j_ I l''l 5 f'-l~ I· 

J> :£ J{,/ [V}(),,+g ti 3 -~ f>-c.&xCC 

SETTLEMENT AGREEMENT AND RELEASE 

This Settlement Agreement and Release (hereinafter refen·ed to as the "Agreement") is 

entered into on this 30111 day of November 2009 by and between the Federal Deposit Insurance 

Corporation, in its capacity as Receiver of Indy Mac Bank, F .S.B. and Zurich American 

Insurance Company (hereinafter referred to as "Zurich") (collectively refen·ed to hereinafter as 

the "Parties"). 

RECITALS 

WHEREAS Zurich issued Crime Policy Numberl ..... ____ ----'jin favor of Natio@l 

Settlement Agency, Inc. ("NSA") as the Named Insured for the Policy Period Aplil 15, 2005 to 

April 15, 2008 (hereinafter referred to as the "Zurich Policy"); 

WHEREAS the Zurich Policy provides first party "Employee Dishonesty" Coverage, 

subject to, among other things, a $1M Limit of Liability; 

WHEREAS the term "Employee Dishonesty" is defined in the Zurich Policy as follows: 

a. "Employee Dishonestyn in paragraph A.2. means only dishonest acts 

committed by an "employee", whether identified or not, acting alone or 

in collusion with other persons, except you or a partner, with the 

manifest intent to: 

(1) Cause you to sustain loss; and also 

(2) Obtain financial benefit (other than employee benefits earned in 

the normal course of employment, including: salaries, 

commissions, fees, bonuses, promotions, awards, profit sharing 

or pensions) for: 

(a) The "employee"; or 

(b) Any person or organization intended by the "employee" to 

receive that benefit. 

WHEREAS the tenn "you" is defined in the Zurich Policy to include NSA only; 

WHEREAS IndyMac Bank, FSB (hereinafter referred to as "IndyMac") is designated as 

a: "Loss Payee" under the Zurich Policy; 

D 

(b)(4) 
WHEREAS the Federal Deposit Insurance Corporation, in its capacity as Receiver of 

IndyMac Bank, F.S.B. (hereinafter, ("FDIC") was assigned all rights oflndyMac; 

WHEREAS NSA was at all times relevant hereto in the business of conducting home 

loan refinancing closings in the capacity of settlement/closing agent for various mortgage 

companies and/or banks, including Indy Mac; 

WHEREAS at all times relevant hereto, NSA received loan funds via wire transfer from 

IndyMac, which funds were to be utilized by NSA for disbursal to bon·owers and other 

designated payees at mortgage closings;. 

WHEREAS on August 17, 2007, NSA notified Zurich that funds wired to NSA by 

various mortgage companies and/or banks may have been misappropriated by Steven Leff; 

WHEREAS IndyMac subsequently claimed that in excess of $2 million transferred by 

Indy Mac to NSA was lost as a result of misappropriation by Steven Leff (hereinafter: referred to 

as the "IndyMac Loss"); 

WHEREAS Zurich contends that the documentation submitted in suppm1 of the 

IndyMac Loss fails to demonstrate that NSA incutTed a loss of funds from IndyMac resulting 

directly from "Employee Dishonesty" as defined in the Zurich Policy; 

WHEREAS FDIC disputes Zurich's contention; 

WHEREAS FDIC filed a complaint in the United States District Comt for the Southern 

District of New York in an action entitled Federal Deposit Insurance Corporation v. Zurich 

American Insurance Company, Case No. 09 CIV 6600, seeking a declaration that it is entitled to 

the Limit of Liability under the Zmich Policy for the Indy Mac Loss (hereinafter refened to as the 

"Litigation"); 

2 
WHEREAS Zurich disputes the allegations set forth in the complaint filed in the 

Litigation; 

WHEREAS the Parties wish to resolve amicably the Litigation and all disputes between 

them directly or indirectly arising out of, concerning, involving or related in any way or manner 

whatsoever to the lndyMac Loss, the defalcations of Steven Leff, whether acting alone or in 

collusion with others, and coverage under the Zurich Policy for the lndyMac Loss so as to avoid 

the expense oflitigation; 

WHEREAS the Parties understand and agree that by executing this Agreement, neither 

is admitting any facts nor conceding any arguments whatsoever concerning the Indy Mac Loss or 

the Zurich Policy; 

NOW THEREFORE, for an in consideration of the mutual covenants and promises set 

forth and contained herein, the sufficiency and receipt of which is hereby acknowledged, the 

Parties, intending to be legally bound, do hereby covenant and agree as follows: 

1. Within 15 business days of the Parties' execution of this Agreement, Zurich shall pay the 

sum of SIX HUNDRED THOUSAND UNITED STATES DOLLARS AND NO CENTS 

(U.S. $600,000.00) to FDIC in good, available funds by check payable to "Weinstein Smith 

LLP, as escrowee" (the "Settlement Pa0nent"). 

