SETTLEMENTAGREEMENT AND 

MUTUAL RELEASE 

1. ~-{H~;t:I,E,~: Th.e p~rties to this Settlement Agreement ('"Agreement") &re Plaintiff 

FEDERAL DEPOSIT INSURANCE CORPORATION as Recejver for lJowney Savings & toan 

Association, F.A. t'FDIC~R'/, ~d Defendant~, MAR11iA GE~ an individual, and JESSE. 

AttEN GEE., an individuai dointly, "Gees"). The FDIC-R and the Crees are sometimes h¢rein 

. collecth,ely't·efettoo to as the HPa;rties." 

2. !{ECITALS: ·ntis Agreement is made \\ith tet~mmce to the following fact~: 

2.1 Certain claims arose b~tween the Parties concem.ing two loan applications . .. 

that were subniitted mortgage broker Freestand Financial, a dissolved Adl;oU.a corporation. The 

loan applicatioml were submitted tu Downey Savings & Loan i\.ssc>ciation, F.A. C'Dovmc '')in 

(b)( 4 HP.1 200.5 ... and . .2006 oubehalfof..borro.wcr·• ........................................................................................................................ .. 

(

6) . (the .~LOatlSH); Downey approved the loan applications and funded the Loans Which We1'e 

secured by trust deeds .qn the real properties that were then owned b~ ·· J- .. . : .. ..JP.)(4.),(b )i 

. ' (6) 

2.2 The L.mms subsequently clcfau!ted and following septuatc forr-A:lQs\ire salvs 

the real propettics reverted to Downey, resulting in tu1 alleged combined loss to the thrift of over 

$423~000. 

2.3 In November 2008, the FDIC·R was appointed the Receiver over all of 

DoWileyJs assets i:!nd HabiHtiefi. Among the ilsset~ the FDIC·R is charged with trying to .recover 

upon is the loss relating to the two Loans e'Claims~;). 

2.4 The Clail.ns subsequently became the subject of a Complaint 

·. (••compla.inf~) entitled Ji'DfC·R v. Jtreestand Financial, etc, et al, Otse No. SACV10 .. 00437 

DOC (RNBx),.filed by the f<t)!C-R and now pending ii1 t~e Un.ited StA.tes District Court for· 

the Central District of CUlifon'lia, Southern Divi~ion ('~Aciio1f~) . 

2.5 Jn its Fourth ,.\mended Complaints the FDICAR alleges that the Gees were 

the .responsible individual.s operating Freestan<l Financial and. further: that the Gees were .the 

alter egos of Freestand FinanciaL After a series of motions to di.smiss under FRCP 9(b) and 

· 12{b)(6), the Gees ultimately answered the Fourth Amended Complaint and denied all material 

allegations against 1liem alleged therein. 

2.6 By this Agreement~ the PartieS hereto intend to settle and dispose of fully 

and completely> any and all claims, demands, causes of action, obligations, damages> and 

liabilities that arise out of or relate to the Action and the Claims alleged therein by the FDIC~R 

Page 1 cf5 
against the Gees. 

2, 7 The Federal Deposit Insurance Corporation in its separate corporate 

capadty as the insurer of deposits and ba:rik regulator, and all other federal agencies of the 

United .States of Amerk~ are not patties tO this Agreement and ate Mt bound in any manner to 

· its terms and conditions. The FDIC-R eJtteJ.'S into this Agreement solely in its limited capacity as 

the appointed Receiver of Downey Savings & Loan Association, f.A., and no other receivership 

now existin~ previously existing or hereafter appointed. 

3. NQ ADM!S§IQN BE MERITS OF CLAIMS: The Parties agree that nothing in 

this Agreement, and no performance under this Agreement. shall be construed as an admission 

by any Party of the validity or. invalidity of the Claims alleged in the A~ion; and. the Parti~s 

agree that this Agreetnent is entered into solely for the purpose of convenience and ro 

compromise the disputed Claims the .FDIC-R has alleged in tlte Action against the Gees. 

4, SEITL~NT TERMS: The Parties agree to the foJlowing settlement tenus: 

4.1 The Fl){C-R agrees IQ sdpulate with the Gees tO dismiss .th\!'.,m from the 

Action with prejudice in exchnnge for the .Gees's waiver of attorney's fees and coste; and the 

~xecution oftbls Settlement Agreement and Muturu Relen~c:. 

S. MJJ'l'UA.L RELEASES ANU WAIVER OF' CIV. CODE § 1542: 

5.1 . In COl.tSidcra:tion of the Settlement tenns M .set forth in Paragraph 4 aoove1 

and all other promises, covenants and consideration provided for herein, the Parties agree that, 

except a~ 1o such rights or claims as may be created by ~his Agreement, they hereby covenant not 

to sue each other ever again on the Claims and the Patties acknowledge full und oomp1ete 

satisfaction of, and hereby release, remise, a11d forever discharge each oilier, including their 

respective instJre~J, officersi directors, affiliated companies, agents, representatives. spouses, 

·heil-s~ successors or predecessors ln interest, assignees, attorneys~ employees and contractors· 

froxn HrtY and all the Claims, demands, coWlts, obligations, agreements, damages: liabilities, 

losses, costs and expenses of any kind, in la'V or .in equity~ whether known or unknown, t.'lat 

either Party nmv holds~ or has ever held agairmr the other, or may hold in the futur~. that mise out 

ofor ru:e in any \\ray connected with, !he Claims all~gcd in the Action. 

5.2. - This Agreement shall be binding on the Parties and on their respective 

ofllcers, directors, affiliated companies~ insurers, agents, representatives,. spmtses.~ heirs) 

. successors or predecessors in interest, assignees, attorneys~ employees and contractors and shall · 

· inure to the benefitofthe Parties, and each of them. 

Page2 of5 

S.ETTL.EMENT AGRBEI'v1ENT ANDMtiTUAL RELEASE 
5.3 The Partie~ specifically intend that th~ release contained in this Agreement 

shall bar all ;released claiins, including those which are currently uilk:nown to the.tn. The Parties 

understand Md oocept the risk that they may later discover a claim encompassed by the Release 

in this Agreement whkh they did not know or suspect to cx1St~ or which they ·could not have 

known or suspected to exist The Parties hereby specifically waive the protection of California 

Civil Code section 1542 which reads as ibllo .. vs: 

A general release does not extend to claims which the creditor does not 

know or suspect to exist in his or. her favor at the time of executing the 

release, which if known by him or her must have materially affected his or 

her settlement with the debtOr. 

The foregoing wahrer is ell:pressly lLmited to the claims held by the Plaintiff: Federal Deposit 

Insurance Corporation as Receiver for Downey Savings and Loan Association, F.A., and no 

, othet t-eceiVership, nor to the Federal Deposit Insurance Corpot·ation in its separate corporate 

capacity, as more particularly set for in paragraph 2.7 above. 

6. ATfORNEYS' FEES: In the evem any action is brought to enforce or interpret 

this Agreement, the prevailing party shall be entitled to an aWal'd <:>trea$Qnable attorneys• fees in · 

addition to any other relief to which the prevailing party may be entitled. 

7. REPRESENTATIONS AND WARRANTIES: The Parties represent, w-arrant, 

and agree as folloWs: 

7.1 The FDIC~R is the lnwf~llly appointed Receiver for Downey and hm; 

succeeded to and now holds each of the Claims that are the subject of the Action and this 

Agreement The FDIC~R has the authority to enter into this compromise and settlement of the . 

Claims~ the Receiver ofDowney. 

7.2 Each of the Parties has received or had the opportunity to seek their own 

independent legal .advice with regpect to the advisability of executing this Agreement. The 

Parties acknowledge that they have e~~cuted this Agreement without rnrud, duress, or undue 

influence. The Parties affirm that they have tead this Agreement and understand the contents 

hereof. 

7.3 No Party, nor any agent or attorney of any Party, has made any statement, 

representation, or promise to any other Party regarding any facts which the Party has then relied 

up~m in entering into this Agreement, and the Parties here each aftinn that they have not relied 

Page 3 of5 

s.e·ffLEMEl\"f AGREEMENT AND MUTUAL RE.L.J::ASE 

i 

;. .... 
upon any statement, repr~.sentation or promise by any other Party, or of a11y agent oi· nUotti.ey tor 

another Party, ill e«ec~th1~ this Agree1i1ent, or in mnkh1g the settlement provided for herein, 

except as is expre$$ly reprcscntvd or promised in this Agreement 

7.4 None of the Parties have heretofore assigned, transferred. or granted, or 

purported to assign, transfer~ or grant, any of the Claims that arc alleged in the Action. 

7.5 Bach Party agrees to execute ;my additioua1 documents as reasoilably 

convenient, necessary or desirable to can-y out the provisions of this Ag~·eeme11t. 

8. MlSC:ELLANEOUS: 

8.1 This Agreement shall be deemed to have been executed and dettvered 

within the State of Califomia, und the rights an.d obligations of the Partiei<l hereto t~h~ll be 

constmed and enforced in accordance with, and govemed by, the law~> of the StMe of Cnlifomin. 

8.2 'l'his Agreement constitutes n single, integrated written Ci.'H'ltract cxpi'CS!iing 

the e11tirc agreement of the Parties. This Agreement may only be modified In a \vriting signed by 

all the Parties. This Agt·~crnent shall be interpreted in n~ordance with the plain mcnning of it~ 

lerms and not strictly for or ~gainst any of the Parti~s 1o Ibis Agret:mcnl. 

8.3 Tl~~ provisions of tbis Agreement are contrllctual nnd not mere recitals. 

The Agreement shaH be considered severable, such that if any prcwisicn or part ofthe Agreement 

is ever held invalid uuder any law or ruling, that provision or part of the Agreement shall remain 

in force and effect to the extent allowed by law, and all other pmvisiona or parts shall remain in 

full force and effect. 

8.4 This Agreement may be execuh:d in countcrp<trls and shalt be e.ffet:tive on 

the date first t~xecuted by any one of the Parties hereto if so executed in counterparts (the 

"effective datcu). Any signature obtained by tacsimilo or e-mail shall be as valid as ~n original 

(b )(6) H _ .~ignature. An authenticated copy of this Agreement cat\ .purpose for which the 

otigtnalm~Y.b..~ ~1sed. 

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FEDERAL DEPOSIT INSURANCE .· 

CORPORATION, as Receiver for Down~y Savings &Lo ... 

APPROVED AS TO FOR,\/: 

HERSH ORIN & HENRY U .. P 

(b)(6) ············································································· I························································································ 

(b)(6) 

(b)(6) 

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~Y!l for Federal Deposit tnsuran~ 

rporation as Receiver for Do'NJ:iey 

avings &; Loan Association, F.A. 

OOODKTN & L 'r"NCH LLP 

......... ;;,J ..... ~:""rft"''~~-'!"1!1""'1"~------11 DANIEL L. <.:rOODKiN 

Attotfleys for Mrutha Gee, an 

lndivldual, and Jesse Alien Gee} 

an indiVidUal · 

SE1TLEMENT AGREEMENT A'N'D MUTUAL RELEASE 

..... ,, .............. ,, .. _____ ........ ~-~-

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

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