As filed with the Securities and Exchange Commission on July 29, 1999
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
(Address of principal executive offices)
___________________
New Century Financial Corporation 1995 Stock Option Plan
(Full title of the plan)
___________________
Brad A. Morrice
Vice Chairman and President
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:
(949) 440-7030
___________________
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered price per unit price fee
Common Stock, 500,000(1) $19.125(2) $9,562,500(2) $2,659(2)
par value $0.01 shares
per share
(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, as amended (the "Securities Act"), an additional
indeterminate number of shares, options and rights which by reason
of certain events specified in the New Century Financial Corporation
1995 Stock Option Plan, as amended (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 27, 1999, as reported on the Nasdaq National Market System.
The Exhibit Index for this Registration Statement is at page 6.
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 employees as specified by Securities Act Rule
428(b)(1). 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 Securities Act Rule 424. 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.
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 Registration Statement on Form S-8 of the Company
relating to the Plan filed with the Commission on August 1, 1997
registration number 333-32709).
(b) The Registration Statement on Form S-8 of the Company
relating to the Plan filed with the Commission on May 27, 1998
(registration number 333-53665).
Item 5. Interests of Named Experts and Counsel
The validity of the original issuance of the Common Stock
registered hereby is passed on for the Company by Stergios
Theologides, Esq. Mr. Theologides is the Vice President, General Counsel and
Secretary of the Company, is compensated by the Company as an employee, is the
holder of options to acquire shares of Common Stock, and is eligible to
participate in the Plan.
Item 8. Exhibits
See the attached Exhibit Index at page 6.
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
the 29 day of July, 1999.
By:/s/ Brad A. Morrice
Brad A. Morrice
Vice Chairman and
President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Robert K. Cole and Brad A. Morrice, or either of them
individually, 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 attorneys-in-fact and agents, 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
attorneys-in-fact and agents, or either of them individually, or
his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Robert K. Cole Chairman and Chief Executive July 29, 1999
Robert K. Cole Officer (Principal Executive
Officer)
/s/ Brad A. Morrice Vice Chairman, President and July 29, 1999
Brad A. Morrice Director
/s/ Edward F. Gotschall Vice Chairman, Chief July 29, 1999
Edward F. Gotschall Financial Officer and Director
(Principal Financial and
Accounting Officer)
/s/ Stephen G. Holder Vice Chairman, Chief July 29, 1999
Stephen G. Holder Operating Officer and Director
___________________ Director
John C. Bentley
/s/ Francis J. Partel, Jr. Director July 20, 1999
Francis J. Partel, Jr.
/s/ Michael M. Sachs Director July 29, 1999
Michael M. Sachs
/s/ Fredric J. Forster Director July 21, 1999
Fredric J. Forster
/s/ Terrence P. Sandvik Director July 29, 1999
Terrence P. Sandvik
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
4. New Century Financial Corporation 1995 Stock Option Plan.
5. Opinion of Counsel (opinion re legality).
23.1 Consent of KPMG 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").
NEW CENTURY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN
(Amended and Restated May 30, 1997)
(Composite Plan document reflecting the First Amendment to the Plan,
adopted March 19, 1998 and approved by shareholders May 18, 1998.)
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
f 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 3,000,000*
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 3,000,000* 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.
* After giving effect to the 1999 share increase.
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 NonEmployee 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 NonEmployee 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 NonEmployee 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 NonEmployee 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 PerformanceBased 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.
(bb) "Participant" means an Eligible Employee who has been
granted an Award or a Non-Employee Director Participant.
(cc) "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.
(dd) "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.
(ee) "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.
(ff) "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.
(gg) "Plan" means the New Century Financial Corporation 1995
Stock Option Plan, as amended.
(hh) "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.
(ii) "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.
(jj) "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.
(kk) "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.
(ll) "Return on Equity" means consolidated net income of the
Company (less any preferred dividends), divided by the average
consolidated common shareholders equity.
(mm) "Rule 16b-3" means Rule 16b-3 as promulgated by the
Commission pursuant to the Exchange Act as amended from time to time.
(nn) "Securities Act" means the Securities Act of 1933, as
amended.
(oo) "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).
(pp) "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.
(qq) "Total Disability" means a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
(rr) "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.
[New Century Financial Corporation Letterhead]
July 28, 1999
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")
Gentlemen:
At your request, I 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 an additional 500,000 shares of Common
Stock, par value $0.01 per share, of the Company (the "Common
Stock"), to be issued pursuant to the New Century Financial
Corporation 1995 Stock Option Plan, as amended (the "Plan").
I 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 I have deemed relevant, I am 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.
I consent to the use of this opinion as an exhibit to the
Registration Statement.
Respectfully submitted,
/s/ Stergios Theologides
Stergios Theologies
Vice President, General Counsel and
Secretary
CONSENT OF INDEPENDENT AUDITORS
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
January 26, 1999, with respect to the consolidated balance sheets of New
Century Financial Corporation and subsidiary as of December 31, 1998 and
1997 and the related consolidated statements of earnings, changes in
stockholders' equity and cash flows for each of the years in the three-
year period ended December 31, 1998, which appears in the December 31,
1998 annual report on Form 10-K dated March 30, 1999 of New Century Financial
Corporation.
/s/ KPMG LLP
KPMG LLP
Orange County, California
June 28, 1999
