Case 1:09-md LAK Document 747 Filed 02/27/12 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

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1 Case 1:09-md LAK Document 747 Filed 02/27/12 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK : : In re: : : Civil Action No. 09 MD 2017 (LAK) LEHMAN BROTHERS SECURITIES : AND ERISA LITIGATION : ECF CASE : This Document Applies Only to: : : The California Public Employees Retirement : System v. Fuld, et al. : Case No.: 1:11-cv LAK : : : NOTICE OF MOTION AND MOTION FOR ENTRY OF BAR AND JUDGMENT REDUCTION ORDER PLEASE TAKE NOTICE that, upon the accompanying Memorandum of Law in Support of the Motion for Entry of a Bar and Judgment Reduction Order, the supporting Affirmation of Adam J. Wasserman, dated February 27, 2012, the proposed bar and judgment reduction order (the Bar Order ), and all pleadings and proceedings herein, Defendants Richard S. Fuld, Jr., Christopher M. O Meara, Erin M. Callan, Michael L. Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir Christopher Gent, Roland A. Hernandez, Henry Kaufman, and John D. Macomber (collectively, the Settling Defendants ), by and through their undersigned attorneys, will move this Court before the Honorable Lewis Kaplan, at the United States Courthouse, 500 Pearl Street, Courtroom 12D, New York, New York 10007, at the date and time to be determined by the Court, for an order, pursuant to the common law and 15 U.S.C. 78u-4(f)(7), to enter the Bar Order pursuant to the Settlement Agreement and Mutual

2 Case 1:09-md LAK Document 747 Filed 02/27/12 Page 2 of 6 Release dated October 14, 2011 ( Settlement Agreement ) agreed and entered into by the Settling Defendants and Plaintiff The California Public Employees Retirement System ( CalPERS ), and for such other relief as this Court may deem just and proper. Pursuant to Local Rule 6.1(b) of the United States District Courts for the Southern and Eastern Districts of New York, any opposing affidavits and answering memoranda of law shall be served by March 12, 2012, and any reply affidavits and memoranda of law shall be served within seven (7) days after service of the answering papers. Dated: February 27, 2012 New York, New York s/ Adam J. Wasserman DECHERT LLP Andrew J. Levander (andrew.levander@dechert.com) Kathleen N. Massey (kathleen.massey@dechert.com) Adam J. Wasserman (adam.wasserman@dechert.com) 1095 Avenue of the Americas New York, New York Tel: Fax: Attorneys for Michael L. Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir Christopher Gent, Roland A. Hernandez, Henry Kaufman and John D. Macomber 2

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4 Case 1:09-md LAK Document 747 Filed 02/27/12 Page 4 of 6 This Motion is Being Served Upon: ROBBINS GELLER RUDMAN & DOWD LLP Keith F. Park (kpark@rgrdlaw.com) Thomas E. Egler (tome@rgrdlaw.com) David C. Walton (davew@rgrdlaw.com) 655 West Broadway, Suite 1900 San Diego, California Tel: Fax: Attorneys for The California Public Employees Retirement System LATHAM & WATKINS LLP Miles N. Ruthberg (miles.ruthberg@lw.com) Jamie L. Wine (jamie.wine@lw.com) 885 Third Avenue New York, New York Tel: Fax: Peter A. Wald (peter.wald@lw.com) 505 Montgomery Street, Suite 2000 San Francisco, California Tel: Fax: Attorneys for Ernst & Young CLEARY GOTTLIEB STEEN & HAMILTON LLP Mitchell A. Lowenthal (mlowenthal@cgsh.com) Victor L. Hou (vhou@cgsh.com) Roger A. Cooper (racooper@cgsh.com) One Liberty Plaza New York, New York Tel: Fax: KASOWITZ BENSON TORRES & FRIEDMAN LLP Mark P. Ressler (mressler@kasowitz.com) Michael Hanin (mhanin@kasowitz.com) 1633 Broadway New York, New York Tel: Fax: Attorneys for HVB Capital Markets, Inc. Attorneys for ABN AMRO Inc., ANZ Securities Inc., BBVA Securities Inc., BMO Capital Markets Corp. (f/k/a Harris Nesbitt Corp.), BNP Paribas S.A., BNY Capital Markets Inc. (n/k/a BNY Mellon Capital Markets LLC), Caja de Ahorros y Monte de Piedad de Madrid, CIBC World Markets 4

5 Case 1:09-md LAK Document 747 Filed 02/27/12 Page 5 of 6 Corp., Citigroup Global Markets Inc., Daiwa Capital Markets Europe Ltd. (f/k/a Daiwa Securities SMBC Europe Ltd.), DZ Financial Markets LLC, Fortis Securities LLC, HSBC Securities (USA) Inc., ING Financial Markets LLC, Loop Capital Markets LLC, Mellon Financial Markets LLC (n/k/a BNY Mellon Capital Markets LLC), Mizuho Securities USA Inc., Muriel Siebert & Co. Inc., National Australia Capital Markets LLC (n/k/a nabsecurities, LLC) Natixis Bleichroeder Inc. (n/k/a Natixis Securities Americas LLC), RBC Capital Markets Corp. (f/k/a RBC Dain Rauscher Inc.), RBS Greenwich Capital (n/k/a RBS Securities Inc.), Santander Investment Securities Inc., Scotia Capital (USA) Inc., SG Americas Securities, LLC, Sovereign Securities Corporation LLC, SunTrust Capital Markets Inc. (n/k/a SunTrust Robinson Humphrey, Inc.), Utendahl Capital Partners L. P., Wachovia Capital Markets LLC (n/k/a Wells Fargo Securities LLC) and Wells Fargo Securities LLC KATTEN MUCHIN ROSENMAN LLP David C. Bohan (david.bohan@kattenlaw.com) 525 W. Monroe Street Chicago, IL Tel: Fax: William M. Regan (william.regan@kattenlaw.com) 575 Madison Avenue New York, New York Tel: Fax: SCHINDLER COHEN & HOCHMAN LLP Steven R. Schindler (sschindler@schlaw.com) Daniel E. Shaw (dshaw@schlaw.com) 100 Wall Street 15th Floor New York, New York Tel: Fax: Attorneys for The Williams Capital Group, L.P. Attorneys for Cabrera Capital Markets LLC 5

6 Case 1:09-md LAK Document 747 Filed 02/27/12 Page 6 of 6 M.R. BEAL & COMPANY Joseph Mendola (jmendola@mrbeal.com) 110 Wall Street 6th Floor New York, New York Tel: Fax: Attorney for M.R. Beal & Company 6

7 Case 1:09-md LAK Document Filed 02/27/12 Page 1 of 27 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK : : In re: : : Civil Action No. 09 MD 2017 (LAK) LEHMAN BROTHERS SECURITIES : AND ERISA LITIGATION : : This Document Applies Only to: : : The California Public Employees Retirement : System v. Fuld, et al. : Case No.: 1:11-cv LAK : : : [PROPOSED] BAR AND JUDGMENT REDUCTION ORDER WHEREAS, this action was originally filed in the United States District Court for the Northern District of California, captioned The California Public Employees Retirement System v. Richard S. Fuld, Jr., et al., Case No. 3:11-cv The action was then transferred to the U.S. District Court for the Southern District of New York ( District Court ) pursuant to a transfer order from the Judicial Panel on Multidistrict Litigation, in an action captioned The California Public Employees Retirement System v. Richard S. Fuld, Jr., et al., No. 11-cv LAK (S.D.N.Y). The action was then coordinated with the master MDL case, In re: Lehman Brothers Securities and ERISA Litigation, Master Docket No. 09 MD 2017 (LAK) (S.D.N.Y.) (the Lehman MDL ), for pretrial proceedings. The above actions will collectively be referred to in this Agreement as the CalPERS Action. A First Amended Complaint was filed in the CalPERS Action on October 7, A Second Amended Complaint was filed in the CalPERS Action on November 29, 2011;

8 Case 1:09-md LAK Document Filed 02/27/12 Page 2 of 27 WHEREAS, Defendants Richard S. Fuld, Jr., Christopher M. O Meara, Erin M. Callan, Michael L. Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir Christopher Gent, Roland A. Hernandez, Henry Kaufman, and John D. Macomber (collectively, the Settling Defendants ), deny the allegations asserted by Plaintiff and assert certain affirmative defenses, deny any wrongdoing and any liability to Plaintiff; WHEREAS, the Plaintiff and Settling Defendants have entered into a Settlement Agreement and Mutual Release in order to fully, finally, and forever resolve, discharge, and settle all claims in the CalPERS Action that were or could have been brought by Plaintiff and other releasors against the Settling Defendants, as well as the other Releasees, in order to avoid further litigation ( Settlement Agreement ); WHEREAS, all capitalized terms used herein, and not otherwise defined herein, shall have the same meanings set forth in the Settlement Agreement, which is attached as Exhibit A; WHEREAS, the Settlement Agreement was expressly conditioned upon the entry by this Court of a Final Bar Order in substantially the form articulated below; IT IS HEREBY ORDERED THAT: 1. The Settling Defendants and the other Releasees are discharged from all claims for contribution and all claims for indemnification, however styled, by any person or entity, whether arising under state, federal or common law, based upon, arising from, relating to, or in connection with the CalPERS Released Claims released in the Settlement Agreement (together, Contribution Claims ). Accordingly, to the fullest extent provided by law, the Court bars, enjoins, and restrains any and all Contribution Claims (a) against the Settling Defendants and the other Releasees, or (b) against Ernst & Young and the Underwriter Defendants by any or all of the Settling Defendants and the other Releasees, their insurers, subrogees, or assigns, or anyone 2

9 Case 1:09-md LAK Document Filed 02/27/12 Page 3 of 27 acting on behalf of the Settling Defendants, the other Releasees, their insurers, subrogees, or assigns. The discharging of Contribution Claims shall not affect any Defendant s claims filed against Lehman Brothers Holdings Inc. in its bankruptcy proceeding or against Lehman Brothers Inc. in its proceeding under the Securities Investor Protection Act in the United States Bankruptcy Court for the Southern District of New York. 2. In the event Plaintiff in the CalPERS Action seeks to recover damages or any other form of monetary relief ( Damages ) from any person or entity based upon, arising from, relating to, or in connection with the CalPERS Released Claims released in the Settlement Agreement, any verdict or judgment in such action in favor of Plaintiff, shall be reduced by the greater of: (a) the amount of recovery obtained by the Plaintiff in connection with the Settlement Agreement; or (b) the amount of any and all of the Settling Defendants percentage share of responsibility for the Damages. IT IS SO ORDERED. Date: Hon. Lewis A. Kaplan United States District Judge LITIGATION 3

10 Case 1:09-md LAK Document Filed 02/27/12 Page 4 of 27 EXHIBIT A

11 Case 1:09-md LAK Document Filed 02/27/12 Page 5 of 27 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK : : In re: : : Civil Action No. 09 MD 2017 (LAK) LEHMAN BROTHERS SECURITIES : AND ERISA LITIGATION : : This Document Applies Only to: : : The California Public Employees Retirement : System v. Fuld, et al. : Case No.: 1:11-cv LAK : : : SETTLEMENT AGREEMENT AND MUTUAL RELEASE This SETTLEMENT AGREEMENT AND MUTUAL RELEASE, including the releases incorporated herein ( Settlement Agreement or Agreement ), is entered into as of the 14th day of October, 2011 between and among: a. The California Public Employees Retirement System ( CalPERS ), on behalf of itself, its current and former administrators, affiliates, predecessors, heirs, successors, assignors, assigns, agents (including but not limited to any investment managers or advisors acting in their capacity as such), funds, officials, boards and board members, officers, divisions, offices, employees, clients, members, employers, investors, representatives, persons under its control, and other governmental entities acting on its behalf (collectively Plaintiff ); and b. Defendants Richard S. Fuld, Jr., Christopher M. O Meara, Erin Callan, Michael Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir

12 Case 1:09-md LAK Document Filed 02/27/12 Page 6 of 27 Christopher Gent, Roland A. Hernandez, Henry Kaufman, and John D. Macomber (collectively, Settling Defendants ). The Settling Defendants collectively comprise all officer and director defendants in the CalPERS Action, as defined below. Plaintiff and the Settling Defendants shall collectively be referred to in this Settlement Agreement as the Settling Parties. The Underwriter Defendants, as defined in Plaintiff s amended complaint, and Ernst & Young ( E&Y ) are not parties to this Settlement Agreement, are not Settling Defendants, and Plaintiff expressly preserves all of its claims against the Underwriter Defendants and E&Y. In addition, to the extent not otherwise provided for in this Agreement, Plaintiff expressly preserves all of its claims against Lehman pending in the Lehman Bankruptcy Case, as defined below, and in the Lehman Brothers, Inc. SIPA Liquidation Proceeding [No (JMP) SIPA] (the LBI Liquidation Case ). This Agreement concerns the claims of Plaintiff only, and not the State of California or any agency or entity within the State of California other than Plaintiff. No claims are being released through this Agreement for any entity other than Plaintiff. WITNESSETH WHEREAS, this action was originally filed in the United States District Court for the Northern District of California, captioned The California Public Employees Retirement System v. Richard S. Fuld, Jr., et al., Case No. 3:11-cv The action was then transferred to the U.S. District Court for the Southern District of New York ( District Court ) pursuant to a transfer order from the Judicial Panel on Multidistrict Litigation, in an action captioned The California Public Employees Retirement System v. Richard S. Fuld, Jr., et al., No. 11-cv LAK (S.D.N.Y). The action was then coordinated with the master MDL case, In re: Lehman 2

