EFiled: May 13 2020 02:13PHEEDT
`Transaction ID 65634694=(9(.(4,.1")*)
`CaseNo. 11614-VCG Ves
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`EXHIBIT A
`EXHIBIT A
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`EFiled: May 13 2020 02:13PM EDT
`Transaction ID 65634694
`Case No. 11614-VCG
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`IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
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`IN RE SANTANDER CONSUMER USA
`HOLDINGS, INC. DERIVATIVE
`LITIGATION
`
`C.A. No. 11614-VCG
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`NOTICE OF PENDENCY OF DERIVATIVE ACTION,
`PROPOSED SETTLEMENT OF DERIVATIVE ACTION,
`SETTLEMENT HEARING, AND RIGHT TO APPEAR
`
`The Delaware Court of Chancery authorized this Notice.
`This is not a solicitation from an attorney.
`
`TO: ALL RECORD HOLDERS AND BENEFICIAL OWNERS OF
`SANTANDER CONSUMER USA HOLDINGS, INC. (“SANTANDER”
`OR THE “COMPANY”) COMMON STOCK AS OF JANUARY 21,
`2020.
`
`PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.
`
`THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND
`DISMISSAL OF THE ABOVE-CAPTIONED DERIVATIVE ACTION
`(THE “ACTION”) AND CONTAINS IMPORTANT INFORMATION
`REGARDING YOUR RIGHTS. YOUR RIGHTS MAY BE AFFECTED BY
`THESE LEGAL PROCEEDINGS. IF THE COURT APPROVES THE
`SETTLEMENT, YOU WILL BE FOREVER BARRED FROM
`CONTESTING THE APPROVAL OF THE PROPOSED SETTLEMENT
`AND FROM PURSUING THE RELEASED CLAIMS.
`
`IF YOU HOLD SANTANDER COMMON STOCK FOR THE BENEFIT OF
`ANOTHER, PLEASE PROMPTLY TRANSMIT THIS DOCUMENT TO
`SUCH BENEFICIAL OWNER.
`
`PLEASE NOTE THAT THE ACTION IS A DERIVATIVE ACTION
`BROUGHT BY STOCKHOLDERS OF THE COMPANY FOR THE
`BENEFIT OF THE COMPANY, AND THERE IS NO CLAIM FORM
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`BECAUSE NO INDIVIDUAL HAS A RIGHT TO BE COMPENSATED AS
`A RESULT OF THE SETTLEMENT OF THE DERIVATIVE ACTION.
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`THE COURT HAS MADE NO FINDINGS OR DETERMINATIONS
`CONCERNING THE MERITS OF ANY CLAIMS OR DEFENSES BY
`ANY OF THE PARTIES IN THE ACTION. THE RECITATION OF THE
`BACKGROUND AND CIRCUMSTANCES OF THE SETTLEMENT
`CONTAINED HEREIN DOES NOT CONSTITUTE FINDINGS OF THE
`COURT. IT IS BASED ON REPRESENTATIONS MADE TO THE
`COURT BY COUNSEL FOR THE PARTIES.
`
`Notice is hereby provided to you of the proposed Settlement of the Action.
`This long form Notice is provided by Order of the Court of Chancery of the State of
`Delaware (the “Court”). It is not an expression of any opinion by the Court with
`respect to the truth of the allegations in the Action or merits of the claims or defenses
`asserted by or against any party. It is solely to notify you of the terms of the proposed
`settlement and your rights related thereto. Capitalized terms not otherwise defined
`shall have the same meaning as those set forth in the Stipulation and Agreement of
`Settlement, Compromise, and Release, dated as of January 15, 2020 (the
`“Stipulation”). The text of the Stipulation can be viewed and/or downloaded at
`http://investors.santanderconsumerusa.com/news/legal/Santander-Consumer-USA-
`Holdings-Inc-Derivative-Litigation
`
`On May 27, 2020 at 1:30 p.m., a hearing (the “Settlement Hearing”) will be
`held before the Court of Chancery at 34 The Circle, Georgetown, DE 19947, to
`determine: (i) whether the terms of the Settlement are fair, reasonable, and adequate,
`including the amount for Plaintiffs’ Counsel’s attorneys’ fees and expenses, and
`should be finally approved; (ii) whether the Final Order and Judgment should be
`entered and the Action dismissed with prejudice, pursuant to the Stipulation; and
`(iii) such other matters as may be necessary or proper under the circumstances.
`I.
`
`BACKGROUND OF THE ACTION
`
`On October 15, 2015, Plaintiff Feldman filed a derivative complaint,
`captioned Feldman v. Kulas, No. 11614-VCG (Del. Ch.) (the “Feldman Action”),
`on behalf of the Company against certain directors and officers of Santander for
`breaches of fiduciary duty, and alleging, among other things, that Defendants made
`false and misleading statements to the investing public. On September 27, 2016,
`Plaintiff Jackie888 filed a separate derivative complaint, captioned Jackie888, Inc.
`v. Kulas, No. 12775-VCG (Del. Ch.) (the “Jackie888 Action”), asserting similar
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`allegations. The complaints in the Action alleged, among other things, that
`Santander, which specializes in the subprime auto lending business, suffered
`deficiencies in oversight, risk management, and internal controls.
`
`Plaintiffs commenced the Action after several civil suits, including putative
`federal securities class actions, involving Santander and its leadership regarding
`alleged wrongdoing, and after several governmental investigations of Santander,
`including through subpoenas and civil investigative demands (“CIDs”).
`
`Prior to filing the complaint in his action, by letter dated October 3, 2014,
`Plaintiff Feldman made a demand on the Company pursuant to 8 Del. C. §220 to
`inspect certain of the Company’s books and records (the “Demand”). The Company
`produced certain documents pursuant to that Demand, which Plaintiff Feldman
`reviewed prior to filing his complaint. On December 29, 2015, by stipulation of the
`Parties, the Feldman Action was stayed pending resolution of the motions to dismiss
`the Deka Action. On April 13, 2017, Plaintiff Jackie888 also stipulated to stay the
`Jackie888 Action pending resolution of the Deka Action. On March 23, 2018,
`pursuant to stipulation of the Parties, the Court consolidated the Feldman and
`Jackie888 Actions.
`
`The Parties discussed resolution of the Action and, to that end, Plaintiff
`Feldman sent a settlement demand letter to Defendants on February 19, 2018.
`Subsequently, the Parties agreed to mediate the Action. The Parties retained Robert
`A. Meyer of JAMS to mediate their dispute. The Parties exchanged mediation
`statements. Prior to the mediation, the Parties separately had multiple phone calls
`and email correspondence with Mr. Meyer to discuss the merits of their allegations
`and their respective positions. On June 14, 2018, the Parties attended a mediation
`session before Mr. Meyer. After a full day session, the Parties made progress on
`several important issues, but were unable to reach a comprehensive settlement
`agreement. Over the following months, in continued consultation with Mr. Meyer,
`the Parties made several proposals and counter-proposals, and agreed to hold a
`second full-day mediation session before Mr. Meyer, which took place on December
`12, 2018. While the Parties did not reach a resolution that day, they continued to
`negotiate with the assistance of Mr. Meyer, and reached an agreement-in-principle
`on substantive terms to settle the Action. On or around July 18, 2019, the Parties
`executed a term sheet to that effect (the “Term Sheet”). The Stipulation
`memorializes the terms of the Parties’ agreement to settle the Action.
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`In connection with the above-described mediation and settlement discussions,
`counsel for the Parties did not discuss the appropriateness or amount of any
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`application by Plaintiffs’ Counsel for an award of attorneys’ fees and expenses until
`the substantive terms of the Settlement were negotiated and agreed upon.
