Document:

<PAGE>
                                                                    Exhibit 4.12

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 HOLDINGS INC.
                             MEDIUM-TERM NOTE, SERIES
                                    (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,Note
is a Note in global form (a "Global Security") and the followingare applicable
except as specified on the reverse hereof:

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 TODEPOSITORY 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>
                                                                               2

<TABLE>

<S>                                    <C>                                       <C>
ISSUE PRICE:  $                        OPTION TO RECEIVE PAYMENTS                OPTIONAL REPAYMENT PRICES:
                                       IN THE SPECIFIED CURRENCY:
ISSUE DATE:                            [ ] YES    [ ] NO                         OPTIONAL INTEREST RATE RESET:
                                                                                 [ ] YES    [ ] NO
MATURITY DATE:                         SPECIFIED CURRENCY:
                                                                                 OPTIONAL RESET DATES:
INTEREST RATE:                         AMORTIZING NOTE:
                                       [ ] YES    [ ] NO                         OPTIONAL REDEMPTION:
INTEREST PAYMENT DATES:                                                          [ ] YES    [ ] NO
                                       SINKING FUND:
REGULAR RECORD DATES:                                                            INITIAL REDEMPTION DATE:
                                       TOTAL AMOUNT OF OID:
EXCHANGE RATE AGENT:                                                             INITIAL REDEMPTION
                                       YIELD TO MATURITY:                        PERCENTAGE:     %
DEPOSITORY:
                                       INITIAL ACCRUAL PERIOD OID:               APPLICABILITY OF ANNUAL REDEMPTION
DUAL CURRENCY NOTE:                                                              PERCENTAGE REDUCTION:
[ ] YES    [ ] NO                      AUTHORIZED DENOMINATIONS:                 [ ] YES    [ ] NO
                                                                                 If yes, state Annual Percentage
OPTION ELECTION DATES:                 EXTENDIBLE NOTE:                          Reduction:     %
                                       [ ] YES    [ ] NO
OPTIONAL PAYMENT                                                                 RENEWABLE NOTE:
CURRENCY:                              EXTENSION PERIOD:                         [ ] YES    [ ] NO

DESIGNATED EXCHANGE                    NUMBER OF EXTENSION PERIODS:              INITIAL MATURITY DATE:
RATE:
                                       OPTION TO ELECT REPAYMENT:                SPECIAL ELECTION INTERVAL:
OPTION VALUE CALCULATION               [ ] YES    [ ] NO
AGENT:                                                                           RENEWABLE IN PART:
                                       OPTIONAL REPAYMENT DATES:                 [ ] YES    [ ] NO
OTHER PROVISIONS:
                                                                                 AUTHORIZED RENEWABLE AMOUNTS:

                                                                                 SPECIAL ELECTION PERIOD:
</TABLE>

          LEHMAN BROTHERS HOLDINGS 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 Indentureto 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
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.  Unless otherwise
specified above, and except as provided in Section 8 on the reverse hereof if
this Note is a Dual Currency Note (as hereinafter defined), payments of
principal, premium, if any, and interest hereon will be made in U.S. dollars;
if the Specified Currency set forth above is a currency other than U.S.
dollars(a "Foreign Currency"), such payments will be made in U.S. dollars
based on the equivalent of that Foreign Currency converted into U.S. dollars
in the manner set forth in Section 2 on the reverse hereof.  If the Specified

<PAGE>
                                                                               3

Currency is a Foreign Currency and it is so provided above, the Holder may
elect to receive such payments in that Foreign Currency by delivery of a
written request to the Trustee (or to any duly appointed Paying Agent) at the
Corporate Trust Office (as defined below) not later than 10 calendar days
prior to the applicable payment date, and such election will remain in effect
for the Holder until revoked by written notice to the Trustee (or to any such
Paying) at the Corporate Trust Office received not later than 10 calendar
days prior to the applicable payment date; provided, however, no such
election or revocation may be made if, with respect to this Note, (i) an
Event of Default has occurred, (ii) the Company has exercised any discharge
or defeasance options or (iii) the Company has given a notice of redemption.
In the event the Holder makes any such election pursuant to the preceding
sentence, such election will not be effective on any transferee of such
Holder and such transferee shall be paid in U.S. dollars unless such
transferee makes an election pursuant to the preceding sentence; provided,
however, that such election, if in effect while funds are on deposit with the
Trustee to satisfy and discharge this Note, will be effective on any such
transferee unless otherwise specified above.  The "Principal Amount" of this
Note at any time means (i) if this Note is an OID Note, the Amortized Face
Amount at such time as described in Section 7 on the reverse hereof, (ii) if
this Note is an Amortizing Note, the Outstanding Face Amount at such time as
described in Section 4 on the reverse hereof, (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, 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 any Note (a) 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), than the Face
Amount thereof and (b) any other Note 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

<PAGE>
                                                                               4

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 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; (b) if the Specified Currency is a Foreign Currency other than
European Currency Units ("ECU"), (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 Foreign Currency and (y) a day on
which banking institutions in such principal financial center are carrying
out transactions in such Foreign Currency; and (c) if the Specified Currency
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.  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

<PAGE>
                                                                               5

of Amortizing Notes, principal payable at Maturity) will be made by check
(unless otherwise provided above, from an account at a bank located outside the
United States if such amount is payable in a Foreign Currency); 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 (or a Holder of
the equivalent thereof in a Foreign Currency determined as provided in Section
2 on the reverse hereof), 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.  Simultaneously with any election
by the Holder hereof to receive payments in respect hereof in a Foreign
Currency, such 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
(unless otherwise indicated above, payable to an account at a bank located
outside the United States if payable in a Foreign Currency) 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 same-day 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 (which account, unless otherwise provided
above, will be at a bank located outside the United States if payable in a
Foreign Currency).

          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.

<PAGE>

                                                                               6

          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 Holdings Inc. has caused this
instrument to be signed by its Chairman of the Board, its President, its Vice
Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.

Dated:

[SEAL]                             LEHMAN BROTHERS HOLDINGS INC.

                                   By:
                                      ------------------------------
                                      Chairman of the Board

                                   Attest:
                                          --------------------------
                                          Assistant Secretary

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

CITIBANK, N.A.
  as Trustee

By:
   -------------------------
   Authorized Officer

<PAGE>
                                                                               7

                                  [REVERSE OF NOTE]

                            LEHMAN BROTHERS HOLDINGS INC.
                             MEDIUM-TERM NOTES, SERIES
                                     (Fixed Rate)

          Section 1.  General.  This Note is one of a duly authorized
series of Notes of the Company designated as the Medium-Term Notes, Series E
(Fixed Rate) of the Company (herein called the "Notes"), limited in aggregate
principal amount to $              (or (i) the equivalent thereof in Foreign
Currencies or (ii) 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 September 1, 1987, as amended (the
"Indenture"), duly executed and delivered by the Company and Citibank, N.A., 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.  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 and Payments.  If the Specified
Currency hereof is a Foreign Currency and the Holder is either not entitled to
elect to receive payments in respect hereof in such Foreign Currency or any
such election is not in effect, the amount of any U.S. dollar payment to be
made in respect hereof will be determined by the Exchange Rate Agent specified
on the face hereof or a successor thereto (the "Exchange Rate Agent"), based on
the indicative quotation in The City of New York selected by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date that yields the least number of U.S.
dollars upon conversion of such Foreign Currency.  Unless otherwise provided on
the face hereof, such selection shall be made from among the quotations
appearing on the bank composite or multi- contributor pages of the Reuters
Monitor Foreign Exchange Service or, if not available, the Telerate Monitor
Foreign Exchange Service.  If such quotations

<PAGE>
                                                                               8

are unavailable from either such foreign exchange service, unless otherwise
provided on the face hereof, such selection shall be made from the quotations
received by the Exchange Rate Agent from no more than three nor less than two
recognized foreign exchange dealers in The City of New York selected by the
Exchange Rate Agent and approved by the Company (one of which may be the
Exchange Rate Agent) for the purchase by the quoting dealer, for settlement on
such payment date, of the aggregate amount of such Foreign Currency payable on
such payment date in respect of all Notes denominated in such Foreign Currency
and for which the applicable dealer commits to execute a contract.  If no such
bid quotations are available, payments will be made in the Foreign Currency.

