Document:

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                                                                    EXHIBIT 10.4

                            HAWTHORNE SAVINGS, F.S.B.

                           DEFERRED COMPENSATION PLAN

                   Amended and Restated Effective May 1, 2003

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                            HAWTHORNE SAVINGS, F.S.B.

                           DEFERRED COMPENSATION PLAN

                                    ARTICLE I

                                     PURPOSE

         1.1      Establishment of the Plan. Hawthorne Savings, F.S.B. (the
"Company") hereby amends and restates the Hawthorne Savings, F.S.B. Deferred
Compensation Plan (the "Plan") effective May 1, 2003. The Plan was established
by the Company effective October 1, 2000, and previously amended on May 1, 2002.

         1.2      Purpose of the Plan. The purpose of the Plan is to permit a
select group of management or highly compensated employees of the Company to
defer payment of a portion of their current compensation, and to permit members
of the Company's board of directors (the "Board") to defer receipt of director's
fees. The Plan is unfunded and is intended to be exempt from the participation,
vesting, funding, and fiduciary requirements set forth in Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").

                                   ARTICLE II

                                   DEFINITIONS

         2.1      Definitions. The following definitions are in addition to any
other definitions set forth elsewhere in the Plan. Whenever used in the Plan,
capitalized terms shall have the meanings set forth below unless otherwise
required by the context in which they are used:

                  (a)      "Cash Incentive Compensation" means all forms of cash
compensation earned by an Officer of the Company, other than base salary and
sign-on bonuses.

                  (b)      "Code" means the Internal Revenue Code of 1986, as
amended.

                  (c)      "Compensation" means, with respect to an Officer, his
or her base salary and Cash Incentive Compensation. "Compensation" means, with
respect to a Non-Employee Director, any compensation, whether regular retainer,
Board meeting fees, committee meeting fees, or otherwise earned by a
Non-Employee Director for services rendered in such capacity.

                  (d)      "Deferral Account" means the account established
pursuant to Article VI to reflect a Participant's deferred compensation and
adjustments thereto.

                  (e)      "Non-Employee Director" means any member of the
Company's Board of Directors who is not an employee of the Company.

                  (f)      "Officer" means any employee of the Company who is an
officer having the title of senior vice-president or a more senior title.

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                  (g)      "Participant" means any Officer or Non-Employee
Director who meets the eligibility requirements of the Plan, as set forth in
Article IV, and who elects to defer Compensation under the Plan; and includes,
where appropriate to the context, any former Officer or Non-Employee Director
who is entitled to benefits under this Plan.

                  (h)      "Plan Year" means the calendar year, except that the
initial Plan Year shall commence on October 1, 2000, and end on December 31,
2000.

                  (i)      "Unforeseeable Emergency" means a severe financial
hardship to a Participant resulting from a sudden and unexpected illness or
accident of the Participant or the Participant's dependent (as defined in
Section 152(a) of the Code), loss of the Participant's property due to casualty
or similar extraordinary and unforeseeable circumstance arising as a result of
events beyond the control of the Participant.

                  (j)      "Valuation Date" means the last day of each calendar
month and any other date designated as such by the Committee.

                                  ARTICLE III

                                 ADMINISTRATION

         3.1      Committee. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board, which shall consist of not fewer than
two members of the Board. The Board may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee.

         3.2      Authority of the Committee. The Committee shall have absolute
authority in its discretion, to the maximum extent permissible by law, subject
to and not inconsistent with the express provisions of the Plan, to interpret
and administer the Plan and to make all determinations thereunder, including
determinations as to eligibility and as to the amount and timing of benefit
payments. In exercising its authority, subject only to applicable legal
limitations, the Committee shall be under no obligation or duty to treat
similarly situated Participants in the same manner, and any action taken by the
Committee with respect to one Participant shall in no way obligate the Committee
to take the same or similar action with respect to any other Participant. The
Committee may adopt such rules as it deems necessary or advisable in order to
carry out the purpose of the Plan. All questions of interpretation,
administration and application of the Plan shall be determined by a majority of
the members of the Committee then in office, except that the Committee may
authorize any one or more of its members, or any officer of the Company, to
execute and deliver documents on behalf of the Committee. Any interpretation or
determination made by the Committee shall be conclusive and binding upon any
person having or claiming any interest under the Plan and, in the event of
judicial review, shall be entitled to the maximum deference allowable by law.

