SETTLEMENT AND RE'LEASE AGREEMENT 

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

the Federal Deposit Insurance Corporation as Receiver for Williamsburg First National Bank, 

Kingstree, South Carolina ("FDIC-R"), and Fidelity and Deposit Company of Maryland 

("Fidelity") (individually, the FDIC-R and Fidelity may be referred to herein as a "Party" and 

collectively as the "Parties"). 

RECITALS 

WHEREAS: 

Prior to July 23, 2010, Williamsburg .First National Bank (WFNB or the "'Bank'') was a 

depository institution organized and existing Wlder the laws of the United States; 

On July 23, 2010, the Comptroller of the Currency closed the Rank and pursuant to 12 

U.S.C. § 1821(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 of the Bank, including those ·with respect to its assets; 

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

causes of action against the Bank's financial institution bond insurer, inc! uding against Fidelity 

as issuer of the Bond, as that term is defined below. 

On January 31, 2008, Fidelity issued for and on behalf of WFNB and WFNB Banksharcs, 

(b)( 4) nc EinanciaLlnstitution- SelectBond( -· --· · tthe .. Bond"); 

The Bank sent a timely notice of loss and the FDIC-R timely submitted a proof of loss 

and amended proof of loss with supporting documents to Fidelity, seeking coverage under the 

Bond for net losses sustained of$1,540,273.47 ("Loss") caused by James R. McDonald 

("Principal")which are covered under the Bond ("Claim"); and 

In determining the Loss, the FDIC-R applied the full amount of the sales proceeds realized 

from the sale of collateral for the loans related to the Claim ("Loans") and the full amount of 

appraised values of collateral not yet sold against the total loss. As such, all value from the collateral 
has already been applied to reduce the loss. The only remainjng recovery rights related to the Claims 

are the rights against the individual borrowers of the Loans CBorrowers"), which Loans are owned 

by and being administered by an assuming institution ("Af") pursuant to the Purchase 8Jld 

Asswnption Agreement dated July 23,2010. To the extent the FDIC-R receives any future recovery 

from the Alas a result ofthe Al's collection efforts against the Borrowers individually (excluding 

collateral) or from the Principal (including restitution), the net recovery would be subject to the tenns 

of the (Recovery) Section 7 of the Bond. 

The Claim is subject to a $15,000 deductible amount under the Bond. 

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

avoid the uncertainty, trouble, and expense ofJitigation; 

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 FDIC-R 

A. The Recitals above are incorporated herein by reference. 

B. As an essential covenant and condition ofthis Agreement, Fidelity agrees to pay 

to the FDIC-R the sum of One Million, Five Hundred and Twenty-five Thousand, Two Hundred 

and Seventy-three Dollars and 47 Cents ($1 ,525,273.4 7) (the "Settlement Funds"). 

C. Within ten business days after the last date this Agreement is signed below (the 

"Payment Due Date!"), the Settlement Funds shall be delivered to the FDIC-R by check payable 

to the FDIC as Receiver for Williamsburg First National Bank. 

D. Without waiving any other rights that the FDIC-R may have, in the event that all 

Settlement Funds are not rt!ceived by the FDIC-R on or before 30 days following the Payment 

Due Date, then the Settlement Funds shall accrue interest at the then current Treasury bill rate 

unti] the Settlement Funds are received by the FDIC-R. 
SECTION fi: Releases 

A. Release of Fidelity by FDTC-R 

Eflective upon receipt in full of the Settlement Funds, plus any accrued interest, except as 

provided in Paragraph II.D below, the FDIC-~ for itself and its successors and assigns, hereby 

releases and discharges Fidelity, 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 equity, that arise from or relate to the Claim. The FDIC-R further agrees that 

any interest it may have under the Bond is extinguished. 

B. Release of FDIC-R by Fidelity 

Effective simultaneously with the Release granted in Paragraph TJ.A above, Fidelity, for 

itself and its successors and assigns, and on behalf of its parent~, subsidiaries, affiliates, and 

reinsurers and their successors and assigns, hereby releases and discharges the FD1C-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 Claims or the Bond including any rights of subrogation, 

legal equitable or otherwise except as set out in Paragraph ILC.2 below. 

C. Waiver of Subrogatiol! by Fidelity 

1. Except as set forth in Paragraph IT .C.2 below, Fideliry agrees to and 

hereby does irrevocably waive any rights of subrogation it may have relating to or arising out of 

any ofthc Claims or the Bond ("Rights ofRecovery"). Fidelity agrees that the FDIC-Rmay 

retain, sell, transfer: or otherwise dispose of such Rights of Recovery ac; it sees fit, in its sole and 

unfettered discretion. Any future recovery pursuant to such Rights of Recovery shall not modify 

or otherwise affect the amount of Settlement FW1ds due under this Agreement and required to be 

paid by Fidelity. 

2. For those loans that fall within the Single Family Shared Loss Agreement 

under the Purchase and Assumption Agreement ('"SFSLA"), the FDIC-R will pay to Fidelity any 
recoveries it receives from the AI as a result of the Al's collection efforts against the Borrowers 

individually (net of any and all reasonable attorneys' fees and reasonable expenses incurred in 

connection with such recovery) to Fidelity up to the amount of the Settlement FWlds, as provided 

herein. Within 90 days of the Termination Date of the SFSLA or the Closing Date of the 

Termination Agreement if the SFSLA is terminated before the Tennination Date, the FDIC will 

review the asset level data for each of the Loans falling within the SFSLA and detennine the 

total ammmt of recoveries paid to the FDIC-R attributable to collections from the Borrowers 

during the period from January l , 2015 through the termination of the SFSLA, inclusive 

("Recoveries"). (Amounts recovered from the disposition of the collateral for the Loans arc not 

Recoveries). The FDIC-R will also determine any losses that it paid to the AI for the Loans 

under the SFSLA which exceed the losses estimated in exhibit A, attached hereto («Excess 

Losses"). To the extent that any Recoveries exceed any Excess l.osses, the FDIC will pay to 

F&D all Recoveries up to an amount not exceeding $1,525,273.47. In the event that the SFSLA 

is terminated prior to the time specified in the SFSLA, by agreement or othetWise, the FDIC will 

exercise reasonable business judgment to allocate the portion of the tennination payment 

applicable to each Loan for the purpose of determining Excess Losses. 

3. In the event that the Principal is convicted of a criminal offense arising out 

of the Loss paid by Fidelity pursuant hereto, the FDIC-R acknowledges that Fidelity will be 

entitled to receive any restitution payments made by the Principal for the Loss ordered by the 

court pursuant to 18 U.S.C. § 36640)(1). The Parties agree that the FDIC-R is entitled to any 

recovery in excess of the Settlement Funds. 

D. Express ~cservations fro~J{ eases by FDIC-R 

1. Notwithstanding any other provision contained in this Agreement, the 

FDIC-R does not release, and expressly preserves fully and to the same extent as if the 

Agreement had not 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 
FDIC-R, the Rank~ other financial institutions, or any other person or entity, including without 

limitation any daims acquired by the FDlC-R as successor in interest to the Bank or any person 

or entity other than the Banlc 

b. against any person or entity not expressly released in this Agreement; and 

c. under or relating to any policy of insurance issued by Fidelity (or any 

other insurer) other than the Bond; and 

d. which are not expressly released in Paragraph ILA above. 

2. Notwithstanding any other provision, nothing in this Agreement shall be 

construed or interpreted as limiting, waiving, releasing or compromising the jurisdiction of the 

FDIC 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 

administrative enforcement action which may arise by operation oflaw, rule or regulation. 

3. Notwithstanding any other provision, this Agreement does not waive or 

release any claims which could be brought by any person or entity other than the FDIC-R, 

including without limitation by the United States through either the Department of Justice, the 

United States Attorney's Office for the District of South Carolina or any other federal judicial 

district, or by any other agency or instrumentality of the United States government. In addition, 

the FDIC-R specifically reserves the right to seek court ordered restitution pursuant to the 

relevant provisions of the Victim and Witness Protection Act, 18 USC § 3663, et. ~ if 

appropriate. 

SECTION III: Representations and Acknowledgements 

A. No Admissio_n 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 that this Agreement 

is not an admission or evidence of liability regarding any claim. The Parties further acknowledge 

and agree that Fidelity's actions and payment hereunder are limited to the particular facts and 
circumstances ofthis claim only, and do not in any manner whatsoever modify any of the tenns of 

the Bond, or serve as precedent on any other current or future claim. 

B. Execution in Cmmterow.t~ 

This Agreement may be executed in counterparts by one or more of the Parties named 

herein and all such counterparts when so executed sha1l together constitute the final Agreement 

as if one document had been signed by all Parties hereto; and each 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. 

C. Bindi~_g Effect 

Each Party represents and warrants 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 lbis Agreement shall be binding upon and inure 

to the benefit of the undersigned Parties and their respective heirs, executors, administrators, 

representatives, successors and assigns. 

D. Choice of Law 

This Agreement shall be interpreted, construed and enforced according to the applicable 

federal law, or in its absence, the laws of the state of South Carolina. 

E. Entire Agreemeqt.and Amendments 

This Agreement constirutes the entire Agreement and understanding between the Parties 

concerning the matters set forth herein. This Agreement may not be amended or modified except 

by another written instrwnent signed by the Party or Parties to be bound thereby, or by their 

respective authorized attomey(s) or other representative(s). 

F. Reasonable Cooperation 

The undersigned Parties agree to cooperate in good fruth 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 d~wnents necessary to perfonn the tcnns of this Agreement. 

G. 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 his or her cmmsel. 

H. No Confidentiality 

The Parties acknowledge and agree that this Agreement is a public document that will 

need to be disclosed pursuant to 12 U .S.C. § t 821 ( s) and other applicable laws and regulations . 

.., 
IN WITNESS WHEREOF, the Parties have hereto caused this Agreement to be executed 

by each of them or their duly authorized representatives on the dates hereinafter subscribed. 

PRINT NAME: 

.FIDELITY AND DEPOSIT COMPANY 0.14' 

MARYI.A~'D