Document:

Form of senior debt security -- medium-term note

 Exhibit 4.01 
 LEHMAN BROTHERS HOLDINGS INC. 
 100% Principal Protection Absolute Return Barrier Notes Linked to the S&P 500® Index Due February 17, 2009 
  

			
	Number R-1	  	$774,000
	ISIN US5252M0DS31	  	CUSIP 5252M0DS3

 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” and
“Standard & Poor’s 500” are trademarks of The McGraw-Hill Companies, Inc. and are expected to be licensed for use by Lehman Brothers Inc. and sub-licensed for use by the Company. The Securities, which are 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: February 15, 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

  

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 Reverse of Security 
 This Security is one of a duly authorized series of Securities of the Company designated as 100% Principal Protection Absolute Return Barrier Notes Linked to the S&P 500® Index Due February 17, 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 Index Starting Level, the Index Ending Level, the Highest Intraday Index Level, the Lowest Intraday Index Level,
the Absolute 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 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, which will be calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Final 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 thereby, shall be had against any incorporator, stockholder, officer or director, as

  

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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
agrees, and by acceptance of a beneficial ownership interest in the Securities, each Holder will be deemed to have agreed, for United States federal income tax purposes, (i) to treat the Securities as indebtedness that is subject to Treas. Reg.
Sec. 1.1275-4 (the “Contingent Payment Regulations”) and (ii) to be bound by the Company’s determination of the “comparable yield” and “projected payment schedule,” within the meaning of the Contingent Payment
Regulations, with respect to the Securities. The Company has determined that the comparable yield is an annual rate of 3.09%, compounded semi-annually. Based on the comparable yield, the projected payment schedule per $1,000 principal amount
Security is $1,031.31 due at maturity. 
 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. 
 “Absolute Index Return” as calculated by
the Calculation Agent, is the absolute value, of the following: 
 Index Ending Level – Index Starting Level 
 Index Starting Level 
 “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. 
  

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 “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 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. 
 “Final Valuation Date” shall mean February 11, 2009. If the Final Valuation Date is not a Trading Day or if there is a Market
Disruption Event on such day, the Final Valuation Date will be the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred or is continuing; provided, however, that the Index Closing Level will not be
determined on a date later than the eighth scheduled Trading Day after the scheduled Final Valuation Date, and if such day is not a Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent will determine the Index
Closing Level on such date in accordance with the formula for and method of calculating the Index Closing 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, its 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. 
 “Highest Intraday Index Level”, as determined by the
Calculation Agent, shall mean, with respect to each Trading Day, the highest reported level of the Index or the Successor Index, as the case may be, during 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.”

 “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 each
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.” 
  

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 “Index Ending Level” shall equal the Index Closing Level on the Final Valuation Date.

 “Index Sponsor” with respect to the Index shall be Standard & Poor’s (“S&P”), a division of
The McGraw-Hill Companies, Inc. The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.” 
 “Index Starting Level” shall equal 1,348.86. 
 “Lower Index Barrier” shall equal 1,121.58. 
 “Lowest Intraday Index
Level”, as determined by the Calculation Agent, shall mean, with respect to each Trading Day, the lowest reported level of the Index or the Successor Index, as the case may be, during 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.” 
 “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 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. 
 in each case as determined by the calculation agent in its sole
discretion. 
 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 

  

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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 February 17, 2009,
unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity will be made on the next succeeding Business Day following February 17, 2009; provided, however, that if due to a non-Trading Day or a
Market Disruption Event, the Final Valuation Date is postponed so that it falls fewer than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Final Valuation Date, as postponed.

 “NYSE” shall mean The New York Stock Exchange, Inc. 
 “Observation Period” shall mean the period commencing on, and including, the close of trading, as determined by the Calculation Agent,
on the Pricing Date and extending to, 

  

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and including, the close of trading, as determined by the Calculation Agent, on the Final Valuation Date. 
 “Payment at Maturity”, as calculated by the Calculation Agent, for each $1,000 principal amount Security shall equal: 
  

	 	•	 	 If the Highest Intraday Index Level never is greater than the Upper Index Barrier and the Lowest Intraday Index Level never is less than Lower Index Barrier on any
Trading Day during the Observation Period, $1,000 + ($1,000 × Absolute Index Return). 

  

	 	•	 	 If the Highest Intraday Index Level is greater than the Upper Index Barrier or the Lowest Intraday Index Level is less than Lower Index Barrier on any Trading Day
during the Observation Period, $1,000. 

 “Place of Payment” shall mean the place or places where the
Payment at Maturity on the Securities is payable. 
 “Pricing Date” shall mean February 12, 2008. 
 “Relevant Exchange” shall mean, for any security (or any combination thereof) then included in the Index or any Successor Index, the
primary exchange, quotation system (which includes bulletin board services) or other market of trading for such security. 
 “Security” shall have the meaning set forth on the reverse of this Security. 
 “Trading Day”
means a day, as determined by the Calculation Agent, on which trading is generally conducted on (i) the Relevant Exchanges for securities underlying the Index and (ii) the exchanges on which futures or options contracts related to the
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. 
 “Upper Index Barrier” shall equal 1,576.14. 
 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 Closing Level, the Highest Intraday
Index Level and the Lowest Intraday Index Level on each Trading Day during the Observation Period and whether the Highest Intraday Index Level is greater than the Upper Index Barrier or the Lowest Intraday Index Level is less than the Lower Index
Barrier on any Trading Day during the Observation Period, the Index Ending Level, the Absolute Index Return and the Payment at Maturity. In addition, the Calculation Agent will determine whether 

  

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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 the Index Sponsor discontinues publication of the Index and the Index Sponsor 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 “Successor Index”), then any Index Closing Level will be determined by reference to the level of such 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 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 the Index Sponsor discontinues publication of the Index, and such discontinuation is continuing on any Trading Day, and the Calculation Agent
determines, in its sole discretion, that no Successor Index is available at such time, or if the Calculation Agent has previously selected a Successor Index and publication of such Successor Index is discontinued, and such discontinuation is
continuing on any Trading Day, or if the Index Sponsor (or the publisher of any Successor Index) fails to calculate and publish an Index Closing Level for the Index (or any Successor Index) on any date when it would ordinarily do so in accordance
with its customary practice, or if the Index Sponsor (or the publisher of any Successor Index) fails to calculate and publish regular intraday index levels necessary for the Calculation Agent to determine, for each Trading Day during the Observation
Period, the Highest Intraday Index Level or the Lowest Intraday Index Level for the Index (or any 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 or necessary intraday index levels for such Trading Day or such date. The Index Closing Level or necessary intraday index levels will be computed by the Calculation Agent in accordance with the formula for and method of
calculating the Index or Successor Index, as applicable, last in effect on the date prior to such discontinuation or failure to calculate or publish an Index Closing Level or necessary intraday index levels for the Index or Successor Index, as
applicable, using the Closing Price or necessary intraday price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price or necessary intraday price that would have
prevailed but for such suspension or limitation) at the close of the principal trading session (or during the principal trading session in the case of estimating the necessary intraday price) on such date of each security most recently included in
the Index or Successor Index, as applicable. 
 If at any time the method of calculating the Index or a Successor Index, or the level
thereof, is changed in a material respect, or if the Index or a Successor Index is in any other way modified so that the Index or such Successor Index does not, in the opinion of the Calculation Agent, fairly represent the level of the Index or such
Successor Index in the absence 

  

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of such changes or modifications, 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 Successor Index, as the case may be, as
if such changes or modifications were not made, and the Calculation Agent will calculate the Index Closing Level with reference to the Index or such Successor Index, as adjusted. Accordingly, if the method of calculating the Index or a Successor
Index is modified so that the level of the Index or such 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 Successor Index in order to arrive at a level of the Index or such 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. 
  