13 Case 1:09-md LAK Document Filed 02/27/12 Page 7 of 27 Brothers Securities and ERISA Litigation, Master Docket No. 09 MD 2017 (LAK) (S.D.N.Y.) (the Lehman MDL ), for pretrial proceedings. The above actions will collectively be referred to in this Agreement as the CalPERS Action. A First Amended Complaint was filed in the CalPERS Action on October 7, 2011; WHEREAS, on September 15, 2008, Lehman filed a voluntary petition under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ). Lehman s bankruptcy case is styled In re Lehman Brothers Holdings Inc., et al., Case No (JMP) (the Lehman Bankruptcy Case ); WHEREAS, the Settling Defendants deny the allegations asserted by Plaintiff and assert certain affirmative defenses, deny any wrongdoing and any liability to Plaintiff, and state that they are entering into this Settlement Agreement solely to eliminate the uncertainties, burdens and expenses of further protracted litigation; WHEREAS, the Settling Parties intend to fully, finally and forever resolve, discharge and settle claims (as more particularly described in paragraph 12 below) that were or could have been brought by Plaintiff against the Settling Defendants, as well as the other Releasees, to avoid further litigation; NOW THEREFORE, for good and valuable consideration of the covenants and agreements contained in this Settlement Agreement, the adequacy of which is hereby acknowledged, the Settling Parties agree as follows: DEFINITIONS 1. As used in this Agreement, the following capitalized terms have the meanings specified below. a. Effective Date means the date on which the Settlement becomes effective as provided in paragraph 10 below. 3

14 Case 1:09-md LAK Document Filed 02/27/12 Page 8 of 27 b. Final means that with respect to the Bankruptcy Order and Bar Order, that such Orders represent a final and binding determination of all issues within their scope and are not subject to further review on appeal or otherwise. Without limitation, the Bankruptcy Order and Bar Order become Final when (i) no appeal has been filed and the time for commencing any appeal has expired; or (ii) an appeal has been filed and either the appeal has been dismissed and the time, if any, for commencing further appeal has expired, or the order has been affirmed in its entirety and the time, if any, for commencing any further appeal has expired. For purposes of this definition, an appeal includes appeals as of right, discretionary appeals, interlocutory appeals, proceedings involving writs of certiorari, mandamus, or prohibition, and any other proceedings of like kind. c. Insurers means the insurer or insurers that issued directors and officers liability insurance policies to Lehman for the policy period under which the Settling Defendants are insured that will fully or partially fund the Settlement Amount. d. Lehman means Lehman Brothers Holdings Inc., Lehman Brothers Inc. and any and all of their affiliates and subsidiaries. e. Releasees means, in any capacity: i. Settling Defendants; ii. iii. iv. Lehman; Settling Defendants and Lehman s past, present, and future attorneys, accountants (except E&Y), agents, insurers (including, but not limited to those defined in subparagraph (c) above), spouses, children, heirs, successors, assigns, trusts, corporations, companies, partnerships, affiliates, or any entity in which they have a controlling interest; and All of the past, present and future employees, officers, and directors of Lehman. f. Settlement means the settlement of the CalPERS Action, as embodied in this Agreement. g. Settlement Amount means eleven million dollars ($11,000,000.00). TERMS 2. This Settlement Agreement represents a negotiated settlement of disputed claims. The execution of this Settlement Agreement and the negotiations, discussions and communications in connection with this Settlement Agreement shall not be construed as 4

15 Case 1:09-md LAK Document Filed 02/27/12 Page 9 of 27 admissions or concessions by the Settling Parties as to any liability or wrongdoing, or as to the merits of any claim or defense. 3. Neither the existence of this Settlement Agreement nor any of its provisions shall be offered into evidence by the Settling Parties in any action, arbitration, or proceeding for any purpose whatsoever other than (i) in connection with an action, motion, or proceeding by one or more of the Settling Parties to enforce the terms of this Settlement Agreement, (ii) to the Bankruptcy Court (or subsequent appellate court) in connection with the Bankruptcy Order (as defined infra), or (iii) to the District Court (or any subsequent appellate court) in connection with the Bar Order (as defined infra) or an order dismissing the CalPERS Action. 4. Upon execution of this Agreement by each of the Settling Parties, Settling Defendants shall take all reasonable steps to have filed a motion in the Lehman Bankruptcy Case as promptly as possible seeking entry of the Bankruptcy Order by the Bankruptcy Court consistent with paragraph 5 of this Agreement. 5. The Settlement is subject to the Bankruptcy Court entering a Final order in the Lehman Bankruptcy Case authorizing relief from the automatic stay, to the extent applicable, to permit the Insurers to pay the Settlement Amount to Plaintiff as provided herein ( Bankruptcy Order ). Should such authorization be withheld, the Agreement and the Settlement will be deprived of all legal effect, and the Settling Parties shall be deemed to have reverted nunc pro tunc to their respective status as of the date and time immediately before the execution of this Settlement Agreement. 6. Within twenty (20) business days from entry of the Bankruptcy Order by the Bankruptcy Court, the Insurers shall deposit the Settlement Amount of $11,000,000 into an escrow account (the Fund ) under the joint control of counsel for the Settling Defendants, on 5

