SE'ITLEMI!:NT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is entered into by the Federal 

Deposit Insurance Corporation, as Receiver of First Southern Bank of BatesviJle, Arkansas 

(".FDIC-R"), and St. Paul Mercury Insurance Company ("Travelers") (the FDIC-R and Travelers 

may be referred to herein individually as "J>;uty" and collectively as the "Pa11ics"). 

RECITALS 

WHEREAS: 

A Prior to December 17, 2010, Hrst Southern Bank of Batesville, Arkansas ("FSW' 

or "Bank") was a depository institution organi7.ed and existing under the Jaws of the State of 

Arkansns. 

B. On December 17, 2010, FS.B was closed by the Arkansas State Banking 

Department, and pursuant to 12 U.S.C. § 1821(c) the FDIC-R was appointed receiver. In 

accordance with 12 U.S.C. § 182l(d), the FDIC-R ac; receiver succeeded to all rights, tith.,'$, 

powers and privileges of the Hank, its shareholders, and creditors, including right ru1<.1 title with 

respect to the Bank's assets. 

C. Among the assets to which the FDJC-R as receiver succeeded were any and all 

claims, demands, and causes of actions against tho Bank's linancial institution bond insurer(s), 

including against Travelers u::; issuer of 1hat certain Fjnancial Jnslitution Bond, Bond No. 

(b)(4) ..... -... -·-... -..... .j- l issued by Travelers to the Bank (the "Bond"). 

D. Prior to its c1osing, FSB sent Notices of Loss to Travelers on Novemb0r 8, 2010, 

and December 10, 2010, pursuant to Section 5(a) of the Bond (the "Notices"). On November 29, 

20 I 0, FSB submitted its initial Proof of Loss under Section 5(b) of the Bond (the 

Proof of Loss"). On February 15, 2012, after the Bank •vas closed, the FDlC-R submitted to St. 
Paul a supplement to the Proof of Loss (the "Supplemental Proof of Loss"), explaining in more 

detail its claim uuder the Bond ("CJajm>~). 

E. By letter dated May 24, 201 2, Travelers provided the FDIC~R its analysis of the 

Claim, agreed to pay the FDIC a portion of the Claim, but explained that tho remainder of the 

Claim was not covered by the Bond. 

F. The Pruties since have worked to settle their differences with respect to the Claim 

and deem it in their best interests to enter into this Agreement to avoid the uncertainty, trouble, 

and expense of litigation. 

Now, therefore, in consideration of the promises, undertakings, payments, and releases 

stated herein, th~ sufficiency of which consideration is hereby acknowledged, the undersigned 

Parties agree, each with the other, as follows: 

SECTION I: PAYMENT TO f1'DIC-R 

A. The Recitals above arc incolJlorated herein by reference. 

B. As an essential covenant and condition to this Agreement, Truvclcrs <lgret:s to pay 

to the FDIC-R the sum of One Million and 0/100 Dollars ($1,000,000) (the "Settlement Funds"). 

C. No later than fifteen business days fi'lllowing the execution of a signed original, or 

signed originals in counterpart, of thjs Agreement by the undersigned Parties to this Agreement 

(the "Payment Duc Date"), the Settlement I<\mds shall be delivered to the FD.IC-R hy direct wire 

transfer to the Federal IJome Loan Bank of New York, New York Ma.in OHicc, 101 Park 

Avenue, New York, NY 10178-0599; J(()JITING #: L.I ____ ._········ ..... ····l EQR.. .. <;R~DlT.TC~: ... EDIC ... ~).(~) 

National Liquidation Account; ACCOUNT #: I o:r.HER····· .... JjJiN.El\JCIARY .............. (P..K4.) 

INFORMATION (OUl): un~L..fo9~:. 10322; As~ct number~ I I R~f~:renc..ec;- : ---..:....(b...:...: )('--.; 4):....... 

