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                                                                     Exhibit 4.5

                          REGISTRATION RIGHTS AGREEMENT


       Registration Rights Agreement (the "Agreement"), dated as of ______ __,
1995, by and among Hawthorne Financial Corporation (the "Company"), a Delaware
corporation, and each of the undersigned Investors (hereinafter referred to
individually as an "Investor" and collectively as the "Investors").


                                   WITNESSETH:


       WHEREAS, the Company and each of the Investors have entered into a Unit
Purchase Agreement, dated as of October 10, 1995, providing for the purchase by
the Investors of units consisting of the Company's Senior Notes due 2000 (the
"Senior Notes"), the Company's Cumulative Preferred Stock, Series A (the "Series
A Preferred Stock") and the Company's Warrants (the "Warrants") entitling the
holders thereof to purchase shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), subject to the terms and conditions set forth
therein; and

       WHEREAS, Common Stock may be issued to the Investors pursuant to the
sinking fund provisions of the Senior Notes and the dividend provisions of the
Series A Preferred Stock; and

       WHEREAS, the Company desires to provide the Investors with certain
registration rights with respect to the Warrants, the shares of Common Stock
issuable upon exercise of the Warrants and shares of Common Stock which may be
issued pursuant to the terms of the Senior Notes and the Series A Preferred
Stock;

       NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, the Company and the Investors agree as follows:

       SECTION 1. DEFINITIONS.

       As used in this Agreement, the following terms shall have the following
meanings:

              (a) "Affiliate" shall mean, with respect to any Person, any Person
       that, directly or indirectly, controls, is controlled by or is under
       common control with such Person.


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              (b) "Business Day" shall mean any day except a Saturday, Sunday or
       other day on which commercial banks in the State of California are
       authorized by law to close.

              (c) "Commission" shall mean the Securities and Exchange
       Commission, or any other federal agency at the time administering the
       Securities Act.

              (d) "Common Stock" shall mean the common stock, par value $.01 per
       share, of the Company.

              (e) "Demand Registration" shall have the meaning set forth in
       Section 3(a).

              (f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
       as amended.

              (g) "Holder" shall mean any holder of outstanding Registrable
       Securities or anyone who holds outstanding Registrable Securities to whom
       the registration rights conferred by this Agreement have been transferred
       in compliance with this Agreement.

              (h) "Initiating Holders" shall mean any Holder or Holders of at
       least 10% of the Registrable Securities then outstanding.

              (i) "Person" shall mean an individual, a corporation, a
       partnership, an association, a trust or any other entity or organization,
       including a government or political subdivision or an agency or
       instrumentality thereof.

              (j) "Registrable Securities" shall mean (i) the Warrants, (ii) any
       and all shares of Common Stock issued or issuable upon exercise of the
       Warrants, (iii) Common Stock issued pursuant to Section 6(b) of the
       Senior Notes, (iv) Common Stock issued pursuant to Section 2(b) of the
       Certificate of Designations and Preferences relating to the Series A
       Preferred Stock and (v) any shares of the capital stock (or rights to
       receive capital stock of the Company) issued in respect of the securities
       described in clauses (i)-(iv) of this definition by reason of or in
       connection with any stock dividend, stock distribution, stock split,
       purchase in any rights offering or in connection with any combination of
       shares, recapitalization, merger or consolidation, or any other equity
       securities issued pursuant to any other pro rata distribution with
       respect to any of the securities included in clauses (i)-(iv) of this
       definition. Notwithstanding the foregoing, Registrable Securities shall
       not include otherwise Registrable Securities (i) sold to or through a
       broker or dealer or underwriter or (ii) sold in a transaction exempt


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from the registration and prospectus delivery requirements of the Securities Act
under Section 4(1) thereof, if in any such case all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale.

              (k) "Registration Statement" shall mean any registration statement
       filed with the Commission pursuant to Sections 2, 3, 4 or 5 of this
       Agreement.

              (l) "Required Registration" shall have the meaning set forth in
       Section 3 of this Agreement.

              (m) "Securities Act" shall mean the Securities Act of 1933, as
       amended, and the rules and regulations of the Commission thereunder.

              (n) "Senior Notes" shall mean the Senior Notes due 2002 of the
       Company issued by the Company pursuant to the Unit Purchase Agreement, as
       amended, supplemented or otherwise modified from time to time.

              (o) "Series A Preferred Stock" shall mean the shares of Cumulative
       Preferred Stock, Series A, of the Company issued pursuant to the Unit
       Purchase Agreement, as amended, supplemented or otherwise modified from
       time to time.

              (p) "Underwritten Offering" shall mean a bona fide underwritten
       public offering pursuant to a Registration Statement.

              (q) "Unit Purchase Agreement" shall mean the Unit Purchase
       Agreement, dated as of October 10, 1995, among the Company and the
       Investors, as amended, supplemented or otherwise modified from time to
       time.

              (r) "Warrants" shall mean the Warrants of the Company issued by
       the Company pursuant to the Unit Purchase Agreement, as amended,
       supplemented or otherwise modified from time to time.

              SECTION 2. RESTRICTIONS ON TRANSFERABILITY.

       The Registrable Securities shall not be sold, transferred or otherwise
disposed of, except in accordance with and subject to (i) the provisions of the
Securities Act and the rules and regulations promulgated thereunder and (ii) the
applicable requirements of Section 3.2 of the Unit Purchase Agreement.

              SECTION 3. REQUIRED REGISTRATION.


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       The Company hereby agrees to register under the Securities Act and
applicable state securities or blue sky laws the shares of Common Stock issuable
upon exercise of the Warrants within sixty (60) days prior to the time that the
Warrants become exercisable in accordance with their terms and to keep such
Registration Statement current under the Securities Act and applicable state
securities or blue sky laws until such time as all Warrants have been exercised
or the Warrants expire in accordance with their terms (the "Required
Registration"). The terms and procedures for the Required Registration shall be
as set forth in Sections 7, 8 and 9 of this Agreement.

       SECTION 4. DEMAND REGISTRATION RIGHTS.

       (a) At any time after the Warrants become exercisable in accordance with
their terms, and upon thirty (30) days' prior written notice to the Company,
Initiating Holders may make written requests for a total, in the aggregate, of
not more than three registrations under the Securities Act for at least 10% of
the Registrable Securities then outstanding which are not then subject to an
effective Registration Statement (each a "Demand Registration"). The Company
will use its best efforts to effect each Demand Registration as soon as
practicable after the expiration of such thirty (30) days, provided that the
Company shall not be required to effect more than one Demand Registration for
Initiating Holders in any twelve (12) month period, and further provided that
the Company shall not be obligated to file a registration statement relating to
any Demand Registration under this Section 4(a) if counsel to the Company
renders an opinion, in form and substance reasonably satisfactory to the
Initiating Holders requesting such Demand Registration, to the effect that
registration is not required for the proposed transfer of Registrable Securities
or if either (i) the proposed transfer of Registrable Securities is the subject
of an effective Registration Statement which is current under the Securities Act
or (ii) a post-effective amendment to an existing registration statement would
be sufficient for such proposed transfer. Each request for a Demand Registration
will specify the number of shares of Registrable Securities proposed to be sold
by the Initiating Holders requesting the Demand Registration and will also
specify the intended method of disposition thereof. Upon receipt of a request
for a Demand Registration, the Company shall give prompt written notice to all
other Holders of the proposed registration and of such Holders' rights to
include Registrable Securities in such registration, and each such Holder shall
within ten (10) days after the receipt of any such notice notify the Company in
writing of the number of shares of Registrable Securities it proposes to include
in such registration. Unless the Initiating Holders requesting the Demand
Registration shall consent in writing, no other party, including the Company
(but excluding another Holder), shall be permitted to offer securities under any
such Demand Registration. The Company may delay filing the registration
statement relating to any Demand


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Registration under this Section 4(a) for not more than 90 days if (i) the
Company has filed, or has taken substantial steps toward filing, a registration
statement relating to the sale of any of the Company's securities (the "Company
Securities") in an Underwritten Offering and the managing underwriter is of the
opinion that the filing of a registration statement with respect to the Demand
Registration would adversely affect the offering by the Company of Company
Securities, or (ii) the Board of Directors of the Company determines in good
faith, by resolution, that the filing of a registration statement would, if not
so deferred, materially and adversely affect a then proposed or pending
financial project, acquisition, merger or corporate reorganization.

       (b) A registration will not count as a Demand Registration unless and
until it has become effective.

       (c) If the Initiating Holders who have requested a Demand Registration so
elect, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an Underwritten Offering. In such event, if
the managing underwriter or underwriters of such offering advises the Company
and such Initiating Holders in writing that in their reasonable opinion the
aggregate amount of Registrable Securities requested to be included in such
offering is more than can be sold without materially and adversely affecting the
success of such offering, the Company will include in such registration only
such aggregate amount of Registrable Securities which in the reasonable opinion
of such managing underwriter or underwriters can be sold without any such
material adverse effect, and such securities shall be allocated among the
holders of Registrable Securities pro rata based on the number of Registrable
Securities requested to be included in such registration by Holders.

       (d) If any Demand Registration is in the form of an Underwritten
Offering, the Initiating Holders requesting such Demand Registration will select
and retain the investment banker or investment bankers and manager or managers
that will administer the offering; provided that such investment bankers and
managers must be reasonably satisfactory to the Company.

       SECTION 5. PIGGYBACK REGISTRATION RIGHTS.

       (a) If at any time or from time to time after the Warrants become
exercisable in accordance with their terms, the Company shall determine to
register any of its securities, for its own account or the account of any of its
stockholders, other than a registration on Form S-4 or Form S-8 or any successor
or similar forms thereto, the Company will: (i) give to each Holder written
notice thereof as soon as practicable prior to filing the Registration
Statement; and (ii) include in such registration and in any underwriting
involved therein, all the Registrable


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Securities specified in a written request or requests, made within fifteen (15)
days after receipt of such written notice from the Company, by any Holder or
Holders, except as set forth in paragraph (b) below, provided that if, at any
time after giving such notice the Company shall determine for any reason or for
no reason not to register or to delay registration of the securities of the
Company which were to be included in the Registration Statement, the Company
may, at its election, give written notice of such determination to each Holder
desiring to include Registrable Securities in such Registration Statement, and,
thereupon, (i) in the case of determination not to register, shall be relieved
of its obligation to register any of such Holders' Registrable Securities in
connection with such registration (but not from its obligations to pay expenses
incurred in connection therewith, limited as set forth in Section 7), and (ii)
in the case of a delay in registering, shall be permitted to delay registering
all Holders' Registrable Securities for the same period as the delay in
registering such other securities. The Company will pay the expenses in
connection with each registration pursuant to this Section 5, to the extent
provided in Section 7.

       (b) In the case where the Company is registering securities for the
purpose of an Underwritten Offering, if the managing underwriter of the offering
advises the Company and each Holder desiring to include Registrable Securities
in such Registration Statement in writing that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the success of such offering, the Company will include in such registration to
the extent of the number which the Company is so advised can be sold in such
offering securities determined as follows:

              First, the securities proposed by the Company to be sold for its
       own account; and

              Second, allocated among the Holders desiring to include
       Registrable Securities in such Registration Statement pro rata based on
       the number of Registrable Securities to be included in such registration
       by such Holders.

              SECTION 6. UNDERWRITTEN OFFERINGS.

       (a) The Company agrees that if at any time it proposes to register any of
its securities under the Securities Act as contemplated by Section 5 and such
securities are to be distributed by or through one or more underwriters, the
Company will, subject to the provisions of Section 5(b), if requested by any
Holder desiring to include Registrable Securities in such Registration
Statement, arrange for such underwriters to include the shares to be offered and
sold by such holder among the securities to be


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distributed by such underwriters, and each such Holder agrees that all
securities shall be distributed and sold through such underwriters. The
selection of the underwriter or underwriters shall be made by the Company, in
its sole discretion, from amongst underwriting firms of national reputation. The
Holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters also shall be made to and
for the benefit of such Holders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders.

       (b) No Holder may participate in any underwritten registration under
Sections 4 and 5 unless such Holder (i) agrees to sell its Registrable
Securities on the basis provided in any underwriting arrangement approved by the
Company and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, securities escrow agreements, underwriting agreements and other
documents required under the terms of such underwriting, and furnishes to the
Company such information as the Company may reasonably request in writing for
inclusion in the Registration Statement (and the prospectus included therein);
provided, however, that no Holder shall be required to make any representations
or warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder and such
Holder's intended method of distribution and any other representation required
by law.

       (c)(i) Each Holder, whether or not such Holder participates in an
underwritten registration, agrees, if so required by the managing underwriter,
not to effect any public sale or distribution of such Holder's Registrable
Securities or sales of such shares pursuant to Rule 144, during the seven days
prior to and the ninety (90) days after any firm commitment underwritten
registration pursuant to Section 4 or 5 has become effective or, if the managing
underwriter advises the Company in writing that, in its opinion, no such public
sale or distribution should be effected for a specified period longer than
ninety (90) days after such underwritten registration in order to complete the
sale and distribution of securities included in such registration and the
Company gives notice to such Holder of such advice, during a reasonably longer
period after such underwritten registration but in no event longer than one
hundred twenty (120) days, except as part of such underwritten registration.

              (ii) The Company agrees, if so required by the managing
       underwriter, (x) not to effect any public sale or distribution of its
       equity securities or securities convertible into or


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       exchangeable or exercisable for any of such securities during the seven
       days prior to and the ninety (90) days after any firm commitment
       underwritten registration pursuant to Section 4 or 5 has become
       effective, except as part of such underwritten registration and except
       pursuant to registrations on Form S-4 and Form S-8 or any successor or
       similar forms thereto, and (y) to use its best efforts to cause each
       holder of its equity securities or any securities convertible into or
       exchangeable or exercisable for any of such securities, in each case
       purchased from the Company at any time after the date hereof (other than
       in a public offering), to agree not to effect any such public sale or
       distribution of such securities during such period or, in either case, if
       the managing underwriter advises the Company in writing that in its
       opinion no such public sale or distribution should be effected for a
       specified period longer than ninety (90) days after such underwritten
       registration in order to complete the sale and distribution of securities
       included in such registration, during a reasonably longer period after
       such underwritten registration but in no event longer than one hundred
       twenty (120) days, except as part of such underwritten registration.

       SECTION 7. REGISTRATION EXPENSES.

       The Company will pay all reasonable registration expenses in connection
with any registration pursuant to Section 2, 3 or 4 of this Agreement, including
without limitation all registration and filing fees, fees with respect to
filings required to be made with the National Association of Securities Dealers,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, and fees and expenses of counsel for the Company and of all
independent public accountants of the Company (including the expenses of any
"comfort" letters or update thereof required by or incident to the foregoing) in
connection with the Required Registration or the exercise of rights pursuant to
Section 3 or 4, except that the following expenses shall not be borne by the
Company:

              (a) underwriting discounts and commissions, underwriting expenses
       and transfer taxes, if any (other than discounts, commissions, expenses
       and transfer taxes relating to securities offered and sold by the
       Company) and cost of liability insurance (except to the extent carried by
       the Company on its own behalf); and

              (b) the cost of any special audit required by the Securities Act
       or the rules and regulations of the Commission thereunder as a result of
       the Company's obligation to maintain a Registration Statement current for
       more than 90 days pursuant to Section 8, which costs shall be prorated
       among the holders of Registrable Securities according to the number of


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       shares of Registrable Securities so covered by such Registration
       Statement during such extended period.

       SECTION 8. REGISTRATION PROCEDURES.

       Whenever the Company seeks to effect the registration of any shares of
Registrable Securities under the Securities Act as provided in Sections 2, 3 and
4, the Company agrees it will as expeditiously as possible, subject to the terms
and conditions of such sections (including without limitation the Company's
right to terminate or delay a registration pursuant to Sections 3 or 4):

              (a) prepare the file with the Commission and requisite
       Registration Statement to effect such registration, use its best efforts
       to cause such Registration Statement to become effective and promptly
       notify each holder of securities covered by such Registration Statement
       and any managing underwriter of the effectiveness thereof;

              (b) prepare and file with the Commission such amendments and
       supplements to such Registration Statement and the prospectus used in
       connection therewith as may be necessary to keep such Registration
       Statement effective, notify each holder of securities covered by such
       Registration Statement and any managing underwriter as promptly as
       practicable of any request by the Commission for amendments or
       supplements to such Registration Statement or related prospectus or for
       additional information and comply with the provisions of the Securities
       Act with respect to the disposition of all securities covered by such
       Registration Statement until the earlier of such time as all of such
       securities have been disposed of in accordance with the intended methods
       of disposition by the seller or sellers thereof set forth in such
       Registration Statement, but for no longer than 90 days subsequent to the
       effective date of such registration; provided that if less than all the
       securities covered by the Registration Statement are withdrawn from
       registration after the expiration of such period, the securities so
       withdrawn shall be allocated pro rata among the holders thereof on the
       basis of the respective numbers of Registrable Securities held by them
       included in such registration;

              (c) Furnish to each seller of shares covered by such Registration
       Statement such number of conformed copies of such Registration Statement
       and of each such amendment and supplement thereto (in each case including
       all exhibits), such number of copies of the prospectus contained in such
       Registration Statement (including each preliminary prospectus and any
       summary prospectus) and any other prospectus filed under Rule 424 under
       the Securities Act, in conformity with the requirements of the Securities
       Act, and such other


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       documents as such seller or such holder may reasonably request;

              (d) use its best efforts to register or qualify all shares covered
       by such Registration Statement under such other securities or blue sky
       laws of such jurisdictions as each seller thereof shall reasonably
       request, to keep such registration or qualification in effect for so long
       as such Registration Statement remains in effect, and take any other
       action which may be reasonably necessary or advisable to enable such
       seller to consummate the disposition in such jurisdictions of the
       securities owned by such seller, except that the Company shall not for
       any such purpose be required to (i) qualify generally to do business as a
       foreign corporation in any jurisdiction wherein it would not but for the
       requirements of this section (d) be obligated to be so qualified, (ii)
       subject itself to taxation in any such jurisdiction or (iii) consent to
       general service of process in any such jurisdiction;

              (e) use its best efforts to cause all shares covered by such
       Registration Statement to be registered with or approved by such other
       governmental agencies or authorities as may be necessary to enable the
       seller or sellers thereof to consummate the disposition of such shares;

              (f) enter into customary agreements (including, in the case of an
       Underwritten Offering, an underwriting agreement in customary form) and
       take all other action in connection therewith in order to expedite or
       facilitate the distribution of the Registrable Securities included in
       such Registration Statement, and, in the case of an Underwritten
       Offering, make representations and warranties to the holders of
       Registrable Securities covered by such Registration Statement and to the
       underwriters in such form and scope as are customarily made by issuers to
       underwriters in primary underwritten offerings and confirm the same to
       the extent customary if and when requested;

              (g) make available for inspection during normal business hours by
       a representative of the holders of Registrable Securities covered by such
       Registration Statement and any managing underwriter, and any attorney or
       accountant retained by such holders or managing underwriter, all
       financial and other records, pertinent corporate documents and properties
       of the Company, and cause the officers, directors and employees of the
       Company to supply all information reasonably requested by such
       representative, managing underwriter, attorney or accountant in
       connection with such Registration Statement;


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              (h) use its best efforts to furnish to each holder of Registrable
       Securities covered by such Registration Statement a signed counterpart,
       addressed to such holder (and, in the case of an Underwritten Offering by
       the Company, the underwriters), of

                     (i) an opinion of counsel for the Company, dated the
              effective date of such Registration Statement (and, in case of an
              Underwritten Offering by the Company, dated the date of each
              closing under the underwriting agreement), reasonably satisfactory
              in form and substance to such holder, and

                     (ii) a "comfort" letter, dated the effective date of such
              Registration Statement (and, in the case of an Underwritten
              Offering, dated the date of each closing under the underwriting
              agreement), signed by the independent public accountants who have
              certified the Company's financial statements included in such
              Registration Statement, covering substantially the same matters
              with respect to such Registration Statement (and the prospectus
              included therein) and, in the case of the accountants' letter,
              with respect to events subsequent to the date of such financial
              statements, as are customarily covered in accountants' letters
              delivered to underwriters in underwritten public offerings of
              securities and such other financial matters as such holder (or the
              underwriters) may reasonably request;

              (i) immediately notify each holder of Registrable Securities
       covered by such Registration Statement and any managing underwriter, at
       any time when a prospectus relating thereto is required to be delivered
       under the Securities Act, of the happening of any event as a result of
       which the prospectus included in such Registration Statement, as then in
       effect, includes an untrue statement of a material fact or omits to state
       any material fact required to be stated therein or necessary to make the
       statements therein not misleading in the light of the circumstances under
       which they were made, and at the request of any such seller or holder
       promptly prepare and furnish to such seller or holder a reasonable number
       of copies of a supplement to or an amendment of such prospectus as may be
       necessary so that, as thereafter delivered to the purchasers of such
       securities, such prospectus shall not include an untrue statement of a
       material fact or omit to state a material fact required to be stated
       therein or necessary to make the statements therein not misleading in the
       light of the circumstances under which they were made;


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              (j) notify each holder of Registrable Securities covered by such
       Registration Statement and any managing underwriter as promptly as
       practicable after becoming aware of the issuance by the Commission of any
       stop order suspending the effectiveness of such Registration Statement or
       the initiation of any proceedings for that purpose or the receipt by the
       Company of any notification with respect to the suspension of
       qualification of any Registrable Securities for sale in any jurisdiction
       or the initiation or threatening of any proceeding for such purpose and
       make all reasonable efforts to obtain as promptly as practicable the
       withdrawal of any order or other action suspending the qualification of
       the Registrable Securities for sale in any jurisdiction;

              (k) (i) otherwise use its best efforts to comply with all
       applicable rules and regulations of the Commission, (ii) make available
       to its security holders, as soon as reasonably practicable, an earnings
       statement covering the period of at least twelve months, but not more
       than eighteen months, beginning with the first full calendar month after
       the effective date of such Registration Statement, which earnings
       statement shall satisfy the provisions of Section 11(a) of the Securities
       Act, and (iii) not file any Registration Statement or prospectus or
       amendment or supplement to such Registration Statement or prospectus to
       which any such selling Holder shall have reasonably objected on the
       grounds that such amendment or supplement does not comply in all material
       respects with the requirements of the Securities Act, having been
       furnished with a copy thereof at least two Business Days prior to the
       filing thereof;

              (l) provide a transfer agent and registrar for all shares covered
       by such Registration Statement not later than the effective date of such
       Registration Statement; and

              (m) use its best efforts to list all shares of Common Stock
       covered by such Registration Statement on any securities exchange or
       national market system on which the Common Stock is then listed.

       The Company may require each holder of Registrable Securities as to which
any registration is being effected to furnish the Company with such information
and undertakings regarding such holder and the distribution of such securities
as the Company may from time to time reasonably request in writing.

       Each holder of Registrable Securities covered by any Registration
Statement agrees (i) that upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (i) of this Section 8,
such holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the Registration Statement relating to such


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Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by paragraph (i) of this Section
8 and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies (which shall be
conspicuously marked as such), then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice and (ii) that it will immediately notify the Company, at
any time when a prospectus relating to the registration of such shares is
required to be delivered under the Securities Act, of the happening of any event
as a result of which information previously furnished by such holder to the
Company in writing for inclusion in such prospectus contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made. In the event the Company or any
such holder shall give any such notice, the period referred to in paragraph (b)
of this Section 8 shall be extended by a number of days equal to the number of
days during the period from and including the giving of notice pursuant to
paragraph (i) of this Section 8 to and including the date when each seller of
any securities covered by such Registration Statement shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph (i)
of this Section 8.

       SECTION 9. INDEMNIFICATION.