`Subsequently, the Parties discussed and have agreed on attorneys’ fees. Plaintiffs
`intend to submit a Fee and Expense Application and also intend to request an
`incentive award for Plaintiffs.
`
`Plaintiffs have owned Santander common stock since the outset of the Action
`and continue to do so. Plaintiffs, having thoroughly considered the facts and law
`underlying the Action, and based upon the investigation and prosecution of the
`Action and the mediation that led to the Settlement, and after weighing the risks of
`continued litigation, have determined that it is in the best interests of Santander and
`its stockholders that the Action be fully and finally settled in the manner and upon
`the terms and conditions set forth in the Stipulation and that these terms and
`conditions are fair, reasonable, and adequate to Santander and its stockholders.
`
`Defendants have denied and continue to deny each and all of the claims and
`contentions alleged by Plaintiffs in the Action, including any and all allegations of
`wrongdoing, allegations of liability, and the existence of any damages asserted in or
`arising from the Action. Without limiting the generality of the foregoing,
`Defendants have denied and continue to deny that they acted improperly in
`connection with the allegations asserted in the Action, or that any misstatements or
`materially misleading omissions were made. Further, Defendants believe that they
`have substantial defenses to the claims alleged against them in the Action.
`Defendants have further asserted that, at all relevant times, they acted in good faith,
`and in a manner they reasonably believed to be in the best interests of Santander and
`its stockholders. Nevertheless, Defendants have concluded that further litigation in
`connection with the Action would be time-consuming and expensive. After
`weighing the costs, disruption, and distraction of continued litigation, they have
`determined, solely to eliminate the risk, burden, and expense of further litigation,
`and without admitting any wrongdoing or liability whatsoever, that the Action
`should be fully and finally settled in the manner and upon the terms and conditions
`set forth in the Stipulation.
`II. TERMS OF THE PROPOSED DERIVATIVE SETTLEMENT
`
`The principal terms, conditions, and other matters that are part of the
`Settlement, which is subject to approval by the Court, are summarized below. This
`summary should be read in conjunction with, and is qualified in its entirety by
`reference to, the Stipulation, which is available at
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`http://investors.santanderconsumerusa.com/news/legal/Santander-Consumer-USA-
`Holdings-Inc-Derivative-Litigation.
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`In consideration of the full settlement, satisfaction, compromise, and release
`of the Released Plaintiffs’ Claims, as against the Released Defendants, and the
`dismissal with prejudice of the Action, the Parties agree as specified below.
`
`Santander and the Defendants agree that the filing and pendency of the Action
`preceded the decision by Santander to implement certain initial corporate
`governance reforms (the “Initial Reforms”),
`the enumerated governance
`enhancements (the “Governance Enhancements”) were agreed to in settlement of
`and as a result of the Action, and the Settlement confers a substantial benefit on
`Santander.
`
`This Settlement has been approved by those Santander director(s) who have
`not been named as defendants in the Action as being in the best interests of the
`Company.
`
`The Board of Directors of Santander (the “Board”) has adopted or shall adopt
`resolutions and amend committee charters to the extent necessary for the
`implementation of the corporate governance changes set forth below. The
`governance reforms set forth herein shall be maintained for a period of at least four
`years, unless any provision (or part of any provision) is rendered unlawful or ill-
`advised under any statute or regulation. The Board may exercise its discretion in
`deciding whether to continue any of the corporate governance changes after four
`years.
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`Initial Reforms
`
`(a)
`Improved oversight over accounting and financial reporting by
`hiring experienced accounting staff, including:
`
`(i)
`appointing an additional independent director to the Audit
`Committee of the Board;
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`(ii)
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`hiring a new Chief Accounting Officer;
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`(iii) hiring a new Vice President of Accounting Policy;
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`(iv) hiring a new Vice President of Financial Analytics; and
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`(v)
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`hiring a new Head of Internal Controls.
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`(b)
`Improved management documentation, review controls, and
`oversight of accounting and financial reporting activities to ensure accounting
`practices conform to the Company’s policies and U.S. GAAP, including:
`
`(i)
`completed a comprehensive design effectiveness review
`and augmentation of the controls;
`
`(ii)
`implemented a more comprehensive monitoring plan for
`the credit loss allowance with a specific focus on model inputs, changes
`in model assumptions, and model outputs;
`
`(iii)
`implemented improved controls over the development of
`new models or changes to models used to estimate credit loss
`allowance; and
`
`(iv)
`procedures.
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`implemented enhanced on-going performance monitoring
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`(c) Developed and implemented additional documentation, controls,
`and governance for the credit loss allowance and accretion processes,
`including:
`
`(i)
`newly required quarterly accounting memorandum that
`provides a detailed explanation of how the Company’s Allowance for
`Loan and Lease Losses (“ALLL”) complies with GAAP;
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`(ii)
`required quarterly SAB 102 analysis
`newly
`documents compliance with GAAP; and
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`that
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`(iii) newly required quarterly ALLL Methodology memo
`prepared by SC’s Risk Department that includes a full analysis of prior
`quarter ALLL, including a summary of results, any changes in key
`assumptions or model
`inputs, detailed analysis of
`reserves,
`management adjustments and evidence, analysis of all qualitative
`factors, and industry comparisons.
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`Governance Enhancements
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`(d) Executive-Level Accounting and Credit Loss Committee
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`(i)
`Santander commits to forming and maintaining, for no less
`than four years a new, executive-level Accounting and Credit Loss
`Committee, which shall consist of the new Chief Accounting Officer;
`Vice President of Accounting Policy; Vice President of Financial
`Analytics; and Head of Internal Controls.
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`(e) Formalizing and Monitoring of the Initial Reforms
`
`(i)
`Santander will maintain the Initial Reforms for a period of
`no less than four years.
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`(ii) The Accounting and Credit Loss Committee shall monitor
`and document the effectiveness of the Initial Reforms on a quarterly
`basis and ensure that its newly implemented key controls for financial
`reporting, credit loss allowance, and accretion processes are reviewed
`and tested by independent parties on an annual basis; and
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`(iii) The Accounting and Credit Loss Committee shall oversee
`quarterly audits to ensure that the Initial Reforms have been established
`and are being maintained and shall provide the Audit Committee with
`a quarterly report regarding the establishment and maintenance of the
`Initial Reforms.
`
`(f)
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`Training
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`Santander will develop and conduct, on an annual basis,
`(i)
`broad-based Sarbanes-Oxley training for all accountable executives
`and control owners at Santander, to ensure an understanding of the
`control program and employees’ roles in ensuring the accuracy and
`completeness of the Company’s financial statements and disclosures.
`Such training shall include a section on compliance with GAAP and
`federal and state securities laws applicable to Santander’s operations,
`as well as Santander’s policies and codes, including those detailed in
`Santander’s Code of Conduct.
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`(g) Board Diversity
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`Santander agrees to interview at least one woman for every
`(i)
`new Board position until Santander has at least four women on its
`Board.
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`(h) Revisions to Code of Conduct
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`(i)
`provide:
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`The Company’s Code of Conduct shall be revised to
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`If you become aware of a failure by the Company to
`comply with accounting procedures mandated by the
`federal securities laws and SEC rules, regulations, or
`guidance, or if you, or anyone else you are aware of, are
`asked to discharge your/their respective duties in a manner
`that fails to comply with any such rules, regulations, or
`guidance, you shall immediately report the event to the
`legal and compliance department.
`
`(ii) The following clause shall be added to the Code of
`Conduct and the Supplemental Code of Ethics for the Chief Executive
`Officer (“CEO”) and Senior Financial Officers:
`
`You are expected to be familiar with legal and regulatory
`provisions that relate to the performance of your job and
`you must follow the spirit, as well as the letter, of such
`laws and regulations in your business dealings. No officer,
`employee, and/or director of Santander has any authority
`to engage in conduct inconsistent with applicable U.S.
