MERRILL LYNCH & CO., INC. MEDIUM-TERM NOTE, SERIES B 5% Stock Linked Notes due July 3, 2000 (Linked to the performance of the Common Stock of Travelers Group Inc.)

 
                                                                      Exhibit 4b

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE OF DTC OR BY DTC OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO XXXXXXX XXXXX & CO., INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), 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.

REGISTERED NO. 1                                          CUSIP No. 590188 JD1
 

                           XXXXXXX XXXXX & CO., INC.
                               MEDIUM-TERM NOTE,
                                   SERIES B
                    5% Stock Linked Notes due July 3, 2000
               (Linked to the performance of the Common Stock of
                             Travelers Group Inc.)


     XXXXXXX XXXXX & CO., INC., a Delaware corporation (hereinafter referred to
as the "Company", which term includes any successor corporation under the
Indenture herein referred to), for value received, hereby promises to pay and
discharge each Note evidenced hereby on July 3, 2000 (the "Maturity Date") by
delivering to CEDE & CO., or registered assigns with respect to TEN MILLION
DOLLARS ($10,000,000) of the principal amount hereof (i) the Cash Amount or (ii)
if the holder so elects as hereinafter provided, the Equivalent Share Amount,
each as defined below and determined in accordance with the provisions set forth
below, and to pay interest on the principal amount hereof from July 2, 1998, or
from the most recent date in respect of which interest has been paid or duly
provided for, semiannually in arrears on January 3 and July 3, in each year
(each an "Interest Payment Date"), commencing January 3, 1999, at the rate of 5%
per annum (the "Interest Rate"), until the Cash Amount is paid or duly made
available for payment or the Equivalent Share Amount is delivered or duly made
available for delivery, as the case may be. The Notes will be issued in minimum
denominations of $1,000 and integral multiples thereof.  The interest so payable
and punctually paid or duly provided for on any

                                       1

 
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest, which shall
be the fifteenth day (whether or not a Business Day) next preceding such
Interest Payment Date. Any such interest which is payable, but is not punctually
paid or duly provided for on any Interest Payment Date, shall forthwith cease to
be payable to the registered Holder on such Regular Record Date, and may be paid
to the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to the Holder of this Note not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful manner, as more
fully provided in such Indenture.

     Payment of interest, the Cash Amount, and, if applicable, delivery of the
Equivalent Share Amount, if any, with respect to this Note shall be made at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts. The Company shall, or shall cause the Calculation Agent to,
deliver U.S. Dollars (or Travelers Stock, if the Holder of this Note exercises
the Right to Receive the Equivalent Share Amount) to the Trustee for delivery to
the Holder of this Note.

     As used herein:

     "Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and that is a
Trading Day.

     "Cash Amount" means, with respect to this Note, an amount in U.S. dollars
determined in accordance with the following formula, subject to certain
adjustments: (i) if the Final Price is greater than or equal to the Price Cap,
each $1,000 principal amount of each Note evidenced hereby will be redeemed at
maturity for $1,420 and (ii) if the Final Price is less than the Price Cap, each
$1,000 principal amount of each Note evidenced hereby will be redeemed at
maturity for an amount equal to the product of $1,000 and a fraction, the
numerator of which will be equal to the Final Price and the denominator of which
will be the Initial Price.

     "Determination Date" means the fifth Trading Day before the Maturity Date
or if there is a Market Disruption Event on such day, the Determination Date
will be the immediately succeeding Trading Day during which no Market Disruption
Event shall have occurred; provided that the Determination Date will be no later
than the second scheduled Trading Day preceding the Maturity Date,
notwithstanding the occurrence of a Market Disruption Event on such second
scheduled Trading Day.

     "Equivalent Share Amount" means, with respect to this Note, the number of
shares of Travelers Stock equal to the value of a fraction, the numerator of
which is the Cash Amount otherwise payable on each $1,000 principal amount of
each Note evidenced hereby and the denominator of which is the Final Price;
provided that the Company will pay cash in lieu of

                                       2

 
delivering fractional shares, in an amount as determined by the Calculation
Agent. The Company shall deliver the Equivalent Share Amount to the Holder on
the Maturity Date. In the event of certain Market Disruption Events, the
delivery of such Travelers Stock may be delayed until after the Maturity Date.

     "Final Price" will be an amount determined by Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx
& Xxxxx Incorporated (the "Calculation Agent", which term includes any successor
thereto) and will equal the product of the Market Price of one share of
Travelers Stock on the Determination Date and the Share Ratio, each as
determined on the Determination Date.

     "Initial Price" equals $63.18.

     "Issue Price" means an amount equal to $1,000 per $1,000 principal amount
of each Note evidenced hereby.

     "Market Disruption Event" means:

     (i)    a suspension, absence (including the absence of an official closing
price) or material limitation of trading of Travelers Stock on the NYSE for more
than two hours of trading or during the one-half hour period preceding or at the
close of trading in such market; or the suspension or material limitation on the
primary market for trading in options contracts related to Travelers Stock, if
available, during the one-half hour period preceding or at the close of trading
in the applicable market, in each case as determined by the Calculation Agent in
its sole discretion; and

     (ii)   a determination by the Calculation Agent in its sole discretion that
the event described in clause (i) above materially interfered with the ability
of the Company or any of its affiliates to unwind all or a material portion of
the hedge with respect to the 5% Stock Linked Notes due July 3, 2000 or to
purchase Travelers Stock for the purpose of delivering the Equivalent Share
Amount.

     For purposes of determining whether a Market Disruption Event has occurred:
(1) a limitation on the hours or number of days of trading will not constitute a
Market Disruption Event if it results from an announced change in the regular
business hours of the relevant exchange, (2) a decision to permanently
discontinue trading in the relevant option contract will not constitute a Market
Disruption Event, (3) limitations pursuant to any rule or regulation enacted or
promulgated by the NYSE (or other regulatory organization with jurisdiction over
the NYSE) on trading during significant market fluctuations will constitute a
suspension or material limitation of trading in Travelers Stock, (4) a
suspension of trading in an options contract on Travelers Stock by the primary
securities market trading in such options, if available, by reason of (x) a
price change exceeding limits set by such securities exchange or market, (y) an
imbalance of orders relating to such contracts or (z) a disparity in bid and ask
quotes relating to such contracts will constitute a suspension or material
limitation of trading in options contracts related to Travelers Stock and (5) a
suspension, absence or material limitation of trading on the primary securities
market on which options contracts related to Travelers Stock are traded will

                                       3

 
not include any time when such securities market is itself closed for trading
under ordinary circumstances.

     "Market Price" for any security for any date means the official closing
price (afternoon session, as applicable) of such security as reported by the
principal exchange on which such security is traded on such date. If the
official closing price is not available for any reason (including, without
limitation, the occurrence of a Market Disruption Event), the Market Price for
such security for any date shall be the mean, as determined by the Calculation
Agent, of the bid prices for such security obtained from as many dealers in such
security, but not exceeding three, as will make such bid prices available to the
Calculation Agent after 3:00 p.m. (local time in such principal market) on such
date.

     "NYSE" means the New York Stock Exchange.

     "Price Cap" equals $89.72.

     "Share Ratio" initially means 1.0, but will be subject to adjustment, as
provided herein, through and including the Determination Date.

     "Trading Day " means a day on which the NYSE, the American Stock Exchange
and the NASDAQ National Market System are open for trading, as determined by the
Calculation Agent.

     "Travelers" means Travelers Group, Inc., a company incorporated under the
laws of Delaware.

     "Travelers Stock" means the Common Stock, $.01 par value per share of
Travelers Group Inc.

     The Holder of this Note will be entitled, upon completion by the holder and
delivery to the Company and the Calculation Agent of an Official Notice of
Exercise of Right to Receive Equivalent Share Amount (in the form of Annex A
attached hereto) prior to 11:00 a.m., New York City time on or prior to the
fifteenth Business Day preceding the Maturity Date, to elect to receive, with
respect to any of the Notes evidenced hereby, the Equivalent Share Amount at
maturity, in lieu of the Cash Amount, unless it is not reasonably practicable at
such time, in the opinion of the Calculation Agent, to obtain such Equivalent
Share Amount for all Notes with respect to which Holders have elected to receive
the Equivalent Share Amount at maturity, in which case the Cash Amount will be
paid on the Maturity Date.  If the Calculation Agent determines that it is not
reasonably practicable to obtain the Equivalent Share Amount, the Calculation
Agent will provide written notice to the Trustee at its New York office and to
The Depository Trust Company, or any successor depositary ("DTC"), on which
notice the Trustee and DTC may conclusively rely, of such determination on or
prior to 4:00 p.m. on the second Business Day immediately preceding the Maturity
Date.

     Prior to 9:30 a.m. on the first Business Day immediately preceding the
Maturity Date, the Company shall cause the Calculation Agent to provide written
notice to the Trustee at its New

                                       4

 
York office and to DTC , on which notice the Trustee and DTC may conclusively
rely, (i) of its receipt of any such "Official Notice of Instruction to Deliver
the Equivalent Share Amount," (ii) of the Company's determination to deliver the
Equivalent Share Amount (which determination shall be deemed made unless the
Calculation Agent has determined as aforesaid that it is not reasonably
practicable to obtain the Equivalent Share Amount) and (iii) if Travelers Stock
are to be paid, of the number of shares of Travelers Stock per Note and of the
amount of any cash to be paid in lieu of fractional Travelers Stock.

     The Company shall, or shall cause the Calculation Agent to, deliver such
Travelers Stock or cash to the Trustee for delivery to the Holders.

     The Share Ratio (and, in the case of paragraph 5 below, the determination
of the Cash Amount) will be adjusted as follows:

     1. If Travelers Stock is subject to a stock split or reverse stock split,
then once such split has become effective, the Share Ratio will be adjusted to
equal the product of the prior Share Ratio and the number of shares issued in
such stock split or reverse stock split with respect to one share of Travelers
Stock.

     2. If Travelers Stock is subject to a stock dividend (issuance of
additional shares of Travelers Stock) that is given ratably to all holders of
shares of Travelers Stock, then once the dividend has become effective and
Travelers Stock is trading ex-dividend, the Share Ratio will be adjusted so that
the new Share Ratio shall equal the prior Share Ratio plus the product of (i)
the number of shares issued with respect to one share of Travelers Stock and
(ii) the prior Share Ratio.

     3. There will be no adjustments to the Share Ratio to reflect cash
dividends or other distributions paid with respect to Travelers Stock other than
distributions described in clause (v) of paragraph 5 below and Extraordinary
Dividends as described below. A cash dividend or other distribution with respect
to Travelers Stock will be deemed to be an "Extraordinary Dividend" if such
dividend or other distribution exceeds the immediately preceding non-
Extraordinary Dividend for Travelers Stock by an amount equal to at least 10% of
the Market Price of Travelers Stock on the Trading Day preceding the ex-dividend
date for the payment of such Extraordinary Dividend (the "ex-dividend date"). If
an Extraordinary Dividend occurs with respect to Travelers Stock, the Share
Ratio with respect to Travelers Stock will be adjusted on the ex-dividend date
with respect to such Extraordinary Dividend so that the new Share Ratio will
equal the product of (i) the then current Share Ratio and (ii) a fraction, the
numerator of which is the Market Price on the Trading Day preceding the ex-
dividend date, and the denominator of which is the amount by which the Market
Price on the Trading Day preceding the ex-dividend date exceeds the
Extraordinary Dividend Amount. The "Extraordinary Dividend Amount" with respect
to an Extraordinary Dividend for Travelers Stock will equal (i) in the case of
cash dividends or other distributions that constitute quarterly dividends, the
amount per share of such Extraordinary Dividend minus the amount per share of
the immediately preceding non-Extraordinary Dividend for Travelers Stock or (ii)
in the case of cash dividends or other

                                       5

 
distributions that do not constitute quarterly dividends, the amount per share
of such Extraordinary Dividend. To the extent an Extraordinary Dividend is not
paid in cash, the value of the non-cash component will be determined by the
Calculation Agent, whose determination shall be conclusive. A distribution on
the Travelers Stock described in clause (v) of paragraph 5 below that also
constitutes an Extraordinary Dividend shall cause an adjustment to the Share
Ratio pursuant only to clause (v) of paragraph 5.

     4. If Travelers issues rights or warrants to all holders of Travelers Stock
to subscribe for or purchase Travelers Stock at an exercise price per share less
than the Market Price of the Travelers Stock on (i) the date the exercise price
of such rights or warrants is determined and (ii) the expiration date of such
rights or warrants, and if the expiration date of such rights or warrants
precedes the maturity of the Notes, then the Share Ratio will be adjusted to
equal the product of the prior Share Ratio and a fraction, the numerator of
which shall be the number of shares of Travelers Stock outstanding immediately
prior to such issuance plus the number of additional shares of Travelers Stock
offered for subscription or purchase pursuant to such rights or warrants and the
denominator of which shall be the number of shares of Travelers Stock
outstanding immediately prior to such issuance plus the number of additional
shares of Travelers Stock which the aggregate offering price of the total number
of shares of Travelers Stock so offered for subscription or purchase pursuant to
such rights or warrants would purchase at the Market Price on the expiration
date of such rights or warrants, which shall be determined by multiplying such
total number of shares offered by the exercise price of such rights or warrants
and dividing the product so obtained by such Market Price.

     5. If (i) there occurs any reclassification or change of Travelers Stock,
(ii) Travelers, or any surviving entity or subsequent surviving entity of
Travelers (a "Travelers Successor") has been subject to a merger, combination or
consolidation and is not the surviving entity, (iii) any statutory exchange of
securities of Travelers or any Travelers Successor with another corporation
occurs (other than pursuant to clause (ii) above), (iv) Travelers is liquidated,
(v) Travelers issues to all of its shareholders equity securities of an issuer
other than Travelers (other than in a transaction described in clauses (ii),
(iii) or (iv) above) (a "Spin-off Event") or (vi) a tender or exchange offer is
consummated for all the outstanding shares of Travelers Stock (any such event in
clauses (i) through (vi) a "Reorganization Event"), the method of determining
the amount payable at maturity for each Note will be adjusted to provide that
each holder of Notes will receive at maturity, in respect of the principal
amount of each Note and in lieu of the Cash Amount, cash in an amount equal to
the Transaction Value (as defined below); provided that, if the Exchange
Property (as defined below) received in any such Reorganization Event consists
only of cash, the maturity date of the Notes will be deemed to be accelerated to
the date on which such cash is distributed to holders of Travelers Stock.
"Exchange Property" means the securities, cash or any other assets distributed
in any such Reorganization Event, including, in the case of a Spin-off Event,
the share of Travelers Stock with respect to which the spun-off security was
issued. "Transaction Value" means (i) for any cash received in any such
Reorganization Event, the amount of cash received per share of Travelers Stock
multiplied by the then current Share Ratio, (ii) for any property other than
cash or securities received in any such Reorganization Event, the market value
(as determined by the Calculation Agent) of such Exchange Property

                                       6

 
received for each share of Travelers Stock at the date of the receipt of such
Exchange Property multiplied by the then current Share Ratio and (iii) for any
security received in any such Reorganization Event, an amount equal to the
Market Price per share of such security on the Determination Date multiplied by
the quantity of such security received for each share of Travelers Stock
multiplied by the then current Share Ratio.

     For purposes of paragraph 5 above, in the case of a consummated tender or
exchange offer for all Exchange Property of a particular type, Exchange Property
shall be deemed to include the amount of cash or other property paid by the
offeror in the tender or exchange offer with respect to such Exchange Property
(in an amount determined on the basis of the rate of exchange in such tender or
exchange offer). In the event of a tender or exchange offer with respect to
Exchange Property in which an offeree may elect to receive cash or other
property, Exchange Property shall be deemed to include the kind and amount of
cash and other property received by offerees who elect to receive cash.

     No adjustments to the Share Ratio will be required unless such Share Ratio
adjustment would require a change of at least 0.1% in the Share Ratio then in
effect. The Share Ratio resulting from any of the adjustments specified above
will be rounded to the nearest one thousandth with five ten-thousandths being
rounded upward.

     No adjustments to the Share Ratio or to the amount payable at maturity of
the Notes will be required other than those specified above. However, the
Company may, at its sole discretion, cause the Calculation Agent to make
additional adjustments to the Share Ratio to reflect changes occurring in
relation to the Travelers Stock or any other Exchange Property in other
circumstances where the Company determines that it is appropriate to reflect
such changes.

     The Calculation Agent shall be solely responsible for the determination and
calculation of any adjustments to the Share Ratio and of any related
determinations and calculations with respect to any distributions of stock,
other securities or other property or assets (including cash) in connection with
any corporate event described in paragraph 5 above, and its determinations and
calculations with respect thereto, absent manifest error, shall be conclusive
for all purposes and binding on the Company and holders of the Notes.

     The Calculation Agent will provide information as to any adjustments to the
Share Ratio upon written request by any holder of the Notes.

     All percentages resulting from any calculation on the Notes will be rounded
to the nearest one hundred-thousandth of a percentage point, with five one-
millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545)
would be rounded to 9.87655% (or .0987655)), and all U.S. Dollar amounts used in
or resulting from such calculation will be rounded to the nearest cent with one-
half cent being rounded upwards.

     The Company, by its sale of this Note and every Holder of this Note (and
any successor Holder of this Note), by its respective purchase hereof, hereby
agree (in the absence of an administrative determination or judicial ruling to
the contrary):

                                       7

 
        1.  To characterize this Note for all tax purposes as an investment unit
            consisting of the following components (the "Components"): (i) a
            debt instrument of the Company (the "Debt Instrument") with a fixed
            principal amount unconditionally payable on the Maturity Date equal
            to the Principal Amount of this Note and bearing stated interest at
            the Interest Rate and (ii) a contract (the "Forward Contract")
            pursuant to which the Holder agrees to use the principal payment due
            on the Debt Instrument to make a payment to the Company in exchange
            for the right to receive the Cash Amount payable at maturity or the
            Equivalent Share Amount, which treatment will require, among other
            things, each Holder that is subject to United States Federal income
            tax in connection with its ownership of the Notes to include
            currently in income payments denominated as interest that are made
            with respect to this Note in accordance with such Holder's regular
            method of tax accounting and to treat the Debt Instrument as having
            been issued with original issue discount in an amount equal to 1.70%
            of the Issue Price of this Note;

        2.  In the case of purchases of Notes in connection with the original
            issuance thereof, to allocate 98.30% of the entire initial purchase
            price of a Note (i.e., the Issue Price of the Notes) to the Debt
            Instrument component and to allocate the remaining 1.70% of the
            Issue Price to the Forward Contract component; and

        3.  To file all United States Federal, state and local income, franchise
            and estate tax returns consistent with the treatment of each Note as
            a unit consisting of the Debt Instrument and the Forward Contract
            (in the absence of an administrative determination or judicial
            ruling to the contrary).

GENERAL

     Unless the certificate of authentication hereon has been executed by or on
behalf of The Chase Manhattan Bank, the Trustee for this Note under the
Indenture, or its successor thereunder, by the manual signature of one of its
authorized officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

     This Note is one of a duly authorized issue of Securities (hereinafter
called the "Securities") of the Company designated as its Medium-Term Notes,
Series B (the "Notes").  The Securities are issued and to be issued under an
indenture (the "Indenture") dated as of October 1, 1993, as amended, between the
Company and The Chase Manhattan Bank, as trustee (herein called the "Trustee,"
which term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Company, the Trustee and
the Holders of the Notes and the terms upon which the Notes are to be
authenticated and delivered.  The terms of individual Notes may vary with
respect to interest rates or interest rate formulas, issue dates, maturity,
redemption, repayment, currency of payment and otherwise as provided in the
Indenture.

     The Notes are issuable only in registered form without coupons in
denominations, unless otherwise specified above, of $1,000 and integral
multiples thereof.  References to payment "per

                                       8

 
Note" refer to each $1,000 principal amount of each Note evidenced hereby. As
provided in the Indenture and subject to certain limitations therein set forth,
the Notes are exchangeable for a like aggregate principal amount of Notes as
requested by the Holder surrendering the same. If (x) the Depository is at any
time unwilling or unable to continue as depository and a successor depository is
not appointed by the Company within 60 days, (y) the Company executes and
delivers to the Trustee a Company Order to the effect that this Note shall be
exchangeable or (z) an Event of Default has occurred and is continuing with
respect to the Notes, this Note shall be exchangeable for Notes in definitive
form of like tenor and of an equal aggregate principal amount, in authorized
denominations. Such definitive Notes shall be registered in such name or names
as the Depository shall instruct the Trustee. If definitive Notes are so
delivered, the Company may make such changes to the form of this Note as are
necessary or appropriate to allow for the issuance of such definitive Notes.

     This Note is not subject to any sinking fund.

     This Note is not subject to repayment at the option of the Holder prior to
its Maturity Date.

     If an Event of Default (as defined in the Indenture) with respect to the
Notes shall occur and be continuing, the principal of all the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture; provided, however, that in case an Event of Default with respect to
any Notes shall have occurred and be continuing, the amount payable to a
beneficial owner of a Note upon any acceleration permitted by the Notes will be
determined by the Calculation Agent and will be equal to the Cash Amount
determined as though the Determination Date were the date of acceleration of the
Notes, as provided above, plus any accrued but unpaid interest to but not
including the date of acceleration.

     In case of default in (i) payment of the Notes (whether at their stated
maturity or upon acceleration), from and after the maturity date the Notes shall
bear interest, payable upon demand of the beneficial owners thereof, at the rate
of 5% per annum (to the extent that payment of such interest shall be legally
enforceable) on the unpaid amount due and payable on such date in accordance
with the terms of the Notes to the date payment of such amount has been made or
duly provided for, or (ii) delivery of the Equivalent Share Amount of the Notes
at their stated maturity, from and after the maturity date the Notes shall bear
interest, payable upon demand of the beneficial owners thereof, at the rate of
5% per annum (to the extent that payment of such interest shall be legally
enforceable) on the Cash Amount otherwise payable on such date in accordance
with the terms of the Notes to the date payment of such Cash Amount has been
made or duly provided for.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66-2/3% in aggregate principal amount of the
Securities at the time Outstanding, as defined in the Indenture, of each series

                                       9

 
affected thereby.  The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all the Securities
of each series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences.  Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the interest on, and the Cash Amount or
Equivalent Share Amount, with respect to this Note and any interest on any
overdue amount thereof at the time, place and rate, and in the coin or currency,
herein prescribed.

     As provided in the Indenture and subject to certain limitations set forth
therein and on the face hereof, the transfer of this Note may be registered on
the Security Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company duly executed
by, the Holder hereof or by his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

     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 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, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.

     All terms used in this Note which are defined the meanings assigned to them
in the Indenture.

                                       10

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





Dated:  July 2, 1998


CERTIFICATE OF AUTHENTICATION                        Xxxxxxx Xxxxx & Co., Inc.
                                     
This is one of the Securities        [Copy of Seal]
of the series designated therein  
referred to in the within-mentioned
Indenture.

The Chase Manhattan Bank, as Trustee                  By:
                                                                Treasurer
By:                    
     Authorized Officer
                                                      Attest:
                                                                Secretary

                                       11

 
     ANNEX A

                     OFFICIAL NOTICE OF EXERCISE OF RIGHT
                      TO RECEIVE EQUIVALENT SHARE AMOUNT

              5% STOCK LINKED MEDIUM-TERM NOTES DUE JULY 3, 2000

     Dated: [On or prior to the fifteenth Business Day prior to July 3, 2000]

     Xxxxxxx Xxxxx & Co., Inc.
     World Financial Center
     South Tower,  5th Floor
     New York, New York 00000-0000

     Fax No.: (000) 000-0000

     (Attn: Treasury)

     Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated, as Calculation Agent
     World Financial Center
     North Tower,  5th Floor
     New York, New York 00000-0000

     Fax No.: (000) 000-0000

     (Attn: Operations (Xxxxxxx Xxxxxxxx))

     The Chase Manhattan Bank
     000 Xxxx 00xx Xxxxxx
     00xx Xxxxx
     Xxx Xxxx, Xxx Xxxx 00000

     Fax No.: (000) 000-0000

     (Attn: Corporate Trust Department)

     Dear Sirs:

     The undersigned holder of the 5% Stock Linked Medium-Term Notes due July 3,
2000 of Xxxxxxx Xxxxx & Co., Inc. (the "Notes") hereby irrevocably elects to
exercise with respect to the number of Notes indicated below, as of the date
hereof, provided that such day is prior to the fifteenth Business Day prior to
July 3, 2000, the Right to Receive the Equivalent Share Amount as described in
Pricing Supplement dated June 25, 1998 (the "Pricing Supplement") to the
Prospectus Supplement dated March 12, 1998 and the Prospectus dated January 29,
1998. Capitalized terms not defined herein have the meanings given to such terms
in the Pricing Supplement. Please date and acknowledge receipt of this notice in
the place provided below on

                                       12

 
the date of receipt, and fax a copy to the fax number indicated, whereupon the
Company will deliver Travelers Stock, in accordance with the terms of the Notes
described in the Pricing Supplement.

     Very truly yours,

     _____________________________
     [Name of Holder]

     By:
        _________________________________________ 
     [Title]

     _____________________________________________
     [Fax No.]

     $
      ___________________________________________
     Number of Notes surrendered for exercise of the Right to Receive the
     Equivalent Share Amount

     If you want the Travelers Stock  made out in another person's name, fill in
the form below:

     _____________________________

     (Insert person's soc. sec. or  tax ID no.)

     _____________________________

     (Print or type person's name, address and zip code)

     _____________________________

     Date: 
          _______________________________

     Your Signature:
                    ______________________________________

                                       13

 
     Receipt of the above Official
     Notice of Exchange is hereby acknowledged

     XXXXXXX XXXXX & CO., INC., as Issuer

     XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX INCORPORATED,
     as Calculation Agent

     By THE CHASE MANHATTAN BANK,
     as Trustee

     By:_________________________________________________

      Title:

     Date and time of acknowledgment ____________________

                                       14

 
                           ASSIGNMENT/TRANSFER FORM
                           ------------------------

  FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s), assign(s)
and transfer(s) unto

(insert Taxpayer Identification No.)

(Please print or typewrite name and address including postal zip code of
assignee)

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _______________________ attorney to transfer said Note on the books
of the Company with full power of substitution in the premises.

Dated: 
      _____________________

                         NOTICE:  The signature of the registered Holder to this
                         assignment must correspond with the name as written
                         upon the face of the within instrument in every
                         particular, without alteration or enlargement or any
                         change whatsoever.

                                       15