EXHIBIT 10.8
HAWTHORNE FINANCIAL CORPORATION
BENEFIT CONTINUATION AGREEMENT FOR OUTSIDE DIRECTORS
This Agreement is entered into by and between Hawthorne Financial
Corporation, a Delaware corporation (the "Company"), and ___________________
("Director"), an independent member of the Board of Directors of the Company.
RECITALS
A. 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 is able to attract and retain as directors
individuals of superior talent, ability, and achievement.
B. 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 Director, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the
Company.
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:
ARTICLE I. DEFINITIONS. When used in this document, the following terms
shall have the meaning assigned to them, unless the context clearly indicates
otherwise:
Section 1.01 "Company" means Hawthorne Financial Corporation.
Section 1.02 "Board" means the board of directors of the Company.
Section 1.03 "Change of Control" means:
(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 (A) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) 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 Agreement, the exercise of
outstanding Warrants to acquire shares of Outstanding Company Common
Stock is specifically excluded from the determination of whether or not
a Change of Control has occurred. 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 Section 1.03(c); or
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(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 1.03(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 of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, immediately
prior to such Business Combination;
(ii) A Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company who 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 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.
Section 1.04 "Retirement" means the Director's resignation or, removal from,
failure to be re-nominated or declination to stand for re-election to the Board.
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ARTICLE II. CONTINUATION OF BENEFITS.
Section 2.01 Continuation of Benefits Upon Retirement. Subject to the
provisions of Section 2.04, upon Retirement and for the period specified in
Section 2.02, the Company covenants and agrees to provide the Director and/or
the Director's family, as the case may be, with all benefits under each welfare
benefit plan, practice, policy or program provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the Director and/or the Director's
family, at any time during the 120-day period immediately preceding the
Director's Retirement.
Section 2.02 Period of Payments. The Director shall be entitled to
receive the benefits specified in Section 2.01 for the lesser of (a) five years
or (b) the number of years, rounded up to the nearest whole number, equal to the
number of years of service as a Director.
Section 2.03 Continuation of Benefits Following Change of Control. For
a period of five (5) years following a Change in Control, the Company covenants
and agrees to provide the Director and/or the Director's family, as the case may
be, with 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, employee life,
group life, accidental death and travel accident insurance plans and programs)
that were provided to the Director and/or the Director's family, at any time
during the 120-day period immediately preceding the Change in Control.
Section 2.04 Forfeiture of Benefits. All benefits not yet paid for
which Director would be otherwise eligible under this Agreement shall be
forfeited in the event that the Incumbent Board determines that any of the
following circumstances has occurred:
(a) The Director has engaged in knowing and willful
misconduct in connection with his or her service as a Director; or
(b) The Director has willfully breached his or her
fiduciary duties to the Company.
(c) For purposes of this Section 2.04, no act or failure
to act, on the part of the Director, shall be considered "willful"
unless it is done, or omitted to be done, by the Director in bad faith
or without reasonable belief that the Director's action or omission was
in the best interests of the Company, determined by a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4)
of the independent members of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided
to the Director, and the Director is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Director is guilty of the conduct
described in Section 2.04(a) or (b) above, and specifying the
particulars thereof in detail.. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Director in good
faith and in the best interests of the Company.
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ARTICLE III. MISCELLANEOUS
Section 3.01 Continued Board Service. Nothing in this Agreement or the
benefits payable hereunder shall confer upon the Director any right to continue
as a member of the Board.
Section 3.02 Specific Performance. Without prejudice to any other
rights or remedies Director may have, the Company acknowledges and agrees that
damages would not be an adequate remedy for any breach of this Agreement and
Director shall be entitled to the remedies of injunction, specific performance
and other equitable relief for any threatened or actual breach of this
Agreement. The Company hereby consents to jurisdiction in the U.S. District
Court for the Central District of California (or at Director's option, the Los
Angeles County Superior Court Central District) so that such court may enter an
appropriate injunction order and such other relief as may be just and proper.
Section 3.03 Agreement Binding on Successors. This Agreement shall be
binding upon all successors and assigns of the Company (including any transferee
of all or substantially all of its assets and any successor by merger or
operation of law) and shall inure to the benefit of the heirs, personal
representatives and estate of the Director.
Section 3.04 Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not by themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent of the parties to the fullest enforceable extent.
Section 3.05 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, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written or oral
verification of receipt. Until changed upon giving notice as provided herein,
notices shall be sent to:
If to the Company:
Hawthorne Financial Corporation
2381 Rosecrans Avenue
El Segundo, CA 90245
Attention: Simone Lagomarsino, Chief Executive Officer
Fax: (310) 725-5831
If to the Director, at the address specified under his or her signature.
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.
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Section 3.06 Amendments and Termination. This Agreement may be amended only by a
written instrument executed by the parties.
Section 3.07 Entire Agreement. This Agreement constitutes the whole agreement
between the parties with respect to the matters contained in the Agreement.
Section 3.08 Applicable Law. To the extent not preempted by federal law, this
Agreement shall be construed and governed in accordance with the internal laws
of the State of California.
Section 3.09 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, this Agreement is executed as of ________________,
2003.
HAWTHORNE FINANCIAL CORPORATION
By __________________________________
Simone Lagomarsino,
President and Chief Executive Officer
DIRECTOR:
_____________________________________
Address for Notices:
_____________________________________
_____________________________________
Fax No.: ____________________________
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