Document:

Form of senior debt security -- medium -term note (REN Linked to S&P 500 Index)

 Exhibit 4.01 
 LEHMAN BROTHERS HOLDINGS INC. 
 Principal at Risk Buffered Return Enhanced Notes Linked to the S&P 500® Index Due December 29, 2008 
  

			
	 Number R-1
	  	$501,000
	 ISIN US52517P5V98
	  	CUSIP 52517P5V9

 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 $1,000 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. 

 “Standard & Poor’s” “S&P” “S&P 500”
“Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Lehman Brothers Inc. and sub-licensed for use by the Company. The Securities, linked to the
performance of the S&P 500® Index, are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding
the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the
reverse hereof. 
  

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 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: September 27, 2007
  
 [SEAL]
	 	LEHMAN BROTHERS HOLDINGS INC.	 	
				
		 	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

  

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 Reverse of Security 
 This Security is one of a duly authorized series of Securities of the Company designated as Principal at Risk Buffered Return Enhanced Notes Linked to the S&P 500® Index Due December 29, 2008 (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 Index Starting Level, the Index Ending Level, the Index Return or any Index Closing Level 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 $1,000 principal amount Security on the Maturity Date, if any, 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 $1,000 and any whole multiples of $1,000. 
 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 

  

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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. 
 “Buffer Amount”
shall equal 10%. 
 “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 a security, on any particular day, means the last reported sales price for that security on the Relevant Exchange at
the scheduled weekday closing time of the regular trading session of the Relevant Exchange. If, however, the security is not listed or traded on a bulletin board, then the Closing Price of the security will be determined using the average 

  

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execution price per share that an affiliate of the Company pays or receives upon the purchase or sale of the security used to hedge the Company’s
obligations under the Securities. 
 “Company” shall have the meaning set forth on the face of this Security. 

“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. 
 “Index” shall mean the S&P 500® Index, as calculated, published and
disseminated by S&P. 
 “Index Closing Level”, as determined by the Calculation Agent, shall mean, with respect to any
Trading Day, the closing level of the Index or the Successor Index, as the case may be, at the regular official weekday close of the principal trading session of the Relevant Exchange or market for the Index or the Successor Index, as the case may
be, on such day, or as determined by the Calculation Agent pursuant to the Calculation Agency Agreement as described below under “Discontinuation of the Index; Alteration of Method of Calculation.” 
 “Index Ending Level” shall equal the Index Closing Level on the Valuation Date. 
 “Index Return”, as calculated by the Calculation Agent, is calculated as follows: 
 Index Ending Level – Index Starting Level 
 Index Starting Level 
 “Index Starting Level” shall equal 1,517.73, the Index Closing Level on September 24,
2007. 
 “Market Disruption Event”, with respect to the Index or any Successor Index shall mean any of the following events
has occurred on any day as determined by the Calculation Agent: 
 (1)    a suspension, absence or material limitation
of trading of stocks then constituting 20% or more of the level of the Index (or the relevant Successor Index) on the Relevant Exchanges for such securities at any time during the one hour period preceding the close of the principal trading session
on such Relevant Exchange; 
 (2)    a breakdown or failure in the price and trade reporting systems of any Relevant
Exchange as a result of which the reported trading prices for stocks then constituting 20% or more of the level of the Index (or the relevant Successor Index) at any time during the one hour period preceding the close of the principal trading
session on such Relevant Exchange are materially inaccurate; 
 (3)    a suspension, absence or material limitation of
trading on any major securities exchange for trading in futures or options contracts or exchange traded funds related to 

  

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the Index (or the relevant Successor Index) at any time during the one hour period preceding the close of the principal trading session on such exchange; or

 (4)    a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded
funds. 
 For the purpose of determining whether a Market Disruption Event exists at any time, if trading in a security included in the
Index is materially suspended or materially limited at that time, then the relevant percentage contribution of that security to the level of the Index shall be based on a comparison of: 
 (1)    the portion of the level of the Index attributable to that security relative to 
 (2)    the overall level of the Index, 
 in each case immediately before that suspension or limitation. 
 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 or market; 
 (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 any other self-regulatory organization or any government agency
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 Index by the primary securities market trading in such
contracts by reason of (i) a price change exceeding limits set by such exchange or market, (ii) an imbalance of orders relating to such contracts, or (iii) 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 Index; and 
 (4)    a suspension, absence or material limitation of trading on any Relevant Exchange or on the primary market on which futures or options contracts related to the Index are traded will not include any time when such
market is itself closed for trading under ordinary circumstances. 
 “Maturity Date” shall mean December 29, 2008,
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. 
 “Maximum Total
Return” shall equal 20%. 
  

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 “Participation Rate” shall equal 170.00%. 
 “Payment at Maturity”, as calculated by the Calculation Agent for each $1,000 principal amount Security, shall equal: 
  

	 	•	 	 If the Index Ending Level is equal to or above the Index Starting Level, the lesser of: 

 (1)    $1,000 + [$1,000 × Index Return × Participation Rate] 
 (2)    $1,200 
  

	 	•	 	 If the Index Ending Level is below the Index Starting Level by an amount equal to or less than the Buffer Amount, $1,000. 

  

	 	•	 	 If the Index Ending Level is below the Index Starting Level by more than the Buffer Amount, $1,000 + [$1,000 × (Index Return + Buffer Amount)].

 “Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is
payable. 
 “Pricing Date” shall mean September 24, 2007. 
 “Relevant Exchange” for any security (or any combination thereof) then included in the Index or any Successor Index, shall mean, the
primary exchange, quotation system (which includes bulletin board services) or other market of trading for such security. 
 “S&P” shall mean Standard & Poor’s a division of The McGraw-Hill Companies, Inc. 
 “Securities” shall have the meaning set forth on the reverse of this Security. 
 “Successor
Index” shall have the meaning specified under “Discontinuation of the Index; Alteration of Method of Calculation”. 
 “Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted (i) on the Relevant Exchanges for securities included in the Index (or the relevant Successor Index) and
(ii) the exchanges on which futures or options contracts related to the Index (or the relevant Successor Index) are traded, other than a day on which trading on such Relevant Exchange or exchange on which such securities, futures or options
contracts are traded is scheduled to close prior to its scheduled weekday closing time. 
 “Trustee” shall have the meaning
set forth on the reverse of this Security. 
 “Valuation Date” shall mean December 23, 2008, ; provided, 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, that the Index Ending Level for the Valuation Date shall not be determined on a date later than the eighth scheduled Trading Day after the originally scheduled Valuation Date, and if such day is
not a 

  

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Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent shall determine the Index Ending Level for the Valuation Date on
such date in accordance with the formula for and method of calculating the Index Ending Level last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the Closing Price (or, if trading in the
relevant securities has been materially suspended or materially limited, the Calculation Agent’s good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth
scheduled Trading Day of each security most recently constituting the Index. 
 All terms used but not defined in this Security are used
herein as defined in the Calculation Agency Agreement or the Indenture. 
 Calculation Agent 
 The Calculation Agent will determine, among other things, the Index Starting Level, the Index Closing Level on each Trading Day, the Index Ending Level,
the Index Return and the Payment at Maturity, if any. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event or a discontinuation of the Index, and whether there has been a material change in the method of
calculation of the Index. All calculations, determinations or 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. 
 Discontinuation of the Index; Alteration of Method of Calculation 
 If S&P discontinues publication of the Index and S&P or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, to be comparable to the
discontinued Index (a “S&P 500® Successor Index”), then any Index Closing Level will be determined by reference to the level of such S&P 500® Successor Index at the close of trading on the Relevant Exchange or market for the Successor Index on any Trading Day. Upon any selection by the Calculation Agent of a S&P 500® Successor Index, the Calculation Agent will cause written notice thereof to be promptly furnished to the Trustee, to the Company and to the Holders. 
 If S&P discontinues publication of the Index prior to, and such discontinuation is continuing on, any Trading Day, and the Calculation Agent
determines, in its sole discretion, that no S&P 500® Successor Index is available at such time, or the Calculation Agent has
previously selected a S&P 500® Successor Index and publication of such Successor Index is discontinued prior to, and such
discontinuation is continuing on, such Trading Day, or if S&P (or the publisher of any S&P 500® Successor Index) fails to
calculate and publish an Index Closing Level for the Index (or any S&P 500® Successor Index) on any date when it would
ordinarily do so in accordance with its customary practice, then the Calculation Agent will determine the Index Closing Level for such date. The Index Closing Level will be computed by the Calculation Agent 

  

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in accordance with the formula for and method of calculating the Index or S&P 500® Successor
Index, as applicable, last in effect prior to such discontinuation or failure to calculate or publish an Index Closing Level for the Index or S&P 500® Successor Index, as applicable,
using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation) at the close of the
principal trading session on such date of each security most recently composing the Index or S&P 500® Successor Index, as applicable. 
 If at any time the method of calculating the Index or a S&P 500® Successor Index, or the
level thereof, is changed in a material respect, or if the Index or an S&P 500® Successor Index is in any other way modified so that the Index or such S&P 500® Successor Index does not, in the opinion of the Calculation Agent, fairly represent the level of the Index or such S&P 500®
Successor Index had such changes or modifications not been made, then the Calculation Agent will, at the close of business in New York City on each date on which the Index Closing Level is to be determined, make such calculations and adjustments as,
in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a level of a stock index comparable to the Index or such S&P 500® Successor Index, as the
case may be, as if such changes or modifications had not been made, and the Calculation Agent will calculate the Index Closing Level with reference to the Index or such S&P 500®
Successor Index, as adjusted. Accordingly, if the method of calculating the Index or an S&P 500® Successor Index is modified so that the level of the Index or such S&P 500® Successor Index is a fraction of what it would have been if there had been no such modification (e.g., due to a split in the Index), then the Calculation Agent will adjust its calculation of
the Index or such S&P 500® Successor Index in order to arrive at a level of the Index or such S&P 500® Successor Index as
if there had been no such modification (e.g., as if such split had not occurred). 
  

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 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. 
  

 9Solo Cup Company Management Long Term Incentive Plan

 Exhibit 10.38 
 SOLO CUP COMPANY 
 MANAGEMENT LONG-TERM INCENTIVE PLAN 
 ARTICLE I 
 PURPOSE AND EFFECTIVE DATE

 1.1 Purpose of LTIP. Solo Cup Company, a Delaware corporation (the “Company”) hereby establishes the Solo Cup
Company Long-Term Incentive Compensation LTIP (the “LTIP”). The purpose of the LTIP is to provide long-term incentives to selected key management employees of the Company and its Affiliates. 
 1.2 Effective Date. The LTIP shall be effective as of October 1, 2007, the date on which it was adopted and approved by the Board of
Directors of the Company. 
 ARTICLE II 
 DEFINITIONS 
 2.1 Whenever used herein, the following terms shall have the respective meanings set forth below: 
 “Affiliate” means an entity that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under
common control with the Company, provided however, that this shall not include any Vestar Entities. 
 “Award” means an
award granted to a Participant hereunder. 
 “Board” means the Board of Directors of the Company. 
 “Cause” has the meaning assigned to such term in any employment, change in control or severance agreement between a Participant and the
Company or any of its Subsidiaries or Affiliates or, if there is no such agreement or if such term is not defined therein, “Cause” means (i) the Participant’s willful misconduct with regard to the Company or its Affiliates;
(ii) the Participant is indicted for, convicted of, or pleads nolo contendere to, a felony, a misdemeanor involving moral turpitude or an intentional crime involving material dishonesty other than, in any case, vicarious liability;
(iii) the Participant’s conduct involving the use of illegal drugs in the workplace; or (iv) the Participant’s failure to attempt in good faith to follow a lawful directive of his or her supervisor within 10 days after written
notice of such failure, which failure continues more than 10 days after written demand for substantial performance is delivered to the Participant by the Company (to the extent that, in the reasonable judgment of the Board, such breach can be cured
by the Participant). 
 “Change in Control” has the meaning set forth in Treasury Regulation Section 409A –
3(i)(5) and is intended to cover the circumstance in which the Vestar Entities no longer control the board or any sale, transfer, lease, assignment, conveyance, exchange, mortgage or other disposition of all or substantially all of the assets,
property or business of Solo Cup Investment Corporation and its Subsidiaries. 

 “Code” means the Internal Revenue Code of 1986, as amended. 
 “Committee” means the Compensation Committee of the Board. 
 “Company” has the meaning assigned to such term in Section 1.1. 
 “Disability” means a permanent and total disability within the meaning of Section 22(e)(3) of the Code. 
 “Effective Date” has the meaning assigned to such term in Section 1.2. 
 “Equity Value of Solo” means the Fair Market Value of Solo Cup Investment Corporation as defined in the Stockholders’ Agreement (as
determined by the Board). 
 “Grant Date” has the meaning assigned to such term in Section 5.1. 
 “Holdings LLC” means SCC Holding Company LLC and its successors. 
 “Illiquid Securities” has the meaning assigned to such term in Section 5.3(d). 
 “Liquidity Event” means any sale, redemption, transfer or other disposition by Vestar for cash or Marketable Securities, of all or a
portion of its equity interest in Solo Cup Investment Corporation. 
 “LTIP” has the meaning assigned to such term in
Section 1.1. 
 “LTIP Award Pool” means the amount available for payment of Awards, as determined by the Board in
accordance with the LTIP. 
 “LTIP Termination Date” means the seventh anniversary of the Effective Date. 
 A “Marketable Security” means a security that regularly trades in, on or through the facilities of securities exchanges and/or
inter-dealer quotation systems in the United States (within the meaning of Section 902(n) of the Securities Act) or any designated offshore securities market (within the meaning of Rule 902(a) of the Securities Act). 
 “Partial Liquidity Event” has the meaning assigned to such term in Section 5.3(b). 
 “Participant” has the meaning assigned to such term in Section 4.2, provided that such term shall also include any Terminated
Participant. 
 “Securities Act” means the Securities Act of 1933, as amended. 
 “Stockholders’ Agreement” means the Stockholders’ Agreement dated as of February 27, 2004, among Vestar Capital Partners
IV, L.P., Vestar Cup Investment, LLC, 

  

 2 

 
Vestar Cup Investment II, LLC, SCC Holding Company LLC, Solo Cup Company, Solo Cup Investment Corporation and the Management Investors who are party thereto,
as such agreement is amended from time to time. 
 “Subsidiary” means any corporation, partnership, association or other
business entity of which 50% or more of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof, or 50% or more of the equity
interest therein, is at the time owned or controlled, directly or indirectly, by Solo Cup Investment Corporation or the Company. 
 “Terminated Participant” has the meaning assigned to such term in Section 5.2(c). 
 “Vestar
Entities” means, collectively, Vestar Capital Partners IV, L.P., Vestar Cup Investment, LLC and Vestar Cup Investment II, LLC. 
 ARTICLE III 
 ADMINISTRATION 
 3.1 General. The LTIP shall be administered by the Committee. The Committee shall have full responsibility and authority to administer and interpret the LTIP and to determine, following consultation with the Company’s Chief
Executive Officer, which employees of the Company shall be designated as Participants. Any decision made or action taken by the Committee arising out of or in connection with the LTIP shall be within its absolute discretion and shall be conclusive
and binding upon all parties, including the Company, Participants and their respective successors and assigns. The Committee may enact such rules and regulations for the administration of the LTIP as are necessary or appropriate under the
circumstances. The Committee shall act in accordance with the procedures set forth in the Compensation Committee Charter, as in effect from time to time. 
 ARTICLE IV 
 PARTICIPATION AND ELIGIBILITY 
 4.1 Eligibility. Individuals who are employees of the Company or its Affiliates, are designated as key employees by the Company’s Chief
Executive Officer and who are recommended to the Committee by the Company’s Chief Executive Officer to be Participants shall be eligible to be designated a Participant by the Committee. 
 4.2 Participants. Each eligible employee who has received written notification from the Committee of his or her participation in the LTIP shall be
deemed a “Participant” hereunder. 
  

