehman Brothers Inc. has caused this Reset
  Notice to be signed by its  Chairman of the Board,  one of its Vice  Chairmen of
  the Board,  its President,  its Treasureror one of its Vice Presidents and to be
  attested by its Secretary or one of its Assistant Secretaries.
  
  Dated:
  
                                                       LEHMAN BROTHERS INC.
  
                                                       By:________________________
                                       Title:
  
                                                       Attest:____________________
   1/       Insert applicable Optional Reset Date.
                                                              Title:
  EXHIBIT 4.3
  
  CUSIP NO.__________________
  
  REGISTERED                                                    FACE AMOUNT:
  No. ___
  
                    If this Note is an OID Note (as defined  below) the  following
  legend is applicable:
  
                    FOR  PURPOSES  OF SECTIONS  1272,  1273 AND 1275 OF THE UNITED
                    STATES  INTERNAL  REVENUE CODE OF 1986, AS AMENDED,  THE ISSUE
                    PRICE  OF THIS  NOTE IS  _____%  OF ITS FACE  AMOUNT,  AND THE
                    AMOUNT OF  ORIGINAL  ISSUE  DISCOUNT,  THE  YIELD TO  MATURITY
                    COMPOUNDED  _____________,  THE ISSUE  DATE AND THE  AMOUNT OF
                    ORIGINAL  ISSUE   DISCOUNT   ALLOCABLE  TO  THE  SHORT  PERIOD
                    DETERMINED  USING THE  EXACT  METHOD  WITHIN  THE  MEANING  OF
                    PROPOSED TREASURY REGULATION SECTION 1.1272-1(c)(2)(ii) ARE AS
                    SET FORTH BELOW.
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
                                 (CURRENCY INDEXED)
  
                    If the registered  owner of this Note (as indicated  below) is
  The Depository Trust Company (the  "Depository") or a nominee of the Depository,
  this Note is a Note in  global  form (a  "Global  Security")  and the  following
  legends are applicable except as specified on the reverse hereof:
  
  This Note is a Global Security  within the meaning of the Indenture  hereinafter
  referred to and is registered in the name of the  Depository or a nominee of the
  Depository. Unless this certificate is presented by an authorized representative
  of The  Depository  Trust Company (55 Water Street,  New York,  New York) to the
  Company (as defined below) or its agent for  registration of transfer,  exchange
  or payment and any certificate issued is registered in the name of Cede & Co. or
  such other name as requested by an authorized  representative  of The Depository
  Trust  Company and any payment is made to Cede & Co.,  ANY  TRANSFER,  PLEDGE OR
  OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY PERSON IS WRONGFUL  since
  the registered owner hereof, Cede & Co., has an interest herein.
  
  UNLESS AND UNTIL IT IS EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  CERTIFICATED
  FORM,  THIS  GLOBAL  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
  THE 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.
  ISSUE PRICE:  $     INDEXED CURRENCY:                 OPTION TO ELECT REPAYMENT:
                                                        [  ] YES     [  ] NO
  ISSUE DATE:         BASE EXCHANGE RATE:
                                                        OPTIONAL REPAYMENT DATES:
  MATURITY DATE:      DETERMINATION AGENT:
                                                        OPTIONAL REPAYMENT PRICES:
  INTEREST RATE:      SINKING FUND:
                                                     OPTIONAL INTEREST RATE RESET:
  INTEREST PAYMENT    TOTAL AMOUNT OF OID:              [  ] YES     [  ] NO
  DATES:
                      YIELD TO MATURITY:                OPTIONAL RESET DATES:
  REGULAR RECORD
  DATES:              INITIAL ACCRUAL                   OPTIONAL REDEMPTION:
                      PERIOD OID:                       [  ] YES     [  ] NO
  EXCHANGE RATE
  AGENT:              REFERENCE DEALERS:                INITIAL REDEMPTION DATE:
  
  DEPOSITORY:         AUTHORIZED DENOMINATIONS:         INITIAL REDEMPTION
                                                        PERCENTAGE        %
  OTHER PROVISIONS:
                                              APPLICABILITY OF ANNUAL REDEMPTION
                                                        PERCENTAGE REDUCTION:
                                                        [  ] YES     [  ] NO
                                                  If yes, state Annual Percentage
                                                        Reduction:    %
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing  under the laws of the State of Delaware  (herein called the "Company",
  which term includes any successor corporation under the Indenture referred to on
  the  reverse   hereof),   for  value   received,   hereby  promises  to  pay  to
  ___________________,  or registered  assigns, on the Maturity Date the principal
  sum equal to the Face Amount hereof,  plus or minus an amount  determined by the
  Determination  Agent (as defined below) in accordance with the formula set forth
  below  (the  "Principal  Amount")  and to pay  interest  on the Face  Amount  as
  described below and on the reverse hereof until the Principal  Amount is paid or
  made  available for payment and (to the extent that the payment of such interest
  shall be legally  enforceable)  to pay  interest  on any overdue  principal  and
  premium and on any overdue  instalment  of interest.  All payments in respect of
  this Note will be made in U.S. Dollars.
  
                    The  Principal  Amount of this Note payable at Maturity  shall
  equal:
  
           (a)      if the Spot Rate equals or exceeds the Base Exchange Rate,
  
  Face Amount + (Face Amount x  Spot Rate - Base Exchange Rate    Spot Rat); or
                        ------------------------------
  
           (b)      if the Base Exchange Rate exceeds the Spot Rate,
  
   Face Amount - (Face Amount x  Base Exchange Rate - Spot Rate    Spot Rate); or 
  
  ; provided,  however,  that in no event shall such  Principal  Amount be greater
  than  twice  the Face  Amount or less  than  zero.  If this Note is an OID Note,
  unless otherwise  specified above, the term "Face Amount" when used in the above
  formula shall refer to the Amortized  Face Amount,  as described in Section 7 on
  the  reverse  hereof.  An "OID Note" is (a) any Note that has been  issued at an
  Issue Price lower, by more than a de minimis amount (as determined  under United
  States  federal   income  tax  rules   applicable  to  original  issue  discount
  instruments),  than the Face Amount  thereof and (b) any Note not  identified in
  (a) that for United States  federal  income tax purposes  would be considered an
  original issue discount instrument.
  
           The amount of interest, if any, payable on any Interest Payment Date 
  (as defined below) shall equal:
  
           Face Amount x Interest Rate2 x        Basic Exchange Rate   Spot Rate
  
  If the  Interest  Rate on this Note may be reset at the option of the Company as
  set forth on the reverse hereof, the term "Interest Rate" when used in the above
  formula shall refer to the interest rate in effect during the relevant period.
  
                    The  terms  used in the  preceding  formulas  shall  have  the
  following meanings:
  
                    "Business Day" means any day, other than a Saturday or Sunday,
                    that meets each of the following applicable requirements: such
                    day is (a)  not a day on  which  banking  institutions  in the
                    Borough of Manhattan,  The City of New York are  authorized or
                    required by law or regulation to close; (x) not a day on which
                    banking  institutions  are  authorized  or  required by law or
                    regulation to close in the principal  financial  center of the
                    country  issuing the Indexed  Currency  and (y) a day on which
                    banking  institutions in such principal  financial  center are
                    carrying out transactions in such Indexed Currency; and (b) if
                    the Indexed Currency  specified above is ECU, (x) not a day on
                    which banking  institutions  are authorized or required by law
                    or regulation  to close in Luxembourg  and (y) an ECU clearing
                    day, as determined by the ECU Banking Association in Paris.
  
                    "Determination  Date" means the second Exchange Rate Day prior
  to the date of Maturity.
  
                    "Exchange  Rate Day" means any day which is a Business  Day in
                    The City of New York and the principal financial center of the
                    country  which  recognizes  the Indexed  Currency as a unit of
                    domestic exchange.
  
                    "Reference  Dealers" means the three banks or firms  specified
                    above  or,  if any of them  shall be  unwilling  or  unable to
                    provide  the  requested  quotations,  such other  major  money
                    center  bank or banks in The City of New York  selected by the
                    Company, in consultation with the Determination  Agent, to act
                    as Reference Dealer or Dealers in replacement therefor.
  
                    "Spot Rate" means the arithmetic  mean of the open market spot
                    offer quotations for the Indexed Currency (spot bid quotations
                    for the U.S. dollars) obtained by the Determination Agent from
                    the Reference Dealers in The City of New York at approximately
                    11:00 A.M., New York City time, on the Determination Date, for
                    an  amount  of  Indexed  Currency  equal  to the  Face  Amount
                    multiplied by the Base Exchange Rate,  with  settlement on the
                    date of Maturity to be in the U.S.  dollars;  provided that if
                    such quotations  from the Reference  Dealers are not available
                    on the  Determination  Date due to  circumstances  beyond  the
                    control of the Company or the  Determination  Agent,  the Spot
                    Rate  will be  determined  on the  basis of the most  recently
                    available quotations from the Reference Dealers. The Spot Rate
                    shall be  expressed  in units of the Indexed  Currency per one
                    U.S. dollar.
  
                    In the absence of manifest  error,  the  determination  by the
  Determination Agent of the Spot Rate and of the amount of principal and interest
  payable in respect of this Note shall be final and  binding on the  Company  and
  the Holder hereof.
  
                    If this Note is subject to an Annual  Percentage  Reduction as
  specified above, the Redemption Price shall initially be the Initial  Redemption
  Percentage of the Principal  Amount of this Note on the Initial  Redemption Date
  and shall decline at each anniversary of the Initial  Redemption Date (each such
  date, a "Redemption Date") by the Annual Percentage  Reduction of such Principal
  Amount until the Redemption Price is 100% of such Principal Amount.
  
                    In the event of any optional  redemption  by the Company,  any
  repayment at the option of the Holder, acceleration of the maturity of this Note
  or other prepayment of this Note prior to the Maturity Date, the term "Maturity"
  when used herein  shall  refer,  where  applicable,  to the date of  redemption,
  repayment, acceleration or other prepayment of this Note.
  
                    Interest shall be payable from the Issue Date specified  above
  or from the most recent Interest Payment Date to which interest has been paid or
  duly  provided  for until the  principal  hereof is paid or made  available  for
  payment.  Except as provided in the  following  paragraph,  the Company will pay
  interest  semiannually  on February 15 and August 15 of each year (unless  other
  Interest Payment Dates are specified  above) (each an "Interest  Payment Date"),
  commencing with the first Interest  Payment Date next succeeding the Issue Date,
  and at Maturity;  provided,  that any payment of principal,  premium, if any, or
  interest to be made on any Interest  Payment Date or on a date of Maturity  that
  is not a Business Day shall be made on the next succeeding Business Day with the
  same  force  and  effect  as if made  on the  Interest  Payment  Date or date of
  Maturity,  as the case may be,  and no  additional  interest  shall  accrue as a
  result of such delayed  payment.  Each payment of interest  hereon shall include
  interest  accrued  through the day before the  Interest  Payment Date or date of
  Maturity, as the case may be. Unless otherwise specified above, interest on this
  Note will be computed on the basis of a 360-day year of twelve 30-day months. In
  no event shall the  interest  rate of this Note be higher than the maximum  rate
  permitted by applicable law, as the same may be modified by United States law of
  general application.
  
                    Unless otherwise  specified above, the interest payable on any
  Interest Payment Date will, as provided in the Indenture,  be paid to the person
  in whose name this Note (or one or more predecessor  Notes) is registered at the
  close of business on the Regular Record Date  indicated  above (whether or not a
  Business  Day) next  preceding  such  Interest  Payment  Date;  provided,  that,
  notwithstanding any provision of the Indenture to the contrary, interest payable
  on any date of Maturity shall be payable to the Person to whom  principal  shall
  be payable;  and provided,  further,  that, unless otherwise specified above, in
  the case of a Note issued between a Regular Record Date and the Interest Payment
  Date relating to such Regular Record Date,  interest for the period beginning on
  the Issue Date and  ending on such  Interest  Payment  Date shall be paid on the
  Interest  Payment Date following the next succeeding  Regular Record Date to the
  registered Holder on such next succeeding Regular Record Date.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  payment of interest on this Note (other than
  interest  payable  at  Maturity)  will be made by  wire  transfer  or by  check;
  provided,  that, if the Holder hereof is the Holder of U.S.  $10,000,000 or more
  in  aggregate  Face Amount of Notes of this series of like tenor and term,  such
  Holder shall be entitled to receive interest  payments in immediately  available
  funds, but only if complete and appropriate  instructions  have been received in
  writing by the Trustee (or any duly  appointed  Paying Agent) on or prior to the
  applicable  Regular  Record  Date.  A Holder may, if so  entitled  (as  provided
  above),  elect to  receive  such  payments  in  immediately  available  funds by
  providing  complete  and  appropriate  instructions  to the Trustee (or any such
  Paying Agent), and all such payments will be made in immediately available funds
  to an account  maintained  by the payee with a bank  located  outside the United
  States or as otherwise provided above.
  
                    Unless otherwise indicated above, and except as provided below
  if this Note is a Global Security,  payments of principal,  premium, if any, and
  interest  payable at Maturity will be made in immediately  available  funds upon
  surrender  of this Note at the  corporate  trust office or agency of the Trustee
  (or any duly appointed Paying Agent)  maintained for that purpose in the Borough
  of Manhattan,  The City of New York (the "Corporate  Trust  Office"),  provided,
  that this Note is  presented  to the Trustee (or any such Paying  Agent) in time
  for the Trustee (or any such Paying  Agent) to make such  payments in such funds
  in accordance with its normal procedures.
  
                    Unless  otherwise  specified  above,  if this Note is a Global
  Security,  payments  of  interest  (other  than  at  Maturity)  will  be made in
  immediately available funds in accordance with existing arrangements between the
  Trustee  (or  any  duly  appointed  Paying  Agent)  and the  Depository.  Unless
  otherwise  specified  above, if this Note is a Global  Security,  any principal,
  premium and/or interest payable hereon at Maturity will be paid by wire transfer
  in immediately available funds to an account specified by the Depository.
  
                    The Company will pay any administrative costs imposed by banks
  in making payments in immediately  available funds,  but any tax,  assessment or
  governmental  charge  imposed  upon  payments  hereunder,   including,   without
  limitation, any withholding tax, will be borne by the Holder hereof.
  
                    References herein to "U.S. dollars" or "U.S.$" or
  are to the coin or  currency  of the United  States as at the time of payment is
  legal tender for the payment of public and private debts.
  
                    REFERENCE  IS HEREBY  MADE TO THE FURTHER  PROVISIONS  OF THIS
  NOTE SET FORTH ON THE REVERSE  HEREOF.  SUCH  FURTHER  PROVISIONS  SHALL FOR ALL
  PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
  
                    This  Note  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.
  
                    IN WITNESS  WHEREOF,  Lehman  Brothers  Inc.  has caused  this
  instrument  to be signed by its Chairman of the Board,  one of its Vice Chairmen
  of the  Board,  its  President,  or one of its Vice  Presidents,  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:
  
  [SEAL]                              LEHMAN BROTHERS INC.
  
