SETTLEMENT AND RELEASE AGREEMENT 

This Settlem~nt and Release Agreement ("Agreement") is effective as of January 26, 

2015, by, betwc~n, and among the following undersigned parties: (a) Plaintiff Federal Deposit 

Insurance Corporation as Receiver for Community Security Bank ("FDIC-R"); (b) Arvin 

Jacobson, Jason Ashley, Jeffrey Jacobson, and Gary Meyer (collectively, the "Settling 

Defendants"); and (c) Federal Insurance Company ("Insurer") (individually, the FDIC-R, the 

Settling Defendants and the lnsurer may be referred to herein as "Party" and collectively as the 

"Parties"). 

RECITALS 

WHEREAS, prior to July 23, 2010, Community Security Bank, New Prague, Minnesota 

("Rank") was a state non-member bank organi7.ed and existing under the laws of the Stat~ of 

Minnesota; 

WHEREAS, on July 23,2010, the Minnesota Department of Commerce closed the Bank 

and appointed the PDIC as receiver. In accordance with 18 U.S.C. § 1821(d), the FDIC 

succeeded to all rights, titles, powers and privileges of the Bank, including all of the Bank's 

assets. 

WHEREAS, among the assets to which the FDJC-R succeeded were all of the Bank's 

claims, demands, and causes of action against its former directors, officers, and employees 

arising from the performance, nonperformance, and manner of performance of their respective 

functions, duties and acts as directors, officers, and employees of the Bank; 

WHEREAS, the FDIC-I~ has assct1ed claims against the Settling Defendants, each of 

whom served at various times as a director and/or officer of the Bank. The Settling Defendants 

have denied and continue to deny liability for the claims. No litigation has been commenced; 
(b)(4) 

WHEREAS, insurer issued a director and officer liability policy numbered I ·················Jfor ........................... (.P.)(4.) 

the period September IS, 2007 to September 15, 20 L 0, with an extended reporting period 

through September 15,2011 ("Policy"), which insured the directors and officers of the Bank 

according to the terms, provisions, and conditions of the Policy. The Settling Defendants made 

claims for coverage under the Policy. Insurer has reserved its rights to deny coverage under the 

Policy for claims asserted by FDIC-R against the Settling Defendants. 

WHEREAS, the undersigned Parties deem it in their best interests to enter into this 

Agreement to avoid the uncertainty 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 1: Payment to FDIC-R 

A. As an essential covenant and condition to this Agreement, on or before thirty (30) 

calendar days following the date the FDIC-R executes this Agreement (the thirtieth calendar day 

shall be the "Payment Date"), the Insurer agrees to pay the FDIC-R the sum off our llundrcd 

Eighty-Four Thousand Five Hundred Dollars (U.S. $484,500) ("the Settlement Payment") on 

behalf of the Settling Defendants. 

IJ. The Insurer shall deliver the Settlement Payment to the FDIC-R by check payable 

to I·'DIC National Liquidation Account 

AccountNumber:fL._······-···· __ __. 

FIN I 0264; Community Security Bank 

C. If the FDIC-R does not receive the Settlement Payment in full on or before the 

Payment Date, th~n the FDTC-R, in its sole discretion, shall have the right at any time prior to 

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receipt of the Settlement Payment in full (including all accrued interest) to: 

l. Extend the period of time tor the Settlement Payment, including interest 

accruing from the Payment Date, through the date of payment at a rate calculated in accordance 

with 26 U.S.C. § 662 1(a)(3); and/or 

2. Terminate the Agreement and institute an action on the FDIC-R's claims. 

The Settling Defendants and Insurer further agree to waive any defense based on any statute of 

limitations that would bar any of the f'DJC-R's claims and waive all objections, defenses, claims 

or counterclaims, and covenant and agree not to assert any objections, defenses, claims or 

counterclaims that did not exist or were otherwise unavailable as of the date this Agreement was 

fully executed; and/or 

3. Enforce this Agreement, in which event the Settling Defendants and 

Insurer agree to jurisdiction in the United States District Court for the District of Minnesota and 

the Insurer agrees to pay all of the FDIC-R's reasonable attorney's fees and costs expended in 

enforcing the terms of this Agreement; and/or 

4. Seek any other relief available to it in law or equity. 

Any extension of time under Section I.C.l for delivery of the Settlement Payment or 

acceptance of a portion of the Settlement Payment shall not prejudice the FDIC~R's rights to take 

any of the actions set fo1th in Section I.C.2 through I.C.4 at any time prior to receipt of 

Settlement Payment (including all accrued interest) in full. 

SECTION II: Releases 

A. The FPIC-R's Releases. 

Upon receipt of the Settlement Payment in full and except as provided in Section II.D., 

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

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I. The Settling Defendants, and each of them, and each oftheir respective 

heirs, executors, trustees, legatees, beneficiaries, administrators, representatives, successors, 

agents, attorneys, and assigns, from any and all claims, demands, contracts, obligations, 

damages, actions, and causes of action, direct or indirect, in law or in equity, known or unknown, 

belonging to or that ever did or may belong to the fOIC-R, by assignment or otherwise, that 

arise from or relate to, the performance, nonperformance, or manner of performance of the 

Settling Defendants' respective functions, duties, inactions and actions as employees, officers 

and/or directors of the Bank. 

2. Insurer, its parents, subsidiaries, affiliates and reinsurers, and their 

respective employees, officers, directors, agents, attorneys, representatives, successors and 

assigns, from any and all claims, demands, contracts, 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 

Policy. As part of this release of the Insurer, the fDIC-R agrees that any interest it may have 

under the Policy is extinguished. 

3. All other former officers, directors and employees of the Bank insured 

under the Policy, including but not limited to the individuals identitied in h~.: FDIC's demand 

letter dated September 2, 2011 (the "Other Insureds") and each of their respective heirs, 

executors, administrators, 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, belonging to the FDIC, that arise at any time from or relate to, the perfonnancc, 

nonperformance, or manner of performance of the Other Insured's respective functions, duties 

and actions as directors, officers, and/or employees of the Bank. This release shall be null and 

void as to any Other Insured that asserts any claim against the FDIC arising out of matters 

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pertaining to the Bank. 

B. Th~ S~ttling D~fendants' Releases. 

1. The Settling Defendants' Release of the FDIC-R. 

Effective simultaneously with the release granted in Section I I.A. above, the ScUiing 

Defendants, on behalf ofthemselves individually, and their respective heirs, executors, trustees, 

administrators, agents, representatives, attorneys, successors, and assigns, hereby release and 

discharge the FDIC-R, and its employees, officers, directors, representatives, attorneys, 

successors and a~sign , 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 Rank or to the performance, nonperformance, or manner of pcrfonnance of the 

Settling Defendants' respective functions, duties and actions as officers and/or directors of the 

Bank. 

2. The Settling Defendants' Release of Each Other. 

Effective simultaneously with the release granted in Section ll.A above, the Settling 

Defendants, on behalf of themselves individually, and their respective heirs, executors, trustees, 

legatees, beneficiaries, administrators, agents, representatives, attorneys, successors, and assigns, 

hereby release and discharge each other, and/or any person who may be considered an "insured" 

as defined by the Policy, from any and all claims, demands, contracts, obligations, actions and 

causes of action, direct or indirect, in law or in equity, known or unknown, that arise from or 

relate to the Policy. 

3. The Settling Defendants' Release of Insurer. 

Effective simultaneously with the release granted in Section ll.A. above, the Settling 

Defendants, on behalf of themselves individually, and their respective heirs, executors, trustees, 

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legatees, beneficiaries, administrators, agents, representatives, attorneys, successors, and assigns, 

hereby rt;lcasc and discharge Jnsure;:t·, its parents, subsidiaries, affiliates, representatives, 

successors and assigns, from any and all claims, demands, contracts, obligations, damages, 

actions and causes of action, direct or indirect, in law or in equity, known or unknown, that arise 

from or re late to the D&O Action. This release shall not extend to Insurer's obligations to pay 

the Settling Defendants' legal and consulting fees incurred prior to the date of this Agreemenl's 

execution. This release shall not operate as a release of any of the Settling Defendants' remaining 

rights under the Policy with respect to any other claims, and remaining coverage under the 

aggregate liability limits ofthePolicy. 

C. The Insurer's Release. 

I. Insurer's Release of FDIC R. 

Effective simultaneously with the releases granted in Section II.A. above, Insurer, for 

itself and its successors and assigns, and on behalf of its parents, subsidiaries, affiliates and 

reinsurers, and their successors and assigns, hereby releases and discharges the FUI C~R, and its 

employees, officers, directors, agents, representatives, attorneys, 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 ur relate to the Policy. 

2. insurer's Release of Settling Defendants. 

Effective simultaneously with the releases granted in Section £I.A. above, Insurer, for 

itself and its successors and assigns, and on behalf of its parents, subsidiaries, affiliates and 

reinsurers, and their successors and assigns, hereby releases and discharges the Settling 

Defendants, and each of them, and each oftheir employees, officers, directors, agents, 

representatives, attorneys, successors, and assigns, from any and all claims, demands, 

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

arise ti·om or relate to the claims asserted by the FDIC-R. 

D. Exceptions from Releases by FDlC-R. 

I. Notwithstanding any other provision of this Agreement, the FDlC-R does 

not release, and expressly preserves fully and to the same extent as if this Agreement had not 

been executed, any claims or causes of action against the Settling Defendants or any other 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 FDIC-R, the Bank, other financial institutions, or 

any other person or entity, including without limitation any such claims acquired by FDIC~R as 

successor in interest to the Bank or any person or entity other than Bank; and 

b. Against any person or entity not expressly released by the FDIC-R 

in this Agreement. 

2. Notwithstanding any other provision of this Agreement, nothing in this 

Agreement shall be construed or interpreted as limiting, waiving, releasing, or compromising the 

jurisdiction and authority of the Federal Deposit Insurance Corporation in the exercise of its 

supervisory or regulatory authority or to diminish its ability to institute administrative 

enforcement or other proceedings seeking removal, prohibition, or any other relief it is 

authorized to seck pursuant to its supervisory or regulatory authority against any person. 

3. Notwithstanding any other provision of this Agreement, this Agreement 

docs not purport to waive, or intend to waive, any claims that could be brought by the United 

States through the l>cpattment of Justice, the United States Attorney's Office for any federal 

judicial district, or any other department or agency of the United States as defined by 18 U.S.C. § 

6. In addition, the FDIC-R specitically reserves the right to seek court-ordered restitution 

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pursuant to the relevant provisions ofthe Mandatory Victims Restitution Act, 18 U.S.C. §§ 3322 

and 3663 ct. seq., if appropriate. 

E. Common Exceptions from the Parties' Respective Releases. 

With respect to the fDIC-R, the Settling Defendants and the Insurer, none of the 

foregoing parties release, and expressly preserve fully and to the same extent as if this 

Agreement had not been executed, any claims or causes of action against any person or entity not 

expressly released by a Party in this Agreement. 

Sl:C'l'ION III: Waiver of Dividends and Proceeds from Litigation 

To the extent, if any, that Settling Defendants are or were shareholders of the Hank or its 

holding company and by virtue thereof arc or may be entitled to a dividend, payment, or other 

distribution upon resolution of the n.:ccivcrship of the Bank or proceeds in any litigation that has 

been or could be bmught against the federal Deposit Insurance Corporation in any capacity or 

against the 11 nited States based on or arising out of, in whole or in part, the closing of the Bank, 

or any alleged acts or omissions by the Federal Deposit Insurance Corporation in any capacity. 

the United States government, or any agency or department of the United States government in 

connection with the Bank, its conservatorship, or receivership, Settling Defendants hereby 

knowingly assign to the FDIC-R any and alJ rights, titles, and interest in and to any and all such 

dividends, payments, or other distributions, or proceeds. 

SECTION IV: Representations and Acknowledgements 

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

they arc Pa1tics hereto or 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 he binding upon and inure to the benefit of the 

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undersigned Parties and their respective heirs, executors, trustees, administrators, representatives, 

successor~ and assigns. 

B. A~_Y.l~~ ofCounsd. Each Party hereby acknowledges that he 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 or its counsel. 

C. Non-Assignment. Each Party represents and warrants that he, she or it has not 

assigned to any other person or entity any claims released by such Patty pursuant to this 

Agreement. 

SECTION V: Reasonable Cooperation 

A. The Parties agree to cooperate in good faith to effectuate all the terms and 

conditions of this Agreement. 

SECTION VI: Other Matters 

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

that thi~ Agreement and all negotiations, discussions and proceedings in connection wilh this 

settlement shall not be deemed or constitute an admission by the Settling Defendants of fault, 

liability ot· wrongdoing as to any facts or claims and shall not be offered or received in evidence 

or otherwise ust:d by any person in any other action or proceeding for any purpose, except in 

connection with a proceeding to enforce this Agreement. There has been no adjudication by any 

court pursuant to which the Settling Defendants have been determined to have caused a loss to 

the Bank. The Settling Defendants deny any fault, liability or wrongdoing as to any facts or 

claims alleged or asserted by FDIC-R. Payment by Insurer shall not be an admission of 

coverage. 

B. Execution in Counterparts. This Agreement may be executed in counterparts by 

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one or more of the J>arties 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. Signature pages 

may be delivered by facsimile or e-mail transmission, which will constitute complete delivery 

without the necessity to deliver original signed s.ignature pages. 

C. Choice of Law. This Agreement shall be interpreted, construed and enforced 

according to applicable federal law, or in its absence, the laws of the State of Minnesota, without 

regard to conflict oflaw rules. 

D. Notices. Any notices required hereunder shall be sent by registered mail, tirst 

class, return receipt requested, and by email, to the following: 

lfto the FDIC-R: ScottS. Payzant 

Leonard, O'Brien, Spencer, Gale & Sayre, LTD. 

l 00 South Fifth Street, Suite 2500 

Minneapolis, MN 55402. 

Ifto the Settling Defendants: Janel M. Dressen 

Anthony Ostlund Baer & Louwagic P.A. 

90 South Seventh Street, Suite 3600 

Minneapolis, MN 55402 

Jfto Insurer: Brownyn De Witt 

Federal Insurance Company 

82 Hopmeadow Street 

Simsbury, CT 06070-7863 

E. Entin: Agreement and All}end_r.nents. This Agreement constitutes the entire 

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

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

not be amended or modified, nor may any of its provisions be waived, except in writing signed 

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(b)(6) 

by the Parties hound thereby, or by their respective authorized attorney(s), or other 

representative( s). 

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

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

G. Agreement Not Conti dential. ·Pursuant to 12 U .S.C. § 1821 ( s ), this Agreement 

cannot be and shall not be deemed to be confidential, and will be disclosed pursuant to the 

Federal Deposit Insurance Corporation's applicable policies, procedures, and other legal 

requirements. 

·. H. Termination of Tolling Agreement. Effective upon the FDIC-R receipt of the 

Settlement Payment and the SettJemcnt Check clearing, this Agreement shall immediately and 

simultaneously terminate the Tolling Agreement dated July 19, 2013, as amended, between the 

FDJC and Settling Defendants. 

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

by each of them or their duly authorized repre.c;entativcs on the dates hereinafter subscribed. 

[SIGNATURES fOLLOW ON PAGES J 1~12] 

FEDERAL DEPOSIT INSURANCE CORPORATION AS 

RECEIVER FOR COMMUNITY SECURITY BANK 

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