<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
NEW CENTURY FINANCIAL CORPORATION
(Name of Issuer)
Common Stock, $.01 Par Value
(Title of Class of Securities)
64352 D 10 1
(CUSIP Number)
Lee R. Mitau, Esq.
Executive Vice President - Corporate Development, General Counsel
and Secretary
U.S. Bancorp
U.S. Bank Place
601 Second Avenue South, Minneapolis, Minnesota, 55402-4302
(612) 973-0363
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and
Communications)
April 28, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g) check the following
box. / /
(Continued on following page(s))
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 2
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<S><C>
- ------------------------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS: U.S. Bancorp
IRS IDENTIFICATION NOS. OF ABOVE PERSONS: 41-0255900
- ------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- ------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: WC
- ------------------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT ITEMS 2(d) or 2(e): / /
- ------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
- ------------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 4,689,400
SHARES -------------------------------------------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER: 0
EACH -------------------------------------------------------------------------------
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER: 4,689,400
WITH -------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER: 0
- ------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 4,689,400
- ------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
- ------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 24.9%
- ------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: HC
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 3
<TABLE>
<CAPTION>
<S><C>
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1 NAMES OF REPORTING PERSONS: U.S. Bank National Association
IRS IDENTIFICATION NOS. OF ABOVE PERSONS: 41-0417860
- -------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
- -------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO
- -------------------------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT ITEMS 2(d) or 2(e): / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 556,250*
SHARES -------------------------------------------------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER: 0
EACH -------------------------------------------------------------------------------------
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER: 556,250*
WITH -------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER: 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 556,250*
- -------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 2.9%**
- -------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: BK
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
*Represents shares of the Issuer's Common Stock that may be issued to the
Reporting Person upon exercise of warrants as described in Item 4 hereof.
**Assumes conversion of all shares of convertible preferred stock of the
Issuer held by U.S. Bancorp, the parent of the U.S. Bank National Association.
<PAGE>
CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 4
This Amendment No. 4 (the "Amendment") amends the statement on Schedule 13D
filed by U.S. Bancorp with the Securities and Exchange Commission on December
4, 1998, as amended on January 7, 1999, May 12, 1999 and August 3, 1999 and
(the "Statement"). This Amendment supplements and, to the extent inconsistent
therewith, amends the information set forth in the Statement. In particular,
this Amendment adds as a Reporting Person to the Statement, U.S. Bank
National Association, a wholly owned subsidiary of U.S. Bancorp ("U.S. Bank").
ITEM 1. SECURITY AND ISSUER.
The title and class of shares to which this statement relates
is the Common Stock, par value $0.01 per share (the "Common
Stock"), of New Century Financial Corporation, a Delaware
corporation (the "Issuer"). The Issuer's principal executive
office is 18400 Von Karman, Suite 1000, Irvine, California,
92612.
ITEM 2. IDENTITY AND BACKGROUND..
The information previously reported in this Item of the
Statement with respect to U.S. Bancorp is incorporated by
reference herein.
The following information relates to U.S. Bank:
(a) Name: U.S. Bank National Association
(b) Address of Principal Business Office:
U.S. Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
(c) Principal Business:
U.S. Bank is a national banking association organized
under the federal laws of the United States.
The name, business address, present principal occupation or
employment and citizenship of each director and executive
officer of U.S. Bank are set forth in Annex A hereto and are
incorporated herein by reference.
(d) Criminal Proceedings:
During the last five years, neither U.S. Bank nor any
executive officer or director of U.S. Bank has been convicted
in a criminal proceeding (excluding traffic violations and
similar misdemeanors).
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 5
(e) Civil Proceedings:
During the last five years, neither U.S. Bank nor any
executive officer or director of U.S. Bank has been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
(f) Place of Organization:
U.S. Bank is a national banking association organized
under the federal laws of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information previously reported in this Item of the
Statement with respect to the source of funds for U.S.
