SETTLEMENT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ("Agreement") is made by, between, and among 

the following undersigned parties: 

The Federal Deposit Insurance Corporation as Receiver for Montgomery Bank & Trust, 

Ailey, Georgia ("FDIC-R"), Justin Zegalia ("Zegalia"), Kathryn Giardina ("Giardina") and 

Evanston Insurance Company ("Evanston") (individually, the FDIC-R, Zegalia, Giardina and 

Evanston be referred to herein as "Party" and collectively as the Parties"). 

RECITALS 

WHEREAS: 

Prior to July 6, 2012, Montgomery Bank & Trust, Ailey, Georgia ("Bank") was a 

depository institution organized and existing under the laws of Georgia; 

On July 6, 2012, the Georgia Department of Banking and Finance closed the Bank and 

pursuant to 12 U.S.C. § 1821(c), the Federal Deposit Insurance Corporation was appointed 

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

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

Among the assets to which the FDIC-R succeeded \Vere all of the Bank's claims, 

demands, and causes of action against, among others, its former financial advisors, arising from 

the performance, nonperformance, and manner of performance of their respective functions, 

duties and acts as financial advisors for the Bank. 

The FDIC-R has asserted claims, among others, against Zegalia and Giardina, each of 

whom served as a financial advisor of the Bank. Zegalia and Giardina deny liability for the 

claims. 

Evanston issued a Financial Advisors Professional Liability Policy numbered.._! __ ······-······.-~·· .. t .......... (b)(4.J 

for the period January 6, 2012 to January 6, 2013 ("Policy") to Montgomery Asset Management, 

LLC ("MAM"). The Policy was cancelled for non-payment of premium effective August 2, 

2012. Zegalia and Giardina sought coverage from Evanston as financial advisors employed by 

MAM for the Bank, according to the terms, provisions, and conditions of the Policy. Evanston 
has reserved its rights to deny coverage under the Policy for claims asserted by FDIC-R against 

Zegalia and Giardina. 

The undersigned Parties deem it in their best interests to enter into this Agreement to 

avoid the uncertainty and expense of litigation. 

NOW, THEREFORE, in consideration of the promises, tmdertakings, payments, and 

releases stated herein, the sufficiency of which consideration is hereby acknowledged, the 

undersigned Parties agree, each with the other, as tollows: 

SECTION I: Payment to FDIC-R 

A. As an essential covenant and condition to this Agreement, on or before seven (7) 

calendar days following the date the FDIC-R executes this Agreement, Evanston, Zegalia and 

Giardina, jointly and severally, agree to pay the FDIC-R thesum of ONE HUNDRED FIFTY 

THOUSAND AND 00/100 DOLLARS ($150,000.00) ("the Settlement Payment") from the 

Policy. 

R Evanston shall deliver the Settlement Payment to the FDIC-R by check payable to 

the Federal Deposit Insurance Corporation as Receiver for Montgomery Bank and Trust, Ailey, 

Georgia, for credit to FDIC National Liquidation Account Montgomery Bank & Trust, Ailey, 

(b)( 5) Georgia (EIN10448) Professionalbiabilityd • D IF Fund Asset Number I I······ {b.)(~) 

(b)(6) ... mContact-L..I_······-··· ____ __,IDRR Investigations, (972) 761-8112. The Settlement Payment 

shall be delivered via Overnight Delivery to: 

JPMorgan Chase d • · .Cl:>J(4.) 

Attn: FDIC Receivership Lock Box 111,...-..... -............. 1 .......................................... (0.1(4.) 

14800 Frye Road 2nd Floor 

Fort Worth, TX 76155 

In the event that the Settlement Payment is not delivered to the FDIC-R by the date 

determined in subsection A above, interest shall accrue on all unpaid amounts at the rate of 5% 

per annum from that date until the date of payment. However, if said Settlement Funds are not 

delivered to the FDIC-R by the date determined in subsection A above, as a result of the FDICR's failure to execute this Agreement, no interest shall accrue until tive days after the FDIC-R 

2 
executes the Agreement. 

