SETTLEMENT AGREEMENT AND MUTUAL RELEASE 

1, PAR11ES; The parties to this Settlement Agreement ("Agreement") are Plaintiff 

FEDERAL DEPOSIT INSURANCE CORPORA TlON as Receiver for Downey Savings & Loan 

Association, F.A. ("FDIC") on the one hand, and Defendants Cipriano E. Jugarap and Josefina 

Jugarnp ("Borrowers"), on the other hand. The FDIC and Borrowers are sometimes herein 

collectively referred to as the "Parties." 

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

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

was made by Downey to the Botrowers in or about September 15,2005 in the principal amount 

of $488,000 and secured by a deed of trust on real property located ad ................ .. .. ... .,1.:>.).(4).(b) 

Hayward, CA 94545 {the ••toan"} The Loan defaulted resulting in a loss to Downey which the 6 ) 

FDIC seeks to recover upon (the "Claims's). 

2.2 The Claims subsequently became the subject of a Complaint 

( .. Complaint") entitled FDIC v. AMERICAN PRIME FUNDING, INC., a dissolved Nevada 

corporation; JAMES W. MILNES. an individual, et a/, Case No. SACVI0-01396-AG 

(MLGx), filed by the FDIC in the United States District Court for the Central District of 

Californi~ Southern Division (the "Action"). 

2.3 The Borrowers were served with the Swnmons and Complaint in the 

Action. 

2.4 The Parties have agreed to resolve the Claims being alleged by the FDIC 

against The Borrowers pursuant to the tenns stated in this Agreement. Accordingly, The 

Borrowers have not responded to the Complaint 

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 

Borrowers. 

3. NO ADMISSION RE MERJTS 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 

Borrowers; 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 TERM§: The Parties agree to the following settlement tenns: 

4.1 The Borrowers agree to cooperate with the FDIC in its pursuit of its 

Claims in the Action against the other named Defendants by: (a) cooperating with the FDIC's 

oounsel in the drafting of the Borrowers' declaration under penalty of peJjury that will describe 

the events The Borrowers 'w'ritnesse.d surrounding the Loan; and/or (b) The Bo.rrowers giving a 

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SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE 
deposition in the Action; and/or (c) The Borro\vers testifying at the trial of the Action. In the 

event the Borrowers are required to testify at deposition or the trial of the Action, he/she agrees 

to do so without requiring service of a subpoena for his/her appearance and all travel expenses 

relating to his/her appearance shall be paid tor by the FDIC (e.g., air tare, hotel and meals at the 

rates and per diem set by federal employee guidelines then in effect). 

4.2 Concurrent with the execution of this Agreement, the FDIC shall file a 

dismissal with prejudice of the Bormwers from the Action. 

5. MUTUAL RELEASE: 

5.1 In 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 ful) and complete satis&ction 

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, agreements~ 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, that arise out of or are in any way connected with, 

the Claims alleged in the Action. 

5.2. This Agreement shaH 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 shall be entitled to an award of reasonable 

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

7. REPRESENTATIONS AND WARRANTIES: The Parties rep~ warrant, 

and agree as follows: 

7 .I Each of the Parties has received or had the opporttmity 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 undue 

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

hereof. 

7.2 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 bas 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 

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SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE 
(b)(6) 

another Party, in exe-cuting this Agreement, or in making the settlement provided for herein, 

except as is expressly represented or promised in this Agreement. 

7.3 None of the Parties have heretofore assigned, transferred, or granted, or 

purported to assign, transfer, or grant, any of the CJaims that are alleged in the Action. 

7.4 Each Party agrees to execute any additional documents as reasonably 

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

8. MISCELLANEOUS: 

8.1 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 ofthe 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 

all the Parties. This Agreement shall be interpreted in acrordance 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 noi mere redtaJs. 

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~). An authenticated copy of this Agreement can be used for any purpose for 

which the original may be used. 

DATED: ..........:...i_.()/_'2_ 7 __ , 2010 

I DATED {) /b 7 : _____ ,,2010 

~~~~ ;; y ___ .._, _ __ _ '2010 

IT INSURANCE 

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SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE