SETTLEMENT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is made by, between, and among 

the Federal Deposit Insurance Corporation as Receiver for The Park Avenue Bank ("FDIC-R") 

and National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union" or ''Bond 

Insurer") (individually, the FDIC-R and National Union may be referred to herein as "Party" and 

collectively as the "Parties"). 

RECITALS 

WHEREAS: 

Prior to March 12, 20 I 0, The Park A venue Bank ("Bank") was a depository institution 

organized and existing under the laws of New York; 

National Union issued Financial Institution Bond Number I ---~-t the-Bank-for ___ _(p_l(1) 

the bond period ofNovember 9, 2009, through November 9. 2010 (the "Bond''). 

On or about December 3, 2009, the Bank sent a Notice of Claim to National Union (the 

"Notice"), which claim was designated as Claim No.I ....................... ..J.(the'·'B·ondGtaim'')- (b)(4) ···················· ................. .. 

On March 12, 20 I 0, the New York State Banking Department closed the Bank and 

pursuant to 12 U.S.C. § 1821(c), the Federal Deposit Insurance Corporation was appointed 

receiver. In accordance with 12 U.S.C. § 182l(d), the FDlC-R succeeded to all rights, titles, 

powers, and privileges of the Bank, including those with respect to its assets. 

Among the assets to which the FDIC-R succeeded were any and all claims, demands, and 

causes of action under the Bond or with respect to the Bond Claim. The FDIC-R submitted its 

Proof of Loss on August 24, 20 I 0, for loss in the amount of $8,842,628.86 plus interest. and 

supplemented it on January 19, 2011, for additional loss in the amount of $2,630,400 plus 

interest (together, the "Proof of Loss") with respect to the Bond Claim, for total Joss sustained in 

the amount of$11,473,028.86. 

(t )(?.) ············· ...... -················ 
The undersigned Parties deem it in their best interests to enter into this Agreement to 

avoid the uncertainty and further expense of litigation. 

NOW, THEREFORE, in consideration of the promises, undertakings, payments, and 

releases stated herein, the sufficiency of which consideration is hereby acknowledged, the 

undersigned Parties agree, each with the other. as follows: 

SECTION 1: Payment to the FDIC-R 

On or before thirty (30) calendar days following the FDIC-R's execution and delivery of 

this Agreement, National Union agrees to pay to the FDIC-R the sum of $1 million (the 

"Settlement Payment"). 

National Union shall deliver its payment by check made payable to the Federal Deposit 

Insurance Corporation as receiver for The Park Avenue Bank, to Christine P. Hsu, Esq., FDIC 

Legal Division, FDIC, 3501 Fairfax Drive, Room VS-B-7054, Arlington, VA 22226-3500. 

SECTION II: Releases and Assignment 

A. Release ofNational Union by the FDIC-R. 

Effective upon its receipt of the Settlement Payment in full, as described in Section I, the 

FDIC-R, for itself and its successors and assigns, hereby releases and discharges National Union, 

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

directors, agents, representatives, predecessors, 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, that arise ftom or relate to the Bond, the Bond Claim, the Notice, or 

the Proof of Loss. The FDIC-R agrees that any interest it may have under the Bond or with 

respect to the Bond Claim, the Notice, and the Proof of Loss is extinguished. 

(b)(6) 

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B. Release of the FDIC-R by National Union. 

Effective simultaneously with the release granted in Paragraph li.A. above, National 

Union, for itself and its predecessors, successors, and 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 of 

action, direct or indirect, in law or in equity, that arise from or relate to the Bond, the Bond 

Claim. the Notice, and the Proof of Loss, subject to the Subrogation-Recoveries provisions 

contained in Paragraph D below. 

C. Assignment to National Union. 

In consideration of the aforesaid payment by National Union, the FDIC-R does hereby 

transfer, assign and sign over to National Union all of its claims and rights arising out of the 

Bond Claim, the Proof of Loss, or the Bond, but only to the ex.tent of the Settlement Payment 

and National Union's cost of collection. The FDIC-R does hereby agree to execute any and all 

reasonable papers, releases, and/or assignments, and shall provide any reasonable cooperation 

and assistance that may be necessary to effectuate the purposes of this assignment. 

D. Subrogation- Recoveries 

It is understood that National Union maintains subrogation rights to the extent of its 

payment to the FDIC-R, and is entitled, but not obligated, to pursue recovery under its 

subrogation rights and/or assignment rights as set forth in this section and Section C. 

Recoveries, whether pursued by the FDIC-R or by National Union, shall be applied net of 

the expense of such recovery first to the satisfaction of the FDIC-R's Bond Claim loss that is 

excess of the amounts reimbursed by National Union, regardless if it was a covered or uncovered 

loss under the Bond, and secondly, to National Union as reimbursement to the extent of its 

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payment to the FDIC-R. The FDIC-R agrees to provide National Union with further 

infonnation, cooperation and assistance as National Union reasonably requests in pursuing 

recovery from third parties. Each party agrees not to do anything to prejudice the other party's 

potential rights of recovery. 

SECTION III: 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, administrators, representatives, 

successors, and assigns. 

B. 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 this Agreement 

has been explained to that Party by its counsel. 

C. Ownership of the Claims. The Parties hereby represent and warrant that they 

have not transferred, assigned, released, or othenvise compromised any rights or claims released 

herein. The FDIC-R represents and warrants that it is the sole owner of the Bond Claim. The 

FDlC-R understands and agrees that this representation is a material portion of the consideration 

provided to National Union in this Agreement. 

D. Binding Effect. This Agreement is intended to confer rights and benefits only on 

the Parties. This Agreement shall be binding upon and inure to the benefit of the Parties and 

their respective successors, assigns, representatives, members, alter egos, and related entities. 

Except as otherwise expressly provided herein. no person or entity other than the Parties shall 

have any rights under this Agreement. 

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E. Attorney's Fees. Each Party shall bear all of its attorney's fees and costs with 

respect to the Notice, the Proof of Loss, the Bond Claim, and/or the Bond. 

F. Reasonable Cooperation. The 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 perform the terms of this 

Agreement. 

G. 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 or in connection with 

either Party's efforts to recover against third parties. 

H. 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, shaH be deemed a complete original, binding the 

Parties subscribed thereto upon the execution by all Parties to this Agreement. 

I. 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 ofNew York. 

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

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

lfto FDIC-R: 

Christine P. Hsu 

FDIC 

5 

(~)(~) 
3501 Fairfax Drive, Room VS-B-7054 

Arlington, VA 22226 

(b )(6 ) .............................................. . . ( ......... .. I 

If to National Union: 

Barbara Leone 

AIG Claims, Inc. 

Fidelity Bond Department 

175 Water Street, 5th Floor 

New York, NY 10038 

(b)(6) ............................... ........... .... 1. . . .. 

with a copy to: 

Arthur N. Lambert 

Frenkel Lambert Weiss Weisman & Gordon, LLP 

One Whitehall Street 

New York, NY 10004 

(b)(6) ......................................... . ........ J ................... 

(b)(4L ..... Frenkelbambert .. filelL._ ... _. __ ___, 

K. 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 ). 

L. Titles and Captions. All section titles and captions contained in this Agreement 

are for convenience only and shall not affect the interpretation of this Agreement. 

M. No Confidentiality. The undersigned Parties acknowledge that this Agreement 

shall not be confidential. 

(b)(6) 

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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. 

Its: Counsel 

Date: 

AIG CLAIMS, INC. on behalf of NATIONAL UNION FIRE INSURANCE COMPANY OF 

PITISBURGH.llA ./-· 1 

(b)(6) may: ······l'-m=""""""-......-----....,....-..,..._-------' 

Batbara Leone ' \ 

Its: 

Date: 

Assistant Vice President 

; I ; ~-. / 

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