Document:

<PAGE>

                             SUBORDINATION AGREEMENT

         THIS SUBORDINATION AGREEMENT (the "Agreement"), dated as of October 6,
2000, is by and among HealthAxis Inc., a Pennsylvania corporation ("Borrower")
and each of the parties listed on Schedule I hereto (each such party a
"Creditor" and collectively, the "Creditors") and is for the benefit of
HealthAxis.com, Inc., a Pennsylvania corporation ("Senior Lender").

         WHEREAS, Creditors have provided or, from time to time, will provide or
continue to provide to or for the benefit of Borrower, extensions of credit.
Each of the Creditors is willing to subordinate in favor of Senior Lender such
Creditor's rights in connection with such extensions of credit and Borrower is
willing to agree to the subordination.

         NOW, THEREFORE, in consideration of extensions of credit which Senior
Lender has provided or, from time to time, may provide or may continue to
provide to or for the benefit of Borrower, each of the Creditors and Borrower
agree with Senior Lender as follows:

1.  Definitions. As used in this Agreement, the following terms shall have the
    respective meanings indicated below:

    1.1.    "Business Day" shall mean any day of the year other than (i) any
            Saturday or Sunday or (ii) any other day on which banks located in
            New York generally are closed for business.

    1.2.    "Collateral Security" means any security, collateral, encumbrances,
            chattel mortgages, conditional contracts of sale, leases, liens, or
            security interests.

    1.3.    "Convertible Debentures" shall mean the 2% Convertible Debentures
            issued by the Borrower and currently outstanding in the aggregate
            principal amount of $27,000,000.

    1.4.    "Default Notice" means written notice sent by Senior Lender to the
            Creditors advising Creditors that an Event of Default, which did not
            arise as a result of a Payment Default, has occurred.

    1.5.    "Event of Default" has the meaning set forth in the Revolving Credit
            Note and Secured Hannover Re Note attached to and made a part of the
            Loan Agreement.

    1.6.    "Loan Agreement" shall mean the agreement, dated as of September 28,
            2000, pursuant to which Senior Lender has agreed to extend to
            Borrower up to $3,404,589 in credit, represented by the Secured
            Revolving Line of Credit in the amount of $1,100,000, the Secured
            Hannover Re Loan in the amount of up to $1,000,000 and the Unsecured
            Past Advance Loan.

    1.7.    "Payment Default" means the default in payment of any Senior
            Indebtedness when the same becomes due and payable, whether pursuant
            to the terms thereof, by acceleration or otherwise.

    1.8.    "Unsecured Past Advance Loan" means the funds advanced to Borrower
            by HealthAxis.com, Inc. in order for Borrower to pay operating and
            Reorganization expenses between May 2000 and September 28, 2000 in
            the amount of $1,304,589.

<PAGE>

    1.9.    "Senior Indebtedness" means the indebtedness, obligations, and
            liabilities of Borrower to the Senior Lender arising in connection
            with the Secured Revolving Line of Credit, in the amount of
            $1,100,000, and the Secured Hannover Re Loan, in an amount of up to
            $1,000,000, in each case as accruing interest thereunder at the
            rates set forth therein (as of the date hereof) and issued pursuant
            to the terms of the Loan Agreement including any extensions or
            renewals of such instruments; provided, however, notwithstanding
            anything to the contrary in the foregoing, "Senior Indebtedness"
            shall be deemed not to include the Unsecured Past Advance Loan
            issued pursuant to the terms of the Loan Agreement.

    1.10.   "Senior Loan Documents" means the documentation evidencing and
            governing the Senior Indebtedness, including without limitation the
            Loan Agreement.

    1.11.   "Subordinated Indebtedness" means all indebtedness and other amounts
            owing in respect of the indebtedness, as set forth on Schedule II
            hereto provided however, that such indebtedness does not include the
            obligations of Borrower to Alvin H. Clemens under the terms and
            conditions of the Agreement of Termination of Employment Contract
            and First Amendment to Employment Contract dated August 15, 2000..

2.  Subordination; Limitation of Actions; Subordination of Interests in
    Collateral Security.

    2.1.    Payment Subordination. Borrower and Creditors covenant and agree
            that the Subordinated Indebtedness, howsoever evidenced and whether
            now existing or hereafter incurred, shall be subordinate and junior
            in right of payment, to the extent and in the manner hereinafter set
            forth, to the prior payment in full in cash of all Senior
            Indebtedness. The Subordinated Indebtedness shall not be payable,
            and no payment of principal, interest or other amounts on account
            thereof, and no property or Collateral Security or guarantee of any
            nature to secure or pay the Subordinated Indebtedness, shall be made
            or given, directly or indirectly, by or on behalf of Borrower or
            received, accepted, retained or applied by Creditors unless such
            payments are held in trust by Creditors for the benefit of Senior
            Lenders and promptly paid over to Senior Lender until all Senior
            Indebtedness has been paid and satisfied in full in cash; except
            that, prior to the occurrence of a Payment Default or prior to a
            Creditor's receipt of a Default Notice, Borrower may pay, and
            Creditor may accept, regularly scheduled payments of interest made
            in the ordinary course of business under the terms of the
            Convertible Debentures. Upon the occurrence of a Payment Default, no
            payments (in cash or other property) on the Subordinated
            Indebtedness may be made or accepted unless and until (i) Borrower
            has paid and satisfied in full in cash all Senior Indebtedness or
            (ii) such Payment Default has been cured to the satisfaction of
            Senior Lender or waived. If a Creditor shall have received a Default
            Notice, no payments (in cash or other property) on the Subordinated
            Indebtedness may be made or accepted unless and until any one of the
            following conditions is satisfied:

            2.1.1.  the Event of Default specified in such Default Notice shall
                    have been cured to the satisfaction of Senior Lender or
                    waived; or

            2.1.2.  Borrower has paid and satisfied in full in cash all Senior
                    Indebtedness; or

            2.1.3.  one hundred eighty (180) days shall have elapsed from the
                    date that the Default Notice shall have been deemed to have
                    been received by a Creditor (as determined in accordance
                    with Section 21 hereof) and no Payment Default shall exist.

                                      -2-
<PAGE>

3.  No Limitation of Action. Nothing in this Agreement shall be deemed to
    restrict the right of Creditors to demand payment of, accelerate the
    maturity of or commence or join in any action or proceeding against Borrower
    or any property of Borrower to recover all or any part of the Subordinated
    Indebtedness.

4.  Subordination of Interest in Collateral Security. Creditors agree that it
    will not permit or require that the Subordinated Indebtedness be secured by
    any Collateral Security or guaranteed (unless guaranteed pursuant to a
    guarantee under which a Creditor's rights are subordinate to the rights of
    Senior Lender against the guarantor on terms reasonably acceptable to Senior
    Lender) by any party and that, in the event any Subordinated Indebtedness is
    secured by any Collateral Security, whatever right, title, and interest
    (including security interest) that a Creditor has in and to any such
    Collateral Security for the Subordinated Indebtedness shall, at all time and
    in all respects, be subject and subordinate to Senior Lender's right, title,
    and interest (including security interest), if any, in said Collateral
    Security.

5.  Creditor Agreements. In order to effect this subordination, each Creditor
    hereby:

    5.1.    grants Senior Lender the right in the name of such Creditor to file
            (if such Creditor fails to file by the date which is thirty (30)
            days before the applicable bar date) any proof of debt or claim on
            behalf of such Creditor in respect of such Subordinated Indebtedness
            in any proceeding under the federal bankruptcy laws (as now or
            hereafter in effect) or in any dissolution, insolvency, liquidation,
            or other proceeding involving an adjustment of the indebtedness of
            Borrower or application of any assets of Borrower to payment in
            liquidation thereof, or otherwise.

    5.2.    agrees not to assign or transfer or subordinate all or any part of
            the Subordinated Indebtedness held by such Creditor or any claim
            which such Creditor may have against Borrower in respect of the
            Subordinated Indebtedness unless, in the case of assignments and
            transfers of the Subordinated Indebtedness only, such assignment or
            transfer is expressly made subject to the terms and provisions of
            this Agreement.

    5.3.    agrees that in the event Borrower or any other Person or entity
            (including any trustee or receiver in any bankruptcy or similar
            proceeding) offers to a Creditor any payment (including any payment
            received as proceeds of any Collateral Security for the Subordinated
            Indebtedness) or any other distribution of any property on account
            of any Subordinated Indebtedness at any time when such payment or
            other distribution is required to be turned over by the Creditors to
            Senior Lender pursuant to the terms hereof (collectively "Prohibited
            Payments"), Creditor will direct that the full amount of the
            Prohibited Payment be made or delivered directly to Senior Lender;
            any Prohibited Payment received by Creditor from any source
            whatsoever will be immediately delivered to Senior Lender in the
            form received (except for endorsements or assignments by Creditor
            where appropriate or required by Senior Lender) and until so
            delivered will be held by the Person receiving such Prohibited
            Payment in trust as Senior Lender's property; and agrees that Senior
            Lender may, in its sole discretion, retain indefeasibly all moneys
            collected or received pursuant to the exercise of the foregoing
            powers and may, in its sole discretion, apply said moneys to the
            payment of Senior Indebtedness then outstanding (whether matured or
            unmatured), provided that after satisfying all amounts owing, or to
            be owed, to Senior Lender with respect to the matured and unmatured
            Senior Indebtedness, including the payment of all related costs and
            expenses incurred by Senior Lender and payable to Senior Lender
            pursuant to the Senior Loan Documents, Senior Lender shall pay the
            excess, if any, to the Creditors or as a court of competent
            jurisdiction otherwise directs.

                                      -3-
<PAGE>

    5.4.    agrees not to borrow any moneys from, nor otherwise incur any
            indebtedness, obligations or liabilities, direct or contingent, to
            or in favor of Borrower.

    5.5.    agrees that no payment or distributions to Senior Lender pursuant to
            the provisions of this Agreement shall entitle any Creditor to
            exercise any rights of subrogation in respect thereof until the
            Senior Indebtedness shall have been paid in full in cash.

6.  Power of Attorney. Senior Lender and each of its officers is hereby
    irrevocably constituted and appointed attorney-in-fact for each Creditor
    with full power and authority to (i) file proofs of debt or claim with
    respect to Subordinated Indebtedness when permitted pursuant to the
    provisions of Section 5.1 and (ii) make the endorsements and assignments
    required pursuant to the provisions of Section 5.3) if a Creditor fails to
    make such endorsements or assignments. Senior Lender shall not be obligated
    to exercise any authority or right granted to it hereunder and Senior Lender
    shall not be liable for any action taken or omitted or the manner of taking
    any action absent the gross negligence or willful misfeasance of Senior
    Lender.

7.  Books and Records; Modifications to Subordinated Indebtedness. Borrower and
    Creditors agree (a) to make proper notations in their respective books,
    records or other statements which evidence or record any Subordinated
    Indebtedness ("Records") indicating that the Subordinated Indebtedness is
    subject to the provisions of this Agreement, (b) (as to Borrower alone and
    not Creditors) to give Senior Lender access at any time and from time to
    time, upon Senior Lender's reasonable request, to its respective Records in
    order to make a full and free examination of and to copy the Records, (c) to
    furnish Senior Lender at any time and from time to time, upon Senior
    Lender's request, with statements of account relating to the Subordinated
    Indebtedness, (d) to legend any promissory notes evidencing the Subordinated
    Indebtedness to reflect that the indebtedness represented by such promissory
    notes is subordinated pursuant to the terms of this Agreement and (e) not to
    amend or otherwise modify any such promissory notes or any purchase
    agreements or other documentation relating thereto except as agreed to by
    the parties in writing and signed by Senior Lender.

8.  Rights Concerning Senior Indebtedness. Without affecting the rights of
    Senior Lender hereunder, each Creditor agrees that, with or without notice
    to or further assent from such Creditor, Senior Lender may at any time, and
    from time to time, either prior to or after any default by Borrower with
    respect to any indebtedness, (a) advance or refuse to advance additional
    credit and make other accommodations to or for the account of Borrower, (b)
    by written agreement or otherwise, extend, renew or change, modify,
    compromise, release, refuse to extend, renew, or change the Senior
    Indebtedness or any part thereof and waive any default under all or any part
    thereof, and modify, rescind, or waive any provision of any related
    agreement or collateral undertaking, including, but not by way of
    limitation, any provision relating to acceleration of maturity, (c) fail to
    set off any or all accrued balances or deposit balances or any part thereof
    Senior Lender's books in favor of Borrower and/or release the same, (d)
    sell, surrender, release, exchange, resort to, realize upon or apply, or
    fail to do any of the foregoing, with respect to any Collateral Security or
    any part thereof held by Senior Lender or available to Senior Lender for the
    Senior Indebtedness, and (e) generally deal with Borrower in such manner as
    Senior Lender may see fit, including, without limiting the generality of the
    foregoing, any forbearance, failure, delay or refusal by Senior Lender to
    exercise any rights or remedies Senior Lender may have against Borrower, all
    without impairing or affecting Senior Lender's rights and remedies under
    this Agreement. No failure by Senior Lender to file, record or otherwise
    perfect any lien or security interest, nor any improper filing or recording,
    nor any failure by Senior Lender to insure or protect any Collateral
    Security nor any other dealing (or failure to deal) with any Collateral
    Security by Senior Lender, shall impair or release the obligations of
    Creditors hereunder.

                                      -4-
<PAGE>

9.  Representations and Warranties. Borrower and Creditors represent and warrant
    to Senior Lender that Borrower is now or will be indebted to such Creditor
    in the principal amount set forth on Schedule II, without counterclaim,
    claim, defense or offset, that all Subordinated Indebtedness presently
    outstanding is described on Schedule II and that the Subordinated
    Indebtedness is not guaranteed, secured by any Collateral Security or
    represented by any instrument or document except for such instruments and
    documents described on Schedule II. Each Creditor represents and warrants to
    Senior Lender that the Subordinated Indebtedness has not heretofore been
    assigned, transferred, pledged, subordinated or otherwise encumbered.

10. Prior Agreements; Severability. This Agreement revokes and supersedes any
    prior agreement of subordination with respect to Subordinated Indebtedness
    which may have been executed by Creditor in favor of Senior Lender. If any
    term, condition or provision of this Agreement or any other agreement or
    document executed in connection herewith or in connection with the Senior
    Indebtedness or any Collateral Security therefor is determined to be invalid
    or unenforceable under any law, such determination shall not affect the
    validity or enforceability of any other term, condition or provision hereof.

11. Acknowledgement. Each Creditor represents that it has been provided copies
    of, and otherwise acknowledges and assents to the terms of, the Loan
    Agreement, [list other documents].

