Document:

<PAGE>   1

                                                                    EXHIBIT 10.2

                     CHANGE IN CONTROL EMPLOYMENT AGREEMENT

        This Agreement by and between Hawthorne Financial Corporation (the
"Company"), and [EXECUTIVE OFFICER] (the "Executive"), is dated as of July __,
2000.

        RECITALS

        The Board of Directors of the Company (the "Board"), has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company.

        The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.

        Therefore, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.

        NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1)      Certain Definitions.

        a)      The "Effective Date" shall mean the first date during the Change
                of Control Period (as defined in Section 1(b)) on which a Change
                of Control (as defined in Section 2) occurs.

                If a Change of Control occurs and if the Executive's employment
                with the Company is terminated by the Company prior to the date
                on which the Change of Control occurs, and if it is reasonably
                demonstrated by the Executive that such termination of
                employment (i) was at the request of a third party who has taken
                steps reasonably calculated to effect a Change of Control or
                (ii) otherwise arose in connection with or anticipation of a
                Change of Control, then for all purposes of this Agreement the
                "Effective Date" shall mean the date immediately prior to the
                date of such termination of employment.

        b)      The "Change of Control Period" shall mean the period commencing
                on the date of this Agreement and ending on the third
                anniversary of the date THEREAFTER.

        c)      "Renewal Date" - Commencing on the first anniversary date of
                this Agreement and on each anniversary date thereafter, this
                Agreement shall be automatically extended for another three year
                Change of Control period. The Company may, however, terminate
                the

                                                                               1
<PAGE>   2

                automatic extension by providing the Executive with written
                notice at least 60 days prior to the Renewal Date that the
                Change of Control period shall not be so extended.

        d)      "Company" shall mean the Company as herein before defined and
                any successor to its business and/or assets as aforesaid which
                assumes and agrees to perform this Agreement by operation of
                law, or otherwise.

        e)      "Affiliated Companies" shall mean any company controlled by,
                controlling or under common control with the Company.

        f)      "Disability" shall mean the Executive's long-term disability for
                purposes of any reasonable occupation as determined under the
                Company's disability plan that is applicable to the Executive.

        g)      "Notice of Termination" means a written notice which (i)
                indicates the specific termination provision in this Agreement
                relied upon, (ii) to the extent applicable, sets forth in
                reasonable detail the facts and circumstances claimed to provide
                a basis for termination of the Executive's employment under the
                provision so indicated and (iii) if the Date of Termination (as
                defined in Section 1(h)) is other than the date of receipt of
                such notice, specifies the termination date (which date shall be
                not more than thirty days after the giving of such notice).

        h)      "Date of Termination" means (i) if the Executive's employment is
                terminated by the Company for Cause, or by the Executive for
                Good Reason, the date of receipt of the Notice of Termination or
                any later date specified therein, as the case may be, (ii) if
                the Executive's employment is terminated by the Company other
                than for Cause or Disability, the Date of Termination shall be
                the date on which the Company notifies the Executive of such
                termination and (iii) if the Executive's employment is
                terminated by reason of death or Disability, the Date of
                Termination shall be the date of death of the Executive or the
                Disability Effective Date, as the case may be.

2)      Change of Control. For the purpose of this Agreement, a "Change of
        Control" shall mean:

        a)      The acquisition by any individual, entity or group (a "Person")
                within the meaning of Section 13(d)(3) or 14(d)(2) of the
                Securities Exchange Act of 1934, as amended (the "Exchange Act")
                of beneficial ownership (within the meaning of Rule 13d-3
                promulgated under the Exchange Act) of more than 24.9% of either
                (i) the then outstanding shares of common stock of the Company
                (the "Outstanding Company Common Stock") or (ii) the combined
                voting power of the then outstanding voting securities of the
                Company entitled to vote generally in the election of directors
                (the "Outstanding Company Voting Securities").

                For purposes of this subsection (a), a Change of Control may not
                occur due to the exercise of warrants. Therefore, the exercise
                of outstanding warrants is specifically excluded from the
                determination of whether or not a Change of Control has
                occurred.

                                                                               2
<PAGE>   3

                In addition, the following acquisitions shall not constitute a
                Change of Control: (i) any acquisition directly from the
                Company, (ii) any acquisition by the Company, (iii) any
                acquisition by any employee benefit plan (or related trust)
                sponsored or maintained by the Company or any corporation
                controlled by the Company or (iv) any acquisition by any
                corporation pursuant to a transaction which complies with
                clauses (i), (ii) and (iii) of subsection (c) of this Section 2;
                or

        b)      Directors who, as of the date of this Agreement, constitute the
                Board (the "Incumbent Board") cease for any reason to constitute
                at least a majority of the Board; provided, however, that any
                individual becoming a director subsequent to the date of this
                Agreement whose election, or nomination for election by the
                Company's shareholders, was approved by a vote of at least a
                majority of the directors then comprising the Incumbent Board
                shall be considered as though such individual were a member of
                the Incumbent Board, but excluding, for this purpose, any such
                individual whose initial assumption of office occurs as a result
                of an actual or threatened election contest with respect to the
                election or removal of directors or other actual or threatened
                solicitation of proxies or consents by or on behalf of a Person
                other than the Board; or

        c)      Consummation by the Company of a reorganization, merger or
                consolidation or sale or other disposition of all or
                substantially all of the assets of the Company or the
                acquisition of assets or stock of another corporation (a
                "Business Combination").

                This Section 2(c) shall not apply if, following such Business
                Combination:

                (i) all or substantially all of the individuals and entities who
                were the beneficial owners, respectively, of the Outstanding
                Company Common Stock and Outstanding Company Voting Securities
                immediately prior to such Business Combination beneficially own,
                directly or indirectly, more than 50% of, respectively, the then
                outstanding shares of common stock and the combined voting power
                of the then outstanding voting securities entitled to vote
                generally in the election of directors, as the case may be, of
                the corporation resulting from such Business Combination
                (including, without limitation, a corporation which as a result
                of such transaction owns the Company or all or substantially all
                of the Company's assets either directly or through one or more
                subsidiaries) in substantially the same proportions as their
                ownership, immediately prior to such Business Combination of the
                Outstanding Company Common Stock and Outstanding Company Voting
                Securities, as the case may be;

                (ii) A Person (excluding any corporation resulting from such
                Business Combination or any employee benefit plan (or related
                trust) of the Company or such corporation resulting from such
                Business Combination) beneficially owns, directly or indirectly,
                20% or more of, respectively, the then outstanding shares of
                common stock of the corporation resulting from such Business
                Combination or the combined voting power of the then outstanding
                voting securities of such corporation, so long as such ownership
                existed prior to the Business Combination; and

                (iii) at least a majority of the members of the board of
                directors of the corporation

                                                                               3
<PAGE>   4

                resulting from such Business Combination were members of the
                Incumbent Board at the time of the execution of the initial
                agreement, or of the action of the Board, providing for such
                Business Combination; or

        d)      Approval by the shareholders of the Company of a complete
                liquidation or dissolution of the Company.

3)      Employment Period. The Company hereby agrees to continue the Executive
        in its employ, and the Executive hereby agrees to remain in the employ
        of the Company subject to the terms and conditions of this Agreement,
        for the period commencing on the Effective Date and ending on the third
        [second] anniversary of such date (the "Employment Period").

4)      Terms of Employment.

        a)      Position and Duties.

                i)      During the Employment Period, (A) the Executive's
                        position (including status, offices, titles and
                        reporting requirements), authority, duties and
                        responsibilities shall be at least commensurate in all
                        material respects with the most significant of those
                        held, exercised and assigned to the Executive at any
                        time during the 120-day period immediately preceding the
                        Effective Date and (B) the Executive's services shall be
                        performed at the location where the Executive was
                        employed immediately preceding the Effective Date or any
                        office or location less than 25 miles from such
                        location.

                ii)     During the Employment Period, and excluding any periods
                        of vacation and sick leave to which the Executive is
                        entitled, the Executive agrees to devote reasonable
                        attention and time during normal business hours to the
                        business and affairs of the Company and, to the extent
                        necessary to discharge the responsibilities assigned to
                        the Executive hereunder, to use the Executive's
                        reasonable best efforts to perform faithfully and
                        efficiently such responsibilities.

                        During the Employment Period, the Executive may not
                        compete with the Company. The Executive recognizes
                        his/her continuing fiduciary duty to at all times act in
                        the Company's best interest. Any outside employment must
                        be cleared for conflicts and receive the express written
                        permission of the Board.

                        During the Employment Period it shall not be a violation
                        of this Agreement for the Executive to (A) serve on
                        corporate, civic or charitable boards or committees, (B)
                        deliver lectures, fulfill speaking engagements or teach
                        at educational institutions and (C) manage personal
                        investments, so long as such activities do not
                        significantly interfere with the performance of the
                        Executive's responsibilities as an employee of the
                        Company in accordance with this Agreement. It is
                        expressly understood and agreed that to the extent that
                        any such activities have been conducted by the Executive
                        prior to the Effective Date, the continued conduct of
                        such activities (or the conduct of activities similar in
                        nature and scope thereto) subsequent to the Effective
                        Date shall

                                                                               4
<PAGE>   5

                        not thereafter be deemed to interfere with the
                        performance of the Executive's responsibilities to the
                        Company.

        b)      Compensation.

                i)      Base Salary. During the Employment Period, the Executive
                        shall receive an annual base salary ("Annual Base
                        Salary"), which shall be paid at a monthly rate, at
                        least equal to twelve times the highest monthly base
                        salary paid or payable, including any base salary which
                        has been earned but deferred, to the Executive by the
                        Company and its affiliated companies in respect of the
                        twelve-month period immediately preceding the month in
                        which the Effective Date occurs. During the Employment
                        Period, the Annual Base Salary shall be reviewed no more
                        than 12 months after the last salary increase awarded to
                        the Executive prior to the Effective Date and thereafter
                        at least annually. Any increase in Annual Base Salary
                        shall not serve to limit or reduce any other obligation
                        to the Executive under this Agreement. Annual Base
                        Salary shall not be reduced after any such increase, and
                        the term Annual Base Salary as utilized in this
                        Agreement shall refer to Annual Base Salary as so
                        increased.

                ii)     Incentives. In addition to Annual Base Salary, the
                        Executive shall be awarded the following bonuses. For
                        each fiscal year ending during the Employment Period,
                        the Executive shall be awarded an annual bonus in cash
                        at least equal to the average of the Executive's bonuses
                        under the Company's Annual Incentive Program, or any
                        comparable bonus under any predecessor or successor
                        plan(s), for the last three full fiscal years prior to
                        the Effective Date. This bonus shall be known at the
                        "Annual Bonus."

                        In the event an Executive has completed at least one
                        year, but not three full years of employment with the
                        Company prior to the Effective Date, any bonuses
                        received under the Company's Annual Incentive Program,
                        or any comparable bonus under any predecessor or
                        successor plan(s), will be averaged to constitute the
                        Annual Bonus.

                        If an Executive has been employed for less than one year
                        prior to the Effective Date, the then existing President
                        and Chief Executive Officer will review the Executive's
                        performance relative to established performance goals. A
                        pro rata bonus will then be recommended to the
                        Compensation Committee of the Board of Directors, which
                        if approved, will be annualized to constitute the Annual
                        Bonus.

                        Each such Annual Bonus shall be paid no later than the
                        fifteenth day of the third month of the fiscal year next
                        following the fiscal year for which the Annual Bonus is
                        awarded, unless the Executive shall elect to defer the
                        receipt of such Annual Bonus. In addition, during the
                        Employment Period, the Executive shall be entitled to
                        participate in all long-term and other incentive plans,
                        practices, policies and programs applicable generally to
                        other peer executives of the Company and its affiliated
                        companies, but in no event shall such plans, practices,
                        policies and programs provide the Executive with
                        incentive opportunities (measured with respect to both
                        regular and special incentive opportunities, to the
                        extent, if any, that such distinction is

                                                                               5
<PAGE>   6

                        applicable) less favorable, in the aggregate, than the
                        most favorable of those provided by the Company and its
                        affiliated companies for the Executive under such plans,
                        practices, policies and programs as in effect at any
                        time during the 120-day period immediately preceding the
                        Effective Date or if more favorable to the Executive,
                        those provided generally at any time after the Effective
                        Date to other peer executives of the Company and its
                        affiliated companies.

                iii)    Savings and Retirement Plans. During the Employment
                        Period, the Executive shall be entitled to participate
                        in all savings and retirement plans, practices, policies
                        and programs applicable generally to other peer
                        executives of the Company and its affiliated companies,
                        but in no event shall such plans, practices, policies
                        and programs provide the Executive with savings
                        opportunities and retirement benefit opportunities, in
                        each case, less favorable, in the aggregate, than the
                        most favorable of those provided by the Company and its
                        affiliated companies for the Executive under such plans,
                        practices, policies and programs as in effect at any
                        time during the 120-day period immediately preceding the
                        Effective Date or if more favorable to the Executive,
                        those provided generally at any time after the Effective
                        Date to other peer executives of the Company and its
                        affiliated companies. Without limiting the generality of
                        the foregoing, the Company and its affiliated companies
                        shall continue to honor any individual agreements
                        between any of them and the Executive regarding the
                        provision of supplemental retirement benefits such as
                        (but not limited to) post-retirement income and/or
                        welfare benefits (each of which is hereafter referred to
                        as an "Individual SERP").

                iv)     Welfare Benefit Plans. During the Employment Period, the
                        Executive and/or the Executive's family, as the case may
                        be, shall be eligible for participation in and shall
                        receive all benefits under welfare benefit plans,
                        practices, policies and programs provided by the Company
                        and its affiliated companies (including, without
                        limitation, medical, prescription, dental, disability,
                        salary continuance, employee life, group life,
                        accidental death and travel accident insurance plans and
                        programs) to the extent applicable generally to other
                        peer executives of the Company and its affiliated
                        companies, but in no event shall such plans, practices,
                        policies and programs provide the Executive with
                        benefits which are less favorable, in the aggregate,
                        than the most favorable of such plans, practices,
                        policies and programs in effect for the Executive at any
                        time during the 120-day period immediately preceding the
                        Effective Date or, if more favorable to the Executive,
                        those provided generally at any time after the Effective
                        Date to other peer executives of the Company and its
                        affiliated companies.

                v)      Expenses. During the Employment Period, the Executive
                        shall be entitled to receive prompt reimbursement for
                        all reasonable expenses incurred by the Executive in
                        accordance with the most favorable policies, practices
                        and procedures of the Company and its affiliated
                        companies in effect for the Executive at any time during
                        the 120-day period immediately preceding the Effective
                        Date or, if more favorable to the Executive, as in
                        effect generally at any time thereafter with respect to
                        other peer executives of the Company and its affiliated
                        companies.

                                                                               6
<PAGE>   7

                vi)     Fringe Benefits. During the Employment Period, the
                        Executive shall be entitled to fringe benefits,
                        including, without limitation, the fringe benefits
                        identified on Exhibit "A" attached hereto in accordance
                        with the most favorable plans, practices, programs and
                        policies of the Company and its affiliated companies in
                        effect for the Executive at any time during the 120-day
                        period immediately preceding the Effective Date or, if
                        more favorable to the Executive, as in effect generally
                        at any time thereafter with respect to other peer
                        executives of the Company and its affiliated companies.

                vii)    Office and Support Staff. During the Employment Period,
                        the Executive shall be entitled to an office or offices
                        of a size and with furnishings and other appointments,
                        and to exclusive personal secretarial and other
                        assistance, at least equal to the most favorable of the
                        foregoing provided to the Executive by the Company and
                        its affiliated companies at any time during the 120-day
                        period immediately preceding the Effective Date or, if
                        more favorable to the Executive, as provided generally
                        at any time thereafter with respect to other peer
                        executives of the Company and its affiliated companies.

                viii)   Vacation. During the Employment Period, the Executive
                        shall be entitled to paid vacation in accordance with
                        the most favorable plans, policies, programs and
                        practices of the Company and its affiliated companies as
                        in effect for the Executive at any time during the
                        120-day period immediately preceding the Effective Date
                        or, if more favorable to the Executive, as in effect
                        generally at any time thereafter with respect to other
                        peer executives of the Company and its affiliated
                        companies.

5)      Termination of Employment.

        a)      Death or Disability. The Executive's employment shall terminate
                automatically upon the Executive's death during the Employment
                Period. If the Company determines in good faith that the
                Disability of the Executive has occurred during the Employment
                Period, it may give to the Executive written notice in
                accordance with Section 12(b) of this Agreement of its intention
                to terminate the Executive's employment.

                In such event, the Executive's employment with the Company shall
                terminate effective on the 30th day after receipt of such notice
                by the Executive (the "Disability Effective Date"), provided
                that, within the 30 days after such receipt, the Executive shall
                not have returned to full-time performance of the Executive's
                duties.

        b)      Cause. The Company may terminate the Executive's employment
                during the Employment Period for Cause. For purposes of this
                Agreement, "Cause" shall mean:

                i)      the willful and continued failure of the Executive to
                        perform substantially the Executive's duties with the
                        Company or one of its affiliates (other than any such
                        failure resulting from incapacity due to physical or
                        mental illness), after a written demand for substantial
                        performance is delivered to the Executive by the Board
                        which specifically identifies the manner in which the
                        Board believes that the Executive has not substantially
                        performed the Executive's duties, or

                                                                               7
<PAGE>   8

                ii)     the willful engaging by the Executive in illegal conduct
                        or gross misconduct which is materially and demonstrably
                        injurious to the Company.

                        For purposes of this provision, no act or failure to
                        act, on the part of the Executive, shall be considered
                        "willful" unless it is done, or omitted to be done, by
                        the Executive in bad faith or without reasonable belief
                        that the Executive's action or omission was in the best
                        interests of the Company. Any act, or failure to act,
                        based upon authority given pursuant to a resolution duly
                        adopted by the Board or upon the instructions of a
                        senior officer of the Company or based upon the advice
                        of counsel for the Company shall be conclusively
                        presumed to be done, or omitted to be done, by the
                        Executive in good faith and in the best interests of the
                        Company.

                        The cessation of employment of the Executive shall not
                        be deemed to be for Cause unless and until there shall
                        have been delivered to the Executive a copy of a
                        resolution duly adopted by the affirmative vote of not
                        less than three-quarters of the entire membership of the
                        Board at a meeting of the Board called and held for such
                        purpose (after reasonable notice is provided to the
                        Executive, and the Executive is given an opportunity,
                        together with counsel, to be heard before the Board),
                        finding that, in the good faith opinion of the Board,
                        the Executive is guilty of the conduct described in
                        subparagraph (i) or (ii) above, and specifying the
                        particulars thereof in detail.

        c)      Good Reason. The Executive may terminate Executive's employment
                during the Employment Period for Good Reason. For purposes of
                this Agreement, "Good Reason" shall mean:

                i)      the assignment to the Executive of any duties
                        inconsistent in any respect with the Executive's
                        position (including status, offices, titles and
                        reporting requirements), authority, duties or
                        responsibilities as contemplated by Section 4(a) of this
                        Agreement, or any other action by the Company which
                        results in a diminution in such position, authority,
                        duties or responsibilities, excluding for this purpose
                        isolated, insubstantial and inadvertent actionS not
                        taken in bad faith and which are remedied by the Company
                        promptly after receipt of notice thereof given by the
                        Executive;

                ii)     any failure by the Company to comply with any of the
                        provisions of Section 4(b) of this Agreement, other than
                        isolated, insubstantial and inadvertent failureS not
                        occurring in bad faith and which are remedied by the
                        Company promptly after receipt of notice thereof given
                        by the Executive;

                iii)    the Company's requiring the Executive to be based at any
                        office or location other than as provided in Section
                        4(a)(i)(B) hereof or the Company's requiring the
                        Executive to travel on Company business to a
                        substantially greater extent than required immediately
                        prior to the Effective Date;

                iv)     any purported termination by the Company of the
                        Executive's employment otherwise than as expressly
                        permitted by this Agreement; or

                                                                               8
<PAGE>   9

                v)      any failure by the Company to comply with and satisfy
                        Section 11(c) of this Agreement.

For purposes of this Section 5(c), the Executive's cessation of employment shall
not be deemed for "Good Reason" unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice is
provided to the Executive, and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive has Good Reason as described in subparagraph
(i) - (v) above, and specifying the particulars thereof in detail.

        d)      Notice of Termination. Any termination by the Company for Cause,
                or by the Executive for Good Reason, shall be communicated by
                Notice of Termination to the other party hereto given in
                accordance with Section 12(b) of this Agreement. The failure by
                the Executive or the Company to set forth in the Notice of
                Termination any fact or circumstance which contributes to a
                showing of Good Reason or Cause shall not waive any right of the
                Executive or the Company, respectively, hereunder or preclude
                the Executive or the Company, respectively, from asserting such
                fact or circumstance in enforcing the Executive's or the
                Company's rights hereunder.

6)      Obligations of the Company upon Termination.

        a)      Good Reason; Other Than for Cause, Death or Disability. If,
                during the Employment Period, the Company shall terminate the
                Executive's employment other than for Cause or Disability or the
                Executive shall terminate employment for Good Reason:

                i)      the Company shall pay to the Executive in a lump sum in
                        cash within 30 days after the Date of Termination the
                        aggregate of the following amounts:

                        A.      the sum of:

                                (1) the Executive's Annual Base Salary through
                                the Date of Termination to the extent not
                                theretofore paid; plus

                                (2) the product of:

                                (x) the higher of (I) the Annual Bonus and (II)
                                any bonus paid or payable, including any bonus
                                or portion thereof which has been earned but
                                deferred (and annualized for any fiscal year
                                consisting of less than twelve full months or
                                during which the Executive was employed for less
                                than twelve full months), for the most recently
                                completed fiscal year during the Employment
                                Period, if any (such higher amount being
                                referred to as the "Highest Annual Bonus") and;

                                (y) a fraction, the numerator of which is the
                                number of days in the current fiscal year
                                through the Date of Termination, and the
                                denominator of which is 365, plus

                                (3) any accrued vacation pay, in each case to
                                the extent not theretofore paid (the

                                                                               9
<PAGE>   10
                                sum of the amounts described in clauses (1), (2)
                                and (3) shall be hereinafter referred to as the
                                "Accrued Obligations"); and

                        B.      the amount equal to the product of (1) two years
                                and (2) the sum of (x) the Executive's Annual
                                Base Salary and (y) the Highest Annual Bonus;
                                and

                        C.      an amount equal to the difference between (1)
                                the aggregate benefit under any qualified
                                defined benefit retirement plans of the Company
                                and its affiliated companies in which the
                                Executive participates (collectively, the
                                "Retirement Plan") and any "top hat," excess or
                                supplemental defined benefit retirement plans of
                                the Company and its affiliated companies in
                                which the Executive participates, and any
                                Individual SERP (collectively, the "SERP") which
                                the Executive would have accrued (whether or not
                                vested) if the Executive's employment had
                                continued for two years after the Date of
                                Termination and (2) the actual vested benefit,
                                if any, of the Executive under the Retirement
                                Plan and the SERP, determined as of the Date of
                                Termination (with the foregoing amounts to be
                                computed on an actuarial present value basis,
                                based on the assumption that the Executive's
                                compensation during such period of deemed
                                continued employment after the Date of
                                Termination was that required by Section 4(b)(i)
                                and Section 4(b)(ii), and using actuarial
                                assumptions no less favorable to the Executive
                                than the most favorable of those in effect for
                                purposes of computing benefit entitlements under
                                the Retirement Plan and the SERP at any time
                                from the day before the Effective Date through
                                the Date of Termination);

                ii)     the Company shall continue benefits to the Executive
                        and/or the Executive's family, for two years after the
                        Executive's Date of Termination, or such longer period
                        as may be provided by the terms of the appropriate plan,
                        program, practice or policy, at least equal to those
                        which would have been provided to them in accordance
                        with the plans, programs, practices and policies
                        described in Section 4(b)(iv) of this Agreement if the
                        Executive's employment had not been terminated or, if
                        more favorable to the Executive, as in effect generally
                        at any time thereafter with respect to other peer
                        executives of the Company and its affiliated companies
                        and their families; provided, however, that if the
                        Executive becomes reemployed with another employer and
                        is eligible to receive medical or other welfare benefits
                        under another employer provided plan, the medical and
                        other welfare benefits described herein shall be
                        secondary to those provided under such other plan during
                        such applicable period of eligibility; and for purposes
                        of determining the eligibility of the Executive for
                        retiree benefits pursuant to such plans, practices,
                        programs and policies, the Executive shall be considered
                        to have remained employed until the end of a number of
                        years after the Date of Termination equal to the
                        Multiplier and to have retired on the last day of such
                        period;

                iii)    the Company shall, at its sole expense as incurred,
                        provide the Executive with outplacement services the
                        scope and provider of which shall be selected by the
                        Executive in the Executive's sole discretion; and

                iv)     to the extent not theretofore paid or provided, the
                        Company shall timely pay or provide to the Executive any
                        other amounts or benefits required to be paid or

                                                                              10
<PAGE>   11

                        provided or which the Executive is eligible to receive
                        under any plan, program, policy or practice or contract
                        or agreement of the Company and its affiliated companies
                        (such other amounts and benefits shall be hereinafter
                        referred to as the "Other Benefits").

        b)      Death. If the Executive's employment is terminated by reason of
                the Executive's death during the Employment Period, this
                Agreement shall terminate without further obligations to the
                Executive's legal representatives under this Agreement, other
                than for payment of Accrued Obligations and the timely payment
                or provision of Other Benefits. Accrued Obligations shall be
                paid to the Executive's estate or beneficiary, as applicable, in
                a lump sum in cash within 30 days of the Date of Termination.
                With respect to the provision of Other Benefits, the term Other
                Benefits as utilized in this Section 6(b) shall include, without
                limitation, and the Executive's estate and/or beneficiaries
                shall be entitled to receive, benefits at least equal to the
                most favorable benefits provided by the Company and affiliated
                companies to the estates and beneficiaries of peer executives of
                the Company and such affiliated companies under such plans,
                programs, practices and policies relating to death benefits, if
                any, as in effect with respect to other peer executives and
                their beneficiaries at any time during the 120-day period
                immediately preceding the Effective Date or, if more favorable
                to the Executive's estate and/or the Executive's beneficiaries,
                as in effect on the date of the Executive's death with respect
                to other peer executives of the Company and its affiliated
                companies and their beneficiaries.

        c)      Disability. If the Executive's employment is terminated by
                reason of the Executive's Disability during the Employment
                Period, this Agreement shall terminate without further
                obligations to the Executive, other than for payment of Accrued
                Obligations and the timely payment or provision of Other
                Benefits. Accrued Obligations shall be paid to the Executive in
                a lump sum in cash within 30 days of the Date of Termination.
                With respect to the provision of Other Benefits, the term Other
                Benefits as utilized in this Section 6(c) shall include, and the
                Executive shall be entitled after the Disability Effective Date
                to receive, disability and other benefits at least equal to the
                most favorable of those generally provided by the Company and
                its affiliated companies to disabled executives and/or their
                families in accordance with such plans, programs, practices and
                policies relating to disability, if any, as in effect generally
                with respect to other peer executives and their families at any
                time during the 120-day period immediately preceding the
                Effective Date or, if more favorable to the Executive and/or the
                Executive's family, as in effect at any time thereafter
                generally with respect to other peer executives of the Company
                and its affiliated companies and their families.

        d)      Cause; Other than for Good Reason. If the Executive's employment
                shall be terminated for Cause during the Employment Period, this
                Agreement shall terminate without further obligations to the
                Executive other than the obligation to pay to the Executive (x)
                the Annual Base Salary through the Date of Termination, (y) the
                amount of any compensation previously deferred by the Executive,
                and (z) Other Benefits, in each case to the extent theretofore
                unpaid. If the Executive voluntarily terminates employment
                during the Employment Period, excluding a termination for Good
                Reason, this Agreement shall terminate without further
                obligations to the Executive, other than for Accrued Obligations
                and the timely payment or provision of Other Benefits. In such
                case, all Accrued

                                                                              11
<PAGE>   12

                Obligations shall be paid to the Executive in a lump sum in cash
                within 30 days of the Date of Termination.

7)      Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
        limit the Executive's continuing or future participation in any plan,
        program, policy or practice provided by the Company or any of its
        affiliated companies for which the Executive may qualify, nor, subject
        to Section 12(f), shall anything herein limit or otherwise affect such
        rights as the Executive may have under any contract or agreement with
        the Company or any of its affiliated companies. Amounts which are vested
        benefits or which the Executive is otherwise entitled to receive under
        any plan, policy, practice or program of or any contract or agreement
        with the Company or any of its affiliated companies at or subsequent to
        the Date of Termination shall be payable in accordance with such plan,
        policy, practice or program or contract or agreement except as
        explicitly modified by this Agreement. Notwithstanding the foregoing,
        from and after the Effective Date, the compensation and benefits
        provided for pursuant to Sections 5, 8 and 9 hereof shall be in lieu of
        any severance or separation pay or benefits to which the Executive might
        otherwise be entitled under any plan, program, policy or arrangement of
        the Company and its affiliates.

8)      Full Settlement; Legal Fees. The Company's obligation to make the
        payments provided for in this Agreement and otherwise to perform its
        obligations hereunder shall not be affected by any set-off,
        counterclaim, recoupment, defense or other claim, right or action which
        the Company may have against the Executive or others. In no event shall
        the Executive be obligated to seek other employment or take any other
        action by way of mitigation of the amounts payable to the Executive
        under any of the provisions of this Agreement and except as specifically
        provided in Section 6(a)(ii), such amounts shall not be reduced whether
        or not the Executive obtains other employment.

        All legal fees and expenses reasonably incurred as a result of any
        contest to the validity or enforceability of, or liability under, any
        provision of this Agreement or any guarantee of performance thereof
        (whether such contest is between the Company and the Executive or
        between either of them and any third party, and including as a result of
        any contest by the Executive about the amount of any payment pursuant to
        this Agreement), shall be awarded to the prevailing party.

        In addition, if the Executive prevails with respect to a dispute over
        delayed payments, the Executive will be entitled to the delayed payment
        plus interest at the applicable Federal rate provided for in Section
        7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the
        "Code").

9)      Certain Additional Payments by the Company.

        a)      Anything in this Agreement to the contrary notwithstanding and
                except as set forth below, in the event it shall be determined
                that any payment or distribution by the Company to or for the
                benefit of the Executive (whether paid or payable or distributed
                or distributable pursuant to the terms of this Agreement or
                otherwise, but determined without regard to any additional
                payments required under this Section 9) (a "Payment") would be
                subject to the excise tax imposed by Section 4999 of the Code or
                any interest or penalties are incurred by the Executive with
                respect to such excise tax (such excise tax, together with

                                                                              12
<PAGE>   13

                any such interest and penalties, are hereinafter collectively
                referred to as the "Excise Tax"), then the Executive shall be
                entitled to receive an additional payment (a "Gross-Up Payment")
                in an amount such that after payment by the Executive of all
                taxes (including any interest or penalties imposed with respect
                to such taxes), including, without limitation, any income taxes
                (and any interest and penalties imposed with respect thereto)
                and Excise Tax imposed upon the Gross-Up Payment, the Executive
                retains an amount of the Gross-Up Payment equal to the Excise
                Tax imposed upon the Payments. Notwithstanding the foregoing
                provisions of this Section 9(a), if it shall be determined that
                the Executive is entitled to a Gross-Up Payment, but that the
                Payments do not exceed 110% of the greatest amount (the "Reduced
                Amount") that could be paid to the Executive such that the
                receipt of Payments would not give rise to any Excise Tax, then
                no Gross-Up Payment shall be made to the Executive and the
                Payments, in the aggregate, shall be reduced to the Reduced
                Amount.

        b)      Subject to the provisions of Section 9(c), all determinations
                required to be made under this Section 9, including whether and
                when a Gross-Up Payment is required and the amount of such
                Gross-Up Payment and the assumptions to be utilized in arriving
                at such determination, shall be made by a nationally recognized
                certified public accounting firm designated by the Company (the
                "Accounting Firm"), which shall provide detailed supporting
                calculations both to the Company and the Executive within 15
                business days of the receipt of notice from the Executive that
                there has been a Payment, or such earlier time as is requested
                by the Company. Any Gross-Up Payment, as determined pursuant to
                this Section 9, shall be paid by the Company to the Executive
                within five days of the receipt of the Accounting Firm's
                determination. All fees and expenses of the Accounting Firm
                shall be borne solely by the Company. Any determination by the
                Accounting Firm shall be binding upon the Company and the
                Executive. As a result of the uncertainty in the application of
                Section 4999 of the Code at the time of the initial
                determination by the Accounting Firm hereunder, it is possible
                that Gross-Up Payments that will not have been made by the
                Company should have been made ("Underpayment"), consistent with
                the calculations required to be made hereunder. In the event
                that the Company exhausts its remedies pursuant to Section 9(c)
                and the Executive thereafter is required to make a payment of
                any Excise Tax, the Accounting Firm shall determine the amount
                of the Underpayment that has occurred and any such Underpayment
                shall be promptly paid by the Company to or for the benefit of
                the Executive.

        c)      The Executive shall notify the Company in writing of any claim
                by the Internal Revenue Service that, if successful, would
                require the payment by the Company of the Gross-Up Payment. Such
                notification shall be given as soon as practicable but no later
                than ten business days after the Executive is informed in
                writing of such claim and shall apprise the Company of the
                nature of such claim and the date on which such claim is
                requested to be paid. The Executive shall not pay such claim
                prior to the expiration of the 30-day period following the date
                on which the Executive gives such notice to the Company (or such
                shorter period ending on the date that any payment of taxes with
                respect to such claim is due). If the Company notifies the
                Executive in writing prior to the expiration of such period that
                it desires to contest such claim, the Executive shall:

                                                                              13
<PAGE>   14

                i)      give the Company any information reasonably requested by
                        the Company relating to such claim,

                ii)     take such action in connection with contesting such
                        claim as the Company shall reasonably request in writing
                        from time to time, including, without limitation,
                        accepting legal representation with respect to such
                        claim by an attorney reasonably selected by the Company,

                iii)    cooperate with the Company in good faith in order
                        effectively to contest such claim, and

                iv)     permit the Company to participate in any proceedings
                        relating to such claim; provided, however, that the
                        Company shall bear and pay directly all costs and
                        expenses (including additional interest and penalties)
                        incurred in connection with such contest and shall
                        indemnify and hold the Executive harmless, on an
                        after-tax basis, for any Excise Tax or income tax
                        (including interest and penalties with respect thereto)
                        imposed as a result of such representation and payment
                        of costs and expenses. Without limitation on the
                        foregoing provisions of this Section 9(c), the Company
                        shall control all proceedings taken in connection with
                        such contest and, at its sole option, may pursue or
                        forgo any and all administrative appeals, proceedings,
                        hearings and conferences with the taxing authority in
                        respect of such claim and may, at its sole option,
                        either direct the Executive to pay the tax claimed and
                        sue for a refund or contest the claim in any permissible
                        manner, and the Executive agrees to prosecute such
                        contest to a determination before any administrative
                        tribunal, in a court of initial jurisdiction and in one
                        or more appellate courts, as the Company shall
                        determine; provided, however, that if the Company
                        directs the Executive to pay such claim and sue for a
                        refund, the Company shall advance the amount of such
                        payment to the Executive, on an interest-free basis and
                        shall indemnify and hold the Executive harmless, on an
                        after-tax basis, from any Excise Tax or income tax
                        (including interest or penalties with respect thereto)
                        imposed with respect to such advance or with respect to
                        any imputed income with respect to such advance; and
                        further provided that any extension of the statute of
                        limitations relating to payment of taxes for the taxable
                        year of the Executive with respect to which such
                        contested amount is claimed to be due is limited solely
                        to such contested amount. Furthermore, the Company's
                        control of the contest shall be limited to issues with
                        respect to which a Gross-Up Payment would be payable
                        hereunder and the Executive shall be entitled to settle
                        or contest, as the case may be, any other issue raised
                        by the Internal Revenue Service or any other taxing
                        authority.

        d)      If, after the receipt by the Executive of an amount advanced by
                the Company pursuant to Section 9(c), the Executive becomes
                entitled to receive any refund with respect to such claim, the
                Executive shall (subject to the Company's complying with the
                requirements of Section 9(c)) promptly pay to the Company the
                amount of such refund (together with any interest paid or
                credited thereon after taxes applicable thereto). If, after the
                receipt by the Executive of an amount advanced by the Company
                pursuant to Section 9(c), a determination is made that the
                Executive shall not be entitled to any refund with respect to
                such claim and the Company does not notify the Executive in
                writing of its intent to contest such denial of refund prior to
                the expiration of 30 days after such determination,

                                                                              14
<PAGE>   15

                then such advance shall be forgiven and shall not be required to
                be repaid and the amount of such advance shall offset, to the
                extent thereof, the amount of Gross-Up Payment required to be
                paid.

10)     Confidential Information. As used herein, "Confidential Information"
        means all technical and business information of the Company and its
        affiliated companies, whether patentable or not, which is of a
        confidential, trade secret and/or proprietary character and which is
        either developed by the Executive (alone or with others) or to which the
        Executive has had access during the Executive's employment. Such
        Confidential Information includes, but is not limited to customer lists,
        products, procedures, operations, investments, financing, costs,
        employees, accounting, marketing, salaries, pricing, profits and plans
        for future development, the identity, requirements, preferences,
        practices and methods of doing business of specific parties with whom
        the Company transacts business, and all other information which is
        related to any product or service or business of the Company, other than
        information which is generally known in the financial services industry
        or is acquired from public sources.

        a)      The Executive shall use the Executive's best efforts and
                diligence both during and after employment by the Company to
                protect the confidential, trade secret and/or proprietary
                character of all Confidential Information. The Executive shall
                not, directly or indirectly, use (for the Executive or another)
                or disclose any Confidential Information, for so long as it
                shall remain proprietary or protectible as confidential or trade
                secret information, except as may be necessary for the
                performance of the Executive's duties with the Company.

        b)      The Executive shall deliver promptly to the Company, at the
                termination of the Executive's employment, or at any other time
                at the Company's request, without retaining any copies, all
                documents and other material in the Executive's possession
                relating, directly or indirectly, to any Confidential
                Information.

        c)      Each of the Executive's obligations in this Section 10 shall
                also apply to the confidential, trade secret and proprietary
                information learned or acquired by the Executive during the
                Executive's employment from others with whom the Company or any
                affiliated company has a business relationship.

        d)      The Executive understands that the Executive is not to disclose
                to the Company or any affiliated company, or use for its
                benefit, any of the confidential, trade secret or proprietary
                information of others, including any of the Executive's former
                employers.

11)     Successors.

        a)      This Agreement is personal to the Executive and without the
                prior written consent of the Company shall not be assignable by
                the Executive otherwise than by will or the laws of descent and
                distribution. This Agreement shall inure to the benefit of and
                be enforceable by the Executive's legal representatives.

        b)      This Agreement shall inure to the benefit of and be binding upon
                the Company and its successors and assigns.

                                                                              15
<PAGE>   16

        c)      The Company will require any successor (whether direct or
                indirect, by purchase, merger, consolidation or otherwise) to
                all or substantially all of the business and/or assets of the
                Company to assume expressly and agree to perform this Agreement
                in the same manner and to the same extent that the Company would
                be required to perform it if no such succession had taken place.

12)     Miscellaneous.

        a)      This Agreement shall be governed by and construed in accordance
                with the laws of the State of California, without reference to
                principles of conflict of laws. The captions of this Agreement
                are not part of the provisions hereof and shall have no force or
                effect. This Agreement may not be amended or modified otherwise
                than by a written agreement executed by the parties hereto or
                their respective successors and legal representatives.

        b)      All notices required or permitted hereunder shall be in writing
                and shall be deemed effectively given: (a) upon personal
                delivery to the party to be notified, (b) when sent by confirmed
                facsimile if sent during normal business hours of the recipient,
                if not, then on the next business day, (c) three (3) days after
                having been sent by first class mail, return receipt requested,
                postage prepaid, (d) one (1) day after deposit with a nationally
                recognized overnight courier, specifying next day delivery, with
                written or oral verification of receipt, or (e) upon confirmed
                delivery by electronic mail. Until changed upon giving notice as
                provided herein, notices shall be sent to:

                If to the Company:

                      Hawthorne Savings, F.S.B.
                      2381 Rosecrans Avenue
                      El Segundo, CA   90245
                      Attention:  Simone Lagomarsino, Chief Executive Officer
                      Fax:  (310) 725-5831
                      Email:  simonel@hawthornesavings.com

                If to the Executive:

                      --------------
                      --------------
                      --------------
                or to such other address as either party shall have furnished to
                the other in writing in accordance herewith. Notice and
                communications shall be effective when actually received by the
                addressee.

        c)      The invalidity or unenforceability of any provision of this
                Agreement shall not affect the validity or enforceability of any
                other provision of this Agreement.

        d)      The Company may withhold from any amounts payable under this
                Agreement such Federal, state, local or other taxes as shall be
                required to be withheld pursuant to any applicable law or
                regulation.

                                                                              16
<PAGE>   17

        e)      The Executive's or the Company's failure to insist upon strict
                compliance with any provision of this Agreement or the failure
                to assert any right the Executive or the Company may have
                hereunder, including, without limitation, the right of the
                Executive to terminate employment for Good Reason pursuant to
                Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be
                a waiver of such provision or right or any other provision or
                right of this Agreement.

        f)      The Executive and the Company acknowledge that, except as may
                otherwise be provided under any other written agreement between
                the Executive and the Company, the employment of the Executive
                by the Company is "at will" and, subject to Section l(a) hereof,
                prior to the Effective Date, the Executive's employment and/or
                this Agreement may be terminated by either the Executive or the
                Company at any time prior to the Effective Date, in which case
                the Executive shall have no further rights under this Agreement.
                This Agreement shall have no effect on the Executive's rights
                under any plan, program, policy or practice provided by the
                Company or any of its affiliated companies except as
                specifically provided in Section 7 above.

13)     Non-Solicitation. During the Employment Period and for a period of one
        year thereafter, the Executive shall not 1) induce or attempt to induce
        any employee of the Company to leave the employ of the Company or in any
        way interfere with the relationship between the Company and its
        employees, (2) hire any person who was employed by the Company during
        the Employment Period, or (3) induce or attempt to induce any client of
        the Company to cease doing business with the Company or in any way
        interfere with the relationship between the Company and its clients

14)     Waiver & Release. In exchange for the benefits as outlined in this
        Agreement, the Executive agrees to waive and release any and all claims,
        actions or costs arising out of his employment with the Company. The
        Waiver & Release includes all claims whether arising in tort or contract
        and whether arising under statute or common law.

        Such claims may include, but are not limited to, wrongful termination,
        retaliation, harassment, or any statutory claims under Title VII of the
        Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair
        Employment and Housing Act, the Americans with Disabilities Act, or
        similar Federal or state statutes. The Executive understands and
        acknowledges that accepting benefits under this Agreement specifically
        constitutes a voluntary waiver of any and all rights and claims against
        the Company including, without limitation, rights or claims arising
        under the Age Discrimination in Employment Act of 1967, 29 U.S.C.
        Section 621, et. seq..

        This Waiver & Release applies even to such damages or losses about which
        the Executive does not know, or which do not now exist, but which might
        arise in the future. The Executive waives all rights under California
        Civil Code Section 1542. Section 1542 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."

                                                                              17
<PAGE>   18

15)     Binding Arbitration. Any controversy or claim arising out of or related
        to this Agreement, or the breach thereof, shall be settled by
        arbitration administered by the American Arbitration Association under
        its Commercial Arbitration Rules.

        The arbitration will be conducted before an arbitrator who is a member
        of the National Academy of Arbitrators and selected by the parties from
        the American Arbitration Association's Labor Panel. The arbitrator will
        have jurisdiction to determine the arbitrability of any claim. The
        arbitrator will not have the right to add to, subtract from or modify
        any of the terms of this Agreement, nor the power to reverse or modify
        any decision reserved to the Company's discretion.

        The arbitrator shall have the authority to grant all monetary or
        equitable relief (including, without limitation, ancillary costs and
        fees) available under state and federal law. Judgment on any award
        rendered by the arbitrator may be entered and enforced by any court
        having jurisdiction thereof. Discovery shall be in accordance with the
        California Arbitration Act. The parties agree that the parties shall
        share responsibility for the Arbitrator's fee.

16)     Integration Clause. The terms of this Agreement are final. The Executive
        and the Company represent that in executing this Agreement, they have
        not relied upon any representations other than those specifically stated
        in this written Agreement.

        The Agreement contains all promises that have been made by either party.
        There are no hidden terms, and everything that is important to this
        Agreement is specified in writing here. This Agreement shall be
        construed as though both parties have participated equally in its
        drafting, and it shall be interpreted, wherever possible, to make it
        valid and effective.

IN WITNESS WHEREOF, the Executive and, pursuant to the authorization from its
Board of Directors, the Company have executed this Agreement as of the day and
year first above written.

EXECUTIVE                                   HAWTHORNE FINANCIAL CORPORATION

                                            By:
---------------------------------              ---------------------------------
[Executive Officer]                            Simone Lagomarsino,
                                               President & CEO

                                                                              18<PAGE>   1

                                                                    EXHIBIT 10.3

                     CHANGE IN CONTROL EMPLOYMENT AGREEMENT

        This Agreement by and between Hawthorne Financial Corporation (the
"Company"), and SIMONE LAGOMARSINO (the "Executive"), is dated as of July __,
2000.

                                    RECITALS

        The Board of Directors of the Company (the "Board"), has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company.

        The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.

        Therefore, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.

        NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1)      Certain Definitions.

        a)      The "Effective Date" shall mean the first date during the Change
                of Control Period (as defined in Section l(b)) on which a Change
                of Control (as defined in Section 2) occurs.

                If a Change of Control occurs and if the Executive's employment
                with the Company is terminated by the Company prior to the date
                on which the Change of Control occurs, and if it is reasonably
                demonstrated by the Executive that such termination of
                employment (i) was at the request of a third party who has taken
                steps reasonably calculated to effect a Change of Control or
                (ii) otherwise arose in connection with or anticipation of a
                Change of Control, then for all purposes of this Agreement the
                "Effective Date" shall mean the date immediately prior to the
                date of such termination of employment.

        b)      The "Change of Control Period" shall mean the period commencing
                on the date of this Agreement and ending on the third
                anniversary of the date thereafter.

        c)      "Renewal Date" - Commencing on the first anniversary date of
                this Agreement and on each anniversary date thereafter, this
                Agreement shall be automatically extended for another three year
                Change of Control period. The Company may, however, terminate
                the

                                                                               1
<PAGE>   2

                automatic extension by providing the Executive with written
                notice at least 60 days prior to the Renewal Date that the
                Change of Control period shall not be so extended.

        d)      "Company" shall mean the Company as herein before defined and
                any successor to its business and/or assets as aforesaid which
                assumes and agrees to perform this Agreement by operation of
                law, or otherwise.

        e)      "Affiliated Companies" shall mean any company controlled by,
                controlling or under common control with the Company.

        f)      "Disability" shall mean the Executive's long-term disability for
                purposes of any reasonable occupation as determined under the
                Company's disability plan that is applicable to the Executive.

        g)      "Notice of Termination" means a written notice which (i)
                indicates the specific termination provision in this Agreement
                relied upon, (ii) to the extent applicable, sets forth in
                reasonable detail the facts and circumstances claimed to provide
                a basis for termination of the Executive's employment under the
                provision so indicated and (iii) if the Date of Termination (as
                defined in Section 1(h)) is other than the date of receipt of
                such notice, specifies the termination date (which date shall be
                not more than thirty days after the giving of such notice).

        h)      "Date of Termination" means (i) if the Executive's employment is
                terminated by the Company for Cause, or by the Executive for
                Good Reason, the date of receipt of the Notice of Termination or
                any later date specified therein, as the case may be, (ii) if
                the Executive's employment is terminated by the Company other
                than for Cause or Disability, the Date of Termination shall be
                the date on which the Company notifies the Executive of such
                termination and (iii) if the Executive's employment is
                terminated by reason of death or Disability, the Date of
                Termination shall be the date of death of the Executive or the
                Disability Effective Date, as the case may be.

2)      Change of Control. For the purpose of this Agreement, a "Change of
        Control" shall mean:

        a)      The acquisition by any individual, entity or group (a "Person")
                within the meaning of Section 13(d)(3) or 14(d)(2) of the
                Securities Exchange Act of 1934, as amended (the "Exchange Act")
                of beneficial ownership (within the meaning of Rule 13d-3
                promulgated under the Exchange Act) of more than 24.9% of either
                (i) the then outstanding shares of common stock of the Company
                (the "Outstanding Company Common Stock") or (ii) the combined
                voting power of the then outstanding voting securities of the
                Company entitled to vote generally in the election of directors
                (the "Outstanding Company Voting Securities").

                For purposes of this subsection (a), a Change of Control may not
                occur due to the exercise of warrants. Therefore, the exercise
                of outstanding warrants is specifically excluded from the
                determination of whether or not a Change of Control has
                occurred.

                                                                               2
<PAGE>   3

                In addition, the following acquisitions shall not constitute a
                Change of Control: (i) any acquisition directly from the
                Company, (ii) any acquisition by the Company, (iii) any
                acquisition by any employee benefit plan (or related trust)
                sponsored or maintained by the Company or any corporation
                controlled by the Company or (iv) any acquisition by any
                corporation pursuant to a transaction which complies with
                clauses (i), (ii) and (iii) of subsection (c) of this Section 2;
                or

        b)      Directors who, as of the date of this Agreement, constitute the
                Board (the "Incumbent Board") cease for any reason to constitute
                at least a majority of the Board; provided, however, that any
                individual becoming a director subsequent to the date of this
                Agreement whose election, or nomination for election by the
                Company's shareholders, was approved by a vote of at least a
                majority of the directors then comprising the Incumbent Board
                shall be considered as though such individual were a member of
                the Incumbent Board, but excluding, for this purpose, any such
                individual whose initial assumption of office occurs as a result
                of an actual or threatened election contest with respect to the
                election or removal of directors or other actual or threatened
                solicitation of proxies or consents by or on behalf of a Person
                other than the Board; or

        c)      Consummation by the Company of a reorganization, merger or
                consolidation or sale or other disposition of all or
                substantially all of the assets of the Company or the
                acquisition of assets or stock of another corporation (a
                "Business Combination").

                This Section 2(c) shall not apply if, following such Business
                Combination:

                (i) all or substantially all of the individuals and entities who
                were the beneficial owners, respectively, of the Outstanding
                Company Common Stock and Outstanding Company Voting Securities
                immediately prior to such Business Combination beneficially own,
                directly or indirectly, more than 50% of, respectively, the then
                outstanding shares of common stock and the combined voting power
                of the then outstanding voting securities entitled to vote
                generally in the election of directors, as the case may be, of
                the corporation resulting from such Business Combination
                (including, without limitation, a corporation which as a result
                of such transaction owns the Company or all or substantially all
                of the Company's assets either directly or through one or more
                subsidiaries) in substantially the same proportions as their
                ownership, immediately prior to such Business Combination of the
                Outstanding Company Common Stock and Outstanding Company Voting
                Securities, as the case may be;

                (ii) A Person (excluding any corporation resulting from such
                Business Combination or any employee benefit plan (or related
                trust) of the Company or such corporation resulting from such
                Business Combination) beneficially owns, directly or indirectly,
                20% or more of, respectively, the then outstanding shares of
                common stock of the corporation resulting from such Business
                Combination or the combined voting power of the then outstanding
                voting securities of such corporation, so long as such ownership
                existed prior to the Business Combination; and

                (iii) at least a majority of the members of the board of
                directors of the corporation

                                                                               3
<PAGE>   4

                resulting from such Business Combination were members of the
                Incumbent Board at the time of the execution of the initial
                agreement, or of the action of the Board, providing for such
                Business Combination; or

        d)      Approval by the shareholders of the Company of a complete
                liquidation or dissolution of the Company.

3)      Employment Period. The Company hereby agrees to continue the Executive
        in its employ, and the Executive hereby agrees to remain in the employ
        of the Company subject to the terms and conditions of this Agreement,
        for the period commencing on the Effective Date and ending on the third
        anniversary of such date (the "Employment Period").

4)      Terms of Employment.

        a)      Position and Duties.

                i)      During the Employment Period, (A) the Executive's
                        position (including status, offices, titles and
                        reporting requirements), authority, duties and
                        responsibilities shall be at least commensurate in all
                        material respects with the most significant of those
                        held, exercised and assigned to the Executive at any
                        time during the 120-day period immediately preceding the
                        Effective Date and (B) the Executive's services shall be
                        performed at the location where the Executive was
                        employed immediately preceding the Effective Date or any
                        office or location less than 25 miles from such
                        location.

                ii)     During the Employment Period, and excluding any periods
                        of vacation and sick leave to which the Executive is
                        entitled, the Executive agrees to devote reasonable
                        attention and time during normal business hours to the
                        business and affairs of the Company and, to the extent
                        necessary to discharge the responsibilities assigned to
                        the Executive hereunder, to use the Executive's
                        reasonable best efforts to perform faithfully and
                        efficiently such responsibilities.

                        During the Employment Period, the Executive may not
                        compete with the Company. The Executive recognizes
                        his/her continuing fiduciary duty to at all times act in
                        the Company's best interest. Any outside employment must
                        be cleared for conflicts and receive the express written
                        permission of the Board.

                        During the Employment Period it shall not be a violation
                        of this Agreement for the Executive to (A) serve on
                        corporate, civic or charitable boards or committees, (B)
                        deliver lectures, fulfill speaking engagements or teach
                        at educational institutions and (C) manage personal
                        investments, so long as such activities do not
                        significantly interfere with the performance of the
                        Executive's responsibilities as an employee of the
                        Company in accordance with this Agreement. It is
                        expressly understood and agreed that to the extent that
                        any such activities have been conducted by the Executive
                        prior to the Effective Date, the continued conduct of
                        such activities (or the conduct of activities similar in
                        nature and scope thereto) subsequent to the Effective
                        Date shall

                                                                               4
<PAGE>   5

                        not thereafter be deemed to interfere with the
                        performance of the Executive's responsibilities to the
                        Company.

        b)      Compensation.

                i)      Base Salary. During the Employment Period, the Executive
                        shall receive an annual base salary ("Annual Base
                        Salary"), which shall be paid at a monthly rate, at
                        least equal to twelve times the highest monthly base
                        salary paid or payable, including any base salary which
                        has been earned but deferred, to the Executive by the
                        Company and its affiliated companies in respect of the
                        twelve-month period immediately preceding the month in
                        which the Effective Date occurs. During the Employment
                        Period, the Annual Base Salary shall be reviewed no more
                        than 12 months after the last salary increase awarded to
                        the Executive prior to the Effective Date and thereafter
                        at least annually. Any increase in Annual Base Salary
                        shall not serve to limit or reduce any other obligation
                        to the Executive under this Agreement. Annual Base
                        Salary shall not be reduced after any such increase, and
                        the term Annual Base Salary as utilized in this
                        Agreement shall refer to Annual Base Salary as so
                        increased.

                ii)     Incentives. In addition to Annual Base Salary, the
                        Executive shall be awarded the following bonuses. For
                        each fiscal year ending during the Employment Period,
                        the Executive shall be awarded an annual bonus in cash
                        at least equal to the average of the Executive's bonuses
                        under the Company's Annual Incentive Program, or any
                        comparable bonus under any predecessor or successor
                        plan(s), for the last three full fiscal years prior to
                        the Effective Date. This bonus shall be known at the
                        "Annual Bonus."

                        In the event an Executive has completed at least one
                        year, but not three full years of employment with the
                        Company prior to the Effective Date, any bonuses
                        received under the Company's Annual Incentive Program,
                        or any comparable bonus under any predecessor or
                        successor plan(s), will be averaged to constitute the
                        Annual Bonus.

                        If an Executive has been employed for less than one year
                        prior to the Effective Date, the then existing President
                        and Chief Executive Officer will review the Executive's
                        performance relative to established performance goals. A
                        pro rata bonus will then be recommended to the
                        Compensation Committee of the Board of Directors, which
                        if approved, will be annualized to constitute the Annual
                        Bonus.

