(b)(2) 

S N53 

D1KIIL41’k, UTUU 

) 13jb5’ 

SETTLEMENT AND AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is made as of this 

day of J&w, 2009, by and between the following undersigned parties: 

The Federal Deposit Insurance Corporation in any of its capacities, including but 

not limited to, its capacity as receiver for BeatBank of Boulder, Colorado and Its capacity 

as receiver for Franklin Bank, SSB of Houston, Texas (collectively, "FDIC’), and 

Travelers Casualty and Surety Company, as successor in interest to St. Paul Companies. 

and St. Paul Fire and Marine Insurance Company (as Successors in Interest to United 

States Fidelity & Guaranty Company) and St. Paul Mercury Insurance Company 

(collectively "Travelers"). 

RECITALS 

WHEREAS: 

Prior to July 23, 1998, BestBank of Boulder, Colorado ("BestBank") was a 

depository institution organized and existing under the laws of Colorado; 

On July 23, 1998, BestBank was closed by the State of Colorado Division of 

Banking and pursuant to 12 U.S.C. § 1821(c), the FDIC was appointed receiver. In 

accordance with 12 U.S.C. § 1821(d), the FDIC as receiver succeeded to all rights, titles, 

Powers and privileges of BestRank, including those with respect to its assets; 

Among the assets to which the FDIC as receiver succeeded were any and all of 

BesiBanlc’s claims, demands, and causes of action against bonding companies that issued 

policies to BeatBank; 

On January 21, 1999. the FDIC, as receiver for BestRank, submitted a Proof of 

Loss to Travelers under the terms of the Financial Institution Bond NoL 1 (b)(4) 
Page 154 

(b)(4) 

(which may also be refaced b Nos. CCC::I]md CCR= issued - ( b)(4) 

to BestBank; 

On January 17, 2003, the FDIC, as receiver for BeatBank, filed a complaint for 

money damages against Travelers. That claim is now pending in the United States 

District Court for the District of Colorado in FDIC v. St. Paul Gas., Civ. Action No. 03-

CV-001 I 5-MEH-BNB (the "BestBank Bond Action"); 

Prior to November 7, 2008, Franklin Bank, SSB of Houston, Texas ("Franklin") 

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

On November 7, 2008, Franklin was closed by the Texas Department of Savings 

and Mortgage Lending and, pursuant to 12 U.S.C. § 182 1(c), the FDIC was appointed 

receiver. In accordance with 12 U.S.C. § 1821(d), the FDIC as receiver succeeded to all 

tights, titles, powers and privileges of Franklin, including those with respect to its assets; 

Among the assets to which the FDIC as receiver succeeded were any and all of 

Franklin’s claims, demands, and causes of action against bonding companies that issued 

policies to Franklin; 

On June 29, 2006, Franklin submitted its Proof of Loss to Travelers under the 

(b)(4) 

- terms of Financial histitutio Bond Ncf issued to Franklin; 

On September 14, 2007, Franklin filed a complaint for money damages against 

’ Travelers. That claim is now pending in the United States District Court for the Southern 

District of Texas (Houston) in Franklin Bank, SSB v. Si Paul Mercury Insurance 

Company, Civ. Action No. 07-02978 (the "Franklin Bond Action"). 

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The undcmi gued parties deem it in their best interests to enter into this Agreement 

to compromise and settle the FDIC’s claims with respect to both the Franklin Bond 

Action and the BestBank Bond Action and avoid the uncertainty, trouble, and expense of 

further 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 

A. As an essential covenant and condition to this Agreement, settling both the 

BestBank Bond Action and the Franklin Bond Action, Travelers agrees to pay the FDIC 

the sum of $5,700,000 (Five million, seven hundred thousand dollars) (the "Settlement 

Funds"). 

B. Upon execution of an original, or original in counterparts, of this 

Agreement by each of the undersigned Parties to this Agreement, but no later than 30 

days after the Agreement is fully executed (the "Payment Date"), the Settlement Funds 

shall be delivered to the FDIC by direct wire transfer into the following account with the 

following instructions: 

(b)(2),(b)(4) Bank-- F HomeLoan Bank 

ot[I] 

(b)(2)(b)(4) 

RoutingNo 

(b)(2)(b)(4) For Credit T atonal Liquidation Account 

AccountNo.: 

OBI: Contact: Scott Taylor, Investigations, (972) 761-8528; Bond Claim 

Settlements on2banks 

In the event that the Settlement Funds are not delivered to the FDIC by the 

Payment Date, interest shall accrue on all unpaid amounts at the rate of 5% per annum 

from the Payment Date until the date of payment. 

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C. In addition, and without waiving any other rights that the FDIC may have, 

in the event that all Settlement Funds are not received by the FDIC by the Payment Date, 

then the FDIC, in its sole discretion, shall have the right at any time prior to receipt of all 

of the Settlement Funds (including all accrued interest) to declare this Agreement null 

and void, shall have the right to extend this Agreement for any period of time until it 

receives all of the Settlement Funds (including all accrued interest), and/or shall have the 

right to enforce this Agreement against Travelers, in which event Travelers agrees to the 

jurisdiction of the United States District Court for the District of Colorado and agrees to 

pay all of the FDIC’s reasonable attorneys’ fees expended in enforcing the terms of this 

Agreement. Any decision by the FDIC to extend the terms of this Agreement or to 

accept some of the Settlement Funds shall not prejudice its rights to declare this 

Agreement null and void at any time prior to receipt of all of the Settlement Funds 

(including all accrued interest) or to enforce the terms of this Settlement Agreement; 

provided however, that acceptance of some of the Settlement Funds shall reduce 

Traveler’s obligation to the FDIC under the Bonds or under this Agreement solely in the 

amount of such received funds. 

SECTION II: STIPTJLATON AND DISMISSAL 

Upon execution of this Agreement by each of the undersigned parties and the 

FDIC’s receipt of the Settlement Funds, plus any accrued interest, the parties shall 

execute and submit to the respective Courts, ajoint stipulation of dismissal of both the 

BesiBank Bond Action and Franklin Bond Action, pursuant to Fed. R. Civ. P. 

41(a)( I )(A)(ii). The undersigned parties agree that the stipulation of dismissal shall be 

with prejudice, with each party to bear its own costs as these were originally incurred. 

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SECTION HE RELEASES 

A. Release of Travelers by the ID IC. Effective upon payment of all of the 

Settlement Funds plus any accrued interest as described in Section 1 above and dismissal, 

the FDIC, for itself and its successors and assigns, hereby releases and discharges 

Travelers and its employees, officers, directors, representatives, agents, attorneys, 

predecessors, successors, assigns, affiliates and subsidiaries from any and all claims, 

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

in equity, belonging to the FDIC, that in any way arise from or relate to either of the 

Bonds previously referred to herein, including, without limitation, the causes of action 

alleged in both the Franklin Bond Action and the Bestflank Bond Action, and agrees that 

any interest it may have under either Bond is extinguished. 

B. Release of the FDIC by Travelers. Effective simultaneously with the 

release granted in Paragraph III.A. above, Travelers for itself and its successors and 

assigns, hereby releases and discharges the FDIC and its employees, officers, directors, 

representatives, agents, attorneys, 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 either Bond including, but not limited to, any 

rights of subrogation. 

SECTION IV: REPRESENTATIONS AND ACKNOWLEDGEMENTS 

A. No Admission of Liability. The undersigned parties each acknowledge 

and agree that the matters set faith in this Agreement constitute the settlement and 

compromise of disputed claims, and that this Agreement is not an admission or evidence 

of liability by either of them regarding any claim. 

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B. Waiver of Subrogation/Assignment. Travelers hereby waives all rights of 

assignment and subrogation provided for in Section 7 of the Bonds or otherwise. 

C. Execution in Countemarts. This Agreement may be executed in 

counterparts by the undersigned parties and all such counterparts when so executed shall 

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 parties subscribed thereto upon the execution by all parties 

to the Agreement. 

D. Binding Effect. Each of the undersigned persons represents and warrants 

that each of them is a party hereto or is authorized to sign this Agreement on behalf of the 

respective party, and that each of them has the full power and authority to bind such party 

to each and every provision of this Agreement. This Agreement shall be valid and 

binding upon and inure to the benefit of the undersigned parties and their respective heirs, 

executors, administrators, representatives, successors and assigns and when duly 

executed shall be valid and binding upon the parties in accordance with its terms. 

E. Choice of Law. This Agreement shailbe interpreted, construed and 

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

Colorado. 

F. Entire Agreement and Amendments. This Agreement constitutes the 

entire agreement and understanding between and among the undersigned parties 

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

modified except by another written instrument signed by the party or parties to be bound 

thereby, or by their respective authorized attorneys or other representatives. 

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G. Reasonable Cooperation. The undersigned 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 effectuate 

the signing, delivery, execution, filing, recording, and entry, of any documents necessary 

to conclude the Franklin Bond Action and the BcstBank Bond Action that are the subject 

of this Agreement, and to otherwise perform the terms of this Agreement. 

H, Enforceability. In the event that any provision of Section IV of this 

Agreement (except Section IV.B.) is held to be void or unenforceable by a court of 

competent jurisdiction, the remaining provisions of this Agreement shall have the same 

force and effect as though the void or unenforceable parts have been deleted. 

I. Alteration. This Agreement may not be altered, amended or modified in 

any respect except by a writing duly executed by each of the Parties expressly reciting 

such intent. 

J. Authosshiu. In the event any dispute, disagreement or controversy arises 

regarding this Agreement, the Parties shall be considered joint authors and no provision 

shall be interpreted against any Party because of authorship. 

K. Titles and Captions. All section titles or captions contained in this 

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

Agreement. 

ti 
(b)(6) 

Page 160 

IN WJTNESS WHEREOF, the parties hereto have caused this Agreement to be 

executed by each of them or their duly authorized representatives on the date hereinafter 

subscribed. 

FEDERAL DEPOSIT INSURANCE CORPORATION 

Date: 

PRINT NAME: 

TRAVELERS CASUALTY AND SURETY COMPANY, 

AS SUCCESSOR IN INTEREST TO ST. PAUL 

COMPANIES, AND ST. PAUL FIRE AND MARINE 

INSURANCE COMPANY (AS SUCCESSORS IN 

INTEREST TO UNITED STATES FIDELITY & 

GUARANTY COMPANY) AND ST. PAUL MERCURY 

INSURANCE COMPANY 

Date: 9 

TflE:V 

PRINT NAME: jC I 4Ce- ,S ZA 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 

executed by each of than or their duly authorized representatives on the date hereinafter 

subscribed. 

(b)(6) 

Date:_______ 

FEDERAL DEPOSIT INSURANCE CORPORATION 

TITLE: CcL,4v)s’ I 

PRINT NAME: CL Kcs 

TRAVELERS CASUALTY AND SURETY COMPANY, 

AS SUCCESSOR IN INTEREST TO ST. PAUL 

COMPANIES, AND ST. PAUL FIRE AND MARINE 

INSURANCE COMPANY (AS SUCCESSORS IN 

INTEREST TO UNITED STATES FIDELITY & 

GUARANTY COMPANY) AND ST. PAUL MERCURY 

(b)(6) INSURANCE COMPANY 

Date: BY: 

TITLE: V l &(,\(LJJJA.(CU&i4 

PRINTNAME: 7Ceq_&f 1 " 

8