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SErrLEMENT AND RELEASE AGRERMENT 

'This SeuJement and Release Agreement ("Agreement") is entered into by and belween 

f'cderal Deposit Jnsurance Corporation as Receiver for Washington Federal Bank for avings 

("FDLC-R") w1d Colonial American Casualty and Surety Company ("Colonial") (individually, 

the FDIC-Rand Colonial may be referred to herein as a "Party" and collectively as the 

·'Parties"). 

RECITALS 

WHEREAS: 

Priorto December 15, 2017, Washington Federal Bank for Savings (the '·Bank") was a 

deposjt.ory institution organized and existing under the laws oflllinois; 

On December J5, 20 J 7, the Office ofthe Comptroller ofthe Currency closed the Bank 

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

receiver. 1n accordance with 12 U.S.C. § l82l(d), FDlC-R succeeded to all rights, titles, powers 

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

Among the assets to which FDlC-R succeeded were any and all claims, demands, and 

causes ofaction against the Bank's financial institution bond insurer, including against Colonial 

as issuer ofthe Bond, as U1at tenn is defined below; 

Colonial issued 

period November 18, 2016, to November 18, 2019, to 

Bank; 

The Bank sent a notice of potential loss and FDIC-R submitted a proof ofloss and 

supplemental supporting documents to Colonial seeking coverage under the Bond for net losses 

sustained ofal least $ 15.66 million ('·Claim''); 

Colonial disputed that the claim was adequately documented and raised other coverage 

defenses; and 

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

avoid the uncertainty and expense of litigation. 

(b )( 4) 

(b )( 4) 
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NOW, THEREFORE, in consideration ofthe promises. undertakings, payments, and 

releases stated herein, the sufficiency ofwhich consideration is hereby acknowledged, the 

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

SECTION I: Payment to FDJC-R 

A. As an essential covenant and condition ofthis Agreement and in consideration for the 

releases set forth in Section 11, Colonial agrees to pay to FDIC-R the sum of$I ,250,000.00 (One 

Million, Two Hundred and Fifty Thousand U.S. Dollars and Zero Cents) (the .. Settlement 

Payment"). The Senlemenl Payment shall be paid to FDIC-R within thirty (30) calendar days 

after both Panies sign the Agreement The Panies agree that time is ofthe essence with respect 

to the obligation to make the Settlement Payment. 

B. Colonial shall deliver the Settlement Payment to FDIC-R by direct check. The check 

shall be made payable lO Federal Deposit Insurance Corporation as Receiver for Washington 

Federal Bank for Savings. The check shall be delivered to: 

Stuart Tonkinson 

Counsel, Professional Liability Unit 

Federal Deposit Insurance Corporation 

3501 Fairfax Drive, VS-B-7052 

Arlington, Virginia 22226 

C. lf FDIC-R does not receive the Selllement Payment in full on or before the date 

detem,ined by Section LA. above, then the FDIC-R, in its sole discretion, shall have the right al 

any time prior LO receipt ofthe Selllement Payment in full to: 

I. Extend the period of Lime for the Seulement Payment, including interest accruing 

from the date determined by subsection A above, through the date ofpayment at a rate calcuJated 

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

2. Enforce this Agreement, in which event Colonh1I agrees to jurisdiction in United 

States District Court for the Northern District of Illinois and to pay all of FD[C-R's reasonable 

attorney's fees and costs expended in enforcing the terms ofthis Agreement; 

3. Tcnninate the Agreement; and/or 

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

ln the event FDlC-R extends the period ofumc in accordance with Section LC. I, the 

actions set forth in Se~tion J.C.2 through 1.C.4 shall only be available jfFDIC-R does not receive 

the Seulement Payment (including all accrued interest) in full on or before the date set out in lhe 

extension. 

SECTION 11: Releases 

A. Release of Colonial by FDIC-R 

Effective upon receipt in full ofthe Seulcment Payment, plus any accrued interest that 

may have become due pursuant to Section LC. I above, and except as provided in Section n.D 

below, FDIC-R, for itself and ics successors and assigns, l1ereby releases and discharges 

Colonial, its parents, subsidiaries, affiliates and reinsurers. and their respective employees. 

officers, dfrectors, agents, representatives, successors and assigns (collectively the "Colonial 

Released Parties"), from an) and all claims, demands, obligations, damages, actions and causes 

ofaction, direct or indirect, in law or equity, that arise from or relate to lhe Claim or the Bond. 

As part ofthis release ofColonial, FDIC-R further agrees that any interest it has or may have 

under the Bond is extinguished. 

B. Release ofFDIC-R by Colonial 

Effective simultaneously with the Release granted in Section Il.A above, Colonial, for 

itself and its successors and assigns, and on behalf ofthe Colonial Released Partic:s hereby 

releases and discharges FDIC-Rand its employees, officers, directors, agents, representatives, 

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

causes ofaction, direct or indirect, in law or in equity, that arise from or relate to the Claim or 

the Bond. 

C. Waiver of Subrogation by Colonial 

l. Colonial agrees to and hereby does irrevocably waive any rights under Section 7 

ofthe Uond and any rights ofsubrogation or recoveI')' it may have relating to or arising out ofthe 

Claim or the Bond (''Rights of Recovery") including. without limitation, any rights arising from 

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ColoniaJ's payment ofthe Selllement Payment. Colonial docs hereby assign, transfer, and 

convey to FDIC-R any of its rights, claims, title, and interest a to any Rights ofRecovery. 

Colonial agrees that FDIC-R may retnin, sell, transfer, or otherwise dispose ofsuch Rights of 

Recovery as it sees fit, in its sole and unfettered discretion, and retain the proceeds (if any) 

thereof. Any future recovery pursuant to such Rights of Recovery shall not modify or otherwise 

affect the amount of Settlement Payment doe under this Agreement and required to be paid by 

Colonial. 

D. Express Reservations from Releases by FDJC-R 

I. Notwithstanding any other provision conm.ined in this Agreement, FDIC-R does 

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

been executed, any claims or causes of action: 

a. against any person or entity for liability, ifany, incurred as the maker, 

endorser or guarantor of any promissory note or indebtedness payable or owed by them to FDlCR, lhe Bank, other financial institutions, or any other person or entity, including without 

limitation any claims acquired by FDLC-R as successor in interest to the Bank or any person or 

encity other than the Bank; (b )( 4) 

b. against any person or entity not expressly released in this Aw_:~-:n. 

c. under or relating to Policy No 

insurance issued by Colonial (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, nothing in this Agreement shall be 

construed or interpreted as limiting, \\-aiving, releasing or compromising the jurisdiction and 

authority ofFederal Deposit Insurance Corporation in U1e exercise ofits 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. 
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3. Notwithstanding any other provision ofthis Agreement, this Agreement does not 

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

Department ofJustice, the United States Auomey's Office for the Northern District of lllinois or 

any other federal judicial district, or by any other department, agenc) or instrumentality ofthe 

United States as defined by I 8 U.S.C. § 6. In addition, FDIC-R specificaJly reserves the right lo 

seek court-ordered restitution pursuant to the relevant provisions ofthe Mandatory Victims 

Restitution Acl, 18 U.S.C. § 3322 and § 3663, et. scg., ifappropriate. 

SECTJO 111: Representations and Acknowledgements 

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

they arc authorized to sign this Agreement on behalf ofthe respective Party, and tbat 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 benefil ofthe undersigned Parties and 

their respective heirs, executors, trustees, administrators, representatives, successors and assigns. 

B. Ownership of the Claim. The Panics hereby reprcsenl and warrant that they have 

not transferred, assigned, released, or otherwise compromised any rights or claims released 

herein. PDIC-R represents and warrants that it is the sole o\-vner of the Claim. FDIC-R 

understands and agrees that this representation is a material part ofthe consideration provided to 

Colonial in this Agreement. 

C. o Admission ofLiability. The undersigned Parties each acknowledge and agree 

that the matters set forth in this Agreement constitute the settlement and compromise ofdisputed 

claims and defenses. and that this Agreement is not an admission or evidence ofliability or 

infirmity by either Party regarding any claim or defense, and that tJ1e Agreement shal I not be 

offered or received in evidence by, or against, any Party except to enforce tenns. 

D. E>.ecution in Counterparts. This Agreement may be executed in counterparts by 

one or more ofthe Parties named herein and all such counterparts when so executed shall 

together constimte the final Agreement as ifone documenl had been signed by all Parties; and 

each such counterpart, upon execution and delivery, shall be deemed a complete original, 

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binding the Party or Parties subscribed thereto upon lhe execution by all Parties to this 

Agreement. 

E. Choice ofLaw. This Agreement shall be interpreted, construed and enforced 

according to the applicable federal law, or in its absence, the lav.s of the state oflllinois. 

F. Entire Agreement and Amendmt:nts. This Agreement constitutes the entire 

Agreement and understanding between the 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 to be 

bound thereby, or by their respective authorized attomey(s), or other representative(s}. 

G. Reasonable Cooperation. The undersigned Parties agree to cooperate in good 

faith to effectuate all ofthe tenns 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 perfonn the Lerms 

ofthis Agreement. 

11. Advice ofCounsel. Each Party hereby acknowledges that it has consulted with 

and obtained the advice ofcounsel prior to executing this Agreement. and that this Agreement 

bas been explained to that Party by bis or her counsel. 

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

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

applicable laws and regulations. 

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

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

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lN WITNESS WI IEREOF, the Parties llave hcrelo caused this Agreement to be 

executed by eoch of lhem or their duly authorized representatives on Lhe dates hereinafter 

subscribed. 

(b)(6) 

FEDERAL DEPOSIT 

INS 

BY: 

TITLE: o , I 

PRINT NAME: ;(S Tt1t' /4 '·~,.,,; 

(b )(6) 

(b )(6) 

Date: q/19/ti/ 

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