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SETTLEMENT, RELEASE AND ASSIGNMENT 

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

14th day of D¢cember 20I0, by and between The Federal Deposit Insurar-tce Corporation 

in any of its capacities, including but not limited to, its capacity as receiver for the Bank 

ofElmwood, Racine, Wisconsin ("'FDIC") and St. Paul Mercury Insurance Company 

("St. Paul''). 

WHEREAS; 

A. Prior to October 23, 2009, Bank of Elmwood (the "Bank") was a statechartered, federally-insured bank located in Racine, Wisconsin; 

St. Paul issued Finand a1 Institution .&nd numberL..I__ ....;······· ....;;;;;;.JI --- ~~--( 4) 

"Bond") that insured the Bank, among other entities, effective September 1, 2007. 

C. On October 23, 2009, the Bank was closed by the Wisconsin Department 

ofFinancial Institutions, and the FDIC was appointed as Receiver; 

D. The FDIC, in its capacity as Receiver and successor ofthe Bank, has been 

assigned aJI rights, titles~ powers and privileges ofthe Bank in accordance with 12 U.S.C. 

§ 1821 (d)J including ~ith respect to the Bank's assets, claims, demands, a:nd causes of 

actuion arising in connection with the Bond~ 

E. On June 2, 2010, the FDIC submitted a Proof of Loss to St. Paul pursuant 

to Section 5 of the Bond for a claim arising under Insuring Clause (K) for loss "resulting 

directly from the fraudulent use of credit. debit, charge) access., convenience, 

identification or other cards in gaining access to Automated Mechanical Devices, whether 

such cards were issued or purport to have been issued, by the insured or by anyone other 

than the Insured." The June 2, 20 I 0 Proof ofLoss concerned a computer security breach 
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occurring at Heartland Payment Systems, a New Jersey-based card payruent processor, 

that rcsuhed in loss to the Bank:, as detailed by the FDJC, as Receiver for Bank of 

Elmwood, in the ProofofL-oss dated June 2, 2010, and all additionaJ documentation and 

infonnation provided in support ofthat ProofofLoss {the •·claim"); 

F. Jnsuring Clause (K) ofthe Bond has a single }oss limit ofliability of 

$100,000, wjth a single deductible of$5,000; 

G. Upon discussion. the parties have agreed that the Claim submitted is for 

loss incurred in the amount of$90,412.15 before application ofthe deductible; 

H. 1hc undersigned parties wish to resolve amjcably the CJaim and avoid the 

uncertainty, trouble and expense of Jjtigati.on, and. deem it in thek best interests to enter 

into this Agreement to confinn the sett]e.tmnt, release and assignment ofthe Claim. 

NOW. THEREFORE, in consid eration of the mutual covenants~ promises, 

undertakings, payments, and releases stated herein, the sufficiency and receipt ofwhich 

consideration is hereby acknowledged, the undersigned parties agree. each with the other, 

as follows: 

L Pavm~n.t. St. Paul agrees to pay the FDIC the sum of $85,412.15 (the 

''Paymenf'). 1be Payment shall be by check to "FDIC as Receiver for Bank ofElmwood 

(FlN I 0132 )." Payment shaH be sent by overnight mail, on or before December 29. 

2010, to the below contact; 

John Wolfsmitb 


Counsel 


Federal Deposit Insurance Corporation 


200 N. M.artingale, Suite 200 


Schaumburg, lllinois 60173 


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1n the event that the Payment is not delivered to the FDIC by December 29, interest shall 

accrue on ali unpaid amounts at the rate of l 0% per annum until the date of payment 

2. R.~J.~ase ofSt. Paul bv FDIC. Effective upon delivery ofthe Payment and 

any accrued interest, the FDIC, for itself and its successors and assigns, does hereby 

release and forever discharge St. Paul, its employees. offi.cers, directors, representatives, 

agents, attorneys, predecessors, parent, affiliates, subsidiaries, successors and assigns, 

from any and all claims, demands, ob]igations., damages, actions., and causes ofaction, 

direct or indirect. in Jaw or in equity. belonging to FDIC in connection with the Claim. 

3. Release ofFDIC by St. PauL Effective simultaneously with the relea.~ 

granted in Paragraph 2, St. Paul, for itself and its successors and assigns, does ht.-reby 

release and forever discharge the FDIC and its employees, officers, directors, 

representatives, agents, attorneys, predecessors, successors. and assigns, from any and aU 

claims, demands, obligations, damages, actions, and causes ofaction, direct or indirect, in 

Jaw or in equity, belonging to St. Paul in connection with the Claim. 

4. Assignment of the Claim. In further consideration ofthe Payment, the 

FDIC, as Receiver for Bank ofElmwood, does hereby transfer, assign and set over to St. 

Paul all of the FDIC's claims, rights, demands and causes ofaction against all persons~ 

firms or cotperations whomsoever arising out ofor in any way co1mected with the Claim 

up to the amount of the Payment (the "Assigned Claim"). St. Paul may pursue me 

Assigned Claim in its ov.n name. 'D1e FDIC a:ffinns its understanding and agreement to 

be bound by the Bond provisions re.lating to recovery and subrogation including, without 

limitation, the order of recovery provisions, and to cooperate with St Paul in all matters 

pertaining to the Assigned Claim. 

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5. Execution in Counterparts. This Af:,'l'eement may be executed in 

counterparts by the undersigned parties and all !>1lch counterparts when so executed shall 

together constitute the final Agreement, as if()ne document had been signed by all parties 

hereto; and each such counterpart, upon execution and delivery, shalJ be deemed a 

complete original, binding the parties subscribed thereto upon the execution by all parties 

to the Agreement 

6. Binding Effect..:. The parties represeni and warrant that each ofthem is a 

party hereto or is authorized to sign this Agreement on behalfofthe respective party, and 

that each ofthem has the full power and authority to bind such party to each and every 

provision ofthis Agreement. This Agreement shaH be valid and binding upon and inure 

to the benefi£ ofthe undersigned parties and their respective heirs, executors, 

administrators, representalives, successors and assigns and when duly executed shall be 

valid and binding upon the parties in accordance v.ith its tenns. 

7. Choice ofLaw. This Agreement shall be interpreted~ construed and 

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

Wisconsin. 

8. Reasonable Cooperation, 'Ibe undersigned parties agree to cooperate in 

good faith to eftectuate all the 1erms and conditions ofthis 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, ofany documents necessary 

to perform the terms ofthis Agreement. 

9. Entire Agreement and Amendments. This Agreement constitutes the 

entire agreement and understanding between and among the undersigned parties 

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conccrnjng the matters set forth herein. This Agretment 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. 

IN WffNESS WHEREOF, the parties hereto have caused this Ag~ment to be 

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

subscribed. 

:FEDERAL DEPOSIT l.NSURANCE CORPORATION 

(b)(6) ............................Date.:...ld: iJ~J./:J.o.to BY: ······· 

TITLL-E: - -__ ..,.!:T"· --- 0 c~ i\-.s- a."""'\r-_-__. ·-·­

Print Name: >1*o Wt.>'tsrr\,jb 

ST. PAUL MERCURY INSURAt"'CE COMPA..W 

Date:._____ BY: ----- --------­

TITLE:--- --------

PrintNrune: ----------------------­

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concerning the roarters set forth herein. 11ris Agreement may not be amended or 

modified except by another written instnnncn1 signed by the party or parties to be bouod 

thereby. or by their respective authorized attorneys or otber rcpres..,~ta ves.. 

L"'. WITNESS WHEREOF, the parties hereto have caused this Agreement to be 

executed by each of them or their dul>' authorized representatives on the date hereinafter 

sub:;cribed. 

FI:DERAL DEPOSIT INSUR...t.NCE CORPORATION 

(b)(6) ........................................Da Ja}L~J~.:i9.;;;;;; .B¥:1 


~o-:. .....-------' 

TITLE: c:, 0~ f\$Q.\ ~------ -~ 

ST. PAUL MERCURY lNSURANCE COMP~''Y 

)(~--=--=-~~····~-if_,...,_~ Jj ~ 1---­ TITLE: 

Prinl Name; 

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