(b)           Subject to the notice provisions of this paragraph, on the first annual anniversary of the date first above written and each annual anniversary thereafter, the Term of this Agreement shall automatically be extended for an additional one year, unless the Holding Company or the Employee gives written notice to the other party or parties hereto of such party’s or parties’ election not to extend the Term, with such notice to be given not less than ninety (90) days prior to any such anniversary date.  The Holding Company’s Board of Directors (“Board of Directors”) will review this Agreement annually for purposes of determining whether to extend the Agreement.  If any party gives timely notice that the Term will not be extended, then this Agreement shall terminate at the conclusion of its remaining Term.  References herein to the Term of this Agreement and/or the Employment Period shall refer both to the initial Term and successive Terms.

3.             Duties and Authority; Board Representation .

(a)           During the Employment Period, Employee shall devote all his productive time, ability and attention to the business and affairs of the Holding Company and its subsidiaries.  Employee shall not directly render service of a business, commercial or professional nature to any other person or organization other than the Holding Company and its subsidiaries without the consent of the Board of Directors.  However, nothing in this paragraph prohibits Employee from, or requires the Board of Directors to approve or consent to Employee serving as an advisor or Board member of a charitable or nonprofit organization or serving as an advisor or director of any corporation which does not compete with the business of the Holding Company, so long as such service does not materially interfere with the performance of employment duties.  Employee agrees that during the Employment Period, he will use his best efforts, skill and abilities to promote the Holding Company’s interests and to serve as the Executive Vice President of the Holding Company. Employee shall perform such customary, appropriate and reasonable executive duties as are normally assigned to the Executive Vice President at other thrift holding companies, including such duties as are delegated to him from time to time by the Board of Directors.  Employee shall report directly to the Holding Company’s Chairman and Chief Executive Officer.

(b)           At such time that a minimum of $1.0 billion of new Transaction Account Deposits (as defined in the footnote to Section 5(c) hereof) have been on deposit at Commercial Capital Bank, FSB (the “Bank”) for at least 60 days (calculated on an average daily balance basis), with the concurrence of Employee, the Holding Company agrees to take all action necessary to appoint or elect Employee as a director of the Holding Company.

4.             Holding Company’s Authority .  Employee agrees to observe and comply with the Holding Company’s rules and regulations as adopted by the Board of Directors regarding performance of his duties and to carry out and to perform orders, directions and policies stated by the Board of Directors to him periodically, either orally or in writing.

5.             Compensation .

(a)           The Holding Company, through the Bank, agrees to pay to Employee during each year of this Agreement an annual base salary of $500,000, beginning on the date first set forth above and payable in accordance with the Bank’s standard biweekly payroll policy and subject to such withholding as required by law or policy.  The base salary shall be reviewed annually by the Bank’s Board of Directors, on or before January 31 of each year for that year, and may be changed by mutual agreement of the parties.

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(b)           The Holding Company, through the Bank, also agrees to pay a bonus of $500,000 upon the execution of this Agreement, which is specifically conditioned on the Employee’s continued employment with the Bank for three (3) years in accordance with the terms of this Agreement.  Employee hereby acknowledges and agrees that if either (i) he should voluntarily elect to terminate his employment hereunder for other than good reason (as defined herein or (ii) if Employee is terminated by the Holding Company or the Bank for cause (as defined in each employment agreement), in either circumstance, Employee shall immediately return to the Bank the portion of the $500,000 bonus which is equal to the product of $500,000 times the remaining percentage of the three year Term (calculated by the number of days based on a 365 day year) that Employee did not fulfill with the Holding Company and the Bank.

(c)           Pursuant to the Hawthorne Financial Corporation 2001 Stock Incentive Plan which was assumed by the Holding Company subsequent to its acquisition of Hawthorne Financial Corporation (“Plan”), Employee is granted a restricted share right which entitles Employee to receive shares of the Holding Company’s common stock upon the satisfaction of the vesting requirements set forth in the table below.  Employee shall receive a Stock Issuance Agreement issued pursuant to the Plan consistent with the restricted share right referenced herein.

Vesting Schedule

(1)                                   For purposes of this Agreement “Transaction Account Deposits” means savings accounts, money market accounts and demand deposit accounts.

(2)                                   In accordance with the Plan, shares of the Holding Company’s common stock may not be issued before one year from the date of the grant of the restricted share right, regardless of the attainment of the required performance goal.  The date of the restricted share right is the date of this Agreement.

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(d)           The Holding Company, through the Bank, agrees to pay to Employee $700,000 at such time as there is a minimum of $100 million in Transaction Account Deposits (as defined in the footnote to Section 5(c) hereof) attributable to Employee which are on deposit in the Bank for at least 60 days (calculated on an average daily balance basis).

(e)           After the full vesting of the share right awards pursuant to Section 5(c) hereof, the Employee will become eligible to receive from the Bank a bonus or bonuses, and to receive from the Holding Company stock options and restricted stock awards, in each case, in such amount as, in such a manner as, and at such time as, the Board of Directors of the Holding Company or the Bank, as the case may be, in its discretion, determines is appropriate.

(f)            Following the completion of the services provided to the Employee pursuant to Section 5(h), the Holding Company, through the Bank, shall provide a car allowance of $1,000 per month during the Employment Period.

(g)           The Holding Company, through the Bank, agrees to pay the pro rata portion of the monthly dues (based on actual business use as evidenced by receipts) for the Wilshire Country Club, or such other facility as may be mutually agreed upon by the parties hereto.

(h)           The Holding Company understands that it is the Employee’s intention and desire to work out of the Holding Company’s headquarters office in Irvine, California and to relocate his personal residence closer to the Holding Company’s headquarters.  In order to facilitate Employee’s move, for a period of not more than six months from the date of this Agreement, the Holding Company, through the Bank, agrees to provide Employee with a car service selected by the Holding Company to transport Employee to and from his residence to the Holding Company’s headquarters.

(i)            During the Employment Period, Employee shall be eligible to participate in any retirement, pension or profit-sharing plan, including any non-qualified, deferred compensation or salary continuation plan, or similar employee benefit plan or retirement or bonus program of the Holding Company and its subsidiaries, to the extent that he is eligible under the provisions of the plan and commensurate with his position in relationship to other participants and pursuant to the terms of the plans or programs of the Holding Company and its subsidiaries.

(j)            The Holding Company, through the Bank, shall provide medical, dental and other insurance, including key man life and disability, for Employee on the same terms as provided for all executive officers of the Holding Company and its subsidiaries.

6.             Reimbursement of Expenses .  The services required by the Holding Company and its subsidiaries will require Employee to incur business, entertainment and community relations expenses and the Holding Company or its subsidiaries hereby agrees to provide credit cards and charge accounts for Employee’s use for such expenses. The Holding Company or its subsidiaries agrees to reimburse Employee for all out-of-pocket expenses which are business related, upon submission of appropriate documentation and approval by the Chairman and Chief Executive

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Officer of the Holding Company.  Such expenses may include membership fees and dues to organizations approved by the Board.  Each expense, to be reimbursed, must be of a nature qualifying it as a proper deduction on the income tax returns of the Holding Company as a business expense and not as deductible compensation to Employee.  The records and other documentary evidence submitted by Employee to the Holding Company or its subsidiaries with each request for reimbursement of such expenses shall be in the form required by applicable statutes and regulations issued by appropriate taxing authorities for the substantiation of such expenditures as deductible business expenses of the Holding Company and not as deductible compensation to Employee.

7.             Confidential Information .  Employee agrees that he shall not, without the prior written permission of the Holding Company in each case, publish, disclose or make available to any other person, firm or corporation, either during or after the termination of this Agreement, any confidential information which Employee may obtain during the Employment Period, or which Employee may create prior to the end of the Employment Period relating to the business of the Holding Company and its subsidiaries, or to the business of any customer or supplier of any of them; provided, however, Employee may use such information during the Employment Period for the benefit of the Holding Company and its subsidiaries. Employee agrees to execute any and all such additional agreements and instruments that the Holding Company may deem reasonably necessary in order to protect the confidentiality of such confidential information or otherwise to effectuate the purpose and intent of this Section 7.  Prior to or at the termination of this Agreement, Employee shall return all documents, files, notes, writings and other tangible evidence of such confidential information to the Holding Company and its subsidiaries. This Section 7 shall survive the expiration or termination of this Agreement.

8.             Covenant Not to Solicit Customers or Fellow Employees .

(a)           Subject to Section 8(b) hereof, Employee agrees that for a period of eighteen (18) months following the termination of employment with the Holding Company, he will not solicit, directly or indirectly, divert or attempt to divert for himself or for any third party, the business of any customer with whom the Holding Company and its subsidiaries had done business during the preceding one year period. Employee recognizes and acknowledges that any customer list and financial information concerning any of the Holding Company’s customers, as it may exist from time to time, is a valuable, special and unique asset of the Holding Company’s business.

(b)           To the extent that Employee has terminated his employment with the Holding Company and desires to solicit the business of any customer of the Holding Company who has had Transaction Account Deposits attributed to the Employee for purposes of Section 5(c) hereof, Employee agrees to observe the following time periods during which no solicitation of such customers may be made:

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(c)           Employee agrees not to solicit directly or indirectly, divert or attempt to divert for himself or for any third party, the services of any officer or employee of the Holding Company and its subsidiaries during the period of 18 months following the termination of employment with the Holding Company.

(d)           This Section 8 shall survive the expiration or termination of this Agreement.

9.             Remedy .  Employee understands that, because of the unique character of the services to be rendered by Employee hereunder, the Holding Company would not have any adequate remedy at law for the breach or threatened breach by Employee of any one or more of the covenants set forth in this Agr