Exhibit 99.5
June 21, 2002
Dear holders of First Fidelity convertible senior notes,
This letter is being delivered to you in connection with the proposed
merger (the "Merger") of First Fidelity Bancorp, Inc. ("First Fidelity") with a
subsidiary of Hawthorne Financial Corporation ("Hawthorne Financial") pursuant
to an Agreement and Plan of Reorganization, dated as of March 19, 2002, and
amended and restated on April 24, 2002 (as of March 19, 2002), by and among
Hawthorne Financial, First Fidelity and the other parties thereto (the "Merger
Agreement"). Upon consummation of the Merger, each share of common stock of
First Fidelity issued and outstanding immediately prior thereto will be
converted into the right to receive, on a share-by-share basis,
- $36.6049 in cash; or
- 1.5151 shares of Hawthorne Financial common stock, subject to
adjustment in certain circumstances, plus cash in lieu of any
fractional share interest; or
- a combination of cash and shares of Hawthorne Financial common stock
(collectively, the "Merger Consideration").
Pursuant to the Merger Agreement, each record holder of shares of First
Fidelity common stock and convertible senior notes (the "Notes") as of the
record date for the First Fidelity meeting of stockholders at which the Merger
Agreement will be considered for adoption by voting stockholders of First
Fidelity is being given the opportunity to elect to receive cash and/or shares
of Hawthorne Financial common stock for the shares of First Fidelity common
stock held by them or acquirable by them upon conversion of the Notes. These
elections will be subject to the election, allocation and proration procedures
set forth in the Merger Agreement and described in the accompanying joint proxy
statement/prospectus of Hawthorne Financial and First Fidelity, and as a result
there can be no assurance that First Fidelity stockholders and Note holders will
receive the form of Merger Consideration they elect for some or all of the
shares held by them or issuable upon conversion of their Notes.
In order for you, as a record holder of Notes, to make an election with
respect to the form of Merger Consideration to be received in exchange for the
First Fidelity shares issuable upon conversion of your Notes, you must do the
following:
- execute the Irrevocable Notice of Conversion enclosed herewith and
deliver it, along with your Notes, to First Fidelity in the envelope
provided prior to 5:00 p.m., on June 30, 2002; and
- complete and execute the Letter of Transmittal that will be sent to
you by Xxxxxxxxx Financial's exchange agent, Mellon Investor
Services LLC (the "Exchange Agent"), in accordance with the
instructions accompanying such Letter of Transmittal, except
as noted below, and deliver it in the envelope provided to the
Exchange Agent prior to 5:00 p.m. on July 22, 2002.
In completing the Letter of Transmittal you should make elections with
respect to each share of First Fidelity common stock issuable upon conversion of
the Notes held by you. Certificates evidencing the shares of First Fidelity
common stock issuable upon conversion of your Notes have been prepared by First
Fidelity and forwarded to the Exchange Agent for holding in escrow so that they
may be cancelled upon consummation of the Merger. As a result, you need not
forward certificates evidencing these shares to the Exchange Agent or complete a
Guarantee of Delivery with respect to such certificates notwithstanding the
instructions contained in the Letter of Transmittal.
If you execute the Irrevocable Notice of Conversion of First Fidelity
Senior Notes, your Notes will be automatically converted into shares of First
Fidelity Series B common stock immediately prior to the effective time of the
Merger without any further action on your part.
Interest due on the Notes from the most recent interest payment date
thereon to the date of the Merger will be paid to you promptly following the
Merger.
It is a condition to the obligation of Hawthorne Financial to consummate
the Merger that all outstanding Notes be converted into shares of First Fidelity
common stock in accordance with their terms prior to the effective time of the
Merger. Accordingly, in order for the Merger to proceed, as well as to enable
you to elect, subject to the terms of the Merger Agreement, the form of Merger
Consideration which you would like to receive upon consummation of the Merger
for the First Fidelity shares issuable upon conversion of your Notes, First
Fidelity encourages you to promptly follow the procedures set forth above.
Needless to say, please do not hesitate to call me if you have any
questions or if we can be of assistance in any way.
Very truly yours,
Wm. Xxxx Xxxxxx
Chairman of the Board
