As filed with the Securities and Exchange Commission on August 1, 1997.
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
New Century Financial Corporation
(Exact name of registrant as specified in its charter)
___________________
Delaware 33-0683629
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612
(714) 440-7030
(Address of principal executive offices)
New Century Financial Corporation 1995 Stock Option Plan
(Full title of the plan)
Brad A. Morrice
New Century Financial Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612
(Name and address of agent for service)
Telephone number, including area code, of agent
for service:
(714) 440-7030
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered perunit price fee
Common Stock, par 2,000,000<1> $18.375<2> $36,750,000<2> $11,137<2>
value $0.01 shares
per share
<FN>
<1> This Registration Statement covers, in addition to the
number of shares of Common Stock stated above, options
and other rights to purchase or acquire the shares of
Common Stock covered by the Prospectus and, pursuant to
Rule 416(c) under the Securities Act of 1933, an
indeterminate number of shares which by reason of
certain events specified in the Plan may become subject
to the Plan.
<2> Pursuant to Rule 457(h), the maximum offering price,
per share and in the aggregate, and the registration
fee were calculated based upon the average of the high
and low prices of the Common Stock on July 28, 1997, as
reported on the Nasdaq National Market System.
The Exhibit Index for this Registration Statement is at
page S-3.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified
in Part I of Form S-8 (plan information and registrant
information) will be sent or given to optionees as specified
by Rule 428(b)(1) of the Securities Act of 1933, as amended
(the "Securities Act"). Such documents need not be filed
with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to
Rule 424 of the Securities Act. These documents, which
include the statement of availability required by Item 2 of
Form S-8, and the documents incorporated by reference in
this Registration Statement pursuant to Item 3 of Form S-8
(Part II hereof), taken together, constitute a prospectus
that meets the requirements of Section 10(a) of the
Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of New Century Financial
Corporation (the "Company") filed with the Commission are
incorporated herein by reference:
(a) The Company Registration Statement on Form S-1,
filed with the Commission on June 2, 1997, which
contains audited financial statements for the
Company's year ended December 31, 1996 and quarter
ended March 31, 1997;
(b) The description of the Common Stock contained in
the Company's Registration Statement on Form 8-A,
filed with the Commission on June 2, 1997;
All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been
sold or which deregisters all securities then remaining
unsold shall be deemed to be incorporated by reference into
the prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained herein or
in a document, all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed,
except as so modified or amended, to constitute a part of
this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Common Stock is registered pursuant to Section
12 of the Exchange Act. Therefore, the
description of the securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Certain matters relating to this offering are
being passed upon for the Company by O'Melveny
& Myers LLP, Newport Beach, California. A
partner of such firm owns 211,032 shares of
Common Stock of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation
provides that to the fullest extent permitted by applicable
law a director of the Company shall not be liable to the
Company or its stockholders for monetary damages for breach
of fiduciary duty as a director. Under the Delaware General
Corporation Law, liability of a director may not be limited
(i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain
unlawful dividend payments or stock redemptions or
repurchases, and (iv) for any transaction from which the
director derives an improper personal benefit. The effect
of the provisions of the Company's Certificate of
Incorporation is to eliminate the rights of the Company and
its stockholders (through stockholders' derivative suits on
behalf of the Company) to recover monetary damages against a
director for breach of the fiduciary duty of care as a
director (including breaches resulting from negligent or
grossly negligent behavior), except as provided in the
situations described in clauses (i) through (iv) above.
This provision does not limit or eliminate the rights of the
Company or any stockholder to seek nonmonetary relief such
as an injunction or rescission in the event of a breach of a
director's duty of care.
The Bylaws of the Company provide that the Company
will indemnify its directors and officers to the fullest
extent permitted by the Delaware General Corporation Law.
In addition, the Company has entered into agreements with
each of the directors and officers of the Company pursuant
to which the Company has agreed to indemnify, subject to
certain limitations, such director or officer from claims,
liabilities, damages, expenses, losses, costs, penalties or
amounts paid in settlement incurred by such director or
officer in or arising out of his capacity as a director,
officer, employee and/or agent of the Company or any other
corporation of which such person is a director or officer at
the request of the Company to the maximum extent provided by
applicable law. In addition, such director or officer is
entitled to an advance of expenses to the maximum extent
authorized or permitted by law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index on page S-3.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of this
Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
and
(iii) To include any material information
with respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
with or furnished to the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated
by reference in this Registration Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant
to the provisions described in Item 6 above, or otherwise,
the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Act, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing
on Form S-8 and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irvine, State of California,
on July 29, 1997.
By: /s/ Brad A. Morrice
--------------------
Brad A. Morrice,
Vice Chairman of the Board
and President
POWER OF ATTORNEY
Each person whose signature appears below
constitutes and appoints Robert K. Cole and Brad A. Morrice
his true and lawful attorney-in-fact and agent, with full
powers of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to
sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, granting unto
said attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed below
by the following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Robert K. Cole Chairman of the Board, Chief July 29, 1997
Robert K. Cole Executive Officer and Director
(Principal Executive Officer)
/s/ Brad A. Morrice Vice Chairman of the Board, July 29, 1997
Brad A. Morrice President, General Counsel,
Secretary and Director
/s/ Edward F. Gotschall Vice Chairman of the Board, July 29, 1997
Edward F. Gotschall Chief Operating Officer -
Finance/Administration and
Director (Principal Financial
and Accounting Officer)
/s/ Steven G. Holder Vice Chairman of the Board, July 29, 1997
Steven G. Holder Chief Operating Officer -
Loan Production/Operations
and Director
/s/ John C. Bentley Director July 29, 1997
John C. Bentley
/s/ Sherman I. Chu Director July 29, 1997
Sherman I. Chu
Harlan W. Smith Director
/s/ Martin F. Ryan Director July 29, 1997
Martin F. Ryan
/s/ Michael M. Sachs Director July 29, 1997
Michael M. Sachs
/s/ Fredric Forster Director July 29, 1997
Fredric Forster
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 New Century Financial Corporation 1995 Stock
Option Plan.
4.2 Form of New Century Financial Corporation 1995
Stock Option Plan Restricted Stock Award
Agreement.
4.3 Form of New Century Financial Corporation 1995
Stock Option Plan Incentive Stock Option
Agreement.
4.4 Form of New Century Financial Corporation 1995
Stock Option Plan Nonqualified Stock Option
Agreement.
4.5 Form of Non-Employee Director Nonqualified
Stock Option Agreement.
5. Opinion of Counsel (opinion re legality).
23.1 Consent of KPMG Peat Marwick LLP (consent of
independent auditors).
23.2 Consent of Counsel (included in Exhibit 5).
24. Power of Attorney (included in this Registration Statement
under "Signatures").
<PAGE>
NEW CENTURY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN
(Amended and Restated May 30, 1997)
TABLE OF CONTENTS
Page
I. THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Administration. . . . . . . . . . . . . . . . . . . . 1
1.3 Participation . . . . . . . . . . . . . . . . . . . . 2
1.4 Shares Available Under the Plan . . . . . . . . . . . 2
1.5 Grant of Awards . . . . . . . . . . . . . . . . . . . 3
1.6 Exercise of Awards. . . . . . . . . . . . . . . . . . 3
1.7 No Transferability; Limited Exception to
Transfer Restrictions . . . . . . . . . . . . . . . . 3
II. OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Option Price. . . . . . . . . . . . . . . . . . . . . 5
2.3 Option Period . . . . . . . . . . . . . . . . . . . . 5
2.4 Exercise of Options . . . . . . . . . . . . . . . . . 6
2.5 Limitations on Grant of Incentive Stock
Options . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Non-Employee Director Awards. . . . . . . . . . . . . 7
III. STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . 8
3.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Exercise of Stock Appreciation Rights . . . . . . . . 9
3.3 Payment . . . . . . . . . . . . . . . . . . . . . . . 9
IV. RESTRICTED STOCK AWARDS . . . . . . . . . . . . . . . . . . . 10
4.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Restrictions. . . . . . . . . . . . . . . . . . . . . 10
V. PERFORMANCE SHARE AWARDS. . . . . . . . . . . . . . . . . . . 11
5.1 Grants of Performance Share Awards. . . . . . . . . . 11
5.2 Grants of Performance-Based Share Awards. . . . . . . 11
VI. OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Rights of Eligible Employees, Participants
and Beneficiaries . . . . . . . . . . . . . . . . . . 13
6.2 Adjustments Upon Changes in Capitalization. . . . . . 14
6.3 Termination of Employment . . . . . . . . . . . . . . 15
6.4 Acceleration of Awards. . . . . . . . . . . . . . . . 17
6.5 Government Regulations. . . . . . . . . . . . . . . . 17
6.6 Tax Withholding . . . . . . . . . . . . . . . . . . . 18
6.7 Amendment, Termination and Suspension . . . . . . . . 18
6.8 Privileges of Stock Ownership . . . . . . . . . . . . 19
6.9 Effective Date of the Plan. . . . . . . . . . . . . . 19
6.10 Term of the Plan . . . . . . . . . . . . . . . . .. . 19
6.11 Governing Law . . . . . . . . . . . . . . . . . . . . 20
6.12 Plan Construction . . . . . . . . . . . . . . . . . . 20
6.13 Non-Exclusivity of Plan . . . . . . . . . . . . . . . 21
VII. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Definitions . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
I. THE PLAN.
1.1 Purpose.
The purpose of this Plan is to promote the success
of the Company by providing an additional means to attract,
motivate and retain key personnel, consultants, advisors and
knowledgeable directors through the grant of Options and
other Awards that provide added long term incentives for
high levels of performance and for significant efforts to
improve the financial performance of the Company.
Capitalized terms are defined in Article VII.
1.2 Administration.
(a) This Plan shall be administered by the
Committee. Action of the Committee with respect to the
administration of this Plan shall be taken pursuant to a
majority vote or the unanimous written consent of its
members. In the event action by the Committee is taken by
written consent, the action shall be deemed to have been
taken at the time specified in the consent or, if none is
specified, at the time of the last signature. The Committee
may delegate administrative functions to individuals who are
officers or employees of the Company.
(b) Subject to the express provisions of this
Plan, the Committee shall have the authority to construe and
interpret this Plan and any agreements defining the rights
and obligations of the Company and Participants under this
Plan, to further define the terms used in this Plan, to
prescribe, amend and rescind rules and regulations relating
to the administration of this Plan, to determine the
duration and purposes of leaves of absence which may be
granted to Participants without constituting a termination
of their employment or consulting services for purposes of
this Plan, to accelerate or extend the exercisability or
extend the term of any or all outstanding Awards within the
maximum term of such Awards required by Section 2.3 or
applicable law, and to make all other determinations
necessary or advisable for the administration of this Plan.
The determination of the Committee on any of the foregoing
matters shall be conclusive.
(c) Any action taken by, or inaction of, the
Company, any Subsidiary, the Board or the Committee relating
to this Plan shall be within the absolute discretion of that
entity or body. No member of the Board or Committee, or
officer of the Company or any Subsidiary, shall be liable
for any such action or inaction.
(d) In making any determination or in taking or
not taking any action under this Plan, the Company, any
Subsidiary, the Board or the Committee may obtain and rely
upon the advice of experts, including professional advisors
to the Company. No member of the Board or Committee, or
officer of the Company or any Subsidiary, shall be liable
for any such action or determination made or omitted.
(e) Subject to the requirements of Section
7.1(h), the Board, at any time it so desires, may increase
or decrease the number of members of the Committee, may
remove from membership on the Committee all or any portion
of its members, and may appoint such person or persons as it
desires to fill any vacancy existing on the Committee,
whether caused by removal, resignation or otherwise.
1.3 Participation.
Awards may be granted only to Eligible Employees.
An Eligible Employee who has been granted an Award may, if
otherwise eligible, be granted additional Awards if the
Committee shall so determine. Except as provided in Section
2.6 below, members of the Board who are not officers or
employees of the Company shall not be eligible to receive
Awards.
1.4 Shares Available Under the Plan.
Subject to the provisions of Section 6.2, the
capital stock that may be delivered under this Plan shall be
shares of the Company's authorized but unissued Common Stock
and any shares of its Common Stock held as treasury shares.
The aggregate maximum number of shares of Common Stock that
may be issued or transferred pursuant to Awards (including
Incentive Stock Options) granted under this Plan shall not
exceed 1,565,000 shares (or, after the completion of the
initial public offering of the Common Stock and the
registration of the Common Stock under Section 12 of the
Exchange Act, 2,000,000 shares). The maximum number of
shares of Common Stock that may be delivered pursuant to
options qualified as Incentive Stock Options granted under
the Plan is 1,565,000 shares (or, after the completion of
the initial public offering of the Common Stock and the
registration of the Common Stock under Section 12 of the
Exchange Act, 2,000,000 shares). The maximum number of
shares that may be subject to Options and Stock Appreciation
Rights that are granted during any calendar year to any
individual shall not exceed 500,000 shares. Each of the
foregoing numerical limits shall be subject to adjustment as
contemplated by this Section 1.4 and Section 6.2. If any
Option and any related Stock Appreciation Right shall lapse
or be cancelled or terminate without having been exercised
in full, or any Common Stock subject to a Restricted Stock
Award shall not vest or any Common Stock subject to a
Performance Share Award shall not have been transferred, the
unpurchased, unvested or nontransferred shares subject
thereto shall again be available for purposes of this Plan.
1.5 Grant of Awards.
Subject to the express provisions of this Plan,
the Committee shall determine from the class of Eligible
Employees those individuals to whom Awards under this Plan
shall be granted, the terms of Awards (which need not be
identical) and the number of shares of Common Stock subject
to each Award. Each Award shall be subject to the terms and
conditions set forth in this Plan and such other terms and
conditions established by the Committee as are not
inconsistent with the purpose and provisions of this Plan.
The grant of an Award is made on the Award Date.
1.6 Exercise of Awards.
An Option or Stock Appreciation Right shall be
deemed to be exercised when the Secretary of the Company
receives written notice of such exercise from the
Participant, together with payment of the purchase price
made in accordance with Section 2.2(a), except to the extent
payment may be permitted to be made following delivery of
written notice of exercise in accordance with Section
2.2(b). Notwithstanding any other provision of this Plan,
the Committee may impose, by rule and in Awards Agreements,
such conditions upon the exercise of Awards (including,
without limitation, conditions limiting the time of exercise
to specified periods) as may be required to satisfy
applicable regulatory requirements.
1.7 No Transferability; Limited Exception to Transfer
Restrictions.
(a) Unless otherwise expressly provided below (or
pursuant to) this Section 1.7, by applicable law and by the
Award Agreement, as the same may be amended, (i) all Awards
are non-transferable and shall not be subject in any manner
to sale, transfer, anticipation, alienation, assignment,
pledge, encumbrance or charge; Awards shall be exercised
only by the Participant; and (ii) amounts payable or shares
issuable pursuant to an Award shall be delivered only to (or
for the account of) the Participant.
(b) The Committee may permit Awards to be
exercised by and paid to certain persons or entities related
to the Participant, including but not limited to members of
the Participant's immediate family and/or charitable
institutions, or to such other persons or entities as may be
approved by the Committee, pursuant to such conditions and
procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the
Committee receive evidence satisfactory to it that the
transfer is being made for estate and/or tax planning
purposes on a gratuitous or donative basis and without
consideration (other than minimal consideration).
Notwithstanding the foregoing, Incentive Stock Options and
Restricted Stock Awards shall be subject to any and all
additional transfer restrictions under the Code.
(c) The exercise and transfer restrictions in
Section 1.7(a) shall not apply to:
(i) transfers to the Company;
(ii) the designation of a beneficiary to
receive benefits in the event of the Participant's
death or, if the Participant has died, transfers to or
exercise by the Participant's beneficiary, or in the
absence of a validly designated beneficiary, transfers
by will or the laws of descent and distribution;
(iii) transfers pursuant to a QDRO order if
approved or ratified by the Committee;
(iv) if the Participant has suffered a Total
Disability, permitted transfers or exercises on behalf
of the Participant by his legal representative;
(v) the authorization by the Committee of
"cashless exercise" procedures with third parties who
provide financing for the purpose of (or who otherwise
facilitate) the exercise of Awards consistent with
applicable laws and the express authorization of the
Committee.
II. OPTIONS.
2.1 Grants.
One or more Options may be granted to any Eligible
Employee. Each Option so granted shall be designated by the
Committee as either a Nonqualified Stock Option or an
Incentive Stock Option; provided, however, that consultants
or advisors may not be granted Incentive Stock Options under
the Plan.
2.2 Option Price.
(a) The purchase price per share of Common Stock
covered by each Option shall be determined by the
Committee, but in the case of Incentive Stock Options shall
not be less than 100% (110% in the case of a Participant who
owns more than 10% of the total combined voting power of all
classes of stock of the Company) of the Fair Market Value of
the Common Stock on the date the Incentive Stock Option is
granted. The purchase price of any shares purchased shall
be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash or by
check payable to the order of the Company, (ii) if
authorized by the Committee or specified in the Option being
exercised, by a promissory note made by the Participant in
favor of the Company, upon the terms and conditions
determined by the Committee, and secured by the Common Stock
issuable upon exercise in compliance with applicable law
(including, without limitation, state corporate law and
federal margin requirements) or (iii) if authorized by the
Committee or specified in the Option being exercised, by
shares of Common Stock of the Company already owned by the
Participant; provided, however, that any shares delivered
which were initially acquired upon exercise of a stock
option must have been owned by the Participant at least six
months as of the date of delivery. Shares of Common Stock
used to satisfy the exercise price of an Option shall be
valued at their Fair Market Value on the date of exercise.
(b) In addition to the payment methods described
in subsection (a), the Option may provide that the Option
can be exercised and payment made by delivering a properly
executed exercise notice together with irrevocable
instructions to a bank or broker to promptly deliver to the
Company the amount of sale or loan proceeds necessary to pay
the exercise price and, unless otherwise allowed by the
Committee, any applicable tax withholding under Section 6.6.
The Company shall not be obligated to deliver certificates
for the shares unless and until it receives full payment of
the exercise price therefor.
2.3 Option Period.
Each Option and all rights or obligations
thereunder shall expire on such date as shall be determined
by the Committee, but not later than 10 years after the
Award Date, and shall be subject to earlier termination as
hereinafter provided.
2.4 Exercise of Options.
(a) Subject to Sections 6.2 and 6.4, an Option
may become exercisable or vest, in whole or in part, on the
date or dates specified in the Award Agreement and
thereafter shall remain exercisable until the expiration or
earlier termination of the Option. An Option may be
exercisable or vest on the Award Date.
(b) The Committee may, at any time after grant of
the Option and from time to time, increase the number of
shares exercisable at any time so long as the total number
of shares subject to the Option is not increased. No Option
shall be exercisable except in respect of whole shares, and
fractional share interests shall be disregarded. Not less
than 10 shares of Common Stock may be purchased at one time
unless the number purchased is the total number at the time
available for purchase under the terms of the Option.
2.5 Limitations on Grant of Incentive Stock Options.
(a) To the extent that the aggregate fair market
value of stock with respect to which incentive stock options
first become exercisable by a Participant in any calendar
year exceeds $100,000, taking into account both Common Stock
subject to Incentive Stock Options under this Plan and stock
subject to incentive stock options under all other plans of
the Company, such options shall be treated as nonqualified
stock options. For purposes of determining whether the
$100,000 limit is exceeded, the fair market value of stock
subject to options shall be determined as of the date the
options are awarded. In reducing the number of options
treated as incentive stock options to meet the $100,000
limit, the most recently granted options shall be reduced
first. To the extent a reduction of simultaneously granted
options is necessary to meet the $100,000 limit, the Company
may, in the manner and to the extent permitted by law,
designate which shares of Common Stock are to be treated as
shares acquired pursuant to the exercise of an Incentive
Stock Option.
(b) There shall be imposed in any Award Agreement
relating to Incentive Stock Options such terms and
conditions as are required in order that the Option be an
"incentive stock option" as that term is defined in Section
422 of the Code.
(c) No Incentive Stock Option may be granted to
any person who, at the time the Incentive Stock Option is
granted, owns shares of outstanding Common Stock possessing
more than 10% of the total combined voting power of all
classes of stock of the Company, unless the exercise price
of such Option is at least 110% of the Fair Market Value of
the stock subject to the Option and such Option by its terms
is not exercisable after the expiration of five years from
the date such Option is granted.
2.6 Non-Employee Director Awards.
(a) Participation. Awards under this Section 2.6
shall be made only to Non-Employee Directors.
(b) Option Grants. Each Non-Employee Director
who is elected to the Board in May 1997 shall be granted a
Nonqualified Stock Option (the Award Date of which shall be
the date of such annual meeting) to purchase 15,000 shares
of Common Stock. Subsequent to such election, upon an
individual's initial election to the Board as a Non-Employee
Director (or initial appointment to the Board as a Non-
Employee Director), such Non-Employee Director shall be
granted a Nonqualified Stock Option (the Award Date of which
shall be the date of such election or appointment) to
purchase 15,000 shares of Common Stock.
(c) Option Price. The purchase price per share
of the Common Stock covered by each Option granted pursuant
to this Section 2.6 shall be one hundred percent of the Fair
Market Value of the Common Stock on the Award Date. The
purchase price of any shares purchased shall be paid in full
at the time of each purchase in cash or by check or in
shares of Common Stock valued at their Fair Market Value on
the business day next preceding the date of exercise of the
Option, or partly in such shares and partly in cash.
(d) Option Period. Each Option granted under
this Section 2.6 and all rights or obligations thereunder
shall expire on the tenth anniversary of the Award Date and
shall be subject to earlier termination as provided below.
(e) Exercise of Options. Except as otherwise
provided in the applicable Award Agreement and Sections
2.6(f) and 2.6(g), each Option granted under this Section
2.6 shall become exercisable according to the following
schedule: (i) one-third of the total number of shares
subject to the Option shall become exercisable on the first
anniversary of the Award Date, (ii) an additional one-third
of the total number of shares subject to the Option shall
become exercisable on the second anniversary of the Award
Date, and (iii) the remaining number of shares subject to
the Option shall become exercisable on the third anniversary
of the Award Date. Notwithstanding the foregoing, the
vesting and exercisability of Options granted to Non-
Employee Directors prior to May 24, 1997 shall be governed
by the terms of this Section 2.6(e) as it existed prior to
such date.
(f) Termination of Directorship. If a Non-
Employee Director Participant's services as a member of the
Board terminate, each Option granted pursuant to Section
2.6(b) hereof held by such Non-Employee Director Participant
which is not then exercisable shall terminate; provided,
however, that if a Non-Employee Director Participant's
services as a member of the Board terminate by reason of
death or Total Disability, either the Board or the Committee
may, in its discretion, consider to be exercisable a greater
portion of any such Option than would otherwise be
exercisable, upon such terms as the Board or the Committee
shall determine. If a Non-Employee Director Participant's
services as a member of the Board terminate by reason of
death or Total Disability, any portion of any such Option
which is then exercisable may be exercised for one year
after the date of such termination or the balance of such
Option's term, whichever period is shorter. If a Non-
Employee Director Participant's services as a member of the
Board terminate for any other reason, any portion of any
such Option which is then exercisable may be exercised for
six months after the date of such termination or the balance
of such Option's term, whichever period is shorter.
(g) Acceleration Upon an Event. Immediately
prior to the occurrence of an Event, in order to protect the
holders of Options granted under this Section 2.6, each
Option granted under Section 2.6(b) hereof shall become
exercisable in full.
(h) Adjustments. The specific number of shares
stated in the foregoing Section 2.6(b) hereof and the
consideration payable for such shares shall be subject to
adjustment in certain events as provided in Section 6.2 of
this Plan.
III. STOCK APPRECIATION RIGHTS.
3.1 Grants.
In its discretion, the Committee may grant Stock
Appreciation Rights concurrently with the grant of Options.
A Stock Appreciation Right shall extend to all or a portion
of the shares covered by the related Option. A Stock
Appreciation Right shall entitle the Participant who holds
the related Option, upon exercise of the Stock Appreciation
Right and surrender of the related Option, or portion
thereof, to the extent the Stock Appreciation Right and
related Option each were previously unexercised, to receive
payment of an amount determined pursuant to Section 3.3.
Any Stock Appreciation Right granted in connection with an
Incentive Stock Option shall contain such terms as may be
required to comply with the provisions of Section 422 of the
Code and the regulations promulgated thereunder. In its
discretion, the Committee may also grant Stock Appreciation
Rights independently of any Option subject to such
conditions as the Committee may in its absolute discretion
provide.
3.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right granted
concurrently with an Option shall be exercisable only at
such time or times, and to the extent, that the related
Option shall be exercisable and only when the Fair Market
Value of the stock subject to the related Option exceeds the
exercise price of the related Option.
(b) In the event that a Stock Appreciation Right
granted concurrently with an Option is exercised, the number
of shares of Common Stock subject to the related Option
shall be charged against the maximum amount of Common Stock
that may be issued or transferred pursuant to Awards under
this Plan. The number of shares subject to the Stock
Appreciation Right and the related Option of the Participant
shall also be reduced by such number of shares.
(c) If a Stock Appreciation Right granted
concurrently with an Option extends to less than all the
shares covered by the related Option and if a portion of the
related Option is thereafter exercised, the number of shares
subject to the unexercised Stock Appreciation Right shall be
reduced only if and to the extent that the remaining number
of shares covered by such related Option is less than the
remaining number of shares subject to such Stock
Appreciation Right.
(d) A Stock Appreciation Right granted
independently of any Option shall be exercisable pursuant to
the terms of the Award Agreement.
3.3 Payment.
(a) Upon exercise of a Stock Appreciation Right
and surrender of an exercisable portion of the related
Option, the Participant shall be entitled to receive payment
of an amount determined by multiplying
(i) the difference obtained by subtracting
the exercise price per share of Common Stock under the
related Option from the Fair Market Value of a share of
Common Stock on the date of exercise of the Stock
Appreciation Right, by
(ii) the number of shares with respect to
which the Stock Appreciation Right shall have been
exercised.
(b) The Committee, in its sole discretion, may
settle the amount determined under paragraph (a) above
solely in cash, solely in shares of Common Stock (valued at
Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in
cash, provided that the Committee shall have determined
that such exercise and payment are consistent with
applicable law. In any event, cash shall be paid in lieu of
fractional shares. Absent a determination to the contrary,
all Stock Appreciation Rights shall be settled in cash as
soon as practicable after exercise. The exercise price for
the Stock Appreciation Right shall be the exercise price of
the related Option. Notwithstanding the foregoing, the
Committee may, in the Award Agreement, determine the maximum
amount of cash or stock or a combination thereof which may
be delivered upon exercise of a Stock Appreciation Right.
(c) Upon exercise of a Stock Appreciation Right
granted independently of any Option, the Participant shall
be entitled to receive payment of an amount based on a
percentage, specified in the Award Agreement, of the
difference obtained by subtracting the Fair Market Value per
share of Common Stock on the Award Date from the Fair Market
Value per share of Common Stock on the date of exercise of
the Stock Appreciation Right. Such amount shall be paid as
described in paragraph (b) above.
IV. RESTRICTED STOCK AWARDS.
4.1 Grants.
Subject to Section 1.4, the Committee may, in its
discretion, grant one or more Restricted Stock Awards to any
Eligible Employee. Each Restricted Stock Award agreement
shall specify the number of shares of Common Stock to be
issued to the Participant, the date of such issuance, the
price, if any, to be paid for such shares by the Participant
and the restrictions imposed on such shares, which
restrictions shall not terminate earlier than six months
after the Award Date.
4.2 Restrictions.
(a) Shares of Common Stock included in Restricted
Stock Awards may not be sold, assigned, transferred, pledged
or otherwise disposed of or encumbered, either voluntarily
or involuntarily, until such shares have vested.
(b) Participants receiving Restricted Stock shall
be entitled to dividend and voting rights for the shares
issued even though they are not vested, provided that such
rights shall terminate immediately as to any forfeited
Restricted Stock.
(c) In the event that the Participant shall have
paid cash in connection with the Restricted Stock Award, the
Award Agreement shall specify whether and to what extent
such cash shall be returned upon a forfeiture (with or
without an earnings factor).
V. PERFORMANCE SHARE AWARDS.
5.1 Grants of Performance Share Awards.
The Committee may, in its discretion, grant
Performance Share Awards to Eligible Employees based upon
such factors as the Committee shall determine. A
Performance Share Award agreement shall specify the number
of shares of Common Stock (if any) subject to the
Performance Share Award, the price, if any, to be paid for
any such shares by the Participant and the conditions upon
which payment or issuance to the Participant shall be based.
The amount of cash or shares or other property that may be
deliverable pursuant to a Performance Share Award shall be
based upon the degree of attainment over a specified period
of not more than 10 years (a "performance cycle") as may be
established by the Committee of such measure(s) of the
performance of the Company (or any part thereof) or the
Participant as may be established by the Committee. The
Committee may provide for full or partial credit, prior to
completion of such performance cycle or the attainment of
the performance achievement specified in the Award in the
event of the Participant's death, Retirement, or Total
Disability, an Event or in such other circumstances as the
Committee, consistent with Section 6.12, may determine.
5.2 Grants of Performance-Based Share Awards.
Without limiting the generality of the foregoing,
and in addition to Options and Stock Appreciation Rights
granted under other provisions of this Plan which are
intended to satisfy the exception for "performance-based
compensation" under Section 162(m) of the Code (with such
Awards hereinafter referred to as "Qualifying Options" or
"Qualifying Stock Appreciation Rights," respectively), other
performance-based awards within the meaning of Section
162(m) of the Code ("Performance-Based Awards"), whether in
the form of Cash-Based Awards, restricted stock, performance
stock, phantom stock or other rights, the grant, vesting,
exercisability, or payment of which depends on the degree of
achievement of the Performance Goals relative to
preestablished targeted levels for the Company or a
consolidated segment, subsidiary, or division of the
Company, may be granted under this Plan. Any Qualifying
Option or Qualifying Stock Appreciation Right shall be
subject only to the requirements of subsections (a) and (c)
below in order for such Awards to satisfy the requirements
for Performance-Based Awards under this Section 5.2. With
the exception of any Qualifying Option or Qualifying Stock
Appreciation Right, an Award that is intended to satisfy the
requirements of this Section 5.2 shall be designated as a
Performance-Based Award at the time of grant.
(a) The eligible class of persons for
Performance-Based Awards under this Section shall be
executive officers of the Company.
(b) The applicable performance goals for
Performance-Based Awards (other than Qualifying Options)
shall be, on an absolute or relative basis, one or more of
the Performance Goals, as selected by the Committee in its
sole discretion. The Committee shall establish in the
applicable Award Agreement the specific performance
targets(s) relative to the Performance Goal(s) which must be
attained before the compensation under the Performance-Based
Award becomes payable. The specific targets shall be
determined within the time period permitted under Section
162(m) of the Code (and any regulations issued thereunder)
so that such targets are considered to be preestablished and
so that the attainment of such targets is substantially
uncertain at the time of their establishment. The
applicable performance measurement period may not be less
than one nor more than 10 years.
(c) Notwithstanding any other provision of the
Plan to the contrary, the maximum number of shares of Common
Stock which may be delivered pursuant to Awards qualified as
Performance-Based Awards to any Participant in any calendar
year shall not exceed 500,000 shares, either individually or
in the aggregate, subject to adjustment as provided in
Section 6.2. Awards that are cancelled during the year
shall be counted against this limit to the extent required
by Section 162(m) of the Code. In addition, the aggregate
amount of compensation to be paid to any Participant in any
calendar year in respect of any Cash-Based Awards granted
during any calendar year as Performance-Based Awards shall
not exceed $1,000,000.
(d) Before any Performance-Based Award under this
Section 5.2 is paid (other than a Qualifying Option or
Qualifying Stock Appreciation Right), the Committee must
certify in writing that the Performance Goals and any other
material terms of the Performance-Based Award were
satisfied; provided, however, that a Performance-Based Award
may be paid without regard to the satisfaction of the
applicable Performance Goal(s) with respect to an Event in
accordance with Section 6.4.
(e) The Committee will have discretion to
determine the restrictions or other limitations of the
individual Awards under this Section 5.2 (including the
authority to reduce Awards, payouts or vesting or to pay no
Awards, in its sole discretion, if the Committee preserves
such authority at the time of grant by language to this
effect in its authorizing resolutions or otherwise).
(f) In the event of a change in corporate
capitalization, such as a stock split or stock dividend, or
a corporate transaction, such as a merger, consolidation,
spinoff, reorganization or similar event, or any partial or
complete liquidation of the Company, or any similar event
consistent with the regulations issued under Section 162(m)
of the Code including, without limitation, any material
change in accounting policies or practices affecting the
Company and/or the Performance Goals or targets, then the
Committee may make adjustments to the Performance Goals and
targets relating to outstanding Performance-Based Awards to
the extent such adjustments are made to reflect the
occurrence of such an event; provided, however, that
adjustments described in this subsection may be made only to
the extent that the occurrence of an event described herein
was unforeseen at the time the targets for a Performance-
Based Award were established by the Committee.
VI. OTHER PROVISIONS.
6.1 Rights of Eligible Employees, Participants and
Beneficiaries.
(a) Status as an Eligible Employee shall not be
construed as a commitment that any Award will be granted
under this Plan to any Eligible Employee generally.
(b) Nothing contained in this Plan (or in Award
Agreements or in any other documents related to this Plan or
to Awards) shall confer upon any Eligible Employee or
Participant any right to continue in the service or employ
of the Company or constitute any contract or agreement of
service or employment, or interfere in any way with the
right of the Company to reduce such person's compensation or
other benefits or to terminate the services or employment of
such Eligible Employee or Participant, with or without
cause, but nothing contained in this Plan or any document
related thereto shall affect any independent contractual
right of any Eligible Employee or Participant. Nothing
contained in this Plan or any document related hereto shall
influence the construction or interpretation of the
Company's Certificate of Incorporation or Bylaws regarding
service on the Board.
(c) Options payable under this Plan shall be
payable in shares and no special or separate reserve, fund
or deposit shall be made to assure payment of such Options.
No Participant, Beneficiary or other person shall have any
right, title or interest in any fund or in any specific
asset (including shares of Common Stock) of the Company by
reason of any Award granted hereunder. Neither the
provisions of this Plan (or of any documents related
hereto), nor the creation or adoption of this Plan, nor any
action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any
Participant, Beneficiary or other person. To the extent
that a Participant, Beneficiary or other person acquires a
right to receive an Award hereunder, such right shall be no
greater than (and will be subordinate to) the right of any
unsecured general creditor of the Company.
6.2 Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are
changed into or exchanged for cash or a different number or
kind of shares or securities of the Company or of another
issuer, or if additional shares or new or different
securities are distributed with respect to the outstanding
shares of the Common Stock, through a reorganization or
merger to which the Company is a party, or through a
combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock
split, stock consolidation or other capital change or
adjustment, an appropriate adjustment shall be made in the
number and kind of shares or other consideration that is
subject to or may be delivered under this Plan and pursuant
to outstanding Awards. A corresponding adjustment to the
consideration payable with respect to Awards granted prior
to any such change and to the price, if any, paid in
connection with Restricted Stock Awards or Performance Share
Awards shall also be made. Any such adjustment, however,
shall be made without change in the total payment, if any,
applicable to the portion of the Award not exercised but
with a corresponding adjustment in the price for each share.
Corresponding adjustments shall be made with respect to
Stock Appreciation Rights based upon the adjustments made to
the Options to which they are related or, in the case of
Stock Appreciation Rights granted independently of any
Option, based upon the adjustments made to Common Stock.
(b) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company with one or more corporations as a result of
which the Company is not the surviving corporation, the Plan
shall terminate. Notwithstanding the foregoing, the
Committee may provide in writing in connection with, or in
contemplation of, any such transaction for any or all of the
following alternatives (separately or in combinations):
(i) for the assumption by the successor corporation of the
Awards theretofore granted or the substitution by such
corporation for such Awards of Awards covering the stock of
the successor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and
kind of shares and prices; (ii) for the continuance of this
Plan by such successor corporation in which event this Plan
and the Options shall continue in the manner and under the
terms so provided; or (iii) for the payment in cash or
shares of Common Stock in lieu of and in complete
satisfaction of such Awards.
(c) In adjusting Awards to reflect the changes
described in this Section 6.2, or in determining that no
such adjustment is necessary, the Committee may rely upon
the advice of independent counsel and accountants of the
Company, and the determination of the Committee shall be
conclusive. No fractional shares of stock shall be issued
under this Plan on account of any such adjustment.
6.3 Termination of Employment.
(a) If the Participant's service to or employment
by the Company terminates for any reason other than
Retirement, death or Total Disability, the Participant shall
have, subject to earlier termination pursuant to or as
contemplated by Section 2.3, thirty days or such shorter
period as is provided in the Award Agreements from the date
of termination of services or employment to exercise any
Option to the extent it shall have become exercisable on the
date of termination of employment, and any Option not
exercisable on that date shall terminate. Notwithstanding
the preceding sentence, in the event the Participant is
discharged for cause as determined by the Committee in its
sole discretion, all Options shall lapse immediately upon
such termination of services or employment.
(b) If the Participant's service to or employment
by the Company terminates as a result of Retirement or Total
Disability, the Participant or Participant's Personal
Representative, as the case may be, shall have, subject to
earlier termination pursuant to or as contemplated by
Section 2.3, 3 months or such shorter period as is provided
in the Award Agreements from the date of termination of
services or employment to exercise any Option to the extent
it shall have become exercisable by the date of termination
of services or employment and any Option not exercisable on
that date shall terminate.
(c) If the Participant's service to or employment
by the Company terminates as a result of death while the
Participant is rendering services to the Company or is
employed by the Company or during the 3 month period
referred to in subsection (b) above, the Participant's
Option shall be exercisable by the Participant's
Beneficiary, subject to earlier termination pursuant to or
as contemplated by Section 2.3, during the 3 month period or
such shorter period as is provided in the Award Agreements
following the Participant's death, as to all or any part of
the shares of Common Stock covered thereby to the extent
exercisable on the date of death (or earlier termination).
(d) Each Stock Appreciation Right granted
concurrently with an Option shall have the same termination
provisions and exercisability periods as the Option to which
it relates. The termination provisions and exercisability
periods of any Stock Appreciation Right granted
independently of an Option shall be established in
accordance with Section 3.2(d). The exercisability period
of a Stock Appreciation Right shall not exceed that provided
in Section 2.3 or in the related Award Agreement and the
Stock Appreciation Right shall expire at the end of such
exercisability period.
(e) In the event of termination of services to or
employment with the Company for any reason, (i) shares of
Common Stock subject to the Participant's Restricted Stock
Award shall be forfeited in accordance with the provisions
of the related Award Agreement to the extent such shares
have not become vested on that date; and (ii) shares of
Common Stock subject to the Participant's Performance Share
Award shall be forfeited in accordance with the provisions
of the related Award Agreement to the extent such shares
have not been issued or become issuable on that date.
(f) In the event of termination of services to or
employment with the Company for any reason, other than
discharge for cause, the Committee may, in its discretion,
increase the portion of the Participant's Award available to
the Participant, or Participant's Beneficiary or Personal
Representative, as the case may be, upon such terms as the
Committee shall determine.
(g) If an entity ceases to be a Subsidiary, such
action shall be deemed for purposes of this Section 6.3 to
be a termination of services or employment of each
consultant or employee of that entity who does not continue
as a consultant or as an employee of another entity within
the Company.
(h) Upon forfeiture of a Restricted Stock Award
pursuant to this Section 6.3, the Participant, or his or her
Beneficiary or Personal Representative, as the case may be,
shall transfer to the Company the portion of the Restricted
Stock Award not vested at the date of termination of
services or employment, without payment of any consideration
by the Company for such transfer unless the Participant paid
a purchase price in which case repayment, if any, of that
price shall be governed by the Award Agreement.
Notwithstanding any such transfer to the Company, or
failure, refusal or neglect to transfer, by the Participant,
or his or her Beneficiary or Personal Representative, as the
case may be, such nonvested portion of any Restricted Stock
Award shall be deemed transferred automatically to the
Company on the date of termination of services or
employment. The Participant's original acceptance of the
Restricted Stock Award shall constitute his or her
appointment of the Company and each of its authorized
representatives as attorney(s)-in-fact to effect such
transfer and to execute such documents as the Company or
such representatives deem necessary or advisable in
connection with such transfer.
6.4 Acceleration of Awards.
(a) Unless prior to an Event the Board determines
that, upon its occurrence, there shall be no acceleration of
Awards or determines those selected Awards which shall be
accelerated and the extent to which they shall be
accelerated, upon the occurrence of an Event (i) each Option
and each related Stock Appreciation Right shall become
immediately exercisable to the full extent theretofore not
exercisable, (ii) Restricted Stock shall immediately vest
free of restrictions and (iii) the number of shares covered
by each Performance Share Award shall be issued to the
Participant; subject, however, to compliance with applicable
regulatory requirements, including without limitation
Section 422 of the Code. For purposes of this section only,
the Board shall mean the Board as constituted immediately
prior to the Event.
(b) If any Option or other right to acquire
Common Stock under this Plan has been fully accelerated as
permitted by Section 6.4(a) but is not exercised prior to
(i) a dissolution of the Corporation, or (ii) an event
described in Section 6.2 that the Corporation does not
survive, such Option or right shall thereupon terminate,
subject to any provision that has been expressly made by the
Committee pursuant to Section 6.2(b) for the survival,
substitution, exchange or other settlement of such Option or
right.
6.5 Government Regulations.
This Plan, the granting and vesting of Awards
under this Plan and the issuance or transfer of shares of
Common Stock (and/or the payment of money) pursuant thereto
are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited
to state and federal securities law and federal margin
requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion
of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this
Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the
Company, provide such assurances and representations to the
Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements.
6.6 Tax Withholding.
(a) Upon the disposition by a Participant or
other person of shares of Common Stock acquired pursuant to
the exercise of an Incentive Stock Option prior to
satisfaction of the holding period requirements of Section
422 of the Code, or upon the exercise of a Nonqualified
Stock Option, the exercise of a Stock Appreciation Right,
the vesting of a Restricted Stock Award or the payment of a
Performance Share Award the Company shall have the right at
its option to (i) require such Participant or such other
person to pay by cash or check payable to the Company, the
amount of any taxes which the Company may be required to
withhold with respect to such transactions or (ii) deduct
from amounts paid in cash the amount of any taxes which the
Company may be required to withhold with respect to such
cash amounts. The above notwithstanding, in any case where
a tax is required to be withheld in connection with the
issuance or transfer of shares of Common Stock under this
Plan, the Participant may elect, pursuant to such rules as
the Committee may establish, to have the Company reduce the
number of such shares issued or transferred by the
appropriate number of shares to accomplish such withholding.
(b) The Committee may, in its discretion, permit
a loan from the Company to a Participant in the amount of
any taxes which the Company may be required to withhold with
respect to shares of Common Stock received pursuant to a
transaction described in subsection (a) above. Such a loan
will be for a term, at a rate of interest and pursuant to
such other terms and rules as the Committee may establish.
6.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan (or
any part hereof). In addition, the Committee may, from time
to time, amend or modify any provision of this Plan except
Section 6.4 and, with the consent of the Participant, make
such modifications of the terms and conditions of such
Participant's Award as it shall deem advisable. The
Committee, with the consent of the Participant, may also
amend the terms of any Option to provide that the Option
price of the shares remaining subject to the original Award
shall be reestablished at a price not less than 100% of the
Fair Market Value of the Common Stock on the effective date
of the amendment. No modification of any other term or
provision of any Option which is amended in accordance with
the foregoing shall be required, although the Committee may,
in its discretion, make such further modifications of any
such Option as are not inconsistent with or prohibited by
this Plan. No Awards may be granted during any suspension
of this Plan or after its termination.
(b) If an amendment would materially (i) increase
the benefits accruing to Participants, (ii) increase the
aggregate number of shares which may be issued under this
Plan, or (iii) modify the requirements of eligibility for
participation in this Plan, the amendment shall be approved
by the Board and, to the extent then required by applicable
law or deemed necessary or desirable by the Board, by a
majority of the shareholders.
(c) In the case of Awards issued before the
effective date of any amendment, suspension or termination
of this Plan, such amendment, suspension or termination of
the Plan shall not, without specific action of the Board or
the Committee and the consent of the Participant, in any way
modify, amend, alter or impair any rights or obligations
under any Award previously granted under the Plan.
6.8 Privileges of Stock Ownership.
Except as otherwise expressly authorized by the
Committee or under this Plan, a Participant shall not be
entitled to any privilege of stock ownership as to any
shares of Common Stock not actually delivered to and held of
record by him or her. No adjustment will be made for
dividends or other rights as a shareholder for which a
record date is prior to such date of delivery.
6.9 Effective Date of the Plan.
This Plan shall be effective upon its approval by
the Board, subject to approval by the shareholders of the
Company within twelve months from the date of such Board
approval.
6.10 Term of the Plan.
Unless previously terminated by the Board, this
Plan shall terminate ten years after the Effective Date of
the Plan, and no Awards shall be granted under it
thereafter, but such termination shall not affect any Award
theretofore granted.
6.11 Governing Law.
This Plan and the documents evidencing Awards and
all other related documents shall be governed by, and
construed in accordance with, the laws of the State of
California. If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue to be fully
effective.
6.12 Plan Construction.
(a) It is the intent of the Company that
transactions in and affecting Awards in the case of
Participants who are or may be subject to Section 16 of the
Exchange Act satisfy any then applicable requirements of
Rule 16b-3 so that such persons (unless they otherwise
agree) will be entitled to the benefits of such rule or
other exemptive rules under Section 16 of the Exchange Act
in respect of those transactions and will not be subjected
to avoidable liability thereunder. If any provision of the
Plan or of any Award would frustrate or otherwise conflict
with the intent expressed above, that provision to the
extent possible shall be interpreted as to avoid such
conflict. If the conflict remains irreconcilable, the
Committee may disregard the provision if it concludes that
to do so furthers the interest of the Company and is
consistent with the purposes of the Plan as to such persons
in the circumstances.
(b) It is the further intent of the Company that
Options and Stock Appreciation Rights with an exercise or
base price not less than Fair Market Value on the date of
grant and Performance Share Awards under Section 5.2 of this
Plan that are granted to or held by a person subject to
Section 16 of the Exchange Act shall qualify as performance-
based compensation under Section 162(m) of the Code, and
this Plan shall be interpreted consistent with such intent.
6.13 Non-Exclusivity of Plan.
Nothing in this plan shall limit or be deemed to
limit the authority of the Board to grant options, stock
awards or authorize any other compensations under any other
plan or authority.
VII. DEFINITIONS.
7.1 Definitions.
(a) "Award" means an Option, which may be
designated as a Nonqualified Stock Option or an Incentive
Stock Option, a Stock Appreciation Right, Restricted Stock
Award, Performance Share Award or Performance-Based Award.
(b) "Award Agreement" means a written agreement
setting forth the terms of an Award.
(c) "Award Date" means the date upon which the
Committee took the action granting an Award or such later
date as is prescribed by the Committee or, in the case of
Options granted under Section 2.6, the date specified in
such Section 2.6.
(d) "Beneficiary" means the person, persons,
trust or trusts entitled by will or the laws of descent and
distribution to receive the benefits specified under this
Plan in the event of a Participant's death.
(e) "Board" means the Board of Directors of the
Company.
(f) "Cash-Based Awards" mean Awards that, if
paid, must be paid in cash and that are neither denominated
in nor have derived the value of, nor an exercise or
conversion privilege at a price related to, shares of Common
Stock.
(g) "Cash Flow" shall mean cash and cash
equivalents derived from either (i) net cash flow from
operations, or (ii) net cash flow from operations,
financings and investing activities, as determined by the
Committee at the time the Award is granted.
(h) "Code" means the Internal Revenue Code of
1986, as amended from time to time.
(i) "Commission" means the Securities and
Exchange Commission.
(j) "Committee" means the Board or a committee
appointed by the Board to administer this Plan, which
committee shall be comprised only of two or more directors
or such greater number of directors as may be required under
applicable law, each of whom (i) in respect of any
transaction at a time when the affected Participant may be
subject to Section 162(m) of the Code, shall be an "outside
director" within the meaning of Section 162(m) of the Code,
and (ii) in respect of any transaction at a time when the
affected Participant may be subject to Section 16 of the
Exchange Act, shall be a "Non-Employee Director" within the
meaning of Rule 16b-3(b)(3) under the Exchange Act.
(k) "Common Stock" means the Common Stock of the
Company.
(l) "Company" means New Century Financial
Corporation, a Delaware corporation, and its successors.
(m) "Director" means member of the board of
Directors of the Company or any person performing similar
functions with respect to the Company.
(n) "Earnings Per Share" shall mean earnings per
share of Common Stock on a fully diluted basis determined by
dividing (i) net earnings, less dividends on any preferred
stock of the Company, by (ii) the weighted average number of
common shares and common share equivalents outstanding.
(o) "Eligible Employee" means (i) an officer or
key employee of the Company and (ii) any individual
consultant or advisor who renders or has rendered bona fide
services (other than services in connection with the
offering or sale of securities of the Company in a capital
raising transaction) to the Company, and who is selected to
participate in this Plan by the Committee.
(p) "Event" means any of the following:
(1) Approval by the shareholders of the
Company of the dissolution or liquidation of the
Company;
(2) Approval by the shareholders of the
Company of an agreement to merge or consolidate, or
otherwise reorganize, with or into one or more entities
other than Subsidiaries, as a result of which less than
50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be, owned
by former shareholders of the Company; or
(3) Approval by the shareholders of the
Company of the sale of substantially all of the
Company's business assets to a person or entity which
is not a Subsidiary.
(q) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(r) "Fair Market Value" means (i) if the stock is
listed or admitted to trade on a national securities
exchange, the closing price of the stock on the Composite
Tape, as published in the Western Edition of The Wall Street
Journal, of the principal national securities exchange on
which the stock is so listed or admitted to trade, on such
date, or, if there is no trading of the stock on such date,
then the closing price of the stock as quoted on such
Composite Tape on the next preceding date on which there was
trading in such shares; (ii) if the stock is not listed or
admitted to trade on a national securities exchange, the
last price for the stock on such date, as furnished by the
National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such
information; (iii) if the stock is not listed or admitted to
trade on a national securities exchange and is not reported
on the National Market Reporting System, the mean between
the bid and asked price for the stock on such date, as
furnished by the NASD; or (iv) if the stock is not listed or
admitted to trade on a national securities exchange, is not
reported on the National Market Reporting System and if bid
and asked prices for the stock are not furnished by the NASD
or a similar organization, the values established by the
Committee for purposes of the Plan.
(s) "Gain on Sale of Loans" means the total gain
recognized on loans sold through whole loan transactions or
through securitizations, net of premiums paid to acquire
such loans and net of expenses associated with the sale of
such loans, as reported in the Company's quarterly and/or
annual financial statements.
(t) "Incentive Stock Option" means an option
which is designated as an incentive stock option within the
meaning of Section 422 of the Code, the award of which
contains such provisions as are necessary to comply with
that section.
(u) "Loan Production Volume" means loans funded
during any given period as reported in the Company's
quarterly and/or annual financial statements.
(v) "Loan Quality" means the number of loans
originated in accordance with the Company's underwriting
policies and procedures and is measured as loans sold,
either individually, through bulk sales transactions, or
through securitizations, at a premium price as a percentage
of total loans sold, based on information as reported in the
Company's quarterly and/or annual financial statements.
(w) "Non-Employee Director" means a member of the
Board who is not an officer or employee of the Company.
(x) "Non-Employee Director Participant" means a
Non-Employee Director who has been granted an Option under
Section 2.6.
(y) "Nonqualified Stock Option" means an option
which is designated as a Nonqualified Stock Option and shall
include any Option intended as an Incentive Stock Option
that fails to meet applicable legal requirements thereof.
Any Option granted hereunder that is not designated as an
Incentive Stock Option shall be deemed to be designated a
Nonqualified Stock Option under this Plan and not an
incentive stock option under the Code.
(z) "Officer" means a president, vice-president,
secretary, treasurer or principal financial officer,
comptroller or principal accounting officer and any person
routinely performing corresponding functions with respect to
the Company.
(aa) "Option" means an option to purchase Common
Stock under this Plan. An Option shall be designated by the
Committee as a Nonqualified Stock Option or an Incentive
Stock Option.
(ab) "Participant" means an Eligible Employee who
has been granted an Award or a Non-Employee Director
Participant.
(ac) "Performance-Based Award" means an Award of a
right to receive shares of Common Stock or other
compensation (including cash) under Section 5.2, the
issuance or payment of which is contingent upon, among other
conditions, the attainment of performance objectives
specified by the Committee.
(ad) "Performance Goal" shall mean Cash Flow,
Earnings Per Share, Gain on Sale of Loans, Loan Production
Volume, Loan Quality, Return on Equity, Total Stockholder
Return, or any combination thereof.
(ae) "Performance Share Award" means an award of a
right to receive shares of cash or Common Stock under
Section 5.1, or to receive shares of Common Stock or other
compensation (including cash) under Section 5.2, the
issuance or payment of which is contingent upon, among other
things, the attainment of performance objectives specified
by the Committee.
(af) "Personal Representative" means the person or
persons who, upon the disability or incompetence of a
Participant, shall have acquired on behalf of the
Participant by legal proceeding or otherwise the power to
exercise the rights and receive the benefits specified in
this Plan.
(ag) "Plan" means the New Century Financial
Corporation 1995 Stock Option Plan, as amended.
(ah) "QDRO" means an order requiring the transfer
of an Award or portion thereof pursuant to a state domestic
relations law to the spouse, former spouse, child or other
dependent of a Participant. Such order must be in a form
substantially identical to a qualified domestic relations
order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended.
(ai) "Restricted Stock" means those shares of
Common Stock issued pursuant to a Restricted Stock Award
which are subject to the restrictions set forth in the
related Award Agreement.
(aj) "Restricted Stock Award" means an award of a
fixed number of shares of Common Stock to the Participant
subject, however, to payment of such consideration, if any,
and such forfeiture provisions, as are set forth in the
Award Agreement.
(ak) "Retirement" means retirement from employment
by or providing services to the Company or any Subsidiary
after age 65 and, in the case of employees, in accordance
with the retirement policies of the Company then in effect.
(al) "Return on Equity" means consolidated net
income of the Company (less any preferred dividends),
divided by the average consolidated common shareholders
equity.
(am) "Rule 16b-3" means Rule 16b-3 as promulgated
by the Commission pursuant to the Exchange Act as amended
from time to time.
(an) "Securities Act" means the Securities Act of
1933, as amended.
(ao) "Stock Appreciation Right" means a right to
receive a number of shares of Common Stock or an amount of
cash, or a combination of shares and cash, determined as
provided in Section 3.3 (a).
(ap) "Subsidiary" means any corporation or other
entity a majority or more of whose outstanding voting stock
or voting power is beneficially owned directly or indirectly
by the Company.
(aq) "Total Disability" means a "permanent and
total disability" within the meaning of Section 22(e)(3) of
the Code.
(ar) "Total Stockholder Return" means, with
respect to the Company or other entities (if measured on a
relative basis), the (i) change in the market price of its
Common Stock (as quoted on the principal market on which it
is traded as of the beginning and ending of the period) plus
dividends and other distributions paid, divided by (ii) the
beginning quoted market price, all of which is adjusted for
any changes in equity structure, including but not limited
to stock splits and stock dividends.
<PAGE>
NEW CENTURY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN
RESTRICTED STOCK AWARD AGREEMENT
THIS AWARD AGREEMENT is dated as of the ___ day of
_______, 19__, by and between New Century Financial
Corporation, a Delaware corporation (the "Company") and
______________________ (the "Participant").
W I T N E S S E T H
WHEREAS, on ________________, 19__, pursuant to
the New Century Financial Corporation 1995 Stock Option Plan
(the "Plan"), the Company granted to the Participant,
effective as of _______________, 19__, (the "Award Date"), a
restricted stock award (the "Restricted Stock Award" or
"Award") upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual
promises and covenants made herein and the mutual benefits
to be derived herefrom, the parties hereto agree as follows:
1. GRANT OF AWARD.
(a) The Company has granted to the Participant as
a matter of separate inducement and agreement in connection
with his or her employment, and not in lieu of any salary or
other compensation for his or her services, an Award with
respect to an aggregate of _________ shares of Restricted
Stock at the price of $0.01 per share (the "Purchase
Price"), which amount (the "Returnable Amount") shall be
returnable to the Participant upon forfeiture.
(b) The Company shall issue a certificate or
certificates for the shares of Restricted Stock subject to
the Award, registered in the name of the Participant, which
certificate(s) shall be held by the Company until such time
as the shares shall have become vested (which, in any event,
can not be earlier than six months after the Award Date).
The Award shall vest as follows:
Date on Which Restricted Stock Number of Shares as to
is Vested ("Vesting Date") Which Vesting Occurs
[One Year] , 19__ [1/3]
[Two Years] , 19__ [1/3]
[Three Years] , 19__ [1/3]
(c) The Participant shall execute a stock power
or stock powers, in blank, with respect to such
certificate(s) and shall deliver the same to the Company.
The Participant, by acceptance of the Award, hereby appoints
the Company and each of its authorized representatives as
the Participant's attorney(s)-in-fact to effect any transfer
of such shares to the Company as may be required pursuant to
the Plan or this Award Agreement and to execute such
documents as the Company or such representatives deem
necessary or advisable in connection with any such transfer.
2. CONTINUANCE OF EMPLOYMENT. The Participant hereby
agrees to remain in the employ of the Company for a period
of not less than six months from the Award Date. Nothing
contained in this Award Agreement or in the Plan shall
confer upon the Participant any right to continue in the
employ of the Company or constitute any contract or
agreement of employment. The Participant acknowledges that
the Company has the right to terminate the Participant at
will. Nothing contained in this Award Agreement or in the
Plan shall interfere in any way with the right of the
Company to (i) terminate the employment of the Participant
at any time for any reason whatsoever, with or without
cause, or (ii) reduce the compensation received by the
Participant from the rate in existence on the Award Date.
However, nothing contained in this Agreement shall affect
any independent contractual right of the Participant.
3. RESTRICTED STOCK.
(a) Prior to the Vesting Date(s), the shares of
Restricted Stock subject to the Award may not be sold,
assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily.
(b) The Participant shall be entitled to dividend
and voting rights with respect to the shares of Restricted
Stock subject to the Award even though such shares are not
vested, provided that such rights shall terminate
immediately as to any Restricted Stock which is forfeited.
Any shares receivable by the Participant pursuant to Section
6.2 of the Plan with respect to the Restricted Stock will be
subject to the restrictions set forth in this Award
Agreement to the same extent as the shares of Restricted
Stock to which such shares relate.
4. LAPSE OF RESTRICTIONS. The shares of Restricted
Stock shall vest on the Vesting Date(s) specified in Section
1 of this Award Agreement. Promptly after the Vesting Date
and satisfaction of all applicable restrictions, a
certificate or certificates evidencing the number of shares
of Common Stock as to which the restrictions have lapsed (or
such lesser number as may be permitted pursuant to Section
10 of this Award Agreement) shall be delivered to the
Participant; provided, that the Participant shall have
delivered to the Company any written statements required
pursuant to Section 8 of this Award Agreement and all
withholding taxes required pursuant to Section 10 of this
Award Agreement have been paid or otherwise provided for.
5. EFFECT OF TERMINATION OF RELATIONSHIP.
(a) If the Participant terminates employment with
the Company for any reason other than due to his or her
death or Total Disability, the Participant's shares of
Restricted Stock shall be forfeited to the extent such
shares have not become vested on the date of such
termination. If the Participant terminates employment with
the Company due to his or her death or Total Disability, the
Participant's shares of Restricted Stock shall become fully
vested as of the date of such termination. If an entity
ceases to be a Subsidiary, such action shall be deemed to be
a termination of employment of each employee of that entity.
(b) Upon forfeiture of shares of Restricted Stock
pursuant to (a) above, the Participant, or the Participant's
Beneficiary or Personal Representative, as the case may be,
shall transfer to the Company the portion of the Award not
vested at the date of termination of employment, without
payment of any consideration by the Company for such
transfer other than such Returnable Amount, if any, as may
be specified in this Award Agreement. Notwithstanding any
such transfer to the Company, or failure, refusal or neglect
to transfer, by the Participant, or Participant's
Beneficiary or Personal Representative, as the case may be,
such nonvested portion of the Award shall be deemed
transferred automatically to the Company on the date of
termination of employment.
6. NON-ASSIGNABILITY OF AWARD. Subject to limited
exceptions contained in Section 1.7 of the Plan, amounts
payable pursuant to the Award shall be paid only to the
Participant or the Participant's Beneficiary or Personal
Representative, as the case may be, and amounts payable
under and interests in the Award may not be sold,
transferred, pledged, assigned or alienated.
7. ADJUSTMENT UPON SPECIFIED CHARGES. As set forth
in Section 6.2 of the Plan, upon the occurrence of specified
events relating to the Company's stock, adjustments will be
made in the number and kind of shares that may be issuable
under or in the consideration payable with respect to an
Award.
8. ACCELERATION. Upon the occurrence of an Event,
the Restricted Stock shall immediately vest free of
restrictions (subject to the minimum six month period set
forth in Section 1(b) of this Agreement), unless prior to
the Event the Board determines otherwise.
9. APPLICATION OF SECURITIES LAWS. The granting and
vesting of the Award and the issuance or transfer of shares
pursuant to the Award are subject to compliance with all
applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities
laws and federal margin requirements) and to such approvals
by any listing, regulatory or governmental authority as may,
in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. All securities acquired
pursuant to the Award shall be subject to such restrictions
and the person acquiring such securities shall, if requested
by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or
desirable to assure compliance with all applicable legal
requirements. The Committee may impose such conditions on
an Award or on its acceleration or on the payment of any
withholding obligation as may be required to satisfy
applicable regulatory requirements.
10. NOTICES. Any notice to be given to the Company
under the terms of this Award Agreement or pursuant to the
Plan shall be in writing and addressed to the Secretary of
the Company at its principal office and any notice to be
given to the Participant shall be addressed to him or her at
the address given beneath the Participant's signature
hereto, or at such other address as either party may
hereafter designate in writing to the other party. Any such
notice shall be deemed to have been duly given if hand
delivered or when enclosed in a properly sealed envelope
addressed as aforesaid and deposited the United States mail
(or, in the case of notices sent from countries other than
the United States, when received).
11. EFFECT OF AWARD AGREEMENT. This Award Agreement
shall be assumed by, be binding upon and inure to the
benefit of any successor or successors of the Company to the
extent provided in Sections 6.2 and 6.4 of the Plan.
12. TAX WITHHOLDING. At the time that the shares of
Restricted Stock vest free of restrictions or are treated as
vesting under an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, the Company shall
have the right to require the Participant (or other person
entitled to receive such shares under the Plan) to pay by
cash or check payable to the Company, the amount of any
federal, state, local, foreign, or other taxes it may be
required to withhold with respect to such transaction. The
Company may also permit, consistent with rules established
by the Committee, the Participant to pay any such
withholding taxes by reducing the number of shares otherwise
transferrable pursuant to the Award.
13. TERMS OF PLAN GOVERN. The Award and this Award
Agreement are subject to, and the Company and the
Participant agree to be bound by, all of the terms and
conditions of the Plan. Capitalized terms not otherwise
defined herein are defined in the Plan. The Participant
acknowledges receipt of a copy of the Plan, which is
incorporated herein by this reference. The rights of the
Participant are subject to limitations, adjustments,
modifications, suspension and termination in certain
circumstances and upon the occurrence of certain conditions
as set forth in the Plan.
14. LAWS APPLICABLE TO CONSTRUCTION. The Award has
been granted, executed and delivered as of the day and year
first above written and the interpretation, performance and
enforcement of the Award and this Award Agreement shall be
governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this
Award Agreement to be executed on its behalf by a duly
authorized officer and the Participant has hereunto set his
or her hand as of the date and year first above written.
NEW CENTURY FINANCIAL CORPORATION
By:______________________________________
Its:_____________________________
PARTICIPANT
___________________________________
(Signature)
____________________________________
(Print Name)
____________________________________
(Address)
____________________________________
(City, State, Zip Code)
____________________________________
(Social Security Number)
<PAGE>
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Restricted Stock Award Agreement by New Century Financial
Corporation, I, ____________________, the spouse of
Participant therein named, do hereby join with my spouse in
executing the foregoing Restricted Stock Award Agreement and
do hereby agree to be bound by all of the terms and
provisions thereof and of the Plan.
Date: ___________________ __________________________________
(Signature of Spouse)
__________________________________
(Print Name)
<PAGE>
NEW CENTURY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the ________ day of
_________, 199__, between NEW CENTURY FINANCIAL CORPORATION,
a Delaware corporation (the "Company"), and
__________________________ (the "Employee").
W I T N E S S E T H
WHEREAS, pursuant to the New Century Financial
Corporation 1995 Stock Option Plan (as amended and restated
May 30, 1997 and referred to herein as the "Plan"), the
Company has granted to the Employee effective as of the
______ day of ______________, 199__ (the "Award Date") an
option to purchase all or any part of _________________
authorized but unissued shares of the Company's Common Stock
upon the terms and conditions set forth herein and in the
Plan.
NOW, THEREFORE, in consideration of the mutual
promises and covenants made herein and the mutual benefits
to be derived herefrom, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein
and not otherwise defined herein shall have the meaning
assigned to such terms in the Plan.
2. Grant of Option. This Agreement evidences
the Company's grant to the Employee of the right and option
to purchase, on the terms and conditions set forth herein
and in the Plan, all or any part of an aggregate of _______
shares of the Common Stock at the price of $______ per share
(the "Option"), exercisable from time to time, subject to
the provisions of this Agreement and the Plan, prior to the
close of business on the day before the tenth anniversary of
the Award Date (the "Expiration Date"). Such price is not
less than the Fair Market Value of the Company's Common
Stock as of the Award Date. It is the intent of the Company
that this Option constitute an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.
3. Exercisability of Option. Except as earlier
permitted by or pursuant to the Plan or by resolution of the
Committee adopted after the date hereof, no shares may be
purchased by exercise of the Option until the date or dates
set forth below. [ALTERNATIVE 1: The Option may be
exercised in installments as to __% of the aggregate number
of shares set forth in Section 2 hereof (subject to
adjustment) on and after the first anniversary of the Award
Date and as to an additional __% of such aggregate number of
such shares (subject to adjustment) on each of the second,
______, and _____ anniversaries of the Award Date.]
[ALTERNATIVE 2: The Option is fully vested and immediately
exercisable.]
To the extent the Employee does not in any year
purchase all or any part of the shares to which the Employee
is entitled, the Employee has the right cumulatively
thereafter to purchase any shares not so purchased and such
right shall continue until the Option terminates or expires.
Fractional share interests shall be disregarded, but may be
cumulated. No fewer than 10 shares may be purchased at any
one time, unless the number purchased is the total number at
the time available for purchase under the Option.
4. Limitation on Exercise of Option. In the
event the Employee is granted incentive stock options
(whether under this Agreement or any other incentive stock
option agreement) and the aggregate fair market value
(determined as of the respective dates of grant of such
options) of the Common Stock with respect to which such
options are first exercisable in any calendar year exceeds
$100,000, the most recently granted options shall be treated
as nonqualified stock options to the extent of the excess.
In addition, in the case of simultaneously granted options,
the Company may, in the manner and to the extent permitted
by law, designate which shares are to be treated as stock
acquired pursuant to the exercise of an incentive stock
option.
5. Method of Exercise of Option. The Option
shall be exercisable by the delivery to the Company of a
written notice stating the number of shares to be purchased
pursuant to the Option and accompanied by payment made in
accordance with and in a form permitted in Section 2.2 of
the Plan for the full purchase price of the shares to be
purchased, subject to such further limitations and rules or
procedures as the Committee may from time to time establish
as to any non-cash payment and as to the tax withholding
requirements of Section 6.6 of the Plan. Shares delivered
in payment of the exercise price must have been owned by the
Employee for at least six months prior to the exercise. In
addition, the Employee (or the Employee's Beneficiary or
Personal Representative) shall furnish any written
statements required pursuant to Section 6.5 of the Plan.
6. Effect of Termination of Employment or Death;
Change in Subsidiary Status. If the Employee ceases to be
employed by or perform services for the Company, the Option
and all other rights hereunder, to the extent not previously
exercised, shall terminate and become null and void at such
times set forth in and as provided by Section 6.3 of the
Plan.
7. Termination of Option Under Certain Events.
The Option, to the extent not previously exercised, shall
terminate upon an event or transaction which the Company
does not survive, as provided in Section 6.2 of the Plan.
8. Non-Transferability of Option. The Option
and any other rights of the Employee under this Agreement or
the Plan are generally nontransferable as provided in
Section 1.7 of the Plan.
9. Notices. Any notice to be given under the
terms of this Agreement shall be in writing and addressed to
the Company at its principal office to the attention of the
Secretary and to the Employee at the address given beneath
the Employee's signature hereto, or at such other address as
either party may hereafter designate in writing to the
other. Any such notice shall be deemed to have been duly
given when enclosed in a properly sealed envelope addressed
as aforesaid, registered and certified, and deposited
(postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by
the United States Government.
10. Plan. The Option and all rights of the
Employee thereunder are subject to, and the Employee agrees
to be bound by, all of the terms and conditions of the Plan,
incorporated herein by this reference. The Employee
acknowledges receipt of a copy of the Plan, and agrees to be
bound by the terms thereof. Unless otherwise expressly
provided in other Sections of this Agreement, provisions of
the Plan that confer discretionary authority on the
Committee do not (and shall not be deemed to) create any
rights in the Employee unless such rights are expressly set
forth herein or are otherwise in the sole discretion of the
Committee so conferred by appropriate action of the
Committee under the Plan after the date hereof.
11. Notice of Disposition. The Employee agrees
to notify the Company of any sale or other disposition of
any shares of Common Stock received upon exercise of the
Option, if such sale or disposition occurs within two years
after the Award Date or within one year after the date of
such exercise.
12. Continuance of Employment. As a condition of
this Option, the Employee hereby agrees to remain in the
employ of or in service to the Company for a period of one
(1) year after the Award Date. Nothing contained herein or
in the Plan shall confer upon the Employee any right with
respect to the continuation of employment by or in service
to the Company or interfere in any way with the right of the
Company at any time to terminate such employment or service
or to increase or decrease the compensation of the Employee
from the rate in existence at any time.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed on its behalf by a duly authorized
officer and the Employee has hereunto set his or her hand.
NEW CENTURY FINANCIAL CORPORATION
(a Delaware corporation)
By_________________________
Title______________________
EMPLOYEE
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
<PAGE>
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Incentive Stock Option Agreement by New Century Financial
Corporation, I, ____________________________, the spouse of
the Employee therein named, do hereby join with my spouse in
executing the foregoing Incentive Stock Option Agreement and
do hereby agree to be bound by all of the terms and
provisions thereof and of the Plan.
DATED: ____________, _____. _____________________________
Signature of Spouse
<PAGE>
NEW CENTURY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the ______ day of
_________, 199__, between NEW CENTURY FINANCIAL CORPORATION,
a Delaware corporation (the "Company"), and
__________________________ (the "Employee").
W I T N E S S E T H
WHEREAS, pursuant to the New Century Financial
Corporation 1995 Stock Option Plan (as amended and restated
May 30, 1997 and referred to herein as the "Plan"), the
Company has granted to the Employee effective as of the
_____ day of ____________, 199__ (the "Award Date") an
option to purchase all or any part of ______________
authorized but unissued shares of the Company's Common Stock
upon the terms and conditions set forth herein and in the
Plan.
NOW, THEREFORE, in consideration of the mutual
promises and covenants made herein and the mutual benefits
to be derived herefrom, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein
and not otherwise defined herein shall have the meaning
assigned to such terms in the Plan.
2. Grant of Option. This Agreement evidences
the Company's grant to the Employee of the right and option
to purchase, on the terms and conditions set forth herein
and in the Plan, all or any part of an aggregate of _____
shares of the Common Stock at the price of $______ per share
(the "Option"), exercisable from time to time, subject to
the provisions of this Agreement and the Plan, prior to the
close of business on the day before the tenth anniversary of
the Award Date (the "Expiration Date"). Such price is not
less than the Fair Market Value of the Company's Common
Stock as of the Award Date. The Option is a nonqualified
stock option and is not intended to be an incentive stock
option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
3. Exercisability of Option. Except as earlier
permitted by or pursuant to the Plan or by resolution of the
Committee adopted after the date hereof, no shares may be
purchased by exercise of the Option until the date or dates
set forth below. [ALTERNATIVE 1: The Option may be
exercised in installments as to __% of the aggregate number
of shares set forth in Section 2 hereof (subject to
adjustment) on and after the first anniversary of the Award
Date and as to an additional __% of such aggregate number of
such shares (subject to adjustment) on each of the second,
______, and _____ anniversaries of the Award Date.]
[ALTERNATIVE 2: The Option is fully vested and immediately
exercisable.]
To the extent the Employee does not in any year
purchase all or any part of the shares to which the Employee
is entitled, the Employee has the right cumulatively
thereafter to purchase any shares not so purchased and such
right shall continue until the Option terminates or expires.
Fractional share interests shall be disregarded, but may be
cumulated. No fewer than 10 shares may be purchased at any
one time, unless the number purchased is the total number at
the time available for purchase under the Option.
4. Method of Exercise of Option. The Option
shall be exercisable by the delivery to the Company of a
written notice stating the number of shares to be purchased
pursuant to the Option and accompanied by payment made in
accordance with and in a form permitted in Section 2.2 of
the Plan for the full purchase price of the shares to be
purchased, subject to such further limitations and rules or
procedures as the Committee may from time to time establish
as to any non-cash payment and as to the tax withholding
requirements of Section 6.6 of the Plan. Shares delivered
in payment of the exercise price must have been owned by the
Employee for at least six months prior to the exercise. In
addition, the Employee (or the Employee's Beneficiary or
Personal Representative) shall furnish any written
statements required pursuant to Section 6.5 of the Plan.
5. Effect of Termination of Employment or Death;
Change in Subsidiary Status. If the Employee ceases to be
employed by or perform services for the Company, the Option
and all other rights hereunder, to the extent not previously
exercised, shall terminate and become null and void at such
times set forth in and as provided by Section 6.3 of the
Plan.
6. Termination of Option Under Certain Events.
The Option, to the extent not previously exercised, shall
terminate upon an event or transaction which the Company
does not survive, as provided in Section 6.2 of the Plan.
7. Non-Transferability of Option. The Option
and any other rights of the Employee under this Agreement or
the Plan are generally nontransferable as provided in
Section 1.7 of the Plan.
8. Notices. Any notice to be given under the
terms of this Agreement shall be in writing and addressed to
the Company at its principal office to the attention of the
Secretary and to the Employee at the address given beneath
the Employee's signature hereto, or at such other address as
either party may hereafter designate in writing to the
other. Any such notice shall be deemed to have been duly
given when enclosed in a properly sealed envelope addressed
as aforesaid, registered and certified, and deposited
(postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by
the United States Government.
9. Plan. The Option and all rights of the
Employee thereunder are subject to, and the Employee agrees
to be bound by, all of the terms and conditions of the Plan,
incorporated herein by this reference. The Employee
acknowledges receipt of a copy of the Plan, and agrees to be
bound by the terms thereof. Unless otherwise expressly
provided in other Sections of this Agreement, provisions of
the Plan that confer discretionary authority on the
Committee do not (and shall not be deemed to) create any
rights in the Employee unless such rights are expressly set
forth herein or are otherwise in the sole discretion of the
Committee so conferred by appropriate action of the
Committee under the Plan after the date hereof.
10. Continuance of Employment. As a condition of
this Option, the Employee hereby agrees to remain in the
employ of or in service to the Company for a period of one
(1) year after the Award Date. Nothing contained herein or
in the Plan shall confer upon the Employee any right with
respect to the continuation of employment by or in service
to the Company or interfere in any way with the right of the
Company at any time to terminate such employment or service
or to increase or decrease the compensation of the Employee
from the rate in existence at any time.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed on its behalf by a duly authorized
officer and the Employee has hereunto set his or her hand.
NEW CENTURY FINANCIAL CORPORATION
(a Delaware corporation)
By_________________________
Title______________________
EMPLOYEE
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
<PAGE>
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Nonqualified Stock Option Agreement by New Century Financial
Corporation, I, ____________________________, the spouse of
the Employee therein named, do hereby join with my spouse in
executing the foregoing Nonqualified Stock Option Agreement
and do hereby agree to be bound by all of the terms and
provisions thereof and of the Plan.
DATED: ____________, _____. _____________________________
Signature of Spouse
NEW CENTURY FINANCIAL CORPORATION
NON-EMPLOYEE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the ______ day of
___________, 199__, between NEW CENTURY FINANCIAL
CORPORATION, a Delaware corporation (the "Company"), and
________________ (the "Director").
W I T N E S S E T H
WHEREAS, the Company maintains the New Century
Financial Corporation 1995 Stock Option Plan (as amended and
restated May 30, 1997 and referred to herein as the "Plan");
and
WHEREAS, pursuant to Section 2.6 of the Plan, the
Company has granted an option (the "Option") to the Director
upon the terms and conditions evidenced hereby, as required
by the Plan, which Option is not intended as and shall not
be deemed to be an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as
amended;
NOW, THEREFORE, in consideration of the services
rendered and to be rendered by the Director, the Company and
the Director agree to the terms and conditions set forth
herein as required by the terms of the Plan.
1. Option Grant. This Agreement evidences the
grant to the Director, as of __________________, 199__ (the
"Award Date"), of an Option to purchase an aggregate of
15,000 shares of Common Stock under Section 2.6 of the Plan,
subject to the terms and conditions of and to adjustments
provided in or pursuant to the Plan.
2. Exercise Price. The Option entitles the
Director to purchase all or any part of the Option shares at
a price per share of $________. The exercise price shall be
paid in full at the time of each purchase in a form
permitted by Section 2.6(c) of the Plan.
3. Option Term. The Option shall terminate ten
years after the Award Date unless earlier terminated in
accordance with the terms of the Plan.
4. Exercisability of Option. The Option shall
vest and become exercisable as to 5,000 shares subject to
the Option on the first anniversary of the Award Date, as to
an additional 5,000 shares subject to the Option on the
second anniversary of the Award Date, and as to the
remaining 5,000 shares subject to the Option on the third
anniversary of the Award Date.
5. Service. The Director agrees to serve as a
director in accordance with the provisions of the Company's
Articles of Incorporation, Bylaws and applicable law.
6. Termination of Directorship. If the
Director's services as a member of the Board of Directors
terminate, the Option and any rights thereunder shall
terminate pursuant to and at the times set forth in Section
2.6(f) of the Plan.
7. General Terms. The Option and this Agreement
are subject to, and the Company and the Director agree to be
bound by, the provisions of the Plan. Such provisions are
incorporated herein by this reference. The Director
acknowledges receiving a copy of the Plan and reading its
applicable provisions. Capitalized terms not otherwise
defined herein shall have the meaning assigned to such terms
in the Plan.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
NEW CENTURY FINANCIAL CORPORATION
(a Delaware corporation)
By___________________________
Title________________________
Director
_____________________________
(Signature)
_____________________________
(Print Name)
_____________________________
(Address)
_____________________________
(City, State, Zip Code)
<PAGE>
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Nonqualified Stock Option Agreement by New Century Financial
Corporation, I, __________________________________________,
the spouse of the Director therein named, do hereby join
with my spouse in executing the foregoing Nonqualified Stock
Option Agreement and do hereby agree to be bound by all of
the terms and provisions thereof and of the Plan.
DATED: ___________________________, 19__. ____________________________
Signature of Spouse
[O'Melveny & Myers Letterhead]
August
1st
1 9 9 7
(714) 760-9600
619,481-007
NB1-319826.V1
New Century Financial Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612
Re: Registration on Form S-8 of New Century
Financial Corporation (the "Company")
Ladies and Gentlemen:
At your request, we have examined the Registration
Statement on Form S-8 to be filed with the Securities and
Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of 2,000,000
shares of Common Stock, $0.01 par value per share, of the
Company (the "Common Stock"), to be issued pursuant to the
New Century Financial Corporation 1995 Stock Option Plan
(the "Plan"). We have examined the proceedings heretofore
taken and to be taken in connection with the authorization
of the Plan and the Common Stock to be issued pursuant to
and in accordance with the Plan.
Based upon such examination and upon such matters of
fact and law as we have deemed relevant, we are of the
opinion that the Common Stock has been duly authorized by
all necessary corporate action on the part of the Company
and, when issued in accordance with such authorization, the
provisions of the Plan and relevant agreements duly
authorized by and in accordance with the terms of the Plan,
will be validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit
to the Registration Statement.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
<PAGE>
The Board of Directors
New Century Financial Corporation:
We consent to incorporation by reference in the registration
statement on Form S-8 of New Century Financial Corporation of
our report dated March 7, 1997, except for note 4, which is as
of March 28, 1997, with respect to the consolidated balance
sheets of New Century Financial Corporation and subsidiary
as of December 31, 1996 and 1995 and the related consolidated
statements of operations, changes in stockholders' equity
and cash flows for the year ended December 31, 1996 and the
period from November 17, 1995 (inception) to December 31,
1995, which appears in the registration statement on Form S-1
dated June 25, 1997 of New Century Financial Corporation.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Orange County, California
August 1, 1997
