10-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K/A-1

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

Commission File No.: 0-22193

Pacific Premier Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Delaware	33-0743196
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

1600 Sunflower Ave. 2^nd Floor, Costa Mesa, California 92626

(Address of principal executive offices)

(714) 431-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes o No ý

The aggregate market value of the voting stock held by non-affiliates of the registrant, i.e., persons other than directors and executive officers of the registrant is approximately $6,480,000 and is based upon the last sales price as quoted on The NASDAQ Stock Market for March 14, 2003.

As of March 14, 2003, the Registrant had 1,333,572 shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2003 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

FORWARD-LOOKING STATEMENTS

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  Actual results may differ from those projected in the forward-looking statements.  These forward-looking statements involve risks and uncertainties.  These include, but are not limited to, the following risks:   (1) Changes in the performance of the financial markets, (2) Changes in the demand for and market acceptance of the Company’s products and services, (3) Changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive projects and pricing, (4) the effect of the Company’s policies, (5)  the continued availability of adequate funding sources, (6)  actual prepayment rates and credit losses as compared to prepayment rates and credit losses assumed by the Company for purposes of its valuation of mortgage derivative securities (the “Participation Contract”), (7)  the effect of changes in market interest rates on the spread between the coupon rate and the pass through rate and on the discount rate assumed by the Company in its valuation of its Participation Contract, and (8)  various legal, regulatory and litigation risks.

EXPLANATORY NOTE

This Amendment No. 1 to the Form 10-K of Pacific Premier Bancorp (the “Company”) for the fiscal year ended December 31, 2002, is being filed to (i) amend Part I, Item 3, “Legal Proceedings,” and (ii) to revise the exhibit index in Item 15 and to file additional exhibits previously omitted from the Company’s Form 10-K.

PART I

ITEM 3.  LEGAL PROCEEDINGS

In December 1999, certain shareholders of the Company filed a Federal securities lawsuit against the Company, various officers and directors of the Company, and certain other third parties, titled “Funke v. Life Financial, et. al.”  The class action lawsuit was filed in the United States District Court for the southern District of New York to assert claims against the defendants under the Securities Exchange Act of 1934 and the Securities Act of 1933, in connection with the sale of the Company’s common stock in its 1997 public offering.  Plaintiffs seek unspecified damages in their compliant.  A substantially similar action was filed in the United States District Court for the Central District of California in January 2000 and subsequently dismissed without prejudice.  In April 2000, the Company and its officer and director defendants filed motions to dismiss the lawsuit or transfer it to California.  In December 2002, the Court denied the motion to transfer, dismissed one of the claims, and allowed one of the claims to remain open.  Plaintiff’s sole remaining cause of action is based on an alleged violation of Section 11 of the Securities Act.  The Court has not certified the class or set a trial date.  The parties have completed very limited discovery.  The parties are currently in settlement negotiations with respect to the action, but, if it cannot be settled on terms acceptable to the Company, the Company intends to vigorously defend against the claim asserted in the litigation.  Although the Company’s insurance carrier has accepted this claim with a customary reservation of rights, the Company believes that under its policy its potential liability may be as high as 20% of any settlement and litigation expenses.  The maximum aggregate coverage for this claim under the insurance policy is $10,000,000.

In addition, from time to time, the Company is a party to claims and legal proceedings arising in the ordinary course of its business. After taking into consideration information furnished by our counsel as to the current status of these claims or proceedings to which we are a party, Management is of the opinion that the ultimate aggregate liability represented thereby, if any, will not have a material adverse affect on the Company’s financial condition.

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)The financial statements required in response to this Item are incorporated by reference from Item 8 of this Report.

(a)(2)Financial statement schedules have been omitted because the information is either not required, not applicable, or is included in the financial statements or notes thereto.

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(a)(3)The following exhibits are submitted herewith or incorporated by reference herein:

Exhibit Number
3.1	Certificate of Incorporation of Pacific Premier Bancorp, Inc. filed December 6, 1996(1)
3.2	Certificate of Amendment to Certificate of Incorporation of Pacific Premier Bancorp filed January 21, 1997 (increasing authorized shares)
3.3	Certificate of Amendment to Certificate of Incorporation filed June 8, 2001 re reverse stock split
3.4	Certificate of Amendment to Certificate of Incorporation filed June 24, 2002 re name change to Pacific Premier Bancorp, Inc.
3.5	By-laws of Pacific Premier Bancorp(1)
4.1	Stock Certificate of Pacific Premier Bancorp(2)
4.2	Form of Warrants to purchase an aggregate of 1,166,400 shares of common stock(3)
10.1	2000 Stock Option Plan(4)
10.2	Purchase of Residual Securities and Related Servicing Rights Agreement by and among Pacific Premier Bancorp and Bear Stearns, Inc. and EMC Mortgage dated December 31, 1999 (Participation Contract)(5)
10.3	Note and Warrant Purchase Agreement dated November 20, 2001(3)
10.4	Employment Agreement dated June 27, 2002 between Steven Gardner and Pacific Premier Bancorp.
10.5	Employment Agreement dated June 27, 2002 between Steven Gardner and Pacific Premier Bank.
10.6	Pledge and Security Agreement dated November 20, 2001 between registrant and New Life Holdings, LLC(3)
10.7	Debenture Purchase Agreement dated March 12, 1997
10.8	Purchase Agreement for Corporate Offices dated April 3, 2002
21.1	Subsidiaries of Pacific Premier Bancorp
23.1	Consent of Vavrinek, Trine, Day & Co., LLP
23.2	Consent of Grant Thornton LLP
31.1	Certification Pursuant to Section 302 of Sarbanes Oxley Act of Chief Executive Officer
31.2	Certification Pursuant to Section 302 of Sarbanes Oxley Act of Chief Financial Officer
32.1	Certification Pursuant to Section 906 of Sarbanes Oxley Act of Chief Executive Officer and Chief Financial Officer

(b) Reports on Form 8-K – There were no reports on Form 8-K filed during the fourth quarter of 2002.

(1) Indicates this exhibit was previously filed with the Form 10-K for the fiscal year ended December 31, 2002 and is not being filed with this Form 10-K/A.

(2) Incorporated herein by reference from the exhibits on Registration Statement Form S-4, filed on January 27, 1997 (Registration No. 333-20497).

(3) Incorporated herein by reference to the Appendices to Registrant’s Proxy Statement for the Special Meeting of Stockholders held January 10, 2002.

(4) Incorporated by reference to Exhibit 1 to definitive proxy statement filed May 1, 2000 for 2000 annual meeting of stockholders.

(5) Incorporated herein by reference from the Exhibits on Registrant’s Form 10K/A filed May 1, 2001.

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SIGNATURES

Pursuant to the requirements of Section 13 the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 28, 2003	PACIFIC PREMIER BANCORP, INC.
	By:	/s/ Steven R. Gardner
		Steven R. Gardner, President and
		Chief Executive Officer

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EX-3.2

Exhibit 3.2

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

LIFE FINANCIAL CORP.

BEFORE RECEIPT OF PAYMENT FOR STOCK

Life Financial Corp., a Delaware corporation (the “Corporation”), does hereby certify:

FIRST:The Corporation has not received any payment for any of its stock.

SECOND:The amendment set forth below to the Corporation’s Certificate of Incorporation was duly adopted by a majority of its directors in accordance with the provisions of Section 241 of the General Corporation Laws of the State of Delaware.

Paragraph A to Article FOURTH is hereby amended to read in its entirety as follows:

“A.The total number of shares of all classes of stock which the Corporation shall have authority to issue is thirty million (30,000,000) consisting of:

1.Five million (5,000,000) shares of Preferred Stock, par value one cent ($.01) per share (the “Preferred Stock”); and

2.Twenty-five million (25,000,000) shares of Common Stock, par value one cent ($.01) per share (the “Common Stock”).”

IN WITNESS WHEREOF, Life Financial Corp. has caused this Certificate of Amendment to be executed and attested by its duly authorized officers this 8^th day of January, 1997.

	LIFE FINANCIAL CORP.
	By:	/s/ Daniel L. Perl
		Daniel l. Perl
		President and Chief Executive Officer
ATTEST:
/s/ L. Bruce Mills, Jr.
L. Bruce Mills, Jr.
Secretary

EX-3.3

Exhibit 3.3

CERTIFICATE OF AMENDMENT OF

CERTIFICATE OF INCORPORATION

OF

LIFE FINANCIAL CORPORATION

The undersigned hereby certifies that:

1.He is the duly elected and acting President, Chief Executive Officer and Chief Operating Officer of Life Financial Corporation, a Delaware corporation (the “Corporation”).

2.The Certificate of Incorporation of the corporation was originally filed with the Secretary of State of Delaware on December 6, 1996.

3.Pursuant to Section 242 of the General Corporation Law of the State of Delaware, this Certificate of Amendment of Certificate of Incorporation amends Paragraph A. to Article FOURTH of the Corporation’s Certificate of Incorporation to read in its entirety as follows:

“A.Effective upon amendment of this Article FOURTH, each five (5) outstanding shares of Common Stock is combined and reconstituted into one (1) share of Common Stock.  No fractional shares or scrip shall be issued upon the combination and reconstitution of the Common Stock.  In lieu of any fractional shares resulting from the combination and reconstitution to which such holder would otherwise be entitled, the corporation shall pay such holder the cash value of such fractional shares as determined by the Corporation’s Board of Directors.  The total number of shares of all classes of stock which the Corporation shall have authority to issue is thirty million (30,000,000) consisting of:

1.Five million (5,000,000) shares of Preferred Stock, par value one cent ($.01) per share (the “Preferred Stock”); and

2.Twenty-five million (25,000,000) shares of Common Stock, par value one cent ($.01) per share (the “Common Stock”).”

4.The foregoing Certificate of Amendment has been duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.

Executive at Riverside County, California, on June 8, 2001.

/s/ Steven R. Gardner

Steven R. Gardner,

President, CEO and COO

Life Financial Corp.

EX-3.4

Exhibit 3.4

STATE OF DELAWARE

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

First:  That a meeting of the Board of Directors of Life Financial Corporation, resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof.  The resolution setting forth the proposed amendment is as follows:

Resolved, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “First” so that, as amended, said Article shall be and read as follows:

“First:  The name of the corporation is Pacific Premier Bancorp, Inc. (hereinafter sometimes referred to as the “Corporation”).”

Second:  That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

Third:  That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

Fourth.  That the capital of said corporation shall not be reduced under or by reason of said amendment.

By:	/s/ Roy L. Painter
	Roy L. Painter
	EVP/CFO/Corporate Secretary
Date:		June 13, 2002

EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT BETWEEN LIFE FINANCIAL CORP. AND STEVEN GARDNER

This Employment Agreement (“Agreement”) is made by and between LIFE FINANCIAL CORPORATION, a Delaware corporation (“COMPANY”), and STEVEN GARDNER (“Executive”).  Company hereby employs Executive and Executive hereby accepts employment with Company in accordance with the following terms and subject to the following conditions:

1.   Term.  This Agreement shall be retroactively effective to January 5, 2001.  The initial term of the Agreement shall be until January 5, 2004, unless earlier terminated as provided herein.  This Agreement shall be automatically extended for an additional one-year period upon the same terms and conditions as are herein set forth unless at least 90 days prior to the then applicable expiration date, Company or Executive delivers written notice to the other party of its or his intent to terminate this Agreement.

2.   Duties.  Executive shall serve as President, Chief Executive Officer and Chief Operating Officer of Company and the Bank.  Executive shall do and perform all services, acts or things necessary or advisable to discharge the duties and responsibilities of that position, subject to the policies, directives and oversight of the Boards of Directors of the Company and of the Bank, and shall perform such other duties as the Boards of Directors may assign to him from time to time.

3.   Extent of Services.  Executive shall devote substantially all of his energies, interest, abilities and productive time to the business of Company and its subsidiaries, including Life Bank, and shall not, during the term of this Agreement, be engaged in any other business activity other than that required of him in connection with his positions with Company and its subsidiaries, including Life Bank.  Without otherwise limiting the scope of the foregoing, nothing herein shall prevent Executive from investing his personal assets in non-competing businesses that will not require any services on his part.

4.   Compensation and Benefits.  In full compensation for all services rendered by Executive to Company pursuant to this Agreement, Company shall compensate Executive as follows:

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4.1   Salary.  Company shall guarantee the payment of Base Salary to Executive under his Employment Agreement with Life Bank.

4.2   Stock Options.  Executive previously has been awarded stock options.  Nothing in this Agreement shall affect such options.  The terms and conditions of said options shall be governed by the applicable stock option agreements and stock option plans.  The Board, in its discretion, may award additional stock options in the future.

4.3   Fringe Benefits.  Executive shall be entitled to receive all benefits and conditions of employment generally available to other executives of Bank, including, without limitation, sick leave, disability, accident, life, hospitalization, medical and dental insurance, paid holidays, and participation in any pension, profit sharing or other retirement plan pursuant to the terms of said plans.  Bank shall obtain disability insurance coverage for Executive in the amount of $250,000 per year, if reasonably obtainable, for the remaining term of this Agreement and life insurance in the amount of $2,000,000, if reasonably obtainable, with the beneficiary or beneficiaries of said life insurance to be designated by Executive.

5.   Termination and Severance.

5.1  Executive’s employment may be terminated with or without cause and with or without advance notice.  If Executive’s employment is terminated without cause by Company and the Bank, Executive will receive a severance payment equal to two times the sum of Executive’s then-current annual salary plus his incentive bonus for the previous year, less taxes and other required withholding, payable in a lump sum.  Said payment shall constitute Company’s and the Banks’ sole financial obligation to Executive in the event of a termination without cause.  “Cause” means personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, material breach of any provision of this Employment Agreement or continued incapacity (because of disability or otherwise) to perform Executive’s duties.  If Executive’s employment is terminated with cause by Company, or if Executive voluntarily terminates his employment, Executive will not have the right to receive compensation for any period after termination.  If Executive voluntarily terminates his employment with Company, he shall be automatically deemed to have terminated his employment with Life Bank.

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5.2  Termination Because of Change-in-Control.  If Executive is terminated without cause because of a change-in-control of the Company, this subparagraph 5.2 shall govern his eligibility for severance pay.  In such event, Executive will receive a severance payment equal to two years’ Base Salary plus incentive, less taxes and other required withholding, in a lump sum.  For purposes of this subparagraph, “change-in-control” means an acquisition of all, or substantially all, of Company’s assets, as well as the acquisition of ownership or voting control by a party or “group”, as defined in the applicable securities laws, of 35% or more of Company’s outstanding voting securities.

6.   Notices.  All notices and other communications to be given pursuant to this Agreement shall be in writing and may be served personally or by certified mail, return receipt requested, to the parties at such places as either of the parties hereto may from time to time designate in writing.

7.   Post-Termination Obligations.

7.1  All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with subparagraphs 7.2, 7.3 and 7.4.

7.2  Executive shall, upon reasonable notice, furnish such information and assistance to Company as may reasonably be required by Company in connection with any litigation or governmental investigation in which it or any of its subsidiaries or affiliates is, or may become, a party.  Executive shall not be entitled to any additional compensation for furnishing such information and assistance but shall be entitled to be reimbursed for all expenses reasonably incurred thereby.

7.3  Executive recognizes and acknowledges that his knowledge of the business activities and plans for business activities of Company and affiliates thereof, as it may exist from time-to-time, is a valuable, special and unique asset of the business of Company.  Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of Company or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever, unless compelled to do so by court or regulatory agency process.  Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of Company, and may disclose information regarding Company to third parties such as investment bankers and investors so long as to do so would not

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constitute the release of material, non-public information.  In the event of a breach or threatened breach by Executive of the provisions of this Section 7, Company will be entitled to an injunction restraining Executive from disclosing, in whole in part, the knowledge of the past, present, planned or considered business activities of Company or affiliates thereof, or from rendering any services to any person, firm, corporation, other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed.  Nothing herein will be construed as prohibiting Company from pursuing any other remedies available to Company for such breach or threatened breach, including the recovery of damages from Executive.  Company acknowledges that following termination of this Agreement, Executive may seek employment with other financial institutions and agrees that Executive shall not, by virtue of seeking or accepting such employment, be deemed to automatically have disclosed or threatened to disclose any of his knowledge of the past, present, planned or considered business activities of Company of its affiliates.

7.4  For a period of one year after Executive’s employment termination, Executive will not solicit any employee of Company to terminate his or her employment with Company.

8.   Assignment.  This Agreement and the rights and obligations of each of the parties hereunder may not be assigned by either party without the prior written consent of the other party hereto; provided, however, that this Agreement and all rights and obligations hereunder may be assigned by Company to, and assumed by, any corporation or other business entity which succeeds to all or substantially all of the business of Company through a merger, consolidation, corporate reorganization or by acquisition of all or substantially all of the stock or assets of Company.

9.   Parties Bound.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns permitted by this Agreement.

10.   Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.   Arbitration.  As concluded by the parties hereto upon the advice of counsel, and as evidenced by the signatures of the parties hereto, any controversy between the parties hereto involving the construction, application or enforcement of any of the terms, covenants or conditions of this Agreement shall, on the written

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request of one party served upon the other, shall be resolved solely through final and binding arbitration, which arbitration shall be conducted in Riverside County, California in accordance with the applicable rules of the American Arbitration Association then in effect governing employment disputes.  The only exception to this arbitration clause is that Company may apply to a court for injunctive relief to enforce Section 7 of this Agreement.

12.   Waiver or Breach.  The waiver by either party of any breach hereof by the other party or, in any particular instance or series of instances, of any term or condition of this Agreement shall not constitute nor be deemed a waiver of such breach or of any such term or condition hereof in any other instance nor shall any waiver constitute a continuing waiver hereunder.  No waiver shall be binding unless executed in writing by the party making the waiver.

