<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO Section 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to section 240.14a-11(c) or section
240.14a-12
HAWTHORNE FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
HAWTHORNE FINANCIAL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rule 14a-5(i)(4) and 0-11.
1) Title of each class of securities to which transactions applies:
....................................................................
2) Aggregate number of securities to which transactions applies:
....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule -11.
....................................................................
4) Proposed maximum aggregate value of transaction:
....................................................................
5) Total fee paid:
....................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:
.....................................................................
2) Form, Schedule or Registration Statement No.:
.....................................................................
3) Filing Party:
.....................................................................
4) Date Filed:
.....................................................................
<PAGE>
HAWTHORNE FINANCIAL CORPORATION
2381 Rosecrans Avenue
El Segundo, CA 90245
-------------------
Dear Stockholder:
I am writing to invite you to attend a Special Meeting of Stockholders of
HAWTHORNE FINANCIAL CORPORATION (the "Company") that will be convened at 10:00
a.m. on Thursday, August 31, 1995 at the Radisson Plaza Hotel at 1400 Parkview
Avenue, Manhattan Beach, California.
The purpose of the Special Meeting is to renew consideration of the
proposed amendments to Hawthorne Financial Corporation's Certificate of
Incorporation presented at the Annual Meeting this year that (1) would increase
to 20,000,000 the number of shares of Common Stock we are authorized to issue
and (2) would authorize the issuance of up to 10,000,000 shares of Preferred
Stock. The proposed amendments received the favorable vote of over 64% of the
shares voting, representing 49.1% of the Company's total shares outstanding.
Under Delaware law, however, the favorable vote of a majority of the outstanding
shares is required for approval of the amendment.
Since the date of the Annual Meeting, the Company's principal subsidiary,
Hawthorne Savings, F.S.B., has been ordered by the Office of Thrift Supervision
(the "OTS") to raise $15 to $20 million of new capital by not later than
December 15, 1995. Your Board of Directors believes that authorization of
additional Common Stock and of Preferred Stock is essential to assure that the
Company is able to issue the amount and types of securities that investors may
require to comply with the OTS order. Failure to comply with the OTS order
could result in a forced liquidation of Hawthorne Savings at a distressed price
under regulatory compulsion or the appointment of a conservator or receiver for
Hawthorne Savings, in which case it is likely that your investment in Hawthorne
Financial Corporation would become worthless.
Important information concerning your Company and the proposals to be voted
upon at the Special Meeting is contained in the accompanying proxy statement,
which you should read carefully before deciding how to vote. In addition, I and
the other officers of your Company welcome the opportunity to answer your
questions in person or at the telephone numbers shown below.
<PAGE>
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. WE HOPE YOU
WILL ATTEND THE SPECIAL MEETING IN PERSON IF IT IS CONVENIENT FOR YOU TO DO SO.
IF YOU ARE UNABLE TO ATTEND, PLEASE VOTE BY SIGNING, DATING AND RETURNING THE
ENCLOSED PROXY CARD TODAY.
Sincerely,
Scott A. Braly
President and Chief Executive Officer
----------------------------------------------------------------------
IMPORTANT: PLEASE SEND YOUR PROXY CARD TODAY. FAILURE TO VOTE WILL
HAVE THE EFFECT OF A VOTE AGAINST THE PROPOSALS THAT WILL BE PRESENTED
AT THE SPECIAL MEETING AND THAT THE BOARD OF DIRECTORS BELIEVES ARE
ESSENTIAL FOR THE FUTURE SUCCESS OF YOUR COMPANY.
COMPANY OFFICERS AND REPRESENTATIVES ARE AVAILABLE TO ANSWER YOUR
QUESTIONS AT THE FOLLOWING TELEPHONE NUMBERS: AMY ULANICH OF D.F.
KING & COMPANY AT (800) 290-6432 OR NORMAN MORALES OF HAWTHORNE
FINANCIAL CORPORATION AT (310) 725-5631.
