SETTLEMENT AND RELEASE AGREEMENT 

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

the following undersigned parties: 

The Plaintiff Federal Deposit Insurance Corporation as Receiver for The Farmers Bank of 

Lynchburg ("FDIC-R"), and Brenda F. Barnes, William B. Bryant, Jerry F. Daniel, Howard G. 

Kirksey, III, Marion E. Lowery, William C. Menke!, RichardS. Moody, Lydia Reynolds, Sloan 

A. Stewart and Gerald Wade (collectively the "Settling Individuals"), and The Cincinnati 

Insurance Company ("Insurer") (individually, the FDIC-R, the Settling [ndividuals and the 

Insurer may be referred to herein as "Party" and collectively as the "Parties''). 

RECITALS 

WHEREAS: 

Prior to June 15, 2()12, The Farmers Bank of Lynchburg, Lynchburg, Teooessee ("Bank'') 

was a depository institution organized and existing under the laws of the State of Tennessee; 

On June l5, 2012, the Tennessee Department of Financial Institutions closed the Bank 

and pursuant to 12 U.S.C. § 182l(c), the Federal Deposit Insurance Corporation was appointed 

Receiver. In accordance with 12 U.S.C. § 1821 (d), the FDIC-R succeeded to all rights, titles, 

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

Among the assets to which the FDIC-R succeeded \Vere 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 if and to the extent any such 

claims, demands or causes of action existed. 

Tbe FDIC-R has asserted claims against the Settling Individuals, each of whom served at 

various times as a director and/or officer of the Bank. The Settling Individuals deny liability for 

the claims. 
Insurer issued a director and officer liability policy numbered I frorthe .... .CPJ(4) 

period of July I, 2009, to July I, 2012 ("Policy"), which insured the directors and officers of the 

Bank according to the terms, provisions, and conditions of the Policy: The Settling Individuals 

asserted claims for coverage under the Policy. Insurer has reserved its rights to deny coverage 

under t11e Policy for claims asserted by FDlC-R against the Settling [ndividuals. 

The undersigned Parties deem it in their best interests to enter into this Agreement to 

avoid the uncertainty and 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 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 all Parties have executed this Agreement, the Settling 

Individuals and Insurer, jointly and severally, agree to pay the FDIC-R the sum ofNine Hundred 

Seventy Five Thousand and 00/100 Dollars ($975,000.00) ("the Settlement Payment"). On or 

before twenty (20) calendar days following the date all Parties have executed this Agreement, the 

FDIC~R shall deliver to Insurer by overnight delivery to Insurer's counsel, Victor C. Peters, 

whose address is Peters & Nye LLP, 14 Executive Court, Suite 2, South Barrington, IL 60010, a 

fully executed IRS Fonn W-9. 

B. Insurer shall deliver the Settlement Payment by check sent via overnight delivery 

to FDIC-R's counsel, Mary L. Wolff, whose address is Wolff Ardis, P.C., 5810 Shelby Oaks 

Drive, Memphis, TN 38134. The Settlement Payment check shall be made payable to ''FDIC-R 

for The Farmers Bank of Lynchburg (10447)" and the Settlement Payment check memo area 

(b)( 5 ) .................................... ~h~U~t.ll.!.~~'P.r.ofess.ional...L.iabilityj.__ .. _ ___. 

Interest shaJl accrue on all unpaid amounts at the rate of 5% per annum begilllling thirtyone (31) calendar days following the date all Parties have exe.cuted this Agreement. 

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C. 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 receipt of the Settlement Payment in fuU (including all accrued interest) 

to: 

I. Extend the period of time for the Settlement Payment, including interest 

accruing from the date determined by subse.ction B above, through the date of payment at a rate 

calculated in accordance with 26 U.S.C. § 6621(a)(2); or 

2. Enforce this Agreement, in which event the Settling Individuals and 

Insurer agree to jurisdiction in the United States District Court for the Middle District of 

Tennessee and to pay all of the FDIC-R's reasonable attorney's fees and costs expended in 

enforcing the tenns of this Agreement; or 

3. Terminate the Agreement and institute an action on the FDfC-R's claims. 

The Settling Individuals and Insurer covenant and agree not to assert any objections, defenses, 

claims or counterclaims that did not exist or were othervdse 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 Section I.C.l for delivery ofthe Settlement Payment shall 

not prejudice the FDIC-R's rights to take any of the actions set forth in Section I.C.2 through 

I .C.4 at any time prior to receipt of Settlement Payment (including all accrued interest) in full. 

SECTION II: Releases 

A. The FDIC·R's Releases. 

Upon receipt of the Settlement Payment in full, and except as provided in Section II.D., 

the FDIC-R, for itself, and its succ-essors, and assigns, hereby releases and discharges: 

I. The Settling Individuals and their respective heirs, executors, trustees, 

administrators, representatives, insurers, succes~ors, and assigns, from any and all claims, 

demands, obligations, damages, actions, and causes of action, direct or indirect, in law or in 

equity, belonging to or assertable by the FDIC-R, that arise from or relate to, the performance, 

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nonperfonnance, or manner ofperfonnance of the Settling Individuals' respective tunctions, 

duties and actions as officers and/or directors of the Bank. 

2. Insurer, its parents, subsidiaries, affiliates and reinsurers, and their 

respective employees, officers, directors, agents, representatives, 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 part of this release of the 

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

3. All other former directors, ofticers, and employees of the Bank 

(collectively, the "Covered Persons") and their respective heirs, executors, trustees, 

administrators, representatives, insurers, successors, and assigns, from any and all claims, 

demands, obligations, damages, actions, and causes of action, direct or indirect, in law or in 

equity, belonging to or assertable by the FDIC-R: that arise from or relate to, the performance, 

nonperfonnance, or manner of performance of the Covered Persons' respective functions, duties 

and actions as directors, officers and/or employees of the Bani<. 1l1is release shall be null and 

void as to any Covered Person if such Covered Person asserts any claim against the FDIC-R. 

B. The Settling Individuals' Release. 

Effective simultaneously with the release granted in Section II.A. above, the Settling 

Individuals, on behalf of themselves individually, and their respective heirs, executors, trustees, 

administrators, agents, representatives, insurers, successors, and assigns, hereby release and 

discharge: 

1. The FDIC-R, and its employees, officers, directors, representatives, 

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 Bank or to 

the perfonnance, nonperformance, or manner ofperfonnance of the Settling Individuals' 

respective functions, duties and actions as oftkers and/or directors of the Bank. 

2. The Insurer from any and all claims under the Policy relating to the FDICR's claims against them concerning the BanJ<. 

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3. Each other from any and all claims relating to the Ba~, the FDIC-R's 

claims or the Policy. 

C. The Insurer's Release. 

Effective simultaneously with the releases granted in Section II.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: 

1. The FDIC-R. and its employees, officers, directors, agents, 

representatives, 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. 

2. Each of the Settling Individuals from any and all claims under the Policy 

relating to the FDIC-R's claims against them concerning the Bank. 

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 Individuals or any other person or entity for 

1iability, if any, incun-ed as the maker, endorser or guarantor of any promissory note or 

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 Bank; and 

b. Against any person or entity not expressly released by the FDIC-R 

in this Agreement. 

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 

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enforcement or other proceedings seeking removal, prohibition, or any other relief it is 

authorized to seek pursuant to its supervisory or regulatory authol"ity against any person. 

3. Notwithstanding any other provision of this Agreement, this Agreement 

does not purport to waive, or intend to waive, any claims that could be brought by the United 

States through the Depa1tment 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, the FDIC-R specifically reserves ihe right to seek court-ordered restitution 

pursuant to the relevant provisions of the Mandatory Victims Restitution Act, 18 U.S.C. §§ 3322 

and 3663 et. ~ if appropriate. 

SECTION III: Waiver of Dividends and Proceeds from Litigation 

To the extent, if any, that Settling Individuals are or were shareholders of the Bank or 

Fanners Bancorp, Inc., and by vittue thereof are or may be entitled to a dividend, payment, or 

other distribution upon resolution ofthe.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 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 

goverrunent in connection with the Bank~ its conservatorship, or receivership, Settling 

Individuals hereby knowingly assign to the FDIC-R any and all tights, titles, and interest in and 

to any and all such dividends, payments, or other distributions, or proceeds. 

SECTION IV: 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. 

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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. 

SECTION V: Reasonable Cooperation 

The Partjes agree to cooperate in good faith to eftectuate 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, filing, recording, and entry, 

of any documents necessary to perform the terms of this Agreement. 

SECTION VI: Other Matters 

A No Admission of Liabj!jtv. 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 all Parties to this Agreement. 

C. Choice of Law. This Agreement shaH be interpreted, construed and enforced 

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

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

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

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If to the FDIC-R: 

Mary L. Wolff 

Wolff Ardis, P.C. 

5810 Shelby Oaks Drive 

Memphis. TN 38134 

(b)(6L~---· I.__ _____ ___. 

If to Settling Individuals Bryant. Daniel, Kirksey, Menkel, Reynolds, Stewart and Wade: 

Larry H. Montgomery 

GJankler Brown, PLLC 

6000 Poplar A venue, Suite 400 

Memnh js TN 38119 

(b )(6)_.-.... -·-·-·-·-·-·· .......... --· 1 L-. _·-· ____ ____. 

If to Settling Individual Barnes: 

Robert A. McLean 

Farris Bobango 

999 S. Shady Grove Road, Suite 500 

Memphis, TN 38120 

(b)(6). __ _ I ---

If to Settling Individual Lowery: 

Nader Baydoun 

Baydoun & Knight, PLLC 

5147 Virginia Way, Suite 210 

Brentwood ~ 37027 

(b)(6) ........... ! ...................................................................... ............. .................................... . 

If to the Settling Individual Moody: 

Marc T. McNamee 

Neal & Harwell, PLC 

I SO Fourth Avenue North, Suite 2000 

Nashville, TN 37219 

(b)E6) ___ .__I _______ __. 

Ifto Insurer: 

Victor C. Peters 

Peters & Nye LLP 

14 Executive Court, Suite 2 

South Barrington, IL 600 I 0 

(b)(6).... 1 ............................................... . ........................................ ........ _________ __, 

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E. Eutir~ {\greemen( and Amendment;>. Tbis Agreement constitutes tlle el\tire 

agreement and understanding between and among the Lmdersign~d Parties concerning the matters 

set forth herdu and supersedes any prior agreements or unders~dings. Ibis Agree1nent may 

not be amended or modified, IlOt may any ()fits pro'-!"isions be waived, except in \'VT.iting signed 

by tlle Parties bound th~rcby. 

F. Titles !'U)d Captions. All section titles and captions contained in this Agrcw.ent 

are for canvenJeuce only and shall not Affect the intei:pretution of this Agreement. 

G. No ConfidentialitY. Th.e undeaigned Parties acknowledge tho.t this Agreetnent 

shall not be coa'fi.dential and will be disclosed pUJ$uant to tbe Federal Deposit Ins\H;ance 

Corporation's applicable po icies~ procedures, and other legal requirements. 

IN WITNESS WHEREOI:> the Parties hereto have call'>ed this Agreement to be 

executed by each of them or thejr duly uuthori:r.ed t·epJesentatives on tlu~ dates hereinafter 

subscribed. 

Date~ 

FEDERAL DF..POS!1' INSURANCE CORPORATION AS 

RECEIVER FOR T.H AlU.lERS BANK OF 

LYNQ.~~~--~-----------, 

BY: ........., ___ .,.,.,.,., ______ ====:!_.. ____ _ 

TITLE: S t!!ff 1 ~r A tf?.r...tt:....:.-e.-rX'--------

PRJNT NAME: ((, ·~ ha f"7i.. £ · _E:J:; ~t2-~ 

Brenda F. Barnes 

----------------

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(b)(6) 

E. Entire AKreement and Amenclments. 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. 

F. 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. 

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. 

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 ERS BANK OF 

LYNCHB~~~G~--~-------------, 

___ ,,,_ .... .................. ,_,,,,, ... 7 ......... .... -7: ·-"-'""""-·-·-·· .......................................... --·-· --

Date: d7!31! '-IJI s- BY: ~ I --~--------------------------~ 

TITLE: 5 e111 ~r I} f&.r 11 €. )' 

PRINTNAME: ({','e. han£ £ . £/set~-

Date: 7/&do,/S · ~Br~end~afi~aml:l:I.U:.::esiL--__ ~......-.... 4"------, 

(b)(6),,.,., -·-"""""""'"'"""""-" mmm """"""""""""""' """""""""""""- " J mmm o•••-.. •·-·-••" l 

Date: --------- William B. Bryant 

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(b)(6) __ 

--------

Date: ¢jotS' 

(b)(6) ............... ,. .................................. . ................................................... ................................................. . ... .................................. . 

Date: ----- Marion E. Lowery 

Date: ____ _ William C. Menke! 

Date: ____ _ Richard S. Moody 

Date: ____ _ Lydia Reynolds 

Date: Sloan A. Stewart 

(b)(6) __ 

Date: ___ _ _ Gerald Wade 

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Date: _ ____ _ Jerry F. Daniel 

Date: _ ____ _ Howard G. Kirksey, III 

Date: ;i-1- J~ Marion E. Lower~ 

f 

(b)(6) 

1 

Date: William C. Menkel 

Date: - ----- RichardS. Moody 

Date: - - - --- Lydia Reynolds 

Date: Sloan A Stewart --- ---

Date: Gerald Wade ------

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Date: ____ _ Jerry F. Daniel 

Date: ____ _ Howard G. K.i.rksey, m 

Date: ____ _ Marion E. Lowery 

Date: ~ lv // r William C. Mentel 

(b)(6) ......................... ,. ..... --················ ······················IL ···_···········_·········_···········_············_·········_···········_···········_············_······ ____ __Jr--

Date: ___ ___.__ RichardS. Moody 

Date: ____ _ Lydia Reynolds 

Date: ____ _ Sloan A. Stewart 

Date: ____ _ 

10 

-----i 

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Date:---- - - Jerry F. Daniel 

Date: ------ Howard G. Kirksey, m 

Date:------ Marion E. Lowery 

Date:------ William C. Menke! 

Date:------ Lydia Reynolds 

Date:-- - - - - Sloan A. Stewart 

Date: Gerald Wade ------

lO 
Date: -----

Date: ----

-

Date: ----

-

Date: ____ _ 

Date: -----

Date: -----

Date: ____ _ 

Jerry F. Daniel 

Howard 0. Kirksey, ill 

Marion E. Lowery 

William C. Menke! 

Richard S, Moody 

Sloan A. Stewart 

Gerald Wade 

10 

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Date: ------ Jerry F. Daniel 

Date:----- - Howard G. Kirksey, III 

Date: ------ Marion E. Lowery 

Date:- --- -- William C. Menkel 

Date: ____ __._ Richard S. Moody 

Date: --- - - - Lydia Reynolds 

Date: - --- -- Sloan A. Stewart 

(b )(6) 

I .--

Date: &wtf-Z..d/J. 

----- ---

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