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-R"), and Defendant Loan Officer, JUAN PAOLO FRANCISCO HI, 

an individual ("Francisco"). The FDIC-R and Defendant 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 two (2) loan 

applications that were submitted by Francisco to Downey Savings & Loan Association, F.A. 

("Downey") in 2005 and 2006 ("Loans"). Downey approved the loan applications for !bette 

Nicole Baza and Angel L. Rivera. Each Loan was secured by a trust deed on real property that 

was then owned by the borrowers. 

2.2 The Loans subsequently defaulted and following foreclosure sales, the real 

properties each reverted to Downey, resulting in a combined alleged loss to the thrift of over 

$454,150. 

2.3 In November 2008, the FDIC-R was appointed the Receiver over aU of 

Downey's assets and liabilities. Among the assets the FDIC-R is charged with trying to recover 

upon is the loss relating to the Loan ("Claims"). 

2.4 The Claims subsequently became the subject of a Complaint 

("Complaint") entitled FDIC-R v. American Prime Funding, Inc., eta/., Case No. 3:11-cv-00996 

- SC. filed by the FDIC-R ("Action") and now pending in the United States District Court fo~ the 

Northern District of California, San Francisco Division. 

2.5 In its Complaint, the FDIC-R alleges that Francisco was licensed by the 

Department of Real Estate as a salesperson and that he was acting as the sub-agent for Broker 

James W. Milnes and/or American Prime Funding, Inc. in submitting the applications for the 

Loans to Downey. Although Francisco has been served with the summons and Complaint in the 

Action, the FDIC-R has not required him to file a response to it. 

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 

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SETILEMENT AGREEMENT AND MUTUAL RELEASE 
liabilities that arise out of or relate to the Action and the Claims alleged therein by the FDIC-R 

against the Defendant. 

2.7 The Federal Deposit Insurance Corporation in its separate corporate 

capacity as the insurer of deposits and bank regulator, and all other federal agencies of the 

United States of America, are not parties to this Agreement and are not bound in any manner to 

its terms and conditions. The FDIC-R enters into this Agreement solely in its limited capacity as 

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

now existing, previously existing or hereafter appointed. 

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 any Party of the validity or invalidity of the Claims alleged in the Action; and, the Parties 

agree that this Agreement is entered into solely for the purpose of convenience and to 

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

4. SETTLEMENT TERMS: The Parties agree to the following settlement tenns: 

4.1 The FDIC-R agrees to stipulate with Defendant to dismiss the Defendant 

from the Action with prejudice in exchange for Defendant's waiver of attorney's fees and costs 

and the execution of this Settlement Agreement and Mutual Release. 

5. MUTUAL RELEASES AND WAIVER OF CIV. CODE§ 1542: 

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

and aU 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 ever 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 insurers, officers, directors, affiliated companies, agents, representatives, spouses, 

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

from any and all the 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, or may hold in the future, 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, insurers, agents, representatives, spouses, heirs, 

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

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

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SETILEMENT AGREEMENT AND MUTUAL RELEASE 
5.3 The Parties specifically intend that the release contained in this Agreement 

shall bar all released claims, including those which are currently unknown to them. The Parties 

understand and accept the risk that they may later discover a claim encompassed by the Release 

in this Agreement which they did not know or suspect to exist, or which they could not have 

known or suspected to exist. The Parties hereby specifically waive the protection of Civil Code 

section 1542 which reads as follows: 

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 waiver is expressly limited to the claims held by the Plaintiff, Federal Deposit 

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

other receivership, nor to the Federal Deposit Insurance Corporation in its separate corporate 

capacity, as more particularly set for in paragraph 2.8 above. 

6. A TIORNEYS' FEES: In the event 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 reliefto which the prevailing party may be entitled. 

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

and agree as follows: 

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

. 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 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 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 

PageJ of5 

SETILEMENT AGREEMENT AND MUTUAL RELEASE 
u.JM)n any statomettl, J'('(Jl'e~otation or pmml$¢ by ·IU'I)' olh\!t P"arly, or uf' MY "gcnl or attorney fm 

another Party, in ~~ecutins this Agreement, or in making lhc settlement pro'Vided: for ht~in. 

t}C(Cpt ns is exp~ rep~nted or pmmiUld tnthi1!> Asrcctmenl. 

7.4 None of the: Partie.;; have he~ofore as!rie;ned. tran:s:feom:d, ar pn[ed, or 

pUJPOrlr:d to *Kl~Jn. tn:msftr .. " gnmt.any of1J1o Cf4imllih!U •ro ultq- in dle A\Jtion. 

7.5 E:u~h Party rlBfees to exeeuk any 3ddilionaJ documetaCS .- ~'iottably 

convenient. n~ or dodmbl4t to e8tfy out llw PtOVisiont of thls Aatetnwnt. 

g, 1\fi§CIJz~LA!!&ll!§: 

8, l 1'his Agre~tnenl 11hall be. domnod 10 ha\'e *h e~.couted and delimed 

within the State of Califumia, and the right~ and obU.@ations of the P411ies hereto shalt be 

toll$tr-uld .:wd (,'f!ro~ in nct::Or'"llnte wltb. 41'14. aovemcd by. ttw law$ or the State of Ctl1Uom1a. 

8.2 ·nds A~mcnt oon!ililutes •• 5insle. integrated written conttiltt t-~ina 

the entire: ag{cl!nlent ()f the PAtties. ·nu* Aweet~wnc nm1 only tK: MQdUied In a wTitlng ,tgna~ by 

alllbe .Patties. This AgNement shall be intet'pt"e-ted in accon:lance with lh~ plain meaning of its 

tems 3M nol !!Uietty ft.w or 4p[m4t IU\)' or~ flartics ltlthls Aattcoment. 

8.3 TJlt. provilrions of this Agreement ~ contrac:t\i!IJ rmd not mere Jtdbls. 

1'heo Agrecmmt studl be cons!der.:d $elf>etltble. such that If OJ\)' p!'Ovi sion tJr J)lrt or the Aatt:ement 

is el~ b~ld invalid muter any hrw or ruling. that pn»ision or part ofdl~ AUJCCment shall remain 

in r~ «UHf ~fl'\'!Ol W iho CX«:ut tdlo\\'tod by ltW, Ufld aiJ Odlef provJstOM Or pa!U &half ml1Alirt jn 

mU force •nd eft'eet. 

8,4 1lua. Agw~nt lftiiY ~ OXC(.uttd Jn tOltntcfPQit! and sbaU be t:ffecli.vo on 

lhe date fm>t execmed by any me of tbe Parties hereto if so executed in etJunmpsrts (Ou: 

1

'ct&clivo dote;. Any slpmutt nblmt1td by ta~lmllt or c.t•NU shall be M vaUd as an orl~IMl 

sip.ture. An aut.henllca.ted eopy of this Agreement can be wed for any purpose for whi<::h the 

~=~:-~;~<icl:k _j .... ·.·· -. u I~ -

Juan Paokl fi'Qncisw Ill. on individual 

. DATilD.:. 

(b)(6) 

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

APPROVED ASTO FORM: 

omeys for Federal Deposit Insurance 

orpor~tion as Receiver for Downey 

'-----'Savings & Loan AsSociation, F.A. 

/ 

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SETILEME:NT AGREEMENT AND MUTUAL RELEASE