          Unless otherwise specified on the face hereof, if payment
hereon is required to be made in a Foreign Currency and such currency is
unavailable to the Company for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the Company's control, or is no
longer used by the government of the country which issued such currency or for
the settlement of transactions by public institutions of or within the
international banking community, then the Company will be entitled to make
payments with respect hereto in U.S. dollars until such Foreign Currency is
again available or so used.  The amount so payable on any date in such Foreign
Currency shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent on the basis of the noon buying rate in The City of New
York for cable transfers in the Foreign Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
for such Foreign Currency on the second Business Day prior to such payment
date, or on such other basis as may be specified on the face hereof.  In the
event such Market Exchange Rate is not then available, the Company will be
entitled to make payments in U.S. dollars (i) if such Foreign Currency is not a
composite currency, on the basis of the most recently available Market Exchange
Rate for such Foreign Currency or (ii) if such Foreign Currency is a composite
currency, including, without limitation, the ECU, in an amount determined by
the Exchange Rate Agent to be the sum of the results obtained by multiplying
the number of units of each component currency of such composite currency, as
of the most recent date on which such composite currency was used, by the
Market Exchange Rate for such component currency on the second Business Day
prior to such payment date (or if such Market Exchange Rate is not then
available, by the most recently available Market Exchange Rate for such
component currency, or as otherwise specified on the face hereof).  Any payment
in respect hereof made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.

                 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

<PAGE>
                                                                               9

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 Specified
Currency or the Optional Payment Currency (including, without limitation, an
official redenomination of any such currency that is a composite currency), the
obligations of the Company to make payments in or with reference to such
currency shall, in all cases, be deemed immediately following such
redenomination to be obligations to make payments in or 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.

          All currency exchange costs will be borne by the Holder hereof
by deduction from the payments made hereon.

          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 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.
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

<PAGE>
                                                                              10

to be redeemed shall be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate.

          Section 4.  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 I, 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 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 or Section 9.  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.

<PAGE>
                                                                              11

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 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.

<PAGE>
                                                                              12

          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.  Dual Currency Notes.  If it is specified on the
face hereof that this Note is a Dual Currency Note, the Company has a one time
option, exercisable on any one of the Option Election Dates specified on the
face hereof in whole, but not in part, with respect to all Dual Currency Notes
issued on the same day and having the same terms as this Note (this "Tranche"),
of thereafter making all payments of principal, premium, if any, and interest
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face hereof.  If the
Company makes such an election, the amount of Optional Payment Currency payable
in respect hereof shall be determined by the Exchange Rate Agent by converting
the amount of Specified Currency that would otherwise be payable into the
Optional Payment Currency at the Designated Exchange Rate specified on the face
hereof.

          The Company may exercise such option by notifying the Trustee
of such exercise on or prior to the Option Election Date.  The Trustee will
mail by first-class mail to each holder of a Note of this Tranche a notice of
such election within five Business Days of the Option Election Date which shall
state (i) the first date, whether an Interest Payment Date and/or the Maturity
Date, on which scheduled payments in the Optional Payment Currency will be made
and (ii) the Designated Exchange Rate.  Any such notice by the Company, once
given, may not be withdrawn.

          If this Note is a Dual Currency Note, unless otherwise
specified on the face hereof and notwithstanding any prior election made by the
Company, the amount payable hereon in the event of any optional redemption by
the Company, any repayment at the option of the Holder, any acceleration of the
Maturity of this Note or other prepayment of this Note prior to the Maturity
Date shall be an amount equal to the Principal Amount hereof otherwise due and
payable plus accrued interest to but excluding the date of redemption,
repayment, acceleration or other prepayment minus the Total Option Value
multiplied by a fraction, the numerator of which is the Principal Amount hereof
and the

<PAGE>
                                                                              13

denominator of which is the aggregate Principal Amount of all Dual Currency
Notes of this Tranche.  In no event will such payment be less than zero.
Notwithstanding any prior election made by the Company, such payment shall be
made in the Specified Currency unless otherwise provided on the face hereof.

          The term "Total Option Value" means, with respect to any Dual
Currency Note on any date, an amount (calculated as of such date by the
Option Value Calculation Agent) equal to the sum of the Option Values
(calculated as of such date by the Option Value Calculation Agent) for all
Interest Payment Dates occurring after the date of calculation up to and
including the Maturity Date.  The term "Option Value" means, with respect to
an Interest Payment Date or the Maturity Date, the amount calculated by the
Option Value Calculation Agent to be the arithmetic average of the prices
quoted on the date of calculation by three reference banks (which banks shall
be selected by the Option Value Calculation Agent and shall be reasonably
acceptable to the Company) for the right on the Option Election Date
immediately preceding such Interest Payment Date or Maturity Date to purchase
for value on such Interest Payment Date or Maturity Date from such reference
banks (A) the aggregate amount of the Specified Currency due on such Interest
Payment Date or Maturity Date with respect to all of the Dual Currency Notes
of this Tranche in exchange for (B) the amount of the Optional Payment
Currency that would be received if the amount in clause (A) were converted
into the Optional Payment Currency at the Designated Exchange Rate.

          All determinations referred to above made by the Exchange Rate
Agent or the Option Value Calculation Agent shall be at their 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
neither the Exchange Rate Agent nor the Option Value Calculation Agent shall
have any liability therefor.

          Section 9.  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

<PAGE>
                                                                              14

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 10.  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

<PAGE>
                                                                              15

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

<PAGE>
                                                                              16

equal to the Face Amount of this Note for which no election was made, with
terms identical to this Note.

          Section 11.  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 12.  Modification and Waivers.  The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66-2/3% in aggregate principal amount of each series
of 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, (i) extend the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series.  Any such consent or waiver by the Holder
of this 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 13.  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,

<PAGE>
                                                                              17

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 14.  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 15.  Authorized Form and Denominations.  The Notes of
this series are issuable in registered form, without coupons.  Unless otherwise
set forth on the face hereof, Notes denominated in U.S. dollars will be issued
in Face Amount denominations of U.S. $100,000 and any integral multiple of U.S.
$1,000 in excess thereof.  Notes denominated in a Foreign Currency will be
issued in the denomination or denominations set forth on the face hereof.  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 16.  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

<PAGE>
                                                                              18

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 17.  Events of Default.  If an Event of Default with
respect to Notes of this series shall occur and be continuing, the principal of
the Notes of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.  In the event that this Note is an OID
Note or a Dual Currency 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 or Section 8, respectively, 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 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.

<PAGE>
                                                                              19

          Section 20.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

<PAGE>
                                                                              20

                              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 or the Extendible Notes provision described in Section 9 hereof.  Any
such election is irrevocable except as provided in Section 6 or Section 9
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                          Fill in for registration of
repaid, if amount to be                    Notes if to be issued otherwise
repaid is less than the                    than to the registered Holder:
Face Amount of this
Note (Face Amount                          Name:  ___________________________
remaining must be an                       Address:  ________________________
authorized denomination)                           ______________________
                                                      (Please print name
$_______________________                               and address including
                                                       zip code)

                                        SOCIAL SECURITY OR OTHER TAXPAYER ID
                                        NUMBER

                                        _________________________________

<PAGE>
                                                                              21

                  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                 Fill in for registration of
terminated, if amount to be       Notes if to be issued otherwise
terminated is less than the       than to the registered Holder:
Face Amount of this
Note (such Face Amount            Name:  ___________________________
must be an authorized             Address:  ________________________
denomination)                              ______________________
                                                (Please print name
$_______________________                         and address including
                                                 zip code)

                                        SOCIAL SECURITY OR OTHER TAXPAYER
                                        ID NUMBER

                                        _________________________________

<PAGE>
                                                                              22

                                    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 HOLDINGS INC. and all rights thereunder and
does hereby irrevocably constitute and appoint

<PAGE>
                                                                              23

______________________________________________________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
         ----                                           -------

<PAGE>
                                                                       EXHIBIT A

                                  RESET NOTICE

                         LEHMAN BROTHERS HOLDINGS INC.
                          Medium-Term Notes, Series
                                  (Fixed Rate)
                             CUSIP No. ___________
                            Registered Nos. ___-___

          LEHMAN BROTHERS HOLDINGS 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 Holdings Inc. has caused
this Reset Notice to be signed by its Chairman of the Board, its President, its
Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer and to be attested by its Secretary or one of its Assistant
Secretaries.

Dated:                             LEHMAN BROTHERS HOLDINGS INC.

                                   By:
                                      -------------------------------
                                      Title:

                                   Attest:
                                          ---------------------------
                                          Title:

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

1/    Insert applicable Optional Reset Date.<PAGE>
                                                                    Exhibit 4.13

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 HOLDINGS INC.
                             MEDIUM-TERM NOTE, SERIES
                                  (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:

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>
                                                                               2