16 Case 1:09-md LAK Document Filed 02/27/12 Page 10 of 27 the one hand, and counsel for Plaintiff on the other, with the escrow agent and escrow instructions to be mutually agreed to by counsel for the Settling Defendants and counsel for Plaintiff. The Settling Defendants counsel shall maintain joint control with Plaintiff s counsel over the Fund until five business days after the Effective Date, at which time Plaintiff s counsel shall obtain sole control over the Fund. 7. Settling Defendants shall take all reasonable steps to cause Insurers to pay the Settlement Amount into the Fund. Settling Defendants represent and warrant that they consulted with Insurers before entering into this Agreement and that Insurers have agreed with Settling Defendants to the terms of this Agreement, including the terms regarding payment of the Settlement Amount. 8. Plaintiff acknowledges that it is responsible for the payment of any applicable taxes related to its receipt of the Settlement Amount or any amount otherwise received from the Fund. 9. It is a condition of the Settlement that the Settling Parties shall obtain entry by the District Court of an appropriate bar order, substantially in the form of Exhibit 1 hereto, barring claims for contribution or indemnification against any Settling Defendant and the other Releasees, however styled, based upon, arising from, relating to, or in connection with the CalPERS Released Claims (defined below) (the Bar Order ). Promptly after entry of the Bankruptcy Order, the Settling Defendants shall move the District Court for such Bar Order, and the Settling Parties shall take all reasonable steps to accomplish this result. In the event a Final Bar Order is not entered, the Agreement and the Settlement will be deprived of all legal effect, and the Settling Parties shall be deemed to have reverted nunc pro tunc to their respective status as of the date and time immediately before the execution of this Settlement Agreement. 6

17 Case 1:09-md LAK Document Filed 02/27/12 Page 11 of It is a condition of the Settlement that this Settlement Agreement is approved by the CalPERS Board of Administration. Plaintiff agrees to obtain this approval no later than October 21, The Effective Date of this Settlement shall be the date when the following shall have occurred: (i) the Settlement Agreement has been approved by the CalPERS Board of Administration, (ii) the Bankruptcy Order has been entered by the Bankruptcy Court and has become Final, and (iii) the Bar Order has been entered by the District Court and has become Final. 11. Except as otherwise provided herein, in the event the Settlement is terminated or the Effective Date does not occur for any reason, then the Settling Parties shall be deemed to have reverted nunc pro tunc to their respective status as of the date and time immediately before the execution of this Settlement Agreement and the Fund paid by the Insurers on behalf of the Settling Defendants, together with any interest earned thereon, less any taxes actually paid, due or incurred with respect to such income, and less any reasonable administration costs actually paid or incurred not to exceed $15,000, shall be returned to the Insurers, on a pro-rata basis, within ten business days of a Final order rejecting either the Bankruptcy Order or the Bar Order. 12. Upon the Effective Date, and except as set forth in paragraph 13 below, Plaintiff hereby releases and forever discharges the Releasees, and each of them individually, of and from any and all claims, suits, actions, causes of action, damages (including without limitation compensatory, punitive, exemplary, or rescissory damages, and disgorgement), demands, rights, debts, penalties, costs, expenses, fees, attorneys fees, prejudgment interest, postjudgment interest, indemnities, duties, liabilities, losses, duties, or obligations of every nature and description whatsoever, known or unknown, whether or not concealed or hidden, fixed or contingent, direct or indirect, anticipated or unanticipated, asserted or that could have been 7

18 Case 1:09-md LAK Document Filed 02/27/12 Page 12 of 27 asserted by Plaintiff, whether legal, contractual, rescissory, statutory, or equitable in nature, that are based upon, arise from, or relate to (a) Plaintiff s investments in Lehman securities, (b) the subject matter of the CalPERS Action or (c) the facts alleged in any complaint filed in the CalPERS Action. Notwithstanding the foregoing, this Agreement does not release claims by persons or entities acting on their own behalf in their capacity as such and unrelated to CalPERS. The claims released in this paragraph shall be collectively known as the CalPERS Released Claims. 13. Notwithstanding the release language set forth in paragraph 12 above, this Settlement does not waive, release, impair or otherwise affect Plaintiff s claims against Lehman filed in the Lehman Bankruptcy Case or in the LBI Liquidation Case, including but not limited to: (1) Plaintiff s Claim No filed on September 21, 2009 in the amount of $433,090,000 in the Lehman Bankruptcy Case; (2) Any and all proofs of claim filed on behalf of Plaintiff by an indenture trustee or other agent in the Lehman Bankruptcy Case or the LBI Liquidation Case, including but not limited to claims filed by Wilmington Trust Company, State Street Bank & Trust Company, Alliance Bernstein L.P., Pyramis Global Advisors, and/or Bank of New York Mellon; (3) Plaintiff s Claim No filed on January 30, 2009 in the amount of $4,867,16 in the LBI Liquidation Case; (4) Plaintiff s Claim No filed on January 30, 2009 in the amount of $ in the LBI Liquidation Case; and (5) Plaintiff s Claim No filed on May 28, 2009 in the amount of $12, in the LBI Liquidation Case (collectively, the Filed Claims ); provided, however, that notwithstanding anything that is or may be set forth in the Filed Claims to the contrary, the Filed Claims shall not be deemed or construed to include any claims that are the subject of the CalPERS Action. The CalPERS 8

19 Case 1:09-md LAK Document Filed 02/27/12 Page 13 of 27 Released Claims shall not include the Filed Claims against Lehman. Plaintiff retains all rights, title, and interest in such Filed Claims. 14. Plaintiff does not release any claims against the Underwriter Defendants or E&Y, their partners, managers, and employees, and their affiliates, and expressly preserves all such claims. 15. Upon the Effective Date, the Settling Defendants and their counsel hereby release and forever discharge Plaintiff and its counsel from all claims and remedies of every nature and description, known and unknown, that are based upon, arise from, or relate to (a) Plaintiff s investments in Lehman securities, (b) the subject matter of the CalPERS Action or (c) the facts alleged in any complaint filed in the CalPERS Action. 16. The Settling Parties expressly acknowledge that they may hereafter discover facts in addition to or different from those that any of them or their counsel now knows or believes to be true with respect to the subject matter of the Claims released in paragraphs 12 and 15 or otherwise. However, upon the Effective Date, the Settling Parties each shall have expressly, fully, finally, and forever settled and released any and all Claims as set forth in paragraphs 12 and 15, whether known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not now existing or coming into existence in the future, including, but not limited to, conduct that is negligent, reckless, intentional, with or without malice, or a breach of any duty, law, or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Settling Parties acknowledge that the foregoing waiver was separately bargained for and a key element of the Settlement of which this release is a part. 17. Within five business days of the Effective Date, Plaintiff shall dismiss with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1) all claims against all Settling 9

20 Case 1:09-md LAK Document Filed 02/27/12 Page 14 of 27 Defendants in the CalPERS Action by filing a notice of dismissal with prejudice, and Plaintiff shall be forever barred and enjoined from asserting, prosecuting, or continuing the prosecution of the CalPERS Released Claims. Plaintiff does not and will not dismiss any of its claims against the Underwriter Defendants under this Agreement. Plaintiff, and the Settling Defendants, jointly controlling the Fund with counsel for Plaintiff at the time, shall use their reasonable best efforts to ensure that the filing of the dismissal as set forth in this paragraph occurs simultaneously with the transfer of control of the Fund to counsel for Plaintiff as set forth in paragraph With the exception of the warranties and representations made in this Settlement Agreement, by entering into this Settlement Agreement and Mutual Release, the Settling Parties assume the risk of any misrepresentation, concealment or mistake. If any Settling Party to this Settlement Agreement subsequently discovers that any fact relied upon by it, him or her in entering into this Settlement Agreement was untrue, was concealed from that Settling Party, or that Settling Party s understanding of the facts or of the law was incorrect, such Settling Party shall not be entitled to any relief in connection therewith, including, without limitation, any alleged right or claim to set aside or rescind this Settlement Agreement. This Settlement Agreement is intended to be and is final and binding between and among the Settling Parties. REPRESENTATIONS AND WARRANTIES 19. To induce one another to enter into this Settlement Agreement, the Settling Parties each represent and warrant that it, he or she has the full and absolute right, power, authority and ability to enter into this Settlement Agreement, and all releases, representations, and warranties contained in this Settlement Agreement, and to perform all of its, his or her obligations hereunder, except that Plaintiff states that its right, power, authority and ability to do so is conditioned on approval by the CalPERS Board of Administration. 10