       (a) In the event of any registration of any Holder's Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless each such Holder (a "Selling Holder"), its
directors, each underwriter and each controlling Person of any Selling Holder,
if any, against any losses, claims, damages or liabilities, joint or several (or
actions in respect thereof), including attorneys' fees and costs, to which such
holder, underwriter or controlling Person may be subject under the Securities
Act, under any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement (or alleged untrue statement) of any material fact
contained in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, any summary prospectus issued in connection with
any securities being registered, any other document used to sell the securities
(including an illegal prospectus) (collectively, the "Selling Documents"), or
any amendment or supplement thereto (an "Amended Selling Document"), or (ii) any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein (in light of the
circumstances in which they were made with respect to any prospectus) not
misleading, and shall reimburse each such Selling Holder, its directors,
underwriter or controlling Person for any


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legal or other expenses reasonably incurred by such selling Holder, its
directors, underwriter or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to any Selling Holder, its directors,
underwriter or controlling Person in any such event to the extent that any loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such Registration Statement, Selling Document, Amended
Selling Document, or any other document, in reliance upon and in strict
conformity with written information furnished to the Company by such Selling
Holder, its directors, underwriter or controlling Person, respectively,
specifically for use therein; and provided further that the Company shall not be
liable under this paragraph (a) with respect to any misstatement or omission or
alleged misstatement or omission in any Selling Document to the extent that any
such loss, claim, damage or liability results from the fact that the Selling
Holder, underwriter or controlling Person sold securities to a Person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of any Amended Selling Document if the Company had previously
furnished copies thereof to such Selling Holder, underwriter or controlling
Person and if the misstatement or omission or alleged misstatement or omission
was corrected in the Amended Selling Document. The indemnity provided for herein
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Selling Holder, its directors, underwriter or controlling
Person.

       (b) In the event of any registration of any of the Company's securities
or any Registrable Securities under the Securities Act, each Selling Holder
shall furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with such Registration
Statement and agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, each underwriter and each controlling Person of the
Company, if any, against any losses, claims, damages or liabilities, joint or
several (or actions in respect thereof), to which the Company, its directors,
such Selling Holder, underwriter or controlling Person may be subject under the
Securities Act or under any other statute or at common law, insofar as such
losses, claims, damages or liabilities, joint or several (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement (or alleged
untrue statement) of any material fact contained in any Registration Statement
under which such securities were registered under the Securities Act, any
Selling Document or any Amended Selling Document, or (ii) any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein (in light of the circumstances in
which they were made with respect to any prospectus) not misleading, and shall
reimburse the Company, its directors, such underwriter and controlling Person
for any legal or other expenses reasonably incurred by such Persons in


                                      -14-
<PAGE>   15

connection with investigating or defending any such loss, claim, damage,
liability or action; in each case, to the extent, and only to the extent, that
each untrue statement or omission (or alleged untrue statement or omission) is
made in reliance upon and in strict conformity with written information
furnished to the Company by such Selling Holder.

       (c) If the indemnification provided for in paragraph (a) or (b) above is
unavailable to an indemnified party in accordance with its terms in respect of
any losses, claims, damages or liabilities referred to therein, then the
obligations of each indemnitor thereunder shall be limited to such amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities, in such proportion as is appropriate to reflect the relative
fault of such indemnitor on the one hand and of the indemnified parties on the
other hand in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of each indemnitor and of the indemnified
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
indemnitor, or by the indemnified parities, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

       The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities or actions in respect thereof referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expense reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no Selling
Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities sold by it exceeds the
amount of any damages which such person has otherwise been required to pay and
has actually paid by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of a fraudulent misrepresentation
(within the meaning of Section 10(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

       (d) Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party shall, if


                                      -15-
<PAGE>   16

a claim in respect thereof is to be made against an indemnitor under paragraph
(a) or (b) above, as the case may be, notify the indemnitor in writing of the
commencement thereof; but the omission so to notify the indemnitor shall not
relieve it from any liability which it may have to any indemnified party under
such subsection unless the failure to provide such notice results in the
forfeiture by the indemnitor of substantial rights or defenses. In case any such
action shall be brought against any indemnified party, and it shall notify the
indemnitor of the commencement thereof, the indemnitor shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnitor and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are in addition to or in conflict with those
available to the indemnitor, the indemnified party or parties shall have the
right to select separate counsel to assert such legal defenses (in which case
the indemnitor shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties). Upon the permitted assumption by
the indemnitor of the defense of such action, and approval by the indemnified
party of counsel, the indemnitor shall not be liable to such indemnified party
under this Section 9 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof (other than
reasonable costs of investigation) unless (i) the indemnified party shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence, (ii) the indemnitor
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time, (iii) the indemnitor
and its counsel do not actively and vigorously pursue the defense of such
action, or (iv) the indemnitor has authorized the employment of counsel for the
indemnified party at the expense of the indemnitor. The indemnitor shall not be
liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld.

