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EXHIBIT 99.2
UNITED STATES OF AMERICA
Before the
OFFICE OF THRIFT SUPERVISION
________________________________
)
In the Matter of: ) OTS Order No.: ______________
)
Life Financial Corporation, ) Date:
OTS Docket No. H-2834 )
)
________________________________)
ORDER TO CEASE AND DESIST
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WHEREAS, Life Financial Corporation ("Life Financial"), OTS Docket No. H-
2834, owns one hundred percent (100%) of the outstanding common stock of Life
Bank, F.S.B., Riverside, California, ("the Institution"), an insured savings
association; and
WHEREAS, Life Financial is a savings and loan holding company as that term
is defined at 12 U.S.C. (S) 1467a(a)(1)(D); and
WHEREAS, Life Financial, by and through its Boards of Directors (the
Board), has executed a Stipulation and Consent to the Issuance of an Order to
Cease and Desist (Stipulation); and
WHEREAS, Life Financial, in the Stipulation, has consented and agreed to
the issuance of this Order to Cease and Desist (Order) pursuant to 12 U.S.C. (S)
1818(b); and
WHEREAS, the Director of the Office of Thrift Supervision (OTS) has
delegated to the Regional Directors of the OTS the authority to issue an Order
to Cease and Desist on behalf of the OTS where entities subject to OTS
jurisdiction have consented to the issuance of the Order.
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NOW, THEREFORE, IT IS ORDERED that:
A. CAPITAL INFUSION
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1. By no later than December 31, 2000, Life Financial shall contribute to the
Institution capital in the amount of $5.2 million, which represents
reimbursement to the Institution of the amount the Institution paid to Life
Financial for its residual assets; provided, however, that in the event the
OTS determines that Life Financial is making satisfactory progress towards
such capital raising efforts, then Life Financial shall not be deemed to be
in violation of this Order. The tax refunds, if any, due the Institution
shall not be counted in this required infusion. Life Financial shall provide
satisfactory evidence of such infusion to the OTS within five (5) days after
the infusion is complete.
B. TRANSACTIONS-WITH-AFFILIATES
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1. Life Financial shall not enter into any transaction, or otherwise engage in
any action, which would cause, directly or indirectly, the Institution to
violate or be in violation of 12 C.F.R. (S)(S) 563.41 and 563.42.
2. Life Financial shall provide the OTS with at least 30 days prior written
notice of any transaction that would constitute a "covered transaction" from
the perspective of Life Bank. The term "covered transaction" shall have the
meaning as set forth at 12 C.F.R. (S) 563.41(b)(7).
3. Life Financial shall provide the OTS with at least 30 days prior written
notice of any transaction, or series of transactions, between Life Bank and
any third party where: (a) Life Financial, or any affiliate, holder of 5.0
percent of the company's stock, officer, or director of Life Financial, has a
financial interest in the third party; (b) Life Financial, or any affiliate,
shareholder, officer, or director of Life Financial, participates in the
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transaction; or (c) any of the proceeds of the transaction are used for the
benefit of, or transferred to, directly or indirectly, Life Financial, or any
affiliate, holder of 5.0 percent of the company's stock, officer, or director
of Life Financial For purposes of this paragraph, the term "affiliate" as it
relates to Life Financial shall have the meaning as set forth at 12 C.F.R.
(S) 563.41(b)(1) with "Life Financial" substituted for "savings association."
4. Upon written notice of objection by OTS during the notice period set forth in
paragraphs (B) 1-3, above, Life Financial shall not enter into the
transactions identified in the notice.
5. The Board shall take all necessary measures to cause the procedures governing
the Transactions With Affiliates Log to be revised to ensure compliance with
all applicable laws, regulations or regulatory guidance. Beginning July 31,
2000, and monthly thereafter, the Board shall submit the Transactions With
Affiliates Log to the Assistant Regional Director for review.
C. BOOKS AND RECORDS
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1. In accordance with 12 C.F.R. (S) 563.170(c), Life Financial shall at all
times maintain adequate books and records to enable management, outside
auditors, and examiners to adequately and timely review Life Financial's
operations and activities. This requirement, at a minimum, includes
maintenance of accurate and reliable minutes of meetings, certified by the
secretary, or assistant secretary, of the corporation.
2. The Board shall meet at least monthly. The Board shall prepare in advance and
shall follow a detailed written agenda at each meeting, which shall include
consideration of actions of any committees. A chronological file of all
written agendas shall be maintained. Notwithstanding, the foregoing, the
Board shall not be precluded from
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considering matters other than those contained on the agenda. Detailed
written minutes of all Board meetings shall be timely maintained and
recorded. Within 10 days following each meeting of the Board, Life Financial
shall submit the official certified minutes of that meeting to the Assistant
Regional Director.
D. TAX SHARING
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1. Life Financial shall not cause the Institution to upstream any tax payment
(nor accept any such payment) that exceeds the lesser of the Institution's
tax liability or the combined tax liability of the consolidated entities to
the taxing authorities.
2. Within 60 days from the Effective Date, Life Financial shall approve and
submit to the ARD for review and non-objection a revised Tax Sharing
Agreement. The revised Tax Sharing Agreement shall be in compliance with all
regulatory guidance and shall govern the relationship between the Institution
and Life Financial. The revised Tax Sharing Agreement shall require complete
documentation of any calculation utilized by the Institution or Life
Financial to upstream funds for the payment of any tax liability.
3. Within 15 days of receipt of the ARD's objection, if any, to any aspect of
the revised Tax Sharing Agreement, Life Financial shall submit a revised
agreement to the ARD addressing any such objections or comments of the ARD.
4 Once the revised Tax Sharing Agreement is submitted pursuant to this Order
and all objections from the ARD, if any, have been satisfactorily resolved,
Life Financial may not amend, suspend, or revoke the agreement without the
prior written non-objection from the ARD.
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5. Within 15 days of receiving notice of the ARD's non-objection to the revised
Tax Sharing Agreement, Life Financial shall implement the agreement and
ensure that all signatories adhere to it.
6. Within 60 days following the end of each calendar quarter, Life Financial
shall approve and submit a report to the ARD detailing its progress in
implementing the revised Tax Sharing Agreement.
E. FINANCIAL STATEMENTS
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1. Within 60 days from the Effective Date, Life Financial shall prepare and
submit to the Assistant Regional Director a comprehensive, report on Life
Financial's condition on a pro forma unconsolidated basis (Financial
Statement) for the immediately preceding four quarters.
2. Thereafter, Life Financial shall monthly submit a Financial Statement to the
Assistant Regional Director.
F. SEPARATE CORPORATE EXISTENCE
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1. Within 60 of the Effective Date, Life Financial shall approve and submit to
the ARD for review and non-objection revised policies and procedures
governing separate corporate existence (the Separate Corporate Existence
Policy) that address the concerns identified in the Institution's Report of
Examination dated April 3, 2000. At a minimum, the Separate Corporate
Existence Policy should ensure that the Institution is being operated with an
adequate degree of separation such that the Institution is insulated from
operations of the holding company, and demonstrate to the public the separate
corporate existence of the Institution and its holding company.
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2. Within 15 days of receipt of the ARD's objection, if any, to any aspect of
the Separate Corporate Existence Policy, Life Financial shall submit a
revised policy to the ARD addressing any such objections or comments of the
ARD.
3. Once the Separate Corporate Existence Policy is submitted pursuant to this
Order and all objections from the ARD, if any, have been satisfactorily
resolved, Life Financial may not amend, suspend, or revoke the policy without
the prior written non-objection from the ARD.
4. Within 15 days of receiving notice of the ARD's non-objection to the Separate
Corporate Existence Policy, Life Financial shall implement the agreement and
ensure that all signatories adhere to it.
5. Within 60 days following the end of each calendar quarter, Life Financial
shall approve and submit a report to the ARD detailing its progress in
implementing the Separate Corporate Existence Policy.
G. COMPLIANCE WITH ORDER
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1. The Board and the officers of Life Financial shall take immediate action to
cause Life Financial to comply with the terms of this Order and shall take
all actions necessary or appropriate thereafter to cause Life Financial to
continue to comply with this Order.
2. The Board, on a quarterly basis, shall adopt a Board resolution (the
Compliance Resolution) formally resolving that, following a diligent inquiry
of relevant information (including reports of management), to the best of its
knowledge and belief, during the immediately preceding quarter, Life
Financial complied with each provision of this Order, except as otherwise
stated. The Compliance Resolution shall: (a) specify in detail
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how, if at all, full compliance was not found to exist; and (b) identify all
notices of exemption issued by the OTS that were outstanding as of the date
of its adoption.
3. The minutes of the meetings of the Board shall set forth the following
information with respect to the adoption of the Compliance Resolution: (1)
the identity of each director voting in favor its adoption; and (2) the
identity of each director voting in opposition to its adoption or abstaining
from voting thereon, setting forth each such director's reasons for opposing
or abstaining.
4. By November 30, 2000 (for calendar quarter ending September 30, 2000), and
within 60 days following the end of each calendar quarter thereafter, Life
Financial shall provide to the Assistant Regional Director a certified true
copy of the Compliance Resolution adopted at the respective Board meeting.
The Board, by virtue of Life Financial's submission of a certified true copy
of each such Compliance Resolution to the OTS, shall be deemed to have
certified to the accuracy of the statements set forth in each Compliance
Resolution, provided however, that in the event that one or more directors do
not agree with the representations set forth in the Compliance Resolution,
such disagreement shall be noted in the minutes of Life Financial.
5. The Board shall promptly respond to any request from the OTS for documents
that the OTS reasonably requests to demonstrate compliance with this Order.
H. STIPULATION
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1. The Stipulation is incorporated by reference into this Order.
I. DEFINITIONS
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1. All technical words or terms used in this Order, and the Stipulation, for
which meanings are not specified or otherwise provided by the provisions of
this Order shall, insofar as
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applicable, have meanings as defined in Chapter V of Title 12 of the Code of
Federal Regulations, the Home Owners' Loan Act ("HOLA"), FDIA, or OTS
publications. Any such technical words or terms used in this Order and the
Stipulation and undefined in the Code of Federal Regulations, HOLA, FDIA, or
OTS publications shall have meanings that are in accordance with the best
custom and usage in the savings and loan industry.
J. SUCCESSOR STATUTES, REGULATIONS, GUIDANCE, AMENDMENTS
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1. Any references in this Order and Stipulation to provisions of statutes,
regulations, OTS publications, and OTS regulatory guidance shall be deemed to
include references to all amendments to such provisions as have been made as
of the date of this Order and references to successor provisions as they
become applicable.
K. NOTICES
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1. Except as otherwise provided herein, any request, demand, authorization,
direction, notice, consent, waiver or other document provided or permitted by
the Order to be made upon, given or furnished to, delivered to, or filed with
the OTS or Life Financial shall be in writing and mailed, first class or
overnight courier, or by facsimile transmission, or physically delivered, and
addressed as follows:
OTS: OTS-West Region Life Financial Corp.
Attn: Michael Buting, ARD Attn: Chief Executive Officer
1551 N. Tustin Ave., Suite 1050 10540 Magnolia Avenue, Suite B
Santa Ana, CA 92705-8635 Riverside, CA 92505-1814
Notices hereunder shall be effective upon receipt, if by mail, overnight
delivery service, or facsimile, and upon delivery, if by physical delivery.
If there is a dispute about the date on which a written notice has been
received by a party to this Order, then, in the event such notice was sent by
the U.S. mail, there shall be a presumption that the notice
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was received two (2) business days after the date of the postmark on the
envelope in which the notice was enclosed.
L. DURATION, TERMINATION OR SUSPENSION OF ORDER
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1. This Order shall: (a) become effective upon its execution by the OTS, acting
through its authorized representative whose signature appears below; and (b)
remain in effect until terminated, modified, or suspended in writing by the
OTS, acting through its Director or Regional Director (including any
authorized designee thereof).
2. The Regional Director of the OTS, in his or her sole discretion, may, by
written notice, suspend, modify, or terminate any or all provisions of this
Order.
M. TIME LIMITS
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1. Time limitations for compliance with the terms of this Order run from the
Effective Date, unless otherwise noted.
N. EFFECT OF HEADINGS
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1. The section headings herein are for convenience only and shall not affect the
construction hereof.
O. SEPARABILITY CLAUSE
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1. In case any provision of this Order is ruled to be invalid, illegal, or
unenforceable by the decision of any court of competent jurisdiction, the
validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby, unless the Regional
Director, in his or her sole discretion, determines otherwise.
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P. NO VIOLATIONS OF LAW, RULE, REGULATION OR POLICY
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STATEMENT AUTHORIZED; OTS NOT RESTRICTED
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1. Nothing in this Order shall be construed as: (a) allowing Life Financial or
the Institution to violate any law, rule, regulation, or policy statement to
which it is subject; or (b) restricting or estopping the OTS from taking any
action(s) that it deems appropriate in fulfilling the responsibilities placed
upon it by law.
Q. SUCCESSORS IN INTEREST/BENEFIT
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1. The terms and provisions of this Order shall be binding upon and inure to the
benefit of, the parties hereto and their successors in interest. Nothing in
this Order, express or implied, shall give to any person or entity, other
than the parties hereto, and the Federal Deposit Insurance Corporation, and
their successors hereunder, any benefit or any legal or equitable right,
remedy or claim under this Order.
SO ORDERED this the ___ day of September 2000 (Effective Date).
OFFICE OF THRIFT SUPERVISION
By: _______________________________
Charles A. Deardorff
Regional Director, West Region
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