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 ARTICLE V 
 AWARDS OF INCENTIVE COMPENSATION 
 5.1 Grant of Awards. The Committee shall determine the terms and
conditions of each Award granted hereunder, which terms and conditions shall not be inconsistent with the LTIP. The Committee, following consultation with the Company’s Chief Executive Officer, shall determine the percentage of the LTIP Award
Pool to be awarded to each Participant. Each Award shall be evidenced by a written notice and shall be deemed granted on the date on which the Committee resolves to grant such Award (the “Grant Date”). 
 5.2 Continued Employment. 
 (a)
General. Except as provided herein, a Participant must be employed by the Company and its Affiliates or Subsidiaries as of a Liquidity Event or the LTIP Termination Date, as applicable, in order to vest and receive payment of such
Participant’s Award. 
 (b) Termination For Cause or Voluntary Resignation. In the event that a Participant’s employment
with the Company or its Affiliates is terminated by the employer for Cause or the Participant voluntarily terminates employment prior to a Liquidity Event or, if no Liquidity Event occurs, prior to the LTIP Termination Date, such Participant’s
Award shall be immediately forfeited, the Participant shall have no further rights thereunder and such individual shall no longer be a Participant in the LTIP. 
 (c) Vesting Upon Certain Terminations of Employment. If during the term of the LTIP a Participant’s employment with the Company or its Affiliates is terminated (i) by the employer without Cause or
(ii) as a result of the Participant’s death or Disability, such Participant’s Award shall be vested as set forth below. Any portion of an award held by a Participant whose employment is terminated that does not become vested pursuant
to this Section 5.2(c) shall be immediately forfeited. A Participant whose Award becomes vested in full or in part upon termination of employment shall be referred to herein as a “Terminated Participant” and shall continue to be a
Participant in the LTIP as set forth herein. 
  

				
	 Termination prior to first anniversary of Grant Date
	  	0	%
	 Termination on or after first anniversary of Grant Date and prior to second anniversary of Grant Date
	  	20	%
	 Termination on or after second anniversary of Grant Date and prior to third anniversary of Grant Date
	  	40	%
	 Termination on or after third anniversary of Grant Date and prior to fourth anniversary of Grant Date
	  	60	%
	 Termination on or after fourth anniversary of Grant Date and prior to fifth anniversary of Grant Date
	  	80	%
	 Termination on or after fifth anniversary of Grant Date
	  	100	%

  

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 Unless otherwise determined by the Committee at the time of Grant, the above vesting schedule shall apply
equally to all Terminated Participants, including a Terminated Participant who first became a Participant in any year after the year in which the Effective Date occurred. 
 5.3 Determination of LTIP Award Pool. 
 (a) General. Subject to Section 5.3(b), the
LTIP Award Pool with respect to any Liquidity Event shall be calculated as of consummation of the transaction constituting such Liquidity Event as the sum of A, B and C, where: (i) A equals 2.5% of the first $240 million of Equity Value of
Solo; (ii) B equals 7.5% of the next $240 million of Equity Value of Solo; and (iii) C equals 15.0% of Equity Value of Solo in excess of $480 million.  
 For example: With respect to a Liquidity Event resulting in the calculation of an Equity Value of $750 million, the LTIP Award Pool would be equal to $64.5 million, calculated as (i) 2.5% of the first $240
million (or $6 million); plus (ii) 7.5% of the next $240 million (or $18 million); plus (iii) 15% of the Equity Value of Solo in excess of $480 million (or $40.5 million). 
 (b) Partial Liquidity Event. In the event that a Liquidity Event occurs which involves the sale or other disposition of less than 100% of the
Vestar Entities’ collective equity interest in the Company (a “Partial Liquidity Event”), the Board shall determine the Equity Value of Solo as of the consummation of the transaction constituting such Partial Liquidity Event,
taking into account such factors as the Board shall determine in good faith, and shall calculate the LTIP Award Pool with respect to such Equity Value of Solo in accordance with Section 5.3(a). The LTIP Award Pool determined in accordance with
this Section 5.3(b) shall be multiplied by a ratio corresponding to the percentage of aggregate equity interests held by the Vestar Entities which was disposed of in the transaction constituting such Partial Liquidity Event. Each Participant
and Terminated Participant’s Award percentage shall be applied to such adjusted LTIP Award Pool and such Awards shall be paid to Participants and Terminated Participants in accordance with Section 5.4. 
 In the event that there are a series of Partial Liquidity Events, the LTIP Award Pool in respect of each such event will be calculated as of consummation of the
transaction constituting such event as described above; provided, however, that each resulting LTIP Award Pool shall take into account the value of Solo Cup Investment Corporation as determined for each previous event, in order to
provide Participants with the benefit of the formula set forth in the first paragraph of this Section 5.3(b) and also in order to avoid the duplication of benefits. 
  

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 For example: Assume that a series of 25% Partial Liquidity Events occur and assume further that the Fair Market Value of
the Company at consummation of each event is a constant $1 billion. The Fair Market Value available for the LTIP Award Pool after each Partial Liquidity Event is equal to $250 million (25% times $1 billion), calculated by applying the ratio
described in the first paragraph of this Section 5.3(b). After the first Partial Liquidity Event, the LTIP Award Pool would be equal to $6.8 million (2.5% of the first $240 million (6.0 million) plus 7.5% of the remaining $10 million (.8
million) = $6.8 million). After the second Partial Liquidity Event, the LTIP Award Pool would be equal to $20.3 million (7.5% of $230 million (17.3 million) plus 15% of the remaining $20 million (3.0 million) = 20.3 million). After the third Partial
Liquidity Event, the LTIP Award Pool would be equal to $37.5 million (15% of $250 million = $37.5 million). After the fourth and final Partial Liquidity Event, the LTIP Award Pool would be equal to $37.5 million (15% of $250 million = $37.5
million). 
 (c) LTIP Termination Date. In the event that no Liquidity Event has occurred prior to the LTIP Termination Date,
(i) notwithstanding any other provisions of the LTIP or any Award Agreement to the contrary, any portion of any Award held by a Participant who continues to be employed by the Company and its Subsidiaries as of the LTIP Termination Date which
is not vested shall be fully vested, (ii) the Company shall determine the Equity Value of Solo as of the LTIP Termination Date; provided that, in such event, LTIP Award Pool shall be calculated as the sum of A, B and C, where: (i) A equals
1.25% of the first $240 million of Equity Value of Solo; (ii) B equals 3.75% of the next $240 million of Equity Value of Solo; and (iii) C equals 7.5% of Equity Value of Solo in excess of $480 million. Payment of Awards determined pursuant
to this Section 5.3(c) shall be made to Participants and Terminated Participants in accordance with Section 5.4. 
 (d) Receipt
of Illiquid Securities. In the event that during the term of the LTIP the Vestar Entities sell, redeem, transfer or otherwise dispose of equity interests in the Company or its Affiliates and receive property that does not constitute Marketable
Securities as consideration for any portion of such equity interests (such securities, “Illiquid Securities”), (i) the LTIP Award Pool shall be calculated in accordance with Section 5.3(a) or 5.3(b), as applicable,
(ii) that percentage of the LTIP Award Pool corresponding to the percentage of the consideration received by the Vestar Entities in such transaction which constitute Illiquid Securities shall be credited to Company bookkeeping accounts in the
name of each Participant and Terminated Participant and (iii) the remaining percentage of the LTIP Award Pool shall be paid to Participants and Terminated Participants in accordance with Section 5.4. Bookkeeping accounts established
pursuant to this Section 5.3(d) shall be credited with interest at a rate equal to that of the 10-year Treasury Note as in effect as of the last day of the previous calendar quarter plus 2 percentage points, compounded quarterly, until such
time as the Vestar Entities sell or otherwise dispose of such Illiquid Securities and receive cash or Marketable Securities in consideration of such sale or other disposition, at which time such amounts shall be paid to Participants and Terminated
Participants in accordance with Section 5.4. 
  

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 Notwithstanding anything to the contrary in the LTIP or otherwise, for purposes of determining the amount to be credited
to Company bookkeeping accounts under this Section 5.3(d), the Equity Value of Solo shall be determined by the Board in good faith and, in connection therewith, the final determination of such value shall be made by the independent directors.
Nothing contained herein shall bar the Company from engaging a nationally recognized investment bank experienced in the valuation of securities that is independent of the Company and its Affiliates (whose fees and expenses shall be paid by the
Company) to perform the valuation contemplated by this Section 5.3(d), and any determination by such investment bank shall be final, conclusive and binding. If required by any such investment bank, the Company shall execute a retainer and
engagement letter containing reasonable and customary terms and conditions. 
 (e) Reallocation of Forfeited Awards. Awards or any
portion thereof that are forfeited pursuant to the LTIP shall be eligible for reallocation among Participants (including Participants who are hired or promoted after the Effective Date) in the sole discretion of the Committee. Such forfeited Awards
shall be reallocated upon a Liquidity Event or Partial Liquidity Event among those Participants who are actively employed with the Company or its Affiliates as of such event on a pro rata basis or otherwise in the discretion of the Committee.

 5.4 Payment of Awards. 
 (a) General. All Awards shall be paid by the Company in the form of cash, or other property having a value equal to such cash payment, as determined by the Committee in its discretion; provided, however, that all Participants shall
with respect to each payment event shall receive the same form of payment (whether cash or other property). Subject to Sections 5.4(b) and (c), payment of Awards shall occur as soon as practicable after the occurrence of a Liquidity Event, Partial
Liquidity Event or the LTIP Termination Date, as applicable, each of which shall constitute the vesting date with respect to the Award as set forth in Section 5.2(a). 
 (b) Delayed Payment in Certain Circumstances. 
 (i) Subject to clause (ii) below, payment of Awards held by Terminated Participants shall only be paid on the earlier to occur of (x) a Liquidity Event that also constitutes a Change in Control or
(y) the LTIP Termination Date. 
 (ii) Payment of Awards held by Participants which become payable in connection with a
Partial Liquidity Event or Liquidity Event that does not constitute a Change in Control shall not become payable until the earlier to occur of (x) a Liquidity Event that also constitutes a Change in Control or (y) the LTIP Termination Date
(and shall be paid upon the earlier to occur of such events in accordance with Section 409A of the Code). Amounts deferred pursuant to this Section 5.4(b)(ii) shall be credited to a Company bookkeeping account which shall be credited with
interest at a rate equal to that of the 10-year Treasury Note as in effect as of the last day of the previous calendar quarter plus 2 percentage 

  

 7 

 
points, compounded quarterly. The portion of an Award credited to a bookkeeping account pursuant to this Section 5.4(b)(ii) shall be deemed satisfied as
of the date the initial bookkeeping entry is made, as though cash payment had been made to the Participant as of such date, and shall following such date no longer be considered outstanding Awards for purposes of the LTIP. 
 (c) Terminated Participants. 
 (i) Subject to clause (ii) below, payment of Awards held by Terminated Participants shall only be paid on the earlier to occur of (x) a Liquidity Event that also constitutes a Change in Control or (y) the LTIP Termination
Date. 
 (ii) Payment of Awards held by Terminated Participants which become payable in connection with a Partial Liquidity
Event or Liquidity Event that does not constitute a Change in Control shall not become payable until the earlier to occur of (x) a Liquidity Event that also constitutes a Change in Control or (y) the LTIP Termination Date (and shall be
paid upon the earlier to occur of such events in accordance with Section 409A of the Code). Amounts deferred pursuant to this Section 5.4(c)(ii) shall be credited to a Company bookkeeping account which shall be credited with interest at a
rate equal to that of the 10-year Treasury Note as in effect as of the last day of the previous calendar quarter plus 2 percentage points, compounded quarterly. The portion of an Award credited to a bookkeeping account pursuant to this
Section 5.4(c)(ii) shall be deemed satisfied as of the date the initial bookkeeping entry is made, as though cash payment had been made to the Terminated Participant as of such date, and shall following such date no longer be considered
outstanding Awards for purposes of the LTIP. 
 ARTICLE VI 
 OBLIGATIONS OF THE COMPANY 
 6.1 Contractual Obligation. The sole obligation of the Company to any
Participant in respect of any amounts which may become payable hereunder (including, without limitation, amounts credited to Participant Accounts) is a general, unsecured contractual obligation to make payments in accordance with the terms hereof.

 6.2 Source of Payments. All amounts payable under the LTIP shall be paid by the Company and the Company shall be under no
obligation to segregate any of its assets in respect of the benefits provided hereunder or to fund or otherwise secure its obligation to make such payments. 
 ARTICLE VII 
 PLAN TERM; PLAN AMENDMENT AND TERMINATION 
 7.1 Term of LTIP. Subject to Section 7.2, if a Liquidity Event has not earlier occurred, the LTIP shall automatically terminate upon the
seventh anniversary of the Effective Date. 
  

 8 

 7.2 Effect of Amendment or Termination. The LTIP may be amended, suspended, restated or
terminated, in whole or in part, as of any date specified in a resolution adopted by the Board; provided, however, that no such amendment, suspension, restatement or termination shall, without the consent of an affected Participant, adversely affect
the rights of such Participant with respect to any Award which had been granted prior to the date thereof. 
 ARTICLE VIII 
 MISCELLANEOUS 
 8.1 Nontransferability.
Awards granted under the LTIP may not be transferred, pledged or hypothecated in any manner other than by will or the laws of descent and distribution. 
 8.2 Withholding. The Company retains the right to make any provision it deems necessary or appropriate in its sole discretion for the reporting and withholding of any federal, state or local taxes or charges
that may be required to be withheld with respect to any payments under the LTIP and shall be entitled to pay such withheld amounts to the appropriate taxing or governmental authorities. 
 8.3 Section 409A. The LTIP and Awards granted hereunder are intended to be interpreted and construed, and Awards are intended to be paid to
Participants, in a manner that avoids Participants’ incurring additional tax and interest under Section 409A of the Code. Notwithstanding any provision of the LTIP to the contrary, to the extent required in order to avoid accelerated
taxation and/or tax penalties under Section 409A of the Code, (i) the payment of Awards pursuant to this LTIP shall be deferred to the earliest date on which payment may be made in compliance with Section 409A of the Code and
(ii) if at any time a Participant is a “specified employee”, within the meaning of Section 409A of the Code, the payment of Awards pursuant to this LTIP shall not be made on a date that is earlier that the first day of the
seventh month following the Participant’s separation from service. 
 8.4 No Right to Employment. Nothing herein shall be
construed as conferring upon any person any legal or contractual right to be employed by the Company or any Subsidiary or Affiliate thereof. 
 8.5 Governing Law. All questions pertaining to the construction, regulation, validity and effect of the provisions of the LTIP shall be determined in accordance with the laws of the State of Delaware, without giving effect to the
conflict of laws principles thereof. 
 8.6 Validity. In the event any provision of this LTIP is held invalid, void or unenforceable,
the same shall not affect, in any respect whatsoever, the validity of any other provision of this LTIP. 
  

 9

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