SETTLEMENT AGREEMENT AND MUTUAL RELEASE 

1. 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 LAWRENCE S. LEAL ("Loan 

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

referred to as the "Parties." 

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

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

(b )(6) ~~m~c,k.hyUowneytol lin the amount of $682,500 on or about 

(b )(6). H----~QY.~m~~r.14.20044 ··· I The I J,vassecuredbya.4~~Qf.t.~~ (b)(6) 

(b )(6) H H~mr~L.property.commonly.Hknown as-1-- I Lake Forest, California 

(b )(6)........... HQHH···H p. The mortgage broker that submitted the I lappiicationJQ ................... (b)(6) 

Downey was AMERICAN BEN£FlT MORTGAGE, INC.t with which broker the Loan Officer 

(b )(6) ~-t.b.~riW.Qrkingor. ... affiliated. Thel lwas approved and funded by Downey and 

subsequently defaulted. Following a trustee's foreclosure sale on the deed of trust that secured 

(b )(6). H .. Hthel-···· ····· ·· I Downey sustained a loss that the FDIC is charged with seeking to recover 

upon (the "Claims~'). 

2.2 The Claims subsequently became the subject of a Complaint 

("Complaint'') entitled FDIC v. American Benefit A1ortgag~. Inc., etc., et a/., Case No. CVI 0-

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

California, Western Division (the "Action"). 

2.3 The Loan Officer was 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 12(b)(6) the Loan Officer filed his Answer to the First 

Amended Complaint. 

2.4 The FDIC thereafter conducted discovery and, in particular, ascertained 

(b)(6) Jrom .... r-J_- ....... -....... -. ---.~hat all of the financial infonnation provided to Downey in the l ·H·HHH··H-1H ... H(b)(6) 

application was true and correct at that time. 

2.5 The Parties have agreed to resolve the Claims alleged by the FDIC against 

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

2.6 By this Agreement the Parties intend to settle and dispose of. fully and 

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE 
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. 

3. NO ADMISSION RE MERITS OF CLAIMS: The Parties agree that nothing in 

this Agreement, and no performance under this Agreement, shall 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. SETILEMENT TEBMS: The Parties agree to the following settlement tenns; 

4.1 Upon execution of this Agreement the Loan Officer shall be dismissed 

with prejudice from the Action. For that purpose, a Stipulation for Dismissal ofthe Loan Officer 

will be prepared and circulated for signature among all appearing parties by the FDIC. Upon full 

execution thereof, the FDIC sha!J cause the Stipulation for Dismissal to be submitted to the 

Court. 

5. MUTUAL RELEASE: 

5 .I ln consideration of the Settlement terms 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 interes1, assignees, attorneys, employees and contractors of and 

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

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

now holds, or has ever held against the other, that arise out of or are in any way connected with, 

the Claims alleged in the Action. 

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

officers, directors, affiliated companies, agents, servants, 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 sha11 be entitled to an award of reasonable 

attorneys' fees in addition to any other relief to whkh the prevailing party may be entitled. 

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

and agree as follows: 

7.1 The FDIC is the lawfully appointed Receiver for Downey and has 

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SET11-Ei\1ENT AGREEMENT AND MUTUAL RELEASE 
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 compwmise 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 fraudJ duress, or undue 

influence. The Parties affirm 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 

another Party, in executing this Agreement, or in making the senlement 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 aHeged in the Action. 

7.5 Each Party agrees to execute any additional documents as reasonably 

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

8, MISCELLANEOUS: 

8. t 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 Califomia. 

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 

all the Parties. This Agreement shall be interpreted in accordance with the plain meaning of its 

terms 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. 

The Agreement shall be considered severable, such that if any provision or part of the Agreement 

is ever held invalid under any law ot 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 shall 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. 

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SETTLEMENT AGREEMENT AND r..fl.JTUAL RELEASE 
(b )(6) 

(b )(6) 

DATED: /,2.-2-7·/ u 

I I 

DATED: }/ t~ f, // 

Downey ,.Savings &; Loan Association, F .A. 

By; t(;' t& /< 1/t t:" tvvu· (.,II ' v- .• r. , • / ts: :>£- :1- Fe~ (~~~ i:Jst,;~ ( ~>e < 

:r 

APPROVED AS TO FORM: 

HERSHORTN & HENRY LLP 

By: __________ _ 

JEAN C. WILCOX 

Attorneys for Federal Deposit Insurance 

Corporation as Receiver for Downey 

Savings & Loan Association, F.A. 

LAW OFFICES OF HERMAN TI£0RDSEN 

AGYAR 

r Lawrence S. Leal 

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE