IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
each of them or their duly authorized representatives on the dates hereinafter subscribed.
FEDERAL DEPOSIT INSURANCE CORPORATION

As Receiver for Patriot Bank Minnesota

By:
Name:
Title:

Dated:

John Milbauer, an Individual

‘Dated:

Sarah Bazey, an Individual

Dated:

Greg Evgen, an Individual

Dated: “3-0 = Pad

Michael Muske, an Individual

Dated:



B, The Settling Defendants’ Release.

Effective simultaneously with the release granted in Section IILA. above, the Settling
Defendants, on behaif of themselves individually, and their respective heirs, executors, trustees,
administrators, agents, representatives, attorneys, successors, and assigns, hereby release and
discharge the FDIC-R and its employees, officers, directors, representatives, attorneys,
successors and assigns, from any and all claims, demands, obligations, damages, actions, and
causes of action, direct or indirect, that arise from or relate to, the performance, non-
performance, or manner of performance of Settling Defendants’ functions, duties and actions as
officers and/or directors of the Bank, including without limitation the causes of action alleged in
the Action.

C. The Insurer’s Release.

Effective simultaneously with the releases granted in Section IIJ.A. above, Insurer, for
itself and its successors and assigns, and on behalf of its parents, subsidiaries, affiliates and
reinsurers, and their successors and assigns, hereby releases and discharges the FDIC-R, and its
employees, officers, directors, agents, representatives, attorneys, successors, and assigns, from
any and all claims, demands, obligations, damages, actions, and causes of action, direct or
indirect, in law or equity, that arise from or relate to the Policy.

D. Exceptions from Releases by FDIC-R.

1. Notwithstanding any other provision of this Agreement, the FDIC-R does
not release, and expressly preserves fully and to the same extent as if this Agreement had not
been executed, any claims or causes of action:

a. Against the Settling Defendants or any other person or entity for

liability, if any, incurred as the maker, endorser or guarantor of any promissory note or


MAR-14-2016 65:33

~ BLUELINE COATINGS

Benson Theuninek, an Individual

6514646729 P.a2

Dated:

Donald Waldoch, an Individual

Dated:,

Leonierel wojtofa, an TAdividual

mL ee

FRORRAT. INSURANCE COMPANY

Ry:
Name:
Title:

Dated:

TOTAL P.@2


E. Entire Agreement and Amendments. This Agreement constitutes the entire

agreement and understanding between and among the undersigned Parties concerning the matters
set forth herein and supersedes any prior agreements or understandings. This Agreement may
not be amended or modified, nor may any of its provisions be waived, except in writing signed
by the Parties bound thereby, or by their respective authorized attorney(s) or other
representative(s).

F. Title and Captions. All section titles and captions contained in this Agreement are
for convenience only and shall not affect the interpretation of this Agreement.

G. No Confidentiality. The undersigned Parties acknowledge that this Agreement
shall not be confidential and will be disclosed pursuant to the Federal Deposit Insurance
Corporation’s applicable policies, procedures, and other legal requirements.

H. No Reliance. The Parties warrant and represent that no promise or inducement
has been offered, made, or accepted by anyone in connection with this Agreement except for the
mutual covenants expressly set forth herein, and that they have accepted and executed this
Agreement without reliance upon any other statements, claims, or representations made by other

Parties or their attorneys, consultants, representatives, or agents.

10


against the United States based on or arising out of, in whole or in part, the closing of the Bank,
or any alleged acts or omissions by the Federal Deposit Insurance Corporation in any capacity.
the United States government, or any agency or department of the United States government in
connection with the Bank, its conservatorship, or receivership, Settling Defendants hereby
knowingly assign to the FDIC-R any and ail rights, titles, and interest in and to any and all such
dividends, payments, or other distributions, or proceeds.

SECTION V: Representations and Acknowledgements

A. Authorized Signatories. All of the undersigned persons represent and warrant that
they are Parties hereto or are authorized to sign this Agreement on behalf of the respective Party,
and that they have the full power and authority to bind such Party to each and every provision of
this Agreement. This Agreement shall be binding upon and inure to the benefit of the
undersigned Parties and their respective heirs, executors, trustees, administrators, representatives,
successors and assigns.

B. Advice of Counsel. Each Party hereby acknowledges that he, she or it has
consulted with and obtained the advice of counsel prior to executing this Agreement, and that
this Agreement has been explained to that Party by his or her counsel.

Cc Non-Assignment. Each Party represents and warrants that he, she or it has not
assigned to any other person or entity any claims released by such Party pursuant to this
Agreement.

SECTION V: Reasonable Cooperation

The Parties agree to cooperate in good faith to effectuate all of the terms and conditions
of this Agreement, including doing, or causing their agents and attorneys to do, whatever is
reasonably necessary to effectuate the signing, delivery, execution, filing, recording, and entry,

of any documents necessary to conclude the Action and to otherwise perform this Agreement.


indebtedness payable or owed by them to FDIC-R, the Bank, other financial institutions, or any
other person or entity, including without limitation any such claims acquired by FDIC-R as
successor in interest to the Bank or any person or entity other than the Bank,

b. Against any person or entity not expressly released by FDIC-R in
this Agreement, including without limitation any appraiser who provided services to the Bank.

2. Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall be construed or interpreted as limiting, waiving, releasing or compromising the
jurisdiction and authority of the Federal Deposit Insurance Corporation in the exercise of its
supervisory or regulatory authority or to diminish its ability to institute administrative
enforcement proceedings seeking removal, prohibition or any other relief it is authorized to seek
pursuant to its supervisory or regulatory authority against any person.

3. Notwithstanding any other provision of this Agreement, this Agreement
does not purport to waive, or intend to waive, any claims which could be brought by the United
States through the Department of Justice, the United States Attorney’s Office for any federal
judicial district , or any other department or agency of the United States as defined by 18 U.S.C.
§ 6. In addition, FDIC-R specifically reserves the right to seek court-ordered restitution pursuant
to the relevant provisions of the Victim and Witness Protection Act, 18 U.S.C. § 3663, ef. seq., if
appropriate.

SECTION IV: Waiver of Dividends and Proceeds from Litigation
To the extent, if any, that Settling Defendants are or were shareholders of the Bank or its
holding company and by virtue thereof are or may be entitled to a dividend, payment, or other
distribution upon resolution of the receivership of the Bank or proceeds in any litigation that has

been or could be brought against the Federal Deposit Insurance Corporation in any capacity or


Benson Theuninck, an Individual

Dated:

Donald Waldoch, an Individual

Dated:

Leonard Wojtowicz, an Individual

Dated:

FEDERAL INSURANCE COMPANY

By: a
Name: NVOLA B. NEALY
Vide: SQ. CLUS OFFICER?

Dated: Liar 2, 20/6



may be delivered by facsimile or e-mail transmission, which will constitute complete delivery
without the necessity to deliver original signed signature pages.

Cc. Choice of Law, This Agreement shall be interpreted, construed and enforced
according to applicable federal law, or in its absence, the laws of the State of Minnesota, without
regard to conflict of law rules.

D. Notices. Any notices required hereunder shall be sent by registered mail, first

class, return receipt requested, or by email, to the following:

If to FDIC-R:

M. Jesse Carlson, Counsel

Federal Deposit Insurance Corporation
3501 North Fairfax Drive, Room B-7030
Arlington, VA 22226

bo]

with a copy to:

James A. Rolfes

Reed Smith LLP

10 South Wacker Drive
Suite 4000

Chicago, IL 60606

If to Settling Defendants:
Susan E. Barnes

Lindquist & Vennum LLP

80 South Eighth Street

4200 IDS Center
Minneapolis, MN 55402-2100

Lae

If to Insurer:

Nora B. Neary

Federal Insurance Company
82 Hopmeadow Street
Simsbury, CT 06070-7683

Ce)


SETTLEMENT AND RELEASE AGREEMENT

This Settlement and Release Agreement (“Agreement”) is effective as of February 25,
2016, by, between, and among the following undersigned parties: the Plaintiff Federal Deposit
Insurance Corporation, as Receiver for Patriot Bank Minnesota (“FDIC-R”), and John Milbauer,
Sarah Bazey, Greg Evgen, Michael Muske, Benson Theuninck, Donald Waldoch and Leonard
Wojtowicz (collectively, the “Settling Defendants”), and Federal Insurance Company (“Insurer”)
(individually, the FDIC-R, the Settling Defendants, and the Insurer may be referred to herein as a
“Party” and collectively as the “Parties”).

RECITALS
WHEREAS:

1. Prior to January 27, 2012, Patriot Bank, Minnesota (“Bank”) was a state non-
member bank, owned by of Lino Lakes Banc Shares, Inc., a registered bank holding company
incorporated under the laws of the State of Minnesota;

2. On January 27, 2012, the Minnesota Department of Commerce closed the Bank
and appointed FDIC-R receiver. In accordance with 12 U.S.C. § 1821(d), FDIC-R succeeded to
all rights, titles, powers and privileges of the Bank, including those with respect to its assets.

