SETTjJ1" AND RELEASL jEN 

Th:sSettknei t and Release Agreement ("Agreement’) is made as of this day of 

1 1 

-612, by, between. and among the following undersigned parties: rhe Federal Deposit 

Insurance Corporation, as Receiver of Heritage Community Baak ("FDIC-R"), on the one hand, 

and John M. Saphir, Patrick G. Faming. Stephef L. Faydash. Williar i I-letter, thomas Jc1inel, 

Lori A. Moseley, Stephen Anthony, Jerry C. Bruccr, James K. Champion, AndreW B. Nathan, 

and Mary C. Mills on the other hand (collectively, the "Settling Defendants’). T’h FDIC-R ani 

the Settlir g Defendants may bo refei red to ii .dividunlly hcrein as "Party," and co11ectivey as the 

"Panics." 

RECITALS 

WHF.REAS: 

Prior to FcLruary 27, 2009. Heritage Cornrnurity Bank (Heritagc" or the "Bank") was a 

depository institution organized and existirg ur der the laws of the State of Illinois, and its 

principal place of business was located at 18301 South Halsted Street, Glcnvood, Illinois; 

On February 27, 2009, Heritage was closed by I1e Illinois Department of Financial and 

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

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

Heritage’s rights, titles, powers, and privileges, including those with respect to its assets. 

Among the assets to which the FDIC-R, as Receivei, succeeded were any aid all of 

Heritage’s claims, demands, and causes of actions against its formcr directors, officers, and 

employees arising from the performance. non-performance, and manner of performance of their 

respective functions, duties, and acts as directors and/or officers of the Bank: 
The FDIC-R filed a complaint in the United States District Court for the Northern District 

of Illinois, entitled, Federal Deposit Insurance Corporation, as Receiver ofHeritage Community 

Bank v. John M Saphir, et al., Case No. I0-cv-7009 (herein, the "Action"), asserting claims 

against the Settling Defendants, who had each served at various times as directors and/or officers 

of the Bank. The Settling Defendants deny liability for the FDIC-k’s claims. 

The undersigned parties, without any admission of liability, 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 1: Payment to FDIC-R 

A. As an essential covenant and condition to this Agreement, the Settling 

Defendants, shall cause their insurer to pay the FDIC-R the sum of Three Million, One Hundred 

Fifty Thousand Dollars ($3,150,000) (the "Settlement Funds") in full and complete settlement of 

all claims that have been made or could be made by FDIC-R against the Settling Defendants in 

the Action. 

B. Within thirty (30) business days of the date counsel for the Settling Defendants 

receives a fully executed copy of this Agreement (that is, the Agreement has been executed by 

each and every Party) (the "Payment Date"), the Settlement Funds shall be delivered to the 

FDIC-R by a check payable to the Federal Deposit Insurance Corporation, as Receiver of 

Heritage Community Bank. If the Settlement Funds are not paid by the Payment Date, interest 

shall accrue on all unpaid amounts from the Payment Date until finally paid, at the rate of one- 
year U. S. Treasury bills as reported in the WALL SThIET JOURNAL at the end of the last quarter 

immediately preceding the date of this Agreement. 

C. 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 the Payment 

Date, then the FDIC-R, in its sole discretion, shall have the right to enforce this Agreement 

against the Settling Defendants, in which event the non-delivering Parties agree to jurisdiction in 

the United States District Court for the Northern District of Illinois, or to declare the Agreement 

null and void and sue on any and all claims as if the Agreement had never been signed. 

SECTION II: Releases 

A. Effective upon receipt in full of the Settlement Funds, and except as provided in 

Paragraph(s) 11.1) below, the FDIC-R, for itself and its successors and assigns, hereby fully, 

finally, and generally releases and discharges each of the Settling Defendants and their respective 

heirs, executors, administrators, representatives, insurers, successors, and assigns, from any and 

all claims, demands, obligations, damages, actions, and causes of action, whether known or 

unknown, whether accrued, inchoate, liquidated, contingent, actual or asserted, direct or indirect, 

whether in law, equity, or otherwise, including but not limited to any violation of any state or 

federal statute, rule or regulation, or in equity, belonging to the FDIC-R and Heritage, including 

to any such claims That arise from or relate to the Settling Defendants’ positions as directors, 

officers, or employees of Heritage, or The performance, non-performance, or manner of 

performance of the Settling Defendants’ respective functions, duties, and actions as officers 

and/or directors of Heritage. 

B. Effective simultaneously with the release granted in Paragraph ILA above, the 

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

3 
administrators, agents, representatives, insurers, successors, and assigns, hereby filly, finally, 

and generally release and discharge the FDIC-R and its employees, officers, directors, 

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

actions, and causes of action, direct or indirect, whether in law, equity, or otherwise, that arise 

from or relate to Settling Defendants’ positions as directors, officers, or employees of Heritage, 

or the Bank, or to the performance, non-performance, or manner of performance of the Settling 

Defendants’ respective functions, duties, and actions as officers and/or directors of Heritage, or 

that arise from or relate to the Policy. 

C. Effective simultaneously with the releases granted in Paragraphs ILA and J1.B 

above, the Settling Defendants, and their respective heirs, executors, administrators, 

representatives, successors, and assigns hereby release and discharge each other 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 performance, non-performance, or manner of 

performance of their respective functions, duties, and actions as officers and/or directors of 

Heritage. Excluded from the releases granted in this Paragraph IIC are all payments and 

funding rights and obligations provided for in that certain Fanning-Faydash Escrow Agreement 

among certain of the Settling Defendants. 

11 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 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-B, the Bank, other 

4 
financial institutions that are insured by the FDIC, including, without limitati on, 

any claims acquired by the 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 in this 

Agreement. 

2. Notwithstanding any other provision, nothing in this Agreement shall be 

construed or interpreted as limiting, waiving, releasing, or compromising the jurisdiction 

and authority of the FDIC in the exercise of its supervisory or regulatory authority, or to 

diminish its ability to institute administrative enforcement proceedings seeking removal, 

prohibition, or any other administrative enforcement action. 

3. Notwithstanding any other provision, this Agreement does not purport to 

waive, or intend to waive, any claims which could be brought by the United States 

through either the Department of Justice or the United States Attorney’s Office for the 

Northern District of Illinois, or any other federal judicial district In addition, the FDIC-R 

specifically reserves the right to seek court-ordered restitution pursuant to the relevant 

provisions of the Victim and Witness Protection Act, 18 U.S.C. § 3663, et seq., if 

appropriate. 

SECTION lii; Dismissal of Action with Prejudice 

After the Settlement Payment is made, the Parties will jointly file a Stipulation of 

Dismissal with Prejudice in the Action with all parties to bear their own costs. 

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SECTION P 7: Representations 

A. FDIC-R represents that it has not transferred or assigned any claim or cause of 

action that it has held or may have ever held or owned against any of the Settling Defendants. 

B. The Settling Defendants expressly deny the claims asserted by the FDIC-R 

against the Settling Defendants. The undersigned parties each acknowledge and agree that the 

matters set forth in this Agreement constitute the settlement and compromise of disputed claims, 

and that this Agreement is not an admission or evidence of liability by any of them regarding any 

claim. 

C. 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. 

D. Each of the undersigned persons represents and warrants that he or she is a party 

hereto, or is authorized to sign this Agreement on behalf of the respective party, and that he or 

she has the capacity and the full power and authority to bind such party to each and every 

provision of this Agreement. Each Party represents and warrants that he or she intends to carry 

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

benefit of the undersigned parties and their respective heirs, executors, administrators, 

representatives, successors, and assigns. 

E. This Agreement shall be interpreted, construed, and enforced according to 

applicable federal law or, in its absence, the laws of the State of Illinois. 
F. This Agreement constitutes the entire agreement and understanding between the 

FDIC-R and the Settling Defendants concerning the matters set forth herein. This Agreement 

may not be amended or modified except by another written insirument signed by the party or 

parties to be bound thereby, or by their respective authorized attorney(s) or other 

representative(s). The Parties agree that if any provision of the Settlement and Release 

Agreement or application thereof is held to be invalid, the invalidity shall not affect other 

provisions or applications of this Settlement and Release Agreement 

G. The Settling Defendants expressly acknowledge that in determining to settle the 

claims released herein, the FDIC-R has reasonably and justifiably relied upon the accuracy of 

financial information contained in the sworn FDIC Form 7600101 (the "Sworn Form") 

submitted. g in their Sworn Forms, the Settling Defendants have failed to disclose any material 

interest, legal, equitable, or beneficial, in any asset, the Settling Defendants agree to cooperate 

My with the FDIC-R to transfer their interest in the asset to the FDIC-R and to sign any and all 

documents necessary to irarisfer their interest in the asset to the FDIC-R. Moreover, if, in Sworn 

Forms, any of the Settling Defendants have failed to disclose any material interest, legal, 

equitable, or beneficial, in any asset, the FDIC-R, in its sole discretion, may exercise one or more 

or all of the following remedies: 

(1) The FDIC-R may declare the releases granted to that Settling Defendant as 

null and void; 

(2) The FDIC-R may retain the Settlement Funds; and 

(3) The FDIC-R may sue that Settling Defendant for damages, an injunction, 

and specific performance for the breach of this Agreement. 
H. Tlx undersigned parties agee to cooperate in good faith to effixtuat ali the term3 

and conditions ufchs ArreeruenL h.ic1udin doing or causigIheii ai b and aaorneys to Jo 

hatever is reasonably necessary to effectuate the signing., deli ery, exedutir, filing, rccordin’. 

and entry of at N docni3 ents reasonably neccssaiy to perfirm the terms of Ills Agreement. 

I. The Parties hcrcbN acknowledge that they have read this Sealcmcnt and Relcase 

Agrecirment, that they have consulted with and obtained he advice of counsel piir to executing 

th Agreement, arid that this Agreement his been explained to them by their eounset 

J. The iccitals are incorporated htrein and made a part of this Agreerncit. 

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

by each of them or their duly authorized represcntati%cs on J,c dates hereinafter subscribed. 

FEDERAL DEJOSIT INSiTRANE 

CORPORATION, as Receiver of 

Heritage Comm unity Bunk, Glenwood, 

Illinois 

(b)(6) 

By: 

1 

Title. 

Date - - - - 

JOHN M. SAillIR 

Date: - 

PATRICK G. FANNING 

Date: 
(3) The FDIC-R may sue that Settling Defendant for damages, an injunction, 

and specific performance for the breach of this Agreement. 

H. 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 reasonably necessary to perform the terms of this 

Agreement. 

The Parties hereby acknowledge that they have read this Settlement and Release 

Agreement, that they have’ consulted with and obtained the advice of counsel prior to executing 

this Agreement, and that this Agreement has been explained to them by their counsel. 

The recitals are incorporated herein and made a part of this Agreement. 

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 of 

Heritage Community Bank, Glenwood, 

Illinois 

By: 

Name: 

Title: 

Date: 

JOHN M.SAPIIIR 

1(b)(6) 

(b)(6) 

Dar)(}Ji (yw1 5226(7 

PATRICK G. FANNING 
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 of 

Heritage Community Bank, Glenwood, 

Illinok 

By: 

Name: 

Title: 

Date: 

JOHN M. SAPHIR 

Date: 

.1 ATUIVic i. 1pk11Wti 

Dkte 

STEPHEN L. FAYDASH 

Date: 

WILLIAM F. HETLER 

Date: 

THOMAS JELINEK 

Date: 
WILLIAM E. HETLER 

Date: 

THOMAS JELINEK 

Date: 

LORI A. MOSELEY 

Date: 

STEPHEN ANTHONY 

Date: 

JERRY C. BRUCER 

Date: 

JAMES K CHAMPION 

Date.: 

ANDREW B. NATHAN 

Date: 
STEPHEN L. FAYDASH 

Date:_______ 

WILL1A4 E. HETLRR 

(b)(6) 

Date:______ 

THOMAS JELINEK 

Date: 

LORI A. MOSELEY 

Date: 

STEPHEN ANTHONY 

Date: 

JERRY C. BRUCER 

Date:____ 

JAMES K. CHAMPION 

Date:_________ 

ANDREW B. NATHAN 

Date:_________ 

9 
STEPHEN L. FAYDASH 

Date: 

WILLIAM E. HETLER 

Dale: 

THOMAS JELINEIC 

Date: (b)(6) If 19.1 1 

LORI A. MOSELEY 

Date: 

STEPHEN ANTHONY 

JERRY C. BRUCER 

Date: 

JAMES K CHAMPION 

ANDREW B. NATHAN 

Date: 

9 
STEPHEN L. FAYDASH 

Date: 

WILLIAM E. HETLER 

Date: 

THOMAS JEL11’4EK 

Date: 

LOIZIJ A. MOSELEY I(b)(6) I 

’Date: 

STEPHEN ANTHONY ANTHONY 

Date: 

JERRY C. BRUCER 

Date: 

JAMES K. CHAMPION 

Date: 

ANDREW B. NATHAN 

Date: 
STEPHEN L. FAYDASH 

Date: 

WILLIAM IL HETLER 

Date: 

THOMAS JELINEK 

Date: 

LORI A. MOSELEY 

Date: 

STEPHEN ANTHONY 

(b)(6) 

Date: , Z - 2 6--1 (b)(6) 

JERRY C. BRUCER 

Date: 

JAMES K. CHAMPION 

Date: 

ANDREW B. NATHAN 

Date: 
STEPHEN L. FAVDASI-1 

Date: 

WILLIAM E. LWTLER 

Date: 

THOMAS JELYNEK 

Date: 

LORI 4. MOSELEY 

Date: 

STEPhEN ANTHONY 

Date: 

Pyr nm.lrrR 

(b)(6) 

JAMES K. CHAMPION 

Date: 

ANDREW B. NATHAN 

Date: 
SVLtIU..\ I I \\ 

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I iii)Ni kh III I \L K 

1’ 

.11 RIV ( Ii 

JA NA) K. 

(b)(6) - - 

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.\OitI J.\IiL\ 
F 

STEPHEN L. FAYDASH 

Date:___________ 

WILLIAM E. LIETLER 

Date:________________________________ 

THOMAS JELINEK 

Date:____________________________________ 

LORI A. MOSELEY 

Date:_______________________________ 

STEPHEN ANTHONY 

Date:_____________________ 

JERRY C. BRUCER 

Date:____________________________________ 

JAMES K. CHAMPION 

Date:________________________________ 

ANDREW B. NATHAN 

(b)(6) 

Date:_________________ 

9 
(1)(6) 

Date: 

10