----------------------------------------------------------------------
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<PAGE>
HAWTHORNE FINANCIAL CORPORATION
2381 Rosecrans Avenue
El Segundo, CA 90245
-------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be Held on August 31, 1995
-------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of HAWTHORNE
FINANCIAL CORPORATION (the "Company") will be convened at 10:00 a.m. on
Thursday, August 31, 1995 at the Radisson Plaza Hotel at 1400 Parkview Avenue,
Manhattan Beach, California, to consider and vote upon the following matters:
1. A proposed amendment to Article FOURTH of the Company's
certificate of incorporation that would increase the number of
shares of Common Stock that the Company is authorized to issue to
20,000,000 shares and change the designated par value of the
Company's common stock to $.01 per share.
2. A proposed amendment (together with the amendment described in
Item 1 above, the "Amendments") to Article FOURTH of the
Company's certificate of incorporation that would authorize the
issuance of up to 10,000,000 shares of Preferred Stock, par value
of $.01 per share, in one or more series from time to time as
determined by the Board of Directors, and authorize the Board of
Directors to determine the designations, rights, preferences,
privileges and other terms of any series of such stock that may
be issued.
3. A proposal to adjourn the Special Meeting if necessary to permit
solicitation of additional proxies in favor of the Amendments to
obtain approval thereof by the stockholders of the Company.
4. Such other matters, if any, as may properly come before the
Special Meeting or any adjournments or postponements thereof and
may properly be voted upon.
<PAGE>
The Board of Directors of the Company has selected July 20, 1995 as the
record date for the Special Meeting. Only those stockholders of the Company of
record at the close of business on that date will be entitled to notice of and
to vote at the Special Meeting or any postponements or adjournments thereof.
By Order of the Board of Directors
James D. Sage
Senior Vice President and Corporate Secretary
El Segundo, California
July 25, 1995
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<PAGE>
HAWTHORNE FINANCIAL CORPORATION
2381 Rosecrans Avenue
El Segundo, CA 90245
-------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement is being sent to you in connection with the
solicitation of proxies by the Board of Directors of Hawthorne Financial
Corporation (the "Company") to be voted at the Special Meeting of Stockholders
of the Company to be held on August 31, 1995, and at any postponement or
adjournment thereof. The approximate date of mailing of this Proxy Statement is
July 25, 1995.
PROPOSED AMENDMENTS TO CERTIFICATE OF INCORPORATION
Stockholders will be asked at the Special Meeting to approve amendments to
Article FOURTH of the Company's Certificate of Incorporation (the "Amendments")
that would (i) increase to 20 million the number of shares of Common Stock which
the Company is authorized to issue without further approval of the stockholders
of the Company from the 5 million shares currently so authorized and change the
designated par value of the Common Stock to $.01 per share from the current par
value of $1.00 per share, and (ii) authorize the issuance by the Company of up
to 10 million shares of Preferred Stock, par value $.01 per share, in one or
more series, from time to time and having such rights, preferences, privileges,
designations and other terms, as the Board of Directors may determine without
further approval of the stockholders of the Company.
The Amendments were initially proposed at the 1995 Annual Meeting, together
with a proposal to effect a one-for-three reverse split of the Company's
outstanding shares of Common Stock (the "Reverse Stock Split"), for the purposes
of increasing the number and kind of shares of stock available for raising
capital and for the purpose of increasing the per share price of the Company's
outstanding Common Stock. The Reverse Stock Split was approved by the
stockholders at the Annual Meeting and will be completed by the Board of
Directors. The Amendments received the favorable vote of over 64% of those
shares voted on the proposal at the Annual Meeting, representing 49.1% of the
outstanding shares. Under Delaware law, however, the affirmative vote of over
50% of the outstanding shares of Common Stock was required for approval of the
Amendments. Because approval of the Amendments is necessary to maximize the
ability of the Company, market conditions permitting, to increase the regulatory
capital of its operating subsidiary, Hawthorne Savings,
<PAGE>
F.S.B. ("Hawthorne Savings") in compliance with the Directive (as defined
below), and because of the closeness of the vote at the Annual Meeting, the
Amendments are again being submitted to the Company's stockholders for their
approval. The Board of Directors believe that, absent approval of the
Amendments, the Company faces a significant risk of a regulatorily forced
liquidation or the appointment of a conservator or a receiver for Hawthorne
Savings and that in such event the Company's stockholders could lose their
entire investment.