2. For and in consideration of the Settlement Payment, FDIC, on its own behalf and on behalf 

of Indy Mac and each of their respective past, present and future directors, officers, members, 

shareholders, employees, agents, partners, representatives, attorneys, parent and affiliated 

corporations, direct and indirect affiliates of any form, subsidiaJies, divisions, joint venturers, 

predecessors-in-interest, successors, beneficiaries, grantees, vendees, transferees and assigns, 

and all other persons or entities acting on their behalf with respect to the events, transactions, 

3 
or occurrences that are the subject of this Agreement does hereby irrevocably release, acquit 

and forever discharge Zurich and each of its past, present and future directors, officers, 

members, shareholders, employees, agents, partners, representatives, attorneys, parent and 

affiliated corporations, direct and indirect affiliates of imy form, subsidiaries, divisions, joint 

venturers, predecessors-in-interest, successors, beneficiaries, grantees, vendees, transferees 

and assigns, and all other persons or entities acting on its behalf with respect to the events, 

transactions, or occurrences that are the subject of this Agreement, from any and all known 

and unknown, suspected or unsuspected, fixed or contingent, actions, arbitrations, causes of 

action, suits, debts, liabilities, obligations, dues, sums of money, accounts, reckonings, 

bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, 

trespasses, damages, judgments, extents, executions, claims and demands whatsoever, at Jaw 

or in equity, that it shall or may have for or had for, upon, or by reason of any matter, cause 

or thing whatsoever directly or indirectly arising out of, concerning, involving or related in 

any way or manner whatsoever to the lndyMac Loss, the Zurich Policy, the defalcations of 

Steven Leff, whether acting alone or in collusion with others, including the claim asserted or 

any claim that could have been asserted by FDIC in the Litigation, as well as any claims 

directly or indirectly arising out of, conceming, involving or related in any way whatsoever 

to the manner in which Zurich handled the IndyMac Loss under the Zurich Policy, whether 

based in contract or in tort, including, but not limited to, any claim for bad faith by Zurich in 

the payment, investigation, handling or consideration of the Indy Mac Loss, and any claim for 

interest and/or attorneys' fees and costs, whether pursuant to statute, under the common law, 

or othetwise. 

4 
3. Upon receiving the Settlement Payment, FDIC will discontinue the Litigation with prejudice 

and file a Stipulation of Discontinuance with Prejudice in the form set fo11h in Exhibit A. 

4. Upon full execution of this Agreement, FDIC will execute and deliver the Stipulation to 

Weinstein Smith LLP to be held in escrow. Upon receipt of the Settlenient Payment, 

Weinstein Smith LLP will release the payment to FDIC and deliver the signed Stipulation to 

Zurich's counsel, who will file the Stipulation with the court in the Litigation. 

5. Zurich hereby relinquishes any claim or right of subrogation or any other claim that it is 

entitled to by reason of its payment hereunder against any individual and/or entity 

responsible for the loss fom1ing the basis for the Indy Mac Loss, regardless of whether FDIC 

has collected or will collect on such claim. 

6. The foregoing release is not intended to, and shall not extend to, or otherwise release or 

discharge any rights, privileges, benefits, duties or obligations of either of the Pat1ies under 

this Agreement. 

7. This Agreement shall be deemed to have fully and finally settled any and all known and 

unknown claims directly or indirectly arising out of, concerning, involving or related in any 

way or matmer whatsoever to the Indy Mac Loss, the Zurich Policy and/or the defalcations of 

Steven Leff, whether acting alone or in collusion with others, without regard to the 

subsequent discovery or detetmination by either of the Patties hereto of different or 

additional facts, claims, events oi·law. 

8. This Agreement is without precedential value and it is not intended to be, nor shall it be 

construed as, an inte1pretation of any insurance policy. It shall not be used as evidence, or in 

any other manner, in any comt or other dispute resolution proceeding to create, prove, or 

5 
interpret the obligations of Zurich under any insurance policy issued to NSA or to any other 

person or entity. 

9. The Pa1ties acknowledge that they were represented by experienced counsel and had a fuJi 

and fair oppoltunity to review the terms of this Agreement. The language used in this 

Agreement shall be deemed to be the language chosen by the Patties to express their intent, 

and no rule. of construction for or against any of them shall apply to any tem1 or condition of 

this Agreement. The Parties and their respective counsel acknowledge that neither they nor 

any of their representatives have made any representations or promises other than as set forth 

in this Agreement. 

10. The Parties signing this Agreement represent and warrant to each other that they have 

authority and capacity to enter into and perform fuliy their respective obligations under this 

Agreement. 

11. This Agreement constitutes the complete understanding between the Pa1ties hereto and may 

not be changed, modified, amended or waived except by a writing signed by a duly 

authorized representative of each of the Parties. This Agreement supersedes any prior or 

contemporaneous oral or written releases, negotiations and discussions with respect to the 

subject matter of this Agreement. 

12. This Agreement is binding upon and shall inure to the benefit of, the Parties, and their 

-respective successors and assigns. This Agreement is not made for the benefit of, and may 

not be enforced by, any third party. 

13. This Agreement may be executed in counterpa11s, each of which shall be deemed an original, 

but all of which together shall constitute one and the same instrument. 

6 
(b)(6) 

Jt.i Wirt .. :{E:ss WifE:REbF; tlie Paitii$I1av~. ~xectited this Agr~el11ent br 6a1.l~ed tt to be 

·execut~d bY-their dlilY aiitliorii¢d officers or-representatives . 

.D,ated: 

. '"·· 

.fEDERAL DEPOSIT INSURANOECORPORATION 

hJ it& Cap4city ~S.Rec~iv.e~· ofli1dyMac Bc:ii1k,.f.S.ll. 

.. :rrCH~liRICAN.lNSUMNcE00MPANY 

'ritly; tlr~ . ~lfr.r¢5~~~ .. 

' 

.\ . 

\ 

i' i· 

! 

l 

! 

' .i 

j 

! 

I 

i 

( 

-1 

l 

I 

~ 

:~ 

i 

I 

i 

f 

!· 

., 

'' I 

·l 

.; 
{b)(6) -

tN WITNESS Wl-IEiWOF, tlfe P~rlies have executed tllis Agr¢eiMilt pt caused iUo be 

~xecuted·byth~ir (lui}' au~hoihcd. officer$ or rep.reseiltatives. . 

.SIGNATORIJ:!S. 

f'BDEML b.BPOsrr rNS"lfRANt;g CORPQRATJON 

lit Us canacitv as Receiver ofindvMacHa.nk, F.S.B. 

~yd . . . . L 

title:· . L:q· y t[.)·:;r?.~- \ .. 

]Jated: ZURICH AMERICAJ\J JNSlJRANCE COlvlPANY 

7 
(b)(6) 

·CbMMON\VEALTHOFVIRGINIA 

COUNTY{)F.ARIJNGTON 

) 

Jss: 

) 

On:thilCf. ···.··~ " · .. day of Dee~Inber 2009, 'before me, the unders{gncd, iNohiiy l'!-ublic. in a1id 

fofsaid Ooutity <'\nd State, persona'IJy appeared J~L~£ 0I/J ... ) pci'so1tally lci1o\V:i1 i:o 

of 

lh¢ FEDEML DEPOSIT INSURANCE CORPORATION, the entity inat. :e~ecuted the 

fqre&ofng SEULEiypiNT AdREEiv.t~NT AND R.,'f;L~AsB, ~iitl 1rnown :to .me to h~ the ptjrson 

·~ho exec:v((!d fP.e foregoin.g s:FrtJ'LE!\1:ENl AG!WEMENt ANJ) RELEASE on b~ha~t· t>f ~414 
(b)(6) 

ACKNOWLEDGMENT 

STATE OF MARYLAND ) 

) ss: 

COUNTY OF BALTIMORE ) 

On this J.:f.._ day of December 2009, before me, the undersigned, a Notary Public in and 

for said County and State, personally apperu·ed Robert· L Lawrence.. , personally known to 

me or proved to me on the basis of satisfactory evidence to be the V1 C.e t~"'e. s ,de r1T of 

ZURICH AMERICAN iNSURANCE COMPANY, the entity that executed the foregoing 

SETTLEMENT AGREEMENT AND RELEASE, and known to me to be the person who 

executed the foregoing SETTLEMENT AGREEMENT AND RELEASE on behalf of said 

NOTARY PUBLIC 

9