12. No Representations or Warranties by Senior Lender. No representations,
    warranties or promises have been made by Senior Lender to the other parties
    hereto except as expressly set forth the Senior Loan Documents and such
    parties have not relied upon any such representation, warranty or promise
    made by Senior Lender unless expressly set forth in the Senior Loan
    Documents, including without limiting the generality of the foregoing, any
    representation, warranty or promise by Senior Lender to give any credit,
    advances or loans to Borrower or to extend the time of payment of any such
    credits, advances or loans or to grant any other forbearance.

13. Binding Effect. This Agreement shall inure to the benefit of and be binding
    upon each of Borrower, each Creditor, Senior Lender and their respective
    successors and assigns. Each reference herein to the Senior Lender, Borrower
    or Creditor shall be deemed to include, except when inconsistent with the
    contents of this Agreement, their respective successors and assigns and
    subsequent holders of any Senior Indebtedness.

14. Expenses. Borrower agrees to pay to Senior Lender on demand, all costs and
    expenses of any kind, including reasonable counsel fees, which Senior Lender
    may incur in enforcing any of its rights under this Agreement.

15. Actions Required by Borrower; Waiver of Setoff. Borrower agrees to do and
    perform any and all acts and things which may be required on its part to
    enable each Creditor to perform its obligations under this Agreement, and to
    refrain from doing any act or thing which would cause or contribute to a
    violation by each Creditor of its obligations hereunder. Borrower hereby
    waives and agrees not to exercise any right of setoff against the
    Subordinated Indebtedness for any indebtedness, liability or obligation of
    any Creditor to Borrower.

16. Additional Waivers by Creditors and Borrower. Creditor and Borrower waive
    any and all notice of the receipt and acceptance by Senior Lender of this
    Agreement or of the creation, renewal, extension, or accrual of any of the
    Senior Indebtedness, present or future, in whole or in part, by Senior
    Lender or of the reliance by Senior Lender on this Agreement at any time.

                                      -5-
<PAGE>

17. Continuing Agreement. This Agreement is a continuing agreement and if all
    Senior Indebtedness shall at any time be paid in full, this Agreement shall
    remain in full force and effect with respect to any Senior Indebtedness
    thereafter incurred.

18. Governing Law. This Agreement shall be governed by and construed in
    accordance with the laws of the State of New York and any applicable laws of
    the United States of America in all respects, including construction,
    validity and performance without regard to conflicts of laws principles.

19. Counterparts. This Agreement may be separately executed in counterparts and
    by the different parties hereto in separate counterparts, each of which when
    so executed shall be deemed to so constitute one and the same Agreement.

20. ENTIRE AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
    PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
    CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT BY THE PARTIES. THERE ARE NO
    ORAL AGREEMENTS AMONG THE PARTIES HERETO.

21. Notices. Any notice or other communication required or permitted to given
    under this Agreement shall be in writing addressed to the respective party
    as set forth below and may be personally served, telecopied, telexed or sent
    by overnight courier service or United States mail and shall be deemed to
    have been received: (a) if delivered in person, when delivered; (b) if
    delivered by telecopy or telex, on the date of transmission if transmitted
    on a Business Day before 4:00 p.m. (New York time) or, if not, on the next
    succeeding Business Day; (c) if delivered by overnight courier, two days
    after deliver to such courier properly addressed; or (d) if by U.S. Mail,
    four Business Days after depositing in the United States mail, with postage
    prepaid and properly addressed:

     Notices shall be addressed as follows:

              If to Creditors:             To the respective addresses set forth
                                           on Schedule I hereto

              If to Senior Lender:         HealthAxis.com, Inc.
                                           2500 DeKalb Pike
                                           East Norriton, PA 19401
                                           Attn: Michael Ashker, President & CEO

              If to Borrower:              HealthAxis Inc.
                                           2500 DeKalb Pike
                                           East Norriton, PA 19401
                                           Attn: Michael Ashker, President & CEO

    or to such other address as the party addressed shall have previously
    designated by written notice to the serving party, given in accordance with
    this Section 21. A notice not given as provided above shall, if it is in
    writing, be deemed given if and when actually received by the party to whom
    given.

22. Survival of Warranties and Certain Agreements. All agreements,
    representations and warranties made herein shall survive the execution and
    delivery of this Agreement.

23. Amendments and Waivers. No amendment, modification, termination or waiver of
    any provision of this Agreement, or consent to any departure by Borrower or
    Creditor therefrom, shall in any event be effective unless the same shall be
    in writing and signed by Senior Lender.

                                      -6-
<PAGE>

24. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay
    on the part of Senior Lender in the exercise of any power, right or
    privilege hereunder shall impair such power, right or privilege or be
    construed to be a waiver of any default or acquiescence therein, nor shall
    any single or partial exercise of any such power, right or privilege
    preclude other or further exercise thereof or of any other right, power or
    privilege. All rights and remedies existing under this Agreement are
    cumulative to, and not exclusive of, any rights or remedies otherwise
    available.

25. Headings. Section and subsection headings in this Agreement are included
    herein for convenience of reference only and shall not constitute a part of
    this Agreement for any other purpose or be given any substantive effect.

26. Consent to Jurisdiction and Service of Process. BORROWER AND EACH CREDITOR
    HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
    DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
    STATE COURT SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
    PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
    AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER AND CREDITOR
    EACH IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
    OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
    ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
    PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
    FORUM.

27. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
    EACH OF THE PARTIES HERETO IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
    TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
    CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THE SUBJECT
    MATTER OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
    ACTIONS OF SENIOR LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
    OF THE TERMS HEREOF.

                 [[Remainder of page intentionally left blank]]

                                      -7-
<PAGE>

         IN WITNESS WHEREOF, each of the Creditors and Borrower have caused this
Agreement to be duly executed as of the date first written above.

                           CREDITORS:

                           UICI

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

                            BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
                            By:  Brown Simpson Asset Management LLC

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

                            BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
                            By:  Brown Simpson Capital, LLC, its general partner

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

                            BROWN SIMPSON - ORD INVESTMENTS LLC

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

                            LB I GROUP INC.

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

                            /s/ Alvin Clemens
                            ----------------------------------------------------
                                              ALVIN CLEMENS

                                      -8-
<PAGE>

                            BORROWER:

                            HEALTHAXIS INC., a Pennsylvania corporation

                            By:  /s/ Michael Ashker
                                 -----------------------------------------------
                            Name:  Michael Ashker
                                   ---------------------------------------------
                            Title: President and CEO
                                   ---------------------------------------------

                            SENIOR LENDER

                            HEALTHAXIS.COM, INC., a Pennsylvania corporation

                            By:  /s/ Michael Ashker
                                 -----------------------------------------------
                            Name:  Michael Ashker
                                   ---------------------------------------------
                            Title: President and CEO
                                   ---------------------------------------------

                                      -9-
<PAGE>

                                       Schedule I
                                           to
                                 Subordination Agreement

                     Name of Creditor                     Address
                     ----------------                     -------

Brown Simpson Strategic Growth Fund, Ltd.      152 West 57th Street, 40th Floor
                                               New York, New York 10019
                                               Attn:  General Counsel
                                               Fax: (212) 247-1329
                                               Residence: Grand Cayman,
                                                          Cayman Islands

Brown Simpson Strategic Growth Fund, L.P.      152 West 57th Street, 40th Floor
                                               New York, New York 10019
                                               Attn:  General Counsel
                                               Fax: (212) 247-1329
                                               Residence:  New York, New York

Brown Simpson - ORD Investments LLC            C/o OTA Limited Partnership
                                               1 Manhattanville Road
                                               Purchase, NY  10577
                                               Attn: Vinny DiGeso
                                               Fax: (914) 694-6342

UICI                                           4001 McEwen
                                               Suite 200
                                               Dallas, Texas  75201
                                               Attn:  Mr. Gregory T. Mutz
                                               Fax:  (972) 392-6717

Alvin Clemens                                  [Address]

LB I Group Inc.                                c/o Lehman Brothers, Inc.
                                               3 World Financial Center
                                               New York, New York  10285
                                               Attn:  Regis Hagler
                                               Fax: (212) 526-6327
                                               Residence:  New York, New York

<PAGE>

                                   Schedule II
                                       to
                             Subordination Agreement

                    Description of Subordinated Indebtedness<PAGE>   1
                                                                    EXHIBIT 4.01

            This Subordinated Note is a Global Security within the meaning of
the Indenture hereinafter referred to and is registered in the name of the
Depository named below or a nominee of the Depository. This Subordinated Note is
not exchangeable for Subordinated Notes registered in the name of a Person other
than the Depository or its nominee except in the limited circumstances described
herein and in the Indenture, and no transfer of this Subordinated Note (other
than a transfer of this Subordinated Note 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) may be registered except in the limited
circumstances described herein.

            Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation (the "Depository"), to
the Company or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of the Depository (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.

                                 CITIGROUP INC.
                  7.250% SUBORDINATED NOTES DUE OCTOBER 1, 2010
REGISTERED                                                            REGISTERED

                                                              CUSIP: 172967 AZ 4
                                                              ISIN: US172967AZ49
                                                          Common Code: 011888305

No. R 0001                                                          $_00,000,000

            CITIGROUP INC., a Delaware corporation (the "Company", which term
includes any successor Person under the Indenture), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
$_00,000,000 on October 1, 2010 and to pay interest thereon from and including
October 11, 2000 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on April 1 and October 1 of
each year, commencing April 1, 2001, at the rate of 7.250% per annum, until the
principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Subordinated
Note is registered at the close of business on the Record Date for such
interest, which shall be the March 15 or September 15 (whether or not a Business
Day) next preceding such Interest Payment Date.

<PAGE>   2

            Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the holder on such Record Date and may either
be paid to the Person in whose name this Subordinated Note is registered at the
close of business on a subsequent Record Date, such subsequent Record Date to be
not less than five days prior to the date of payment of such defaulted interest,
notice whereof shall be given to holders of Subordinated Notes of this series
not less than 15 days prior to such subsequent Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Subordinated Notes of this series may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.

            Interest hereon will be calculated on the basis of a 360-day year
comprised of twelve 30-day months.

            If either a date for payment of principal or interest on the
Subordinated Notes or the Maturity of the Subordinated Notes falls on a day that
is not a Business Day, the related payment of principal or interest will be made
on the next succeeding Business Day as if made on the date the payment was due.
No interest will accrue on any amounts payable for the period from and after the
date for payment of principal or interest on the Subordinated Notes or the
Maturity of the Subordinated Notes. For these purposes, "Business Day" means any
day which is a day on which commercial banks settle payments and are open for
general business in The City of New York.

            Payment of the principal of and interest on this Subordinated Note
will be made at the office or agency of the Trustee maintained for that purpose
in The City of New York.

            Reference is hereby made to the further provisions of this
Subordinated Note set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.

            Unless the certificate of authentication hereon has been executed by
the Trustee or by an authenticating agent on behalf of the Trustee by manual
signature, this Subordinated Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

                                       2
<PAGE>   3

            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.

Dated:  October 11, 2000

                                 CITIGROUP INC.

                                 By:
                                    ---------------------------------
                                 Title:  Deputy Treasurer

ATTEST:

By:
   -------------------
Assistant Secretary

                                       3
<PAGE>   4

            This is one of the Subordinated Notes of the series issued under the
within-mentioned Indenture.

Dated:  October 11, 2000
                             BANK ONE TRUST COMPANY, N.A.,
                             as Trustee

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

                                        4
<PAGE>   5

            This Subordinated Note is one of a duly authorized issue of
Securities of the Company (the "Subordinated Notes"), issued and to be issued in
one or more series under the Indenture, dated as of July 17, 1998 (as amended
and supplemented to date, the "Indenture"), between the Company and Bank One
Trust Company, N.A. (formerly known as The First National Bank of Chicago), as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the holders of
the Subordinated Notes and of the terms upon which the Subordinated Notes are,
and are to be, authenticated and delivered. This Subordinated Note is one of the
series designated on the face hereof, initially issued in the aggregate
principal amount of $3,000,000,000.

            The Company covenants and agrees that the indebtedness evidenced by
the Subordinated Notes is subordinate and junior in right of payment to all
Senior Indebtedness (as defined in the Indenture) to the extent provided in the
Indenture, and each holder of Subordinated Notes, by his or her acceptance
thereof, likewise covenants and agrees to the subordination provided in the
Indenture (including Article Fourteen thereof) and shall be bound by the
provisions thereof.

            In the event that the Company shall default in the payment of any
principal of (or premium, if any) or interest on any Senior Indebtedness when
the same becomes due and payable after any applicable grace period, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, property, securities,
by set-off or otherwise) shall be made or agreed to be made on account of the
principal of or interest on the indebtedness evidenced by the Subordinated
Notes, or in respect of any redemption, retirement, purchase or other
acquisition of any of the Subordinated Notes, except that holders of
Subordinated Notes may receive and retain (x) securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in these
subordination provisions with respect to the indebtedness evidenced by the
Subordinated Notes, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment and (y) payments made from a defeasance trust
created pursuant to Article Eleven of the Indenture.

            (c)   In the event of:

                  (i)   any insolvency, bankruptcy, receivership, liquidation,
      reorganization, readjustment, composition or other similar proceeding
      relating to the Company, its creditors or its property,

                  (ii)  any proceeding for liquidation, dissolution or other
      winding up of the Company, voluntary or involuntary, whether or not
      involving insolvency or bankruptcy proceedings,

                                       5
<PAGE>   6

                  (iii) any assignment by the Company for the benefit of
            creditors, or

                  (iv)  any other marshalling of the assets of the Company,

all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall be
made to any Holder of any of the Subordinated Notes on account thereof (except
as provided in the next sentence). Any payment or distribution, whether in cash,
securities or other property (other than (x) securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in these
subordination provisions with respect to the indebtedness evidenced by the
Subordinated Notes, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment and (y) payments made from a defeasance trust
created pursuant to Article Eleven of the Indenture), which would otherwise (but
for these subordination provisions) be payable or deliverable in respect of the
Subordinated Notes shall be paid or delivered directly to the holders of Senior
Indebtedness in accordance with the priorities then existing among such holders
until all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) shall have been paid in full.

                  If an event of default (as defined in the Indenture) with
respect to Subordinated Notes of this series shall occur and be continuing, the
principal of the Subordinated Notes of this series may be declared due and
payable in the manner and with the effect provided in the Indenture.

                  The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Subordinated Note upon compliance by the
Company with certain conditions set forth in Article Eleven thereof, which
provisions apply to this Subordinated Note.

                  The Indenture contains provisions permitting the Company and
the Trustee, without the consent of the holders of Securities, to establish,
among other things, the form and terms of any series of Securities issuable
thereunder by one or more supplemental indentures, and, with the consent of the
holders of not less than a majority of the principal amount of Securities at the
time Outstanding which are affected thereby, to modify the Indenture or any
supplemental indenture or the rights of the holders of Securities of such series
to be affected, provided that no such modification shall, without the consent of
the holder of each Outstanding Security so affected, (x) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium thereon, or change any place of payment where, or the
coin or currency in which any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption
on or after the Redemption Date) or modify the provisions of the Indenture with
respect to the subordination of the Securities in a manner adverse to the
Securityholders or (y) reduce the aforesaid percentage in principal amount of
the Outstanding

                                       6
<PAGE>   7

Securities of any series, the consent of the holders of which is required for
any supplemental indenture, or the consent of whose holders is required for any
waiver provided for in the Indenture, or (z) modify certain other provisions of
the Indenture, as set forth in Section 13.02 of the Indenture.

                  No reference herein to the Indenture and no provision of this
Subordinated Note or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
interest on this Subordinated Note at the times, place and rate, and in the coin
or currency, herein prescribed.

                  This Subordinated Note is a Global Security registered in the
name of a nominee of the Depository. This Subordinated Note is exchangeable for
Subordinated Notes registered in the name of a person other than the Depository
or its nominee only in the limited circumstances hereinafter described. Unless
and until it is exchanged in whole or in part for definitive Subordinated Notes
in certificated form, this Subordinated Note 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.

                  The Subordinated Notes represented by this Global Security are
exchangeable for definitive Subordinated Notes in certificated form of like
tenor as such Subordinated Notes in denominations of $1,000 and integral
multiples thereof only if (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository for the Subordinated Notes or (ii)
the Depository ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, or (iii) the Company in its sole discretion
decides to allow the Subordinated Notes to be exchanged for definitive
Subordinated Notes in registered form. Any Subordinated Notes that are
exchangeable pursuant to the preceding sentence are exchangeable for
certificated Subordinated Notes issuable in authorized denominations and
registered in such names as the Depository shall direct. As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
definitive Subordinated Notes in certificated form is registrable in the
register maintained by the Company in The City of New York for such purpose,
upon surrender of the definitive Subordinated Note for registration of transfer
at the office or agency of the registrar, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
registrar duly executed by, the holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Subordinated Notes of this series and
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. Subject to
the foregoing, this Subordinated Note is not exchangeable, except for a Global
Security or Global Securities of this issue of the same principal amount to be
registered in the name of the Depository or its nominee.

                  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 payable in connection therewith.

                  Prior to due presentment of this Subordinated Note for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in

                                       7
<PAGE>   8

whose name this Subordinated Note is registered as the owner hereof for all
purposes, whether or not this Subordinated Note be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

      The Company will pay additional amounts ("Additional Amounts") to the
beneficial owner of any Subordinated Note that is a non-United States person in
order to ensure that every net payment on such Subordinated Note will not be
less, due to payment of U.S. withholding tax, than the amount then due and
payable. For this purpose, a "net payment" on a Subordinated Note means a
payment by the Company or a paying agent, including payment of principal and
interest, after deduction for any present or future tax, assessment or other
governmental charge of the United States. These Additional Amounts will
constitute additional interest on the Subordinated Note.

      The Company will not be required to pay Additional Amounts, however, in
any of the circumstances described in items (1) through (12) below.

      (1)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld solely by
            reason of the beneficial owner:
            (a)   having a relationship with the United States as a citizen,
                  resident or otherwise;
            (b)   having had such a relationship in the past or
            (c)   being considered as having had such a relationship.

      (2)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld solely by
            reason of the beneficial owner:
            (a)   being treated as present in or engaged in a trade or business
                  in the United States;
            (b)   being treated as having been present in or engaged in a trade
                  or business in the United States in the past or
            (c)   having or having had a permanent establishment in the United
                  States.

      (3)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld solely by
            reason of the beneficial owner being or having been a:
            (a)   personal holding company;
            (b)   foreign personal holding company;
            (c)   foreign private foundation or other foreign tax-exempt
                  organization;
            (d)   passive foreign investment company;
            (e)   controlled foreign corporation or
            (f)   corporation which has accumulated earnings to avoid United
                  States federal income tax.

                                       8
<PAGE>   9

      (4)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld solely by
            reason of the beneficial owner owning or having owned, actually or
            constructively, 10 percent or more of the total combined voting
            power of all classes of stock of the Company entitled to vote.

For purposes of item (1) through (4) above, "beneficial owner" means a
fiduciary, settlor, beneficiary, member or shareholder of the holder if the
holder is an estate, trust, partnership, limited liability company, corporation
or other entity, or a person holding a power over an estate or trust
administered by a fiduciary holder.

      (5)   Additional Amounts will not be payable to any beneficial owner of a
            Subordinated Note that is a:
            (a)   fiduciary;
            (b)   partnership;
            (c)   limited liability company or
            (d)   other fiscally transparent entity
            or that is not the sole beneficial owner of the Subordinated Note,
            or any portion of the Subordinated Note. However, this exception to
            the obligation to pay Additional Amounts will only apply to the
            extent that a beneficiary or settlor in relation to the fiduciary,
            or a beneficial owner or member of the partnership, limited
            liability company or other fiscally transparent entity, would not
            have been entitled to the payment of an Additional Amount had the
            beneficiary, settlor, beneficial owner or member received directly
            its beneficial or distributive share of the payment.

      (6)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld solely by
            reason of the failure of the beneficial owner or any other person to
            comply with applicable certification, identification, documentation
            or other information reporting requirements. This exception to the
            obligation to pay Additional Amounts will only apply if compliance
            with such reporting requirements is required by statute or
            regulation of the United States or by an applicable income tax
            treaty to which the United States is a party as a precondition to
            exemption from such tax, assessment or other governmental charge.

      (7)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is collected or imposed by any method
            other than by withholding from a payment on a Subordinated Note by
            the Company or a paying agent.

      (8)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld by reason of a
            change in law, regulation, or administrative or judicial
            interpretation that becomes effective more than 15 days after the
            payment becomes due or is duly provided for, whichever occurs later.

                                       9
<PAGE>   10

      (9)   Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment or
            other governmental charge that is imposed or withheld by reason of
            the presentation by the beneficial owner of a Subordinated Note for
            payment more than 30 days after the date on which such payment
            becomes due or is duly provided for, whichever occurs later.

      (10)  Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any:
            (a)   estate tax;
            (b)   inheritance tax;
            (c)   gift tax;
            (d)   sales tax;
            (e)   excise tax;
            (f)   transfer tax;
            (g)   wealth tax;
            (h)   personal property tax or
            (i)   any similar tax, assessment or other governmental charge.

      (11)  Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any tax, assessment, or
            other governmental charge required to be withheld by any paying
            agent from a payment of principal or interest on a Subordinated Note
            if such payment can be made without such withholding by any other
            paying agent.

      (12)  Additional Amounts will not be payable if a payment on a
            Subordinated Note is reduced as a result of any combination of items
            (1) through (11) above.

      Except as specifically provided herein, the Company will not be required
to make any payment of any tax, assessment or other governmental charge imposed
by any government or a political subdivision or taxing authority of such
government.

      As used in this Subordinated Note, "United States person" means:
      (a)   any individual who is a citizen or resident of the United States;
      (b)   any corporation, partnership or other entity created or organized
            in or under the laws of the United States;
      (c)   any estate if the income of such estate falls within the federal
            income tax jurisdiction of the United States regardless of the
            source of such income and
      (d)   any trust if a United States court is able to exercise primary
            supervision over its administration and one or more United States
            persons have the authority to control all of the substantial
            decisions of the trust.

      Additionally, "non-United States person" means a person who is not a
United States person, and "United States" means the United States of America,
including the States and the District of Columbia, its territories, its
possessions and other areas within its jurisdiction.

                                       10
<PAGE>   11

      Except as provided below, the Subordinated Notes may not be redeemed prior
to maturity.

      (1)   The Company may, at its option, redeem the Subordinated Notes if:
            (a)   the Company becomes or will become obligated to pay Additional
                  Amounts as described above;
            (b)   the obligation to pay Additional Amounts arises as a result of
                  any change in the laws, regulations or rulings of the United
                  States, or an official position regarding the application or
                  interpretation of such laws, regulations or rulings, which
                  change is announced or becomes effective on or after October
                  3, 2000 and
            (c)   the Company determines, in its business judgment, that the
                  obligation to pay such Additional Amounts cannot be avoided by
                  the use of reasonable measures available to it, other than
                  substituting the obligor under the Subordinated Notes or
                  taking any action that would entail a material cost to the
                  Company.

      (2)   The Company may also redeem the Subordinated Notes, at its option,
            if:
            (a)   any act is taken by a taxing authority of the United States on
                  or after October 3, 2000, whether or not such act is taken in
                  relation to the Company or any affiliate, that results in a
                  substantial probability that the Company will or may be
                  required to pay Additional Amounts as described above;
            (b)   the Company determines, in its business judgment, that the
                  obligation to pay such Additional Amounts cannot be avoided by
                  the use of reasonable measures available to it, other than
                  substituting the obligor under the Subordinated Notes or
                  taking any action that would entail a material cost to the
                  Company and
            (c)   the Company receives an opinion of independent counsel to the
                  effect that an act taken by a taxing authority of the United
                  States results in a substantial probability that the Company
                  will or may be required to pay the Additional Amounts
                  described under above, and delivers to the Trustee a
                  certificate, signed by a duly authorized officer, stating that
                  based on such opinion the Company is entitled to redeem the
                  Subordinated Notes pursuant to their terms.

Any redemption of the Subordinated Notes as set forth in clauses (1) or (2)
above shall be in whole, and not in part, and will be made at a redemption price
equal to 100% of the principal amount of the Subordinated Notes Outstanding plus
accrued interest thereon to the date of redemption. Holders shall be given not
less than 30 days nor more than 60 days prior notice by the Trustee of the date
fixed for such redemption.

            All terms used in this Subordinated Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The
Subordinated Notes are governed by the laws of the State of New York.

                                       11

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