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SETfLEMENT AGREEMENT Al~D RELEASE 

This Settlement Agreement and Release c·Agreement..) is made M of1his 151h day of 

Septembc:T~ 2011, by, between, and among the Federal Deposit Insurance Corporation as 

Receiver for AmTrust Bank, Cleveland. Ohio ("FD!C-R11), and PrimeLending, a PtainsCapital 

WHEREAS: 

On December 4, 2009, the Office ofThrift Supervision closed AmTrust Bank~ Cte.,reland, 

Ohio$ previously koownM Ohio Savings Bank (the "Bank11) and appointed the Federal Deposit 

Insurance Corporat1on as its receiver. In accordance with l2 U.S.C. § 18:21(d)t the FDlC-R 

suc~eeded ro all rights, titles, powers, and privileges of the Bank, including those with respect to 

its assets. 

on or about July 26, 2010, FDIC-R initiated a lawsuit entitled Federal Deposit Insurance 

C'Qrp()raticn (1$ Receiverfer Am Trust BarJk, Cleveland Ohio v. Daniel Koenn~ an individual, and 

Primdending; a Plains C11piial Ccrmpany, United States .District Court Case Number CVl o~ 

5528~RGK {VBI0:) (hereinafter. the "Aetiontf). On or lllbou.t May 121 2011. the FDIC-R filed the 

First Amended Complaint in the Action, which werted a cla.irn for rel1ef for bre3Ch ofcontract 

against PrimeLend.ing. 

In the Action, FDIC~R alleged that PrimeLending and the Bank entered into a Master 

Correspondent Loan Pur.:;hase Agreement dated May 8, 2007 (the "Contractn). 

In the Action. FDIC·R further alleged that, pursuant to the terms ofthe Contract, 

PrimeLending delivered to the Bank the following residential mortgage loans: a mortgage loan 

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

H Hto-l· lin the principal amount of$620t000 (the I ~an·')whichwasseeured 

·1 •. 
Page 2 

6 by a deed oftrust Te{:Orded against the real property located atl IPomonlltC.A.t (b)( l 

(b)(6) andtwomortgageloaruttol lin the principal amounts of$545,600 and $136AOO 

(b)(6) 

(coUectively;theULoan") which were secured by deeds oftrust recorded against the real 

(b)(6) propertylocatedatl IPomona, CA. 

In the Action, FDIC·R asserted that. pursuant to the Contract~ PrimeLending WH 

6 

obligated to indemnify FDIC-R for certain deficiencies relating to theGcanandthe H ­ (b)( )

(b)(6) -----------·················· ------1----------------

PrirneLending de:Ilie$ (be cause ofaction aUcged against H in the Action. 

To avoid the expense and uncertainty ofcontinued litigation, the Parties desire to enter 

into this Agreement. 

NOW, THEREFORE~ in co-nsideration of the promises, undertakings, payments, and 

releases stated herein1 the sufficiency ofwhich consideration is hereby acknowledged. the 

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

A As an essential covenant and condition to this Agreement, on or before 

Sep-ten1f>er t9, 201 J, Prime.Lending shaH pay to the fDlC·R the coral sum ofFour Hundred 

Se'flenty Five Thousand Dollars and no/cents {$415-tOCK)J)O) (the "Settlement Payrnenr•). 

The Settlement Payment shalL be made by wire transfer made payable to "Mortgage Recovery 

(b)(4) Law Group Client Trust Acoount," Account Number:._I__----_-------_-------_-------_,IRomingNurnber~------ (b)(4) 

1--------------------------- I .Reference: PrimeLending Settlement. 

B. If the FDIC~R does not receive the Settlement Payment in full on or before the date 

determined by subparagraph A above ("Settlement Payment Due Dateft), interest shall accrue at 
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the rate of5% per annum, until the date offuU payment In addition. ifthe FDIC-R does oot 

receive the Settlement Payment in full on or before the Settlement PaymerH Due Date. the FDICR, in its sole discreriont shalJ have the right to: 

L extend fue period oftirne for payment, including interest accruing from the 

Settfernent Payment Due Date through the date ofpayment at a rate calculated in 

accordance with 26 U.S.C. § 662l(b)(3); and/or 

2. enforce this Agreement and, in such eventt Primeic:nding agrees to 

jurisdietion in Federal District Court in California and to pay all ofthe FDIC~R's 

reasonable attorneys fees and costs expended in enforcing the terms ofthis Agreement; 

and/or 

3, declare this. Agreement null and void, move to vacate any dismissal order, 

to which Primelending agrees to consent~ and re-institute the Action on the FDIC~R's 

claims; andior 

4. seek any other relief available to it in taw or equity, 

SECTION U: Stipulation and Dismissal. 

At .any time afier FDlC-R ~ives the fuUy-executed Agreement and full Settlement 

Payment, plus L'"W accrued interest ifapphcabJe, PrimeLending's oounscl may instruct the FD!CR's counsel to file a Stipulation of Dismissal of the Action. with prejudice (the "Stipulation"), 

with each party to bear its own costs and attorneys' f«:s. Upon receipt ofsuch instruction from 

Primelem:Jing's c:ounse~ the FDIC·R's counsel shall file the Stipulation within five (5) business 

days. 

At the request of Prime Lending. the FDlC-R agrees to delay the filing ofthe Stipulation 
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ofDismissal ofthc Aetion ro .as to allow PrimeLending time ro subpoena third parties for 

(b)(6) deposition in th.e Action. including but not limited 1oL..I____·······-·······..,JPrime~dingagr.eesto 

take reasonable steps to subpoena any third parties for deposition as soon as possible in light of 

the deadlines associated with the November 15. 2fH 1 trial date. PrimeLending further agrees 

that ifsuch depositions are not t.ompleted in lime for the FDJCwR to avoid costs associated with 

trial-related deadlines or court appearances, or ifthe court so instructs, the J-l)IC-R is entitled to 

file rhe SHpulatioo ofDismissal ofthe Action with prejudice after providin~ PrimeLending five 

{.5) business days. notice, The FDIC~R agrees t<> provide tc PrimeLending any .non-privileged 

(b)(6) dooumentsproducedbyl Ito the FDfC-R in connection with the Action. 

SECTION ur.: Releases. 

Each Party ackoowJedgcs that this Agreement applies to all cla.i ms or causes ofaction for 

aJl injuries, damagest or losses ofany type or nature (whether those injuries~ damages. or losses 

are known or unknown, foreseen or unforeseen, patent or latent) which that Party may have 

(b)(6) ..........................against..tbe..Oiher.Party..re:lating··to·tnef Iwan or[3Lmm··orarisingfrom···t~ ............... J................,,,,!~l(B,l 

(b)(6) 

LoanorEJtoan. Each Party hereby expressly waives application ofCalifornia. CMI Code 

§i 542 and any other similar $tstute or rule. 

Each Party certifies that they have read and understood the following. provisions. of 

California Civil Code §I542, which states in pertinent part as follows; 

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

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

execuling the release, which if known by him or her must have 

materially affected his or her settlement with the debtor. 

Each Party understands and acknowledges that the significance and consequence ofits 

waiver ofCalifornia Civil Code§!542 is that even ifany Party stwuJd eventually suffer 
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additi{}nal···damagesrelating···totheEJ.oan or [3Loan-or--arising-out9f.~:::~~l,~!l........... 

.. .. .. --o.I·H ltoa.n. including relating tn claims and causes ofaction that were or could have been 

,....... ~relatingtoth~ano8Loan, or any facts or circumstances related to the 

. ,...........,......F...... · ~ant)rU~ that Party will nof be able to make any claim against the other 

Party for those damages, injuries, or loss. Furthermore. each Party acknowledges that it 

consciously intends these consequences even as to claims for damages that may exist as ofthe 

date ofthis release but which that Party does not know exists, and wbich. i.fknown. would 

materially aff~t thai Party's decision to e"ecute rhis reierure, regardless ofwhether that Party's 

lack of knowledge is the result ofignorance, oversight, error, negl.igence, or any other cause. 

Upon receipt of the Se1tlement Payment, plus any ac<;rued interest, and except as 

provided in PARAGRAPH Ill. C •• the FDIC-R, for itselfand its employees, successors, and 

assigns hereby releases and discharges PrimeLmding and its respective employees, officers, 

directors, representatives, heirs, executors, administrators, attorneys, sha:rehol~ affiliates 

(includin~ but not limited to, Pla:insCapital Bank and Pl.ainsCapital Corporation), successors and 

assigns. from any and all claims, demands. contracts, obligations, damages, atlions, and causes 

ofaction, -dlrect or .indirect, in law or in equity (hercinafter, "C1aims11) arising out o( or relating 

(b)(6) 

B. PrimeLending'§ .Bel.ea,se, 


Effective sirnultanoously with the release in PARAGRAPH UtA. above. Prime Lending, 


executors~ administrators, attorneys, shareholders, affiliates. successors and assigns, hereby 

releases and discharges the FDIC-R. and its employees, officers, diroctorst representatives, heirs. 

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executors~ administrators, atrorneys, shareholdeJ's. affiliates, successo~ and assigns, from any 

(b)(6) 	 (b)(6) -Mdall Claims arising~ut<lt:arrelating·ro•theEJ Loan and [3Loan. 

C. E~~tions to Rel~e b~ FDIC-R. 

Notwithstanding any other provision of this Agreement, the FDIC-R does not reh::aset 

and expressly preserves fully .and to the~ extent as if this Agreement had not been executed, 

any claims or causes ofaction: 

t. against PrimeJendlng arising out ofany transactions or l.oans not relating 

••••••••••••• 	 roth~ ILoauandULoant including transactions or loans which arose out ofany 

other existing or failed financial institutions other than AmTrust Bank; .and 

2. which arc not expressly released in PARAGRAPH UI.A. above. 

D. Limitations on Release. 

I. Notwithstanding any other pwvisjon oftMs Agreement, this Agreement 

does not waive any claims. which could be ~rought by the United States through the Depa.rtrnent 

ofJustke and!o.r the United States Attorney's Office for any federaljudidal district Should the 

Department ofJustice and/or the Unites States Attorney bring such a. claim, the FDIC-R reserves 

the right to seek. court ordered restitution pursuant to the relevant provisions of the Victim and 

Wim~ Protection Act. 18 U.S.C. § 3663, et. seq.~ ifappropriate, subject to offset by the 

Settlement Payment described in PARAGRAPH LA above, 

2. · This Agreement is binding on the Federal Deposit rnsurance Corporation 

in its capacity as Receiver f4)f AmTrust Bank~ Cleveland. Ohio. Therefore, where ilie 

Federal Deposit lru;urmce Corporation is not acting in its capacity as Receiver for ArnTrust 

Bank, Clevelandt Ohio, nothing herein limits, waives, releases, diminishes or compromises the 

jurisdiction and authority ofthe Federal Deposit lnsurance Corporation. 
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SECflON V: lnsol\?en(.y. 

A. Insoht¢tl:Cl!. 

PrimcLending warran1s as to payments made by .or on its bebalfthaf at the time ¢fsuch 

payment, it is not insolvent nor will the payment made by or on its behalf rend~r (l in!IDI.vent 

within the meaning and/or for the purposes ofthe United Stat~ Brulkruptcy Code. This warranty 

is made by PrimeLending and not by its coWlseL 

B. Prefer~cs. 

ln the event that the FDlC~R is required to return anyporticm ofthe Settlement Payment 

due to a final or<ler by acourt that the transfer ofthe Settlement Payment or any portion theroof 

constituted a preference. voidable preference, fraudulent tt'artSfer or similar transaction, then. in 

its sole discretion, the FDIC-R may. without waiver ofany other rights it may have in law or 

equity~ JlutsUe any ofthe rights and remedies set forth in PARAGRAPH LB. above; and/or 

othel."'Nise permitted by Jaw. 

SECTION VI: Termination. 

In the event the FOIC-R exercises its right to declare this Agreement null and void as 

provided herein in PARAGRAPH I.B.3, then. for the pu~poses ofany statute oflimitatians or 

other •ime-based defense w any oftbe claims of the FDIC-R the parties to this Agreement shall 

be deemed to have reverted to their respective status as of5:00p.m. Eastern Time. August 25, 

201L 

SECflON VH: Notices. 

Any notices required hereunder shall be sent by registered mail, first class. return receipt 

requested, and may also be sentby email, 10 the following: 

Jfto the FDJC-R: 
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Vanessa H. Widener 

Anderson, McPharlln & C(}l'IDers LLP 

444 South Flower Street. J1st Floor 

:~=~?.~~!es. CA 9~071 ~290 l (b)(6) 

1 Dir~t: {2L3) 236~1613 

Main Phone: (213) 688...0080 


Main Fax: (213) 622.-75(]4 


lfto Primetending: 

Robert BeaU, Esq. 

Brian Farrell, Esq. 

Sheppard Mullin Richter & Hampton LLP 

650 Town Center Dr.• 4m Floor 

Costa Mesa, CA 92626 

{p) (714) 513w5100 

(Q (714) 513-5130 

(b)(6) 

···········I······ 

SECTION VIU: Other Matten. 

A. No Admission ofLiability. 

The undersigned Parties each acknowledge and. agree that the matters set forth in this 

Agreement ~nstimse the settlement and coroprorn.ise ofdisputed chrims and defenses, that lhis 

Agreement is not an admission or evidence of liability or infirmity by any ofthem regarding any 

daim or defense. and that the Agreemen! shall not be offered or received in evidence by or 

.B. Execution in Count~. 

This Agreement may be e:;:ecuted in counterparts by one or more ofthe Parties named 

herein and all such coun.terparts when so executed sha.U together constitute th.e final Agreement, 

as ifone dooumem had been signed by all PI.U'ties hereto; and ea~h such counterpart, upon 

execution and delivery. shall be deemed a complete original, binding the Party or Parties 

subscribed thereto upon the execution by aU Parties to this Agreement 
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c. ID.nd,ing Etie<:t, 

All ofthe undersigned persons represent and wammt that they are a Party hereto or are 

authorized to sign this Agreement on bebalf ofthe respective Partyt and that they have the full 

power and authority to bind such Party to each and every provision ofthis Agreement This 

Agreement :shall be binding upon and inure to the benefit ofthe undersigned Parties and their 

respective heirs, executors. administrators, representatives, employeest att0'.1"11eysl successors and 

assigns. 

D, tlutire Agreement. 

This Agreemen.t constitutes rhe entire agreement and understanding between and among 

the undersigned Parties concerning the mRtters set: forth herein and supersedes: any prior 

agreements or understandings. No Jeprcsentations1 warranties or inducements have been made to 

or relied on by any Party concerning this Agreement and its. exhibits other than those contained 

therein. 

E. Amendments. 

This Agreement may oot be: amended or modified. oo:r may any ofits provisions be 

waived. except in writing by the .Party or Parties bound thereby. or by their respective authorized 

ano:mey(s) or \ltber representative(s), 

F. Reasonable Coorurration. 

J. The undersigned Parties agree to cooperate in good faith. to effoctuate all 

the terms and conditions ofthis Agreements including doin~ or causing their agents. and 

attom.eys to do~ whatever is reasonably necessary to effectuate the signing, delivery, executiont 

filing1 recording~ and entry, ofany documents necessary to perfonn the terms ofthis Agreement. 

2. Further, Primelending agrees to cooperate fully with the FDfC-R in 
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connection with an .action that is expressly required ofPrimeLending under this Agreement, 

Any such cooperation that 1nvotves any out ofpocket costs is subject [O reasonable 

reimbursement by the FDlC·R pursuant to its internal guidelines and policy for such 

reimbursement, Streb c~ation (ifrelating roan action expressly required ofPrimeLending 

w1der this Agreement) shall consist of: 

a. producing aJl docum(nts requested by the PDIC-~ without the 

necessity ofsubpoena. as determined by the FDIC·R to be relevant to the Bank; 

b. making themselves available upon reques1 by the f.DlC-R at 

reasonable times and places for interviews regarding facts relevant to the .Bank; 

e. appearing to testify. upon rt4uest by the FDIC-R on matters 

related to the Bank, without the necessity ofsubpoena; 

d. signing truthful affidavits upon request hy the FDJC-R~ regarding 

atJy matter relevant to the Bank 

H. Choice of~. 

TJ1is Agreement shall be interpreted, construed and enforced acoording to applicable 

federal law, or in its absence, the internal laws of the State of Calift:tmia, without regard to its 

conflicts oflaws. 

L Advice ofCounsel. 

Each Party hereby acknowledges iliat he or it has consulted with and obtained the advice 

ofC<Junsel prior to executing this Agreement, and that this Agreement has been explained to that 

Party by his or U.s counseL 

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J, Title and c;~,etions. 

All section rides and captions contained in this Agreement are for ronvenicnce only and 

shall not affect the interpretation ofthis Agreement. 

K. AplhornhiPICsmstruction. 

This Agreement sets forth terms and agreements jointly negotiated by the Parties, Ir b 

express.ly agreed that this Agreement shaH not be cornrtrued for or against any party by .reason of 

which party drafted st. 

rsiGNATtiRES ON FOLLOWING PAGE} 

-11· 

Page 12 


by each ofthem Of tht:ir duly authorized representatives em the dates hereinafter sub&cribt:d. 

FDIC as RMver for AmTrust Primtlending) a Plains Capital 

Btuk Oevd•nd f)tdo Compuy (b)(6) 

sJL...-0-·_______.I ar. 

Nrune:"'"b:·~« /ft. /4[Gv.rk 

Title; -~"'lseL Title: 

Date: f/1~!Jl 

Date: -·--------­

Approved as to form: / 


DATED: September 1!:1, 2011 ANDERSON, McPHARLIN &. CONNERS U,P 


(b)(6) 

"""' \ ~essa H. Widener .._... 

Corporation 

Ahomeya for 

as 

Plaintiff 

Receiver 

Federnl 

for AmTrust 

!'.)eposit 

Bim.k, 

~ 

C!evland, 

Ohio 

DATED: September_, 2011 	 SHEPPARD, MULLIN, RtCHTER & HAMPTON 

LLC 

---· ·-~ Robert BeaU 

Attorneys for Defendant Primelending, a PLains Capital 

Comp;my 
--------------------

Page 13 

JN WITNESS WHEREOF, the parties hereto have caused Uris Agreement robe executed 

by each ofthem or their duly authorized representatives on the dates hereinafter ~'l.lbscribed. 

FDIC as Receiver tor AtuTrust PrimeJe.ading, a Plains Capita} 


Ba~ Cleveland~ Ohm 


(b)(6) 

By: 

Name~ 

Title: 

Da1e: 

Approve ID1 to fmm and content; 


DATED: September___, 2011 Ai'\JDERSONJ McPHARLIN & CONNERS LLP 


By: 

Vanessa H. Widener 

Attorneys for .PlaintiffFedeml Deposit Insuraru:e 

Corporaticm as Receiver for AmTrust Bank, Clevta.'"ldJ 

Ohio 

DATED: September~ 2011 SHEPPARD MULLIN RICHTER HAMPTON LLC 

By: ~......:-.-_..-.~--------'-··-- J.obert BeilJ ....., 

Attorneys for Defetldant Primeiending~ a Plains Capital 

Company