Document:

Employment Agreement, dated December 14, 2007, Dan M. Beers

 Exhibit 10.42 
 EMPLOYMENT AGREEMENT dated as of December 14, 2007, between Pacer International, Inc., a Tennessee corporation (the “Company”), and Dan M. Beers (the “Executive”).

 The Company and the Executive are entering into this Agreement to set forth the terms of the Executive’s employment with the Company.
Accordingly, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Company and the Executive, the
Company and the Executive hereby agree as follows: 
 Section 1. Duties. The Executive will be employed by the Company on the terms
and subject to the conditions contained in this Agreement. As of the date of this Agreement, the Executive’s title is Executive Vice President, Chief Commercial Officer - Intermodal Segment. The Executive shall perform such duties and services
on behalf of the Company and its Affiliates (as defined in Section 24(b) below) consistent with such title and position as may reasonably be assigned to the Executive from time to time by the Company’s Board of Directors (the
“Board”) or the Chairman of the Board or other more senior officers of the Company. The Executive’s title and position and related duties and services may be changed during the course of Executive’s employment by the Board or the
Chairman of the Board or other more senior officers of the Company. 
 Section 2. Term. The Executive’s employment hereunder
shall be for the period (the “Employment Period”) commencing on the date hereof (the “Commencement Date”) and ending on the effective date of the termination of such employment pursuant to and in accordance with the
applicable provisions of this Agreement. Upon such termination of the Executive’s employment hereunder, the Executive (or, if applicable, the Executive’s beneficiaries or estate) shall be only entitled to those rights and benefits provided
in Section 8(a) or Section 8(b), as applicable to such termination, subject to compliance with those continuing covenants and agreements set forth herein. 
 Section 3. Time to be Devoted to Employment. During the Employment Period, the Executive will devote substantially all of the Executive’s working energies, efforts, interest, abilities and time exclusively
to the business and affairs of the Company and its Affiliates. The Executive will not engage in any other business or activity which, in the reasonable judgment of the Board, would conflict or interfere in any material respect with the
Executive’s performance of his duties as set forth herein, whether or not such activity is pursued for gain, profit or other pecuniary advantage. 
 Section 4. Base Salary; Bonus; Benefits. 
 (a) During the Employment Period, the
Company (or any of its Affiliates) shall pay the Executive a minimum annual base salary (the “Base Salary”) of $291,891.00, payable in such installments (but not less often than monthly) as is generally the policy of the Company
with respect to the payment of regular compensation to its executive officers. The Base Salary may be 

 
increased from time to time in the sole discretion of the Board. The Executive will also be entitled to vacation under the Company’s policy. Such
vacation shall accrue and may be taken in accordance with the Company’s policy in effect from time to time with respect to its executive officers generally, subject to the Company’s right at any time and from time to time to amend, modify,
change or terminate such vacation policy in any respect. The Executive will also be entitled to such other benefits as may be made available to other executive officers of the Company generally, including participation in such health, life and
disability insurance programs and retirement or savings plans, if any, as the Company may from time to time maintain in effect as well as a monthly car allowance of $700.00 in accordance with the Company’s policy from time to time for similarly
situated executives, in all cases subject to the Company’s right at any time and from time to time to amend, modify, change or terminate in any respect any of its employee and other benefit plans, policies, or programs. 
 (b) During the Employment Period, the Executive shall be entitled to participate in the Company’s performance bonus plan or program
as adopted by Board and in effect from time to time with respect to similarly situated executives of Pacer International, Inc. (“Pacer International”), and its subsidiaries, including the Company (the “Bonus Plan”),
and to receive such performance bonus thereunder (if any) with respect to each fiscal year of the Company occurring during the Employment Period, subject in all cases to the terms and conditions of this Agreement and such Bonus Plan. The amount of
such performance bonus, if any, that may be awarded and payable to the Executive hereunder with respect to any such fiscal year shall range up to thirty-five percent (35%) of the Base Salary in effect for such fiscal year as determined by the
Board (or committee thereof) in its sole discretion based on and to the extent of the achievement or satisfaction of such targets, goals and conditions as may be provided in such Bonus Plan for such fiscal year, and as the Board (or committee
thereof) may otherwise determine. Such targets, goals and conditions may include (i) business, financial, operating and/or other performance measures applicable to (A) Pacer International and its Affiliates taken as a whole and
(B) those business segment(s) or unit(s) of Pacer International and its Affiliates for and with respect to which the Executive is responsible or has authority (e.g., Intermodal Segment) and (ii) such personal and individual
performance criteria as may be determined by the Board (or committee thereof) taking into account the Executive’s duties and responsibilities to the Company and its Affiliates for the period in question. The performance bonus awarded and
payable to the Executive under such Bonus Plan with respect to any such fiscal year (including any pro rated amount payable pursuant to the following provisions of this Section 4(b)) shall be paid at such time or times and in such manner as
performance bonuses are paid to the other executive officers of the Company generally. If the Executive’s employment with the Company is terminated without “cause” pursuant to Section 7(b) below, the Executive will be entitled to
receive that portion of the bonus payable for the fiscal year of the Company during which such termination occurs pro rated through the date of such termination based on the number of days elapsed through the termination date over 365 days. If the
Executive’s employment with the Company is terminated for any reason other than without “cause” pursuant to Section 7(b) below, neither the Company nor any of its Affiliates will be obligated to pay the Executive any bonus with
respect to the fiscal year of the Company in which such termination occurred or thereafter. The Executive’s rights to participate in, and to receive a performance bonus under, the Company’s Bonus Plan in effect for any given fiscal year
shall be subject to the Company’s right at any time and from time to time to amend, modify, change or terminate such Bonus Plan in any respect. In the event of a conflict between this Agreement and such Bonus Plan, this Agreement shall control.

  

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 Section 5. Reimbursement of Expenses. During the Employment Period, the Company shall reimburse
the Executive in accordance with Company policy for all reasonable and necessary traveling expenses and other disbursements incurred by the Executive for or on behalf of the Company in connection with the performance of the Executive’s duties
hereunder upon presentation of appropriate receipts or other documentation therefor, in accordance with all applicable policies of the Company. 
 Section 6. Disability or Death. If, during the Employment Period, the Executive is incapacitated or disabled by accident, sickness or otherwise (a “Disability”) so as to render the Executive mentally or physically
incapable of performing the services required to be performed by the Executive under this Agreement for any period of 90 consecutive days or for an aggregate of 180 days in any period of 360 consecutive days, the Company may, at any time thereafter,
at its option, terminate the Executive’s employment under this Agreement immediately upon giving the Executive written notice to that effect. In the event of the Executive’s death, the Executive’s employment will be deemed terminated
as of the date of death. 
 Section 7. Termination. 
 (a) The Company may terminate the Executive’s employment hereunder at any time for “cause” by giving the Executive written
notice of such termination, containing reasonable specificity of the grounds therefor. For purposes of this Agreement, “cause” shall mean (i) willful misconduct with respect to the business and affairs of the Company or any of its
Affiliates, (ii) willful neglect of the Executive’s duties or the failure to follow the lawful directions of the Board or more senior officers of the Company to whom the Executive reports, including the violation of any material policy of
the Company or of any of its Affiliates that is applicable to the Executive, (iii) the material breach of any provision of this Agreement or any other written agreement between the Executive and the Company or any of its Affiliates and, if such
breach is capable of being cured, the Executive’s failure to cure such breach within 30 days of receipt of written notice thereof from the Company, (iv) the Executive’s commission of a felony, (v) the Executive’s commission
of an act of fraud or financial dishonesty with respect to the Company or any of its Affiliates or (vi) any conviction of the Executive for a crime involving moral turpitude or fraud. A termination pursuant to this Section 7(a) shall take
effect immediately upon the giving of the notice contemplated hereby. 
 (b) The Company may terminate the Executive’s
employment hereunder at any time without “cause” by giving the Executive written notice of such termination, which termination shall be effective as of the date set forth in such notice, provided that such date shall not be earlier than
the day on which such notice is delivered to Executive (determined pursuant to Section 16(b) below). 
 (c) The Executive
may terminate his employment hereunder at any time for any or no reason by giving the Company written notice of such termination, which termination shall be effective as of the date set forth in such notice, provided that such date shall not be
earlier than the day on which such notice is delivered to the Company (determined pursuant to Section 16(b) below). 
  