                        Each such Annual Bonus shall be paid no later than the
                        fifteenth day of the third month of the fiscal year next
                        following the fiscal year for which the Annual Bonus is
                        awarded, unless the Executive shall elect to defer the
                        receipt of such Annual Bonus. In addition, during the
                        Employment Period, the Executive shall be entitled to
                        participate in all long-term and other incentive plans,
                        practices, policies and programs applicable generally to
                        other peer executives of the Company and its affiliated
                        companies, but in no event shall such plans, practices,
                        policies and programs provide the Executive with
                        incentive opportunities (measured with respect to both
                        regular and special incentive opportunities, to the
                        extent, if any, that such distinction is

                                                                               5
<PAGE>   6

                        applicable) less favorable, in the aggregate, than the
                        most favorable of those provided by the Company and its
                        affiliated companies for the Executive under such plans,
                        practices, policies and programs as in effect at any
                        time during the 120-day period immediately preceding the
                        Effective Date or if more favorable to the Executive,
                        those provided generally at any time after the Effective
                        Date to other peer executives of the Company and its
                        affiliated companies.

                iii)    Savings and Retirement Plans. During the Employment
                        Period, the Executive shall be entitled to participate
                        in all savings and retirement plans, practices, policies
                        and programs applicable generally to other peer
                        executives of the Company and its affiliated companies,
                        but in no event shall such plans, practices, policies
                        and programs provide the Executive with savings
                        opportunities and retirement benefit opportunities, in
                        each case, less favorable, in the aggregate, than the
                        most favorable of those provided by the Company and its
                        affiliated companies for the Executive under such plans,
                        practices, policies and programs as in effect at any
                        time during the 120-day period immediately preceding the
                        Effective Date or if more favorable to the Executive,
                        those provided generally at any time after the Effective
                        Date to other peer executives of the Company and its
                        affiliated companies. Without limiting the generality of
                        the foregoing, the Company and its affiliated companies
                        shall continue to honor any individual agreements
                        between any of them and the Executive regarding the
                        provision of supplemental retirement benefits such as
                        (but not limited to) post-retirement income and/or
                        welfare benefits (each of which is hereafter referred to
                        as an "Individual SERP").

                iv)     Welfare Benefit Plans. During the Employment Period, the
                        Executive and/or the Executive's family, as the case may
                        be, shall be eligible for participation in and shall
                        receive all benefits under welfare benefit plans,
                        practices, policies and programs provided by the Company
                        and its affiliated companies (including, without
                        limitation, medical, prescription, dental, disability,
                        salary continuance, employee life, group life,
                        accidental death and travel accident insurance plans and
                        programs) to the extent applicable generally to other
                        peer executives of the Company and its affiliated
                        companies, but in no event shall such plans, practices,
                        policies and programs provide the Executive with
                        benefits which are less favorable, in the aggregate,
                        than the most favorable of such plans, practices,
                        policies and programs in effect for the Executive at any
                        time during the 120-day period immediately preceding the
                        Effective Date or, if more favorable to the Executive,
                        those provided generally at any time after the Effective
                        Date to other peer executives of the Company and its
                        affiliated companies.

                v)      Expenses. During the Employment Period, the Executive
                        shall be entitled to receive prompt reimbursement for
                        all reasonable expenses incurred by the Executive in
                        accordance with the most favorable policies, practices
                        and procedures of the Company and its affiliated
                        companies in effect for the Executive at any time during
                        the 120-day period immediately preceding the Effective
                        Date or, if more favorable to the Executive, as in
                        effect generally at any time thereafter with respect to
                        other peer executives of the Company and its affiliated
                        companies.

                                                                               6
<PAGE>   7
                vi)     Fringe Benefits. During the Employment Period, the
                        Executive shall be entitled to fringe benefits,
                        including, without limitation, the fringe benefits
                        identified on Exhibit "A" attached hereto in accordance
                        with the most favorable plans, practices, programs and
                        policies of the Company and its affiliated companies in
                        effect for the Executive at any time during the 120-day
                        period immediately preceding the Effective Date or, if
                        more favorable to the Executive, as in effect generally
                        at any time thereafter with respect to other peer
                        executives of the Company and its affiliated companies.

                vii)    Office and Support Staff. During the Employment Period,
                        the Executive shall be entitled to an office or offices
                        of a size and with furnishings and other appointments,
                        and to exclusive personal secretarial and other
                        assistance, at least equal to the most favorable of the
                        foregoing provided to the Executive by the Company and
                        its affiliated companies at any time during the 120-day
                        period immediately preceding the Effective Date or, if
                        more favorable to the Executive, as provided generally
                        at any time thereafter with respect to other peer
                        executives of the Company and its affiliated companies.

                viii)   Vacation. During the Employment Period, the Executive
                        shall be entitled to paid vacation in accordance with
                        the most favorable plans, policies, programs and
                        practices of the Company and its affiliated companies as
                        in effect for the Executive at any time during the
                        120-day period immediately preceding the Effective Date
                        or, if more favorable to the Executive, as in effect
                        generally at any time thereafter with respect to other
                        peer executives of the Company and its affiliated
                        companies.

5)      Termination of Employment.

                a) Death or Disability. The Executive's employment shall
                terminate automatically upon the Executive's death during the
                Employment Period. If the Company determines in good faith that
                the Disability of the Executive has occurred during the
                Employment Period, it may give to the Executive written notice
                in accordance with Section 12(b) of this Agreement of its
                intention to terminate the Executive's employment.

                In such event, the Executive's employment with the Company shall
                terminate effective on the 30th day after receipt of such notice
                by the Executive (the "Disability Effective Date"), provided
                that, within the 30 days after such receipt, the Executive shall
                not have returned to full-time performance of the Executive's
                duties.

                b) Cause. The Company may terminate the Executive's employment
                during the Employment Period for Cause. For purposes of this
                Agreement, "Cause" shall mean:

                i)      the willful and continued failure of the Executive to
                        perform substantially the Executive's duties with the
                        Company or one of its affiliates (other than any such
                        failure resulting from incapacity due to physical or
                        mental illness), after a written demand for substantial
                        performance is delivered to the Executive by the Board
                        which specifically identifies the manner in which the
                        Board believes that the Executive has not substantially
                        performed the Executive's duties, or

                                                                               7
<PAGE>   8

                ii)     the willful engaging by the Executive in illegal conduct
                        or gross misconduct which is materially and demonstrably
                        injurious to the Company.

                        For purposes of this provision, no act or failure to
                        act, on the part of the Executive, shall be considered
                        "willful" unless it is done, or omitted to be done, by
                        the Executive in bad faith or without reasonable belief
                        that the Executive's action or omission was in the best
                        interests of the Company. Any act, or failure to act,
                        based upon authority given pursuant to a resolution duly
                        adopted by the Board or upon the instructions of a
                        senior officer of the Company or based upon the advice
                        of counsel for the Company shall be conclusively
                        presumed to be done, or omitted to be done, by the
                        Executive in good faith and in the best interests of the
                        Company.

                        The cessation of employment of the Executive shall not
                        be deemed to be for Cause unless and until there shall
                        have been delivered to the Executive a copy of a
                        resolution duly adopted by the affirmative vote of not
                        less than three-quarters of the entire membership of the
                        Board at a meeting of the Board called and held for such
                        purpose (after reasonable notice is provided to the
                        Executive, and the Executive is given an opportunity,
                        together with counsel, to be heard before the Board),
                        finding that, in the good faith opinion of the Board,
                        the Executive is guilty of the conduct described in
                        subparagraph (i) or (ii) above, and specifying the
                        particulars thereof in detail.

        c)      Good Reason. The Executive may terminate Executive's employment
                during the Employment Period for Good Reason. For purposes of
                this Agreement, "Good Reason" shall mean:

                i)      the assignment to the Executive of any duties
                        inconsistent in any respect with the Executive's
                        position (including status, offices, titles and
                        reporting requirements), authority, duties or
                        responsibilities as contemplated by Section 4(a) of this
                        Agreement, or any other action by the Company which
                        results in a diminution in such position, authority,
                        duties or responsibilities, excluding for this purpose
                        isolated, insubstantial and inadvertent actionS not
                        taken in bad faith and which are remedied by the Company
                        promptly after receipt of notice thereof given by the
                        Executive;

                ii)     any failure by the Company to comply with any of the
                        provisions of Section 4(b) of this Agreement, other than
                        isolated, insubstantial and inadvertent failureS not
                        occurring in bad faith and which are remedied by the
                        Company promptly after receipt of notice thereof given
                        by the Executive;

                iii)    the Company's requiring the Executive to be based at any
                        office or location other than as provided in Section
                        4(a)(i)(B) hereof or the Company's requiring the
                        Executive to travel on Company business to a
                        substantially greater extent than required immediately
                        prior to the Effective Date;

                iv)     any purported termination by the Company of the
                        Executive's employment otherwise than as expressly
                        permitted by this Agreement; or

                                                                               8
<PAGE>   9

                v)      any failure by the Company to comply with and satisfy
                        Section 11(c) of this Agreement.

For purposes of this Section 5(c), the Executive's cessation of employment shall
not be deemed for "Good Reason" unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice is
provided to the Executive, and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive has Good Reason as described in subparagraph
(i) - (v) above, and specifying the particulars thereof in detail.

        d)      Notice of Termination. Any termination by the Company for Cause,
                or by the Executive for Good Reason, shall be communicated by
                Notice of Termination to the other party hereto given in
                accordance with Section 12(b) of this Agreement. The failure by
                the Executive or the Company to set forth in the Notice of
                Termination any fact or circumstance which contributes to a
                showing of Good Reason or Cause shall not waive any right of the
                Executive or the Company, respectively, hereunder or preclude
                the Executive or the Company, respectively, from asserting such
                fact or circumstance in enforcing the Executive's or the
                Company's rights hereunder.

6)      Obligations of the Company upon Termination.

        a)      Good Reason; Other Than for Cause, Death or Disability. If,
                during the Employment Period, the Company shall terminate the
                Executive's employment other than for Cause or Disability or the
                Executive shall terminate employment for Good Reason:

                i)      the Company shall pay to the Executive in a lump sum in
                        cash within 30 days after the Date of Termination the
                        aggregate of the following amounts:

                        A.      the sum of:

                                (1) the Executive's Annual Base Salary through
                                the Date of Termination to the extent not
                                theretofore paid; plus

                                (2) the product of:

                                (x) the higher of (I) the Annual Bonus and (II)
                                any bonus paid or payable, including any bonus
                                or portion thereof which has been earned but
                                deferred (and annualized for any fiscal year
                                consisting of less than twelve full months or
                                during which the Executive was employed for less
                                than twelve full months), for the most recently
                                completed fiscal year during the Employment
                                Period, if any and;

                                (y) a fraction, the numerator of which is the
                                number of days in the current fiscal year
                                through the Date of Termination, and the
                                denominator of which is 365, plus

                                (3) any accrued vacation pay, in each case to
                                the extent not theretofore paid (the

                                                                               9
<PAGE>   10

                                sum of the amounts described in clauses (1), (2)
                                and (3) shall be hereinafter referred to as the
                                "Accrued Obligations"); and

                        B.      the amount equal to the product of (1) three
                                years and (2) the sum of (x) the Executive's
                                Annual Base Salary and (y) the Annual Bonus; and

                        C.      an amount equal to the difference between (1)
                                the aggregate benefit under any qualified
                                defined benefit retirement plans of the Company
                                and its affiliated companies in which the
                                Executive participates (collectively, the
                                "Retirement Plan") and any "top hat," excess or
                                supplemental defined benefit retirement plans of
                                the Company and its affiliated companies in
                                which the Executive participates, and any
                                Individual SERP (collectively, the "SERP') which
                                the Executive would have accrued (whether or not
                                vested) if the Executive's employment had
                                continued for three years after the Date of
                                Termination and (2) the actual vested benefit,
                                if any, of the Executive under the Retirement
                                Plan and the SERP, determined as of the Date of
                                Termination (with the foregoing amounts to be
                                computed on an actuarial present value basis,
                                based on the assumption that the Executive's
                                compensation during such period of deemed
                                continued employment after the Date of
                                Termination was that required by Section 4(b)(i)
                                and Section 4(b)(ii), and using actuarial
                                assumptions no less favorable to the Executive
                                than the most favorable of those in effect for
                                purposes of computing benefit entitlements under
                                the Retirement Plan and the SERP at any time
                                from the day before the Effective Date through
                                the Date of Termination);

        ii)     the Company shall continue benefits to the Executive and/or the
                Executive's family, for three years after the Executive's Date
                of Termination, or such longer period as may be provided by the
                terms of the appropriate plan, program, practice or policy, at
                least equal to those which would have been provided to them in
                accordance with the plans, programs, practices and policies
                described in Section 4(b)(iv) of this Agreement if the
                Executive's employment had not been terminated or, if more
                favorable to the Executive, as in effect generally at any time
                thereafter with respect to other peer executives of the Company
                and its affiliated companies and their families; provided,
                however, that if the Executive becomes reemployed with another
                employer and is eligible to receive medical or other welfare
                benefits under another employer provided plan, the medical and
                other welfare benefits described herein shall be secondary to
                those provided under such other plan during such applicable
                period of eligibility; and for purposes of determining the
                eligibility of the Executive for retiree benefits pursuant to
                such plans, practices, programs and policies, the Executive
                shall be considered to have remained employed until the end of a
                number of years after the Date of Termination equal to the
                Multiplier and to have retired on the last day of such period;

        iii)    the Company shall, at its sole expense as incurred, provide the
                Executive with outplacement services the scope and provider of
                which shall be selected by the Executive in the Executive's sole
                discretion; and

        iv)     to the extent not theretofore paid or provided, the Company
                shall timely pay or provide to the Executive any other amounts
                or benefits required to be paid or

                                                                              10
<PAGE>   11

                provided or which the Executive is eligible to receive under any
                plan, program, policy or practice or contract or agreement of
                the Company and its affiliated companies (such other amounts and
                benefits shall be hereinafter referred to as the "Other
                Benefits").

        b)      Death. If the Executive's employment is terminated by reason of
                the Executive's death during the Employment Period, this
                Agreement shall terminate without further obligations to the
                Executive's legal representatives under this Agreement, other
                than for payment of Accrued Obligations and the timely payment
                or provision of Other Benefits. Accrued Obligations shall be
                paid to the Executive's estate or beneficiary, as applicable, in
                a lump sum in cash within 30 days of the Date of Termination.
                With respect to the provision of Other Benefits, the term Other
                Benefits as utilized in this Section 6(b) shall include, without
                limitation, and the Executive's estate and/or beneficiaries
                shall be entitled to receive, benefits at least equal to the
                most favorable benefits provided by the Company and affiliated
                companies to the estates and beneficiaries of peer executives of
                the Company and such affiliated companies under such plans,
                programs, practices and policies relating to death benefits, if
                any, as in effect with respect to other peer executives and
                their beneficiaries at any time during the 120-day period
                immediately preceding the Effective Date or, if more favorable
                to the Executive's estate and/or the Executive's beneficiaries,
                as in effect on the date of the Executive's death with respect
                to other peer executives of the Company and its affiliated
                companies and their beneficiaries.

        c)      Disability. If the Executive's employment is terminated by
                reason of the Executive's Disability during the Employment
                Period, this Agreement shall terminate without further
                obligations to the Executive, other than for payment of Accrued
                Obligations and the timely payment or provision of Other
                Benefits. Accrued Obligations shall be paid to the Executive in
                a lump sum in cash within 30 days of the Date of Termination.
                With respect to the provision of Other Benefits, the term Other
                Benefits as utilized in this Section 6(c) shall include, and the
                Executive shall be entitled after the Disability Effective Date
                to receive, disability and other benefits at least equal to the
                most favorable of those generally provided by the Company and
                its affiliated companies to disabled executives and/or their
                families in accordance with such plans, programs, practices and
                policies relating to disability, if any, as in effect generally
                with respect to other peer executives and their families at any
                time during the 120-day period immediately preceding the
                Effective Date or, if more favorable to the Executive and/or the
                Executive's family, as in effect at any time thereafter
                generally with respect to other peer executives of the Company
                and its affiliated companies and their families.

        d)      Cause; Other than for Good Reason. If the Executive's employment
                shall be terminated for Cause during the Employment Period, this
                Agreement shall terminate without further obligations to the
                Executive other than the obligation to pay to the Executive (x)
                the Annual Base Salary through the Date of Termination, (y) the
                amount of any compensation previously deferred by the Executive,
                and (z) Other Benefits, in each case to the extent theretofore
                unpaid. If the Executive voluntarily terminates employment
                during the Employment Period, excluding a termination for Good
                Reason, this Agreement shall terminate without further
                obligations to the Executive, other than for Accrued

                                                                              11
<PAGE>   12

                Obligations and the timely payment or provision of Other
                Benefits. In such case, all Accrued Obligations shall be paid to
                the Executive in a lump sum in cash within 30 days of the Date
                of Termination.

7)      Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
        limit the Executive's continuing or future participation in any plan,
        program, policy or practice provided by the Company or any of its
        affiliated companies for which the Executive may qualify, nor, subject
        to Section 12(f), shall anything herein limit or otherwise affect such
        rights as the Executive may have under any contract or agreement with
        the Company or any of its affiliated companies. Amounts which are vested
        benefits or which the Executive is otherwise entitled to receive under
        any plan, policy, practice or program of or any contract or agreement
        with the Company or any of its affiliated companies at or subsequent to
        the Date of Termination shall be payable in accordance with such plan,
        policy, practice or program or contract or agreement except as
        explicitly modified by this Agreement. Notwithstanding the foregoing,
        from and after the Effective Date, the compensation and benefits
        provided for pursuant to Sections 5, 8 and 9 hereof shall be in lieu of
        any severance or separation pay or benefits to which the Executive might
        otherwise be entitled under any plan, program, policy or arrangement of
        the Company and its affiliates.

8)      Full Settlement; Legal Fees. The Company's obligation to make the
        payments provided for in this Agreement and otherwise to perform its
        obligations hereunder shall not be affected by any set-off,
        counterclaim, recoupment, defense or other claim, right or action which
        the Company may have against the Executive or others. In no event shall
        the Executive be obligated to seek other employment or take any other
        action by way of mitigation of the amounts payable to the Executive
        under any of the provisions of this Agreement and except as specifically
        provided in Section 6(a)(ii), such amounts shall not be reduced whether
        or not the Executive obtains other employment.

        All legal fees and expenses reasonably incurred as a result of any
        contest to the validity or enforceability of, or liability under, any
        provision of this Agreement or any guarantee of performance thereof
        (whether such contest is between the Company and the Executive or
        between either of them and any third party, and including as a result of
        any contest by the Executive about the amount of any payment pursuant to
        this Agreement), shall be awarded to the prevailing party.

        In addition, if the Executive prevails with respect to a dispute over
        delayed payments, the Executive will be entitled to the delayed payment
        plus interest at the applicable Federal rate provided for in Section
        7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the
        "Code").

9)      Certain Additional Payments by the Company.

        a)      Anything in this Agreement to the contrary notwithstanding and
                except as set forth below, in the event it shall be determined
                that any payment or distribution by the Company to or for the
                benefit of the Executive (whether paid or payable or distributed
                or distributable pursuant to the terms of this Agreement or
                otherwise, but determined without regard to any additional
                payments required under this Section 9) (a "Payment") would be
                subject to the excise tax imposed by Section 4999 of the Code or
                any interest or penalties are incurred by the Executive with
                respect to such excise tax (such excise tax, together with

                                                                              12
<PAGE>   13

                any such interest and penalties, are hereinafter collectively
                referred to as the "Excise Tax"), then the Executive shall be
                entitled to receive an additional payment (a "Gross-Up Payment")
                in an amount such that after payment by the Executive of all
                taxes (including any interest or penalties imposed with respect
                to such taxes), including, without limitation, any income taxes
                (and any interest and penalties imposed with respect thereto)
                and Excise Tax imposed upon the Gross-Up Payment, the Executive
                retains an amount of the Gross-Up Payment equal to the Excise
                Tax imposed upon the Payments. Notwithstanding the foregoing
                provisions of this Section 9(a), if it shall be determined that
                the Executive is entitled to a Gross-Up Payment, but that the
                Payments do not exceed 110% of the greatest amount (the "Reduced
                Amount") that could be paid to the Executive such that the
                receipt of Payments would not give rise to any Excise Tax, then
                no Gross-Up Payment shall be made to the Executive and the
                Payments, in the aggregate, shall be reduced to the Reduced
                Amount.

        b)      Subject to the provisions of Section 9(c), all determinations
                required to be made under this Section 9, including whether and
                when a Gross-Up Payment is required and the amount of such
                Gross-Up Payment and the assumptions to be utilized in arriving
                at such determination, shall be made by a nationally recognized
                certified public accounting firm designated by the Company (the
                "Accounting Firm"), which shall provide detailed supporting
                calculations both to the Company and the Executive within 15
                business days of the receipt of notice from the Executive that
                there has been a Payment, or such earlier time as is requested
                by the Company. Any Gross-Up Payment, as determined pursuant to
                this Section 9, shall be paid by the Company to the Executive
                within five days of the receipt of the Accounting Firm's
                determination. All fees and expenses of the Accounting Firm
                shall be borne solely by the Company. Any determination by the
                Accounting Firm shall be binding upon the Company and the
                Executive. As a result of the uncertainty in the application of
                Section 4999 of the Code at the time of the initial
                determination by the Accounting Firm hereunder, it is possible
                that Gross-Up Payments that will not have been made by the
                Company should have been made ("Underpayment"), consistent with
                the calculations required to be made hereunder. In the event
                that the Company exhausts its remedies pursuant to Section 9(c)
                and the Executive thereafter is required to make a payment of
                any Excise Tax, the Accounting Firm shall determine the amount
                of the Underpayment that has occurred and any such Underpayment
                shall be promptly paid by the Company to or for the benefit of
                the Executive.

        c)      The Executive shall notify the Company in writing of any claim
                by the Internal Revenue Service that, if successful, would
                require the payment by the Company of the Gross-Up Payment. Such
                notification shall be given as soon as practicable but no later
                than ten business days after the Executive is informed in
                writing of such claim and shall apprise the Company of the
                nature of such claim and the date on which such claim is
                requested to be paid. The Executive shall not pay such claim
                prior to the expiration of the 30-day period following the date
                on which the Executive gives such notice to the Company (or such
                shorter period ending on the date that any payment of taxes with
                respect to such claim is due). If the Company notifies the
                Executive in writing prior to the expiration of such period that
                it desires to contest such claim, the Executive shall:

                                                                              13
<PAGE>   14

                i)      give the Company any information reasonably requested by
                        the Company relating to such claim,

                ii)     take such action in connection with contesting such
                        claim as the Company shall reasonably request in writing
                        from time to time, including, without limitation,
                        accepting legal representation with respect to such
                        claim by an attorney reasonably selected by the Company,

                iii)    cooperate with the Company in good faith in order
                        effectively to contest such claim, and

                iv)     permit the Company to participate in any proceedings
                        relating to such claim; provided, however, that the
                        Company shall bear and pay directly all costs and
                        expenses (including additional interest and penalties)
                        incurred in connection with such contest and shall
                        indemnify and hold the Executive harmless, on an
                        after-tax basis, for any Excise Tax or income tax
                        (including interest and penalties with respect thereto)
                        imposed as a result of such representation and payment
                        of costs and expenses. Without limitation on the
                        foregoing provisions of this Section 9(c), the Company
                        shall control all proceedings taken in connection with
                        such contest and, at its sole option, may pursue or
                        forgo any and all administrative appeals, proceedings,
                        hearings and conferences with the taxing authority in
                        respect of such claim and may, at its sole option,
                        either direct the Executive to pay the tax claimed and
                        sue for a refund or contest the claim in any permissible
                        manner, and the Executive agrees to prosecute such
                        contest to a determination before any administrative
                        tribunal, in a court of initial jurisdiction and in one
                        or more appellate courts, as the Company shall
                        determine; provided, however, that if the Company
                        directs the Executive to pay such claim and sue for a
                        refund, the Company shall advance the amount of such
                        payment to the Executive, on an interest-free basis and
                        shall indemnify and hold the Executive harmless, on an
                        after-tax basis, from any Excise Tax or income tax
                        (including interest or penalties with respect thereto)
                        imposed with respect to such advance or with respect to
                        any imputed income with respect to such advance; and
                        further provided that any extension of the statute of
                        limitations relating to payment of taxes for the taxable
                        year of the Executive with respect to which such
                        contested amount is claimed to be due is limited solely
                        to such contested amount. Furthermore, the Company's
                        control of the contest shall be limited to issues with
                        respect to which a Gross-Up Payment would be payable
                        hereunder and the Executive shall be entitled to settle
                        or contest, as the case may be, any other issue raised
                        by the Internal Revenue Service or any other taxing
                        authority.

        d)      If, after the receipt by the Executive of an amount advanced by
                the Company pursuant to Section 9(c), the Executive becomes
                entitled to receive any refund with respect to such claim, the
                Executive shall (subject to the Company's complying with the
                requirements of Section 9(c)) promptly pay to the Company the
                amount of such refund (together with any interest paid or
                credited thereon after taxes applicable thereto). If, after the
                receipt by the Executive of an amount advanced by the Company
                pursuant to Section 9(c), a determination is made that the
                Executive shall not be entitled to any refund with respect to
                such claim and the Company does not notify the Executive in
                writing of its intent to contest such denial of refund prior to
                the expiration of 30 days after such determination,

                                                                              14
<PAGE>   15

                then such advance shall be forgiven and shall not be required to
                be repaid and the amount of such advance shall offset, to the
                extent thereof, the amount of Gross-Up Payment required to be
                paid.

10)     Confidential Information. As used herein, "Confidential Information"
        means all technical and business information of the Company and its
        affiliated companies, whether patentable or not, which is of a
        confidential, trade secret and/or proprietary character and which is
        either developed by the Executive (alone or with others) or to which the
        Executive has had access during the Executive's employment. Such
        Confidential Information includes, but is not limited to customer lists,
        products, procedures, operations, investments, financing, costs,
        employees, accounting, marketing, salaries, pricing, profits and plans
        for future development, the identity, requirements, preferences,
        practices and methods of doing business of specific parties with whom
        the Company transacts business, and all other information which is
        related to any product or service or business of the Company, other than
        information which is generally known in the financial services industry
        or is acquired from public sources.

        a)      The Executive shall use the Executive's best efforts and
                diligence both during and after employment by the Company to
                protect the confidential, trade secret and/or proprietary
                character of all Confidential Information. The Executive shall
                not, directly or indirectly, use (for the Executive or another)
                or disclose any Confidential Information, for so long as it
                shall remain proprietary or protectible as confidential or trade
                secret information, except as may be necessary for the
                performance of the Executive's duties with the Company.

        b)      The Executive shall deliver promptly to the Company, at the
                termination of the Executive's employment, or at any other time
                at the Company's request, without retaining any copies, all
                documents and other material in the Executive's possession
                relating, directly or indirectly, to any Confidential
                Information.

        c)      Each of the Executive's obligations in this Section 10 shall
                also apply to the confidential, trade secret and proprietary
                information learned or acquired by the Executive during the
                Executive's employment from others with whom the Company or any
                affiliated company has a business relationship.

        d)      The Executive understands that the Executive is not to disclose
                to the Company or any affiliated company, or use for its
                benefit, any of the confidential, trade secret or proprietary
                information of others, including any of the Executive's former
                employers.

11)     Successors.

        a)      This Agreement is personal to the Executive and without the
                prior written consent of the Company shall not be assignable by
                the Executive otherwise than by will or the laws of descent and
                distribution. This Agreement shall inure to the benefit of and
                be enforceable by the Executive's legal representatives.

        b)      This Agreement shall inure to the benefit of and be binding upon
                the Company and its successors and assigns.

                                                                              15
<PAGE>   16

        c)      The Company will require any successor (whether direct or
                indirect, by purchase, merger, consolidation or otherwise) to
                all or substantially all of the business and/or assets of the
                Company to assume expressly and agree to perform this Agreement
                in the same manner and to the same extent that the Company would
                be required to perform it if no such succession had taken place.

12)     Miscellaneous.

        a)      This Agreement shall be governed by and construed in accordance
                with the laws of the State of California, without reference to
                principles of conflict of laws. The captions of this Agreement
                are not part of the provisions hereof and shall have no force or
                effect. This Agreement may not be amended or modified otherwise
                than by a written agreement executed by the parties hereto or
                their respective successors and legal representatives.

        b)      All notices required or permitted hereunder shall be in writing
                and shall be deemed effectively given: (a) upon personal
                delivery to the party to be notified, (b) when sent by confirmed
                facsimile if sent during normal business hours of the recipient,
                if not, then on the next business day, (c) three (3) days after
                having been sent by first class mail, return receipt requested,
                postage prepaid, (d) one (1) day after deposit with a nationally
                recognized overnight courier, specifying next day delivery, with
                written or oral verification of receipt, or (e) upon confirmed
                delivery by electronic mail. Until changed upon giving notice as
                provided herein, notices shall be sent to:

    If to the Company:

        Hawthorne Savings, F.S.B.

        2381 Rosecrans Avenue

        El Segundo, CA   90245

        Attention:  Timothy R. Chrisman, Chairman of the Board

        Fax:  (310) 725-5831

    If to the Executive:

        Simone Lagomarsino

        14540 Bledsoe Street

        Sylmar, CA  91342

                or to such other address as either party shall have furnished to
                the other in writing in accordance herewith. Notice and
                communications shall be effective when actually received by the
                addressee.

                                                                              16
<PAGE>   17

        c)      The invalidity or unenforceability of any provision of this
                Agreement shall not affect the validity or enforceability of any
                other provision of this Agreement.

        d)      The Company may withhold from any amounts payable under this
                Agreement such Federal, state, local or other taxes as shall be
                required to be withheld pursuant to any applicable law or
                regulation.

        e)      The Executive's or the Company's failure to insist upon strict
                compliance with any provision of this Agreement or the failure
                to assert any right the Executive or the Company may have
                hereunder, including, without limitation, the right of the
                Executive to terminate employment for Good Reason pursuant to
                Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be
                a waiver of such provision or right or any other provision or
                right of this Agreement.

        f)      The Executive and the Company acknowledge that, except as may
                otherwise be provided under any other written agreement between
                the Executive and the Company, the employment of the Executive
                by the Company is "at will" and, subject to Section l(a) hereof,
                prior to the Effective Date, the Executive's employment and/or
                this Agreement may be terminated by either the Executive or the
                Company at any time prior to the Effective Date, in which case
                the Executive shall have no further rights under this Agreement.
                This Agreement shall have no effect on the Executive's rights
                under any plan, program, policy or practice provided by the
                Company or any of its affiliated companies except as
                specifically provided in Section 7 above.

13)     Non-Solicitation. During the Employment Period and for a period of one
        year thereafter, the Executive shall not 1) induce or attempt to induce
        any employee of the Company to leave the employ of the Company or in any
        way interfere with the relationship between the Company and its
        employees, (2) hire any person who was employed by the Company during
        the Employment Period, or (3) induce or attempt to induce any client of
        the Company to cease doing business with the Company or in any way
        interfere with the relationship between the Company and its clients

14)     Waiver & Release. In exchange for the benefits as outlined in this
        Agreement, the Executive agrees to waive and release any and all claims,
        actions or costs arising out of his employment with the Company. The
        Waiver & Release includes all claims whether arising in tort or contract
        and whether arising under statute or common law.

        Such claims may include, but are not limited to, wrongful termination,
        retaliation, harassment, or any statutory claims under Title VII of the
        Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair
        Employment and Housing Act, the Americans with Disabilities Act, or
        similar Federal or state statutes. The Executive understands and
        acknowledges that accepting benefits under this Agreement specifically
        constitutes a voluntary waiver of any and all rights and claims against
        the Company including, without limitation, rights or claims arising
        under the Age Discrimination in Employment Act of 1967, 29 U.S.C.
        Section 621, et. seq..

        This Waiver & Release applies even to such damages or losses about which
        the Executive does not know, or which do not now exist, but which might
        arise in the future. The

                                                                              17
<PAGE>   18

        Executive waives all rights under California Civil Code Section 1542.
        Section 1542 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."

15)     Binding Arbitration. Any controversy or claim arising out of or related
        to this Agreement, or the breach thereof, shall be settled by
        arbitration administered by the American Arbitration Association under
        its Commercial Arbitration Rules.

        The arbitration will be conducted before an arbitrator who is a member
        of the National Academy of Arbitrators and selected by the parties from
        the American Arbitration Association's Labor Panel. The arbitrator will
        have jurisdiction to determine the arbitrability of any claim. The
        arbitrator will not have the right to add to, subtract from or modify
        any of the terms of this Agreement, nor the power to reverse or modify
        any decision reserved to the Company's discretion.

        The arbitrator shall have the authority to grant all monetary or
        equitable relief (including, without limitation, ancillary costs and
        fees) available under state and federal law. Judgment on any award
        rendered by the arbitrator may be entered and enforced by any court
        having jurisdiction thereof. Discovery shall be in accordance with the
        California Arbitration Act. The parties agree that the parties shall
        share responsibility for the Arbitrator's fee.

16)     Integration Clause. The terms of this Agreement are final. The Executive
        and the Company represent that in executing this Agreement, they have
        not relied upon any representations other than those specifically stated
        in this written Agreement.

        The Agreement contains all promises that have been made by either party.
        There are no hidden terms, and everything that is important to this
        Agreement is specified in writing here. This Agreement shall be
        construed as though both parties have participated equally in its
        drafting, and it shall be interpreted, wherever possible, to make it
        valid and effective.

IN WITNESS WHEREOF, the Executive and, pursuant to the authorization from its
Board of Directors, the Company have executed this Agreement as of the day and
year first above written.

EXECUTIVE                                   HAWTHORNE FINANCIAL CORPORATION

                                            By:
---------------------------------              ---------------------------------
Simone Lagomarsino                             Timothy R. Chrisman, Chairman

                                                                              18
<PAGE>   19

                                   Exhibit "A"
--------------------------------------------------------------------------------
Membership in Manhattan Country Club
Use of personal trainer

                                       19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}]]