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

date determined by subsection A above, then the FDIC-R, in its sole discretion, shall have the 

right at any time prior to receipt of the Settlement Payment in full (including all accrued interest) 

to: 

1. Extend the period of time for the Settlement Payment, including interest 

accruing from the date determined by subsection A above, through the date of payment at a rate 

calculated in accordance with 26 U.S.C. § 6621(a)(2); or 

2. Enforce this Agreement, in which event Zegalia, Giardina, and Evanston 

agree to jurisdiction in United States District Court in the Southern District of Georgia and to pay 

all of the FDIC-R's reasonable attorney's fees and costs expended in enforcing the terms of this 

Agreement; or 

3. Terminate the Agreement and move to institute an action on the FDIC-R's 

claims. Zegalia, Giardina, and Evanston further agree to waive any defense based on any statute 

of limitations that would bar any of the FDIC-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 

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 ofthe Settlement Payment shall not prejudice the FDIC-R's rights to take 

any of the actions set forth 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 FDIC-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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1. Zegalia, Giardina, and their respective heirs, executors, trustees, 

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-R, that arise from or relate to, the pedonnance, nonperformance, or 

manner of performance ofZegalia and Giardina's respective functions, duties and actions as 

financial advisors for the Banlc 

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

respective 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, 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. 

B. Zegalia and Giardina's Releases. 

Effective simultaneously with the release granted in Section II.A. above, Zegalia and 

Giardina, on behalf of themselves 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, repres·entatives, 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 or relate to, the Bank or to 

the performance, nonperformance, or manner of performance of Zegalia and Giardina's . . 

respective functions, duties and actions as financial advisors for the Bank. 

Zegalia and Giardina further agree, simultaneously with their execution of this 

Agreement, to release Evanston, its parents, claim service managers, affiliates and reinsurers, and 

their respective employees, officers, directors, agents, representatives, successors and assigns, 

from any and all claims, rights and demands that they have, had, or may claim to have in the 

future, whether known or Wlk.nown, against the Policy that arise from or relate in any way to ( 1) 

the FDIC-R's or Bank's claims, demands or coverage requests; and/or (2) any contention that 

Evanston breached any contract, statute, duty of good faith or fair dealing, ethical or fiduciary 

4 
duty in connection with the Policy and/or the investigation and request for coverage. 

C. The Insurer's Release. 

Effective simultaneously with the releases granted in Section ILA. above, Evanston, 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 FDIC-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 or relate to the Policy. 

D. Exceptions from Releases bv FDIC-R. 

1. Notwithstanding any other provision ofthis Agreement, the FDIC-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: 

a. Against Zegalia and Giardina 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 

in this Agreement. 

2. 

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

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 seek pursuant to its supervisory or regulatory authority against any person. 

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

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

5 
States through the Department of Justice, the United States Attorney's Office for any federal 

judicial district, or any other depru1ment or agency of the United States as defined by 18 U.S.C. § 

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

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

and 3663 et. seq., if appropriate. 

E. Express Reservation ofRights of Bond Carrier. 

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

Agreement shall release or prejudice the rights of St. Paul Mercury Insurance Company or any 

other unden.vriter of any financial institution bond, fidelity bond, or banker's blanket bond on 

which the Bank is an insured, to bring any claims by way of subrogation to the claims of the 

FDIC-R, against (a) any financial advisors for the Bank, including but not limited to the Settling 

Defendants, in their capacities as financial advisors for the Bank or in any other capacity, or (b) 

any other individual or entity. 

2. Nothing herein shall be construed to admit the existence of, or to establish, 

any claim or cause of action on the part of St. Paul Mercury Insurance Company or any other 

bond underwriter by way of subrogation to claims of the FDIC-R, that would not exist had this 

Agreement not been executed. 

SECTION III: Waiver of Dividends and Proceeds from Litigation 

To the extent, if any, that Zegalia and Giardina are or were shareholders ofthe Bank or 

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

distribution upon resolution of the receivership of the Bank or proceeds in any litigation that has 

been or could be brought against the Federal Deposit Insurance Corporation in any capacity or 

against the United 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 ofthe United States government in 

connection with the Bank, its conservatorship, or receivership, Zegalia and Giardina hereby 

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

6 
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 are Parties 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 e~ch and every provision of 

this Agreement. This Agreement shall be binding upon and inure to the benefit of the 

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

successors and assigns. 

B. Advice of Counsel. Each Party hereby acknowledges that he, she, 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 her counsel. 

