SETTLEMENT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is made as ofthis:J.1d~ of 

April, 2015, by, between, and among the following und~::rsign~::d parties: 

Federal Deposit Insurance Corporation, as receiver f(w Bank of Lincolnwood ("FDICR"); and 

Continental Casualty Company ("Continental") (individually, the FDIC-R and 

Continental may be referred to herein as "Party" and, collectively, as the "Parties"). 

RECITALS 

WHEREAS: 

Prior to June 5, 2009, Bank of Lincolnwood ("Bank") was a depository institution 

organized and existing under the laws of the State oflllinois. 

In February 2009, the Bank discovered that $525,000 it had paid as dividends to its 

former Chairman and CEO, Clyde William Engle ("Engle") could not have been paid, and that 

Engle had withheld key financial information from the Bank's Board when it approved the 

dividends. Soon thereafter, the Bank dismissed Engle, and on July 6, 2009, notice of the loss 

was given to Continental in accordance with Community Financial Institutions Bond No. 

(b)(4) l lethe "Bond"). 

On June 5, 2009, the Bank was closed by the Illinois Department of Financial and 

Professional Regulation, and pursuant to 12 U.S.C. § l82l(c), the FDIC-R was appointed 

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

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

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(b)(4) ....... ... 

(b)(4) 

On s~pt~mb~r 11, 2009, the FDIC-R submitted a Proof of Loss, and on September 16, 

2013, the FDIC-R submitted an Amended Proof of Loss to Continental for a claim under the 

Bond arising from Engle's dishonesty relating to the dividends of$525,000 (the "Dividend 

Claim"). In connection with these submissions, Contin~ntal requested additional infonnation 

and documents from the FDIC in order to evaluate the Dividend Claim. 

NOW, THEREFOR£, in consideration ofthe 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 arc incorporated herein by reference. 

B. As an ess~ntial covenant and condition to this Agreement, Continental agrees to 

pay to the .FDIC-R the sum ofThrce Hundred Seventy-Five Thousand Dollars ($375,000.00) (the 

"Settlement Funds"). 

C. Not later than ten business days following the execution of a signed original, or 

signed originals in counterpart, of this Agreement by the undersigned Parties to this Agreement 

(the "Payment Due Date"), the Settlement Funds shall be delivered to the FDIC-R by direct wire 

transfer into the following designated account: 

HANK: Fcderalllome Loan Bank ofNcw York 

.ROUfiNG#:l I 

}'OR CREDIT TO: FDIC National Liquidation Account 

••••••••••••••••mACCOUNT#~I· •••••••••••• I 

OJU: FIN 1 0064; Bank of I .incolnwood, I .incolnwood, U .; Contact: Michael J. 

Pollack, 703-562-2592; Bond Settlement; Professional Liability d ·HHhDlF .. .Eund (p)(S) 

Fl II .B New York 

New York Main Office 

1 01 Park A venue 

2 
1\cw York, NY 10178-0599 

212-681-6000 (Phone) 

212-441-6890 (Fax) 

D. In the event that the Settlement Funds arc not delivered in full to the FDIC-R by 

the Payment Due Date, interest shall accrue on all unpaid amounts at the compound rate of 5 

percent per annum from such date until the date of payment in full. 

E. In addition, and without waiving any other rights that the FDIC-R may have, in 

the event that all Settlement Funds are not received by the FDIC-R on or before 30 days 

following the Payment Due Date, then the FDIC-R, in its sole discretion, shall have the right at 

any time prior to receipt of all 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 Settlement Funds (including all accrued interest), and/or shall have the right 

to ent(.>rce this Agreement against Continental, which agrees to jurisdiction in the United States 

District Court for the Northern District oflllinois in Chicago, Illinois (the "Federal District 

Court"), and further agrees to pay all the FDIC-R's reasonable attomeys' fees expended in 

enforcing Continental's obligation to pay the Settlement Funds or any part of them. Any 

decision by the FDIC-R to extend the terms of this Agreement or to accept a portion of the 

Settlement Funds shall not prejudice the FDIC-R's rights to declare this Agreement null and void 

at any time prior to receipt of all Settlement Funds (including all accmcd interest) or to enforce 

the terms of this Settlement Agreement; provided, however, that in the event the FDIC-R 

declares this Agreement null and void, the FDIC-R will return all amounts paid to it under this 

Agreement by Continental. The Parties further agree to the jurisdiction of the Federal District 

Comt to resolve any other disputes related to the enforcement of the terms of this Agreement. 

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SECTION II: Releases 

A. Release ofContil'}t!ntal by_fPJ~:-R. Ef1ective upon payment by Continental of the 

Settlement Funds, together with any accrued interest (as specified in Section I.D above), the 

FDIC-R, for itself and its successors and assigns, hereby releases and discharges Continental, its 

parents, subsidiaries, affiliates, and reinsurers, and their respective employees, of1ict!r.s, 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 t!quity, statutory or noncontractual, that the FDIC-R has or had for losses arising from the Dividend Claim. 

B. B.e.l~.~~~ of FDIC-R by Continental. Effective simultaneously with the release 

granted in Paragraph II. A. abovt!, Continental, for itself and its successors and assigns, and on 

behalf of its parents, subsidiaries, atliliatcs and reinsurers, and their successors and assigns, 

hereby releases and discharges 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, for losses arising from the 

Dividend Claim. 

C. ExRre~~J\.e~.et~va.tions fi:om Releases. 

1. Notwithstanding any other provision, by 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 FDJC-R, the Bank, other financial institutions, or any other 

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person or entity, including, without limitation, any daims acquired by the FDIC-R 

as successor in interest to the Bank, or any person or entity other than the Dank; 

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

Agreement; 

c. against Continental for any other losses or claims, aside f!·om those 

arising from the Dividend Claim, for which coverage may be provided under the 

Bond or any other Continental insurance policy issued to the Bank; and 

d. that arc not expressly released in Section II.B. above. 

2. Notwithstanding any other provision, this Agreement docs not waive any 

claims or actions that could be brought by any agency or instrumentality of the United 

States govcmmcnt other than the FDIC-R. 

SECTION IV: Additional Covenants 

A. Assignment. The FDIC-R hereby assigns and transfers to Continental, its 

successors and assigns, for their use and benefit, all rights, claims, and actions the FDIC-R may 

have against Engle involving any dishonest, thmdulcnt, and/or intentional act committed by 

Engle that caused any loss arising from the Dividend Claim, limited to the extent of the amount 

of the Settlement Funds. 

B. .C~.mfldential Materials. Continental may retain possession of any and all 

documents produced to it by the FDIC-R in connection with the Dividend Claim; however, 

Continental shall not publish such documents or disclose them to any other person, except as 

may be necessary in connection with any claim Continental may pursue against Engle pursuant 

to the <:~ssignment in Section lV.A above, or as may be permitted under that certain 

Confidentiality Agreement entered by the FDJC-R and Continental, dated March 3, 2011 (the 

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"Confidentiality Agreement"). Upon the conclusion of any claim that Continental may pursue 

against Engle, or if Continental decides not to pursue such a claim, Continental shall dispose of 

all documents produced to it by the FDIC-R in connection with the Dividend Claim, as provided 

under the Confidential Agreement. 

SECTION V: Representations and Acknowledgments 

A. No Admission of Liability. The undersigned Parties each acknowledge and agree 

that the matters set forth in this Agreement constitute the settlement and compromise of a 

disputed claim, and that this Agreement is not an admission or evidence of liability by either of 

them regarding any claim, nor is it intended to be, nor shall it be construed as, an interpretation 

of the Bond or any other insurance policy. This Agreement and negotiations leading to it shall 

not be used as evidence, or in any other manner, before any court or any proceeding to create, 

prove, or interpret the obligations or alleged obligations of Continental under the Bond to any 

Party or non-party to this Agreement. Except as provided above, the Parties may use the 

Agreement in any other proceeding to the extent deemed relevant and admissible by a court, and 

may usc this Agreement in any manner as may be necessary to enforce the terms of the 

Agreement. 

B. Cooperative Drl!ilirtg. The Parties to this Agreement have participated jointly in 

the negotiation and preparation of this Agreement. Accordingly, each Party agrees not to assert 

that the other Pruty is the sole or principal drafter of the Agreement. The Pa11ics also agree not 

to assert that any canon of construction applicable to sole or principal drafters should be applied 

against any Party. 

C. ~xecu~ioQ. __ jJ]. Counterpmts. This Agreement may be executed in countCI])arts by 

one or more of the Parties named herein, and all such counterparts, when so executed, shall, 

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together, constitute the final Agreement, as if one document had been signed by all parties 

hereto; and each such counterpru.1, 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. 

D. Binding EfJe_<;~. Each of the undersigned persons represents and warrants that he 

or she is duly authorized to sign this Agreement on behalf ofthc respective Party, and has the 

full power and authority to bind such Party to each and every provision ofthis Agreement. This 

Agreement shall be binding upon and inure to the benefit of the undersigned Parties and their 

respective heirs, executors, administrators, representatives, directors, officers, employees, agents, 

attorneys, successors, and assigns. 

E. No Co11f.ig~ptiality. The Parties acknowledge and agree that this Agreement is a 

public doctuncnt that will need to be disclosed pursuant to 12 U.S.C. § 1821 (s) and other 

applicable laws and regulations. 

F. Construction. The descriptive headings of this Agreement arc for convenience 

only and shall not affect the construction or interpretation ofthis Agreement. 

G. Notices. If any Party gives notice to another Party under this Agreement, such 

notice shall be (i) delivered personally, (ii) sent by Federal Express (or another recognized 

overnight or two-day courier), requesting next-day or second-business-day delivery, or (iii) sent 

by United States Certified or Registered Mail, postage prepaid, return receipt requested. Any 

such notice shall be deemed given when (i) so delivered personally, (ii) if sent by express 

courier, one or two business days (as the case may be) following delivery to the courier, or (iii) if 

sent by United States Certified or Registered Mail, three business days after the date of deposit in 

the United States Mail to the respective address of the Party as set f<Jrth below: 

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lf to the FDIC-R: 

If to Continental: 

Michael Pollack 

Supervisory Counsel 

Federal Deposit Insurance Corporation 

3501 North Fairfax Drive 

Arlington, VA 22226 

Telephone: (703) 562-2592 

With a copy to: 

Susan Valentine 

Robinson Curley & Clayton, P.C. 

300 South Wacker Drive, Suite 1700 

Chicago, IL 60606 

Telephone: (312) 663-3100 

Timothy Markey 

Fidelity Bond Claim Director 

CNA-Specialty Claim 

Management Ijability Financial Institutions 

and Technology 

1249 South River Road 

Cranbury, NJ 08512 

Telephone: (609) 860-2341 

or to such other address as the recipient Patty has specified by prior written notice to the sending 

Party (or in the case of counsel, to such other readily ascertainable business address as such 

counsel may hereafter maintain). If more than one method for sending notice as set forth above 

is used, the earliest notice date established as set forth above shall control. 

H. Choice of I ,aw. This Agreement shall be interpreted, constmed, and enforced 

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

I. pnti:nu\ .. gi:~~ment m,g_;\mendmcnts. 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 Patty or Patties to be bound thereby, or hy their respective authorized 

attorney( s) or other representative( s ). 

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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 

BANK OF LINCOLNWOOD 

Dated: ___5f-!7_~_1_..:;!::~---

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CONTINENTAL INSURANCE 

COMPANY 

Dated: __ '-(_,_(_&.--<..I(y.i...Lt""'-£----