REASONS FOR PROPOSAL; REGULATORY ACTION
The Company's only significant asset is its investment in Hawthorne
Savings. Hawthorne Savings has been under intense regulatory scrutiny by the
Office of Thrift Supervision ("OTS"), its primary regulator, and by the Federal
Deposit Insurance Corporation, since 1991 because of its very large amounts of
foreclosed properties, delinquent loans and other problem assets and the losses
and reserves for possible loss associated therewith. As a result of these
losses, which have aggregated over $64 million since January 1, 1992, the
regulatory capital of Hawthorne Savings has been severely reduced and regulatory
restrictions and requirements have been placed on its operations pursuant to the
"prompt corrective action" regulations of the OTS. As further described below,
these have included the requirement that Hawthorne Savings increase its
regulatory capital to acceptable levels within time frames set by the OTS.
In October 1994, the OTS and Hawthorne Savings entered into a Supervisory
Agreement (the "Agreement"), which superseded all previous directives of and
agreements with the OTS. The Agreement required Hawthorne Savings to
(i) achieve minimum core and risk-based capital ratios of 6% and 11%,
respectively, by June 30, 1995, (ii) operate for the term of the Agreement
consistent with an annual business plan approved by the OTS, (iii) retain
qualified compliance and Community Reinvestment Act ("CRA") officers and staff,
(iv) fully comply with the organizational provisions of its assets review
policy, and (v) maintain effective and comprehensive compliance and CRA programs
to ensure compliance with all applicable consumer and compliance laws and
regulations. The required capital was not raised by the June 30, 1995 deadline
specified in the Agreement. As discussed below, the Agreement has been
superseded and Hawthorne Savings has been given a limited amount of additional
time to raise new capital.
As a result of further losses incurred in the first quarter of 1995, the
regulatory capital of Hawthorne Savings has been reduced below permitted levels.
Hawthorne Savings was notified on May 8, 1995 by the OTS that it had been
classified as an "undercapitalized" institution under the OTS's prompt
corrective action regulations, and on June 23, 1995, Hawthorne Savings submitted
a revised plan for raising the required capital (the "Revised Plan") to the OTS.
On June 30, 1995 the OTS issued a prompt corrective action directive
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<PAGE>
(the "Directive") to Hawthorne Savings which superseded the Agreement.
Compliance with the Directive is a condition to the OTS's approval of the
Revised Plan. Hawthorne Savings and its Board of Directors have stipulated and
consented to the issuance of the Directive. The Directive requires Hawthorne
Savings, among other things, (i) to comply with the terms of its Revised Plan,
(ii) to achieve a capital infusion of between $15 and $20 million by December
15, 1995 (the "Recapitalization"), (iii) to retain an investment banking firm to
assist in the Recapitalization, (iv) to comply with all of the mandatory prompt
corrective action provisions automatically applicable to Hawthorne Savings based
upon its prompt corrective action capital category, and (v) to maintain its
total assets at a level not to exceed its total assets as of year-end 1994.
EXPLANATION OF PROPOSED AMENDMENTS
The proposed Amendments to Article FOURTH of the Company's Certificate of
Incorporation have been approved by the Board of Directors and is being
recommended by the Board for approval by the stockholders in order to assist the
Company in raising additional capital for the Company's business. As described
above, Hawthorne Savings is subject to a Directive issued by its principal
regulator, the OTS, pursuant to which Hawthorne Savings is required to, among
other things, increase the level of its regulatory capital by not later than
December 15, 1995. The Board of Directors believes that the most likely means
of enabling Hawthorne Savings to comply with the Directive will be a public or
private offering of equity securities, including debt securities convertible
into equity securities, of the Company, with all or a portion of the proceeds of
such issuances being made available to Hawthorne Savings in the form of
contributions to its equity capital or in other forms permitted pursuant to
applicable OTS regulations. It is expected, however, that any such issuances of
equity securities would result in substantial dilution of the investments of
existing stockholders whether or not the proposed Amendments are approved.