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 Section 8. Effect of Termination. 
 (a) Upon the effective date of a termination of the Executive’s employment under this Agreement for any reason other than a
termination by the Company without cause pursuant to Section 7(b), neither the Executive nor the Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Company or any of its
Affiliates arising out of this Agreement, except the right to receive, within 30 days after the effective date of such termination (or such earlier period as may be required by applicable law): 
 (i) the unpaid portion of the Base Salary provided for in Section 4, computed on a pro rata basis to the effective date of such
termination; 
 (ii) reimbursement for any expenses incurred by the Executive up to the effective date of such termination of
employment and with respect to which the Executive shall not have theretofore been reimbursed, as provided in Section 5; and 
 (iii) the unpaid portion of any amounts earned by the Executive prior to the effective date of such termination pursuant to any employee benefit plan or program in which the Executive participated during the Employment Period (including any
accrued and unused or unpaid vacation benefits that may be earned by or due to the Executive as of the effectiveness of such termination in accordance with the Company’s policy in effect at the effective time of such termination);
provided, however, that the Executive shall not be entitled to receive any benefits under any such employee benefit plan or program that have accrued during any period if the terms of such plan or program require that the beneficiary
be employed by the Company as of the end of any period ending on or after the effective date of such termination. 
 (b) Upon
termination of the Executive’s employment under this Agreement by the Company without cause pursuant to Section 7(b), neither the Executive nor the Executive’s beneficiaries or estate shall have any further rights under this Agreement
or any claims against the Company or any of its Affiliates arising out of this Agreement, except the right to receive the following amounts and benefits within 30 days after the effective date of such termination, in the case of amounts due pursuant
to clause (i) below, and at such other times as provided in clauses (ii) and (iii) below in the case of amounts due thereunder (or in each case such earlier period as may be required by applicable law); provided,
however, that in the case of clauses (ii) and (iii) below, the Executive is not in breach of any provision of this Agreement surviving such termination and does not engage in any activity or conduct proscribed by Section 9 or
Section 10 (regardless of the extent to which such Section may be enforced under applicable law): 
 (i) the payments, if
any, referred to in Section 8(a) above; 
 (ii) continued payment of an annual amount equal to the Base Salary as in
effect immediately prior to the effective date of such termination for twelve (12) months following the effective date of such termination (the “Severance Period”), payable during the Severance Period in such manner as the Base
Salary would have been payable pursuant to Section 4(a) but for such termination; and 
  

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 (iii) the payment of any pro rata bonus (or portion thereof), if any, awarded and payable
to the Executive pursuant to and in accordance with Section 4(b) with respect to the fiscal year in which such termination occurs, to be paid when and as provided in such Section 4(b). 
 (c) Without limiting any other provision of this Agreement, if the Executive dies on or after the effective date of the termination of the
Executive’s employment hereunder, the Executive’s heirs, beneficiaries or estate, as their respective interests may appear (but without duplication), shall be entitled to receive or continue to receive those benefits that would otherwise
have been due and payable to the Executive pursuant to Section 8(a) above or Section 8(b) above, as applicable. 
 (d) In addition to, and not by way of limitation of, any other provision of this Agreement, upon the effective date of the termination of the Executive’s employment hereunder, the Executive shall surrender and deliver to the Company
(i) all computers, cell phones, office equipment, credit cards, charge cards and other tangible property of or belonging to or issued in the name of the Company or any of its Affiliates, (ii) all membership cards for memberships maintained
by or in the name of the Company or any of its Affiliates, (iii) all passwords, access codes, documents, records, and files (including all copies thereof, regardless of the form or media in which the same exist or are stored) in the
Executive’s possession and belonging or relating to the Company or any of its Affiliates (except that the Executive may retain one copy thereof for personal archive purposes, subject to the other terms and conditions of this Agreement,
including Section 9), and (iv) any and all other personal property in the Executive’s possession belonging to the Company or any of its Affiliates. 
 Section 9. Disclosure of Information. 
 (a) From and after the date hereof, the
Executive shall not at any time disclose, divulge, furnish or make accessible to any Person any Confidential Information (as hereinafter defined) heretofore acquired or acquired during the Employment Period for any reason or purpose whatsoever
(provided that nothing contained herein shall be deemed to prohibit or restrict the Executive’s right or ability to disclose, divulge, furnish or make accessible any Confidential Information (i) to any officer, director, employee,
Affiliate or representative of the Company, or (ii) to any other Person as required in connection with the performance of the Executive’s duties under and in compliance with this Agreement, or as required by law or judicial process), nor
shall the Executive make use of any Confidential Information for the Executive’s own purposes or benefit or for the purposes or benefit of any other Person except the Company and its Affiliates. The covenant contained in this Section 9
shall survive the termination or expiration of the Employment Period and any termination of this Agreement. 
 (b) For
purposes of this Agreement, the term “Confidential Information” means (i) the Intellectual Property Rights (as hereinafter defined) of the Company and its Affiliates and (ii) all other information of a proprietary or
confidential nature relating to the Company or any Affiliate thereof, or the business or assets of the Company or any such Affiliate, including: books and records; agent and independent contractor lists and related information; customer lists and
related information; vendor lists and related information; supplier lists and related information; employee and personnel lists, policies and related information; contract terms and conditions 

  

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(including those with customers, suppliers, vendors, independent contractors and agents, and present and former employees); terms and conditions of permits,
orders, judgments and decrees; wholesale, retail and distribution channels; pricing information, cost information, and pricing and cost structures and strategies; marketing, product development and business development plans and strategies;
management reports; financial statements, reports, schedules and other information; accounting policies, practices and related information; business plans, strategic plans and initiatives, forecasts, budgets and projections; and shareholder, board
of directors and committee meeting minutes and related information; provided, however, that Confidential Information shall not include (A) information that is generally available to the public on the date hereof, or which becomes
generally available to the public after the date hereof without action by the Executive in breach or violation of this Agreement, or (B) information that the Executive receives from a third party who does not have any obligation to the Company
or any of its Affiliates to keep such information confidential and which the Executive does not know (or reasonably could not have known) is confidential to the Company or any of its Affiliates. 
 (c) As used herein, the term “Intellectual Property Rights” means all industrial and intellectual property rights,
including the following (whether patentable or not): patents, patent applications, and patent rights; trademarks, trademark applications, trade names; service marks and service mark applications; trade dress, logos and designs, and the goodwill
associated with the foregoing; copyrights and copyright applications; certificates of public convenience and necessity, franchises and licenses; trade secrets, know-how, proprietary processes and formulae, inventions, improvements, devices and
discoveries; development tools; marketing materials; instructions; Confidential Information; and all documentation and media constituting, describing or relating to the foregoing, including manuals, memoranda and records. 
 Section 10. Noncompetition Covenant. 
 (a) The Executive acknowledges and agrees that he will receive significant and substantial benefits from his employment with the Company under this Agreement, including the remuneration, compensation and other
consideration inuring to his benefit hereunder, as well as introductions to, personal experience with, training in and knowledge of the Company and its Affiliates, the industries in which they engage, and third parties with whom they conduct
business. Accordingly, in consideration of the foregoing, and to induce the Company to employ and continue to employ the Executive hereunder and provide such benefits to the Executive (in each case subject to the terms and conditions of this
Agreement and the applicable employment policies of the Company and its Affiliates), the Executive agrees that he will not during the period beginning on the Commencement Date and ending twelve (12) months after the effective date of the
termination of the Executive’s employment with the Company and its Affiliates (the “Non-Competition Period”) for any reason: 
 (i) in any city or county in any state or province of the United States, Canada or Mexico where the Company or any of its Affiliates conducts business during the Non-Competition Period, directly or indirectly engage
or participate in any Competing Business (as defined in Section 10(b) below) (whether as an officer, director, employee, partner, consultant, holder of an equity or debt investment, lender or in any other manner, or capacity, including by the
rendering of services or advice to any person), or lend his name (or any part or variant thereof) to, any Competing Business; 
  

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 (ii) deal, directly or indirectly, with any customers, vendors, agents or contractors
doing business with the Company or any of its Affiliates, or with any officer, director, employee of the Company or any of its Affiliates, in each case in any manner that is or could reasonably be expected to be competitive with the Company or any
of its Affiliates; 
 (iii) take any action to solicit, encourage or induce any customer, vendor, agent or contractor doing
business with the Company or any of its Affiliates, or any officer, director, employee or agent of the Company or any of its Affiliates: 
 (A) to terminate or alter in any manner adverse to the Company and its Affiliates his or its business, commercial, employment, agency or other relationship with the Company or such Affiliate (including any action to
do business or attempt to do business with, or to hire, retain, engage or employ or attempt to hire, retain, engage or employ, any customer, vendor, agent or contractor, or any officer, director or employee, of the Company or any of its Affiliates);

 (B) to become a customer, vendor, agent or contractor, or an officer, director or employee, of the Executive, the
Executive’s Affiliates or any other Person; or 
 (C) to engage in any Competing Business; or 
 (iv) engage in or participate in, directly or indirectly, any business conducted under any name that shall be the same as or similar to
the name of the Company or any of its Affiliates or any trade name used by any of them. 
 Ownership by the Executive for investment purposes only of less
than 2% of the outstanding shares of capital stock or class of debt securities of any Person with one or more classes of its capital stock listed on a national securities exchange or actively traded in the over-the-counter market shall not
constitute a breach of the foregoing covenant. The covenant contained in this Section 10 shall survive the termination or expiration of the Employment Period and any termination of this Agreement. 
 (b) As used herein, the term “Competing Business” means any transportation or other business that the Company or any of
its Affiliates has engaged in at any time during the Employment Period in any city or county in any country, state or province of the United States, Canada or Mexico, including any such business directly or indirectly engaged in providing any of the
following: 
 (i) intermodal marketing or rail or intermodal brokerage services (whether in connection with domestic or
international shipments or customers), car fleet management services, and railcar brokerage and management services; 
 (ii)
highway brokerage services, including full trailer load, less than trailer load, trailer fleet management and depot operations services; 
  

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 (iii) international freight transportation services, including ocean forwarding, custom
house brokerage, ocean carrier services (including NVOCC operations), import/export air forwarding services, and special project services; 
 (iv) specialized transport and cartage services, including heavy, oversized, and other specialized flatbed trucking services, dry van trucking services, port and rail depot cartage services (whether in connection with
domestic or international shipments or customers), and local and regional trucking services (including full truckload and less-than-truckload motor carrier services); 
 (v) freight consolidation and handling services, including third party warehouse, cross dock, consolidation, deconsolidation and
distribution services; 
 (vi) comprehensive transportation management programs and services to third party customers,
including supply chain and traffic management services, carrier rate and contract management services , logistics optimization planning, and vendor bid optimization; and 
 (vii) intermodal rail equipment (including double-stack rail car, container and chassis) supply and management services, including
doublestack transportation services. 
 Section 11. Inventions Assignment. 
 During the Employment Period, the Executive shall promptly disclose, grant and assign to the Company for its and its Affiliates’ sole
use and benefit any and all inventions, improvements, technical information and suggestions reasonably relating to the business of the Company and its Affiliates (collectively, the “Inventions”) that the Executive may develop or
acquire during the Employment Period (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or with respect to the Inventions. In
connection with the previous sentence, the Executive shall, at the expense of the Company, including a reasonable payment based on the Executive’s last per diem earnings with the Company for the time involved if (a) the Executive is not
then in the Company’s employ, or (b) if the Executive is not then receiving severance payments pursuant to Section 8(b) above, or (c) if the Executive has not otherwise received one or more severance payments with respect to such
period (whether on a lump sum, pre-paid, or accelerated basis or otherwise), (i) promptly execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of the Company to vest
title to the Inventions and any patent applications, patents, copyrights, reissues or other proprietary rights related thereto in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world, and
(ii) render such reasonable assistance to the Company as may be required in the prosecution of applications for said patents, copyrights, reissues or other proprietary rights, in the prosecution or defense of interferences or infringements that
may be declared involving any said applications, patents, copyrights or other proprietary rights and in any litigation in which the Company may be involved relating to the Inventions. The covenant contained in this Section 11 shall survive the
termination or expiration of the Employment Period and any termination of this Agreement. 
  

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 Section 12. Assistance in Litigation. At the request and expense of the Company (including a
reasonable payment, based on the Executive’s last per diem earnings, for the time involved if (a) the Executive is not then in the Company’s employ, or (b) if the Executive is not then receiving severance payments from the
Company pursuant to Section 8(b)(ii), or (c) if the Executive has not otherwise received one or more severance payments from the Company with respect to such period (whether on a lump sum, pre-paid or accelerated basis or otherwise)) and
upon reasonable notice, the Executive shall, at all times during and after the Employment Period, furnish such information and assistance to each of the Company and its Affiliates as the Company may reasonably require in connection with any issue,
claim or litigation in which the Company or any of its Affiliates may be involved. If such a request for assistance occurs after the expiration of the Employment Period, then the Executive will only be required to render such assistance to the
Company and its Affiliates to the extent that the Executive can do so without materially adversely affecting the Executive’s other business obligations. The covenant contained in this Section 12 shall survive the termination or expiration
of the Employment Period and any termination of this Agreement. 
 Section 13. Expenses; Taxes. Each party hereto shall bear his or
its own expenses incurred in connection with this Agreement (including legal, accounting and any other third party fees, costs and expenses and all federal, state, local and other taxes and related charges incurred by such party). All references
herein to remuneration, compensation and other consideration payable by the Company or any of its Affiliates hereunder to or for the benefit of the Executive or his heirs, representatives, or estate are to the gross amounts thereof before
reductions, set-off, or deduction for taxes and other charges referred to below, and all such remuneration, compensation and other consideration shall be paid net of and after reduction, set-off and deduction for any and all applicable withholding,
F.I.C.A., employment and other similar federal, state and local taxes and contributions required by law to be withheld by the Company or any such Affiliate. 
 Section 14. Representation. The Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the Executive do not breach, violate or cause a
default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, and (b) the Executive is not a party to or bound by any employment agreement, consulting
agreement, noncompetition agreement, confidentiality agreement or similar agreement with any other Person. 
 Section 15. Entire
Agreement; Amendment and Waiver. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous agreements and
understandings between the Executive and the Company or any predecessor of the Company, or any of their respective Affiliates, with respect to the subject matter hereof. Other than this Agreement, there are no other agreements or understandings
continuing in effect relating to the subject matter hereof. No waiver, amendment or modification of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
or remedies arising by virtue of any such prior or subsequent occurrence. 
  

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 Section 16. Notices. 
 (a) All notices or other communications pursuant to or contemplated by this Agreement shall be in writing and shall be deemed to be
sufficient if delivered personally, telecopied, sent by nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice): 
 (i) if to the Company, to it: 
 c/o Pacer International, Inc. 
 One Concord Center 
 2300 Clayton Road, Suite 1200 
 Concord, California 94520 
 Attention: Chief Financial Officer 
 Telephone No.: (925) 887-1400 
 Facsimile No.: (925) 887-1565 
 with copy to: 
 Pacer International, Inc. 
 One Independent Drive, Suite 1250 
 Jacksonville, Florida 32202 
 Attention: General Counsel 
 Telephone No.: (904) 485-1001 
 Facsimile No.: (904) 485-1019 
 (ii) if to the Executive, to him or at his last known
address contained in the records of the Company. 
 (b) All such notices and other communications shall be deemed to have been
given and received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by telecopy, on the date of such delivery (if sent on a business day where sent, or if sent on other than a business day
where sent, on the next business day where sent after the date sent), (iii) in the case of delivery by nationally-recognized, overnight courier, on the next business day where sent following dispatch, and (iv) in the case of mailing, on
the third business day where sent next following such mailing. In this Agreement, the term “business day” means, as to any location, any day that is not a Saturday, a Sunday or a day on which banking institutions in such location
are authorized or required to be closed. 
 Section 17. Severability. It is the desire and intent of the parties that the provisions
of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement is determined to be partially or wholly
invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be so
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be excised from this Agreement; provided, however, that the legality, binding effect and enforceability of the remaining provisions of this
Agreement, to the extent the economic benefits conferred upon the parties by virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with
respect to such provision in such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 
 Section 18. Remedies. The Executive acknowledges and agrees that the provisions of this Agreement (including Section 9, Section 10, Section 11, and Section 12) are of a special and unique nature, the loss of which
cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any provision of this Agreement (including Section 9, Section 10, Section 11, and Section 12) would cause the
Company irreparable harm. The Executive further acknowledges and agrees that in the event of a breach or threatened breach of any of the covenants contained in this Agreement (including Section 9, Section 10, Section 11, and
Section 12), the Company shall be entitled to immediate relief enjoining the same in any court or before any judicial body having jurisdiction over such a claim. All rights and remedies provided for in this Agreement are cumulative, are in
addition to any other rights and remedies provided for by law, and may, to the extent permitted by law, be exercised concurrently or separately. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy or
to preclude the exercise or pursuit of any other right or remedy. 
 Section 19. Benefits of Agreement; Assignment. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estates, as applicable. This Agreement shall not be assignable by the Executive
without the prior written consent of the Company (acting with approval its Board of Directors). Except as expressly provided in this Agreement, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and
their respective successors, permitted assigns, representatives, heirs and estates, as applicable. 
 Section 20. Governing Law. THIS
AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF TEXAS, OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS TO BE APPLIED. 
 Section 21. Jury Trial Waiver. THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED TO THE SUBJECT MATTER HEREOF. EXECUTIVE UNDERSTANDS THAT THE WAIVER OF THE RIGHT TO
A TRIAL BY JURY IS AN IMPORTANT RIGHT WHICH EXECUTIVE HEREBY FOREGOES. 
 Section 22. Jurisdiction and Venue; Service of Process.

 (a) The parties hereto agree that all disputes among them arising out of, connected with, related to, or incidental to the
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Agreement shall be resolved exclusively by state or federal courts located in Fort Worth, Texas and any appellate court from any thereof, or by an arbitrator
located in Fort Worth, Texas in such cases where both parties hereto have expressly agreed to binding arbitration. 
 (b) Each
of the parties hereto hereby irrevocably and unconditionally submits, for himself or itself and his or its property, to the exclusive jurisdiction of any Texas state court or federal court of the United States of America sitting in Fort Worth,
Texas, and any appellate court from any thereof, in any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereunder or thereunder or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such Texas state court or, to the extent permitted by law, in
any such federal court. Each of the parties hereto agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 (c) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent he or it may legally
and effectively do so, any objection that he or it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereunder or thereunder in any Texas
state or federal court of the United States of America sitting in Fort Worth, Texas. Each of the parties hereto hereby irrevocably waives, to the fullest extent he or it may legally and effectively do so, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court. 
 (d) Each of the parties hereto hereby agrees that the
mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without the necessity for service by any other means provided by law.

 Section 23. Independence of Covenants and Representations and Warranties. All covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain covenant, the fact that such action or condition is permitted by another covenant shall not affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is correct or is not breached shall not affect the incorrectness of or a breach of a representation and warranty hereunder. 
 Section 24. Interpretation and Construction; Defined Terms. 
 (a) The term “Agreement” means this Employment Agreement and any and all schedules, annexes and exhibits that may be
attached hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The use in this Agreement of the word “including” means “including, without limitation.” The
words “herein,” “hereof,” “hereunder,” “hereby,” “hereto,” “hereinafter,” and other words of similar import refer 

  

 -12- 

 
to this Agreement as a whole, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in, or any schedule, annex
or exhibit that may be attached to, this Agreement. All references to articles, sections, subsections, paragraphs, subparagraphs, clauses, schedules, annexes and exhibits mean such provisions of this Agreement and the schedules, annexes and exhibits
that may be attached to this Agreement, except where otherwise stated. The title of and the article, section, paragraph, schedule, annex and exhibit headings in this Agreement are for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement. The use herein of the masculine, feminine or neuter forms also shall denote the other forms, as in each case the context may require. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement has been chosen by
the parties to express their mutual intent, and no rule of strict construction shall be applied against any party. Accounting terms used but not otherwise defined herein shall have the meanings given to them under GAAP. Unless otherwise provided
herein, the measure of one month or year for purposes of this Agreement shall be that date of the following month or year corresponding to the starting date, except that, if no corresponding date exists, the measure shall be the next day of the
following month or year (e.g., one month following February 8 is March 8, and one month following March 31 is May 1). 
 (b) The term “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with
such Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract
or otherwise. 
 (c) The term “Person” shall be construed as broadly as possible and shall include an
individual or natural person, a partnership (including a limited liability partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a business, and any
other entity, including a governmental entity such as a domestic or foreign government or political subdivision thereof, whether on a federal, state, provincial or local level and whether legislative, executive, judicial in nature, including any
agency, authority, board, bureau, commission, court, department or other instrumentality thereof. 
 Section 25. Counterparts and
Facsimile Execution. This Agreement may be executed in two or more counterparts, and each such counterpart shall be an original instrument, but all such counterparts taken together shall be considered one and the same agreement, effective when
one or more counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Any signed counterpart delivered by facsimile shall be deemed for all purposes to
constitute such party’s good and valid execution and delivery of this Agreement. 
  