13.   Modification.  The provisions of this Agreement may be amended, supplemented, cancelled or otherwise altered only by an agreement in writing signed by each of the parties hereto.

14.   Severability.  If any provision contained in this Agreement should, for any reason, be held to be invalid or unenforceable in any respect under the laws of the United States or any state, such invalidity or enforceability shall not affect the validity or enforceability of any other provision.

15.   Guarantee; No Duplication.  Company unconditionally guarantees payment and provision of all amounts and benefits due under the Employment Agreement between Life Bank and Executive entered into contemporaneously herewith.  To the extent payments and benefits required under this Agreement (including, without limitation, insurance, vacation, holidays, sick leave, retirement, severance, or 401(k)) are paid by Life Bank, such payments and benefits shall not be duplicated by payments or benefits from Company.

16.   Integration.  This Agreement supersedes and replaces all prior oral or written agreements between the parties, including that certain offer letter dated January 6, 2000, the January 12, 2000 Employment Agreement Between Life Bank and Steven Gardner, the January 12, 2000 Employment Agreement Between Life Financial Corp. and Steven Gardner, and the January 5, 2001 Amendment to the Employment Agreements.  Without otherwise limiting the scope of this paragraph, this Agreement shall not supersede any existing stock option agreements between the parties.

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	LIFE FINANCIAL CORPORATION
Dated:  06/27, 2002	By:	/s/ Ronald G. Skipper
		Ronald G. Skipper
		Chairman of the Board
	EXECUTIVE
Dated:  June 27, 2002	By:	/s/ Steven Gardner
		Steven Gardner

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EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT BETWEEN LIFE BANK AND STEVEN GARDNER

This Employment Agreement (“Agreement”) is by and between LIFE BANK, a federal savings bank (“Bank”) and STEVEN GARDNER (“Executive”).  Bank hereby employs Executive and Executive hereby accepts employment with Bank in accordance with the following terms and subject to the following conditions:

1.   Term.  This Agreement shall be retroactively effective to January 5, 2001.  The initial term of this Agreement shall be until January 5, 2004, unless earlier terminated as provided herein.  This Agreement may be extended for a one-year period upon the same terms and conditions as are herein set forth if a majority of the disinterested members of the Board of Directors affirmatively votes to so extend the contract on or prior to the then applicable expiration date.

2.   Duties.  Executive shall serve as President, Chief Executive Officer and Chief Operating Officer of the Company and the Bank. Executive shall do and perform all services, acts or things necessary or advisable to discharge the duties and responsibilities of that position, subject to the policies, directives and oversight of the Boards of Directors of the Company and of the Bank, and shall perform such other duties as the Boards of Directors may assign to him from time-to-time.

3.   Extent of Services.  Executive shall devote substantially all of his energies, interest, abilities and productive time to the business of Bank and its parent, and shall not, during the term of this Agreement, be engaged in any other business activity other than that required of him in connection with his positions with Bank and its parent.  Without otherwise limiting the scope of the foregoing, nothing therein shall prevent Executive from investing his personal assets in non-competing businesses that will not require any services on his part.

4.   Compensation and Benefits.  In full compensation for all services rendered by Executive to Bank pursuant to this Agreement, Bank shall compensate Executive as follows:

4.1   Salary.  Executive’s annual Base Salary shall be $250,000.  Salary shall be paid in periodic installments (not less than monthly) in accordance with the

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general payroll practices of the Bank, as in effect from time-to-time.

4.2   Fringe Benefits.  Executive shall be entitled to receive all benefits and conditions of employment generally available to other executives of Bank, including, without limitation, sick leave, disability, accident, life, hospitalization, medical and dental insurance, paid holidays, and participation in any pension, profit sharing or other retirement plan pursuant to the terms of said plans.

4.3   Vacation and Sick Leave.  Starting on his first day of active employment, Executive shall accrue paid vacation at the rate of three weeks per year and paid sick leave at the rate of two hours per pay period.  Except as stated in this subparagraph, the terms and conditions of Executive’s vacation and sick pay shall be governed by Life Bank’s Employee Handbook, as amended from time-to-time.

4.4   Reimbursement for Business Expenses.  Executive shall be reimbursed for all reasonable business expenses incurred by him in performing his duties under this Agreement in accordance with the policies of Bank in effect from time-to-time.  All requests for reimbursement shall be substantiated by invoices and other pertinent data reasonably satisfactory to Bank.

4.5   Car Allowance.  During the term of this Agreement, Executive shall receive a monthly car allowance of $1,000.00.

4.6   Discretionary Bonus.  Executive shall be eligible for a discretionary performance bonus, based on individual performance and overall performance of the Bank.  The criteria for determining eligibility and the amount of any bonus shall be in the discretion of the Bank’s Board of Directors.

5.   Termination and Severance.

5..1   Executive’s employment may be terminated with or without cause and with or without advance notice.  If Executive’s employment is terminated without cause by the Bank, Executive will receive a severance payment equal to two times the sum of Executives’ then-current base salary plus his incentive bonus for the previous year, less taxes and other required withholding, payable in a lump sum.  The payment specified in this paragraph shall constitute the Bank’s sole financial obligations to Executive in the event of a termination without cause.  Pursuant to applicable OTS Regulations (12 C.F.R. § 563.39), Executive’s employment shall

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also be subject to termination for cause.  “Cause” means personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, material breach of any provision of this Employment Agreement, or continued incapacity (because of disability or otherwise) to perform Executive’s duties.  If Executive’s employment is terminated with cause by Bank, or if Executive voluntarily terminates his employment, Executive will not have the right to receive compensation for any period after termination.  If Executive voluntarily terminates his employment with Bank, he shall be automatically deemed to have terminated his employment with Life Financial Corporation.

5.2   Termination Because of Change-in-Control.  If Executive is terminated without cause because of a change-in-control of the Bank, this subparagraph 5.2 shall govern his eligibility for severance pay.  In such event, Executive will receive a severance payment equal to two years’ Base Salary plus incentive, less taxes and other required withholding, in a lump sum.  For purposes of this subparagraph, “change-in-control” means an acquisition of all, or substantially all, of the Bank’s assets, as well as the acquisition of ownership or voting control by a party or “group”, as defined in the applicable securities laws, of 35% or more of Company’s outstanding voting securities.

6.   Required Provisions

6.1   The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other than Termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement.  Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 5 herein above.

6.2   If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e)(3) or (g)(1), the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while their contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

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6.3   If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section (e)(4) or 8(g)(l) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e)(4) or (g)(l), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

6.4   If the Bank is in default as defined in Section 3(x)(l) of the Federal Deposit Insurance Act, 12 U.S.C. § 1813(x)(l) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

6.5   All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution, (i) by the Director of the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. § 1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director (or his designee) approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition.  Any rights of the parties that have already vested, however, shall not be affected by such action.

6.6   Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon compliance with 12 U.S.C. § 1828(k) and 12 C.F.R. § 545.121 and any rules and regulations promulgated thereunder.

7.   Notices.  All notices and other communications to be given pursuant to this Agreement shall be in writing and may be served personally or by first class mail to the parties at such places as either of the parties hereto may from time to time designate in writing.

8.   Post-Termination Obligations.

8.1   All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with subparagraphs 8.2, 8.3 and 8.4.

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8.2   Executive shall, upon reasonable notice, furnish such information and assistance to Bank as may reasonably be required by Bank in connection with any litigation or governmental investigation in which it or any of its subsidiaries or affiliates is, or may become, a party.  Executive shall not be entitled to any additional compensation for furnishing such information and assistance but shall be entitled to be reimbursed for all expenses reasonably incurred thereby.

8.3   Executive recognizes and acknowledges that his knowledge of the business activities and plans for business activities of Bank and affiliates thereof, as it may exist from time-to-time, is a valuable, special and unique asset of the business of Bank.  Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever, unless compelled to do so by court or regulatory agency process.  Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of Bank, and may disclose information regarding Bank to third parties such as investment bankers and investors so long as to do so would not constitute the release of material, non-public information.  In the event of a breach or threatened breach by Executive of the provisions of this Section 8, Bank will be entitled to an injunction restraining Executive from disclosing, in whole in part, the knowledge of the past, present, planned or considered business activities of Bank or affiliates thereof, or from rendering any services to any person, firm, corporation, other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed.  Nothing herein will be construed as prohibiting Bank from pursuing any other remedies available to Bank for such breach or threatened breach, including the recovery of damages from Executive.  Bank acknowledges that following termination of this Agreement, Executive may seek employment with other financial institutions and agrees that Executive shall not, by virtue of seeking or accepting such employment, be deemed to automatically have disclosed or threatened to disclose any of his knowledge of the past, present, planned or considered business activities of the Bank or its affiliates.

8.4   For a period of one year after Executive has terminated his employment with Bank, Executive will not solicit any employee of Bank to terminate his or her employment with Bank.

9.   Assignment.  This Agreement and the rights and obligations of each of

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the parties hereunder may not be assigned by either party without the prior written consent of the other party hereto provided, however, that this Agreement and all rights and obligations hereunder may be assigned by Bank to, and assumed by, any corporation or other business entity which succeeds to all or substantially all of the business of Bank through a merger, consolidation, corporate reorganization or by acquisition of all or substantially all of the stock or assets of Bank.

10.   Parties Bound.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns permitted by this Agreement.

11.   Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California, except to the extent preempted by federal law.

12.   Arbitration.  As concluded by the parties hereto upon the advice of counsel, and as evidenced by the signatures of the parties hereto, any controversy between the parties hereto involving the construction, application or enforcement of any of the terms, covenants or conditions of this Agreement shall, on the written request of one party served upon the other, be resolved solely through final and binding arbitration, which arbitration shall be conducted in Riverside County, California in accordance with the applicable rules of the American Arbitration Association then in effect governing employment disputes.  The only exception to this arbitration clause is that Bank may apply to a court for injunctive relief to enforce Section 8 of this Agreement.

13.   Waiver or Breach.  The waiver by either party of any breach hereof by the other party or, in any particular instance or series of instances, of any term or condition of this Agreement shall not constitute nor be deemed a waiver of such breach or of any such term or condition hereof in any other instance nor shall any waiver constitute a continuing waiver hereunder.  No waiver shall be binding unless executed in writing by the party making the waiver.

14.   Modification.  The provisions of this Agreement may be amended, supplemented, cancelled or otherwise altered only by an agreement in writing signed by each of the parties hereto.

15.   Severability.  If any provision contained in this Agreement should, for any reason, be held to be invalid or unenforceable in any respect under the laws of

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the United States or any state, such invalidity or enforceability shall not affect the validity or enforceability of any other provision.

16.   No Duplication.  To the extent payments and benefits required under this Agreement (including, without limitation, insurance, vacation, holidays, sick leave, severance, retirement or 401(k)) are paid by Life Financial Corp., such payments and benefits shall not be duplicated by payments or benefits from Bank.

17.   Integration.  This Agreement supersedes and replaces all prior oral or written agreements between the parties including that certain offer letter dated January 6, 2000., the January 12, 2000 Employment Agreement Between Life Bank and Steven Gardner, the January 12, 2000 Employment Agreement Between Life Financial Corp. and Steven Gardner, and the January 5, 2001 Amendment to the Employment Agreements.  Without otherwise limiting the scope of this paragraph, this Agreement shall not supersede any existing stock option agreements between the parties.

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		LIFE BANK, FSB
Dated:	6/27, 2002	By:	/s/ Ronald G. Skipper
			Ronald G. Skipper
			Chairman of the Board
		EXECUTIVE
Dated:	June 27, 2002	By:	/s/ Steven Gardner
			Steven Gardner

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EX-10.7

Exhibit 10.7

LIFE SAVINGS BANK, FEDERAL SAVINGS BANK

(the “Company”)

13½% SUBORDINATED DEBENTURES DUE March 15, 2004

DEBENTURE PURCHASE AGREEMENT

Dated as of March 12, 1997

TABLE OF CONTENTS

(Not Part of Agreement)

1.	AUTHORIZATION OF ISSUE OF DEBENTURES
2.	PURCHASE AND SALE OF DEBENTURES
3.	CONDITIONS OF CLOSING
4.	PREPAYMENTS
5.	COVENANTS
6.	EVENTS OF DEFAULT
7.	REPRESENTATIONS, COVENANTS AND WARRANTIES
8.	REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
9.	SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES
10.	DEFINITIONS
11.	MISCELLANEOUS
PURCHASER SCHEDULE
EXHIBIT A — FORM OF DEBENTURE
EXHIBIT B — FORM OF OPINION OF COMPANY’S COUNSEL

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TO THE PURCHASERS SET

FORTH IN SCHEDULE HERETO

Gentlemen:

The undersigned, Life Savings Bank, Federal Savings Bank (herein called the “Bank”), hereby agrees with you as follows:

1.AUTHORIZATION OF ISSUE OF DEBENTURES. The Bank will authorize the issue of its

Subordinated Debentures (herein called the “Debentures”) to be issued in global form, in the aggregate principal amount of $10,000,000, to be dated the date of issue thereof, to mature March 15,2004, to bear interest on the unpaid balance thereof from the date thereof until the principal thereof shall have become due and payable at the rate of 13\12% per annum, which interest shall be payable semi-annually, and to be substantially in the form of Exhibit A attached hereto (the “Global Debenture”). The term “Debentures” as used herein shall include the Global Debenture delivered pursuant to any provision of this Agreement each Debenture delivered in substitution or exchange for any such Debenture pursuant to any such provision and, to the extent the context hereof requires, each Beneficial Interest in a Global Debenture held by a Beneficial Holder thereof.

2.PURCHASE AND SALE OF DEBENTURES. Subject to the terms and conditions herein set forth, the Bank hereby agrees to sell to you and you agree to purchase from the Bank the aggregate principal amount of Debentures set forth opposite your name in the Purchaser Schedule attached hereto at 100% of such aggregate principal amount. Each purchaser identified in the Purchaser Schedule is referred to herein as a “Purchaser”.

Payment of the purchase price for and delivery of the Debentures to be purchased by the Purchasers shall be made at the offices of Friedman, Billings, Ramsey & Co., Inc., Arlington, Virginia or at the option of the Bank through the systems of the Depository Trust Company or any successor entity (the “Depository”), with delivery of the Debentures to the Depository for the respective accounts of the Purchasers to be made against payment for the Debentures in same day funds, or in such other manner as shall be agreed upon by the Purchasers and the Bank, at 10:00 A.M. on          , 1997 (such time and date being referred to herein, respectively, as the “Closing Time” and the “Closing Date”).

3.CONDITIONS OF CLOSING. Your obligation to purchase and pay for the Debentures to be purchased by you hereunder is subject to the satisfaction, on or before the Closing Date, of the following conditions:

3A.Opinion of Company’s Counsel, You shall have received from Muldoon, Murphy & Faucette, special counsel for the Bank, a favorable opinion reasonably satisfactory to you and substantially in the form of Exhibit B attached hereto.

3B.Representations and Warranties; No Default. The representations and warranties contained in Section 7 shall be true on and as of the Closing Date, except to the extent of changes caused by the transactions herein contemplated; there shall exist on the Closing Date no Event of Default or Default; and the Bank shall have delivered to you an Officer’s Certificate, dated the Closing Date, as to both such effects.

3C.Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in substance and form to you, and you shall have received all such counterpart originals or certified or other copies of such documents as you may reasonably request.

4.PREPAYMENTS.

4A.Company Prepayments. Except for prepayments made pursuant to Sections 4B, 5J and 6A hereof, for a period of 18 months following the Closing Date the Bank shall not, and shall not permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in part prior to their stated final maturity (other than upon acceleration of such final maturity pursuant to paragraph 6A), any Debentures held by any Holder; provided, that, nothing herein shall be deemed to limit the ability of the Bank, any Subsidiary or Affiliate to repurchase Debentures at any time on such terms as the Bank, any Subsidiary or Affiliate, as the case may be, and the Holder or Holders of Debentures may agree. Notwithstanding the foregoing sentence, in the event that the Bank is not then in compliance with any of the covenants contained in Sections 5(A), (B), (C) or (G), the Bank shall not, and shall not permit any of its Subsidiaries or Affiliates to, purchase any Debenture other than through a pro-rata offer to purchase such aggregate principal amount of Debentures which has been made to all Holders of Debentures. Voluntary prepayments by the Bank after the initial 18 month period may be made in accordance with the procedure described in the Debenture.

4B.Purchase Option. This paragraph 4B shall apply only if, pursuant to paragraph 11D of this Purchase Agreement,

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the Company is substituted for the Bank as a party to this Purchase Agreement and as obligor on the Debentures.

Any Holder may require the Company to prepay the Debenture early by giving notice to the Company not more than 30 days before September 15, 1998 or if the substitution of the Company for the Bank has not occurred by that date, not more than 30 days after such substitution. If such notice is given, the Company shall prepay the principal of the Debenture with respect to which such notice is given within 90 days of September 15, 1998 or the date of the notice if it is given after that date along with interest as provided in paragraph 1 of this Purchase Agreement for the period prior to the prepayment date, provided that no premium will be payable.

5.COVENANTS.

5A.Limitation on Funded Indebtedness and Indebtedness. The Bank will not, and will not cause or permit any Subsidiary to create, assume, guarantee, incur or in any manner become, directly or indirectly liable in respect of any indebtedness unless, after giving effect thereto, Indebtedness shall not exceed 200% of consolidated net tangible equity capital.

5B.Consolidated Tangible Equity Capital. The Bank will not at any time permit Consolidated Tangible Equity to be less than $9 million plus the cumulative amount equal to fifty percent (50%) of the consolidated net income (but not loss) for each fiscal quarter commencing March 31, 1997 plus the net proceeds of the Offerings.

5C.Restrictions as to Dividends and Certain Other Payments. So long as the Debentures are outstanding, the Bank will not, and will not permit any Subsidiary to, declare or pay any dividend or make any other distribution on its capital stock (other than on account of capital stock of a Subsidiary owned legally and beneficially by the Bank or a Subsidiary) or to its respective stockholders (other than dividends or distributions payable in its capital stock) or purchase, redeem or otherwise acquire for value (except pursuant to a bona fide pledge or employee benefit plan) any of its capital stock (other than on account of capital stock of a Subsidiary owned legally and beneficially by the Bank or a Subsidiary) (each, a “Restricted Payment”) unless: (i) immediately before, and after giving effect to such Restricted Payment, the obligation under paragraph 5B would be met; (ii) at the time of and immediately before, such declaration is made and after giving effect to, such Restricted Payment, no Default or Event of Default exists or would exist as a result of such Restricted Payment; and (iii) no Default or Event of Default shall have occurred within 365 days of the declaration of such Restricted Payment.

5D.Merger, Consolidation or Sale of Assets; Successor Corporations. The Bank will not merge or consolidate with, or sell al1 or substantial1y al1 of its assets to, any person, firm or corporation unless it is the successor corporation in such transaction and, immediately thereafter, it is not in default under this Agreement or, if it is not the successor corporation, the successor corporation expressly assumes the Bank’s obligations under this Agreement and immediately after such transaction, it is not in default under this Agreement. Any successor corporation shall succeed to and be substituted for the Bank as if such successor corporation had been named as the Bank in this Agreement.

5E.Modification of the Debentures or this Agreement. With the consent of the Beneficial Holders of not less than 51 % in principal amount of the Debentures, any term, covenant, agreement, or condition of the Debentures or this Agreement may be amended or compliance therewith may be waived, provided that no amendment or waiver shall, without the consent of the Beneficial Holders of all the Debentures affected thereby: (i) change the principal amount of any Debenture or the maturity of the principal of any Debenture or (ii) reduce the rate or extend the time of payment of interest on any Debenture or (iii) reduce the percentage of Holders of Debentures required to consent to any such amendment or waiver.

5F.Line of Business. So long as the Debentures are outstanding, the Bank will remain principally engaged in the financial services business.

5G.Capital Adequacy. The Bank shall be classified as “well capitalized” or “adequately capitalized” as defined in 12 C.F.R. Sec. 565.4 (or its equivalent as such regulation may be amended from time to time).

5H.FDIC Membership. The Bank shall not at any time fail to have its deposits insured by the FDIC.

5I.Limitation on Incurrence of Indebtedness by Subsidiaries. Any Indebtedness incurred by any Subsidiary subsequent to the issuance of the Debentures shal1 not include any covenant which would restrict the payment of dividends to the Bank.

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5J.Change of Control. This paragraph 5J shall apply only if, pursuant to paragraph 11D of this Purchase Agreement, the Company is substituted for the Bank as a party to this Purchase Agreement and as obligor on the Debentures.

(i)The Company shall maintain liquid assets in an amount equal to interest on the aggregate outstanding Debentures for one year.

(ii)Notwithstanding anything in Section 4 of the contrary, the Company shall, within 45 days following the date of the consummation of a transaction resulting in a Change of control, notify the Holders in writing of such Change of Control. To the extent that the Debentures are in the form of a Global Debenture held by the Depository for the benefit of the respective accounts of the Beneficial Holders, in accordance with the procedures of the Depository at that time, such notice shall contain all necessary provisions to provide for the Beneficial Holders to receive notification of such Change in Control through the Depository. Upon receipt of such notification, each Beneficial Holder shall have the option, through and in accordance with the procedures of the Depository, to notify the Company that such Beneficial Holder requires that the Company purchase all or a portion of such Beneficial Holder’s Beneficial Interest in the Global Debenture at a price equal to 10 I % of the principal amount of such Beneficial Interest plus accrued interest to the purchase date. The Company will purchase the Beneficial Interests in the Debentures on a date specified in the notification of Change of Control, which date will not be later than 60 days after the consummation of the transaction resulting in a Change of Control.

A “Change of Control” will be deemed to have occurred in the event that, after the date of this Agreement, either (a) any person (as defined in Rules l3d-3 and I3d-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor provision thereto) directly or indirectly, shall beneficially own (as defined in Rule 13d-3 under the Exchange Act, or any successor provision thereto) at least 50% of the aggregate voting power of all classes of capital stock of the Company entitled to vote generally in the election of directors or (b) any Person, directly or indirectly, shall succeed in having a sufficient number of its nominees elected to the Board of Directors of the Company such that such nominees, when added to any existing director remaining on the Board of Directors of the Company after such election who is an affiliate or related person of such Group, will constitute a majority of the Board of Directors of the Company; provided however that, for purposes of this Section 5J, in the case of (a) a Change in Control shall not be deemed to have occurred, if at the time the Person becomes the beneficial owner of such aggregate voting power, the Person has outstanding securities which have received a rating from a nationally recognized statistical rating organization (as that term is defined in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act) which rating is in one of such rating organization’s generic rating categories which signifies “investment grade”.

5K.Financial and Business Information.

The Bank for periods for which it or a parent holding company makes periodic filings with the OTS or the Securities and Exchange Commission, in accordance with procedures of the Depository, shall deliver or cause to be delivered to each Beneficial Holder of the Debentures:

(i)as soon as practicable after the end of each quarterly fiscal period in each fiscal year of

the Bank (other than the last quarterly fiscal period of each such fiscal year), and in any event within 45 days thereafter: (a) a consolidated statement of financial condition of the Bank and its consolidated subsidiaries, as at the end of such quarter, and (b) consolidated statements of operations, cash flows and shareholders’ equity of the Bank and its consolidated subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case, in comparative form, the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with generally accepted accounting principles, but in such detail as is customarily applied to quarterly financial statements, and certified as complete and correct, subject to changes resulting from year-end adjustments, by a Senior Financial Officer, and accompanied by the certificate required by Section 5M; provided, that delivery of copies of the Bank’s Quarterly Report on Form IO-Q filed with the Securities and Exchange Commission (and any successor agency) (the “Commission”) within the time period specified above shall be deemed to satisfy the requirements of this Section 5K(i) so long as such quarterly report contains or is accompanied by the information and certificates specified in this Section 5K(i).

(ii)as soon as practicable after the end of each fiscal year of the Bank, and in any event within 90 days thereafter (a) consolidated statements of financial condition of the Bank and its consolidated subsidiaries, as at the end of such year, and (b) consolidated and consolidating statements of operations, cash flows and shareholders’ equity of the Bank and its consolidated subsidiaries, for such year, setting forth in the case of each consolidated financial

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statement, in comparative form, the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with generally accepted accounting principles; and

(iii)promptly upon their becoming available, (a) each financial statement, report, notice or proxy statement sent by the Bank or any Subsidiary to stockholders generally, (b) each regular or periodic report (including, without limitation, each Form 10-K, Form 10-Q and Form 8-K), any registration statement which shall have become effective, and each final prospectus and all amendments thereto filed by the Bank or any Subsidiary with the Commission, and (c) each regular or periodic report (including, without limitation, each call report) filed by the Bank or any Subsidiary with the FDIC, or the OTS (and any similar agency or successor agency).

51.Officer’s Certificates. Each set of financial statements delivered to each Beneficial Holder of the

Debentures pursuant to Section 5K(i) or Section 5K(ii) shall be accompanied by a certificate of a Senior Financial Officer, setting forth:

(i)the information (including detailed calculations) required in order to establish whether the

Bank was in compliance with the requirements of Section 5A through Section 5C, inclusive, as of the end of the period covered by the financial statements then being furnished (including with respect to each such section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such sections, and the calculation of the amount, ratio or percentage then in existence); and

(ii)a statement that the signer has reviewed the relevant terms hereof and has made, or caused

to be made, under his or her supervision, a review of the transactions and conditions of the Bank and its consolidated subsidiaries from the beginning of the accounting period covered by the income statements being delivered therewith to the date of the certificate and that such review has not disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Bank has taken or proposes to take with respect thereto.

6.  EVENTS OF DEFAULT.

6A. Acceleration. If any of the following events shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise):

(i)default in the payment of the principal of or premium, if any, on any Debenture when the same becomes due and payable at maturity, upon redemption or otherwise;

(ii)default in the payment of interest on the Debentures when the same becomes due and payable and the continuance of such default for a period of 30 days;

(iii)failure to comply with any agreement or covenant of the Bank in, or provisions of, the Debentures or this Agreement and the continuance of such default for a period of 30 days after the date the Bank has knowledge thereof;

(iv)an event of default occurs under any mortgage, bond, indenture, loan agreement or other evidence of indebtedness under which there may be issued or by which there may be secured or evidenced any Indebtedness (other than non-recourse Indebtedness) for money borrowed by the Bank or any Subsidiary thereof (or the payment of which is guaranteed by the company or any Subsidiary), whether such Indebtedness or guarantee now exists or shall be created hereafter; provided, however, that no such event of default shall constitute an Event of Default unless the effect of such Event of Default is to cause the acceleration of such Indebtedness prior to its stated maturity, which, together with the principal amount of any other such Indebtedness so caused to be accelerated, aggregates $2 million or more at any time;

(v)a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Bank or any Subsidiary thereof which remains or remain undischarged for a period of 60 days, provided that the aggregate of all such judgments is $2 million or more at any time;

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(vi)any representation or warranty made by the Bank in this Agreement, or made by the Bank in any written statement or certificate furnished by the Bank in connection with the issuance and sale of the Debentures or furnished by the Bank pursuant to this Agreement proves false in any material respect as of the date of the issuance or making thereof and, if susceptible of cure, is not cured within 60 days of notice thereof;

(vii)the entry of a decree or order by a court having jurisdiction in the premises adjudging the Bank bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Bank under the Federal Bankruptcy Code or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar officials) of the Bank or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days or the appointment of the FDIC or the OTS or any successor agency thereto as conservator or receiver for the Bank and the continuance of such conservatorship or receivership un stayed and in effect for a period of 30 consecutive days; or

(viii)the Bank or any material Subsidiary thereof shall institute proceedings to be adjudicated insolvent, or shall consent to the filing of an insolvency proceeding against it, or shall file a petition or answer or consent seeking reorganization, readjustment, arrangement, composition, appointment of a receiver or similar relief under the federal insolvency laws, or any other similar applicable law of any governmental unit, domestic or foreign, or shall consent to the appointment of a receiver, conservator, liquidator, trustee or assignee in insolvency of it or of a substantial part of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or if the Bank shall voluntarily suspend transaction of its business, or if corporate action shall be taken by the Bank or any Subsidiary thereof in furtherance of any of the aforesaid purposes;

then in the cases of clauses (i), (ii), (iv), (v), (vi), (vii) and (viii) above, unless the principal of the Debentures shall have already become due and payable, Beneficial Holders of no less than 51 % in aggregate principal amount of the Debentures then outstanding may declare the principal of the Debentures to be immediately due and payable, anything in this Agreement or in the Debentures to the contrary notwithstanding, except the limitations applicable with respect to the FDIC as receiver described in the Debentures. In the case of clause (iii) above, unless the principal of the Debentures shall have already become due and payable, Beneficial holders of no less than 51 % in aggregate principal amount of the Debentures then outstanding may declare the principal of the Debentures to be due and payable, along with all accumulated interest, 10 days after the Bank has been in default under clause (iii) above. Overdue principal and overdue interest in respect of the Debentures shall bear interest at a rate of 13½% per annum, subject to applicable law. A Holder, by written notice to the Bank, may waive all defaults and rescind such acceleration and its consequences as to the Debentures held by such Debenture Holder; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent upon any subsequent default.

The Bank shall deliver to the Holders, within 15 days after it becomes aware of the occurrence thereof, written notice of any event which with the giving of notice or the lapse of time or both would become an Event of Default under (iv) or (v) above, its status and what action the Bank is taking or proposes to take with respect thereto.

In the event Holders shall have proceeded to enforce any right under this Agreement and such proceeding shall have been discontinued or abandoned or shall have been determined adversely to the Holders, then in every such case the Bank and the Holders shall be restored, respectively, to their former positions under the Debentures and this Agreement, and all other rights, remedies and powers of the Bank and the Holders, respectively, under the Debentures and this Agreement shall continue as though no such proceedings had been undertaken.

6B.Other Remedies. If any Event of Default or Default shall occur and be continuing, a Holder of any Debenture may proceed to protect and enforce its rights under this Agreement and such Debenture by exercising such remedies as are available to such Holder in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon the Holder of any Debenture is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise.

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7. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Bank represents, covenants and warrants:

7A.Organization. The Bank has been duly organized and is validly existing as a federal savings bank under the laws of the United States, each material Subsidiary is duly organized and existing in good standing under the laws of the jurisdiction in which it is incorporated. and the Bank and each material Subsidiary has the corporate power to own its respective property and to carry on its respective business as now being conducted.

7B.Financial Statements. The audited consolidated financial statements of the Bank and its subsidiaries and other financial information included in the Private Placement Memorandum, dated March 12, 1997 (the “Private Placement Memorandum”) present fairly the consolidated financial position of the Bank and its Subsidiaries as of and at the dates indicated and the consolidated results of their operations for the periods specified therein and said consolidated financial statements have been prepared in conformity with generally accepted accounting principles applied on a basis consistent in all material respects during the periods involved and the independent certified public accountants who certified the audited financial statements included in the Private Placement Memorandum are independent public accountants as required by the Securities Act and the rules and regulations thereunder.

7CMaterial Adverse Change. At the Closing Time, there shall not have been, since the latest date as of which financial or statistical information is presented in the Private Placement Memorandum, any change in the business operations, profits, financial condition or Properties of the Bank or its Subsidiaries except changes that in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

7 D.Actions Pending. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Bank, threatened against the Bank or any of its Subsidiaries, or any properties or rights of the Bank or any of its Subsidiaries, by or before any court, arbitrator or administrative or governmental body which has not been previously disclosed to the Purchasers and which would be reasonably likely to have a Material Adverse Effect.

7E.Outstanding Debt. Neither the Bank nor any of its Subsidiaries has outstanding any debt with a term in excess of one year except as disclosed in the Private Placement Memorandum. There exists no default under the provisions of any instrument evidencing such debt or of any agreement relating thereto.

7F.Title to Properties. The Bank has and each of its Subsidiaries has good and indefeasible title to its respective real properties (other than properties which it leases) and good title to all of its other respective properties and assets, subject to no Lien of any kind, except for Liens for taxes not yet due and payable and any other Liens, encumbrances or defects in title which are not material to the Bank and its Subsidiaries, taken as a whole. All leases necessary in any material respect for the conduct of the respective businesses of the Bank and its Subsidiaries are valid and subsisting and are in full force and effect.

7G.Taxes. The Bank has and each of its Subsidiaries has filed all Federal, State and other income tax returns which, to the best knowledge of the officers of the Bank, are required to be filed, and each has paid all taxes as shown on such returns and on all assessments received but it to the extent that such taxes have become due, except such taxes as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles.

7H.Environmental Compliance.

(i)After reasonable inquiry, to the best of the Bank’s knowledge, neither the Bank nor any Subsidiary is in violation of any applicable Environmental Protection Law except for such violations that, in the aggregate for all such violations, would not be reasonably likely to have a Material Adverse Effect.

(ii)After reasonable inquiry, to the best of the Bank’s knowledge, neither the Bank nor any Subsidiary is subject to any liability under any Environmental Protection Law that, in the aggregate for all such liabilities, would be reasonably likely to have a Material Adverse Effect.

71.Conflicting Agreements and Other Matters. Neither the Bank nor any of its Subsidiaries is a party to any contract or agreement which materially and adversely affects its business, property or assets, or financial condition. Neither the execution nor delivery of this Agreement or the Debentures, nor the offering, issuance and sale of the Debentures, nor fulfillment of nor compliance with the terms and provisions hereof and of the Debentures will conflict with, or result in a material breach of the terms, conditions or provisions of the charter or by-laws of the Bank or any of its Subsidiaries, or constitute a material default under, or result in any material violation of, or result in the creation of any material Lien upon, any of the material properties or assets of the Bank or any of

8

its Subsidiaries pursuant to any award of any arbitrator or any agreement (including any agreement with stockholders), instrument, order, judgment, decree, statute, law, rule or regulation to which the Bank or any of its Subsidiaries is subject. Neither the Bank nor any of its Subsidiaries is a party to, or otherwise subject to any provision contained in, any instrument evidencing indebtedness of the Bank or such Subsidiary, any agreement relating thereto or any other contract or agreement (including its charter) which limits the amount of, or otherwise imposes restrictions on the incurring of, debt of the Bank of the type to be evidenced by the Debentures.

71.Offering of Debentures. Neither the Bank nor, to the Bank’s knowledge, any agent acting on its behalf, has taken or will take any action which would subject the issuance or sale of the Debentures to the provisions of section 5 of the Securities Act, or to the provisions of any securities or blue sky law of any applicable jurisdiction.

7K.Governmental Consent. Neither the nature of the Bank or of any Subsidiary, nor any of their respective businesses or properties, nor any relationship between the Bank or any Subsidiary and any other Person, nor any circumstance in connection with the offering, issuance, sale or delivery of the Debentures is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or administrative or governmental body which have not already been obtained as of the date of this Agreement (other than routine filings after the date of closing with the Securities and Exchange Commission and/or any state securities commissions) in connection with the execution and delivery of this Agreement, the offering, issuance, sale or delivery of the Debentures or fulfillment of or compliance with the terms and provisions hereof or of the Debentures.