Professional I.inbility (37100) DlF Fund; _bccO\mt Qfti®!,'S_{o cJlot_ ficd a!t~l_ £?hQtt~~ numhcrs: 

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Sleven .Hall 972-761-8508; and John C. Letteri (703) 562-6297; Pescription ofjhe Trapsaction: 

FSB Bond Claim Settlement. 

SI~CTION II: RELEASlt:S 

A. Release ofTravelers by FD1G:B. .. 

Effective upon full payment by Travelers of the Settlement Funds, the FDIC-R, fot 

itself and its predecessors, successors and assigns, hereby releases and discharges Travelers, 

its parents, subsidiaries, affiliates and reinsurers, and their respective employees, officers, 

directors, agents, representatives, predecessors, successors and assigns, from the Claim, 

including but not limited to any and all cluims, demands, obligations, damages, actions and 

causes of action, direct or indircct1 in Jaw or in equity, statutory, non-contractual, or in tort, 

!mown or unknown, that the FDIC-R alleged or could have alleged against Travelers in 

connection with the Claim, the Notices, the Proof of Loss, the Supplemental Proof of Loss, 

and the Bond, and which the FDIC-R did allege or could have alleged against Travelers that 

arjse from or rcl~tc to the Claim, or Travelers' adjusting of the Claim, or otherwise arise 

from, relate to or concern the Bond, and agrees that any interest it may have under the Bond 

is extinguished. 

B. R~l ~{lSe QfFDIC-R by Traveler&. 

Effective simultaneously with the release granted in Paragraph II. A. above, Travt:lers, 

for itself and its predecessors, successors and <1ssigns, and on behalf of its purcnts, subsidiaries, 

anJliates and rejnsurers, and their S\lccessors rutd assigns, hereby releases and discharges 

the FDIC·R and its employees, officers, directors, agents, representatives, predecessors, 

successors and assigns, from any and all claims, demands> obligations, damages, actions, and 

causes o:f action, direct or indirect, in law or in equity, that arise from or relate to the 

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Claim, the Notices, the Proof of Loss, the Supplemental Proof of Loss, and the Bond 

including but uot limited to any rights of subrogation, Legal, C(Juitablc, ur otherwise. 

C. Waiver ofSubrormtion by Travelersc 

Tnwclcrs agrees to and hereby does irrevocably waive any rights of subrogation it 

may have relating to the Claim, including without limitation those arising from Travelers' 

payment of the Settlement Funds, or involving the underlying properties, assets or claim:-~ 

involved in the Claim and all rights to .recovety thereof ("Rights of Recovery"). Travelers 

agrees that the FDIC- R may retain, sell, transfer, or otherwise dispose of such Rights of 

Recovery as it sees fit, in its sole discretion, and retain the proceeds (if any) thereof and any 

such present or future retention or disposition of such Rights of Recovery shall not serve to 

modify, alter, increase, decrease, or otherwise affect the consideration due under this 

Agreement or thc·monctary amount being paid by Travelers. 

D. Express Reservations From Releases. 

1. Notwithstanding any other provision, by this Agreement the FDICNR docs 

not release, and expressly preserves fully and to the same extent as if the 

Agreement hud not been executed, any claims or causes of action: 

a. against any person or entity for liability, if uny, incurred as the 

maker, endorser or guarantor of any promissory note or 

indebtedness payable or owed by them to the FDIC-R, the Bank, 

other financial institutions, or any other per:::on or entity, including 

without limitation any claims acquired by the fDIC-R as successor 

in interest to the Bank or any person or entity other than th~ Bank; 

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h. against any person or entity not expressly released in this 

Agreement: 

c. under or relating to any policy ofinsurancc issued by Travelers (or 

any other insurer) other than the Bond, and 

d. which are not expressly released in Section IL A. above. 

2. Notwithstanding any other provision, by this Agreement Travelers docs 

not release, and expressly preserves .fully und to the satne extent as if the. 

Agreement had llot been executed, any claims or causes of action: 

a. against any person or entity for liability, if any, incurred as the 

maker, endorser or guarantor of any promissory note or 

indebtedness payable or owed by them to the Travelers; 

b. against any person or entity not expressly released m this 

Agreement; and 

c. under or relating to any policy of insurance issued b)• Travelers (or 

any other insurer) other than the Bond> and 

d. which are not expressly released in Section n. B. above. 

3. Notwithstanding any other provision, this At,rreemt:mt does not waive or 

release any claims or actions that could be brought by any person or entity 

other than the FDIC-R, including but not limited to any agency or 

instrumentality of the United States government. 

SECTION Ill: REPRESENTATIONS AND ACKNOWLJ!:DGM.ENTS 

A Ow.Q.gship of the Claims. The FDlC-R represents and wnrrants that, pursuanl to 

12 U.S.C. § 18?.1 (d), the FDIC-R is the current lnwful owner of, and that it has not assigned, sohl, 

or transfcrrc.;d any interest in the Claim or any of the other mnttcrs being released herein. 

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B. No Additional Action~. Travelers hereby agrees that it will not bring, file, or 

otherwise pm:sue any claims against any party, in relation to the Bond, including any claims for 

indemnity or subrogation. 

C. NQ Admission of Liability. The undersigned Parties each acknowledge and agree 

that the matters set forth in this Agreement constitute the sdtlemeut and compromise of a 

disputed claim, and that this Agreement is not an admission or evidence of liability by either of 

them regarding any claim nor is it intended to he, nor shall it be constmed as, an jnlerprctation of 

the Bond or any other insurance policy. This Agreement shall not be used as evidence, or in any 

other manner, before any COUlt or any proceeding to create, prove, or interpret the obligations or 

alleged obligations of Tmvclcrs under the l3ond to the FDIC~R or to any non-party to this 

Agreement. Notwithstanding the toregoing, either Party m<ty usc the Agreement in any 

proceeding and in any matmcr as may be necessary to enforce the tenns of the Agreement. 

D. Cooperative Drani.l)g. The Parties to this Agreement have participated jointly in 

the negotiation and preparation of this Agreement. Accordingly, each Party agrees not to assert 

that the other Party is the sole or principal drafter of the Agreement. Each Pa1ty also agrees not 

to assert that any canon of constJ:uction applicable to sole or principal draHers should be applied 

against the other Party. 

E. Execution in Countcmnrt_~. 'Jl1is Agreetnent may be executed in counterparts by 

one or more of the Parties named herein and all such counterparts when so executed shall 

together constitute the final Agreement, as if one document had been signed by a.ll Parties hereto; 

and ench such counterpart, upon execution and delivery, shall be deemed a complete original, 

binding the Party or Parties subscribed thereto upon the execution by all Parties to this 

Agreement. 

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E Binding lif(cct. Each of the undersigned persons represents and wa.JTaots that they 

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 insurers, agents, heirs, executors, administrators, representatives, attorneys, successors 

and assigns. 

G. No Confidentiality. The Parties acknowledge and agree that this Agreement is a 

public document that will be publicly disclosed. 

H. Construction. The descriptive headings of this Agreement are for convenience 

only and shall not affect the construction or interpretation of this Agreement. 

I. Notices. If any Party is required to give notice to another Party under this 

Agreement, such notice shall be (i) delivered personally, (ii) sent by Fcdl;ral Express (or 

another recognized overnight or two-day courier) requesting next or second business day 

delivery, (iii) sent by facsimile, (iv) sent by United States certified or rcgistcr(:d mail, postage 

prepaid, retum receipt requested, or (v) sent by email with a conftrmation to be sent the same 

day by one of the methods enumerated above. Any such notice shall be deemed given when {i) 

so delivered personally, (ii) if sent by express courier, one or two business days (as the case 

may be) following delivery to the courier, (iH) on the date sent by facsimile or email, with 

confirmation of transmission, if sent during normal business hours of the recipient, or, if not, 

then on the next business day, or (iv) if sent by certified or registered mail, ti.ve business 

dnys after the d1.1!e of deposit jn the United States mail to the n~spcctivc address of the Party 

as set forth he.low, with copies sent to the persons indicated below: 

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(b)(6) 

(b)(6) 

(b)(6) 

(b)(6) 

To the Jo'DIC-R: 

George R. Fair, Esq. 

Michael Gwin, Esq. 

Watkins & Eager PLLC 

The Emporium Building 

400 Rast Capitol Street I Jackson: MS 39201 

Facsimile: (601) 965~1901 

J~mai.I.~'L ..............,. . _______ ___. 

and 

John C. Letteri, Esq. 

Counsel 

Professional Liability Unit 

Federal Deposit Insurance Corporation 

3501 Fairfax Drive, Room VS-B-7030 

Arlington, VA 22226-3500 

Facsimile: (703) 516-5067 

................... m.Email:.j'-m-· ----~ 

To St. Jlaul Mercury Insurance Company: 

Michael Keeley, Esq. 

Strasburger & Price, LLP 

901 Main Street, Suite 4400 

Dallas, TX 75202 

Facsimile: (214) 659-4186 

•••••' m•• m•••• •••••mJ.::Il~<liJ .. : . .l ... • •••••••m•m•••m•m••••••••••••••••• 

and 

Ronald G. Mund 

St. Paul Mere my Insurance Company 

385 Washington Street 

St. Paul, MN 55102 

Facsjmile: (888) 256-5409 

............ Ema.il: .. '-1-·· _______ _, 

or to such other address as the recipient Pmty has specified hy prior written notice to the sending 

Party (or in tht: case of counsel, to such other readily ascertainable business address ns such 

counsel may hereafter maintain). If more th<m one method for sending notice as set forth above is 

used, the earliest notice date established as set forth above shall control. 
J. Choice .9f _L~JY. This Agreement shall be interpreted, construed and cnt<nced 

according to applicable federal law, or in its absence, the laws ofthe State of Arkansas. 

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

agreement and understanding between and among the undersigned Parties concerning the matters 

set forth hel'ein. This Agreement mny not be runendcd or moditicd except by another written 

instrument signed by the Party or Parties to be bound thereby, or by their respective aulholizcd 

attomey(s) or other rcpresentative(s). 

L. R_eas,Qpable Cooperation. The undersigned Parties agree to cooperate in good faith 

to effectuate all 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, tiling, recording, and entry, of any documents necessary to perform the tcnm: of tllis 

Agreement. 

M. Advice of Counsel. Each Party hereby acknowledges that it has consulted with 

and obtained the advice of counsel prior to executing this Agreement, and that thb Agreement 

ha:~ been explained to that Party by his, her, or its counsel. 

N. A!lthor~jy_t_(} __ ~9Jtill~ The FDIC~R, for itself and expressly in its capf\city of having 

succecd~d to all of FSB's rights against Travelers under the Bond, and Travelers, respectively, 

each warrant and represent that they are the persons or entities which have collectively all of the 

interest in the Claim and any of the rights, claims or matter:; being waived or released as set forth 

in this Agreement, that the Recitals set forth above are material, true and accurate, and that they 

have the full right, power, and specific authority to enter into, execute and consummate this 

Agreement. 

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0. Severability. If any provision of this Agreement or the application of any 

provision herein to any person or circumstance is held invalid or. unenforceable, only that 

provision shall be affected, and the remainder of this Agreement (and the application of such 

provision to other persons or circumstances) shall remain in full force and effect. 

P. li:ff9~tiy~_P.!.\1~. This Agreement is effective on the date sig11ed by the last party 

signing below. 

IN WITNESS WHEREOF, the Pmties hereto have caused this Agreement to be 

executed by their duly authorized representatives on the dates hereinafter subscribed. 

Federal Deposit lnsuruncc Corporation, as 

(b)(6) 

By 

(rite: Ct:-•u ~_; :;t.' l-··---·--

iJ'-"\~ Date: J\:ffl& } , 2013 

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