SETTLEMENT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is entered into by and between 

the Federal Deposit Insurance Corporation, as Receiver for The Bank of Asheville, Asheville, 

North Carolina ("FDIC-R"), and Cincinnati Insurance Company ("Cincinnati"). Individually, 

the FDIC-R and Cincinnati may be referred to herein as "Party" and collectively as the "Parties." 

RECITALS 

WHEREAS: 

A. Prior to January 21, 2011, The Bank of Asheville ("BOA" or the "Bank") was a 

depository institution organized and existing under the laws of the State of North Carolina. 

B. On January 21, 2011, BOA was closed by the North Carolina Commissioner of 

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

accordance with 12 U.S.C. § 182l(d), the FDIC-R as receiver succeeded to all rights, titles, 

powers and privileges of the Bank, its shareholders, and creditors, including right and title with 

respect to the Bank's assets. 

C. Among the assets to which FDIC-R as receiver succeeded were any and all 

claims, demands, and causes of actions against the Bank's financial institution bond insurer(s), 

including against Cincinnati as issuer of the Bond, as that term is defined below. 

D. Prior to its closing, BOA sent a Property Loss Notice ("Notice") and Proof of 

Loss ("Proof of Loss") on December 2, 2010, and January 12, 2011, respectively, to Cincinnati 

under Insuring Agreement A of that certain Depository Institutions Blanket Bond, Bond No. 

(b )(4 L .m l··· lissued by Cincinnati to the Bank (the "Bond"). On July 6, 2011, after the Bank was 

closed, the FDIC-R submitted to Cincinnati an Amended and Supplemental Proof of Loss 

("Supplemental Proof of Loss"), explaining in more detail its claim under the Bond ("Claim"). 

1 
E. The. Parties deem it in their best interests to enter into this Agreement to avoid the 

uncertainty, trouble,. and expense. of 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-R 

A.. The. Recitals above. are. incorporated herein by reference. 

B... As. an essential covenant and condition to this. Agreement, Cincinnati agrees to. 

pay to the FDIC-R the. sum of Three Million and 00/100 Dollars. ($3,000,000.00) (the 

"Settlement Funds") .. 

C. . Within three. business days after the. last date. this. Agreement is signed below, the 

Settlement Funds. shall be. delivered to. the FDIC-R by direct wire. transfer to. the Federal Home. 

Loan Bank of New York, New York Main Office, 101 Park Avenue, New York,. NY 10178-

(b)(4) .. 0599;.ROUTINC:J#: f I FOR CREDIT TO: FDIC National Liquidation Account;. 

(b)(4)H .ACGQlJNT#f · !OTHER BENEFICIARY INFORMATION (OBI): Fund code:. 10330; 

Asset number:. N/ A;. Reference: Professional Liability (371 00) DIF Fund;. Account officers to be. 

notified and phone numbers:. Steven C. Morrison (703) 516-5029; Description of the 

Transaction:. Bank of Asheville. Bond Claim Settlement. ... 

SECTION 11:. RELEASES 

A... Release. of Cincinnati by FDIC-R. 

Effective upon full payment by Cincinnati of the Settlement Funds, the FDIC-R,. for itself 

and its. predecessors, successors. and assigns, hereby releases. and discharges Cincinnati,. its. 

parents,. subsidiaries,. affiliates and reinsurers, and their respective. employees, officers, directors, 

2 
agents, representatives, predecessors, successors and assigns, from the Claim, including but not 

limited to any and all claims, demands, obligations, damages, actions and causes of action, direct 

or indirect, in law or in equity, statutory, contractual, non-contractual, or in tort, that the FDIC-R 

alleged or could have alleged against Cincinnati in connection with the Notice, the Claim, the 

Proof of Loss, the Supplemental Proof of Loss, and the Bond, and which the FDIC-R did allege 

or could have alleged against Cincinnati that arise from or relate to the Claim, or Cincinnati's 

adjusting of the Claim, or otherwise arise from, relate to or concern the Bond, and agrees that 

any interest it may have under the Bond is extinguished. 

B. Release of FDIC-R by Cincinnati. 

Effective simultaneously with the release granted in Paragraph II. A. above, Cincinnati, 

for itself and its predecessors, successors and assigns, and on behalf of its parents, subsidiaries, 

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

FDIC-R and its employees, officers, directors, agents, attorneys, representatives, predecessors, 

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

causes of actions, direct or indirect, in law or in equity, that arise from or relate to the Notice, the 

Claim, the Proof of Loss, the Supplemental Proof of Loss, and the Bond including but not 

limited to any rights of subrogation, legal, equitable, or otherwise. 

C. Waiver of Subrogation by Cincinnati. 

Cincinnati agrees to and hereby does irrevocably waive any rights of subrogation it may 

have relating to the Claim, including without limitation those arising from Cincinnati's payment 

of the Settlement Funds, or involving the underlying properties, assets or claims involved in the 

Claim and all rights to recovery thereof ("Rights of Recovery"). Cincinnati agrees that the 

FDIC-R may retain, sell, transfer, or otherwise dispose of such Rights of Recovery as it sees fit, 

3 
in its sole discretion, and retain the proceeds (if any) thereof and any such present or future 

retention or disposition of such Rights of Recovery shall not serve to modify, alter, increase, 

decrease, or otherwise affect the consideration due under this Agreement or the monetary amount 

being paid by Cincinnati. 

D. Express Reservations From Releases. 

1. Notwithstanding any other provision contained in 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 FDIC-R, the Bank, 

other financial institutions, or any other person or entity, including 

without limitation any claims acquired by the FDIC-R as successor 

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

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

Agreement; 

c. under or relating to any policy of insurance issued by Cincinnati 

(or any other insurer), other than the Bond; and 

d. which are not expressly released in Section II. A. above. 

2. Notwithstanding any other provision, by this Agreement, Cincinnati 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: 

4 
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 Cincinnati; 

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

Agreement; 

c. under or relating to any policy of insurance issued by Cincinnati 

(or any other insurer), other than the Bond; and 

d. which are not expressly released in Section II. B. above. 

3. Notwithstanding any other provision, this Agreement does not waive or 

release any claims or actions that could be brought by any person or 

entity other than the FDIC-R, including but not limited to any agency or 

instrumentality of the United States government. 

SECTION III: REPRESENTATIONS AND ACKNOWLEDGMENTS 

A. Ownership of the Claims. The FDIC-R represents and warrants that, pursuant to 

12 U.S.C. § 182 l (d), the FDIC-R is the current lawful owner of, and that it has not assigned, 

sold, or transferred, any interest in the Claim and all other matters being released herein. 

B. No Additional Actions. Cincinnati hereby agrees that it will not bring, file, or 

otherwise pursue any claims against any party, in relation to the Bond, including any claims for 

indemnity or subrogation. 

C. 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 

5 
the Bond or any other insurance policy. This Agreement 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 Cincinnati under the Bond to the FDIC-R or to any non-party to this 

Agreement. Notwithstanding the foregoing, either Party may use the Agreement in any 

proceeding and in any manner as may be necessary to enforce the terms of the Agreement. 

D. Cooperative Drafting. The Parties to this Agreement have participated jointly in 

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

that the other Party is the sole or principal drafter of the Agreement. Each Party also agrees not 

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

against the other Party. 

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

one or more of the Parties named herein 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 Party or Parties subscribed thereto upon the execution by all Parties to this 

Agreement. 

F. Binding Effect. Each of the undersigned persons represents and warrants that they 

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 insurers, agents, heirs, executors, administrators, representatives, attorneys, successors 

and assigns. 

6 
(b )(6)moo 

G. No Confidentiality. The Parties acknowledge and agree that this Agreement is a 

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

applicable laws and regulations. 

H. Construction. The descriptive headings of this Agreement are for convenience 

only and shall not affect the construction or interpretation of this Agreement. 

