SETTLEMENT AND RELEASE AGREEMENT 

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

the Federal Deposit Insurance Corporation as Receiver for Mainstreet Bank (''FDIC-R") and 

Federal Insurance Company (''Federal" or "Bond insurer") (individually, the FDIC-R and 

Federal may be reterred to herein as ··Party" and collectively as the ''Parties"). 

RECITALS 

WHEREAS: 

Prior to August 28, 2009, Mainstreet Bank (''Bank") was a depository institution 

organized and existing under the laws of Minnesota; 

Federal issued Community Bank Bond numberL.I ____ _,~ ·· the··· Bankfor·· the···botld·· ························· _(p)(4.) 

period of April 30. 2006, through April 30, 2009 (the ''Bond''). 

On or about May 22, 2008, the Bank sent a Notice of Claim to Federal (the ·'Notice''), 

(b)(4)...... ... w.lJ.ichclaimwas .. .designatedasGiaimNo;f._:_·· ___ __,hhe "Bond Claim"). 

On August 28, 2009, the Minnesota Department of Commerce closed the Bank and 

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

rw~i ver. In accordance with 12 U .S.C. § 1821 (d), the FDfC-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 October 30, 2009, and supplemented it on August 9, 20 I 0 (together, the ''Proof 

of Loss'') with respect to the Bond Claim. 

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

avoid the uncertainty and ftuthcr expense of litigation. 

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NOW, THEREFORE. in consideration of the promises, undet1akings, payments, and 

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

undersigned Parties ngrce, each with the other, as follows: 

SECTION 1: Payment to the IC~R 

On or before thirty (30) calcndat· days toll owing the FDIC~R's exec.ution of this 

Agreement, Federal agrees to pay to the FDIC-R the sum of$1.1 million (the ''Settlement 

Payment''). 

Federal shall delivet' its payment by check made payable to the Federal Deposit Insurance 

Corporation as receiver for Mainstrcet Bank, to Christine P. Hsu. Esq .. FDIC Legal Division, 

FDIC, 350 I Fairfax Drive, Room VS-B-7054, Arlington, VA 22226-3500. 

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SECTION II: Releases and Assignment 

Release of Federal by the FDIC-R. 

Effectivt! 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 Federal, its 

par-ents, subsidiaries, affi liates, and reinsurers, and their respective employees, ofti~crs, 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 from or relate to the Bond, the Bond Claim, the Notice, and the Proof of 

Los.s. 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. Upon payment of the amount 

:fescribed in Section I of this Agreement, Federal shall have no further obligation with respect to 

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

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B. Rdease of the FDIC-R by the Bond lnsmer. 

Etfective simultaneously with the release granted in Paragraph II.A. above, Federal, for 

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its1!lf and its predecessors, successors, and assigns, hereby releases und discharges the FDIC-R 

· and its employees. ofticers, directors, agents, r~presentatives. predecessors, successors, and 

assigns, from any and all claims. demands, obligations, damages, actions, und 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, including but not limited to any rights of subrogation, legal. 

equitable, or othetwisc. 

C. Assignment of Subrogation Rights to Federal. 

In t'tuther consideration of the aforesaid payment by Federal, the FDIC-R docs hereby 

tmnsfer, assign and sign over to Federal all of its claims and rights arising out of the Bond Claim, 

the Proof of Loss, or the Bond, but only to the extent of the Settlement Payment. The FDIC-R 

does hereby agree to execute any and all further papers, releases, and/or assignments, and shall 

provide any further coopemtiotl and assistance that may be necessary to effectuate the purposes 

of this assignment. It is understood that Federal maintains these subt'ogation rights, and is 

entitled, but not obligated, to pursue recovery under its subrogation rights and/or assignment 

rignts subject to the provisions of the Bond. 

SECTION llf: Representations and Acknowledgements 

A. Authorized Signatories. All of the undersigned persons represent and warrant that 

they are Parties hereto Ol' 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. 

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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, her, or its counsel. 

C. Q_wnership of the Claims. The Parties hereby represent and warrnnt that they 

have not transferred, assigned, released, or otherwise compromised any rights or clnims released 

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

FDJC-R understands and agrees that this representation is a material pottion of the consideration 

provided to Pedet·al in this Agreement. 

D. IJinding 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. 

Ex.t;cpt as othctwise expressly provided herein, no person or entity other than the Parties shall 

have any rights under this Agreement. 

E. Attorney's Fees. Each Party shall bear all of his or its attorney's tees and costs 

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

eve:nt of litigation in connection with or concerning this Agreement, the prevailing p~uty shall be 

emitled to recover all reasonable costs and expenses incurred by that Party. 

F. Reasonable Cooperation. The Patties 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 Pa1ties each acknowledge and agree 

thar: the matters set fotth in this Agreement constitute the settlement and compromise of disputed 

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claims and defenses, that this Agreement is not an admission o•· 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 o1· against any Party except to enforce its terms. 

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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, shall 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. constwed, and enforced 

according to applicable federal law. 01' in its absence, the laws of the State of Minnesota. 

J. Notices. Any notices required hereunder shall be sent by registct·ed mail, first 

cla~;s, return receipt requested, and by email, to the following: 

Jfto FDJC-R 

Christine P. Hsu 

FDIC 

350 I failfax Drive, Room VS-B-7054 

Arlington. VA 22226 

(b)(6) ..... H·H·- . ···lH ... I 

If to Federal: 

Michael Maillet 

Chubb & Son 

N.Y. Specialty Claims 

55 Water St., 29th Floor 

New York, N.Y. 10041-2899 

(b )(6) . HI.. I 

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

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

set forth herein and supersedes any prior agreements or understandings. This Agreement may 

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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 attomcy(s), or other 

representative(s ). 

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

an: (or convenience only and shall not affect the interpretation of this Agreement. 

IN WITNESS WHEREOF, the Patties 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 

r Mainstrcet Bank 

Its: Counsel 

Date: M {0{2014 

(b)(6)_ 

Its: Assistant Vice President 

Chubb & Son Divisions of Federal Insurance Company ik: /~ Jdl / I 

Date: 

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