3. Among the assets to which the FDIC-R succeeded were all of the Bank's claims,
demands, and causes of action against its former directors, officers, and employees arising from
the performance, nonperformance, and manner of performance of their respective functions,
duties and acts as directors, officers, and employees of the Bank;

4, On February 3, 2015, the FDIC-R filed a complaint for money damages against

the Settling Defendants. Those claims for damages are now pending in the United States District


IN WITNESS WHEREOF, the Partics hereto have caused this Agreement to be executed by
each of them or their duly authorized representatives on the dates hereinaiier subscribed.
FEDERAL DEPOSIT INSURANCE CORPORATION

As Receiver for Patriot Bank Minnesota

By:
Name:
Title:

Dated:

John Milbauer, an Individual

Died $93 ren

Sarah Bazey, an Individual!

Dated:

Greg Evgen, an Individual

Dated:

Michael Muske, an Individual

Dated:



IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
each of them or their duly authorized representatives on the dates hereinafter subscribed.

FEDERAL DEPOSIT INSURANCE CORPORATION
As Receiver for Patriot Bank Minnesota

By:
Name: Aiclae\ Jee Cala
Title: Compr, 0

Dated: Fie 2, we

John Milbauer, an Individual

Dated:

Sarah Bazey, an Individual

Dated:

Greg Evgen, an Individual

Dated:

Michael Muske, an Individual

Dated:

11


SECTION VI: Destruction of Confidential Documents and ESI

Within thirty (30) days of the effective date of the release given by FDIC-R to the
Settling Defendants pursuant to this Agreement, counsel for the Settling Defendants shall certify
to the FDIC-R that afl documents and electronically stored information ("ESI") related to the
Bank that FDIC-R provided either in response to formal or informal discovery requests, in
connection with mediation or settlement discussions, or as part of the FDIC-R’s investigation,
(hereinafter, "Confidential Materials Provided by FDIC-R") have been destroyed and deleted,
with no copies retained, in a manner designed to protect the confidential nature of the
Confidential Materials provided by FDIC-R. Furthermore, the Settling Defendants and their
counsel shall continue to comply with any previous confidentiality agreements with the FDIC-R
and the protective order entered in the Action.

SECTION VII: Other Matters

A. No Admission of Liability. The undersigned Parties each acknowledge and agree
that the matters set forth in this Agreement constitute the settlement and compromise of disputed
claims and defenses, that this Agreement is not an admission or evidence of liability or infirmity
by any of them regarding any claim or defense, and that the Agreement shall not be offered or
received in evidence by or against any Party except to enforce its terms.

B. Execution in Counterparts. This Agreement may be executed in counterparts by
one or more of the Parties and all such counterparts when so executed shall together constitute
the final Agreement, as if one document had been signed by all Parties; and each such
counterpart, upon execution and delivery, shall be deemed a complete original, binding the

Parties subscribed thereto upon the execution by ail Parties to this Agreement. Signature pages


the actions set forth in Sections 1.C.2 through 1.C.4 at any time prior to receipt of the Settlement
Payment in full.

SECTION II: Stipulation and Dismissal

Within ten business days after the latter of (1) full execution of this Agreement by all of
the Parties, and (2) receipt of the Settlement Payment, the FDIC-R shall file a stipulation of
dismissal with prejudice, executed by the attorneys for all Parties hereto, in the form attached as
Exhibit A, in the Action.

SECTION III: Releases

A. FDIC-R's Releases.

Upon receipt of the Settlement Payment in full and except as provided in Section IILD.,
the FDIC-R, for itself and its successors and assigns, hereby releases and discharges:

1. The Settling Defendants and their respective heirs, executors, trustees,
administrators, representatives, attorneys, successors and assigns, from any and all claims,
demands, obligations, damages, actions, and causes of action, direct or indirect, in law or in
equity, known or unknown, belonging to the FDIC-R against the Settling Defendants that arise
from or relate to, the performance, non-performance, or manner of performance of Settling
Defendants’ functions, duties and actions as officers and/or directors of the Bank, including
without limitation the causes of action alleged in the Action.

2. Insurer, its parents, subsidiaries, affiliates and reinsurers, and their respective
employees, officers, directors, agents, representatives, attorneys, successors and assigns, from
any and all claims, demands, obligations, damages, actions, and causes of action, direct or
indirect, in law or in equity, that arise from or relate to the Policy. As a part of this release, the

FDIC-R agrees that any interest it may have under the Policy is extinguished.


IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
each of them or their duly authorized representatives on the dates hereinafter subscribed.
FEDERAL DEPOSIT INSURANCE CORPORATION

As Receiver for Patriot Bank Minnesota

By:
Name:
Title:

Dated:

John Milbauer, an Individual

Dated:

Sarah Bazey, an Individual

Dated:

Greg Evgen, an Individual

Dated:

Michael Muskéan Individual _

Dated: STP DS Cc


Benson Theuninck, an Individual

Dated:

Donald Waldoch, an Individual

Dated: 2-4

Leonard Wojtowicz, an Individual

Dated:

FEDERAL INSURANCE COMPANY

By:
Name:
Title:

Dated:

12


the Settling Defendants (the “Settlement Payment”). The Settlement Payment shall be made by
check payable to FDIC as Receiver for Patriot Bank Minnesota, with Memorandum Line reading

E—=1) and sent by overnight delivery to:

JPMorgan Chase (TX1-0006)
Attn: FDIC Receivership Lock Box {__—-}
14800 Frye Road 2nd Floor
Fort Worth, TX 76155
B. If the FDIC-R does not receive the Settlement Payment in full on or before the
date determined by subsection A above, then the FDIC-R, in its sole discretion, shall have the
right at any time prior to the receipt of the Settlement Payment in full to:
1. Extend the period of time for the Settlement Payment; and/or
2. Enforce this Agreement, in which event the Settling Defendants and
Insurer agree to jurisdiction in the United States District Court for the District of Minnesota and
the Insurer agrees to pay all of the FDIC-R's reasonable attorney's fees and costs expended in
enforcing the terms of this Agreement; and/ or
3. Terminate this Agreement, move to vacate any dismissal order (to which
the Settling Defendants and Insurer agree to consent), and re-institute an action on the FDIC-R’s
claims. The Settling Defendants and Insurer further agree to waive any defense based on the
statute of limitations that would bar any of the FDIC-R’s claims, and covenant and agree not to
assert any objections, defenses, claims or counterclaims that did not exist or were otherwise
unavailable as of the date this Agreement was fully executed; and/or
4. Seek any other relief available to it in law or equity.

Any extension of time under 1.C.1 for delivery of the Settlement Payment or acceptance

of a portion of the Settlement Payment shall not prejudice the rights of the FDIC-R to take any of


Court for Minnesota in FDIC v. Milbauer, et al, No. 1:15-cv-434-ADM/JJK (D. Minn.)
(“Action”);

5. The Settling Defendants have denied liability in the Action;

6. Insurer issued liability policy number|__—~~~}the-“Poliey”)-which-insured the
Settling Defendants according to the terms, provisions and conditions of the Policy, and the
Settling Defendants made claims under the Policy for coverage of the claims asserted against
them by FDIC-R in the Action;

7. On February 25, 2016, the Hon. Jeffrey Keyes, United States Magistrate Judge for
the United States District Court for the District of Minnesota (the “Court”) instructed that Insurer
shall execute this Agreement, could make payment by check, and in any subsequent action based
on the Insurer’s failure to make timely payment, could be subject to an assessment of costs,
including attorney’s fees, of any subsequent proceeding to collect past due amounts, if
warranted; and

8. The undersigned Parties deem it in their best interests to enter into this Agreement
to avoid the uncertainty and expense of further litigation.

NOW, THEREFORE, in consideration of the promises, undertakings, payments, and
releases stated herein, the sufficiency of which consideration is hereby acknowledged, and in
reliance upon the Recitals, which are incorporated by reference into the rest of this Agreement
and are a material part of this Agreement, the undersigned Parties agree, each with the other, as
follows:

SECTION I. Payment to FDIC-R

A. As an essential covenant and condition to this Agreement, on or before thirty (30)
calendar days following the date that the FDIC-R executes this Agreement, the sum of Three

Million One Hundred and Twenty-Five Thousand Dollars ($3,125,000) shall be paid on behalf of

be

(b)(4)


IN WITNESS WHEREOF, the Parties hercto have caused this Agreement to he executed by
each of them or their duly authorized representatives on the dates hereinafter subscribed.
FEDERAL DEPOSIT INSURANCE CORPORATION

As Receiver for Patriot Bank Minnesota

By:
Name:
Title:

Dated:

John Milbauer, an Individual

Dated:

Sarah Bazey, an Individual

Greg Evgen, an Individual

Dated:

Michael Muske, an Individual

Dated:



Benson Theuninck, an Individual

jogusigna

3/4/2016
Dated:

Donald Waldoch, an Individual

Dated:

Leonard Wojtowicz, an Individual

Dated:

FEDERAL INSURANCE COMPANY

By:

Name:
Title:

Dated: