Document:

Exhibit 10.7

 

LIFE SAVINGS BANK, FEDERAL SAVINGS
BANK

(the “Company”)

 

131⁄2% 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

 

5

 

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;

 

6

 

(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 131⁄2% 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.

 

7

 

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.

 

7C                                  Material 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.

 

10

 

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.

 

11

 

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;

 

12

 

(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:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
				

 

16

 

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

 

17

 

$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.

 

18

 

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

  

 

19

 

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.

 

20

 

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

  

 

21EXHIBIT 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

 

	
   

  	
   

  	
   

  
	
  S.G.

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

1

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

 

	
   

  	
   

  	
   

  
	
  S.G.

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

2

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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6

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
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  President & CEO

  	
   

  
	
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7

 

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

  	
   

  	
   

  
	
   

  	
   

  	
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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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1

 

(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.

 

	
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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

 

	
   

  	
   

  	
   

  	
   

  
	
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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.

 

	
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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.

 

	
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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

 

	
   

  	
   

  	
   

  	
   

  
	
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4

 

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

 

	
   

  	
   

  	
   

  	
   

  
	
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  Initials

  	
   

  

 

6

 

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

  

 

 

 

	
   

  	
   

  	
   

  	
   

  
	
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  Initials

  	
   

  	
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7

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