The requirement in the Directive that the regulatory capital of Hawthorne
Savings be increased is the result of the adverse results of operations of
Hawthorne Savings and its high levels of nonperforming assets. Based on
informal discussions that the Company has had with various investment banking
firms, management and the Board of Directors believed that the Company will not
be in an optimal position to access the capital markets until further
improvements have been made in reducing problem assets, enhanced operating
margins are achieved, and such improvements have been reflected in the Company's
results of operations. Based on these considerations, management urged the OTS
to give the Company until June 30, 1996 to complete the Recapitalization. The
OTS, however, declined to do so. Accordingly, the Board of Directors does not
have a current specific plan for the issuance of additional securities, whether
Common or Preferred Stock or debt securities. Management and the Board are
actively exploring the possibility of conducting the Recapitalization in the
form of a "rights offering" of Common Stock to current stockholders and to other
investors,
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<PAGE>
either alone or in combination with one or more other transactions. No
assurance can be given, however, that a rights offering will be determined to be
feasible within the financial, time and other constraints with which the Company
is faced.
Of the 5 million shares of Common Stock currently authorized by the
Company's certificate of incorporation, a total of 2,599,275 shares were issued
and outstanding prior to the Company's 1995 Annual Meeting and an additional
455,000 shares were reserved for possible future issuance pursuant to the
Company's stock option plan. After completion of the Reverse Stock Split, as
approved by the Company's stockholders at the 1995 Annual Meeting, the Company
will have a total of approximately 866,425 shares of Common Stock outstanding.
The Board of Directors believes that the proposed increase in the
authorized number of shares of Common Stock that the Company may issue is
advisable in order to assure that the Company has sufficient flexibility to
issue additional Common Stock as market opportunities arise in order to raise
the capital required to comply with the Directive. The shares of Common Stock
proposed to be authorized pursuant to the Amendments will be available for
issuance in one or more public offerings or private placements of such stock, or
of securities convertible into such stock, by action of the Board of Directors
from time to time without further approval of the stockholders, for the purpose
of raising additional capital or for any other corporate purpose, including
acquisitions, stock dividends and stock-based employee compensation
arrangements. The Company has no current plans to use such authorized shares
for any purpose other than meeting the requirements of the Directive.
The Company's Certificate of Incorporation does not currently authorize the
issuance of any shares of Preferred Stock. The proposed Amendments would
authorize the Board of Directors, without any further stockholder approval, to
approve the issuance of one or more series of Preferred Stock and to establish
the terms thereof, including, without limitation, any preferences upon
liquidation, preferential dividend rights or voting rights as the Board of
Directors may deem appropriate. The Board of Directors believes that this
flexibility is necessary to enable it to tailor the specific terms of any series
of Preferred Stock that may be issued to meet market conditions and financing
opportunities as they arise without the expense and delay that would be entailed
in calling a stockholders meeting to approve the terms of any specific series of
Preferred Stock. In this regard, the Board of Directors has been advised that,
as a practical matter in today's financial markets, it is seldom practicable to
delay potential issuances of Preferred Stock for the period that would be
necessary to obtain stockholder approval of any particular series of Preferred
Stock.
The Board of Directors does not have any current plan to issue Preferred
Stock. The Board of Directors believes, however, that the ability to issue
Preferred Stock may be helpful in structuring financings in order to comply with
the requirements of the Directive.
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<PAGE>
Preferred Stock may also be used for acquisitions and other corporate purposes.
In the event that any shares of Preferred Stock are issued, the holders of
such stock may receive payment of dividends from the Company at times when no
dividends, or lesser amounts of dividends, are paid on the Company's Common
Stock. In addition, holders of Preferred Stock may be entitled to receive
distributions upon liquidation of the Company that are prior in right of payment
to the entitlement of holders of Common Stock in such event. Preferred Stock
may also be given general or special voting rights, which may include the right
to elect one or more directors upon nonpayment of specified amounts of dividends
or at any time.
In their consideration of the proposed Amendments, stockholders may wish to
take into account the possibility that issuances of Common Stock or of one or
more series of Preferred Stock could be used to impede attempts to acquire
control of the Company that are not negotiated with the Board of Directors,
regardless of whether such transactions may be favored by some or most of the
stockholders. The Company is not aware of any current attempts to acquire
control of the Company and will consider any proposals to acquire control of the
Company that may arise in the future in accordance with their fiduciary duties
and their judgment as to the best interest of the stockholders of the Company at
that time. In addition, any issuances of Common or Preferred Stock by the
Company in the future will be subject to the fiduciary duties of the Board of
Directors to all stockholders.
The proposed change in the par value of the Company's Common Stock is
intended solely to reduce the amount of filing fee payable by the Company to the
State of Delaware, which is the state of incorporation of the Company. The
Delaware filing fee is based upon the aggregate par value of the shares of stock
authorized by a Delaware corporation's Certificate of Incorporation. The change
in par value will not affect in any manner any rights of the stockholders of the
Corporation, nor is it expected to have any effect on the market value of their
Company stock.
BOARD RECOMMENDATION
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to approve the Amendments. Approval of the
Amendments will require the affirmative vote of a majority of the outstanding
shares of Common Stock entitled to vote at the Special Meeting.
VOTING RIGHTS AND OTHER PROXY INFORMATION
-5-
<PAGE>
The Board of Directors of the Company has selected July 20, 1995 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Special Meeting. The Company had 2,599,275 shares of common stock,
par value of $1.00 per share (the "Common Stock"), issued and outstanding on
that date. Holders of shares of the Company's Common Stock will be entitled to
cast one vote for each share held of record as of the close of business on the
record date.
All valid proxies received in response to this solicitation will be voted
in accordance with the instructions indicated thereon by the stockholders giving
such proxies. Each valid proxy received without specific directions will be
voted FOR approval of each of the proposed Amendments to Article FOURTH of the
certificate of incorporation of the Company as further described in this proxy
statement and, FOR any proposal that may be presented to adjourn the Special
Meeting if, in the judgement of the proxy holders, such adjournment in necessary
to permit the solicitation of additional proxies in favor of such Amendments.
Each proxy delivered may be revoked by the stockholder who executed it at any
time before it is voted by filing written notice of revocation, which may
consist of a later dated proxy, with the Secretary of the Company prior to the
vote on the matters described herein or by attending the Special Meeting and
voting in person.
A majority of the outstanding shares of Common Stock of the Company,
represented in person or by proxy, will constitute a quorum for the transaction
of business. Abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of any matter submitted for a
vote of the stockholders. Because approval of the Amendments described herein
that are to be presented at the Special Meeting will require the affirmative
vote of the majority of the outstanding shares of Common Stock, abstentions will
have the same effect as a vote against the Amendments. If a broker indicates on
the proxy that the broker does not have discretionary authority to vote on a
particular matter as to certain shares, those shares will be counted for general
quorum purposes but will not be considered as present and entitled to vote with
respect to that matter.
The Board of Directors does not know of any business to be presented for
action at the meeting other than that stated herein. If any other business is
properly presented at the meeting and may properly be voted upon, the proxies
solicited hereby will be voted on such matters in accordance with the best
judgment of the proxy holders named therein.
The expenses of this proxy solicitation will be borne by the Company. The
original mail solicitation may be supplemented by additional mail solicitation
or by telephone, telegram, facsimile transmission, or personal solicitation,
made by directors, officers and employees of the Company, who will not receive
any additional compensation for such solicitation. The Company has also
retained D.F. King & Co., a proxy solicitation firm, to
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<PAGE>
assist in the solicitation of proxies for a fee of $3,500 plus reimbursement of
certain expenses. The Company will request record holders of shares
beneficially owned by others to send proxy material to the beneficial owners of
such shares and will reimburse such holders for their reasonable expenses
incurred in doing so.
By Order of the Board of Directors
James D. Sage
Senior Vice President and Corporate Secretary
July 25, 1995
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<PAGE>
ANNEX I
The full text of Article FOURTH of the Certificate of Incorporation of the
Company as it would be amended by the proposed Amendments, and including the
amendment to Article FOURTH implementing the Reverse Stock Split approved by the
stockholders at the 1995 Annual Meeting, is as follows:
FOURTH: The total number of shares of all classes of capital stock which
this Corporation shall have authority to issue is thirty million (30,000,000),
of which twenty million (20,000,000) shares shall be Common Stock, par value
$.01 per share, and ten million (10,000,000) shares shall be Preferred Stock,
par value $.01 per share.