       SECTION 10. TERMINATION OF RIGHTS.

       All rights of any particular Holder under this Agreement shall terminate
at 5:00 p.m., Pacific Time, on the date ten (10) years after the date of this
Agreement, provided that the provisions of Section 9 hereof shall survive any
termination of this Agreement.

       SECTION 11. CALCULATION OF SHARES.

       For purposes of calculating the number of Registrable Securities held by
a Holder (including without limitation pursuant to Sections 4(c) and 5(b)
hereof), a Warrant shall be deemed to


                                      -16-
<PAGE>   17

count as the number of shares of Common Stock which may be acquired upon
exercise thereof.

       SECTION 12. MISCELLANEOUS.

       (a) GOVERNING LAW. This Agreement shall be governed by and construed
under the internal substantive laws of the State of California.

       (b) SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the parties and their respective successors,
assigns, heirs, executors and administrators. The rights and obligations of any
Investor hereunder may be assigned by such Investor to any Person acquiring
Registrable Securities from the Investor contemporaneously with such assignment,
provided that the rights so assumed shall apply only to the Registrable
Securities so acquired. The rights and obligations of the Company hereunder may
not be assigned by it without the prior written consent of the Investors.

       (c) ENTIRE AGREEMENT. This Agreement, the Unit Purchase Agreement and the
Related Agreements (as defined in the Unit Purchase Agreement) constitute the
full and entire understanding and agreement among the parties with regard to the
subject matter hereof and no party shall be liable or bound to any other party
in any manner by any representations, warranties, covenants or agreements except
as specifically set forth herein or therein. Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties hereto
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided herein.

       (d) SEPARABILITY. Any invalidity, illegality or limitation of the
enforceability of any one or more of the provisions of this Agreement, or any
part thereof, shall in no way affect or impair the validity, legality or
enforceability of the other provisions of this Agreement. In case any provision
of this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent practicable, be modified so as to make it valid, legal and enforceable
and to retain as nearly as practicable the intent of the parties, and the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

       (e) AMENDMENT AND WAIVER. Any provision of this Agreement may be amended
and the observance of any provision of this Agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely), with the written
consent of the Company and the holders of not less than two thirds of the


                                      -17-
<PAGE>   18

Registrable Securities; provided, however, that no such amendment or waiver
shall reduce the aforesaid percentage of Registrable Securities the holders of
which are required to consent to any waiver or supplemental agreement without
the consent of the holders of all outstanding Registrable Securities. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon the Company and each Holder under this Agreement. Upon the effectuation of
each such amendment or waiver, the Company shall promptly give written notice
thereof to the Holders who have not previously consented thereto in writing.

       (f) DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any Holder or any subsequent holder of any
Registrable Securities upon any breach, default or noncompliance of the Company
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on the Holders' part of any breach, default or
noncompliance under this Agreement or any waiver on the Holders' part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing, and that
all remedies afforded to the Holders under this Agreement shall be cumulative
and not alternative.

       (g) NOTICES, ETC. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:

              (i) if to any Holder, initially at the address set forth below its
       name on Exhibit A to the Unit Purchase Agreement, and thereafter at such
       other address, notice of which is given in accordance with this Section
       12(g); and

              (ii) if to the Company, initially at 2381 Rosecrans Avenue, El
       Segundo, California 90245, Attention: President, and thereafter at such
       other address notice of which is given in accordance with this Section
       12(g).

       All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being sent by certified mail, return receipt requested, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.


                                      -18-
<PAGE>   19

       (h) TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

       (i) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

       IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                        HAWTHORNE FINANCIAL CORPORATION



                                        By:
                                             -----------------------------------
                                             Name:  Scott A. Braly
                                             Title:  Chief Executive Officer


                                        [NAME OF INVESTOR]



                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                        [NAME OF INVESTOR]



                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                      -19-
<PAGE>   20

                                        [NAME OF INVESTOR]



                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                        [NAME OF INVESTOR]



                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                        [NAME OF INVESTOR]



                                        By: