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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