 10Separation Agreement and Release

 Exhibit 10.1 
 SEPARATION AGREEMENT AND RELEASE 
 This Separation Agreement and Release (the
“Agreement”) is made effective as set forth below, by and between Jones Soda Co. (“Jones Soda”) and Peter M. van Stolk (“PVS”). 
 In consideration of the mutual promises contained in this Agreement, Jones Soda and PVS agree as follows: 
 1. PVS hereby resigns as an officer (including as CEO and Chairman of the Board) and as an employee of Jones Soda effective December 31, 2007 (“Separation Date”). Thereafter PVS will continue to serve as a member of the Board
of Directors, subject to all terms and conditions generally applicable to members of the Board of Directors of Jones Soda and subject to Washington and federal law. Jones Soda acknowledges that PVS retains his rights and responsibilities as a member
of the Board of Directors and as a shareholder, which includes all the rights and responsibilities of those capacities that are specifically and explicitly protected by federal and state law, including but not limited to corporate governance
laws and the Sarbanes-Oxley Act. 
 2. Jones Soda will pay PVS severance payments in the total amount of $450,000 (“Severance
Payment”). The Severance Payment shall be made in equal monthly installments, less all applicable withholdings, beginning January 31, 2008 and ending December 31, 2009. 
 3. PVS will be on vacation and out of the office from December 22, 2007 through the Separation Date. Jones Soda agrees to pay PVS his accrued but
unused vacation pay through the Separation Date. 
 4. A. Jones Soda will pay PVS $100,000, less lawful withholdings, ten days after
expiration of the Revocation Period, which amount shall be used by PVS to make a donation to Vitamin Angels (“Vitamin Angels Donation”). PVS shall provide Jones Soda with proof that he has donated the remaining amount to Vitamin Angels by
no later than March 21, 2008. Jones Soda will provide PVS with a 1099 Tax Form reflecting the Vitamin Angels Donation. PVS assumes complete and sole responsibility for the payment of any and all taxes, whether federal, state, local, or
otherwise, if any, relating to the Vitamin Angels Donation, and shall protect, defend, indemnify and hold harmless Jones Soda against any and all claims, lawsuits, damages, liabilities, suits, actions, judgments, costs, taxes, interests, penalties
and expenses resulting from this payment. 
 B. Jones Soda will pay for PVS’s continuing COBRA coverage for a period of twelve
(12) months from the Separation Date. This continuing coverage will include medical, dental and vision to the same extent as maintained by PVS during his employment with Jones Soda, recognizing that the plans offered may be changed so long as
PVS is offered the same plan as is generally available to other Jones Soda employees. 
 5. PVS agrees that the economic value of the
Severance Payment, the Vitamin Angels Donation, and other benefits contained in this Agreement is more than he otherwise would be entitled to under his Employment Agreement and the existing benefit plans provided by Jones Soda to him. 
  

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 6. PVS accepts the payments and benefits contained in this Agreement in full satisfaction of all his
rights and interests relating to his employment with Jones Soda and, in consideration therefore, PVS hereby releases Jones Soda, its affiliates, subsidiaries, successors, past and present officers, directors, agents, and employees from all claims
(other than claims for the payments provided for under this Agreement), causes of action or liabilities, suspected or unsuspected and irrespective of any present lack of knowledge of any possible claim or of any fact or circumstance pertaining
thereto, which he may have or could claim to have against Jones Soda. This Release is intended to be all encompassing, and without limitation covers all matters arising from or during the employment of PVS with Jones Soda and/or related to his
separation from Jones Soda. This Release includes, but is not limited to, claims of discrimination based on race, color, national origin, sex, marital status, age (including the Age Discrimination in Employment Act), or physical or mental disability
under any federal, state, or local law, rule, or regulation; claims under state or federal law governing the payment of wages; and claims under any express or implied contract or legal restrictions on Jones Soda’s right to terminate employees;
claims under any employment agreement between PVS and Jones Soda; any and all claims based on tort law; and all workers’ compensation or disability claims under law. This Release applies to all claims which arose up through the Separation Date.

 7. Jones Soda agrees that it will indemnify PVS from any and all liabilities, obligations, claims or expenses which arise in connection
with or as a result of PVS’s service as an officer, director or employee of Jones Soda to the same extent as other officers and directors are indemnified. Jones Soda further agrees that PVS will continue to be covered by its Directors and
Officers insurance so long as PVS remains a Director. 
 8. PVS represents that he has not filed any complaints, charges or lawsuits against
Jones Soda or any of its affiliates, subsidiaries, successors, past and present officers, directors, agents, or employees with any governmental agency or any court, related in any way to matters arising from or during the employment of PVS with
Jones Soda and/or his separation from Jones Soda and that he will not do so at any time hereafter. 
 9. PVS represents that he has read,
considered, and fully understands this Agreement and all its terms, and executes it freely and voluntarily. 
 10. PVS acknowledges that:

 a. Pursuant to applicable law, he has been offered the opportunity to review a copy of this Agreement for a period of
twenty-one (21) days (the “Review Period”); 
 b. Jones Soda has advised PVS to consult with an attorney
concerning the terms and conditions of this Agreement, including without limitation the release set forth in this Separation and Release Agreement, and PVS has in fact done so; and 
  

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 c. The terms and conditions of this Agreement have not been amended, modified, or revoked
during the Review Period. PVS and Jones Soda agree that van Stolk shall have seven (7) calendar days (the “Revocation Period”) following the date on which he signs this Agreement to revoke his acceptance of this Separation and Release
Agreement and the Release set forth herein, and this Separation and Release Agreement shall not become effective until the Revocation Period has expired. 
 11. PVS agrees that he shall not make any disparaging or derogatory statements to any third party regarding Jones Soda, or any of its officers, directors or employees. PVS retains his rights and responsibilities as a
member of the Board of Directors and as a shareholder, which includes all the rights and responsibilities of those capacities that are specifically and explicitly protected by federal and state law, including but not limited to corporate
governance laws and the Sarbanes-Oxley Act. Jones Soda, by and through its present officers and directors, agrees that it will not make any disparaging or derogatory statements to any third party regarding PVS. This Paragraph 11 shall not apply to
statements made by PVS or Jones Soda pursuant to legal process or as required by law. 
 12. PVS acknowledges that he is subject to certain
continuing obligations under the terms of the Employment Agreement with Jones Soda dated December 1, 2004 (“EA”). PVS recognizes that the EA contains binding covenants and restrictions, including non-competition and confidentiality.
PVS hereby reaffirms the substantive terms of all covenants and restrictions in the EA, as well as the following restrictions. If there is any conflict between this Agreement and the EA, the terms of this Agreement shall prevail. 
 12.1 Non-Competition. 
  

