SETTLEMENT AGREEMENT AND MUTUAL RELEASE 

l. PARTIES: The parties to this Settlement Agreement ('"Agreement") are Plaintiff 

FEDERAL DEPOSIT INSURANCE CORPORATION as Receiver for Downey Savings & Loan 

Association, F.A. (''FDIC") on the one hand, and Defendant JEFFREY WATKINS (''Loan 

Officer"), on the other hand. The FDIC and the Loan Officer are sometimes herein collectively 

referred to as the "Parties." 

2. RECITALS: Titis Agreement is made with reference to the following facts: 

2.1 Certain claims arose between the Parties concerning a residential loan that 

(b)( 4 ),(~)m was made byDowney~ I in the amount of $416,000 on or about 

~S1( 4 )?(1:>.1 H.P.~~e.mberJ4.2005(the :j ····· I Loan"). The I HLoan-was secured.by ade.ed.Q[ITY.$t.QJ.:l(P1(4.) 

~~ 4 M~l ~:~:~~Y~::=~~~:"~:t ~:~:;~~ mel I ~:u.;:::;i~:o:i~-•Y ~~m~!i:~: ~ AMERICAN BENEFIT MORTGAGE, INC., with which broker the Loan Officer was then (

6

) 

(b)( 4 ),(~) ............ working .. or affiliated. H Tb.el· H I Loan was approved and funded by Downey and 

(6) subsequently defaulted. Following a trustee's foreclosure sale on the deed oftrust that secured 

(b)(4),(~1.. mq··H·H I Loan, Downey sustained a Joss that the FDIC is charged with seeking to recover 

(

6

) upon (the "Claims"). 

2.2 The Claims subsequently became the subject of a Complaint 

("'Complaint'') entitled FDIC v. American Benefitlt4.ortgage, Inc:., etc., et a/., Case No. CVl0-

3032 JFW (RCx). filed by the FDIC in the United States District Court for the Central District of 

California, Western Division (the '"Action"). 

2.3 The Loan Ofticer wac; served with the Summons and Complaint in the 

Action. The FDIC thereafter filed its First Amended Complaint and, after the denial of the Loan 

Officer's Motion to Dismiss under FRCP J 2(b)(6) the Loan Officer filed his Answer to the First 

Amended Complaint. 

2.4 The Parties have agreed to resolve the Claims alleged by the fDlC against 

the Loan Officer in the Action pursuant to the terms stated in this Agreement 

2.5 By this Agreement the Parties 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 against the 

Loan Officer. 

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE 
3. NO ADMISSION RE MERITS OF CLAIMS: The Parties agree that nothing in 

this Agreement, and no perfom1ance under tl1is Agreement, shal1 be construed as an admission 

by either Party of the validity or invalidity of the Claims alleged in the Action against the Loan 

Officer; and, the Parties agree that this Agreement is entered into for the purpose of convenience 

and to compromise the disputed Claims alleged in the Action. 

4. SETTLEMENT TERMS: The Parties agree to the foUowing settlement terms: 

4.1 Concurrent with the execution of this Agreement, the Loan Officer shall 

execute and provide to the FDIC a Stipulation for Entry of Judgment ("Stipulation for 

Judgment") in the amount of $100~000.00, payable at the rate of $15,000.00 per month 

commencing January 31, 2011, that shall be deemed paid in full upon timely payment of 

$45,000.00. The Stipulation for Judgment shall be held and not filed with the court unless or 

until a default in payment under its terms occurs. If a default in payment occurs that is not 

timely cured, then the FDIC may file the Stipulation for Judgment with the Court and request 

entry of judgment against the Loan Officer in the amount of $100,000.00. less all payments 

previously made thereon. 

4.2 Upon fuJI and timely payment of $45,000.00 the FDIC shall execute with 

the Loan Officer's counsel of record a Stipulation for Dismissal of the Loan Oftlcer from the 

Action, with prejudice, and the original Stipulation for Judgment shall be marked '"satisfied" and 

delivered to the Loan Officer's counsel of record. 

4.3 In the event Judgment is entered against the Loan Officer under the 

Stipulation for Judgment, then such Judgment shall be non-dischargeable in any proceeding 

(voluntary or involuntarily) commenced under the U.S. Bankruptcy Code, pursuant to ll U.S.C. 

§ 523(a)(2)(A) and§ 523(a)(4). 

5. MUTUAL RELEASE: 

5.1 In consideration of the Settlement tenns as set forth in Paragraph 4 above, 

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

except as to such rights or claims as may be created by this Agreement, they hereby covenant not 

to sue each other again on the Claims and the Parties acknowledge full and complete satisfaction 

of, and hereby release, remise. and forever discharge each other~ including their respective 

officers, directors, affiliated companies, agents, servants, representatives, spouse, heirs, 

successors or predecessors in interest, assignees, attorneys, employees and contractors of and 

from any and all Claims, demands, counts, obligations, agreemenrs, damages, liabilities, losses, 

costs and expenses of any kind, in law or in equity, whether known or unknown, that either Party 

now holds, or has ever held against the other, or may hold in the future, that arise out of or are in 

any way connected with, the Claims al1eged in the Action. 

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

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....................... ,.. ................. -............................... _ ... _ ................ _.. ....................... , ... _.,. . ....,...,...-...,.,--.. - SETTLEMENT AG~EEMENT AND MUTUAL RELEASE 
officers, directors~ affiliated companies. agents, servan~ representatives, spouse, heirs, 

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

inure to the benefit of said Parties, and each of them. 

6. ATTORNEYS' FEES: In the event that any action is brought to enforce or 

interpret this Agreement, the prevailing party Shall be entitled to an award of reasonable 

attorneys' tees in addition to any other relief to which the prevailing party may be entitled. 

7. REPRESENTATIONS AND WARRANTIES: The Parties represent, warrant, 

and agree as follows: 

7.1 The FDIC is the la\\fully appointed Receiver for Dm.vney and has 

succeeded to and now holds each of the Claims that are the subject of this Agreement. The 

FDIC has the authority to enter into this compromise and settlement of the Claims as the 

Receiver of Downey. 

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

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

Parties acknowledge that they have executed this Agreement without fraud, duress, or tmdue 

influence. The Parties affinn that they have read 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 

upon in entering into this Agreement, and the Parties here each affirm that they have not relied 

upon any statement, representation or promise by any other Party, or of any agent or attorney for 

aoother Party, in executing this Agreement, or in making the settlement provided for herein, 

except as is expressly represented 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 are alleged in the Action. 

7.5 Each Party agrees to execute any additional docwnents as reasonably 

convenient, necessary or desirable to cany out the provisions of this Agreement. 

8. MISCELLANEOUS: 

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

within the State of California~ and the rights and obligations of the Parties hereto shall be 

construed and enforced in accordance with, and governed by~ the laws of the State of California. 

8.2 This Agreement constitutes a single, integrated written contract expressing 

the entire agreement of the Parties. This Agreement may only be modified in a writing signed by 

aiL the Parties. This Agreement shall be interpreted in accordance with the p1ain meaning of its 

tenns and not strictly for or against any of the Parties to this Agreement. 

8.3 The provisions of this Agreement are contractual and not mere recitals. 

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·--:-::-=-:-::-~=---:::-:::-=-:-=··--·---·-··----··----·-.... ____________ _ SETI'LEMENT AGREEMENT AND MUTUAL RELEASE 
The Agreement shall be considered severable, such that if any provision or part of the Agreement 

is ever held invalid under 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 provisions or parts shall remain in 

full force and effect. 

8.4 This Agreement may be executed in counterparts and shall be effective on 

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

·'effective date"). Any signature obtained by facsimile or e-mail shaH be as valid as an original 

signature. An authenticated copy of this Agreement can be used for any purpose for which the 

original may be used. 

(b )(6) ···········································································~·· 7 z 

DATED: //k ~// 

TKINS, Loan Jeer 

(b)(6) 

APPROVED AS TO FORM: 

HERSHORIN & HENRY LLP 

(b)(6) 

ts~ts~ ·.·.·.·.·.·.·.·.·:·:·:·:·:·;;,, .... , ...... ~ .......................... ·· ... C. \>\llLCOX 

~eys for Federal Del"'-n ____ ___. . . ··~ 

"-'v•p ration as Rece1ver JOf Downey 

( 

Savings & Loan Association, F.A. 

LONG WILLIAMSON & DEUS 

(b)(6) 

······································· 

atkins 

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SETILEMENT AGREEMENT AND MUTUAL RELEASE