         3.3      Authority of Board. Notwithstanding the foregoing, if the
Board does not appoint a Committee, the Board shall have all of the authority of
and fulfill all of the functions of the Committee hereunder. If the Board does
appoint a Committee, the Board may still reserve

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certain authority and responsibility to itself with respect to the Plan. To the
extent necessary to be consistent with the provisions of this Section 3.3, any
reference in the Plan to a decision, determination or action of the Committee
shall be read and understood as referring to a decision, determination or action
of the Board.

         3.4      Liability of Board and Committee Members. Except as otherwise
required by law, no member of the Board or Committee shall be liable for
anything whatsoever in connection with the administration of the Plan other than
such member's own willful misconduct. In the performance of its functions with
respect to the Plan, the Board and Committee shall be entitled to rely upon
information and advice furnished by the Company's officers, accountants, legal
counsel and any other party the Board and Committee deems necessary, and no
member of the Board or Committee shall be liable for any action taken or not
taken in reliance upon any such advice.

                                   ARTICLE IV

                                   ELIGIBILITY

         4.1      Eligibility. Each Officer and Non-Employee Director shall
automatically be eligible to participate in the Plan.

                                   ARTICLE V

                                   DEFERRALS

         5.1      Deferrals. A Participant may elect to defer receipt of a
portion of his or her Compensation for a Plan Year. An election to defer
Compensation shall be made in writing prior to the first day of the Plan Year to
which it applies, except that with respect to the first Plan Year in which an
Officer or Non-Employee Director becomes eligible to participate in the Plan,
the election must be made no later than thirty (30) days after the date on which
such individual becomes eligible to participate in the Plan, and may only be
made with respect to Compensation earned for services performed after such
election.

                  All deferral elections shall be subject to the following
                  rules:

                  (a)      An Officer may elect to defer a whole percentage of
his or her base salary, and/or a whole percentage of his or her Cash Incentive
Compensation, which percentages need not be the same. Moreover, a deferral
election with respect to Cash Incentive Compensation may specify that the Cash
Incentive Compensation to be deferred for the Plan Year (i) shall not exceed a
stated dollar amount and/or (ii) shall not be less than a stated minimum dollar
amount (but not more than one hundred percent (100%) of the Cash Incentive
Compensation). Amounts deferred from an Officer's base salary shall reduce the
Officer's base salary in equal installments for each pay period during the Plan
Year (or portion thereof) to which the election applies. Amounts deferred from
an Officer's Cash Incentive Compensation shall reduce the Officer's Cash
Incentive Compensation for the Plan Year on the date such Cash Incentive
Compensation would otherwise be paid to such individual (which, in the case of
discretionary annual cash bonuses, is generally within forty five (45) days
following the end of the Plan Year).

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                  (b)      A Non-Employee Director may elect to defer a whole
percentage of his or her Compensation.

                  (c)      An election shall be irrevocable with respect to all
Compensation payable for services performed by the Participant during the Plan
Year following the date on which the election is received by the Committee,
except that a Participant may terminate an election to defer Compensation if the
Committee determines that the termination is necessary as a result of an
Unforeseeable Emergency.

                  (d)      While an election to defer Compensation shall relate
solely to the Plan Year for which it is made, nonetheless, unless the
Participant files a new election form on a timely basis for a subsequent Plan
Year, a Participant's election form in effect for a Plan Year shall
automatically renew and become applicable to the next following Plan Year.

         5.2      Election of Form and Time of Payment.

                  (a)      At the time that a Participant makes a deferral
election pursuant to Section 5.1, the Participant shall also designate on the
Participant's deferral election form (i) the form in which the deferred amount
for such Plan Year (and earnings thereon) is to be paid by the Company, and (ii)
the time at which the deferred amount for such Plan Year (and earnings thereon)
is to be paid by the Company.

                  (b)      The available forms of payment under the Plan are:
(i) a single lump sum payment; (ii) annual installments over a period of five
(5) years; and (iii) annual installments over ten (10) years.

                  (c)      A Participant may designate (i) that payment is to be
made upon the Participant's attainment of a particular age; (ii) that payment is
to be made upon termination of the Participant's services as an Officer or
Non-Employee Director for any reason; or (iii) that payment is to be made upon
the Participant's attainment of a particular age, but not prior to termination
of the Participant's services. Subject to paragraphs (d) and (e), payment shall
be made (or, in the case of installments, commence) in accordance with the
Participant's election, as soon as practicable following the date designated by
the Participant.

                  (d)      Notwithstanding any election made by a Participant
pursuant to this Section 5.2, in the event that a Participant's service
terminates prior to the Participant's attainment of age sixty (60), the
Participant's entire Deferral Account balance shall be paid in a single lump sum
as soon as practicable following the Participant's termination of service.

                  (e)      Notwithstanding the foregoing, in the event that the
Committee determines that payment of an amount at the time elected by the
Participant would result in all or a portion thereof not being deductible for
federal income tax purposes, pursuant to Section 162(m) of the Code, the
Committee, in its sole discretion, may defer the payment (or a portion thereof)
until the earliest year in which the payment (or the portion) is fully
deductible.

                  (f)      Any election of a specified payment form or date
pursuant to this Section 5.2 shall be subject to any restrictions that the
Committee may, in its sole discretion,

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choose to establish in order to limit the number of different payment forms or
dates that a Participant may have in effect at one time.

                  (g)      Except as otherwise provided in Sections 5.3 and 5.4,
all elections of forms and times of payment are irrevocable thirty (30) days
after they are made.

         5.3      Modification of Prior Election; Acceleration of Payment Date.

                  (a)      In the event of an Unforeseeable Emergency, the
Committee, in its sole discretion, may allow a Participant, to accelerate
payment hereunder and receive an amount which, under the original election form
filed by the Participant, would not be payable until a future date, but only to
the extent necessary to prevent severe financial hardship. Such action shall be
taken only if the Participant submits an application describing the
circumstances which the Participant believes justify the payment and the amount
necessary to prevent severe financial hardship, together with such supporting
evidence as the Committee may reasonably require. Payment may not be made under
this paragraph (a) to the extent that the Participant's hardship is or may be
relieved (i) through reimbursement or compensation by insurance or otherwise;
(ii) by liquidation of the Participant's assets, to the extent that this would
not in itself cause severe financial hardship; or (iii) by the termination of
the Participant's election to defer the payment of compensation hereunder.

                  (b)      A Participant may at any time change a prior election
and elect to accelerate payment hereunder by giving prior written notice thereof
to the Committee; provided, however, that any such election change shall result
in a reduction in the Participant's Deferral Account by ten percent (10%) of the
amount with respect to which the election change is being made, determined as of
the date of the election change.

         5.4      Modification of Prior Election: Deferral of Payment Date or
Change in Form of Payment. A Participant may at any time change a prior election
and elect to (i) delay the date on which payment is to be made (or, in the case
of installments, commence) or (ii) change the form in which payment is to be
made, by giving prior written notice thereof to the Committee; provided,
however, that any such election change shall not be effective unless it is made
no less than one year prior to the date on which payment would otherwise have
been made (or commenced), absent the election change.

         5.5      Restriction on Payment. Notwithstanding the above paragraphs,
any fixed payment date elected by a Participant as provided under Article V must
be no earlier than the January 1 of the third calendar year after the calendar
year in which the election is made or in which the Participant gives a written
notice of extension.

                                   ARTICLE VI

                                DEFERRAL ACCOUNTS

         6.1      Accounts. The Committee shall establish and maintain a
Deferral Account in the name of each Participant to record the deferred
compensation payable to the Participant hereunder, and shall, if applicable,
establish and maintain subaccounts for each deferral election of each
Participant that could cause a payment to be made at a different time or form
from other

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payments of deferrals elected by the same Participant. A Participant's Deferral
Account shall be for bookkeeping purposes only and shall not be deemed to create
a fund or trust for the benefit of any Participant. A Participant's Deferral
Account shall be fully and immediately vested.

         6.2      Credits and Adjustments. Each Participant's Deferral Account
shall periodically be adjusted as follows:

                  (a)      Amounts deferred by a Participant pursuant to Article
V shall be credited to the Participant's Deferral Account as of the dates as of
which they are applied to reduce the Participant's applicable Compensation.

                  (b)      As of each Valuation Date, a Participant's Deferral
Account balance shall be credited with interest at a rate equal to the interest
rate on 10-year Treasury notes, as in effect on the last date of the calendar
year quarter immediately preceding the calendar year quarter in which occurs
such Valuation Date, plus two and one-half percent (2.5%).

                  (c)      As of the date of any distribution to a Participant,
a Participant's Deferral Account shall be reduced by the amount of the
distribution and, if applicable, by the amount of any penalty imposed, pursuant
to Section 5.3(b).