7L.Disclosure. Neither this Agreement nor any other document, certificate or statement furnished to you by the Bank or on behalf of the Bank with the Bank’s approval in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading.

7M. Debentures Not Listed or Quoted. The Debentures will not be, at the Closing Time, of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act, or quoted in a U.S. automated interdealer quotation system.

7N.No General Solicitation. None of the Bank, its affiliates (as defined in Rule 501(b) under the Securities Act) or any person (other than the Purchasers, as to whom the Bank makes no representation) acting on its behalf has engaged, in connection with the offering of the Debentures, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the 1933 Act.

7O.No Sales or Offers of Similar Securities. The Bank has not, directly or indirectly, sold or offered to sell the Debentures or any securities having terms substantially similar to the Debentures in anyone or more public or private offerings during the last twelve months or otherwise approached or negotiated with any potential purchaser for the purchase of any such securities during such twelve-month period.

8.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

8A.Each Purchaser hereby represents and warrants to, and agrees with, the Bank that it (i) is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and or an “accredited investor” within the meaning of Regulation D under the Securities Act; (ii) has not and will not solicit offers for, or offer or sell, Debentures by means of any general solicitation or general advertising within the meaning of Rule 502(c) under Regulation D under the Securities Act; (iii) will otherwise act in accordance with the terms and conditions set forth in this Agreement, including Section 9 hereof, in connection with the placement of the Debentures contemplated hereby; (iv) has received and read the Bank’s Private Placement Memorandum dated March 12, 1997 (the “Memorandum”); (v) has had the opportunity to ask questions and receive answers concerning the Bank, the terms and conditions of the offering contemplated by the Memorandum, this Agreement, the Debentures, and the terms and conditions thereof and to obtain any additional information which the Bank possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information contained in the Memorandum or to evaluate the business and financial risk of investing in the Debentures; (vi) relied only on, in purchasing the Debentures, information delivered or made available by the Bank, Friedman, Billings, Ramsey and Co., Inc. and its Affiliates; (vii) is acquiring the Debentures for its own account or an account with respect to which it exercises sole investment discretion and that it or such account has assets of at least $20 million and is an “Accredited Investor” as defined in Regulation D under the Securities Act or “qualified institutional buyer”, as defined in Rule 144A (a “QIB”), acquiring the Debentures for investment purposes and not with a view to offer for sale in connection with any distribution of the Debentures; (viii) understands and agrees that such Debentures are being offered only in a transaction not involving any public offering and will constitute “restricted securities” within the meaning of the Securities Act and the rules thereunder, and that: (A) such Debentures may be resold, pledged or transferred only (1) to the Bank, (2) so long as such Debentures are eligible for resale pursuant to rule 144A, to a person whom the seller reasonably believes is a QIB that purchases for its own account or for the account of a QIB

9

to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A, (3) to a person whom the seller reasonably believes is a QIB that purchases for its own account or for the account of a QIB pursuant to another available exemption from the registration requirements under the Securities Act, or (4) to a person whom the seller reasonably believes is a QIB that purchases for its own account or for the account of a QIB pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States; (B) the purchaser will, and each subsequent holder is required to, notify any purchaser of Debentures from such holder of the resale restrictions referred to in (A) above if then applicable; (C) with respect to any transfer of Debentures pursuant to clause A above, the Bank will require written confirmation from the transferee (or a U.S. registered broker/dealer on the transferee’s behalf) that the transfer is being made in compliance with the applicable restrictions on transfer and the requirements of the exemption from registration relied upon by the transferor (which exemption shall be specified in the confirmation), together with, in the case of a transfer under clause (3) above, such certificates, legal opinions, or other information as the Bank may reasonably require to confirm that such transfer is being made pursuant to an exemption from or in a transaction not subject to, the registration requirements of the Securities Act; and (ix) understands that the notification requirements referred to in (viii) above will be satisfied (except with respect to sales to QIBs holding through DTC) by virtue of the fact that the legends on the Form of Debenture attached hereto as Exhibit A will be placed on the Debentures unless otherwise agreed by the Bank.

9.  SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES.

Each of the Purchasers and the Bank hereby establish and agree to observe the following procedures in connection with the offer and sale by the Purchasers of the Debentures.

9A.Offers and Sales Only to Qualified Institutional Buyers. Offers and sales of the Debentures will be made by the Purchasers only (i) to the Bank, (ii) so long as such Debentures are eligible for resale pursuant to Rule 144A, to a person whom the seller reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A, (iii) to a person whom the seller reasonably believes is a QIB that purchases for its own account or for the account of a QIB pursuant to another available exemption from the registration requirements under the Securities Act, or (iv) to a person whom the seller reasonably believes is a QIB that purchases for its own account or for the account of a QIB pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.

9B.No General Solicitation. If a Purchaser elects to resell any Debentures, such Debentures will be offered by the Purchaser only by approaching prospective purchasers on an individual basis. No general solicitation or general advertising (as such terms are used in Regulation D under the Securities Act) will be used in connection with offering any of the Debentures for resale.

9C.Purchasers by Non-Bank Fiduciaries. In the case of a non-bank purchaser of a Debenture acting as a fiduciary for one or more third parties, in connection with an offer and sale to such purchaser pursuant to Section 9A, each third party shall, in the judgment of the applicable Purchaser, be a QIB.

9D.Minimum Principal Amount. No sale of the Debentures to anyone purchaser will be for less than U.S. $100,000 principal amount and no Debenture will be issued in a smaller principal amount. If the purchaser is a non-bank fiduciary acting on behalf of others, each person for whom it is acting must purchase at least U.S. $100,000 principal amount of the Debentures.

9E.Restrictions on Transfer. The transfer restrictions and the other provisions set forth in the Debentures shall apply to the Debentures except as otherwise agreed by the Bank and the Purchasers. Following the sale of the Debentures by the Purchasers to subsequent purchasers pursuant to the terms hereof, no Purchaser shall be liable or responsible to the Bank for any losses, damages or liabilities suffered or incurred by the Bank, including any losses, damages or liabilities under the Securities Act, arising from or relating to any resale or transfer of any Debenture by such subsequent purchaser. So long as the Debentures qualify for inclusion in the depository system operated by the Depository, the Debentures will be in global form held by the Depository as securities custodian. Accordingly, transfers of Beneficial Interests in the Debentures will be made in accordance with the procedures for such transfers specified by the Depository. The Global Debenture may not be transferred except

(i)by the Depository to a nominee of the Depository;

(ii)by a nominee of the Depository to the Depository or another nominee of the Depository; or

(iii)by the Depository or any such nominee to a successor Depository or nominee of a successor Depository.

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9F.Company to Provide Certain Information. The Bank will make available, upon request, to any seller of the Debentures the information specified in Rule 144A(d)(l) under the Securities Act.

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10.DEFINITIONS. For the purpose of this Agreement the following terms shall have the meanings specified with respect thereto below:

“Affiliate” means any Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Bank, (ii) which beneficially owns or holds 5% or more of any class of the voting stock of the Bank or (iii) which beneficially owns or holds 5% or more of the voting stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of the Bank or a Subsidiary thereof. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

‘.’Beneficial. Holder” shall mean, from time to time, any Person which holds at such time a Beneficial Interest, provided that if such Person is a participant or member of the Depository who is acting as agent for another Person, then that other Person shall be the “Beneficial Holder” for purposes hereof.

“Beneficial Interest” shall mean, from time to time, a beneficial ownership interest in the Global Debenture, as reflected by the Securities Position List of the Depository for the Global Debenture for such time.

“Business Day” means a day other than a Saturday, a Sunday or a day on which commercial banks in California are required by law (other than a general banking moratorium or holiday for a period exceeding four consecutive days) to be closed.

“Capitalized Lease” shall mean any rental obligation which, under generally accepted accounting principles, is or will be required to be capitalized on the books of the Bank or any Subsidiary, taken at the amount thereof accounted for as indebtedness (net of interest expense) in accordance with such principles.

“Company” shall mean Life Financial Corp., a company organized to be the Bank’s parent holding company.

“Consolidated Net Worth” shall mean Stockholders’ Equity plus General Valuation Allowance for Loan Losses.

“Consolidated Tangible Equity Capital”, shall mean Consolidated Net Worth minus Goodwill.

“Environmental Protection Law” shall mean any law, statute or regulation enacted by any jurisdiction in connection with or relating to the protection or regulation of the environment, including, without limitation, those laws, statutes and regulations regulating the disposal, removal, production, storing, refining, handling, transferring, processing or transporting of hazardous or toxic substances, and any orders, decrees or judgments issued by any court of competent jurisdiction in connection with any of the foregoing.

“Event of Default” shall mean any of the events specified in Section 6A, provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and “Default” shall mean any of such events, whether or not any such requirement has been satisfied.

“FDIC” shall mean the Federal Deposit Insurance Corporation and any Person succeeding to the functions thereof..

“Funded Indebtedness” shall mean all indebtedness that matures more than one year from the date of creation thereof, or that is extendible or renewable at the option of any party thereto to a date more than one year from the date of creation thereof (whether or not renewed or extended).

“Goodwill” shall mean unidentified intangibles which have been created in connection with an acquisition transaction.

“Holder” shall mean, at any time, the registered holder of a Debenture.

“Indebtedness” shall mean all indebtedness, liabilities and other obligations, direct or contingent (other than deferred income taxes and other credits, outside minority interests and items of Stockholders’ Equity) which would, in accordance with generally accepted accounting principles, be classified upon the consolidated balance sheet of the Bank as liabilities, but in any event including without limitation:

(1)all guarantees, other than guarantees on secured indebtedness;

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(2)all indebtedness, liabilities and other obligations arising under any conditional sale or other title retention agreement, whether or not the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property; provided, however, that the terms “Funded Indebtedness” and “Indebtedness” shall not include any obligation of the Bank or of any Subsidiary incurred in the ordinary course of its business, with respect to:

(a)any deposits with it or funds collected by it;

(b)any banker’s acceptance or letter of credit issued by it;

(c)any check, note, certificate of deposit, money order, traveler’s check, draft or bill of exchange issued, accepted or endorsed by it;

(d)any discount with, borrowing from, or other obligation to any Federal Reserve Bank, the FDIC or any Federal Home Loan Bank (or successor organization) which discount or borrowing is in the ordinary course of its banking business and not incurred in connection with any unusual or extraordinary “rescue loan” by such Federal Reserve Bank, the FDIC or the Federal Home Loan Bank (or successor organization) to the Bank in connection with a business to be acquired by the Bank or any Subsidiary;

(e)any agreement, made by it in the ordinary course of its banking business, to purchase or repurchase securities, loans or federal funds, or to participate in any such purchase or repurchase;

(f)any transaction made by it in the ordinary course of its banking business in the nature of any extension of credit, whether in the form of a commitment, guarantee or otherwise, undertaken by it for the account of a third party with the application by it of the same banking considerations and legal lending limits that would be applicable if the transaction were a loan to such party;

(g)any transaction in which it acts solely in a fiduciary or agency capacity;

(h)other obligations incurred by it in the ordinary course of its banking, mortgage banking or trust business to its customers solely in their capacities as such;

(i)any other liability or obligation of any Subsidiary incurred in the ordinary course of its banking business not involving any obligation for borrowed money;

(j)Capitalized Leases;

(k)any borrowing under mortgage warehousing lines of credit, including, without limitation, commercial paper and medium term note programs for the purpose of funding or carrying mortgage loans;

(l)any borrowings under any revolving line of credit with a maturity date of less than one year up to an aggregate amount at any time outstanding equal to 30% of Consolidated Net Worth;

(m)drafts outstanding or official bank checks outstanding used to fund mortgage loan volume;

(n)indebtedness ranking junior to the Debentures in right of payment or on liquidation;

provided, however, that notwithstanding the foregoing, Indebtedness shall not be deemed to include the guaranty by the Bank of any secured Indebtedness of any Subsidiary which is permitted to be incurred pursuant to subsection 2(d) of this definition of Indebtedness.

“IRC” shall mean the Internal Revenue Code of 1986, together with all rules and regulations promulgated pursuant thereto, as amended from time to time.

“Lien” shall mean any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property (for purposes of this definition, the “Owner”), whether such interest is based on the common law, statute or contract, and includes but is not limited to

13

(a)the security interest arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes, and the filing of any financing statement under the Uniform Commercial Code’ of any jurisdiction, or an agreement to give any of the foregoing,

(b)reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting real property,

(c)stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements affecting the Owner’s rights in stock owned by the Owner, and

(d)any interest in any Property held by the Owner evidenced by a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to such Property has been retained by or vested in some other Person for security purposes.

“Material Adverse Effect” shall mean a material adverse effect on (i) the business operations, profits, financial condition or Properties of the Bank and the Subsidiaries, taken as a whole, (ii) the ability of the Bank to perform its obligations set forth herein and in the Debentures, or (iii) the validity or enforceability of this Agreement or the Debentures.

“Offerings” shall mean the exchange of each share of common stock of the Bank for three shares of the Company’s common stock and the offering and selling to the public of 2,500,000 additional shares of common stock at a proposed offering price of $7.00 to $9.00 per share.

“OTS” shall mean the federal Office of Thrift Supervision and any Person succeeding to the functions thereof.

“Person” shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

“Private Placement Memorandum” shall mean the offering document pursuant to which the Debentures are being offered.

“Properties” shall mean any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

“Securities Position List” shall mean the securities position list of the Depository listing the Persons that have a Beneficial Interest in the Global Debenture and the amount of such Beneficial Interest.

“Senior Financial Officer” shall mean anyone of the chief financial officer and the principal accounting officer of the Bank.

“Stockholders’ Equity”, “General Valuation Allowance for Loan Losses”, “Consolidated Assets”, “Net Income” and “Consolidated Net Loss” shall be defined according to generally accepted accounting principles applicable to the Bank and in effect on the date the Debentures are issued.

“Subsidiary” shall mean: any entity (i) that is organized under the laws of the United States of America or any state thereof or the District of Columbia and (ii) of which at least 50% (by number of votes) of the voting stock of such entity and all outstanding shares of preferred stock, all outstanding securities convertible into or exchangeable for shares of capital stock and all outstanding warrants, rights or options to purchase shares of capital stock of such entity are owned directly by the Bank or by another Subsidiary.

11.  MISCELLANEOUS

11A.Paying Agent. The Bank shall appoint a Person with an office or agency located in the continental United States (the “Paying Agent”) where Debentures may be presented for payment. The Bank appoints, as of the Closing Date, Chemical Trust Company of California, as Paying Agent, with an office at 101 California Street, Suite 2725, San Francisco, CA 9411 I, and may thereafter appoint successor Paying Agents or co-Paying Agents, from time to time, all of which will for purposes hereof be deemed to be Paying Agents. The Bank shall enter into appropriate written agreements with each Paying Agent (other than the Bank) reflecting

14

the relevant terms of the relationship with each Paying Agent. All fees and expenses of the Paying Agent shall be paid by the Bank.

On or before 9:00 a.m. (local time of the Paying Agent) on each due date of principal or interest on any Debenture and each due date, if any, of any other amount payable in respect of the Debentures, the Bank shall deposit by federal funds wire transfer in immediately available funds (or its equivalent) with the Paying Agent, a sum sufficient to pay the amounts then due. The Bank shall require each Paying Agent (other than the Bank) to agree in writing that the Paying Agent will hold in trust for the ratable benefit of the Holders all moneys held by the Paying Agent for the payment of principal or interest (and any other amount that may be due) on the Debentures. So long as the Bank acts as Paying Agent, it shall segregate and hold as a separate trust fund all amounts held by it as Paying Agent. The Paying Agent shall promptly notify each of the Holders of any failure by the Bank to deposit any moneys at the times and dates, and in the amounts, required hereby.

11B.Debenture Payments.

(i)Manner of Payment. The Bank shall pay, or cause the Paying Agent to pay, all amounts payable to the Purchasers in accordance with their instructions or with respect to the Global Debenture in accordance with the instructions of the Depository. In the absence of written directions, all amounts payable with respect to any Debenture shall be paid by check mailed and addressed to the Holder of the Debenture at the address shown in the records of Holders maintained by the Bank or the Paying Agent, as the case may be.

(ii) Payments Due on Holidays. If any payment due on, or with respect to, any Debenture shall fall due on a day other than a Business Day, then such payment shall be made, in the same amount without adjustment, on the first Business Day following the day on which such payment shall have so fallen due, with the same force and effect as if made on the day the payment became due, and, if so paid, no interest shall accrue for the period after such payment date.

11C.Survival of Representations and Warranties: Entire Agreement. All representations and warranties contained herein or made in writing by or on behalf of the Bank in connection herewith shall survive the execution and delivery of this Agreement and the Debentures, the transfer by you of any Debenture or portion thereof or interest therein and the payment of any Debenture, and may be relied upon by any subsequent purchaser, regardless of any investigation made at any time by or on behalf of you or any subsequent purchaser. Subject to the preceding sentence, this Agreement and the Debentures embody the entire agreement and understanding between you and the Bank and supersede all prior agreements and understandings relating to the subject matter hereof.

11D.Exchange of Debentures for Debentures of Holding Company. At any time prior to maturity of the Debentures as defined therein the Bank may substitute in its place as obligor on the Debentures and as a party to this Purchase Agreement a holding company (“Holding Company”) that owns substantially all of the issued and outstanding common stock of the Bank, as follows:

(i)No less than ten days prior to such substitution, the Bank shall provide notice to you in accordance with Section IIF hereof that it intends to substitute the Holding Company for the Bank and the date of such substitut’f64 (“Substitution Date”). The notice shall (i) include the name and address of the Holding Company_ (ii) be executed by the Chief Executive Officers of the Bank and the Holding Company, (iii) affirm on behalf of the Holding Company the provisions of paragraph 7 of this Purchase Agreement and (iv) enclose an opinion of the Holding Company’s counsel with respect to the Holding Company substantially in the Form of Exhibit B attached hereto.

(ii)On the Substitution Date without further action the Holding Company shall become the issuer of the Debentures and a party to the Purchase Agreement in place of the Bank. All obligations of and references to the Bank in and with respect to the Debentures and this Purchase Agreement shall become obligations of and references to the Holding Company, provided that the last reference to Bank in paragraph 6A(vii) shall continue to be a reference to the Bank.

11E.Successors and Assigns. All covenants and other agreements in this Agreement contained by or on behalf of either of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Beneficial Holder) whether so expressed or not.

11F.Notices. All written communications provided for hereunder shall be sent by first class mail or nationwide overnight delivery service (with charges prepaid) and (i) if to you, addressed to you at the address specified for such communications in the Purchaser Schedule attached hereto, or at such other address as you shall have specified to the Bank in writing, (ii) if to any other Holder of any Debenture, addressed to such other Holders at such address as such other Holders shall have specified to the Bank in writing or, if any such other Holders shall not have so specified an address to the Bank, then addressed to such other Holder in care

15

of the last Holder of such Debenture which shall have so specified an address to the Bank, and (iii) if to the Bank, addressed to it at Life

Savings Bank, Federal Savings Bank, 4110 Tigris Way, Riverside, California 92503, Attention: Daniel L. Perl, Chief Executive Officer or at such other address as the Bank shall have specified to the Holder of each Debenture in writing.

11G.Descriptive Headings. The descriptive headings of the several Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

11H.Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Delaware.

11I. Counterparts. This Agreement may be executed simultaneously in two or more’ counterparts, each of which shall be deemed an original.

If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed counterpart of this letter and return the same to the Bank, whereupon this letter shall become a binding agreement between you and the Bank.

	Very truly yours,
	By:
	Title
Accepted:

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EXHIBIT A

[FORM OF DEBENTIJRE]

THIS DEBENTIJRE IS A GLOBAL DEBENTIJRE WITHIN THE MEANING OF THE DEBENTIJRE PURCHASE AGREEMENT HEREIN AFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), OR A NOMINEE THEREOF. THIS GLOBAL DEBENTIJRE MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A DEBENTIJRE REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, AND MAY NOT BE TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DEBENTIJRE PURCHASE AGREEMENT. UNLESS THIS DEBENTIJRE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO LIFE SAVINGS BANK, FEDERAL SAVINGS BANK (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER., EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS DEBENTURE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OR DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS DEBENTURE IS NOT A SAVINGS ACCOUNT OR A DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY OR FUND OF THE UNITED STATES.

ABSENT PRIOR WRITTEN APPROVAL BY THE OFFICE OF THRIFT SUPERVISION, THIS SECURITY IS NOT ELIGIBLE FOR PURCHASE BY ANY SAVINGS ASSOCIATION OR A CORPORATE AFFILIATE THEREOF, EXCEPT THAT THIS SECURITY MAY BE PURCHASED BY A CORPORATE AFFILIATE OF THE ISSUER OR BY ANY DIVERSIFIED SAVINGS AND LOAN HOLDING COMPANY AND ANY NON-SAVINGS ASSOCIATION SUBSIDIARY THEREOF.

THIS DEBENTURE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). (A) THE HOLDER HEREOF, BY PURCHASING THIS DEBENTURE ACKNOWLEDGES THAT THE DEBENTURES CONSTITIJTE “RESTRICTED SECURITIES” AND AGREES FOR THE BENEFIT OF THE BANK THAT THIS DEBENTURE MAYBE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE BANK, (2) SO LONG AS SUCH DEBENTURES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHOM THE SELLER REASONABL Y BELIEVES IS A “QUALIFIED INSTITIJTIONAL BUYER”, AS DEFINED IN RULE 144A (A “QIB”), THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURSUANT TO ANOTHER A V AILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (4) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES; (B) THE PURCHA”SER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF DEBENTURES FROM SUCH HOLDER OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE IF THEN RESTRICTIONS ON TRANSFER AND THE REQUIREMENTS OF THE EXEMPTION FROM REGISTRATION RELIED UPON BY THE TRANSFEROR (WHICH EXEMPTION SHALL BE SPECIFIED IN THE CONFIRMATION), TOGETHER WITH, IN THE CASE OF A TRANSFER UNDER CLAUSE (3) ABOVE, SUCH CERTIFICATES, LEGAL OPINIONS, OR OTHER INFORMATION AS THE BANK MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REG ISTRA TION REQUIREMENTS OF THE SECURITIES ACT. BY PURCHASING THIS DEBENTURE THE HOLDER HEREOF AGREES AND REPRESENTS FOR THE BENEFIT OF THE BANK THAT THE HOLDER WILL NOTIFY ANY PURCHASER OF THIS DEBENTURE FROM THE HOLDER OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

LIFE SAVINGS BANK, FEDERAL SAVINGS BANK

13’li% SUBORDINATED DEBENTURE DUE March 15,2004

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$10,000,000

CUSIP NUMBER: N/A

FOR VALUE RECEIVED, the undersigned, LIFE SAVINGS BANK, FEDERAL SAVINGS BANK (herein called the “Bank”), a federally chartered savings bank hereby promises to pay to Cede & Co., as nominee for the Depository Trust Company, or registered assigns the principal sum of                                                  on March 15, 2004 (“Maturity”) (unless earlier paid upon acceleration), with interest (computed on the basis of a 360-day year comprised of 12 30 day months) on the unpaid balance thereof at the rate of 13Y2% per annum from the date hereof, payable semiannually on the 15th day of March and September in each year (each, an “Interest Payment Date”), commencing with the September IS next succeeding the date hereof, until the principal hereof shall have become due and payable.

In any case where the applicable Interest Payment Date or Maturity with respect hereto, as the case may be, does not fall on a Business Day, payment of principal or interest otherwise payable on such day need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or at Maturity and no interest shall accrue with respect to such payment for the period from and after the Interest Payment Date or such Maturity, as the case may be, to the date of payment.

This Global Debenture is issued pursuant to a Debenture Purchase Agreement, dated as of March 12, 1997 (the “Debenture Purchase Agreement”) between the Bank and the respective original purchasers of the Debentures named in the Purchasers Schedule attached thereto and is entitled to the benefits thereof. All provisions, including without limitation paragraphs 4,5,6,9, 1 1 (a) and I 1 (d), of the Debenture Purchase Agreement and obligations of the Bank thereunder are incorporated herein by this reference. To the extent not defined in this Debenture, all capitalized terms shall have the meaning set forth in the Debenture Purchase Agreement.

The Debentures (including all of the obligations of the Bank hereunder) are direct, unconditional obligations of the Bank and rank without preference or priority among themselves and at least pari passu with all other existing and future unsecured and subordinated indebtedness of the Bank. The Debentures are subordinated on liquidation, as to principal, interest, and premium, if any, to all claims (including post-default interest) against the Bank having the same priority as savings account holders or any higher priority, are unsecured by the assets of the Bank, or any of its affiliates, and are not eligible as collateral for any loan by the Bank.

The Debentures will not be subject to any sinking fund and will not be redeemable or “repayable prior to September 15, 1998. Thereafter, upon notification of redemption by the Bank, the Debenture to be redeemed shall be surrendered for payment within 30 days of such notification and such Debenture shall continue to earn interest through the date of such surrender but not after the expiration of such 30 day period.

Payments of principal, premium, if any, and interest are to be made in lawful money of the United States of America in the manner provided for in the Debenture Purchase Agreement.

No voluntary prepayment of principal shall be made and no payment of principal shall be accelerated without the approval of the OTS if the Bank is failing to meet its regulatory capital requirements under Part 567 of the OTS regulations or if after giving effect to such payment the Bank would fail to meet such regulatory requirements.

In case an Event of Default, as defined in the Debenture Purchase Agreement, shall occur and be continuing, the principal of this Debenture may be declared or otherwise become due and payable in the manner and with the effect provided in the Debenture Purchase Agreement.

The Debenture Purchase Agreement permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Bank and the rights of Holders of the Debentures to be affected thereby by the Bank with the consent of the Bank and the Beneficial Holders of 51 % of the aggregate principal amount of Debentures at the time outstanding. The Debenture Purchase Agreement also contains provisions permitting the Beneficial Holders of 51 % in principal amount of the outstanding Debentures to waive compliance by the Bank with certain provisions of the Debenture Purchase Agreement. Any such consent or waiver by or on behalf of the Holder of this Debenture shall be conclusive and binding upon Debenture issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Debenture.

Neither the Bank nor any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Debenture or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

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No provision of this Debenture or of the Debenture Purchase Agreement shall alter or impair the obligations of the Bank, which are absolute and unconditional, to pay the principal of and interest on this Debenture at the time, place, and rate herein prescribed, provided, that at any time prior to maturity of the Debentures the Bank may in accordance with Section 11 D of the Purchase Agreement substitute in its place as obligor on the Debentures and as a party to the Purchase Agreement a holding company that owns substantially all of the issued and outstanding common stock of the Bank.

No recourse shall be had for the payment of the principal of or interest on this Note, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, stockholder, officer or director, as such, past, present, or future, of the Bank or of any successor at law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

Under 12 U.S.C. 1828(b) the Bank shall not pay interest on its capital notes or debentures (if such interest is required to be paid only out of profits) or distribute any of its capital assets while it remains in default in the payment of any assessment due the Federal Deposit Insurance Corporation.

Notwithstanding anything to the contrary in this certificate (or in any related document); (A) if the FDIC shall be appointed receiver for the issuer of this certificate (the “issuer”), and in its capacity as such shall cause the issuer to merge with or into another financial institution, or in such capacity shall sell or otherwise convey part or all of the assets of the issuer to another financial institution or shall arrange for the assumption ‘of less than all of the liabilities of the issuer by one or more other financial institutions, the FDIC shall not have any obligation, either in its capacity as receiver or in its corporate capacity, to contract for or to otherwise arrange for the assumption of the obligation represented by this certificate in whole or in part by any financial institution or institutions which results from any such merger or which has purchased or otherwise acquired from the FDIC as receiver for the issuer, any of the assets of the issuer, or which, pursuant to any arrangement with the FDIC, has assumed less than all of the liabilities of the issuer. To the extent that obligations represented by this certificate have not been assumed in full by a financial institution with or into which the issuer may have been merged, as described in this subparagraph (A), and/or by one or more financial institutions which have succeeded to all or a portion of the assets of the issuer, or which have assumed a portion but not all of the liabilities of the issuer as a result of one or more transactions entered into by the FDIC as receiver for the issuer, then the holder of this certificate shall be entitled to payments on this obligation in accordance with the procedures and priorities set forth in any applicable receivership regulations or in orders of the FDIC relating to such receivership. (B) In the event that the obligation represented by this certificate is assumed in full by another financial institution, which shall succeed by merger or otherwise to substantially all of the assets and the business of the issuer, or which shall be arrangement with the FDIC assume all or portion of the liabilities of the issuer, and payment or provision for payment shall have been made in respect of all matured installments of interest upon the certificates together with all matured installments of principal on such certificates which shall have become due otherwise than by acceleration, then any default caused by the appointment of a receiver for the issuer shall be deemed to have been cured, and any declaration consequent upon such default declaring the principal and interest on the certificate to be immediately due and payable shall be deemed to have been rescinded. (C) This security is not eligible to be purchased or held by any savings association or corporate affiliate thereof except that this security may be purchased or held by a corporate affiliate of the issuer or by a diversified savings and loan holding company and its non-savings association subsidiaries. The issuer of this security may not recognize on its transfer books any transfer made to a savings association or any corporate affiliate thereof (except as provided in the preceding sentence) and will not be obligated to make any payments of principal or interest on this security if the owner of this security is a savings association or any corporate affiliate thereof (except as provided in the preceding sentence).

This Debenture shall be construed and enforced in accordance with the law of the State of Delaware.

By:

President and Chief Executive Officer

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March 12, 1997

Address

Dear Sirs:

We have acted as counsel for Life Savings Bank, Federal Savings Bank (the “Company”) in connection with the Agreement, dated as of                                between the Company and each of you (the “Debenture Purchase Agreement”), pursuant to which the Company has issued to you today Subordinated Debentures of the Company due March 15, 2004 in the aggregate principal amount of $10,000,000. All terms used herein that are defined in the Debenture Purchase Agreement and not otherwise defined herein have the respective meanings specified in the Debenture Purchase Agreement.

In this connection, we have examined such certificates of public officials, certificates of officers of the Company and copies certified to our satisfaction of corporate documents and records of the Company and of other papers, and have made such other investigations, as we have deemed relevant and necessary as a basis for our opinion hereinafter set forth. We have relied upon such certificates of public officials and of officers of the Company with respect to the accuracy of material factual matters contained therein which were not independently established.

In the course of our examinations and investigations, we assumed without independent investigation the genuineness of all signatures, the authenticity of all items submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. the due authorization of all documents by all parties other than the Company, the taking of all requisite action respecting such documents, the due execution and delivery of such documents by each such other party, and that all agreements of such other parties are legal, valid and binding with respect to such other parties.

Based on the foregoing it is our opinion that:

1.The Company is a federal savings bank validly existing and in good standing under the laws of the United States. Each material Subsidiary is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation. The Company and its material subsidiaries have the corporate power to carry on their respective businesses as now being conducted.

2.The Debentures have been duly authorized by the Company and when delivered and paid for by the Purchasers in accordance with terms of the Debenture Purchase Agreement, the Debentures will constitute the legal, valid and binding obligations of the Company.

3.To the best of our knowledge, there are no pending legal or governmental proceedings that are material to the operations of the Company and its Subsidiaries, taken as a whole, which are not described or referred to in the Private Placement Memorandum.

4.No consent, approval, authorization, order, decree, registration or qualification of or filing with any court or governmental authority or agency is necessary or required for the performance by the Company of is obligations under the Debenture Purchase Agreement, except such as may be required by securities or Blue Sky laws as to which we render no opinion.

5.To the best of our knowledge, the execution, delivery and performance by the Company of the Debenture Purchase Agreement and the consummation of the transactions contemplated therein will not in any material respect conflict with or constitute a breach of any applicable law or any rule, administrative regulation, judgment or order of any governmental agency or body or any administrative or court decree thereof or any material contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company is a party or by which it may be bound,

Our opinions expressed above are subject to the following qualifications:

A.The opinions are limited in all respects to matters governed by the laws of the State of Delaware and by the Federal laws of the United States of America.

B.With respect to opinions made to the “best of our knowledge” or any phrase having equivalent wording, we are referring solely to the conscious awareness of facts or other information, without independent investigation, by attorneys in our firm who had actual substantive involvement in the transactions relating to the issuance of the Debentures and the preparation of the Debenture Purchase Agreement and related documents.

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C.The opinions are qualified to the extent that the legal, valid and binding status of the Debentures and of any provisions in the Debenture Purchase Agreement may be subject to and affected by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally or the rights of creditors of holding companies of depositary institutions the accounts of which are insured by the FDIC, and we have assumed that (i) if any Beneficial Holder or other holder of Debentures (a “Holder”) is a foreign corporation which has not qualified to transact intrastate business in the State of California, at all relevant times such Holder is not delinquent in the payment of any California franchise or income taxes, or any interest thereon, required of corporations transacting such business in the State of California, and has not failed to file any related California tax return and (ii) if any Holder is a California corporation or a foreign corporation which has qualified to transact interstate business in the State of California, its right to transact such business in the State of California is not at any relevant time suspended or terminated by reason of its failure to pay any such taxes, interest, or any penalty imposed by the California Franchise Tax Board, or to file such a return.

D.The opinions are subject to the application of general principles of equity (whether enforceability is considered in a proceeding in equity or at law) including, without limitation, the right to specific performance, and, thus a court might not enforce certain covenants or allow acceleration of the due date of the Debentures if it concludes that such enforcement or acceleration would be unreasonable or not undertaken in good faith under the then-existing circumstances.

The opinions expressed above are given as of the date hereof. We assume no duty to communicate with you with respect to any matter which comes to our attention hereafter. This opinion is solely for your benefit, and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent.

Very truly yours,

Muldoon, Murphy & Faucette

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EX-10.8

EXHIBIT 10.8

LOGO

STANDARD OFFER, AGREEMENT AND ESCROW

INSTRUCTIONS FOR PURCHASE OF REAL ESTATE

(Non-Residential)

American Industrial Real Estate Association

April 3, 2002

(Date for Reference Purposes)

1.     Buyer.

1.1               Life Bank, a federal savings bank    , (“Buyer”) hereby offers to purchase the real property, hereinafter described, from the owner thereof (“Seller”) (collectively, the “Parties” or individually a “Party”), through an escrow (“Escrow”) to close     10 days after satisfaction of the contingencies in paragraph 9     (“Expected Closing Date”) to be held by     Chicago Title Insurance Company     (“Escrow Holder”) whose address is     16969 Von Karman, Irvine, California 92606    , Phone No.        (949) 263-0126    , Facsimile No.     (949) 263-0356     upon the terms and conditions set forth in this agreement (“Agreement”). Buyer shall have the right to assign Buyer’s rights hereunder, but any such assignment shall not relieve Buyer of Buyer’s obligations herein unless Seller expressly releases Buyer.

1.2           The term “Date of Agreement” as used herein shall be the date when by execution and delivery (as defined in paragraph 20.2) of this document or a subsequent counteroffer thereto, Buyer and Seller have reached agreement in writing whereby Seller agrees to sell, and Buyer agrees to purchase, the Property upon terms accepted by both Parties.

2.     Property.

2.1           The real property (“Property”) that is the subject of this offer consists of (insert a brief physical description) approximately 1.6184 acres improved with an approximate 37,879 gross square foot building      is located in the City of      Costa Mesa    , County of      Orange     , State of     California     , is commonly known by the street address of     1620A Sunflower      and is legally described as:     Sunflower Corporate Center    .

2.2           If the legal description of the Property is not complete or is inaccurate, this Agreement shall not be invalid and the legal description shall be completed or corrected to meet the requirements of     Chicago Title Insurance Company     (“Title Company”), which shall issue the title policy hereinafter described.

2.3           The Property includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which pursuant to applicable law are a part of the property, as well as the following items, if any, owned by Seller and at present located on the Property: electrical distribution systems (power panel, bus ducting, conduits, disconnects, lighting fixtures); telephone distribution systems (lines, jacks and connections only); space heaters; heating, ventilating, air conditioning equipment (“HVAC”); air lines; fire sprinkler systems; security and fire detection systems; carpets; window coverings; wall coverings (collectively, the “Improvements”).

2.4           Not applicable

2.5           Except as provided in Paragraph 2.3, the Purchase Price does not include Seller’s personal property, furniture and furnishings, and                                                                     all of which shall be removed by Seller prior to Closing.

3.     Purchase Price.

3.1           The purchase price (“Purchase Price”) to be paid by Buyer to Seller for the Property shall
be      $4,215,000       payable as follows:

(a)	Cash down payment, including the Deposit as defined in paragraph 4.3 (or if an all cash transaction, the Purchase Price):	$	4,215,000
(b)	Not applicable
(c)	Not applicable
(d)	Not applicable
	Total Purchase Price:	$	4,215,000

3.2           Not applicable

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4.     Deposits.

4.1           ý Buyer shall deliver to Escrow Holder a check in the sum of     $100,000     when both Parties have executed this Agreement and the executed Agreement has been delivered to Escrow Holder. When cashed, the check shall be deposited into the Escrow’s trust account to be applied toward the Purchase Price of the Property at the Closing. Should Buyer and Seller not enter into an agreement for purchase and sale, Buyer’s check or funds shall, upon request by Buyer, be promptly returned to Buyer.

4.2           Additional deposits:

                (b)           Within 15 business days after the contingencies discussed in paragraph 9.1 (a) through (k) are approved or waived, Buyer shall deposit with Escrow Holder the additional sum of    $100,000     to be applied to the Purchase Price at the Closing.

4.3           Escrow Holder shall deposit the funds deposited with it by Buyer pursuant to paragraphs 4.1 and 4.2 (collectively the “Deposit”), in a State or Federally chartered bank in an interest bearing account whose term is appropriate and consistent with the timing requirements of this transaction. The interest therefrom shall accrue to the benefit of Buyer, who hereby acknowledges that there may be penalties or interest forfeitures if the applicable instrument is redeemed prior to its specified maturity. Buyer’s Federal Tax Identification Number is ______________. NOTE: Such interest bearing account cannot be opened until Buyer’s Federal Tax Identification Number is provided.

5.     Not applicable

6.     Not applicable

7.     Real Estate Brokers.

7.1           The following real estate broker(s) (“Brokers”) and brokerage relationships exist in this transaction and are consented to by the Parties (check the applicable boxes):

ý                     Lee & Associates                                       represents Seller exclusively (“Seller’s Broker”);

ý                      Charter Investment Corporation              represents Buyer exclusively (“Buyer’s Broker”); or

ý                                                                                            represents both Seller and Buyer (“Dual Agency”).

The Parties acknowledge that Brokers are the procuring cause of this Agreement. See paragraph 24 for disclosures regarding the nature of a real estate agency relationship. Buyer shall use the services of Buyer’s Broker exclusively in connection with any and all negotiations and offers with respect to the Property for a period of 1 year from the Date of Agreement.

7.2           Buyer and Seller each represent and warrant to the other that he/she/it has had no dealings with any person, firm, broker or finder in connection with the negotiation of this Agreement and/or the consummation of the purchase and sale contemplated herein, other than the Brokers named in paragraph 7.1, and no broker or other person, firm or entity, other than said Brokers is/are entitled to any commission or finder’s fee in connection with this transaction as the result of any dealings or acts of such party. Buyer and Seller do each hereby agree to indemnify, defend, protect and hold the other harmless from and against any costs, expenses or liability for compensation, commission or charges which may be claimed by any broker, finder or other similar party, other than said named Brokers by reason of any dealings or act of the indemnifying Party.

8.     Escrow Closing.

8.1           Upon acceptance hereof by Seller, this Agreement, including any counter-offers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller, but also instructions to Escrow Holder for the consummation of the Agreement through the Escrow, Escrow Holder shall not prepare any further escrow instructions restating or amending the Agreement unless specifically so instructed by the Parties or a Broker herein. Subject to the reasonable approval of the Parties, Escrow Holder may, however, include its standard general escrow provisions.

8.2           As soon as practical after the receipt of this Agreement and any relevant counteroffers, Escrow Holder shall ascertain the Date of Agreement as defined in paragraphs 1.2 and 20.2 and advise the Parties and Brokers, in writing, of the date ascertained.

8.3           Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law and custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code. In the event of a conflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the

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Property is located shall prevail.

8.4           Subject to satisfaction of the contingencies herein described, Escrow Holder shall close this escrow (the “Closing”) by recording a grant deed and the other documents required to be recorded, and by disbursing the funds and documents in accordance with this Agreement.

8.5           Buyer and Seller shall each pay one-half of the Escrow Holder’s charges and Seller shall pay the usual recording fees and any required documentary transfer taxes. Seller shall pay the premium for a standard coverage owner’s or joint protection policy of title insurance.

8.6           Escrow Holder shall verify that all of Buyer’s contingencies have been satisfied or waived prior to Closing. The matters contained in paragraphs 9.1 subparagraphs (b), (c), (d), (e), (g), (i), (n), and (o), 9.4, 9.5, 12, 13, 14, 16, 18, 20, 21, 22 and 24 are, however, matters of agreement between the Parties only and are not instructions to Escrow Holder.

8.7           If this transaction is terminated for non-satisfaction and non-waiver of a Buyer’s Contingency, as defined in paragraph 9.2, then neither of the Parties shall thereafter have any liability to the other under this Agreement, except to the extent of a breach of any affirmative covenant or warranty in this Agreement. In the event of such termination, Buyer shall be promptly refunded all funds deposited by Buyer with Escrow Holder, less only Title Company and Escrow Holder cancellation fees and costs, all of which shall be Buyer’s obligation.

8.8           The Closing shall occur on the Expected Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and said Date is not extended by mutual instructions of the Parties, a Party not then in default under this Agreement may notify the other party, Escrow Holder, and Brokers, in writing that, unless the Closing occurs within 5 business days following said notice, the Escrow shall be deemed terminated without further notice or instructions.

8.9           Except as otherwise provided herein, the termination of Escrow shall not relieve or release either Party from any obligation to pay Escrow Holder’s fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements, covenants or warranties contained therein.

8.10         If this Escrow is terminated for any reason other than Seller’s breach or default, then at Seller’s request, and as a condition to the return of Buyer’s deposit, Buyer shall within 5 days after written request deliver to Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. Provided, however, that Buyer shall not be required to deliver any such report if the written contract which Buyer entered into with the consultant who prepared such report specifically forbids the dissemination of the report to others.

9.     Contingencies to Closing.

9.1           The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies. IF BUYER FAILS TO NOTIFY ESCROW HOLDER, IN WRITING, OF THE DISAPPROVAL OF ANY OF SAID CONTINGENCIES WITHIN THE TIME SPECIFIED THEREIN, IT SHALL BE CONCLUSIVELY PRESUMED THAT BUYER HAS APPROVED SUCH ITEM, MATTER OR DOCUMENT. Buyer’s conditional approval shall constitute disapproval, unless provision is made by the Seller within the time specified therefore by the Buyer in such conditional approval or by this Agreement, whichever is later, for the satisfaction of the condition imposed by the Buyer. Escrow Holder shall promptly provide all Parties with copies of any written disapproval or conditional approval which it receives. With regard to subparagraphs (a) through (i) the pre-printed time periods shall control unless a different number of days is inserted in the spaces provided.

(a)           Not applicable

(b)           Physical Inspection.     Buyer has 20 business days from the Date of Agreement to satisfy itself with regard to the physical aspects and size of the Property.

(c)           Hazardous Substance Conditions Report.     Buyer has 20 business days from the Date of Agreement to satisfy itself with regard to the environmental aspects of the Property. Seller recommends that Buyer obtain a Hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Any such report shall be paid for by Buyer. A “Hazardous Substance” for purposes of this Agreement is defined as any substance whose nature and/or quantity of existence, use, manufacture, disposal or effect, render it subject to Federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare. A “Hazardous Substance Condition” for purposes of this Agreement is defined as the existence on, under or relevantly adjacent to the Property of a Hazardous Substance that would require remediation and/or removal under applicable Federal, state or local law.

(d)           Soil Inspection.     Buyer has 20 business days from the Date of Agreement, whichever is later, to satisfy itself with regard to the condition of the soils on the Property. Seller recommends that Buyer obtain a soil test report. Any such report shall be paid for by Buyer. Seller shall provide Buyer copies of any soils report that Seller may have within 10 days of the Date of Agreement.

(e)           Governmental Approvals.     Buyer has 20 business days from the Date of Agreement to satisfy itself with regard to approvals and permits from governmental agencies or departments which have or may have jurisdiction over the Property and which Buyer deems necessary or desirable in connection with its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped and Americans with Disabilities Act requirements, transportation and environmental matters.

(f)            Conditions of Title.     Escrow Holder shall cause a current commitment for title insurance (“Title Commitment”) concerning the Property Issued by the Title Company, as well as legible copies of all documents referred to in the Title Commitment (“Underlying Documents”) to be delivered to Buyer within 10 days following the Date of Agreement. Buyer has 10 days from the receipt of the Title Commitment and Underlying Documents to satisfy itself with regard to the condition of title. The disapproval of Buyer of any monetary encumbrance, which by the terms of this Agreement is not to remain against the Property after the Closing, shall not be considered a failure of this contingency, as Seller shall have the obligation, at Seller’s expense, to satisfy and remove such disapproved monetary encumbrance at or before the Closing.

(g)           Survey.     Buyer has 10 days from the receipt of the Title Commitment and Underlying Documents to satisfy itself with regard to any ALTA title supplement based upon a survey prepared to American Land Title Association ("ALTA") standards for an owner's policy by a licensed surveyor, showing the legal description and boundary lines of the Property, any easements of record, and any improvements, poles, structures and things located within 10 feet of either side of the Property boundary lines. Any such survey shall be prepared at Buyer's direction and expense. If Buyer has obtained a survey and approved the ALTA title supplement, Buyer may elect within the period allowed for Buyer's approval of a survey to have an ALTA extended coverage owner's form of title policy, in which event Buyer shall pay any additional premium attributable thereto.

(h)           Not applicable

(i)            Other Agreements.     Seller shall within 10 or           days of the Date of Agreement provide Buyer with legible copies of all other agreements ("Other Agreements") known to Seller that will affect the Property after Closing. Buyer has 10 days from the receipt of said Other Agreements to satisfy itself with regard to such Agreements.

(j)            Not applicable

(k)           Not applicable

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(l)            Not applicable

(m)          Destruction, Damage or Loss.     There shall not have occurred prior to the Closing, a destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure. If the cost of repair or cure is $10,000.00 or less, Seller shall repair or cure the loss prior to the Closing. Buyer shall have the option, within 10 days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to either terminate this transaction or to purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price. If the cost to repair or cure is more than $10,000.00, and Buyer does not elect to terminate this transaction, Buyer shall be entitled to any insurance proceeds applicable to such loss and any applicable deductible under the policy not to exceed $10,000. Unless otherwise notified in writing, Escrow Holder shall assume no such destruction, damage or loss has occurred prior to Closing.

(n)           Material Change.     Buyer shall have 10 days following receipt of written notice of a Material Change within which to satisfy itself with regard to such change. "Material Change" shall mean a change in the status of the use, occupancy, tenants, or condition of the Property that occurs after the date of this offer and prior to Closing. Unless otherwise notified in writing, Escrow Holder shall assume that no Material Change has occurred prior to the Closing.

(o)           Seller Performance.     The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement.

(p)           Warranties.     That each representation and warranty of Seller herein be true and correct as of the Closing. Escrow Holder shall assume that this condition has been satisfied unless notified to the contrary in writing by any Party prior to the Closing.

(q)           Brokerage Fee.     Payment at the Closing of such brokerage fee as is specified in this Agreement or later written instructions to Escrow Holder executed by Seller and Brokers ("Brokerage Fee").

9.2           All of the contingencies specified in subparagraphs (a) through (p) of paragraph 9.1 are for the benefit of, and may be waived by, Buyer, and may be elsewhere herein referred to as "Buyer Contingencies."

9.3           If any Buyer's Contingency or any other matter subject to Buyer's approval is disapproved as provided for herein in a timely manner ("Disapproved Item"), Seller shall have the right within 10 days following the receipt of notice of Buyer's disapproval to elect to cure such Disapproved Item prior to the Expected Closing Date ("Seller's Election"). Seller's failure to give to Buyer within such period, written notice of Seller's commitment to cure such Disapproved Item on or before the Expected Closing Date shall be conclusively presumed to be Seller's Election not to cure such Disapproved Item. If Seller elects, either by written notice or failure to give written notice, not to cure a Disapproved Item, Buyer shall have the election, within 10 days after Seller's Election to either accept title to the Property subject to such Disapproved Item, or to terminate this transaction. Buyer's failure to notify Seller in writing of Buyer's election to accept title to the Property subject to the Disapproved Item without deduction or offset shall constitute Buyer's election to terminate this transaction. Unless expressly provided otherwise herein, Seller's right to cure shall not apply to the remediation of Hazardous Substance Conditions or to the Financing Contingency. Unless the Parties mutually instruct otherwise, if the time periods for the satisfaction of contingencies or for Seller's and Buyer's said Elections would expire on a date after the Expected Closing Date, the Expected Closing Date shall be deemed extended for 3 business days following the expiration of: (a) the applicable contingency period(s), (b) the period within which the Seller may elect to cure the Disapproved Item, or (c) if Seller elects not to cure, the period within which Buyer may elect to proceeds with this transaction, whichever is later.

9.4           Buyer understands and agrees that until such time as all Buyer's Contingencies have been satisfied or waived, Seller and/or its agents may solicit, entertain and/or accept back-up offers to purchase the subject Property.

9.5           The parties acknowledge that extensive local, state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remediation of Hazardous Substances. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Brokers. The Parties acknowledge that they have been advised by Brokers to consult their own technical and legal experts with respect to possible presence of Hazardous Substances on this Property or adjoining properties, and Buyer and Seller are not relying upon any investigation by or statement of Brokers with respect thereto. The Parties hereby assume all responsibility for the impact of such Hazardous Substances upon their respective interests herein.

10.          Documents Required at or before Closing:

10.1         Five days prior to the Closing date Escrow Holder shall obtain an updated Title Commitment concerning the Property from the Title Company and provide copies thereof to each of the Parties.

10.2         Seller shall deliver to Escrow Holder in time for delivery to Buyer at the Closing:

                (a) Grant, duly executed and in recordable form, conveying fee title to the Property to Buyer.

                (b) Not applicable

                (c) Not applicable

                (d) Not applicable

                (e) An affidavit executed by Seller to the effect that Seller is not a "foreign person" within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit in form reasonably satisfactory to Buyer at least 3 business days prior to the  Closing, Escrow Holder shall at the Closing deduct from Seller's proceeds and remit to Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers.

                (f) If the Property is located in California, an affidavit executed by Seller to the effect that Seller is not a "nonresident" within the meaning of California Revenue and Tax Code Section 18662 or successor statutes. If Seller does not provide such affidavit in form reasonably satisfactory to Buyer at least 3 business days prior to the Closing, Escrow Holder shall at the Closing deduct from Seller's proceeds and remit to the Franchise Tax Board such sum as is required by such statute.

                (g) Not applicable

                (h) Not applicable

10.3         Buyer shall deliver to Seller through Escrow:

                (a) The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement shall be deposited by Buyer with Escrow Holder, by federal funds wire transfer, or any other method acceptable to Escrow Holder as immediately collectable funds, no later than 2:00 P.M. on the business day prior to the Expected Closing Date.

                (b) Not applicable

                (c) Not applicable

                (d) Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any Other Agreements.

                (e) Not applicable

                (f) If the Buyer is a corporation, a duly executed corporate resolution authorizing the execution of this Agreement and the purchase of the Property.

10.4         At Closing, Escrow Holder shall cause to be issued to Buyer a standard coverage (or ALTA extended, if elected pursuant to 9.1(g)) owner's form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a Purchase Money Deed of Trust in this transaction, the policy of title insurance shall be a joint protection policy insuring both Buyer and Seller.

IMPORTANT: IN A PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAY BE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING.

11.          Prorations and Adjustments.

11.1         Taxes.     Applicable real property taxes and special assessment bonds shall be prorated through Escrow as of the date of the Closing, based upon the latest tax bill available. The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of events occurring prior to the Closing. Payment of the prorated amount shall be made promptly in cash upon receipt of a copy of any supplemental bill.

11.2         Insurance.     WARNING: Any insurance which Seller maintained will terminate on the Closing. Buyer is advised to obtain appropriate insurance to cover the Property.

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11.3         Not applicable

11.4         Not applicable

11.5         Post Closing Matters.     Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined.

11.6         Not applicable

11.7         Not applicable

12.          Representation and Warranties of Seller and Disclaimers.

12.1         Seller's warranties and representations shall survive the Closing and delivery of the deed for a period of 13 years, and, are true, material and relied upon by Buyer and Brokers in all respects. Seller hereby makes the following warranties and representations to Buyer and Brokers:

(a) Authority of Seller.  Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein, and to perform Seller's obligations hereunder.

(b) Maintenance During Escrow and Equipment Condition At Closing.  Except as otherwise provided in paragraph 9.1(m) hereof, Seller shall maintain the Property until the Closing in its present condition, ordinary wear and tear excepted.

(c) Hazardous Substances/Storage Tanks. Seller has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance, nor of the existence or prior existence of any above or below ground storage tank.

(d) Not applicable

(e) Changes in Agreements.  Prior to the Closing, Seller will not violate or modify any Existing Lease or Other Agreement, or create any new leases or other agreements affecting the Property, without Buyer's written approval, which approval will not be unreasonably withheld.

(f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property, except as disclosed by this Agreement or otherwise in writing to Buyer.

(g) Mechanics' Liens.  There are no unsatisfied mechanics' or materialmens' lien rights concerning the Property.

(h) Actions, Suits or Proceedings.  Seller has no knowledge of any actions, suits or proceedings pending or threatened before any commission, board, bureau, agency, arbitrator, court or tribunal that would affect the Property or the right to occupy or utilize same.

(i) Notice of Changes.  Seller will promptly notify Buyer and Brokers in writing of any Material Change (see paragraph 9.1(n)) affecting the Property that becomes known to Seller prior to the Closing.

(j) Not applicable

(k) No Seller Bankruptcy Proceedings.  Seller is not the subject of a bankruptcy, insolvency or probate proceeding.

(l) Not applicable

12.2         Buyer hereby acknowledges that, except as otherwise stated in this Agreement, Buyer is purchasing the Property in its existing condition and will, by the time called for herein, make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the occupational safety and health laws, Hazardous Substance laws, or any other act, ordinance or law, have been made by either Party or Brokers, or relied upon by either Party hereto.

12.3         In the event that Buyer learns that a Seller representation or warranty might be untrue prior to the Closing, and Buyer elects to purchase the Property anyway then, and in that event, Buyer waives any right that it may have to bring an action or proceeding against Seller or Brokers regarding sale representation or warranty.

12.4         Any environmental reports, soils reports, surveys, and other similar documents which were prepared by third party consultants and provided to Buyer by Seller or Seller's representatives, have been delivered as an accommodation to Buyer and without any representation or warranty as to the sufficiency, accuracy, completeness, and/or validity of said documents, all of which Buyer relies on at its own risk. Seller believes said documents to be accurate, but Buyer is advised to retain appropriate consultants to review said documents and investigate the Property.

13.          Possession.

Possession of the Property shall be given to Buyer at the Closing subject to the rights of tenants under Existing Leases.

14.          Not applicable

15.          Further Documents and Assurances.

The Parties shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for closing as and when required by this Agreement. The Parties agree to provide all further information, and to execute and deliver all further documents, reasonably required by Escrow Holder or the Title Company.

16.          Attorneys' Fees.

If any Party or Broker brings an action or proceeding (including arbitration) involving the Property whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision of judgment. The term "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred.

17. Prior Agreements/Amendments.

17.1         This Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property.

17.2         Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller.

18.          Not applicable

19.          Notices.

19.1         Whenever any Party, Escrow Holder or Brokers herein shall desire to give or serve any notice, demand, request, approval, disapproval or other communication, each such communication shall be in writing and shall be delivered personally, by messenger or by mail, postage prepaid, to the address set forth in this Agreement or by facsimile transmission.

19.2         Service of any such communication shall be deemed made on the date of actual receipt if personally delivered. Any such communication sent by regular mail shall be deemed given 48 hours after the same is mailed. Communications sent by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed delivered 24 hours after delivery of the same to the Postal Service or courier. Communications transmitted by facsimile transmission shall be deemed delivered upon telephonic confirmation of receipt (confirmation report from fax machine is sufficient), provided copy is also delivered via delivery or mail. If such communication is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the

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next business day.

19.3         Any Party or Broker hereto may from time to time, by notice in writing, designate a different address to which, or a different person or additional persons to whom, all communications are thereafter to be made.

20.          Duration of Offer.

20.1         Not applicable

20.2         The acceptance of this offer, or of any subsequent counteroffer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party or either Broker herein of a duly executed writing unconditionally accepting the last outstanding offer or counteroffer.

21.          Not applicable

22.          Not applicable

23.          Miscellaneous.

23.1         Binding Effect.     This Agreement shall be binding on the Parties without regard to whether or not paragraphs 21 and 22 are initialed by both of the Parties. Paragraphs 21 and 22 are each incorporated into this Agreement only if initialed by both Parties at the time that the Agreement is executed.

23.2         Applicable Law.     This Agreement shall be governed by, and paragraph 22.3 is amended to refer to, the laws of the state in which the Property is located.

23.3         Time of Essence.     Time is of the essence of this Agreement.

23.4         Counterparts.     This Agreement may be executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement.

23.5         Waiver of Jury Trial.    THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOVLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

23.6         Conflict.     Any conflict between the printed provision of this Agreement and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

24.          Disclosures Regarding The Nature of a Real Estate Agency Relationship.

24.1         The Parties and Brokers agree that their relationship(s) shall be governed by the principles set forth in the applicable sections of the California Civil Code, as summarized in paragraph 24.2.

24.2         When entering into a discussion with a real estate agent regarding a real estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seller acknowledge being advised by the Brokers in this transaction, as follows;

(a)  Seller's Agent.  A Seller's agent under a listing agreement with the Seller acts as the agent for the Seller only. A Seller's agent or subagent has the following affirmative obligations: (1) To the Seller: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To

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the Buyer and the Seller. a.  Diligent exercise of reasonable skills and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c.  A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.

(b)  Buyer's Agent.  A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Seller's agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer:  A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller: a. Diligent exercise of reasonable skills and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c.  A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.

(c)  Agent Representing Both Seller and Buyer.  A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: a.  A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Seller or the Buyer. b.  Other duties to the Seller and the Buyer as stated above in their respective sections (a) or (b) of this paragraph 24.2. (2) In representing both Seller and Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered. (3) The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Seller should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.

(d)  Further Disclosures.  Throughout this transaction Buyer and Seller may receive more than one disclosure, depending upon the number of agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate agent in this transaction and that disclosure. Brokers have no responsibility with respect to any default or breach hereof by either Party. The liability (including court costs and attorneys' fees), of any Broker with respect to any breach of duty, error or omission relating to this Agreement shall not exceed the fee received by such Broker pursuant to this Agreement: provided, however, that the foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

24.3         Confidential Information:  Buyer and Seller agree to identify to Brokers as "Confidential" any communication or information given Brokers that is considered by such Party to be confidential.

25.          Construction of Agreement.  In construing this Agreement, all headings and titles are for the convenience of the parties only and shall not be considered a part of this Agreement. Whenever required by the context, the singular shall include the plural and vice versa. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Agreement shall mean and refer to calendar days. This Agreement shall not be construed as if prepared by one of the parties, but rather according to its fair meaning as a whole, as if both parties had prepared it.

26.          Additional Provisions:

Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraphs 28 through 38. (If there are no additional provisions write "NONE".)

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS AGREEMENT OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1.             SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS AGREEMENT.

2.             RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PROPERTY, SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PROPERTY, THE INTEGRITY AND CONDITION OF ANY STRUCTURES AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PROPERTY FOR BUYER'S INTENDED USE.

WARNING: IF THE PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THIS AGREEMENT MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

NOTE:

1.             THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY.

2.             IF THE BUYER IS A CORPORATION, IT IS RECOMMENDED THAT THIS AGREEMENT BE SIGNED BY TWO CORPORATE OFFICERS.

The undersigned Buyer offers and agrees to buy the Property on the terms and conditions stated and acknowledges receipt of a copy hereof.

BROKER:	BUYER
	Life Bank, a federal savings bank
Attn:	By:	/s/ Steven R. Gardner
Title:	Date:	April 10, 2002
Address:	Name Printed:		Steven R. Gardner
	Title:	President & CEO
Telephone:
Facsimile:	Telephone/Facsimile:
Federal ID No.
	By:
	Date:
	Name Printed:
	Title:
	Address:
	Telephone/Facsimile:
	Federal ID No.

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27.          Acceptance.

27.1         Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified.

27.2         Not applicable

27.3         Seller acknowledges receipt of a copy hereof and authorizes Brokers to deliver a signed copy to Buyer.

NOTE: A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT.

BROKER:	SELLER
	SEE ATTACHED
Attn:	By:
Title:	Date:
Address:	Name Printed:
	Title:
Telephone:
Facsimile:	Telephone/Facsimile:
Federal ID No.
	By:
	Date:
	Name Printed:
	Title:
	Address:
	Telephone/Facsimile:
	Federal ID No.

These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form: American Industrial Real Estate Association, 700 South Flower Street, Suite 800, Los Angeles, CA 90017. (213) 687-8777.

©Copyright 2000-By American Industrial Real Estate Association. All rights reserved.

No part of these works may be reproduced in any form without permission in writing.

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Signature Block

for

STANDARD OFFER, AGREEMENT AND ESCROW

INSTRUCTIONS FOR PURCHASE OF REAL ESTATE

(Non-Residential)

Seller:

P.O.P.-SUNFLOWER LLC,

a Delaware limited liability company

By:	P.O.P. - Sunflower LLC,
	a Delaware limited liability company,
	its sole General Partner
	By:	P.O.P. Venture I, L.L.C.,
		a Delaware limited liability company,
		its sole Member
		By:	Birtcher Realty L.L.C.,
			a Delaware limited liability company,
			its Managing Member
			By:	/s/ Robert M. Anderson,
				Robert M. Anderson,
				An Authorized Manager

ADDENDUM

TO

STANDARD OFFER, AGREEMENT AND ESCROW

INSTRUCTIONS FOR PURCHASE OF REAL ESTATE

(Non-Residential)

28.          Documents to be Delivered by Seller.

Within two (2) days of the date of this Agreement, Seller shall deliver to, or make available to, Buyer, for Buyer's review and inspection, all information in Seller's possession related to the Property, including books and records relating to the Property during its period of ownership, real property tax statements, any structural analysis of the Property prepared for Seller and any applicable construction warranties.

29.          Right of Entry.

Subject to the conditions set forth below, at any time prior to the expiration of the contingency period set forth in Paragraph 9, Buyer and its representatives (including architects and engineers), at Buyer's sole cost and expense, shall have the right to enter upon and inspect the Property (including the interior of the Property) and conduct such soil and engineering tests as Buyer may require. The limited license granted herein shall be subject to the rights of tenants on the Property and shall be co-terminus with the term of the contingency period or any extension thereof.

(i)            Buyer shall obtain the consent of Seller prior to any entry upon the Property.

(ii)           Prior to commencing any tests or investigations which involve the drilling or disturbance of the surface of the Property, Buyer shall submit to Seller its operational plans for conducting such inspections and tests, which plans shall be subject to Seller's reasonable prior written approval. Seller reserves the right to have a representative present during any inspections or tests and Buyer shall provide Seller with prior notice of the date and time such inspections or tests will occur.

(iii)          Buyer shall not disrupt the ongoing activities of any lessee of any portion of the Property pursuant to a Lease in conduction such inspections and studies.

(iv)          During the term of this Agreement, Buyer shall, prior to any such entry, provide Seller with acceptable evidence of public liability insurance in an amount not less than One Million Dollars ($1,000,000.00), which insurance shall name Seller as an additional insured entitled to not less than thirty (30) days cancellation notice and is primary and non-contributing with insurance carried by Seller.

(v)           Buyer shall conduct all studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property during or after such investigation.

(vi)          Buyer shall comply with all applicable laws and governmental regulations.

(vii)         Buyer shall keep the Property free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this section.

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(viii)        Upon completion of any inspections and/or tests of the Property, Buyer shall promptly restore the Property to the condition existing immediately prior to any such inspections and/or tests and shall provide Seller with copies of any reports or data obtained, without charge.

(ix)           Buyer hereby agrees to protect, defend (with counsel satisfactory to Seller), indemnify and hold the Property, Seller and the other Seller Parties free and harmless from and against any and all liability, loss, obligation, lien, cost, damage or expense (including, without limitation, attorney's fees and expenses) which any of the Seller Parties may sustain or incur by reason of the negligent acts or omissions or intentional wrongful acts in connection with any such inspections or tests whether conducted or performed by Buyer or any contractor, subcontractor, material supplier, or other person or entity acting by or under Buyer. The indemnity obligations of Buyer under this subsection shall survive any termination of this Agreement or the delivery of the Grant Deed and the transfer of title.

30.          Representations and Warranties

                In addition to the warranties and representations set forth in paragraph 12.1, the following warranties and representations are hereby added to the provisions of that Section:

(m)          Seller has not received any written notification of any condemnation proceedings or other proceedings in the nature of imminent domain that have been instituted with respect to the Property.

(n)           To Seller's actual knowledge, there are no current or pending lawsuits, investigations, inquiries, actions, or other proceedings affecting the Property or the right to use and occupy the Property.

(o)           There are no current leases in effect with respect to the Property and no party currently has a right to occupy the Property.

(p)           Seller has not received any written notification from any applicable governmental authority indicating that the Property is in violation of any applicable laws, rules, regulations or codes, which violation has not been cured.

(q)           Except as may be disclosed in writing, to Seller's actual knowledge, there are no Hazardous Substances on or under the Property, and Seller has received no written notice from any third parties, or any federal, state or local governmental agency, indicating that any Hazardous Substance remedial or clean-up work will be required. For purposes of this Agreement, the term "Hazardous Substances" shall include asbestos, petroleum, including crude oil and any fraction thereof, and all substances which are classified as hazardous substances or hazardous wastes under any of the following laws, rules and regulations: (i) the Toxic Substances Control Act, 15 U.S.C., Section 2601 et seq., (ii) the Clean Water Act, 33 U.S.C., Section 1251 et seq., (iii) the Resource and Conservation and Recovery Act, 42 U.S.C., Section 6901 et seq., (iv) the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C., Section 9601, et seq., (v) the Hazardous Materials Transportation Act, 49 U.S.C., Section 5101 et seq., (vi) the California Hazardous Waste Control Act, Health and Safety Code, Section 25100 et seq., (vii) the California Hazardous Substance Account Act, Health and Safety Code, Section 25249.5 et seq., (viii) the California Waste Management Act, Health and Safety Code, Section 25170.1 et seq., (ix) Health and Safety Code, Section 25500 et seq., Hazardous Materials Release Response Plans and Inventory, (x) the California Porter Cologne Water Quality Control Act, Water Code, Section 13000 et seq., or (xi) other federal or state laws, rules or regulations, all as amended.

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31.          Defaults

31.1         Buyer's Default.    IF BUYER DEFAULTS HEREUNDER BY FAILING TO TIMELY CLOSE ESCROW, SELLER SHALL BE RELIEVED OF ANY OBLIGATION TO SELL THE PROPERTY TO BUYER, AND SELLER, AS ITS SOLE REMEDY, SHALL BE ENTITLED TO THE DEPOSIT AS LIQUIDATED DAMAGES, WHICH AMOUNT SHALL BE PAID TO SELLER (IF NOT PREVIOUSLY RELEASED TO SELLER) UPON DEMAND. BUYER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES IN THE CASE OF BUYER'S DEFAULT AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES IN SUCH EVENT. SUCH LIQUIDATED DAMAGES SHALL BE IN ADDITION TO, AND SHALL NOT LIMIT OR SUPERSEDE, ANY INDEMNITY OBLIGATIONS OF BUYER TO SELLER OR ESCROW HOLDER UNDER THIS AGREEMENT, ANY OBLIGATIONS OF BUYER TO PAY ESCROW HOLDER'S CANCELLATION CHARGES IN THE EVENT OF BUYER'S DEFAULT, OR ANY RIGHTS OR REMEDIES SELLER MAY HAVE AGAINST BUYER WHICH ACCRUE FOLLOWING CLOSE OF ESCROW. BUYER AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 31.1 AND HEREBY EVIDENCE THEIR SPECIFIC AGREEMENT TO THE TERMS OF THIS SECTION 31.1 BY PLACING THEIR INITIALS IN THE PLACE PROVIDED BELOW.

RMA	S.G.
Seller's Initials	Buyer's Initials

31.2         Seller's Default.    IF THE CLOSE OF ESCROW DOES NOT OCCUR DUE TO SELLER'S DEFAULT UNDER THIS AGREEMENT, BUYER SHALL HAVE THE RIGHT TO PURSUE ONLY ONE OF THE FOLLOWING REMEDIES: (1) RECEIVE THE RETURN OF THE DEPOSIT AND ALL OTHER FUNDS DELIVERED BY OR ON BEHALF OF BUYER TO SELLER OR ESCROW HOLDER, WHICH RETURN SHALL OPERATE TO TERMINATE THIS AGREEMENT AND RELEASE SELLER FROM ANY AND ALL LIABILITY HEREUNDER; PROVIDED, HOWEVER, IN THE EVENT OF A REFUSAL BY SELLER TO CONVEY TITLE TO THE PROPERTY AS REQUIRED BY THE TERMS OF THIS AGREEMENT, THIS LIMITATION ON LIABILITY SHALL NOT APPLY, OR; (2) ENFORCE SPECIFIC PERFORMANCE OF SELLER'S OBLIGATION TO CONVEY THE PROPERTY TO BUYER IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.  SELLER WAIVES THE RIGHT TO CONTEND THAT BUYER IS NOT ENTITLED TO SPECIFIC PERFORMANCE ON THE GROUND THAT MONETARY DAMAGES AS SET FORTH HEREIN IS AN ADEQUATE REMEDY.  BUYER EXPRESSLY WAIVES ITS RIGHTS TO SEEK ANY OTHER FORM OF DAMAGES OR REMEDIES IF THE SALE OF THE PROPERTY DOES NOT OCCUR DUE TO SELLER'S DEFAULT UNDER THIS AGREEMENT.  IN SITUATIONS INVOVLING THE FAILURE OF THE CLOSING DUE TO SELLER'S DEFAULT AS HEREIN ABOVE DESCRIBED, BUYER SHALL BE DEEMED TO HAVE ELECTED CLAUSE (1) ABOVE IF BUYER FAILS TO FILE SUIT FOR SPECIFIC PERFORMANCE AGAINST SELLER IN A COURT HAVING JURISDICTION IN THE COUNTY OF ORANGE, ON OR BEFORE SIXTY (60) DAYS FOLLOWING THE DATE OF SELLER'S DEFAULT.  NOTHING IN THIS SECTION SHALL LIMIT OR SUPERCEDE ANY INDEMNITY OBLIGATIONS, OF SELLER TO BUYER OR ESCROW HOLDER UNDER THIS AGREEMENT, ANY OBLIGATIONS OF SELLER TO PAY ESCROW HOLDER'S CANCELLATION CHARGES IN THE EVENT OF SELLER'S DEFAULT, ANY RIGHTS OR REMEDIES BUYER MAY HAVE AGAINST SELLER WHICH ACCRUE FOLLOWING CLOSE OF ESCROW, OR BUYER'S RIGHT, IF ANY, TO RECOVER ATTORNEY'S FEES AND OTHER COSTS AND EXPENSES UNDER THIS AGREEMENT IN THE EVENT OF ANY BREACH OR DEFAULT BY SELLER. BUYER

S.G.
Initials	Initials

3

AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 31.2 AND HEREBY EVIDENCE THEIR SPECIFIC AGREEMENT TO THE TERMS OF THIS SECTION 31.2 BY PLACING THEIR INTIALS IN THE PLACE PROVIDED BELOW.

RMA	S.G.
Seller's Initials	Buyer's Initials

31.3         Waiver of Specific Performance.    AS A MATERIAL CONSIDERATION FOR SELLER ENTERING INTO THIS AGREEMENT WITH BUYER, IN THE EVENT BUYER FAILS TO FILE SUIT FOR SPECIFIC PERFORMANCE AGAINST SELLER WITHIN THE TIME PERIOD PRESCRIBED IN SECTION 31.2 ABOVE, THE FOLLOWING PROVISIONS SHALL APPLY: (i) BUYER HEREBY WAIVES ANY RIGHT IT MAY HAVE AT LAW, IN THE EQUITY OR OTHERWISE, INCLUDING WITHOUT LIMITATION THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3387, TO COMPEL SPECIFIC PERFORMANCE OF THE SALE OF THE PROPERTY, (ii) BUYER HEREBY WAIVES THE RIGHT TO FILE A NOTICE OF PENDENCY OF ACTION AS PROVIDED BY CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 405 IN CONNECTION WITH ANY ACTION FILED AGAINST SELLER FOR BREACH OF THE AGREEMENT, (iii) BUYER AGREES THAT ANY SUCH NOTICE FILED IN CONTRAVENTION OF THIS SECTION SHALL BE NULL AND VOID, AND (iv) BUYER HEREBY WAIVES THE REQUIREMENT OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 405.33 THAT A BOND OR OTHER UNDERTAKING BE GIVEN AS A CONDITION FOR EXPUNGING SUCH NOTICE.  BUYER AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 31.3 AND HEREBY EVIDENCE THEIR SPECIFIC AGREEMENT TO THE TERMS OF THIS SECTION 31.3 BY PLACING THEIR INITIALS IN THE PLACE PROVIDED BELOW.

RMA	S.G.
Seller's Initials	Buyer's Initials

32.          Disclaimer of Representations and Warranties; As-is Sale.

BUYER ACKNOWLEDGES THAT, BY THE CLOSE OF ESCROW, IT WILL HAVE HAD AMPLE OPPORTUNITY TO FULLY INSPECT, EXAMINE, STUDY AND ANALYZE TO ITS SATISFACTION ALL ASPECTS OF THE PROPERTY INCLUDING, BUT NOT LIMITED TO, (I) THE SUITABILITY OR CONDITION OF THE PROPERTY FOR ANY PURPOSE OR ITS FITNESS FOR ANY PARTICULAR USE, (II) THE PROFITABILITY AND/OR FEASIBILITY OF OWNING, OPERATING AND/OR IMPROVING THE PROPERTY, (III) THE PHYSICAL CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE CURRENT OR FORMER PRESENCE OR ABSENCE OF ENVIRONMENTAL HAZARDS OR HAZARDOUS MATERIALS, ASBESTOS, RADON GAS, UNDERGROUND STORAGE TANKS, ABOVEGROUND STORAGE TANKS, ELECTROMAGNETIC FIELDS, OR OTHER SUBSTANCES OR CONDITION WHICH MAY AFFECT THE PROPERTY OR ITS CURRENT OR FUTURE USES, HABITABILITY, VALUE OR DESIRABILITY, (IV) THE RENTALS, INCOME, COSTS OR EXPENSES THEREOF, (V) THE NET OR GROSS ACREAGE, USABLE OR UNUSABLE, CONTAINED THEREIN, (VI) THE ZONING OF THE PROPERTY, (VII) THE CONDITION OF TITLE, (IX) THE COMPLIANCE BY THE PROPERTY WITH APPLICABLE LAWS, CODES, RULES AND REGULATIONS INCLUDING, WITHOUT LIMITATION, ZONING LAWS, BUILDING CODES AND ENVIRONMENTAL AND SIMILAR LAWS, GOVERNING OR RELATING TO ENVIRONMENTAL HAZARDS OR HAZARDOUS MATERIALS, ASBESTOS, RADON

S.G.
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GAS, UNDERGROUND STORAGE TANKS, ELECTROMAGNETIC FIELDS, OR OTHER SUBSTANCES OR CONDITIONS WHICH MAY AFFECT THE PROPERTY, (X) WATER OR UTILITY AVAILABILITY OR USE RESTRICTIONS, (XI) GEOLOGIC/SEISMIC CONDITIONS, SOIL AND TERRAIN STABILITY OR DRAINAGE, (XII) SEWER, SEPTIC AND WELL SYSTEMS AND COMPONENTS, (XIII) OTHER NEIGHBORHOOD OR PROPERTY CONDITIONS, INCLUDING, WITHOUT LIMITATION, PROXIMITY AND ADEQUACY OF LAW ENFORCEMENT AND FIRE PROTECTION, CRIME STATISTICS, NOISE OR ODOR FROM ANY SOURCES, LANDFILLS, PROPOSED FUTURE DEVELOPMENTS, AND (XIV) ANY OTHER PAST, PRESENT OR FUTURE MATTER RELATING TO THE PROPERTY WHICH MAY AFFECT THE PROPERTY OR ITS CURRENT OR FUTURE USE, HABITABILITY, VALUE OR DESIRABILITY.  ON THE BASIS OF SUCH OPPORTUNITY AND TO INDUCE SELLER TO ENTER INTO THIS AGREEMENT WITH BUYER, BUYER REPRESENTS AND WARRANTS TO SELLER THAT, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT: (I) BUYER IS RELYING SOLELY ON BUYER'S OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION IN THE DETERMINING WHETHER OR NOT TO PURCHASE THE PROPERTY, (II) ANY AND ALL INFORMATION MADE AVAILABLE TO BUYER OR PROVIDED OR TO BE PROVIDED BY OR ON BEHALF OF SELLER WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OF COMPLETENESS OF SUCH INFORMATION, AND (III) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY OR ANY RELATED MATTERS INCLUDING, BUT NOT LIMITED TO, THE MATTERS REFERENCED IN THIS SECTION, AND THE PROPERTY IS BEING SOLD TO THE BUYER IN AN "AS IS" CONDITION.  IN THIS REGARD, BUYER ALSO ACKNOWLEDGES THAT, DUE TO ITS PREVIOUS COMMERCIAL REAL ESTATE EXPERIENCE, IT IS KNOWLEDGEABLE ABOUT THE EFFECT AND IMPACT OF AN "AS IS" CLAUSE SUCH AS SET FORTH IN THIS SECTION.

33.          Buyer's Release of Seller.

EXCEPT FOR THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENT EXECUTED BY SELLER IN CONNECTION WITH THE CLOSING, BUYER, FROM AND AFTER THE CLOSE OF ESCROW, HEREBY WAIVES, RELEASES, REMISES, ACQUITS AND FOREVER DISCHARGES THE SELLER PARTIES OF AND FROM ANY AND ALL ACTIONS, SUITS, LEGAL OR ADMINISTRATIVE ORDERS OR PROCEEDINGS, DEMANDS, ACTUAL DAMAGES, PUNITIVE DAMAGES, LOSS, COSTS, LIABILITIES AND EXPENSE WHICH BUYER MAY HAVE, WHICH CONCERN OR IN ANY WAY RELATE TO THE PROPERTY, WHETHER EXISTING PRIOR TO, AT OR AFTER THE CLOSE OF ESCROW, INCLUDING, WITHOUT LIMITATION, MATTERS RELATING TO THE CONDITION OF TITLE TO THE PROPERTY, ZONING, COMPLIANCE OF THE PROPERTY, OR THE RELEASE OF THREATENED RELEASE OF HAZARDOUS MATERIALS THEREFROM.  IT IS THE INTENTION OF THE PARTIES PURSUANT TO THIS RELEASE THAT, EXCEPT FOR THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENT EXECUTED BY SELLER IN CONNECTION WITH THE CLOSING, ANY AND ALL RESPONSIBILITIES AND OBLIGATIONS OF SELLER, AND ANY AND ALL RIGHTS, CLAIMS, RIGHTS OF ACTION, CAUSES OF ACTION, DEMANDS OR LEGAL RIGHTS OF ANY KIND OF BUYER, ITS SUCCESSORS, ASSIGNS OR ANY

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AFFILIATED ENTITY OF BUYER, ARISING BY VIRTUE OF THE PROPERTY, WHETHER EXISTING PRIOR TO, AT OR AFTER THE CLOSE OF ESCROW, ARE BY THIS RELEASE PROVISION DECLARED NULL AND VOID AND OF NO PRESENT OR FUTURE FORCE AND EFFECT AS TO THE PARTIES.  BUYER EXPRESSLY AGREES TO WAIVE ANY AND ALL RIGHTS WHICH SAID PARTY MAY HAVE UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE WHICH PROVIDES AS FOLLOWS:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR"

34.          Entire Agreement.

THIS AGREEMENT AND THE EXHIBITS ATTACHED HERETO EMBODIES THE ENTIRE AGREEMENT BETWEEN THE BUYER AND SELLER IN CONNECTION WITH THIS TRANSACTION, AND ANY ORAL OR PAROL AGREEMENTS, REPRESENTATIONS OR WARRANTIES EXISTING BETWEEN THE BUYER AND SELLER RELATING TO THIS TRANSACTION WHICH ARE NOT EXPRESSLY SET FORTH HEREIN AND COVERED HEREBY SHALL BE DEEMED CANCELED AND OF NO FURTHER FORCE AND EFFECT.  IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1856 AND ANY RELATED OR SIMILAR STATUTE, THE PARTIES HERETO INTEND THAT A COURT OR FINDER OF  FACT SHALL FIND THAT THIS AGREEMENT AND THE EXHIBITS ATTACHED HERETO IS THE FINAL EXPRESSION OF THE PARTIES AGREEMENT WITH RESPECT TO THE MATTERS CONTAINED HEREIN, THAT THIS AGREEMENT AND THE EXHIBITS ATTACHED HERETO IS INTENDED TO BE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE TERMS OF THE AGREEMENT BETWEEN THE PARTIES, AND THAT THE TERMS CONTAINED HEREIN SHALL NOT BE EXPLAINED OR SUPPLEMENTED BY COURSE OF DEALING OR USAGE OF TRADE OR BY COURSE OF PERFORMANCE.

35.          IRS Form 1099-S.

For the purposes of complying with Section 6045 of the Internal Revenue Code of 1986 ("Code"), as amended, Escrow Holder shall be deemed the "person responsible for closing the transaction," and shall be responsible for obtaining the information necessary to file with the Internal Revenue Service Form 1099-S, "Statement for Recipients of Proceeds From Real Estate, Broker and Barter Exchange Transactions."

36.          Improvement Allowance.

Seller hereby agrees to provide Buyer with an allowance for improvements to the Property in the amount of Sixty-Five Thousand Dollars ($65,000.00).  Seller agrees to pay such amount to Buyer concurrently with the Closing.  Such amount shall be payable by a separate cashier's check to be delivered to Escrow Holder and released by Escrow Holder to Buyer upon the Closing.  Further, Buyer may use a separate statement for purposes of documentary transfer taxes which sets forth the Purchase Price as reduced by the amount of the tenant improvement allowance.

37.          Brokerage Commissions.

Seller hereby represents and warrants to Buyer that the only real estate broker involved in this transaction on behalf of Seller, including any negotiations relating to this Agreement and any other agreements and documents contemplated hereby is Lee & Associates ( the "Seller's Broker").  Buyer hereby represents and warrants to Seller that the only real estate broker involved in this transaction on behalf of Buyer, including any negotiations relating to this Agreement and any other agreements and documents

S.G.
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contemplated hereby is Charter Investment Corporation (the "Buyer's Broker").  Pursuant to a cooperating broker agreement between Seller's Broker and Buyer's Broker, the total commission of Two Hundred Seven Thousand Five Hundred Dollars ($207,500) is to be split between the two Brokers.  Seller agrees that the compensation due Seller's Broker and Buyer's Broker at the Closing is and shall be the sole and exclusive responsibility of Seller, and Buyer shall have no liability or responsibility therefore.  Seller and Buyer shall indemnify the other party against and hold the other party free and harmless from any and all loss, damage, liability or expense (including costs and reasonable attorneys' fees) that such party may incur or sustain by reason of, or in connection with, any misrepresentation or breach of warranty with respect to the foregoing.

38.          Parking Agreement.

                Seller agrees to use its reasonable efforts to process a parking agreement with the City of Costa Mesa in the form provided to Buyer prior to the date of this Agreement.  The approval of such agreement by the City and the recordation of such agreement shall be a condition of the Closing for the benefit of both Seller and Buyer.

Buyer:

LIFE BANK,

a federal savings bank

By:	/s/ Steven R. Gardner
Name:	Steven R. Gardner
Its:	President & CEO

Seller:

P.O.P. - SUNFLOWER LLC,

a Delaware limited liability company

By:	P.O.P. - Sunflower LLC,
	a Delaware limited liability company,
	its sole General Partner
	By:	P.O.P. Venture I, L.L.C.,
		a Delaware limited liability company,
		its sole Member
		By:	Birtcher Realty L.L.C.,
			a Delaware limited liability company,
			its Managing Member
			By:	/s/ Robert M. Anderson
				Robert M. Anderson,
				an Authorized Manager

S.G.
Initials	Initials

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EX-21.1

Exhibit 21.1

Subsidiaries of Pacific Premier Bancorp, Inc.

Name	Jurisdiction of Incorporation	% Ownership
Pacific Premier Bank	Federal	100	%
Pacific Premier Insurance Services	California	100	%

EX-23.1

Exhibit 23.1

Consent of Independent Certified Public Accountants

To:  Pacific Premier Bancorp and Subsidiaries

We consent to the incorporation by reference of our report dated February 28, 2003 on the consolidated financial statements of Pacific Premier Bancorp and Subsidiaries as of December 31, 2002 and 2001, and for the two years then ended, included in this Annual Report on Form 10-K/A-1 for the year ended December 31, 2002.

/s/ Vavrinek, Trine, Day & Co., LLP

Vavrinek, Trine, Day & Co., LLP

Certified Public Accountants

Rancho Cucamonga, California

August 28, 2003

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated March 16, 2001, accompanying the consolidated financial statements included in the Annual Report of Pacific Premier Bancorp, Inc. (previously Life Financial Corporation) on Form 10-K/A Amendment No. 1 to Form 10-K for the year ended December 31, 2002.  We hereby consent to the incorporation by reference of said report in the Registration Statement of Pacific Premier Bancorp, Inc. on Form S-8 (File No. 333-58642).

/s/ Grant Thornton LLP

Irvine, California
August 28, 2003

EX-31.1

Exhibit 31.1

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven R. Gardner, certify that:

1.I have reviewed this annual report on Form 10-K/A-1 of Pacific Premier Bancorp, Inc.;

2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report or conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report; and

c)disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting,  to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 28, 2003	/s/ Steven R. Gardner
	Steven R. Gardner
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John Shindler, certify that:

1.I have reviewed this annual report on Form 10-K/A-1 of Pacific Premier Bancorp, Inc.;

2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report or conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report; and

c)disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting,  to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 28, 2003	/s/ John Shindler
	John Shindler
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Periodic Financial Report

Steven R. Gardner and John Shindler hereby certify as follows:

1.  They are the Chief Executive Officer and Chief Financial Officer, respectively, of Pacific Premier Bancorp, Inc.

2.  The Form 10-K of Pacific Premier Bancorp, Inc. for the year ended December 31, 2002 complied with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d) and the information contained in the report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Pacific Premier Bancorp, Inc.

August 28, 2003	/s/ Steven R. Gardner
	Steven R. Gardner
	President & Chief Executive Officer
August 28, 2003	/s/ John Shindler
	John Shindler
	Senior Vice President & Chief Financial Officer