 -13- 

 Section 26. Further Assurances. Executive hereby agrees, in consideration of the Company’s
covenants and agreements set forth herein, that contemporaneous with Executive’s (or his heirs’, beneficiaries’ or estate’s in the event of his death) acceptance of amounts payable under Section 8, Executive shall for
himself, his heirs, beneficiaries, estate, successors and assigns, enter into such other documents, agreements and instruments reasonably requested by the Company, including a separate settlement agreement prepared by the Company with those
provisions deemed appropriate by the Company, including a release of the Company and its Affiliates from, and a waiver of, all claims (including those related to alleged wrongful discharge or alleged employment discrimination under any federal,
state or local statute or regulation) and confirmation of the confidentiality, non-competition and other covenants of this Agreement that survive termination of employment. 
 [Remainder of page intentionally left blank.] 
  

 -14- 

 IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement effective as
of the date first written above. 
  

			
	THE COMPANY:
	
	PACER INTERNATIONAL, INC.
		
	By: 	 	/s/ Adriene Bailey
	 Name: Adriene Bailey
 Title: Executive Vice
President, Strategy &
     Organizational Development

  

	
	THE EXECUTIVE:
	
	/s/ Dan M. Beers
	Dan M. BeersForm of senior debt security-MTN (Return Opt. Sec. Linked to Proctor & Gamble)

 Exhibit 4.01 
 LEHMAN BROTHERS HOLDINGS INC. 
 Return Optimization Securities with Partial Protection Linked to the Common Stock of The
Proctor & Gamble Company Due August 13, 2009 
  

			
	Number R-1	  	$2,161,670
	ISIN US 52522L6737	  	CUSIP 52522L673

 See Reverse for Certain Definitions 
 THIS SECURITY (THIS “SECURITY”) IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
 LEHMAN BROTHERS
HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the
office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private
debts, for each $10 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST. 
 Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security. 
 REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. 
  

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

							
	Dated: February 13, 2008	 	LEHMAN BROTHERS HOLDINGS INC.	 	
				
	[SEAL]	 	By:	 	  
	 	
		 		 	Vice President	 	
				
		 	Attest:	 	  
	 	
		 		 	Assistant Secretary	 	

  
 TRUSTEE’S CERTIFICATE OF
AUTHENTICATION 
 This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. 
  

			
	 CITIBANK, N.A.
     as
Trustee

		
	By:	 	  

		 	    Authorized Officer

  

 2 

 Reverse of Security 
 This Security is one of a duly authorized series of Securities of the Company designated as Return Optimization Securities with Partial Protection Linked to the Common Stock of The Proctor & Gamble Company
Due August 13, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in
all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series
of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities. 
 The Payment at Maturity at the request of the Trustee shall be determined by the Calculation Agent pursuant to the Calculation Agency Agreement. The Trustee shall fully rely on the determination by the Calculation
Agent of the Payment at Maturity and shall have no duty to make any such determination. The Calculation Agent will provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Payment at
Maturity on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date. 
 All calculations with respect to the Initial Share
Price, the Final Share Price and the Share Return will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the
payment per $10 principal amount Security at maturity will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate
principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward. 
 This Security is not
subject to any sinking fund. 
 If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on
all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity
calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default,
the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to
the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration. 
  

 The Indenture contains provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of each series of Securities at the time Outstanding to be
affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if
any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on
any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such
series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such
series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities. 
 No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the Payment at Maturity with respect to this Security. 
 The Securities are issuable in denominations of
$10 and any whole multiples of $10. 
 The Company, the Trustee, and any agent of the Company or of the Trustee may deem and treat the
registered holder (the “Holder”) hereof as the absolute owner of this Security (whether or not this Security shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving
payment hereof, or on account hereof, and for all other purposes and neither the Company nor the Trustee nor any agent of the Company or of the Trustee shall be affected by any notice to the contrary. All such payments made to or upon the order of
such registered holder shall, to the extent of the sum or sums paid, effectually satisfy and discharge liability for moneys payable on this Security. 
 No recourse for the payment of the principal of, premium, if any, or interest on this Security, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto or in any Security, or because of the creation of any indebtedness represented 

  

 2 

 
thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 
 As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the Corporate Trust Office or agency in a Place of Payment for
this Security, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and
thereupon one or more new Securities of this series or of like tenor and of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 
 The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a cash-settled
financial contract, rather than as a debt instrument. 
 THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. 
 Definitions 
 Set forth below are definitions of the terms used in this Security. 
 “Business Day”,
notwithstanding any provision in the Indenture, shall mean any day that is not a Saturday or Sunday and that is not a day on which banking institutions in the City of New York are authorized or obligated by law to close. 
 “Calculation Agency Agreement” shall mean the Calculation Agency Agreement, dated as of December 21, 2006 between the Company and
the Calculation Agent, as amended from time to time, or any successor calculation agency agreement. 
 “Calculation Agent”
shall mean the person that has entered into an agreement with the Company providing for, among other things, the determination of the Payment at Maturity, which term shall, unless the context otherwise requires, include its successors and assigns.
The initial Calculation Agent shall be Lehman Brothers Inc. 
 “Closing Price” of one share of the Reference Stock (or one
unit of any other security for which a Closing Price must be determined) on any Trading Day means: 
  

	 	•	 	 if the Reference Stock (or any such other security) is listed or admitted to trading on a national securities exchange, the last reported sale price, regular way,
of the principal trading session on such day on the principal United States 

  

 3 

	 	 
securities exchange registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on which the Reference Stock (or any
such other security) is listed or admitted to trading, 

  

	 	•	 	 if the Reference Stock (or any such other security) is listed or admitted to trading on any national securities exchange but the last reported sale price is not
available pursuant to the preceding bullet point, the last reported sale price of the principal trading session on the over-the-counter market as reported on the OTC Bulletin Board Service (the “OTC Bulletin Board”) operated by the
Financial Industry Regulatory Authority, Inc. (“FINRA”) on such day; 

  

	 	•	 	 if the Reference Stock (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin
Board, the last reported sale price of the principal trading session on the OTC Bulletin Board on such day; or 

  

	 	•	 	 if, because of a market disruption event (as defined under “—Market Disruption Event”) or otherwise, the last reported sale price for the Reference
Stock (or any such other security) is not available for such Trading Day pursuant to the preceding bullet points, then (i) if such market disruption event has occurred on a day other than the originally scheduled Valuation Date or any day
thereafter, the Calculation Agent’s good faith estimate of the price of the Reference Stock (or such other security) as of the close of trading on such Trading Day, in its sole discretion, and (ii) if such market disruption event has
occurred with respect to the Reference Stock on the originally scheduled Valuation Date, the price determined pursuant to the final sentence of the definition of “Valuation Date.” 