                  (d)      Payment of Deferred Amounts. A Participant's Deferral
Account shall be paid by the Company to the Participant in accordance with the
Participant's deferral elections, but subject to the provisions of Section 5.2.
If such payment is to be made in the form of a lump sum, it shall be in an
amount equal to the balance of the Deferral Account (or the subaccount) being
paid, determined as of the Valuation Date coincident with or immediately
preceding the payment date. If the payment is to be made in the form of
installments, the amount of each installment payment shall be equal to the
quotient determined by dividing (i) the value of the portion of the Deferral
Account (or the subaccount) to which the installment payment election applies,
determined as of the Valuation Date coincident with or immediately preceding the
date the payment is to be made, by (ii) the number of years over which the
installment payments are to be made, less the number of years in which prior
payments attributable to such installment payment election have been made.

                                  ARTICLE VII

                               GENERAL PROVISIONS

         7.1      Unfunded Obligation. Deferred amounts to be paid to
Participants pursuant to the Plan shall constitute unfunded obligations of the
Company. The Deferral Accounts provided by the Plan are for accounting purposes
only and shall not be funded by a trust or by any segregated assets.

         7.2      Informal Funding Vehicles to Facilitate Payment. The Company
may, but need not, arrange for the purchase of insurance contracts or other
assets and may, but need not establish a so-called "rabbi trust" or other
informal funding vehicle to facilitate the payment of benefits and to discharge
the liability of the Company under the Plan. The making of any such investments
and/or the creation or maintenance of memorandum accounts or a rabbi trust or
other informal funding vehicles shall not, however, be deemed to create a trust
or a fiduciary

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relationship between the Committee or the Company and a Participant or otherwise
confer on any Participant or his or her creditors a vested or beneficial
interest in any assets of the Company whatsoever. Participants have no claim
against the Company for any changes in the value of any assets which may be
invested or reinvested by the Company with respect to the Plan.

         7.3      Status of Participants. Each Participant shall be a general
unsecured creditor of the Company with respect to amounts payable hereunder, the
Plan constituting a mere promise by the Company to make benefit payments in the
future.

         7.4      Beneficiary. For purposes hereof a "Beneficiary" shall mean
the person or persons to whom payments are to be paid pursuant to the terms of
the Plan in the event of a Participant's death. A Participant may designate a
Beneficiary on a form provided by the Committee, executed by the Participant,
and delivered to the Committee; provided, however, that if a married Participant
designates a Beneficiary other than not them the Participant's spouse, the
designation shall be valid only if consented to, in a notarized writing, by the
Participant's spouse. Subject to the foregoing, a Participant may change a
Beneficiary designation at any time. Subject to the property rights of any prior
spouse, if no Beneficiary is designated, if the designation is ineffective, or
if the Beneficiary dies before the balance of the Account is paid, the balance
shall be paid to the Participant's surviving spouse, or if there is no surviving
spouse, to the Participant's estate.

         7.5      Incapacity of Participant or Beneficiary. Every person
receiving or claiming benefits under the Plan shall be conclusively presumed to
be mentally competent and of age until the date on which the Committee receives
a written notice, in a form and manner acceptable to the Committee, that such
person is incompetent or a minor, for whom a guardian or other person legally
vested with the care of his person or estate has been appointed; provided,
however, that if the Committee finds that any person to whom a benefit is
payable under the Plan is unable to care for his or her affairs because of
incompetency, or because he or she is a minor, any payment due (unless a prior
claim therefor shall have been made by a duly appointed legal representative)
may be paid to the spouse, a child, a parent, a brother or sister, or to any
person or institution considered by the Committee to have incurred expense for
such person or otherwise entitled to payment. To the extent permitted by law,
any such payment so made shall be a complete discharge of liability therefor
under the Plan. If a guardian of the estate of any person receiving or claiming
benefits under the Plan is appointed by a court of competent jurisdiction,
benefit payments may be made to such guardian provided that proper proof of
appointment and continuing qualification is furnished in a form and manner
acceptable to the Committee. In the event a person claiming or receiving
benefits under the Plan is a minor, payment may be made to the custodian of an
account for such person under the Uniform Gifts to Minors Act. To the extent
permitted by law, any such payment so made shall be a complete discharge of any
liability therefor under the Plan.

         7.6      Nonassignment. The right of a Participant to the payment of
any amounts under the Plan may not be assigned, transferred, pledged or
encumbered nor shall such right or other interests be subject to attachment,
garnishment, execution or other legal process.

         7.7      No Right to Continued Employment. Nothing in the Plan shall be
construed to confer upon any Participant any right to continued employment with
the Company, nor shall the

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Plan interfere in any way with the right of the Company to terminate the
employment of any Participant at any time without assigning any reason therefor.

         7.8      No Guarantee of Board Membership. No provision in this Plan
shall be deemed or construed to impair or affect in any manner whatsoever the
right of the Company and its shareholders to discontinue or terminate the
services of any member of the Board to the same extent as if this Plan were not
in existence and had not been established.

         7.9      Tax Withholding. Appropriate taxes shall be withheld from cash
payments made to Participants pursuant to the Plan. To the extent tax
withholding is payable in connection with the Participant's deferral of income,
rather than in connection with the payment of deferral amounts, such withholding
may be made from other wages and salary currently payable to the Participant,
or, as determined by the Committee, the amount of the deferral elected by the
Participant may be reduced in order to satisfy required tax withholding for
employment taxes and any other taxes.

         7.10     Claims Procedure.

                  (a)      If a claim for benefits is denied, the Committee
shall furnish to the claimant within ninety (90) days after its receipt of the
claim (or within one hundred eighty (180) days after such receipt if special
circumstances require an extension of time) a written notice which (i) specifies
the reasons for the denial; (ii) refers to the pertinent provisions of the Plan
on which the denial is based; (iii) describes any additional material or
information necessary for the perfection of the claim and explains why such
material or information is necessary; and (iv) explains the claims review
procedures.

                  (b)      Upon the written request of the claimant submitted
within sixty (60) days after his or her receipt of such written notice, the
Committee shall afford the claimant a full and fair review of the decision
denying the claim and, if so requested, permit the claimant to review any
documents which are pertinent to the claim, permit the claimant to submit issues
and comments in writing and afford the claimant an opportunity to meet with
appropriate representatives of the Committee as a part of the review procedure.
Within sixty (60) days after its receipt of a request for review (or within one
hundred twenty (120) days after such receipt if special circumstances, such as
the need to hold a hearing, require an extension of time) the Committee shall
notify the claimant in writing of its decision and the reasons for its decision
and shall refer the claimant to the provisions of the Plan which form the basis
for its decision.

         7.11     Amendment, Suspension and Termination of Plan. The Company may
from time to time amend, suspend or terminate the Plan, in whole or in part.
Without limiting the foregoing, any amendment, suspension, or termination of the
Plan may, without the Consent of any Participant, (i) affect a Participant's
ability to make future deferrals; and (ii) on a prospective basis, affect the
rate at which interest is credited to a Participant's existing Deferral Account
under Section 6.2. Notwithstanding the foregoing, no amendment, suspension or
termination of the Plan may, without the consent of the affected Participant,
impair the right of a Participant to receive his or her existing Deferral
Account balance in accordance with the terms of the Plan prior to the effective
date of such amendment, suspension or termination; provided, however,

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that upon a termination of the Plan, the Company may provide for the accelerated
distribution of Deferral Account balances.

         7.12     Applicable Law. To the extent not preempted by federal law,
the Plan shall be construed and governed in accordance with the internal laws of
the State of California.

         IN WITNESS WHEREOF, Hawthorne Savings, F.S.B. has caused this Plan to
be executed by its duly authorized officer.

                                               HAWTHORNE SAVINGS, F.S.B.:

                                               By: /s/ EILEEN LYON
                                                  ------------------------------
                                                  Eileen Lyon
                                                  Senior Vice President
                                             Date: April 22, 2003
                                                  ------------------------------
                                       9

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>                                                                                        <C>
ARTICLE I           PURPOSE...........................................................       1

         1.1    Establishment of the Plan.............................................       1

         1.2    Purpose of the Plan...................................................       1

ARTICLE II          DEFINITIONS.......................................................       1

         2.1    Definitions...........................................................       1

ARTICLE III         ADMINISTRATION....................................................       2

         3.1    Committee.............................................................       2

         3.2    Authority of the Committee............................................       2

         3.3    Authority of Board....................................................       2

         3.4    Liability of Board and Committee Members..............................       3

ARTICLE IV          ELIGIBILITY.......................................................       3

         4.1    Eligibility...........................................................       3

ARTICLE V           DEFERRALS.........................................................       3

         5.1    Deferrals.............................................................       3

         5.2    Election of Form and Time of Payment..................................       4

         5.3    Modification of Prior Election; Acceleration of Payment Date..........       5

         5.4    Modification of Prior Election:  Deferral of Payment Date or Change in
                Form of Payment.......................................................       5

         5.5    Restriction on Payment................................................       5

ARTICLE VI          DEFERRAL ACCOUNTS.................................................       5

         6.1    Accounts..............................................................       5

         6.2    Credits and Adjustments...............................................       6

ARTICLE VII         GENERAL PROVISIONS................................................       6

         7.1    Unfunded Obligation...................................................       6

         7.2    Informal Funding Vehicles to Facilitate Payment.......................       6

         7.3    Status of Participants................................................       7

         7.4    Beneficiary...........................................................       7

         7.5    Incapacity of Participant or Beneficiary..............................       7

         7.6    Nonassignment.........................................................       7

         7.7    No Right to Continued Employment......................................       7
</TABLE>

                                      -i-

<PAGE>

                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                               <C>
7.8    No Guarantee of Board Membership......................................       8

7.9    Tax Withholding.......................................................       8

7.10   Claims Procedure......................................................       8

7.11   Amendment, Suspension and Termination of Plan.........................       8

7.12   Applicable Law........................................................       9
</TABLE>

                                      -ii-

<PAGE>

                                 AMENDMENT NO. 1
                                     TO THE
                            HAWTHORNE SAVINGS, F.S.B.
                           DEFERRED COMPENSATION PLAN
                  (AMENDED AND RESTATED EFFECTIVE MAY 1, 2003)

         Pursuant to Section 7.11 of the Hawthorne Savings, F.S.B. Deferred
Compensation Plan, as amended and restated effective May 1, 2003 (the "Plan"),
the Plan is hereby amended, effective August 18, 2003, in the following respects
only:

         A new Subsection 2.1(k) is added to the Plan to read as follows:

                  (k)      "Loan Officer" means an employee of the Company who
         is designated as a loan officer and holds the title of vice president.

         Section 4.1 of the Plan is amended in its entirety to read as follows:

         4.1      Eligibility. Each Officer and Non-Employee Director
         automatically shall be eligible to participate in the Plan. Each Loan
         Officer named by the Committee or satisfying requirements or criteria
         established from time to time by the Committee also shall be eligible
         to participate in the Plan.

         IN WITNESS WHEREOF, Hawthorne Savings, F.S.B. has caused this amendment
to be executed by its duly authorized officer on this 18th day of August,
2003.

                                                 HAWTHORNE SAVINGS, F.S.B.

                                                    By: /s/ EILEEN LYON
                                                       -------------------------

                                                 Title: Senior Vice President
                                                       -------------------------<PAGE>

                                                                    EXHIBIT 10.7

                     CHANGE IN CONTROL EMPLOYMENT AGREEMENT

         This Agreement by and between Hawthorne Financial Corporation (the
"Company"), and JOLENE WRYN (the "Executive"), is dated as of September 23,
2003.

         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 first 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 Change of Control period.
          The Company may, however, terminate the automatic

                                                                               1
<PAGE>

          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>

          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>

          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 first 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>

               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>

               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>

          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 11(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>

          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>

          v)   any failure by the Company to comply with and satisfy Section
               10(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
          11(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 sum of the amounts described in
                    clauses (1), (2) and (3) shall be hereinafter referred to as
                    the "Accrued Obligations"); and

                                                                               9

<PAGE>

               B.   an amount equal to the sum of (1) the Executive's Annual
                    Base Salary and (2) 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 one year 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 one year 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 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

                                                                              10

<PAGE>

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

                                                                              11

<PAGE>

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
     11(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)   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

                                                                              12

<PAGE>

     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 9 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.

10)  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.

     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.

11)  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.

                                                                              13

<PAGE>

     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:
                          JoLene Wryn
                          3855 Aruba Circle
                          Huntington Beach, CA 92649

          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.

     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,

                                                                              14

<PAGE>

          program, policy or practice provided by the Company or any of its
          affiliated companies except as specifically provided in Section 7
          above.

12)  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

13)  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."

14)  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

                                                                              15

<PAGE>

     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.

15)  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

/s/ JOLENE WRYN
---------------------------              By: /s/ SIMONE LAGOMARSINO
JoLene Wryn                                 --------------------------------
                                            Simone Lagomarsino, President & CEO

                                                                              16

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