<TABLE>

<S>                                    <C>                                       <C>
ISSUE PRICE:  $                        OPTION TO RECEIVE PAYMENTS                OPTIONAL REPAYMENT PRICES:
                                       IN THE SPECIFIED CURRENCY:
ISSUE DATE:                            [ ] YES    [ ] NO                         OPTIONAL INTEREST RATE RESET:
                                                                                 [ ] YES    [ ] NO
MATURITY DATE:                         SPECIFIED CURRENCY:
                                                                                 OPTIONAL RESET DATES:
INTEREST RATE:                         AMORTIZING NOTE:
                                       [ ] YES    [ ] NO                         OPTIONAL REDEMPTION:
INTEREST PAYMENT DATES:                                                          [ ] YES    [ ] NO
                                       SINKING FUND:
REGULAR RECORD DATES:                                                            INITIAL REDEMPTION DATE:
                                       TOTAL AMOUNT OF OID:
EXCHANGE RATE AGENT:                                                             INITIAL REDEMPTION
                                       YIELD TO MATURITY:                        PERCENTAGE:     %
DEPOSITORY:
                                       INITIAL ACCRUAL PERIOD OID:               APPLICABILITY OF ANNUAL REDEMPTION
DUAL CURRENCY NOTE:                                                              PERCENTAGE REDUCTION:
[ ] YES    [ ] NO                      AUTHORIZED DENOMINATIONS:                 [ ] YES    [ ] NO
                                                                                 If yes, state Annual Percentage
OPTION ELECTION DATES:                 EXTENDIBLE NOTE:                          Reduction:     %
                                       [ ] YES    [ ] NO
OPTIONAL PAYMENT                                                                 RENEWABLE NOTE:
CURRENCY:                              EXTENSION PERIOD:                         [ ] YES    [ ] NO

DESIGNATED EXCHANGE                    NUMBER OF EXTENSION PERIODS:              INITIAL MATURITY DATE:
RATE:
                                       OPTION TO ELECT REPAYMENT:                SPECIAL ELECTION INTERVAL:
OPTION VALUE CALCULATION               [ ] YES    [ ] NO
AGENT:                                                                           RENEWABLE IN PART:
                                       OPTIONAL REPAYMENT DATES:                 [ ] YES    [ ] NO
OTHER PROVISIONS:
                                                                                 AUTHORIZED RENEWABLE AMOUNTS:

                                                                                 SPECIAL ELECTION PERIOD:
</TABLE>

          LEHMAN BROTHERS HOLDINGS 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. Unless otherwise specified above, and except as provided in
Section 9 on the reverse hereof if this Note is a Dual Currency Note (as
hereinafter defined), payments of principal, premium, if any, and interest
hereon will be made in U.S. dollars; if the Specified Currency set forth
above is a currency other than U.S. dollars (a "Foreign Currency"), such

<PAGE>
                                                                               3

payments will be made in U.S. dollars based on the equivalent of that Foreign
Currency converted into U.S. dollars in the manner set forth in Section 2 on
the reverse hereof. If the Specified Currency is a Foreign Currency and it is
so provided above, the Holder may elect to receive such payments in that
Foreign Currency by delivery of a written request to the Trustee (or to any
duly appointed Paying Agent) at the Corporate Trust Office (as defined below)
not later than 10 calendar days prior to the applicable payment date, and
such election will remain in effect for the Holder until revoked by written
notice to the Trustee (or to any such Paying Agent) at the Corporate Trust
Office received not later than 10 calendar days prior to the applicable
payment date; provided, however, no such election or revocation may be made
if, with respect to this Note, (i) an Event of Default has occurred, (ii) the
Company has exercised any discharge or defeasance options or (iii) the
Company has given a notice of redemption. In the event the Holder makes any
such election pursuant to the preceding sentence, such election will not be
effective on any transferee of such Holder and such transferee shall be paid
in U.S. dollars unless such transferee makes an election pursuant to the
preceding sentence; provided, however, that such election, if in effect while
funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above.
The "Principal Amount" of this Note at any time means (i) if this Note is an
OID Note, the Amortized Face Amount at such time as described in Section 8 on
the reverse hereof and (ii) 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, 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, 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 any Note (a) 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), than the Face
Amount thereof and (b) any other Note 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

<PAGE>
                                                                               4

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 3 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; (b) if the Specified Currency is a
Foreign Currency other than European Currency Units ("ECU"), (x) not a day on
which banking institutions are authorized or required by law or regulation to
close is the principal financial center of the country issuing the Foreign
Currency and (y) a day on which banking institutions in such principal
financial center are carrying out transactions in such Foreign Currency; (c)
if the Specified Currency 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; and (d) 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 the
Specified Currency 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 check (unless otherwise

<PAGE>
                                                                               5

provided above, from an account at a bank located outside the United States
if such amount is payable in a Foreign Currency); 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 (or a Holder of the
equivalent thereof in a Foreign Currency determined as provided in Section 2
on the reverse hereof), 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 such Paying
Agent) on or prior to the applicable Regular Record Date. Simultaneously with
any election by the Holder hereof to receive payments in respect hereof in a
Foreign Currency, such 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
(unless otherwise indicated above, payable to an account at a bank located
outside the United States if payable in a Foreign Currency) 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 same-day 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 (which account, unless otherwise provided above, will be at a bank
located outside the United States if payable in a Foreign Currency).

          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.

<PAGE>

                                                                               6

          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 Holdings Inc. has caused this
instrument to be signed by its Chairman of the Board, its President, its Vice
Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.

Dated:

[SEAL]                             LEHMAN BROTHERS HOLDINGS INC.

                                   By:
                                      ------------------------------
                                      Chairman of the Board

                                   Attest:
                                          --------------------------
                                          Assistant Secretary

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

CITIBANK, N.A.
  as Trustee

By:
   -------------------------
   Authorized Officer

<PAGE>
                                                                               7

                                  [REVERSE OF NOTE]

                            LEHMAN BROTHERS HOLDINGS INC.
                             MEDIUM-TERM NOTES, SERIES
                                   (Floating Rate)

          Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series E
(Floating Rate) of the Company (herein called the "Notes"), limited in
aggregate principal amount to $            (or (i) the equivalent thereof
in Foreign Currencies or (ii) 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 September 1, 1987, as amended (the "Indenture"), duly executed and
delivered by the Company and Citibank, N.A., 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.  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 and Payments.  If the Specified
Currency hereof is a Foreign Currency and the Holder is either not entitled to
elect to receive payments in respect hereof in such Foreign Currency or any
such election is not in effect, the amount of any U.S. dollar payment to be
made in respect hereof will be determined by the Exchange Rate Agent specified
on the face hereof or a successor thereto (the "Exchange Rate Agent"), based on
the indicative quotation in The City of New York selected by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date that yields the least number of U.S.
dollars upon conversion of such Foreign Currency.  Unless otherwise provided on
the face hereof, such selection shall be made from among the quotations
appearing on the bank composite or multi- contributor pages of the Reuters
Monitor Foreign Exchange Service or, if not available, the Telerate Monitor
Foreign Exchange Service.  If such quotations

<PAGE>
                                                                               8

are unavailable from either such foreign exchange service, unless otherwise
provided on the face hereof, such selection shall be made from the quotations
received by the Exchange Rate Agent from no more than three nor less than two
recognized foreign exchange dealers in The City of New York selected by the
Exchange Rate Agent and approved by the Company (one of which may be the
Exchange Rate Agent) for the purchase by the quoting dealer, for settlement on
such payment date, of the aggregate amount of such Foreign Currency payable on
such payment date in respect of all Notes denominated in such Foreign Currency
and for which the applicable dealer commits to execute a contract.  If no such
bid quotations are available, payments will be made in the Foreign Currency.

          Unless otherwise specified on the face hereof, if payment
hereon is required to be made in a Foreign Currency and such currency is
unavailable to the Company for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the Company's control, or is no
longer used by the government of the country which issued such currency or for
the settlement of transactions by public institutions of or within the
international banking community, then the Company will be entitled to make
payments with respect hereto in U.S. dollars until such Foreign Currency is
again available or so used.  The amount so payable on any date in such Foreign
Currency shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent on the basis of the noon buying rate in The City of New
York for cable transfers in the Foreign Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
for such Foreign Currency on the second Business Day prior to such payment
date, or on such other basis as may be specified on the face hereof.  In the
event such Market Exchange Rate is not then available, the Company will be
entitled to make payments in U.S. dollars (i) if such Foreign Currency is not a
composite currency, on the basis of the most recently available Market Exchange
Rate for such Foreign Currency or (ii) if such Foreign Currency is a composite
currency, including, without limitation, the ECU, in an amount determined by
the Exchange Rate Agent to be the sum of the results obtained by multiplying
the number of units of each component currency of such composite currency, as
of the most recent date on which such composite currency was used, by the
Market Exchange Rate for such component currency on the second Business Day
prior to such payment date (or if such Market Exchange Rate is not then
available, by the most recently available Market Exchange Rate for such
component currency, or as otherwise specified on the face hereof).  Any payment
in respect hereof made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.

                 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

<PAGE>
                                                                               9

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 Specified
Currency or the Optional Payment Currency (including, without limitation, an
official redenomination of any such currency that is a composite currency), the
obligations of the Company to make payments in or with reference to such
currency shall, in all cases, be deemed immediately following such
redenomination to be obligations to make payments in or 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.

          All currency exchange costs will be borne by the Holder hereof
by deduction from the payments made hereon.

<PAGE>
                                                                            10

          Section 3. 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, 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 preceeding 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 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 succesor 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 Calculatin Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate for the applicable
period will be Commercial Paper Rate in effect on such Interest Determination
Date.

<PAGE>

                                                                            11

          "Money Market Yield" shall be a yield calculated in accordance with
the following formula:

                                   D X 360
            Money Market Yield= ------------- x 100
                                360 - (D X M)

where "D" refers to the per annum rate for the commercial paper,
quoted on a bank discount basis 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 Rate)" 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 transactions 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

<PAGE>

                                                                             12

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 appears 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 or the applicable Foreign Currency specified on the
face hereof for the period (commencing on the Interest Reset Date) of the
applicable Index Maturity which appears on the Telerate Page 3740 (as defined
below) or 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.

<PAGE>

                                                                            13

      (b) With respect to an Interest Determination Date on which fewer than two
offered rates appear on the Renters Screen LIBO Page as specified in (a)(i)
above, or on which no rate appears on Telerate Page 3740 or the Telerate Page
3750, as applicable, as specified in a (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 consolation with the Company, to provide the Calculation Agent
with its offered quotation for deposits in the applicable currency 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 (or the equivalent
thereof in the applicable currency if such currency is a Foreign Currency)
that is representative of a single transaction in such market at 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 (or the equivalent
thereof in the applicable currency if such currency is a Foreign
Currency) 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 3740" means the display designated as page
"3740" on the Telerate Service, or such other page as may replace the 3740
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 Australian Dollars, French Francs,
Canadian Dollars, Italian Lira, Spanish Pesetas and Dutch Guilders. Thar term
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate 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, Swill Francs, Japanese Yen and ECU.

<PAGE>

                                                                            14

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 the 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

<PAGE>

                                                                            15

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 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 hereof 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

<PAGE>

                                                                            16

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 4. 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 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. The Company may exercise such to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate.

<PAGE>

                                                                            17

          Section 5.  Sinking Funds and Amortizing Notes.  Unless
otherwise specified on the face hereof this Note will not be subject to any
sinking fund.

          Section 6.  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 7 or Section 10.  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 7.  Optional Interest Reset 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.

<PAGE>
                                                                             18

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 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 6 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.

<PAGE>
                                                                              19

          Section 8.  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 9.  Dual Currency Notes.  If it is specified on the
face hereof that this Note is a Dual Currency Note, the Company has a one time
option, exercisable on any one of the Option Election Dates specified on the
face hereof in whole, but not in part, with respect to all Dual Currency Notes
issued on the same day and having the same terms as this Note (this "Tranche"),
of thereafter making all payments of principal, premium, if any, and interest
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face hereof.  If the
Company makes such an election, the amount of Optional Payment Currency payable
in respect hereof shall be determined by the Exchange Rate Agent by converting
the amount of Specified Currency that would otherwise be payable into the
Optional Payment Currency at the Designated Exchange Rate specified on the face
hereof.

          The Company may exercise such option by notifying the Trustee
of such exercise on or prior to the Option Election Date.  The Trustee will
mail by first-class mail to each holder of a Note of this Tranche a notice of
such election within five Business Days of the Option Election Date which shall
state (i) the first date, whether an Interest Payment Date and/or the Maturity
Date, on which scheduled payments in the Optional Payment Currency will be made
and (ii) the Designated Exchange Rate.  Any such notice by the Company, once
given, may not be withdrawn.

          If this Note is a Dual Currency Note, unless otherwise
specified on the face hereof and notwithstanding any prior election made by the
Company, the amount payable hereon in the event of any optional redemption by
the Company, any repayment at the option of the Holder, any acceleration of the
Maturity of this Note or other prepayment of this Note prior to the Maturity
Date shall be an amount equal to the Principal Amount hereof otherwise due and
payable plus accrued interest to but excluding the date of redemption,
repayment, acceleration or other prepayment minus the Total Option Value
multiplied by a fraction, the numerator of which is the Principal Amount hereof
and the

<PAGE>
                                                                              20

denominator of which is the aggregate Principal Amount of all Dual Currency
Notes of this Tranche.  In no event will such payment be less than zero.
Notwithstanding any prior election made by the Company, such payment shall be
made in the Specified Currency unless otherwise provided on the face hereof.