 The term OTC Bulletin Board will include any successor service thereto. 
 “Company” shall have the meaning set forth on the face of this Security. 
 “Final
Share Price” shall equal the Closing Price of the Reference Stock on the Valuation Date. 
 “Holder” shall have
the meaning set forth on the reverse of this Security. 
 “Indenture” shall have the meaning set forth on the reverse of
this Security. 
 “Initial Share Price” shall equal the Closing Price of the Reference Stock on the Pricing Date, divided
by the Stock Adjustment Factor. The Initial Share Price of the Reference Stock shall initially be $65.02. 
 “Leverage
Factor” shall equal 2. 
  

 4 

 “Market Disruption Event” means, with respect to the Reference Stock (or any other
security for which a Closing Price must be determined): 
 (1)    the occurrence or existence of a suspension, absence
or material limitation of trading of the Reference Stock (or such security) on the primary market for the Reference Stock (or such security) at any time during the one hour period preceding the close of the principal trading session in such market;

 (2)    a breakdown or failure in the price and trade reporting systems of the primary market for the Reference Stock
(or such security) as a result of which the reported trading prices for the Reference Stock (or such security) during the last one hour period preceding the close of the principal trading session in such market are materially inaccurate; 

(3)    the occurrence or existence of a suspension, absence or material limitation of trading on the primary market for trading
in futures or options contracts related to the Reference Stock (or such security), if available, at any time during the last one hour period preceding the close of the principal trading session in the applicable market; or 
 (4)    a decision to permanently discontinue trading in the relevant futures or options contracts, in each case as determined by the
Calculation Agent in its sole discretion. 
 For the purpose 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 or market for the Reference Stock, 
 (2)    limitations pursuant to the rules of any Relevant Exchange similar to NYSE Rule 80B (or any applicable rule or regulation enacted or promulgated by the NYSE, any other U.S. self-regulatory organization, the
Securities Exchange Commission or any other relevant authority of scope similar to NYSE Rule 80B as determined by the Calculation Agent in its sole discretion) on trading during significant market fluctuations will constitute a suspension, absence
or material limitation of trading, 
 (3)    a suspension of trading in futures or options contracts on the Reference
Stock (or such security) by the primary securities market trading in such contracts, if available, by reason of: 
  

	 	•	 	 a price change exceeding limits set by such securities exchange or market, 

  

	 	•	 	 an imbalance of orders relating to such contracts, or 

  

	 	•	 	 a disparity in bid and ask quotes relating to such contracts 

 will, in each such case, constitute a suspension, absence or material limitation of trading in futures or options contracts related to the Reference Stock (or such security); and 
  

 5 

 (4)    a “suspension, absence or material limitation of trading” on the
primary securities market on which futures or options contracts related to the Reference Stock (or such other security) are traded will not include any time when such securities market is itself closed for trading under ordinary circumstances.

 “Maturity Date” shall mean August 13, 2009, unless that day is not a Business Day, in which case the amount equal
to the Payment at Maturity that would otherwise be due on the scheduled Maturity Date will instead be due on the next succeeding Business Day following such scheduled Maturity Date, with the same effect as if paid on the scheduled Maturity Date;
provided that if due to a non-Trading Day or a Market Disruption Event, the Valuation Date is postponed so that it falls less than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following
the Valuation Date, as postponed. 
 “NYSE” shall mean the New York Stock Exchange, Inc. 
 “Payment at Maturity”, as calculated by the Calculation Agent for each $10 principal amount Security, shall equal: 
  

	 	•	 	 If the Share Return is positive, the lesser of: 

 (1)    $10 + ($10 × Share Return × Leverage Factor); and 
 (2)    $11.98 
  

	 	•	 	 If the Share Return is equal to or less than 0% and equal to or greater than -10%: $10 

  

	 	•	 	 If the Share Return is less than -10%: $10 + [$10 × (Share Return + 10%)]. 

 “Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable. 
 “Price” of one share of the Reference Stock (or one unit of any other security for which a Price must be determined) on any Trading Day
means: 
  

	 	•	 	 if the Reference Stock (or any such other security) is listed or admitted to trading on a national securities exchange, the highest intraday bid price on such day
on the principal United States securities exchange registered under the Exchange Act, on which the Reference Stock (or any such other security) is listed or admitted to trading; 

  

	 	•	 	 if the Reference Stock (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin
Board, the highest reported bid price reported on the OTC Bulletin Board on such day; or 

  

	 	•	 	 if a bid price is not available pursuant to the preceding bullet points, the Calculation Agent’s good faith estimate of such bid price, in its sole discretion.

  

 6 

 The term OTC Bulletin Board will include any successor service thereto. 
 “Pricing Date” shall mean February 8, 2008. 
 “Reference Stock” shall be the common stock of The Proctor & Gamble Company (NYSE: PG). 
 “Relevant Exchange” for the Reference Stock shall mean the primary U.S. exchange or market for trading for the Reference Stock. 
 “Securities” shall have the meaning set forth on the reverse of this Security. 
 “Security” shall have the meaning set forth on the face of this Security. 
 “Share Price” shall
mean the Closing Price of one share of the Reference Stock on each Trading Day. 
 “Share Return”, as calculated by the
Calculation Agent, is calculated as follows: 
 Final Share Price – Initial Share Price 
 Initial Share Price 
 “Stock
Adjustment Factor” for the Reference Stock shall initially equal 1.0, subject to adjustment under certain circumstances as described under “Anti-dilution Adjustments” below. 
 “Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted on the NYSE, the American
Stock Exchange (the “AMEX”), the Nasdaq Global Select Market, the Nasdaq Global Market, the Chicago Mercantile Inc., the Chicago Board Options Exchange, Incorporated and in the over-the-counter market for equity securities in the United
States. 
 “Trustee” shall have the meaning set forth on the reverse of this Security. 
 “Valuation Date” shall mean August 10, 2009; provided, however, that if the scheduled Valuation Date is not a
Trading Day or if there is a Market Disruption Event on such day, the Valuation Date shall be postponed to the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred or shall be continuing; provided,
however, if a market disruption event with respect to the Reference Stock occurs on each of the eight Trading Days following the originally scheduled Valuation Date, the Calculation Agent shall determine the Final Share Price based upon its
good faith estimate of the price of the Reference Stock as of the close of trading on that eighth scheduled Trading Day, in its sole discretion. 
 All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture. 
  

 7 

 Calculation Agent 
 Lehman Brothers Inc., one of our affiliates, will act as the Calculation Agent. The Calculation Agent will determine, among other things, the Final Share Price, the Share Return, the Stock Adjustment Factor,
anti-dilution adjustments and reorganization events, the selection of any Successor Reference Stock and the Payment at Maturity, as specified in the applicable terms supplement. The Calculation Agent will also be responsible for determining whether
a Market Disruption Event has occurred. All calculations, determinations and adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes
and binding on Holders and on the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders 
 Anti-dilution Adjustments 
 The Stock Adjustment
Factor is subject to adjustment by the Calculation Agent as a result of the anti-dilution and reorganization adjustments described in this section. 
 No adjustments to the Stock Adjustment Factor will be required unless the Stock Adjustment Factor adjustment would require a change of at least 0.1% in the Stock Adjustment Factor then in effect. A Stock Adjustment
Factor resulting from any of the adjustments specified in this section will be rounded to the nearest one ten-thousandth with five one hundred-thousandths being rounded upward. The Calculation Agent will not be required to make any adjustments to
the Stock Adjustment Factor after the close of business on the Business Day immediately preceding the Maturity Date. 
 No adjustments to
the Stock Adjustment Factor will be required other than those specified below. 
 The Calculation Agent shall be solely responsible for
(1) the determination and calculation of any adjustments to the Stock Adjustment Factor 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 this section, and (2) the determination of the Successor Reference Stock, and its determinations and calculations shall be conclusive absent manifest error. 
 The Company will, within ten Business Days following the occurrence of an event that requires an adjustment to the Stock Adjustment Factor (other than
as a result of a Reorganization Event as described below), or if the Company is not aware of this occurrence, as soon as practicable after becoming so aware, provide notice to the Calculation Agent, which shall provide written notice to the trustee,
which shall provide notice to Holders of the occurrence of this event and, if applicable, a statement in reasonable detail setting forth such adjusted Stock Adjustment Factor. 
  

 8 

 Stock Splits and Reverse Stock Splits 
 If the Reference Stock is subject to a stock split or reverse stock split, then once any split has become effective, the Stock Adjustment Factor relating
to the Reference Stock will be adjusted so that the new Stock Adjustment Factor shall equal the product of: 
  

	 	•	 	 the prior Stock Adjustment Factor for the Reference Stock, and 

  

	 	•	 	 the number of shares which a holder of one share of the Reference Stock before the effective date of that stock split or reverse stock split would have owned or
been entitled to receive immediately following the applicable effective date. 

 Stock Dividends or Distributions

 If the Reference Stock is subject to a (i) stock dividend, i.e., issuance of additional shares of the Reference Stock, that is given
ratably to all holders of shares of the Reference Stock, or (ii) distribution of shares of the Reference Stock as a result of the triggering of any provision of the corporate charter of the issuer of the Reference Stock, then, once the dividend
has become effective and the shares are trading ex-dividend, the Stock Adjustment Factor for the Reference Stock will be adjusted so that the new Stock Adjustment Factor for the Reference Stock shall equal the prior Stock Adjustment Factor for the
Reference Stock plus the product of: 
  

	 	•	 	 the prior Stock Adjustment Factor for the Reference Stock, and 

  

	 	•	 	 the number of additional shares issued in the stock dividend with respect to one share of the Reference Stock. 

 Non-cash Distributions 
 If the
issuer of the Reference Stock distributes shares of capital stock, evidences of indebtedness or other assets or property of the issuer of the Reference Stock to holders of the Reference Stock (other than (i) dividends, distributions and rights
or warrants referred to under “—Stock Splits and Reverse Stock Splits” and “—Stock Dividends or Distributions” above and (ii) cash distributions or dividends referred under “—Cash Dividends or
Distributions” below), then, once the distribution has become effective and the shares are trading ex-dividend, the Stock Adjustment Factor for the Reference Stock will be adjusted so that the new Stock Adjustment Factor for the Reference Stock
shall equal the product of: 
  

	 	•	 	 the prior Stock Adjustment Factor for the Reference Stock, and 

  

	 	•	 	 a fraction, the numerator of which is the Current Market Price of the Reference Stock and the denominator of which is the amount by which such Current Market Price
exceeds the Fair Market Value of such distribution; provided that if the Fair Market Value of such distribution equals or exceeds the Current Market Price of such Reference Stock, the Calculation Agent shall determine in its sole discretion the
appropriate adjustment to the Stock Adjustment Factor for such Reference Stock. 

  

 9 

 The “Current Market Price” of the Reference Stock means the arithmetic average of the Closing
Price of the Reference Stock for the ten Trading Days prior to the Trading Day immediately preceding the ex-dividend date of the distribution requiring an adjustment to the Stock Adjustment Factor for the Reference Stock. 
 The “ex-dividend date” shall mean the first Trading Day on which transactions in the Reference Stock trade on the Relevant Exchange without
the right to receive that distribution. 
 The “Fair Market Value” of any such distribution means the value of such distribution
on the ex-dividend date for such distribution, as determined by the Calculation Agent. If such distribution consists of property traded on the ex-dividend date on a U.S. national securities exchange, the Fair Market Value will equal the Closing
Price of such distributed property on such ex-dividend date. 
 Notwithstanding the foregoing, a distribution on the Reference Stock
described in clause (a), (d) or (e) of the section entitled “—Reorganization Events” below that also would require an adjustment under this section shall not cause an adjustment to the Stock Adjustment Factor of the
Reference Stock and shall only be treated as a Reorganization Event (as defined below) pursuant to clause (a), (d) or (e) under the section entitled “—Reorganization Events.” A distribution on the Reference Stock described
in the section entitled “—Issuance of Transferable Rights or Warrants” that also would require an adjustment under this section shall only cause an adjustment pursuant to the section entitled “—Issuance of Transferable
Rights or Warrants.” 
 Cash Dividends or Distributions 
 If the issuer of the Reference Stock pays dividends or makes other distributions consisting exclusively of cash to all holders of the Reference Stock
during any fiscal quarter during the term of the notes, in an aggregate amount that, together with other such dividends or distributions made during such quarterly fiscal period, exceeds the Dividend Threshold, then, once the dividend or
distribution has become effective and the shares are trading ex-dividend, the Stock Adjustment Factor for the Reference Stock will be adjusted so that the new Stock Adjustment Factor for the Reference Stock shall equal the product of: 
  

	 	•	 	 the prior Stock Adjustment Factor for the Reference Stock, and 

  

	 	•	 	 a fraction, the numerator of which is the Current Market Price of the Reference Stock and the denominator of which is the amount by which such Current Market Price
exceeds the amount in cash per share the issuer of the Reference Stock distributes to holders of Reference Stock in excess of the Dividend Threshold; provided that if the amount in cash per share of such dividend or distribution equals or exceeds
the Current Market Price of the Reference Stock, the Calculation Agent shall determine in its sole discretion the appropriate adjustment to the Stock Adjustment Factor for the Reference Stock. 

 “Dividend Threshold” shall mean the amount of any cash dividend or cash distribution distributed per share of the Reference Stock that exceeds
the immediately preceding 

  

 10 

 
cash dividend or other cash distribution, if any, per share of the Reference Stock by more than 10% of the Closing Price of the Reference Stock on the
Trading Day immediately preceding the ex-dividend date. 
 Issuance of Transferable Rights or Warrants 
 If the issuer of the Reference Stock issues transferable rights or warrants to all holders of the Reference Stock to subscribe for or purchase the
Reference Stock, including new or existing rights to purchase the Reference Stock at an exercise price per share less than the closing price of the Reference Stock on both (i) the date the exercise price of such rights or warrants is determined
and (ii) the expiration date of such rights and warrants pursuant to a shareholder’s rights plan or arrangement, and if the expiration date of such rights or warrants precedes the Maturity Date, then the Stock Adjustment Factor for the
Reference Stock will be adjusted on the business day immediately following the issuance of such transferable rights or warrants so that the new Stock Adjustment Factor for the Reference Stock shall equal the prior Stock Adjustment Factor for the
Reference Stock plus the product of: 
  

	 	•	 	 the prior Stock Adjustment Factor for the Reference Stock, and 

  

	 	•	 	 the number of shares of the Reference Stock that can be purchased with the cash value of such warrants or rights distributed on one share of the Reference Stock.