	 	(a)	During the twenty four (24) months following the Separation Date, PVS shall not: 

  

	 	(i)	own or have any interest directly in; 

  

	 	(ii)	act as an officer, director, agent, employee or consultant of; or 

  

	 	(iii)	assist in any way or in any capacity, any person, firm, association, partnership, corporation or other entity which competes with the Business of Jones Soda in the production/sale
of non-alcoholic beverages (a “Competitive Entity”). 

  

	 	(b)	The restrictions set out in subparagraph 12.1(a) above shall not apply to the ownership of less than ten percent (10%) of the publicly traded securities of any Competitive
Entity. 

  

	 	(c)	PVS acknowledges that the restrictions contained in this Section 12.1 are reasonable; however, in the event that any court should determine that any of the restrictive
covenants contained herein are unenforceable for any reason, such court shall have the power to revise the scope of the Non-Competition Clause to the extent necessary to allow enforcement. 

  

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 12.2 Confidentiality. 
  

	 	(a)	PVS shall not make any unauthorized disclosure or use of, and shall use his best efforts to prevent publication or disclosure or use of, any and all Confidential Information. The
term “Confidential Information” means any and all confidential, proprietary, secret, or non-public information, knowledge or data, concerning the business of Jones Soda. Confidential Information includes, but is not limited to, all
procedures, policies, programs, reports, plans, proposals, technical information, know-how, systems and other information unique to Jones Soda or its customers; all business, marketing and methods; all trade-secrets, know-how, processes and other
intellectual property; and any non-public data on or relating to past, present or prospective customers. 

  

	 	(b)	PVS acknowledges that any unauthorized disclosure or use of such Confidential Information will result in material damage to Jones Soda, and thus consents to the issuance of an
injunction or other equitable remedy to prohibit, prevent or enjoin his unauthorized disclosure or use of Confidential Information. 

  

	 	(c)	Except as authorized by Jones Soda, PVS will not: 

 (i)
duplicate, transfer or disclose, nor allow any other person to duplicate, transfer or disclose, any Confidential Information; 
 (ii) use
Confidential Information without the prior written consent of Jones Soda; or 
 (iii) incorporate, in whole or in part, within any domestic
or foreign patent application, any Confidential Information. 
  

	 	(d)	PVS will take all reasonable precautions to safeguard all Confidential Information at all times so that it is not exposed to or used by unauthorized persons.

  

	 	(e)	The restrictive obligations set forth above shall not apply to the disclosure or use of any information which is or later becomes publicly known under circumstances involving no
breach of this Agreement. 

  

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 13. On or before December 31, 2007, PVS shall deliver to Jones Soda all books, records, lists,
brochures, documents, and any other property belonging to Jones Soda, or developed in connection with the business of Jones Soda. To the extent PVS believes some of these documents are necessary in order for him to perform in his continuing role as
a Director of Jones Soda, he shall discuss the matter with the Chairman of the Board who shall make the final decision. 
 14. Unless
specifically authorized in writing in advance by Jones Soda’s then-current Chairman of the Board and/or Chief Executive Officer, and except as necessary and required in order to comply with his fiduciary duties as a Director as defined by law,
PVS shall not discuss with any of the following, directly or indirectly, the business of Jones Soda or PVS’s status with Jones Soda: 
  

	 	a.	Jones Soda’s employees or independent contractors; 

  

	 	b.	Jones Soda’s investors, shareholders or lenders; 

  

	 	c.	Jones Soda’s current or prospective customers; 

  

	 	d.	Jones Soda’s distributors or vendors; 

  

	 	e.	any other parties with whom Jones Soda does business; 

  

	 	f.	analysts or other securities industry professionals; or 

  

	 	g.	any news media. 

 In the event that PVS is contacted by any
of the foregoing, he shall advise them that he is no longer an officer of Jones Soda and that he is therefore no longer authorized to speak on behalf of Jones Soda in any capacity. During the twenty four (24) months following the Separation
Date, PVS shall direct all inquiries related to the business of Jones Soda or PVS’s status with Jones Soda, to Jones Soda’s then-current CEO or Chairman of Board. In the event PVS has any question about whether any such contact would
violate this Agreement, he shall attain the consent of the CEO or Chairman of the Board prior to providing any substantive response. This prohibition shall not apply to conversations that PVS has with clients which have been specifically and
expressly approved by the CEO, or Chairman of the Board. 
 PVS retains his rights and fiduciary responsibilities under law to
speak to these entities as necessary and required for his continuing role as a Director, subject to the same rules and guidelines generally applicable to other Directors of Jones Soda. If, during the next twenty four (24) months, PVS no longer
holds the position of Director, then he specifically acknowledges that his communications with the foregoing enumerated entities will be limited as set forth in this Paragraph 14. 
 15. The parties acknowledge and agree that Paragraphs 11, 12, 13 and 14 constitute material terms of this Agreement, and that any breach of these
Paragraphs shall be deemed a material breach of the entire Agreement. The parties acknowledge that a violation of these 

  

 5 

 
Paragraphs by PVS will cause irreparable injury to Jones Soda and shall entitle Jones Soda to extraordinary relief in court, including, but not limited to,
temporary restraining orders and preliminary and permanent injunctions, without the necessity of posting bond or security. The parties acknowledge and agree that Jones Soda will have no continuing obligations toward PVS, including any remaining
Severance Payment, in the event PVS violates in any way any provision of Paragraph 11, 12, 13 or 14 of this Agreement. In the event of such breach by PVS, Jones Soda will be entitled to immediately cease any remaining payments and recover all monies
already paid to PVS, including the payments under Paragraph 2. This right of recoupment shall be in addition to any other remedies Jones Soda is entitled to under law, including damages and injunctive relief. 
 16. Neither this Agreement, nor the payments made hereunder, shall in any way be construed as an admission by Jones Soda or PVS that it or he has acted
wrongfully with respect to PVS, Jones Soda, its directors, officers, agents, employees, or any other person. 
 17. The Severance Payment,
Vitamin Angels Donation, and other benefits described above constitute the sole payments and compensation to PVS as a result of his employment with Jones Soda. PVS confirms that compliance by Jones Soda with the terms of this Agreement shall
constitute fully compliance with the EA. Except for his future service as a Director and/or his status as a shareholder, PVS shall not be entitled to any other payments or benefits from Jones Soda. 
 18. PVS represents that in entering into this Agreement, he does not rely and has not relied upon any representation or statement made by Jones Soda or
any of its employees or agents concerning this Agreement. PVS warrants that he has entered into this Agreement knowingly and voluntarily, and that he has had adequate time to review the contents of this Agreement. PVS has reviewed this Agreement,
and has consulted with his attorney concerning the terms and conditions of this Agreement, including without limitation the release set forth in this Agreement, and fully understands the contents of the Agreement. The parties agree that the common
law principles of construing ambiguities against the drafter shall have no application to this Agreement. 
 19. The parties agree that they
will keep the terms of this Agreement confidential and that they will not hereafter disclose any information concerning this Agreement to anyone, provided that either party may make such disclosures as a) are required by law, and explicitly
recognizing the obligation to disclose this Agreement to the SEC; b) reasonably necessary to enforce the terms of this Agreement, and c) to their respective attorneys, accountants and financial advisors. 
 20. If any provision of this Agreement is determined to be invalid or unenforceable, all of the other provisions shall remain valid and enforceable
notwithstanding, unless the provision found to be unenforceable is of such material effect that this Agreement cannot be performed in accordance with the intent of the parties in the absence thereof. 
 21. This Agreement represents the full understanding and agreement by the parties, and supersedes and replaces any prior agreements by the parties,
whether verbal or written, except the December 1, 2004 Employment Agreement, which is incorporated herein, and the Jones Soda 2002 Stock Option and Restricted Stock Plan, and the relevant Stock Option and/or Restricted Stock Agreements.

  

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 22. This Agreement is intended to constitute a full and final resolution of this matter. Interpretation
of this Agreement shall be under Washington law. If any such action is necessary to enforce the terms of this Agreement, the substantially prevailing party shall be entitled to receive reasonable attorneys’ fees and costs. 
  

									
	/s/ Peter van Stolk	 		 	February 5, 2008
	Peter van Stolk	 		 	DATE
			
	Jones Soda Co.	 		 	
					
	By	 	/s/ Scott Bedbury	 		 		 	February 13, 2008
	Its	 	Chairman	 		 		 	DATE

  

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