Upon the effectiveness of the amendment to this Article FOURTH set forth in
this sentence, the shares of Common Stock then outstanding shall be deemed
combined into the number of whole outstanding shares most nearly equal to one-
third, rounded down, of the number of shares of Common Stock outstanding
immediately prior thereto, and all other such formerly outstanding shares shall
be returned to the status of authorized but unissued shares of stock.
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of this Corporation shall have authority to
fix by resolution or resolutions the designations and the powers, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including without
limitation the voting rights, the dividend rate, conversion rights, redemption
price and liquidation preference, of any series of shares of Preferred Stock, to
fix the number of shares constituting any such series and to increase or
decrease the number of shares of any such shares (but not below the number of
shares thereof then outstanding). In case the number of shares of any such
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution or resolutions
originally fixing the number of shares of such series.
The holders of the capital stock shall be entitled to one vote for each
share held at all meetings of the stockholders of the Corporation. At all
elections of directors of the Corporation each holder of shares of capital stock
of the Corporation entitled to be voted thereat shall be entitled to as many
votes as shall equal the number of shares of stock of such holder multiplied by
the number of directors to be elected, and each stockholder may cast all of such
votes for a single director or may distribute them among the total number of
directors to be voted for, or among any two or more of such directors, as such
stockholder may see fit.
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<PAGE>
No stockholder of the Corporation shall by reason of his holding shares of
any class have any pre-emptive or preferential right to purchase or subscribe to
any shares of any class of the Corporation, now or hereafter to be authorized,
or any notes debentures, bonds, or other securities convertible into or carrying
options or warrants to purchase shares of any class, nor or hereafter to be
authorized, whether or not the issuance of any shares, or such notes,
debentures, bonds or other securities, would adversely affect the dividend or
voting rights of such stockholder.
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<PAGE>
REVOCABLE PROXY
HAWTHORNE FINANCIAL CORPORATION
The undersigned hereby appoints Scott A. Braly, with full power of
substitution, as the lawful proxy and agent of the undersigned at the Special
Meeting of Stockholders of Hawthorne Financial Corporation (the "Company") to be
held on August 31, 1995, or any adjournment thereof, for the purpose of voting
on the matters referred to below, to represent the undersigned and to vote all
shares of stock of the Company held of record by the undersigned on July 20,
1995, as indicated below:
<TABLE>
<S> <C>
(1) Approval of amendment to Article FOURTH of the Company's Certificate of Incorporation to increase the number of
authorized shares of Common Stock to 20,000,000 and to change the par value of such Common Stock from $1.00 to $.01
per share.
/ / FOR / / AGAINST / / ABSTAIN
(2) Approval of amendment to Article FOURTH of the Company's Certificate of Incorporation to authorize the issuance of
up to 10,000,000 shares of Preferred Stock.
/ / FOR / / AGAINST / / ABSTAIN
(3) In their discretion, the proxies are authorized to vote upon all such other matters as may properly come before the
Special Meeting.
</TABLE>
THE BOARD OF DIRECTORS OF HAWTHORNE FINANCIAL CORPORATION RECOMMENDS A VOTE
FOR THE PROPOSALS DESCRIBED IN ITEMS 1 AND 2. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF HAWTHORNE FINANCIAL CORPORATION.
IMPORTANT: PLEASE DATE AND SIGN THIS PROXY ON THE OTHER SIDE.
<PAGE>
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS
DESCRIBED IN ITEMS 1 AND 2 AND IN THE BEST JUDGMENT OF THE PROXY HOLDER ON
MATTERS DESCRIBED IN ITEM 3.
DATED: _______________, 1995
(Be sure to Date Proxy)
-------------------------------
(Signature)
-------------------------------
(Signature)
IMPORTANT: Please sign your
name or names exactly as
indicated on this Proxy. Only
one signature is required in
the case of joint account. If
signing as an attorney,
executor, administrator,
trustee or guardian, please
give your full title as such.
If a corporation, please sign
in full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by an authorized person.
Your signature acknowledges
receipt of the Notice of
Special Meeting and the Proxy
Statement relating to the
Special Meeting prior to
signing this Proxy.
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY AS PROMPTLY AS
POSSIBLE IN THE POSTPAID ENVELOPE PROVIDED.