C. Financial Disclosure Representation. Zegalia and Giardina have each submitted 

financial information to the FDIC-R including sworn Personal Financial Statements, dated May 

24,2015 from Zegalia and February 23,2016 from Giardina and herein affirms that his/her 

financial information is true and accurate as of the date of this agreement. Each Settling 

Defendant expressly acknowledges that, in determining to settle the claims released herein, the 

FDIC-R has reasonably and justifiably relied upon the accuracy of the financial information 

submitted by Zegalia and Giardina. The FDIC-R has no obligation to independently verify the 

completeness or accuracy ofthat financial information. If the FDIC-R establishes via a final 

adjudication in an appropriate judicial forum that Zegalia or Giardina failed to disclose any 

material interest, legal, equitable, or beneficial, in any asset, then Zegalia or Giardina, as 

appropriate, agrees to cooperate fully with the FDIC-R to prm.ide updated financial information 

and to pay to the FDIC-R the lesser of (1) the value ofZegalia or Giardina's undisclosed material 

interest in such asset(s); or (2) the amount of unpaid damages alleged against Zegalia or 

Giardina. 

7 
SECTION V: Reasonable Cooperation 

The 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 tenns of this Agreement. 

SECTION VI: Other Matters 

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

that the matters set forth in this Abrreement constitute the settlement and compromise of disputed 

claims and defenses, that this Agreement is not an admission or evidence of liability or infirmity 

by any of them regarding any claim or defense, and that the Agreement shall not be offered or 

received in evidence by or against any Party except to enforce its terms. 

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

one or more of the Parties 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. 

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 Georgia. 

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

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

If to the FDIC-R: 

Barbara Slott Pegg 

Counsel, Federal Deposit Insurance Corporation 

3501 Fairfax Dr.,# B-7062 

Arlington, VA 22226 

....... 1......... ... I 

Alan Curley 

Robinson Curley & Clayton, P.C. 

300 South Wacker Drive, Suite 1700 

8 
(b)(6) ............. . 

(b)(6) ................ . 

Chicago, 11linois 60606 

If to Zegalia: 

James M. Johnson 

Knight Johnson LLC 

1360 Peachtree Street, NE 

Suite 1201 

Atlanta, Georgia 30309 

404-228-4822 

I . .......................................... . .............................. . 

and 

Henry D. ("Hank") Fellows, Jr., Esq. 

Fellows LaBriola LLP 

Suite 2300 South Tower Peachtree Center 

225 Peachtree Street, N.E. 

Atlanta, GA 30303 

( 404) 586-9200 

(404) 586-2050 (Direct Dial) 

(404) 273-0537 (Cell) 

(b)(6) ··················•········ ..... .. I ································ ..... ··························· 

(b)(6) .. 

(b)(6) ... 

If to Giardina: 

Jo Lanier Meeks 

James Bates Brannan Groover LLP 

3399 Peachtree Rd NE, Suite 1700 

Atlanta, GA 30326 

404-844-2755 

If to Evanston: 

Michael Athans 

Gilson Athans PC 

980 Hammond Drive 

Suite 800 

Atlanta, GA 30328 

678-514-1576 

I ............................. ········································ ................. _ ...... _______ ____. 

9 
E. Entire Agreement and Amendments. 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 

by the Parties bound 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. No Confidentiality. The undersigned Parties acknowledge that this Agreementshall not be confidential and will be disclosed pursuant to the Federal Deposit Insurance 

Corporation's applicable policies, procedures, and other legal requirements. · 

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 MONTGOMERY BANK & ! .· 

TRUST, AILEY, GEORGIA ! 

(b )(

6 

) _ _ -.:D:-a-te-: -"7tt77':f~-t'J':~"'f~('r:-77l'l,_. --- -iY,_: --~ .. 1----- ' ! . /''" . . 

Date: S ) /J /zot ~ 

• , J 

, .. // :/ 

TITLE: {~? t/ 112 f I v v· 

PRINTNAME: }( 5/dl ? f~ ' r JJ 

JUSTIN ZEGALIA 

(b)(6) ................ ·····························································- ......................................................... ............ m OOOOOOOOOOOoooooooooo I OOOOOOOOOOooOOOOOOOOOO 

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PRINT N.Aiv.lE: .J<-1.S 1 r N 2 (.:&A L r A 

10 
Date: 

(b)(6) 

Date: 

u 3_ ,, -I( ___L:_. {! . ~ 

\ 

'<• 

EVANSTON INSURANCE COMPANY, by its Claim 

Service Manager, Markel Service, Incorporated 

BY: 

TITLE:_·-----------

PRJNT NA.tvffi: - ------ ---

11 
Date: KATHRYN OIARDfNA 

PRINT NAME: ----------------------

l~VANSTON INSURANCE GOMPANY, by its Claim 

Service Mana 1er, kd Se ><~'ic , Incorporated 

(b )(6

) ·········· Date·:················· .. ·······:s·/t:,Ut· ························································mBY: · 

I I 

TITLE: 

II