21 Case 1:09-md LAK Document Filed 02/27/12 Page 15 of The Settling Parties represent and warrant that their respective attorneys have explained the meaning and effect of this Settlement Agreement. The Settling Parties further represent and warrant that they have read and understand this Settlement Agreement, and have not relied upon any other statements or representations regarding this matter other than those expressly stated herein. The Settling Parties further represent and warrant that they have signed this Settlement Agreement without duress, coercion, or undue influence by anyone or anything. 21. The attorney signing on behalf of each of the Settling Parties represents and warrants that he or she has the authority to sign this Settlement Agreement on behalf of that particular Settling Party and that he or she has been authorized by that Settling Party to sign this Settlement Agreement. 22. Upon the execution of this Settlement Agreement, the Settling Parties shall promptly notify the District Court of the Settlement Agreement and request that the CalPERS Action be suspended against the Settling Defendants only. DEFAULT 23. Any failure by the Settling Parties to comply with the terms and conditions of this Settlement Agreement shall constitute a material breach of this Settlement Agreement, and the non-compliant party will be considered in default of this Settlement Agreement. 24. In the event of a default by any of the Settling Parties of any of their respective obligations, and upon the giving of ten business days written notice of such default (and if such default is not cured within that ten-day time period), a Settling Party may, in its discretion, institute an action to enforce the terms of this Settlement Agreement. 25. The District Court shall retain jurisdiction with respect to implementation and enforcement of the terms of this Agreement and the Bar Order, and the Settling Parties submit to 11

22 Case 1:09-md LAK Document Filed 02/27/12 Page 16 of 27 the jurisdiction of the District Court for purposes of implementing and enforcing this Agreement and the Bar Order. Such submission to the jurisdiction of the District Court shall not be deemed a waiver of personal jurisdiction defenses for any purpose other than implementation and enforcement of this Agreement. Plaintiff reserves the right to seek a remand of its claims against the Underwriter Defendants. OTHER MATTERS 26. This settlement is not contingent on the Settling Defendants reaching a settlement with any other parties in the Lehman MDL, or in any other related case involving Lehman securities. 27. Plaintiff agrees not to solicit or encourage any other person, whether individual or corporate, to commence any proceeding against the Releasees. 28. This Settlement Agreement shall be deemed drafted equally by all the Settling Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Settling Party shall not apply. The headings in this Settlement Agreement are for convenience and are not intended to affect construction or interpretation. 29. Plaintiff agrees and acknowledges that Lehman is an express third party beneficiary of this Settlement Agreement. 30. The failure, or partial failure, of any of the Settling Parties to enforce at any time any provision of this Settlement Agreement shall not be construed to be a waiver of such provision, nor in any way affect the validity of this Settlement Agreement or any part thereof or the right of any Settling Party thereafter to enforce each and every provision. No waiver of any breach of this Settlement Agreement shall be held to constitute a waiver of any other breach. 12

23 Case 1:09-md LAK Document Filed 02/27/12 Page 17 of This Settlement Agreement may not be altered, modified or amended except by a writing signed by the Settling Parties or their attorneys. 32. This Settlement Agreement may be executed in several counterparts and, when executed by the Settling Parties, each counterpart shall be deemed an original and shall constitute but one and the same instrument. Facsimile, photocopy or PDF signatures shall be valid as originals. 33. This Settlement Agreement constitutes the sole and entire agreement between the Settling Parties with respect to the matters covered in this Agreement. 34. Irrespective of the place of execution, the laws of the State of New York (without reference to its conflicts of law principles) shall govern the validity of this Settlement Agreement, the construction of its terms, and the interpretation of the rights and duties of the Settling Parties. 35. If this Settlement Agreement fails to become effective for any reason, the Settling Parties shall be deemed to have reverted nunc pro tunc to their respective status as of the date and time immediately before the execution of this Settlement Agreement, and they shall proceed in all respects as if this Settlement Agreement had not been executed and without prejudice in any way from the negotiation, fact or terms of this Settlement Agreement. 36. All notices relating to this Settlement Agreement shall be in writing, sent by U.S. mail and transmission, and shall be deemed effective upon receipt. If there is a change of counsel, notice shall be provided to replacement counsel once the Settling Parties have received notice of the change. All notices relating to this Settlement Agreement shall be made as follows: 13