I. Notices. If any Party is required to give 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 or second business day delivery, (iii) 

sent by facsimile, (iv) sent by United States certified or registered mail, postage prepaid, return 

receipt requested, or (v) sent by email with a confirmation to be sent the same day by one of the 

methods enumerated above. 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, (iii) on the date sent by facsimile or email, with confirmation of 

transmission, if sent during normal business hours of the recipient, or, if not, then on the next 

business day, or (iv) if sent by certified or registered mail, five business days after the date of 

deposit in the United States mail to the respective address of the Party as set forth below, with 

copies sent to the persons indicated below: 

To the FDIC-R: 

Kyle M. Keegan, Esq. 

Chris D. Kiesel, Esq. 

Keegan, DeNicola, Kiesel, Bagwell, Juhan & Lowe, LLC 

5555 Hilton A venue, Suite 205 

Baton Rouge, Louisiana 70808 

Facsimile: (225) 364-3608 

........................... E.mail:f .... _---····-··· _________ ___. 

and 

7 
(b )(6) 

(b )(6) . 

Steven C. Morrison,. Esq ... 

Counsel 

Professional Liability Unit 

Federal Deposit Insurance Corporation 

3501 North Fairfax Drive, Room B-7024 

Arlington, VA 22226-3500 

Facsimile:. (703) 516-5067 

............. .Email:. JL...~····-···· _____ ___. 

To Cincinnati. Insurance. Company: . 

Sam H .. Poteet,. Jr.,. Esq .. 

Justin D .. Wear,. Esq .. 

Manier & Herod,. PC 

One Nashville Place. 

150 Fourth Avenue North,. Suite. 2200 

Nashville,. Tennessee. 37219-2494 

Facsimile:. (615) 244-0030 

g.I!l<l:iJ: f.._·_········-······---------' 

and . 

Elizabeth Carley 

Superintendent, Bond Claims. 

Cincinnati Insurance. Company 

P.O. Box 145496 

Cincinnati, Ohio 45250-5496 

Facsimile:. (513) 603-5099 

........ ..Email.:._!-_ ....... ... _ _ .. ______ _, 

or to such other address. as. the. recipient Party 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. 

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

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

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

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

8. 
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 

attorney(s) or other representative(s). 

L. 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 perform the terms of this 

Agreement. 

M. . Advice of Counsel. Each Party hereby acknowledges that 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 

N. Authority to Settle. The FDIC-R, for itself and expressly in its capacity of having 

succeeded to all of BOA's rights against Cincinnati under the Bond, and Cincinnati, respectively, 

each warrant and represent that they are the persons or entities which have. collectively all of the 

interest in the Claim and any of the rights,. claims or matters being waived or released as set forth 

in this Agreement, that the Recitals set forth above are material, true and accurate, and that they 

have the full right, power, and specific authority to enter into, execute and consummate this 

Agreement. 

0. Severability. If any provlSlon of this Agreement or the application of any 

provision herein to any person or circumstance is held invalid or unenforceable, only that 

provision shall be affected, and the remainder of this. Agreement (and the application of such 

provision to other persons or circumstances) shall remain in full force and effect. 

9. 
P. Effccti\c Date. I his Agreement is eiTcctivc on the date signed b) the last Part) 

signing belm'. 

IN \\ ITNE.SS \\I ll RCOf. the Partie!) hereto ha\e caused thb .\gr~cmc:nt to be c'\ecutcu 

b) their dul) authori7ed rcprc:,cntati\ cs on the date'\ hereinatkr ~ubs~ribed. 

~ederal Deposit Insurance Corporation. as Recci\ cr 

tor The Bank of Ashe\ ille. 

(b)( 6) .................................... .Datc; Junc ~J :WJJ ................................................................................................................... Ry.: 1 m····································································································· 

Title: lounsel. Protes<ll'onnll.wll il1t~ Umt 

Print N.une: ~te\ en C. Morrbon 

10