Document:

<PAGE>   1
                                                                   EXHIBIT 10.06

                           HAWTHORNE SAVINGS, F.S.B.

                           DEFERRED COMPENSATION PLAN

                        Effective As of October 1, 2000
<PAGE>   2

                               TABLE OF CONTENTS

                                                                            Page

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.......................2

Article IV.    Participants...................................................3
        4.1    Participants...................................................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 ..................................4
        5.4    Modification of Prior Election:
               Deferral of Payment Date or Change in Form of Payment..........5

Article VI.    Deferral Accounts..............................................5
        6.1    Accounts.......................................................5
        6.2    Credits and Adjustments........................................5

Article VII.   General Provisions.............................................6
        7.1    Unfunded Obligation............................................6
        7.2    Informal Funding Vehicles to Facilitate Payment................6
        7.3    Status of Participants.........................................6
        7.4    Beneficiary....................................................6
        7.5    Incapacity of Participant or Beneficiary.......................7
        7.6    Nonassignment..................................................7
        7.7    No Right to Continued Employment...............................7
        7.8    Tax Withholding................................................7
        7.9    Claims Procedure...............................................7
        7.10   Amendment, Suspension and Termination of Plan..................8
        7.11   Applicable Law.................................................8

                                       i
<PAGE>   3
                           HAWTHORNE SAVINGS, F.S.B.

                           DEFERRED COMPENSATION PLAN

                                   ARTICLE I.

                                    PURPOSE

     1.1   Establishment of the Plan.  Effective as of October 1, 2000,
Hawthorne Savings, F.S.B. (the "Company") hereby establishes the Hawthorne
Savings, F.S.B. Deferred Compensation Plan (the "Plan"), as set forth herein.

     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.  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 other than base salary and sign-on bonuses.

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

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

          (d)  "Participant" means any officer of the Company who meets the
eligibility requirements of the Plan, as set forth in Article IV, and includes,
where appropriate to the context, any former officer who is entitled to benefits
under this Plan.

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

          (f)  "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.
<PAGE>   4
          (g)  "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 Company's board of directors (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 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.

                                       2
<PAGE>   5
                                  ARTICLE IV.

                                  PARTICIPANTS

     4.1 Participants.  Each officer of the Company having the title of senior
vice-president or a more senior title (a "Participant") 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 base salary and Cash Incentive Compensation (collectively,
"Compensation") for the 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 becomes
eligible to participate in the Plan, the election must be made no later than
thirty (30) days after the date on which the officer is first notified by the
Committee of his or her eligibility to participate in the Plan.

           All deferral elections shall be subject to the following rules:

           a. An election may defer a whole percentage of the Participant's base
salary, and/or a whole percentage of the Participant's 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 a Participant's base salary shall reduce
the Participant'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 a Participant's Cash Incentive Compensation shall reduce the
Participant's Cash Incentive Compensation for the Plan Year on the date such
Cash Incentive Compensation would otherwise be paid to the Participant (which,
in the case of discretionary annual cash bonuses, is generally within forty five
(45) days following the end of the Plan Year).

           b. 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.

           c. 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.

                                       3
<PAGE>   6
          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 the Participant's termination of employment for any reason; or (iii)
that payment is to be made upon the Participant's attainment of a particular
age, but not prior to the Participant's termination of employment.  Subject to
paragraphs (d) and (e), payment shall be made (or, in the case of an
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 employment 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 employment.

          (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, 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.

                                       4
<PAGE>   7
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.

                                  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 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 current 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).

                                       5
<PAGE>   8
          (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 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 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

                                       6
<PAGE>   9
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 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 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 deferred 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.

          7.9 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

                                       7
<PAGE>   10
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 deny 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.

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

          7.11 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, the Company has caused this Plan to be executed
this the 5th day of October, 2000.

                                                      HAWTHORNE SAVINGS, F.S.B.

                                                   By:  /S/ Simone Lagomarsino
                                                        ----------------------

                                       8<PAGE>   1

                                                                    EXHIBIT 10.7

                      DEFERRED COMPENSATION LOAN AGREEMENT

        This Agreement is entered into between Hawthorne Financial Corporation
(the "Company") and Karen Abajian ("Executive") as of July 12, 2000.

                                    RECITALS

        A. Executive is currently employed as the Company's Executive Vice
President and Chief Financial Officer.

        B. Prior to her employment with the Company, Executive was a participant
in a deferred compensation plan at Imperial Bank ("Imperial").

        C. As a result of Executive's resignation from Imperial, Executive (1)
was required to recognize $417,705.64 in deferred compensation and (2) lost the
opportunity to receive a corporate matching contribution of $40,832.65 from
Imperial.

        D. As a material inducement to Executive to become employed by the
Company, the Company agreed to reimburse Executive for additional income and
employment tax liabilities she would recognize as a result of the accelerated
deferred compensation and to pay Executive the amount of the matching
contribution which she did not receive, provided that Executive continues to be
employed by the Company.

        E. The Company proposes to loan Executive the amount necessary to cover
the lost matching contribution and Executive's state and federal income tax
liabilities with respect to the early recognition of deferred compensation and
the matching contribution.

        F. Executive, together with her spouse, is a resident of the state of
California and is currently subject to taxation at the top marginal rates for
California and federal income tax purposes.

        NOW, THEREFORE, the parties agree as follows:

        1. Loan for Lost Matching Contribution and Tax Liabilities. The Company
shall make a loan (the "Loan") to Executive in the principal amount of
$227,627.43, with interest at the "applicable Federal rate" (as defined in
Section 1274(d) of the Internal Revenue Code) compounded semiannually, to cover
Executive's lost matching contribution from Imperial and Executive's state and
federal tax liabilities with respect to the early recognition of deferred
compensation and the matching contribution, on the terms and conditions set
forth in this Agreement.

        2. Maturity of Loan. The remaining balance of the Loan, principal and
interest, shall become immediately due and payable on the earliest of (a) the
date Executive resigns her employment with the Company, (b) the date Executive's
employment is terminated for "cause" as defined herein, or (c) the third
anniversary of the date hereof. The Company shall be deemed to have terminated
the employment of Executive "for cause" if, but only if, such termination (x)
shall result from (i) Executive's continued and

                                                                               1
<PAGE>   2

willful failure or refusal to substantially perform her duties in accordance
with the terms of the Agreement, (ii) any act or omission by Executive
constituting gross negligence or willful misconduct that is materially injurious
to the Company, or (iii) Executive's commission of a felony or a serious
misdemeanor or any act or omission involving dishonesty, disloyalty or fraud
with respect to the Company, its customers or suppliers and (y) shall have been
approved by 66.66% of the Board of Directors of the Company. No termination
shall be considered to result from Executive's continued and willful failure or
refusal to substantially perform her duties in accordance with the terms of the
Agreement, unless Executive first shall have received written notice from the
Company specifying the acts or omissions alleged to constitute such failure or
refusal and such failure or refusal continues after Executive shall have had
reasonable opportunity to correct the same.

        3. Loan Forgiveness

        a. One-third (1/3) of the original principal amount of the Loan and all
interest then accrued on the Loan shall be forgiven and cancelled, automatically
and without action on the part of the Company or its Board of Directors, on each
of April 3, 2001, April 3, 2002 and April 3, 2003, provided that Executive
remains employed by the Company through that date.

        b. The full remaining balance of the Loan, principal and interest,
shall, automatically and without action on the part of the Company or its Board
of Directors, be forgiven and cancelled upon the occurrence of any of the
following events:

                i. Company's termination of Executive for any reason other than
        for "cause" as defined herein, or

                ii. Executive's death or disability. The term "disability" shall
        mean a medically determinable physical or mental incapacity of Executive
        rendering her incapable of reporting to work or unable to perform the
        essential functions of her job for a period expected to continue for at
        least twelve (12) consecutive months or result in death, as established
        to the reasonable satisfaction of the Company's Board of Directors.

        4. Tax Gross-Up Payment.

        a. For each year that all or a portion of the Loan is forgiven or an
additional payment is made under this subsection 4a, the Company shall pay to
Executive an additional payment (a "Gross-Up Payment") in an amount equal to the
federal and state income and employment taxes due as a result of such
forgiveness and cancellation. Each Gross-Up Payment shall be made in two
installments. The first installment shall be in the amount of federal and state
income and employment taxes required to be withheld from Executive at the time
of the Loan forgiveness and/or Gross-Up Payment, and shall be paid to the
applicable withholding tax collection agencies within the time periods
prescribed by law. The second installment shall be paid to Executive on or
before the later of (i) April 1 of the calendar year following the calendar year
in which the applicable forgiveness or payment occurs or (ii) thirty (30) days
following the date

                                                                               2
<PAGE>   3

on which the tax return information for such calendar year is provided to the
Company as set forth in subsection c below. The second installment for the last
year in which a Gross-Up Payment is made with respect to Loan forgiveness shall
be adjusted to take into account the future tax effects of such Gross-Up
Payment, and no Gross-Up Payment shall be made for any subsequent year.

        b. The Company shall have the right to deduct or otherwise effect
withholding from the Gross-Up Payment, or from any other compensation payable to
Executive, of any income or employment tax or other amount required by federal
or state tax laws to be withheld with respect to forgiveness of the Loan or the
making of the Gross-Up Payment.

        c. The amount of the state and federal income taxes to be included in
the Gross-Up Payment shall be calculated by Executive's tax return preparer for
each of the years in question, subject to review and approval by the Company.
The Company shall provide to Executive and her tax return preparer a pro forma
Form W-2 for each such year indicating what executive's income and withholding
amounts would have been if no Loan forgiveness income or Gross-Up Payment income
had been reported on Form W-2 for such year. Executive shall provide the Company
a copy of each income tax return on which any Loan forgiveness income, Gross-Up
Payment income and/or state income tax deduction attributable to Loan
forgiveness or Gross-Up Payment is reflected. Additionally, Executive shall
provide the Company her tax return preparer's written calculation of what her
tax liability would be on each such income tax return if no Loan forgiveness
income, Gross-Up Payment income or state income tax deduction attributable to
Loan forgiveness or Gross-Up Payment were reflected. For each year, the income
tax portion of the Gross-Up Payment shall be the difference between the amounts
calculated under the two preceding sentences. The amount of employment taxes
included in the Gross-Up Payment shall be calculated as the Medicare tax rate
(currently 1.45%) multiplied by the amount of any Loan forgiveness income and
Gross-Up Payment income. If, as a result of Executive being audited or filing an
amended tax return, Executive's state or federal income tax liability for any
year covered by this provision is altered, Executive shall notify the Company of
the same and shall have her tax return preparer recalculate the Gross-Up Payment
for such year. If any such calculation indicates that the Company previously
made an excess Gross-Up Payment, Executive shall promptly repay to the Company
the amount of such excess, together with interest at the rate then applicable to
refunds from such taxing authority.

        5. At Will Employment. Nothing herein shall be deemed to waive the
Company's policy that Executive's employment is AT WILL and can be terminated at
the option of either the Company or Executive in their sole and absolute
discretion, for any or no reason whatsoever, with or without cause, and no
representations, warranties or assurances have been made concerning the length
of such employment by the Company.

                                                                               3
<PAGE>   4

        6. General.

        a. Assignment.

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

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

                iii. 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.

        b. Headings. The subject headings of the paragraphs and subparagraphs of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.

        c. Severability. It is agreed that if any term, covenant, provision,
paragraph or condition of this Agreement shall be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not
invalidate the whole Agreement, but it shall be construed as if it did not
contain the invalid, illegal or unenforceable part, and the rights and
obligations of the parties shall be construed and enforced accordingly.

        d. Entire Agreement. The parties hereto agree that this Agreement
supersedes all existing agreements between the Company and Executive relating to
the subject matter hereof, whether oral, written, expressed or implied, and
contains the entire understanding and agreement between the parties on such
subject.

        e. Amendment and Waiver. This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties. Either party may
in writing waive any provision of this Agreement to the extent such provision is
for the benefit of the waiving party. No waiver by either party of a breach of
any provision of this Agreement shall be construed as a waiver of any subsequent
or different breach, and no forbearance by a party to seek a remedy for
noncompliance or breach by the other party shall be construed as a waiver of any
right or remedy with respect to such noncompliance or breach.

        f. Choice of Law. This Agreement and the performance hereunder shall be
construed in accordance with and under and pursuant to the internal substantive
laws of the State of California applicable to agreements fully executed and
performed entirely in such state.

                                                                               4
<PAGE>   5

        g. Notices. 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 Executive:
               Karen Abajian
               7717 Agnew Avenue
               Los Angeles, CA 90045

        h. Attorneys' Fees. In the event of any dispute regarding the
enforcement or interpretation of this Agreement, the party prevailing in such
dispute shall be entitled to recover from the other party hereto all costs of
such dispute, including reasonable attorneys' fees.

        IN WITNESS WHEREOF, 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:
------------------------                   -------------------------------------
KAREN ABAJIAN                               Name and Title:

                                                                               5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}]]