24 Case 1:09-md LAK Document Filed 02/27/12 Page 18 of 27 Notices to Plaintiff The California Public Employees Retirement System: Darren J. Robbins Michael J. Dowd Thomas E. Egler David C. Walton Matthew I. Alpert Maureen E. Mueller Robbins Geller Rudman & Dowd LLP 655 West Broadway, Suite 1900 San Diego, CA Tel: Fax: Notices to Defendant Christopher M. O Meara Michael J. Chepiga Mary Elizabeth McGarry Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY Tel: Fax: mchepiga@stblaw.com mmcgarry@stblaw.com Notices to Defendant Richard S. Fuld, Jr.: Patricia M. Hynes Todd S. Fishman Allen & Overy LLP 1221 Avenue of the Americas New York, NY Tel: Fax: patricia.hynes@newyork.allenovery.com todd.fishman@newyork.allenovery.com 14

25 Case 1:09-md LAK Document Filed 02/27/12 Page 19 of 27 Notices to Defendant Erin Callan: Robert J. Cleary Mark E. Davidson Seth David Fier Proskauer Rose LLP 11 Times Square New York, NY Tel: Fax: Notices to Defendants Michael Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir Christopher Gent, Roland A. Hernandez, Henry Kaufman, and John D. Macomber: Andrew J. Levander Kathleen N. Massey Adam J. Wasserman Dechert LLP 1095 Avenue of the Americas New York, NY Tel: Fax:

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31 Case 1:09-md LAK Document Filed 02/27/12 Page 25 of 27 EXHIBIT 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK : : In re: : : Civil Action No. 09 MD 2017 (LAK) LEHMAN BROTHERS SECURITIES : AND ERISA LITIGATION : : This Document Applies Only to: : : The California Public Employees Retirement : System v. Fuld, et al. : Case No.: 1:11-cv LAK : : : [PROPOSED] BAR AND JUDGMENT REDUCTION ORDER WHEREAS, this action was originally filed in the United States District Court for the Northern District of California, captioned The California Public Employees Retirement System v. Richard S. Fuld, Jr., et al., Case No. 3:11-cv The action was then transferred to the U.S. District Court for the Southern District of New York ( District Court ) pursuant to a transfer order from the Judicial Panel on Multidistrict Litigation, in an action captioned The California Public Employees Retirement System v. Richard S. Fuld, Jr., et al., No. 11-cv LAK (S.D.N.Y). The action was then coordinated with the master MDL case, In re: Lehman Brothers Securities and ERISA Litigation, Master Docket No. 09 MD 2017 (LAK) (S.D.N.Y.) (the Lehman MDL ), for pretrial proceedings. The above actions will collectively be referred to in this Agreement as the CalPERS Action. A First Amended Complaint was filed in the CalPERS Action on October 7, 2011;

32 Case 1:09-md LAK Document Filed 02/27/12 Page 26 of 27 WHEREAS, Defendants Richard S. Fuld, Jr., Christopher M. O Meara, Erin Callan, Michael Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir Christopher Gent, Roland A. Hernandez, Henry Kaufman, and John D. Macomber (collectively, the Settling Defendants ), deny the allegations asserted by Plaintiff and assert certain affirmative defenses, deny any wrongdoing and any liability to Plaintiff; WHEREAS, the Plaintiff and Settling Defendants have entered into a Settlement Agreement and Mutual Release in order to fully, finally, and forever resolve, discharge, and settle all claims in the CalPERS Action that were or could have been brought by Plaintiff and other releasors against the Settling Defendants, as well as the other Releasees, in order to avoid further litigation ( Settlement Agreement ); WHEREAS, all capitalized terms used herein, and not otherwise defined herein, shall have the same meanings set forth in the Settlement Agreement, which is attached as Exhibit A; WHEREAS, the Settlement Agreement was expressly conditioned upon the entry by this Court of a Final Bar Order in substantially the form articulated below; IT IS HEREBY ORDERED THAT: 1. The Settling Defendants and the other Releasees are discharged from all claims for contribution and all claims for indemnification and the like, however styled, by any person or entity, whether arising under state, federal or common law, based upon, arising from, relating to, or in connection with the CalPERS Released Claims released in the Settlement Agreement. Accordingly, to the fullest extent provided by law, the Court bars, enjoins, and restrains any and all of the claims referred to in this paragraph against the Settling Defendants and the other Releasees. 2

33 Case 1:09-md LAK Document Filed 02/27/12 Page 27 of In the event Plaintiff in the CalPERS Action seeks to recover damages or any other form of monetary relief ( Damages ) from any person or entity based upon, arising from, relating to, or in connection with the CalPERS Released Claims released in the Settlement Agreement, Plaintiff shall give such person or entity the benefit of judgment reduction or offset equal to the greater of: (a) the amount of recovery obtained by Plaintiff in connection with the Settlement Agreement; or (b) the amount of any and all of the Settling Defendants percentage share of responsibility for the Damages. Date: IT IS SO ORDERED. Hon. Lewis A. Kaplan United States District Judge 3