                                              By:_________________________________
  Name:
  Title:
  
                                              Attest:_____________________________
  Name:
  Title:
  
  TRUSTEE'S CERTIFICATE OF AUTHENTICATION
  
  This is one of the Securities of the series designated herein referred to in the
  within-mentioned Indenture.
  
  THE FIRST NATIONAL BANK OF CHICAGO
    as Trustee
  
  By:_________________________
           Authorized Officer
  [REVERSE OF NOTE]
  
                                LEHMAN BROTHERS INC.
                   SENIOR SUBORDINATED MEDIUM-TERM NOTES, SERIES A
                                 (Currency Indexed)
  
                    Section  1.  General.  This  Note is one of a duly  authorized
  series of Notes of the Company designated as the Senior Subordinated Medium-Term
  Notes,  Series A (Currency  Indexed) of the Company (herein called the "Notes"),
  limited in  aggregate  principal  amount to  $________________  (or such greater
  amount,  if OID Notes are issued, as shall result in aggregate gross proceeds to
  the Company of $________________),  subject to reduction as a result of the sale
  under  certain  circumstances  of other  debt  securities  of the  Company.  The
  foregoing  limit,  however,  may be increased by the Company if in the future it
  determines  that it may wish to sell additional  Notes.  The Notes are one of an
  indefinite number of series of debt securities of the Company (collectively, the
  "Securities") issued or issuable under and pursuant to an indenture, dated as of
  March 1, 1996 (the "Indenture"),  duly executed and delivered by the Company and
  The First National Bank of Chicago as Trustee (herein called the "Trustee"),  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  Trustee,  the  Company  and the  holders  of the
  Securities  and of the terms  upon  which  the  Securities  are,  and are to be,
  authenticated and delivered.  The separate series of Securities may be issued in
  various  aggregate  principal  amounts,  may mature at different times, may bear
  interest (if any) at  different  rates,  may be subject to different  redemption
  provisions  or  repayment  or  repurchase  rights  (if any),  may be  subject to
  different  sinking,  purchase  or  analogous  funds (if any),  may be subject to
  different  covenants  and Events of  Default  and may  otherwise  vary as in the
  Indenture provided.
  
                    Section 2.  Currency  Exchanges.  If the official  unit of any
  component  currency of a composite  currency is altered by way of combination or
  subdivision,  the  number  of units of that  currency  as a  component  shall be
  divided  or  multiplied  in  the  same  proportion.  If two  or  more  component
  currencies  are  consolidated  into a  single  currency,  the  amounts  of those
  currencies as components  shall be replaced by an amount in such single currency
  equal  to the  sum of the  amounts  of  the  consolidated  component  currencies
  expressed in such single currency. If any component currency is divided into two
  or  more  currencies,  the  amount  of that  original  component  currency  as a
  component shall be replaced by amounts of such two or more currencies  having an
  aggregate  value  on the date of  division  equal to the  amount  of the  former
  component currency immediately before such division.
  
                    In the  event of an  official  redenomination  of the  Indexed
  Currency (including,  without limitation, an official redenomination of any such
  currency that is a composite  currency),  the obligations of the Company to make
  payments  with  reference  to such  currency  shall,  in all  cases,  be  deemed
  immediately  following  such  redenomination  to be obligations to make payments
  with reference to that amount of redenominated  currency representing the amount
  of such currency immediately before such  redenomination.  In no event shall any
  adjustment  be  made  to  any  amount  payable  hereunder  as a  result  of  any
  redenomination of any component  currency of any composite currency (unless such
  composite currency is itself officially redenominated).
  
                    All determinations referred to above made by the Exchange Rate
  Agent shall be at its sole discretion  (except to the extent expressly  provided
  herein that any determination is subject to approval by the Company) and, in the
  absence of manifest  error,  shall be conclusive for all purposes and binding on
  the Holder hereof, and the Exchange Rate Agent shall have no liability therefor.
  
                    Section 3. Redemption. If so specified on the face hereof, the
  Company may at its option redeem this Note in whole or from time to time in part
  on or after  the date  designated  as the  Initial  Redemption  Date on the face
  hereof (which shall not be prior to the first  anniversary  date of the original
  issuance  hereof)  at  either a price  based  on a  constant  percentage  of the
  Principal  Amount  of this  Note as  specified  on the face  hereof or at prices
  declining from the premium  specified on the face hereof, if any, to 100% of the
  Principal  Amount hereof,  together,  in each case, with accrued interest to the
  Redemption Date;  provided,  that permission of the Exchange for such redemption
  has been  obtained.  The Company may exercise such option by causing the Trustee
  to mail by first-class  mail to the Holder hereof a notice of such redemption at
  least 30 but not more than 60 days prior to the Redemption Date. In the event of
  redemption of this Note in part only, a new Note or Notes of this series for the
  unredeemed  portion hereof shall be issued in the name of the Holder hereof upon
  the  cancellation  hereof in accordance with the terms of the Indenture.  Unless
  otherwise  specified on the face hereof, if less than all of the Notes with like
  tenor and terms to this Note are to be redeemed,  the Notes to be redeemed shall
  be selected  by the  Trustee by such  method as the Trustee  shall deem fair and
  appropriate.
  
                    Section 4.  Sinking Fund.  Unless otherwise specified on the
  face hereof, this Note will not be subject to any sinking fund.
  
                    Section 5.  Optional  Repayment.  If so  specified on the face
  hereof,  this Note will be repayable prior to the Maturity Date at the option of
  the Holder on the Optional  Repayment  Dates specified on the face hereof at the
  Optional  Repayment Prices  specified on the face hereof,  together with accrued
  interest to the applicable  Optional Repayment Date. Unless otherwise  specified
  on the face  hereof,  in order for this Note to be so repaid,  the Company  must
  receive,  at least 30 but not more than 45 days prior to an  Optional  Repayment
  Date,  either  (i) this  Note  with the form  below  entitled  "Option  to Elect
  Repayment" duly completed or (ii) a telegram,  telex,  facsimile transmission or
  letter  from  a  member  of a  national  securities  exchange  or  the  National
  Association of Securities Dealers, Inc. or a commercial bank or trust company in
  the United States setting forth the name of the Holder  hereof,  the Face Amount
  hereof,  the Face  Amount  to be  repaid,  the  certificate  number  hereof or a
  description  of the tenor and terms of this Note, a statement that the option to
  elect repayment is being  exercised  thereby and a guarantee that this Note with
  the form below  entitled  "Option to Elect  Repayment"  duly  completed  will be
  received by the Paying Agent not later than five Business Days after the date of
  such telegram,  telex,  facsimile  transmission or letter and this Note and form
  duly  completed  are  received by the Paying Agent by such fifth  Business  Day.
  Exercise of this  repayment  option  shall be  irrevocable,  except as otherwise
  provided under Section 6. The repayment option may be exercised by the Holder of
  this Note with  respect to less than the Face Amount then  outstanding  provided
  that the Face Amount of the Note  remaining  outstanding  after  repayment is an
  authorized  denomination.  Upon  such  partial  repayment  this  Note  shall  be
  cancelled and a new Note or Notes for the remaining  Face Amount hereof shall be
  issued in the name of the Holder of this Note.
  
                    Section 6.  Optional  Interest  Reset.  If so specified on the
  face hereof,  the  Interest  Rate on this Note may be reset at the option of the
  Company,  in the manner set forth below (unless otherwise  specified on the face
  hereof),  on the Optional  Reset Date or Optional  Reset Dates  specified on the
  face hereof.  The Company may exercise  such option by notifying  the Trustee in
  writing  of such  exercise  at least 45 but not  more  than 60 days  prior to an
  Optional  Reset Date.  Not later than five Business Days after receipt  thereof,
  the Trustee  will mail by  first-class  mail to the Holder of this Note a notice
  (the "Reset Notice")  setting forth (i) the election of the Company to reset the
  interest rate, (ii) such new interest rate and (iii) the provisions, if any, for
  redemption  during the period from such optional Reset Date to the next optional
  Reset Date or, if there is no such next  Optional  Reset Date,  to the  Maturity
  Date of this Note (each such period a "Subsequent  Interest Period"),  including
  the date or dates on which or the period or periods  during  which and the price
  or prices at which such  redemption  may occur during such  Subsequent  Interest
  Period. The Reset Notice shall be substantially in the form of Exhibit A to this
  Note.  Upon the  transmittal  by the Trustee of a Reset  Notice to the Holder of
  this Note, such new interest rate shall take effect  automatically,  and, except
  as modified by the Reset  Notice and as described  in the next  paragraph,  this
  Note will have the same terms as prior to the transmittal of such Reset Notice.
  
                    Notwithstanding the foregoing, not later than 20 days prior to
  an Optional Reset Date, the Company may, at its option, revoke the interest rate
  provided for in the Reset Notice and  establish an interest  rate that is higher
  than the  interest  rate  provided  for in the Reset  Notice for the  Subsequent
  Interest Period commencing on such Optional Reset Date by causing the Trustee to
  mail by  first-class  mail notice of such higher  interest rate to the Holder of
  this Note.  Such notice shall be irrevocable  and shall be mailed by the Trustee
  within five Business Days after receipt thereof. All Notes with respect to which
  the  interest  rate is reset on an  Optional  Reset  Date will bear such  higher
  interest rate for the Subsequent Interest Period.
  
                    If the Company elects to reset the interest rate of this Note,
  the Holder of this Note will have the option to elect  repayment  by the Company
  of this Note,  or any  portion  hereof,  on any  Optional  Reset Date at a price
  calculated with reference to the aggregate Face Amount hereof to be repaid, plus
  any interest  accrued to, such Optional Reset Date. In order to obtain repayment
  on an Optional Reset Date, the Holder must follow the procedures set forth above
  in Section 5 for  optional  repayment  except  that the period for  delivery  or
  notification to the Trustee shall be at least 25 but not more than 35 days prior
  to such  Optional  Reset Date and except that,  if the Holder has tendered  this
  Note for  repayment  pursuant  to the Reset  Notice,  the Holder may, by written
  notice to the  Trustee,  revoke  such  tender for  repayment  until the close of
  business on the tenth day prior to such Optional Reset Date; provided,  however,
  that if such day is not a  Business  Day,  then such  notice may be given on the
  next succeeding Business Day.
  
                    Section  7. OID  Notes.  If this Note is an OID  Note,  unless
  otherwise  specified  on the face  hereof,  the  amount  payable in the event of
  redemption by the Company, repayment at the option of the Holder or acceleration
  of Maturity  shall be calculated  with reference to the Amortized Face Amount of
  this Note as of the date of such  redemption,  repayment or acceleration  rather
  than with  reference to the Face Amount hereof.  The "Amortized  Face Amount" of
  this Note shall be the amount  equal to (a) the Issue Price (as set forth on the
  face hereof) plus (b) that portion of the difference between the Issue Price and
  the Face Amount  hereof  that has accrued at the Yield to Maturity  set forth on
  the face hereof  (computed in accordance  with generally  accepted United States
  bond yield  computation  principles)  at the date as of which the Amortized Face
  Amount is  calculated,  but in no event shall the Amortized  Face Amount of this
  Note exceed the Face Amount.
  
                    Section 8. Principal  Amount For Indenture  Purposes.  For the
  purpose  of  determining  whether  Holders  of the  requisite  amount  of  Notes
  outstanding under the Indenture have made a demand,  given a notice or waiver or
  taken any other action,  the outstanding  principal  amount of this Note will be
  deemed to be the Face Amount.
  
                    Section 9.  Modification and Waivers.  The Indenture  contains
  provisions  permitting  the  Company  and the  Trustee,  with the consent of the
  holders of not less than a majority in aggregate principal amount of each series
  of the Securities at the time  Outstanding  to be affected,  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, (a) change the stated maturity
  of the  principal  of, or any  installment  of  principal of or interest on, any
  Security,  (b)  reduce the  principal  amount  thereof  or the rate of  interest
  thereon or any  premium  payable  upon the  redemption  thereof,  (c) reduce the
  amount of the principal of an OID Security that would be due and payable upon an
  Event of  Acceleration or an Event of Default (both as defined in the Indenture)
  (d)  adversely  affect any right of repayment at the option of the holder of any
  Security,  (e) change any place of payment  where,  or the coin or  currency  in
  which,  any  Security or any  premium or the  interest  thereon is payable,  (f)
  impair the right to institute suit for the enforcement of any such payment on or
  after the stated  maturity  thereof (or, in the case of redemption,  on or after
  the  redemption  date),  (g) reduce the  percentage  in principal  amount of the
  outstanding  Securities of any series,  the consent of whose holders is required
  for any such supplemental indenture, or the consent of whose holders is required
  for any waiver (of  compliance  with  certain  provisions  of the  Indenture  or
  certain  defaults  thereunder  and  their  consequences)  provided  for  in  the
  Indenture,  or (h) modify any of the  provisions  of sections  of the  Indenture
  dealing with supplemental indentures, waivers of certain covenants or waivers of
  past defaults, except to increase any such percentage or to provide that certain
  other  provisions  of the  Indenture  cannot be modified  or waived  without the
  consent of the holder of each outstanding  Security affected thereby. 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  Acceleration  or Event of Default under the  Indenture  with respect to such
  series and its  consequences,  except a default in the payment of the  principal
  of, or the premium (if any) or  interest,  if any, on any of the  Securities  of
  such series,  or in respect of a provision  under which the Indenture  cannot be
  modified without the consent of the holder of each outstanding  security of such
  series.  Any  such  consent  or  waiver  by the  Holder  of this  Note  shall be
  conclusive  and binding upon such Holder and upon all future  holders and owners
  of this Note and any Notes  which may be  issued  in  exchange  or  substitution
  herefor,  irrespective of whether or not any notation  thereof is made upon this
  Note or such other Notes.
  
                    Section 10. Obligations Unconditional.  No reference herein to
  the Indenture and no provisions of this Note or of the Indenture  shall alter or
  impair the obligation of the Company,  which is absolute and  unconditional,  to
  pay the principal of, premium, if any, and interest, if any, on this Note at the
  place, at the respective  times, at the rate, and in the coin or currency herein
  prescribed.
  
                    Section 11. Defeasance.  The Indenture contains provisions for
  the discharge of the Indenture and defeasance at any time of the indebtedness on
  this Note upon  compliance  by the Company  with  certain  conditions  set forth
  therein, which provisions apply to this Note.
  