`laws and regulations or to authorize, direct, or condone
`such conduct by any other person.
`
`(i)
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`Reporting to the Board
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`The Chairpersons of the Risk and Audit Committees shall
`(i)
`report to the full Board at least quarterly regarding the areas of risk
`oversight and corporate governance in their purview.
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`(j) Whistleblower Program
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`Santander employees shall be advised that they need not
`(i)
`report concerns directly to the Company and have the right to report
`concerns directly to applicable regulatory agencies (and have the right
`to hire their own lawyer to represent them in any such proceeding, at
`their own cost, if they so choose);
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`If a whistleblower brings his or her complaint to an outside
`(ii)
`regulator or other governmental entity, he or she will be protected by
`the terms of the Whistleblower Program, just as if he or she had
`reported the complaint internally;
`
`(iii) Santander shall remind employees of whistleblower
`options and whistleblower protections in employee communications
`provided at least twice a year and via the Company’s intranet; and
`
`(iv) Santander’s Chief Legal Officer shall meet at least
`annually with the Audit and/or Risk Committee to discuss the current
`Whistleblower Policy and consider any amendments thereto.
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`(k) Revisions to Compensation Committee Charter
`
`The Compensation Committee charter shall be amended to
`(i)
`state that a majority of the Compensation Committee shall be
`comprised of independent directors.
`III. RELEASES
`
`If the Settlement is approved, the Court will enter a Final Order and Judgment
`Approving Derivative Action Settlement. Pursuant to the Final Order and Judgment,
`upon the Effective Date of the Settlement, the Action will be dismissed with
`prejudice and the following releases will occur:
`
`(a) Release of claims by Plaintiffs: Upon the Effective Date,
`Plaintiffs and each and every other Santander Stockholder, derivatively on
`behalf of Santander, and on behalf of themselves and their respective agents,
`spouses, heirs, executors, administrators, personal
`representatives,
`predecessors, successors,
`transferors,
`transferees, representatives, and
`assigns, in their capacities as such, and Santander directly, shall be deemed to
`have, and by operation of law and of the Final Order and Judgment shall have,
`completely, fully, finally, and forever compromised, settled, released,
`resolved, relinquished, waived, discharged, and dismissed with prejudice the
`Released Plaintiffs’ Claims and shall be forever enjoined from pursuing or
`prosecuting the Released Plaintiffs’ Claims, and any other litigation or
`demands, including books and records demands, arising out of or relating to
`the Released Plaintiffs’ Claims, excluding claims relating to the enforcement
`or effectuation of the Settlement or the Final Order and Judgement.