          The term "Total Option Value" means, with respect to any Dual
Currency Note on any date, an amount (calculated as of such date by the Option
Value Calculation Agent) equal to the sum of the Option Values (calculated as
of such date by the Option Value Calculation Agent) for all Interest Payment
Dates occurring after the date of calculation up to and including the Maturity
Date.  The term "Option Value: means, with respect to an Interest Payment Date
or the Maturity Date, the amount calculated by the Option Value Calculation
Agent to be the arithmetic average of the prices quoted on the date of
calculation by three reference banks (which banks shall be selected by the
Option Value Calculation Agent and shall be reasonably acceptable to the
Company) for the right on the Option Election Date immediately preceding such
Interest Payment Date or Maturity Date to purchase for value on such Interest
Payment Date or Maturity Date from such reference banks (A) the aggregate
amount of the Specified Currency due on such Interest Payment Date or Maturity
Date with respect to all of the Dual Currency Notes of this Tranche in exchange
for (B) the amount of the Optional Payment Currency that would be received if
the amount in clause (A) were converted into the Optional Payment Currency at
the Designated Exchange Rate.

          All determinations referred to above made by the Exchange Rate
Agent or the Option Value Calculation Agent shall be at their 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
neither the Exchange Rate Agent nor the Option Value Calculation Agent shall
have any liability therefor.

          Section 10.  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

<PAGE>
                                                                             21

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
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 11.  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

<PAGE>
                                                                              22

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

<PAGE>
                                                                             23

equal to the Face Amount of this Note for which no election was made, with
terms identical to this Note.

          Section 12.  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 13.  Modification and Waivers.  The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66-2/3% in aggregate principal amount of each series
of 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, (i) extend the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series.  Any such consent or waiver by the Holder
of this 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 13.  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,

<PAGE>
                                                                             24

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 15.  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 16.  Authorized Form and Denominations.  The Notes of
this series are issuable in registered form, without coupons.  Unless otherwise
set forth on the face hereof, Notes denominated in U.S. dollars will be issued
in Face Amount denominations of U.S. $100,000 and any integral multiple of U.S.
$1,000 in excess thereof.  Notes denominated in a Foreign Currency will be
issued in the denomination or denominations set forth on the face hereof.  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 17.  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

<PAGE>
                                                                             25

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 18.  Events of Default.  If an Event of Default with
respect to Notes of this series shall occur and be continuing, the principal of
the Notes of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.  In the event that this Note is an OID
Note or a Dual Currency 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 8 or Section 9, respectively, 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 19.  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 20.  Defined Terms.  All terms used but not defined in
this Note are used herein as defined in the Indenture.

<PAGE>
                                                                             26

          Section 21.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

<PAGE>
                                                                              27

                              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 7
hereof or the Extendible Notes provision described in Section 10 hereof.  Any
such election is irrevocable except as provided in Section 7 or Section 10
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                          Fill in for registration of
repaid, if amount to be                    Notes if to be issued otherwise
repaid is less than the                    than to the registered Holder:
Face Amount of this
Note (Face Amount                          Name:  ___________________________
remaining must be an                       Address:  ________________________
authorized denomination)                             ________________________
                                                      (Please print name
$_______________________                               and address including
                                                       zip code)

                                        SOCIAL SECURITY OR OTHER TAXPAYER ID
                                        NUMBER

                                        _________________________________

<PAGE>
                                                                             28

                  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                 Fill in for registration of
terminated, if amount to be       Notes if to be issued otherwise
terminated is less than the       than to the registered Holder:
Face Amount of this
Note (such Face Amount            Name:  ___________________________
must be an authorized             Address:  ________________________
denomination)                              ______________________
                                                (Please print name
$_______________________                         and address including
                                                 zip code)

                                        SOCIAL SECURITY OR OTHER TAXPAYER
                                        ID NUMBER

                                        _________________________________

<PAGE>
                                                                             29

                                    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 HOLDINGS INC. and all rights thereunder and
does hereby irrevocably constitute and appoint

<PAGE>
                                                                             30

______________________________________________________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 HOLDINGS INC.
                          Medium-Term Notes, Series
                                  (Floating Rate)
                             CUSIP No. ___________
                            Registered Nos. ___-___

          LEHMAN BROTHERS HOLDINGS 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 Holdings Inc. has caused
this Reset Notice to be signed by its Chairman of the Board, its President, its
Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer and to be attested by its Secretary or one of its Assistant
Secretaries.

Dated:                             LEHMAN BROTHERS HOLDINGS INC.

                                   By:
                                      -------------------------------
                                      Title:

                                   Attest:
                                          ---------------------------
                                          Title:

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

1/    Insert applicable Optional Reset Date.

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