 The number of shares that can be purchased will be based on the Closing Price of the Reference Stock on the date the
new Stock Adjustment Factor for the Reference Stock is determined. The cash value of such warrants or rights, if the warrants or rights are traded on a U.S. national securities exchange, will equal the Closing Price of such warrant or right, or, if
the warrants or rights are not traded on a U.S. national securities exchange, the Calculation Agent will determine, in its good faith estimate, the price of such warrant or right on the date on which the new Stock Adjustment Factor is determined, in
its sole discretion. 
 Reorganization Events 
 If prior to the maturity date, 
  

	 	(a)	there occurs any reclassification or change of the Reference Stock, including, without limitation, as a result of the issuance of tracking stock by the issuer of the Reference
Stock, 

  

	 	(b)	the issuer of the Reference Stock, or any surviving entity or subsequent surviving entity of the issuer of the Reference Stock (a “Successor Entity”), has been subject to
a merger, combination or consolidation and is not the surviving entity, 

  

	 	(c)	any statutory exchange of securities of the issuer of the Reference Stock or any Successor Entity with another corporation occurs, other than pursuant to clause (b) above,

  

 11 

	 	(d)	the issuer of the Reference Stock is liquidated or is subject to a proceeding under any applicable bankruptcy, insolvency or other similar law, 

  

	 	(e)	the issuer of the Reference Stock issues to all of its shareholders equity securities of an issuer other than the issuer of the Reference Stock, other than in a transaction
described in clauses (b), (c) or (d) above (a “Spin-off Event”), or 

  

	 	(f)	a tender or exchange offer or going-private transaction is commenced for all the outstanding shares of the issuer of the Reference Stock and is consummated for all or substantially
all of such shares, as determined by the Calculation Agent in its sole discretion (an event in clauses (a) through (f), a “Reorganization Event”), 

 then, instead of adjusting the Stock Adjustment Factor for the Reference Stock, the Calculation Agent, in its sole discretion without consideration for the interests of investors, shall either: 
  

	 	(A)	determine a Successor Reference Stock (as defined below) to the Reference Stock that experiences any such Reorganization Event (the “Original Reference Stock”) after the
close of the principal trading session on the Trading Day immediately prior to the effective date of such Reorganization Event in accordance with the following paragraph (each successor reference stock as so determined, a “Successor Reference
Stock” and such successor reference stock issuer, a “Successor Reference Stock Issuer”); or 

  

	 	(B)	deem the Closing Price and the Stock Adjustment Factor of the Original Reference Stock on the Trading Day immediately prior to the effective date of such Reorganization Event to be
the Closing Price (in the case of daily monitoring) or Price (in the case of continuous monitoring) and Stock Adjustment Factor of the Original Reference Stock on every remaining Trading Day to, and including, the last Trading Day in the Monitoring
Period. 

 Upon the determination by the Calculation Agent of the Successor Reference Stock pursuant to clause (A) of the
preceding sentence, references in this Security to such “Reference Stock” shall no longer be deemed to refer to the Original Reference Stock and shall be deemed instead to refer to any such Successor Reference Stock for all purposes, and
references in Security to “issuer” of the Original Reference Stock shall be deemed to be to the Successor Reference Stock Issuer. 
 Upon the selection of the Successor Reference Stock by the Calculation Agent pursuant to clause (A) of the preceding sentence: 
  

	 	(i)	the Initial Share Price for the Successor Reference Stock will be the Closing Price of the Successor Reference Stock on the Trading Day immediately following the effective date of
the Reorganization Event multiplied by the Initial Share Price of the Original Reference Stock and divided by the Closing Price of the Original Reference Stock on the Trading Day immediately prior to the effective date of such Reorganization Event;

  

 12 

	 	(ii)	the Stock Adjustment Factor for the Successor Reference Stock shall be 1.0, subject to adjustment for certain corporate events related to the Successor Reference Stock in accordance
with “— Anti-dilution Adjustments.” 

 For the avoidance of doubt, in the case of an issuance by the issuer of
the Reference Stock to all of its shareholders of equity securities of an issuer other than the issuer of the Reference Stock as described in clause (e) above, if the Closing Price of the Reference Stock as of the effective date of such
issuance does not increase or decline by at least 50% from the Initial Share Price of the Reference Stock, such issuance shall not constitute a Reorganization Event and no adjustments shall be made under this “— Reorganization Events”
section. Instead, the Reference Stock will be subject to adjustments as described under “— Non-cash Distributions” above. 
 The “Successor Reference Stock” will be the common stock of a U.S. company selected by the Calculation Agent from among the common stocks of U.S. companies then registered to trade on the NYSE, Nasdaq Global Select Market or
Nasdaq Global Market that is not already the Reference Stock, with the same primary Standard Industrial Classification Code (“SIC Code”) as the Original Reference Stock that, in the sole discretion of the Calculation Agent, is the most
comparable to the Original Reference Stock, taking into account such factors as the Calculation Agent deems relevant, including, without limitation, market capitalization, dividend history and stock price volatility; provided, however,
that a Successor Reference Stock will not be any stock that is subject to a trading restriction under the trading restriction policies of the Company or any of its affiliates that would materially limit the ability of the Company or any of its
affiliates to hedge the notes with respect to such stock (a “Hedging Restriction”); provided further that if the Successor Reference Stock cannot be identified as set forth above for which a Hedging Restriction does not
exist, the Successor Reference Stock will be selected by the Calculation Agent from the largest market capitalization stock of a U.S. company within the same Division and Major Group classification (as defined by the Office of Management and Budget)
as the primary SIC Code for the Original Reference Stock. 
 Following a Reorganization Event in which a Successor Reference Stock is
selected, the Stock Adjustment Factor of the Successor Reference Stock will be subject to adjustment as described above under this “Anti-dilution Adjustments” section, and, if no Successor Reference Stock is selected, the Original
Reference Stock Issuer will, upon a subsequent Reorganization Event, be subject to the election by the Calculation Agent described in clause (A) and (B) of the first paragraph under “— Anti-dilution Adjustments —
Reorganization Events.” 
 The Company will, or will cause the Calculation Agent to, provide written notice to the Trustee, to the
Company and to The Depository Trust Company (“DTC”) within thirty business days immediately following the effective date of any Reorganization Event, of the Successor Reference Stock Issuer, the Successor Reference Stock, the Trigger Price
and the Initial Share Price for such Successor Reference Stock, as well as the Original Reference Stock so replaced. The Company expects that such notice will be passed on to Holders in accordance with the standard rules and procedures of DTC and
its direct and indirect participants. 
  

 13 

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

							
	TEN COM -	    	as tenants in common	    	UNIF GIFT MIN ACT - _________ Custodian  _________
		    		    	                          (Cust)             
     (Minor)

	TEN ENT -	    	as tenants by the entireties	    	under Uniform Gifts to Minors
	JT TEN -	    	as joint tenants with right of	    	Act	  	  

		    	Survivorship and not as tenants in common	    		  	(State)

 Additional abbreviations may also be used though not in the above list. 
                                       
                   
 FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto 
 PLEASE INSERT SOCIAL SECURITY OR OTHER 
 IDENTIFYING NUMBER OF ASSIGNEE 
  

			
	 	 	
	 	
	 	 	

  
  
  

	
	 

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

	
	 

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

	
	 

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

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

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

 14

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