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`(i)
`“Released Plaintiffs’ Claims” means any and all claims,
`demands, rights, liabilities, losses, obligations, duties, damages, costs,
`debts, expenses, interest, penalties, sanctions, fees, attorneys’ fees,
`actions, potential actions, causes of action, suits, judgments, defenses,
`counterclaims, offsets, decrees, matters, issues and controversies of any
`kind, nature or description whatsoever, whether known or unknown,
`disclosed or undisclosed, accrued or unaccrued, apparent or not
`apparent, foreseen or unforeseen, matured or not matured, suspected or
`unsuspected, liquidated or not liquidated, fixed or contingent, including
`Unknown Claims, that were asserted, or that could have been asserted,
`by any stockholder on behalf of Santander, or by Santander, against any
`Released Party (or any of their current and prior parents, affiliates,
`subsidiaries, predecessors, officers, directors, employees, agents,
`successors, assigns, creditors, administrators, heirs, and
`legal
`representatives) in connection with, arising out of, related to, based
`upon, in whole or in part, directly or indirectly, any action or omission
`or failure to act alleged or which could have been alleged either in the
`Action, Verified Stockholder Derivative Complaints, or any demand
`letter related to the subject matter referenced in the Action or Verified
`Stockholder Derivative Complaints, including, without limitation, any
`such claims based in whole or in part on any allegations made in any of
`the following actions or proceedings: (1) Steck v. Santander Consumer
`Holdings Inc., No. 1:14-cv-06942 (S.D.N.Y.); (2) Deka Investment
`GmbH v. Santander Consumer USA Holding Inc., No. 3:15-cv-02129
`(N.D. Tex.); (3) Parmelee v. Santander Consumer USA Holdings Inc.,
`No. 3:16-cv-00783 (N.D. Tex.); or (4) any government investigations,
`actions, or proceedings referenced in the Action or Verified
`Stockholder Derivative Complaints; provided, however, for the
`avoidance of doubt, that the Released Plaintiffs’ Claims shall not
`include: (1) any direct claims, including, without limitation, any direct
`claims that any Santander Stockholder has or could assert under the
`federal securities laws; or (2) any claims to enforce this Stipulation, the
`Settlement, or the Final Order and Judgment; or (3) any claims, if any,
`that any Party may have against any insurer with respect to any payment
`obligations under this Stipulation or Settlement.
`
`(ii)
`“Released Defendants” means, whether or not each or all
`of the following Persons were named, served with process, or appeared
`in the Action: (1) Defendants, Defendants’ counsel, and Santander;
`(2) the current and former parents (including general or limited
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`partners), affiliates, subsidiaries, successors, predecessors, assigns, and
`assignees of each of the Defendants, Defendants’ counsel, and
`Santander; and (3) all of the former or current agents, controlling
`persons, principals, members, managers, managing members, direct or
`indirect equity holders, employees, officers, directors, trustees,
`predecessors, successors, attorneys, heirs, insurers, reinsurers, co-
`insurers, underwriters, accountants, auditors, consultants, other
`representatives, servants, respective past or present family members,
`spouses, agents, fiduciaries, corporations, bankers, estates, and advisors
`of each Person listed in (1) and (2), in their capacities as such, and each
`of their current and former officers, directors, employees, parents,
`affiliates, subsidiaries, successors, predecessors, assigns, and assignees,
`in their capacities as such.
`
`(b) Release of claims by Defendants: Upon the Effective Date,
`Defendants, Santander, and each of the other Released Defendants shall be
`deemed to have, and by operation of law and of the Final Order and Judgment
`shall have, fully, finally, and forever released, relinquished, and discharged
`the Released Defendants’ Claims against the Released Plaintiffs and any and
`all claims (including Unknown Claims) arising out of, relating to, or in
`connection with the prosecution, settlement, or resolution of the Action
`against the Released Plaintiffs, and shall be forever enjoined from prosecuting
`the Released Defendants’ Claims, excluding claims relating to
`the
`enforcement or effectuation of the Settlement or the Final Order and
`Judgement. Nothing herein shall in any way impair or restrict the rights of
`any Party to enforce the terms of this Stipulation.
`
`(i)
`“Released Defendants’ Claims” means any and all manner
`of claims, demands, rights, liabilities, losses, obligations, duties,
`damages, costs, debts, expenses, interest, penalties, sanctions, fees,
`attorneys’ fees, actions, potential actions, causes of action, suits,
`judgments, defenses, counterclaims, offsets, decrees, matters, issues
`and controversies of any kind, nature or description whatsoever,
`whether known or unknown, disclosed or undisclosed, accrued or
`unaccrued, apparent or not apparent, foreseen or unforeseen, matured
`or not matured, suspected or unsuspected, liquidated or not liquidated,
`fixed or contingent, including Unknown Claims, which were or which
`could have been asserted by any of the Defendants in any court,
`tribunal, forum or proceeding, whether based on state, local, foreign,
`federal, statutory, regulatory, common or other law or rule, and which
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`are based upon, arise out of, relate in any way to, or involve, directly or
`indirectly: (1) the actions, inactions, deliberations, discussions,
`decisions, votes, or any other conduct of any kind by any of the
`Released Parties, relating in any way to any agreement, transaction,
`occurrence, conduct, or fact alleged or set forth in the Verified
`Stockholder Derivative Complaints; or (2) the commencement,
`prosecution, defense, mediation, or settlement of the Action, including,
`but not limited to, discovery produced in the Action; provided,
`however, for the avoidance of doubt, that the Released Defendants’
`Claims shall not include any claims to enforce this Stipulation, the
`Settlement, the Final Order and Judgment, or any other document
`memorializing the Settlement of the Action, and shall not include
`claims, if any, that any Party may have against any insurer with respect
`to any payment obligations under this Stipulation or the Settlement.
`
`(ii)
`“Released Plaintiffs” means Plaintiffs, Plaintiffs’ Counsel,
`Santander, Santander Stockholder(s), and any and all of their former or
`current agents, parents, controlling persons, general or limited partners,
`members, managers, managing members, direct or indirect equity
`holders, subsidiaries, affiliates, employees, officers, directors,
`predecessors, successors, attorneys, heirs, successors, assigns, insurers,
`reinsurers, consultants, other representatives, servants, respective past
`or present family members, spouses, agents, fiduciaries, partners,
`corporations, direct or indirect affiliates, bankers, estates, and advisors,
`in their capacities as such.
`
`(iii) “Unknown Claims” means any Released Claims that a
`Person granting a Release hereunder does not know or suspect to exist
`in his, her or its favor at the time of the Release, including, without
`limitation, those that, if known, might have affected the decision to
`enter into or object to the Settlement. With respect to any and all
`Released Claims, the Parties stipulate and agree that, upon the Effective
`Date, Plaintiffs, Defendants, and Santander shall have expressly
`waived, and Santander Stockholders shall be deemed to have, and by
`operation of the Final Order and Judgment by the Court shall have,
`waived, relinquished, and released any all provisions, rights and
`benefits conferred by or under Cal. Civ. Code §1542 (and equivalent,
`comparable, or analogous provisions of the laws of the United States or
`any state or territory thereof, or of the common law). Cal. Civ. Code
`§1542 provides that:
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`A GENERAL RELEASE DOES NOT EXTEND TO
`CLAIMS WHICH THAT THE CREDITOR OR
`RELEASING PARTY DOES NOT KNOW OR
`SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
`TIME OF EXECUTING THE RELEASE THAT,
`WHICH IF KNOWN BY HIM OR HER, WOULD HAVE
`MATERIALLY AFFECTED HIS OR HER
`SETTLEMENT WITH THE DEBTOR OR RELEASED
`PARTY.
`
`Plaintiffs, Defendants, and Santander acknowledge, and all other Santander
`Stockholders by operation of law shall be deemed to have acknowledged, that they
`may discover facts in addition to or different from those now known or believed to
`be true with respect to the Released Claims, but that it is the intention of Plaintiffs,
`Defendants, and Santander, and all other Santander Stockholders by operation of
`law, to completely, fully, finally and forever extinguish any and all Released Claims
`without regard to the subsequent discovery of additional or different facts. Plaintiffs,
`Defendants, and Santander acknowledge, and all other Santander Stockholders by
`operation of law shall be deemed to have acknowledged, that this waiver and the
`inclusion of “Unknown Claims” in the definition of “Released Claims” was
`separately bargained for and was a material element of the Settlement and was relied
`upon by each and all of the Parties in entering into this Stipulation and agreeing to
`the Settlement.
`
`The “Effective Date” of the Settlement shall be deemed to occur on the
`occurrence or waiver in writing by all Parties of all of the following events: (a)
`Plaintiffs and Defendants have not exercised their options to terminate the
`Settlement in accordance with the terms of the Stipulation; (b) the Court has
`approved the Settlement, following notice to Santander Stockholders and a hearing,
`and has entered the Scheduling order; (c) the Court has entered the Final Order and
`Judgment and the Final Order and Judgment has become Final; and (d) the Action
`has been dismissed with prejudice.
`IV. PLAINTIFFS’ COUNSEL’S ATTORNEYS’ FEES AND EXPENSES
`
`Plaintiffs’ Counsel intend to apply to the Court for an award of attorneys’ fees
`and expenses. Plaintiffs’ Counsel agree not to seek attorneys’ fees and expenses
`from the Court in excess of $1,500,000. Plaintiffs’ Counsel also intend to apply to
`the Court for a service award of $5,000 for each Plaintiff, which, if granted, shall be
`paid out of the attorneys’ fee and expense award. Defendants and Santander have
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`agreed to pay the $1,500,000 attorneys’ fees and expense award. The above-
`referenced fee and expense award shall constitute the full amount that Santander and
`Defendants shall be required to pay to Plaintiffs’ Counsel, or any other counsel, in
`connection with the litigation and settlement of the claims asserted in this Action.
`V. REASONS FOR THE SETTLEMENT
`
`The Parties have determined that it is desirable and beneficial that the Action
`and any dispute related thereto is fully and finally settled in the manner and upon the
`terms and conditions set forth in the Stipulation, and Plaintiffs’ Counsel believes that
`the Settlement is in the best interest of the Parties and Santander Stockholders.
`A. Why Did Plaintiffs Agree to Settle?
`
`Plaintiffs and Plaintiffs’ Counsel believe that the claims asserted in the Action
`have merit. Nonetheless, Plaintiffs and Plaintiffs’ Counsel also recognize and
`acknowledge the significant risk, expense, and length of continued proceedings
`necessary to prosecute the Action against the individual Defendants through trial and
`appeal. Plaintiffs and Plaintiffs’ Counsel also have taken into account the uncertain
`outcome and the risk of any litigation, especially in complex cases, such as the
`Action, as well as the difficulties and delays inherent in such litigation. Plaintiffs
`and Plaintiffs’ Counsel are also mindful of the inherent problems of proving the
`violations asserted in the Action. In consideration of the mediation that led to the
`Settlement, and after weighing the risks of continued litigation, Plaintiffs and
`Plaintiffs’ Counsel have determined that it is in the best interests of Santander and
`its stockholders that the Action be fully and finally settled in the manner and upon
`the terms and conditions set forth in the Stipulation and that these terms and
`conditions are fair, reasonable, adequate, and confer substantial benefits to
`Santander and its stockholders.
`B. Why Did the Defendants Agree to Settle?
`
`Defendants deny each and all of the claims and contentions alleged in the
`Action. Moreover, Defendants expressly deny any misconduct alleged in the Action
`and further deny any wrongdoing, legal liability, or violation of any laws arising out
`of any of the conduct alleged in the Action. Furthermore, Defendants believe they
`have substantial defenses to the claims alleged against them in the Action. And
`neither the Stipulation nor any document referred to therein nor any action taken to
`carry out the Stipulation is, may be construed as, or may be used as an admission by
`or against Defendants of any fault, wrongdoing, or liability whatsoever or the lack
`of merit of any defense that had been or could have been asserted to such claim.
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`Defendants nevertheless recognize that further conduct of the Action against
`them would be protracted, expensive, and distracting. If the Action is not settled,
`substantial amounts of time, energy, and resources have been and, unless this
`Settlement is made, will have to be devoted to the defense of the claims asserted in
`the Action. Defendants have, therefore, determined that it is desirable and beneficial
`to them and the Company that the Action should be fully and finally settled in the
`manner and upon the terms and conditions set forth in the Stipulation to eliminate
`the burden and expense of further protracted litigation.
`VI. SETTLEMENT HEARING
`
`On May 27,