                    Section 12.  Authorized Form and  Denominations.  The Notes of
  this series are  issuable  only in  registered  form,  without  coupons.  Unless
  otherwise  set forth on the face  hereof,  Notes  will be issued in Face  Amount
  denominations of U.S. $1,000 and any integral  multiple of U.S. $1,000 in excess
  thereof.  Each Note will be issued  initially as either a  Book-Entry  Note or a
  Certificated Note, at the option of the holders thereof, either at the office or
  agency to be  designated  and  maintained by the Company for such purpose in the
  Borough of Manhattan,  The City of New York,  pursuant to the  provisions of the
  Indenture or at any of such other offices or agencies as may be  designated  and
  maintained  by the Company for such purpose  pursuant to the  provisions  of the
  Indenture,  and in the manner and  subject to the  limitations  provided  in the
  Indenture,  but without the payment of any service charge, except for any tax or
  other governmental charges imposed in connection therewith. Notes of this series
  are  exchangeable  for a like aggregate Face Amount of Notes of this series of a
  different  authorized  denomination,  except that  Book-Entry  Notes will not be
  exchangeable for Certificated Notes.
  
                    Section  13.  Registration  of  Transfer.  As  provided in the
  Indenture and subject to certain  limitations as therein set forth, the transfer
  of this Note is  registrable  in the Security  Register,  upon surrender of this
  Note for registration of transfer,  at the Corporate Trust office or agency in a
  Place of Payment for this Note,  duly endorsed by, or  accompanied  by a written
  instrument  of transfer  in form  satisfactory  to the Company and the  Security
  Registrar  requiring  such written  instrument of transfer duly executed by, the
  Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
  more new Notes of this  series,  of  authorized  denominations  and for the same
  aggregate  Face  Amount,  will  be  issued  to  the  designated   transferee  or
  transferees.
  
                    If this  Note is a  Global  Security  and if at any  time  the
  Depository  notifies  the Company  that it is unwilling or unable to continue as
  Depository or if at any time the  Depository  shall no longer be eligible  under
  the Indenture, the Company shall appoint a successor Depository.  If a successor
  Depository  for the  Securities  of such series is not  appointed by the Company
  within 90 days after the Company  receives  such notice or becomes aware of such
  ineligibility,  the Company will issue,  and the Trustee will  authenticate  and
  deliver,  Notes in definitive form in an aggregate Face Amount equal to the Face
  Amount hereof.
  
                    No service charge shall be made for any such  registration  of
  transfer or exchange, but the Company may require payment of a sum sufficient to
  cover any tax or other  governmental  charge  that may be imposed in  connection
  therewith.
  
                    Prior to due  presentment  of this  Note for  registration  of
  transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
  may treat the person in whose name this Note is  registered  as the owner hereof
  for all  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.
  
                    Section 14. Events of Acceleration; Events of Default. In case
  an Event of Default or an Event of  Acceleration,  as defined in the  Indenture,
  with respect to Notes of this series shall have occurred and be continuing,  the
  principal  of all of the  Notes  of this  series,  in the  case of an  Event  of
  Default,  shall  become,  or in the  case of an Event  of  Acceleration,  may be
  declared and in accordance with such declaration  shall become,  due and payable
  and such acceleration or declaration may in certain events be rescinded,  in the
  manner, with the effect and subject to the conditions provided in the Indenture.
  In the event that this Note is an OID Note, the amount of principal of this Note
  that becomes due and payable upon such acceleration shall be equal to the amount
  calculated  as set forth in Section 7 hereof.  Upon payment (i) of the aggregate
  applicable  amounts of principal of the Notes of this series so declared due and
  payable and (ii) of interest on any overdue  principal and overdue  interest (in
  each case to the  extent  that the  payment  of such  interest  shall be legally
  enforceable),  all of the Company's obligations in respect of the payment of the
  principal of and interest, if any, on the Notes of this series shall terminate.
  
                    Section   15.    Subordination;    Regulatory   Matters.   The
  indebtedness  evidenced by this Note, together with any interest accrued thereon
  and premium,  if any, is, to the extent  provided in the Indenture,  subordinate
  and  subject  in right of  payment  to the prior  payment  in full of all Senior
  Indebtedness,  as defined in the  Indenture,  and this Note is issued subject to
  the provisions of the Indenture,  and each Holder hereof, by accepting the same,
  agrees to and shall be bound by such  provisions  and authorizes and directs the
  Trustee in his behalf to take such action as may be necessary or  appropriate to
  acknowledge  or effectuate  the  subordination  as provided in the Indenture and
  appoints the Trustee his attorney-in-fact for any and all such purposes.
  
                    As provided in the Indenture,  the Company's obligation to pay
  the principal of the Notes of this series at Stated  Maturity or pursuant to any
  mandatory  sinking  fund shall be  suspended  if,  after  giving  effect to such
  payment and the payment of certain other  subordinated  debt, the Company's "net
  capital" would be reduced below the minimum  amounts of capital to be maintained
  by the Company as required by the various  domestic  exchanges,  boards of trade
  and governmental agencies to which it is subject, all with the effect and to the
  extent  provided in the Indenture.  Optional  redemptions are subject to similar
  suspensions and to the requirement that permission  therefor of the Exchange (as
  defined in the Indenture) has been obtained. If payment is made of the principal
  of the Notes of this series  notwithstanding  the foregoing,  the Holders of the
  Notes so paid are required to repay to the Company,  its  successors or assigns,
  the sum so paid;  provided,  however,  that any suit for such  recovery  must be
  commenced within two years of the date of such payment.  Each Holder hereof,  by
  accepting the same, agrees to be bound by such provisions.
  
                    Section 16. No Recourse Against Certain  Persons.  No recourse
  for the payment of the principal of, premium,  if any, or interest on this Note,
  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 Note, 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.
  
                    Section 17.  Defined Terms.  All terms used but not defined in
   this Note are used herein as efined in the Indenture.
  
                    Section 18.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY 
  AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
  OPTION TO ELECT REPAYMENT
  
            The undersigned owner of this Note hereby  irrevocably  elects to have
  the  Company  repay  the  Face  Amount  of this  Note or  portion  hereof  below
  designated at (i) the Optional Repayment Percentage  multiplied by the Principal
  Amount of this Note to be repaid in respect  of such Face  Amount  plus  accrued
  interest to the Optional  Repayment  Date, if this Note is to be repaid pursuant
  to the Optional Repayment  provision described in Section 5 hereof, or (ii) 100%
  of the Principal Amount of this Note to be repaid in respect of such Face Amount
  plus accrued  interest to the Optional  Reset Date, if this Note is to be repaid
  pursuant to the Optional Interest Reset provision described in Section 6 hereof.
  Any such election is irrevocable except as provided in Section 6 hereof.
  
  Dated: ____________________                    _________________________________
                                                 Signature
                                                 Sign exactly as name appears on 
                                                 the front of this Note
                                                 [SIGNATURE GUARANTEED - required
                                                 only if Notes are to be issued
                                                 and delivered to other than the
                                                 registered Holder]
  
  Face Amount to be repaid, if amount to        Fill in for registration of Notes 
  be repaid is less than the Face Amount        if to be issued otherwise than
  of this Note (Face Amount remaining           to the registered Holder:
  must be an authorized denomination)           
                                                 Name:  __________________________
                                                 Address: _______________________
  
                                                         -----------------------
                                               (Please print name and
                                                address including zip code)
  $------------------------ 
         
  
                                             
                                               SOCIAL SECURITY OR OTHER TAXPAYER
                                               ID NUMBER
  
                                                ---------------------------------
  ABBREVIATIONS
  
                    The following  abbreviations,  when used in the inscription on
  the face of this instrument,  shall be construed as though they were written out
  in full according to applicable laws or regulations:
  
             TEN COM  -  as tenants in common
             TEN ENT  -  as tenant by the entireties
             JT TEN   -  as joint tenants with right of survivorship and not as 
                         tenants in common
  
             UNIF GIFT
             MIN ACT  -     Custodian
                             (Cust)               (Minor)
                            Under Uniform Gifts to Minors Act
  
                           -------------------------------------
                            (State)
  
  Additional abbreviations may also be used though not in the above list.
  
                         FOR VALUE RECEIVED, the undersigned
                   hereby sell(s), assign(s) and transfer(s) unto
  
  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  
  Please print or type name and address, including zip code of assignee
  
  the within Note of LEHMAN BROTHERS INC. and all rights thereunder and does 
  hereby irrevocably constitute and appoint
  
                                                         Attorney to transfer the
  said Note on the books of the within-named Company, with full power of
  substitution in the premises.
  
  Dated: ________________________________
  
  SIGNATURE GUARANTEED:____________________________________________
  
                                              NOTICE:   The   signature   to  this
                                              assignment  must correspond with the
                                              name as it appears  upon the face of
                                              the within Note in every particular,
                                              without alteration or enlargement or
                                              any change whatsoever.
  EXHIBIT A
  
                                    RESET NOTICE
  
                                LEHMAN BROTHERS INC.
                   Senior Subordinated Medium-Term Notes, Series A
                                 (Currency Indexed)
                              CUSIP No. _______________
                              Registered Nos. ____-____
  
                    LEHMAN  BROTHERS  INC.,  a  corporation   duly  organized  and
  existing under tho laws of the State of Delaware (the "Company"),  is the issuer
  of the above-referenced  Notes (the "Notes").  Capitalized terms used herein and
  not defined are used as defined in the Notes.
  
                    The Company hereby elects to reset the Interest Rate set forth
  on the face of the Notes. On and after __________1/, the Interest Rate shall be
  - ----------------------------.
  
            Each Holder of a Note has the option to elect repayment by the Company
  of such Note, or any portion thereof, on any Optional Reset Date pursuant to the
  terms of such  Note.  The Notes may be repaid on the dates and at the prices set
  forth below:
  
                    Date                     Redemption Price
  
            IN WITNESS WHEREOF,  Lehman Brothers Inc. has caused this Reset Notice
  to be signed by its  Chairman  of the  Board,  one of its Vice  Chairmen  of the
  Board,  its  President,  its Treasurer or one of its Vice  Presidents  and to be
  attested by its Secretary or one of its Assistant Secretaries.
  
  Dated:
  
                                              LEHMAN BROTHERS INC.
  
                                              By:_________________________________
                                              Title:
  
                                              Attest:_____________________________
                                                       Title:
  
  1/       Insert applicable Optional Reset Date.