Bancorp's investment in securities of the Issuer is
incorporated by reference herein. No additional investment has
been made in connection with the additional shares of the
Issuer's Common Stock to which this Amendment relates. (See
Item 4 for a description of the transactions effected on April
28, 2000 to which this Amendment relates.)
ITEM 4. PURPOSE OF TRANSACTION.
The information previously reported in this Item of the
Statement with respect to the purpose of U.S. Bancorp's
investment in securities of the Issuer is incorporated by
reference herein.
In addition, in connection with a subordinated loan
agreement dated April 28, 2000 between U.S. Bank and New
Century Mortgage Corporation, a wholly owned subsidiary of
the Issuer ("NCMC"), pursuant to which U.S.Bank agreed to
provide an addition $10 million in subordinated debt to
NCMC over the course of 2000 and extended the term of
certain existing subordinated debt to June 2002, the
Issuer: (a) amended the terms of its Series 1999A
Convertible Preferred Stock to change the conversion ratio
of such series from 46.80 to 69.98; and (b) issued warrants
to purchase an aggregate of 687,500 shares of its Common
Stock (the "Warrants") to U.S. Bank. Of such Warrants,
Warrants to purchase 556,250 shares of the Issuer's Common
Stock are immediately exercisable, and Warrants to purchase
131,250 shares of the Issuer's Common Stock may vest, under
the circumstances described in the Warrant Issuance
Agreement filed as Exhibit 99.3 to this Amendment, on or
before January 1, 2001. Of such Warrants, Warrants to
purchase 37,500 shares of the Issuer's Common Stock have an
exercise price of
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 6
$6.875 per share, and the remainder of such Warrants
have an exercise price of $9.5625 per share.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of April 28, 2000, based on U.S. Bancorp's ownership of
(a) 20,000 shares of the Issuer's Series 1999A Convertible
Preferred Stock, (b) 20,000 shares of the Issuer's Series
1998A Convertible Preferred Stock, and (c) 565,000 shares of
the Issuer's Common Stock, U.S. Bancorp is deemed to be the
beneficial owner of 4,689,400 shares (the "Shares") of the
Issuer's Common Stock. These Shares represent approximately
24.86% of the Issuer's outstanding Common Stock (as such
outstanding shares were reported by the Issuer as of March
24, 2000). As of April 28, 2000, based on U.S. Bank's
ownership of the Warrants, U.S. Bank is deemed to be the
beneficial owner of 556,250 shares (the "Warrant Shares") of
the Issuer's Common Stock. These Warrant Shares represent
approximately 2.86% of the Issuers' outstanding Common Stock
(as such outstanding shares were reported by the Issuer as
of March 24, 2000 and assuming conversion of all shares of
Convertible Preferred Stock held by U.S. Bancorp).
U.S. Bancorp may also be deemed to beneficially own shares of
Common Stock held in client accounts with respect to which
U.S. Bancorp Piper Jaffray Inc., an indirect wholly owned
subsidiary of U.S. Bancorp ("Piper"), or employees of Piper
have voting or investment discretion, or both ("Managed
Accounts"). U.S. Bancorp and Piper disclaim beneficial
ownership of the shares of Common Stock held in Managed
Accounts. U.S. Bancorp and Piper may also be deemed to
beneficially own from time to time shares of Common Stock
acquired in ordinary course trading and market-making
activities by Piper.
(b) The Reporting Persons have sole voting and dispositive power
as to the shares of Convertible Preferred Stock, the
Conversion Shares and the Warrant Shares as described in
paragraph (a) above, other than those shares held by Piper in
ordinary course trading and market-making activities.
(c) Except for the transactions to which this Schedule 13D
relates and any shares bought or sold by Piper in ordinary
course trading and market-making activities, neither of the
Reporting Persons nor, to the best knowledge of the
Reporting Persons, any of Reporting Person's executive
officers or directors, has effected any transaction in the
shares of the Issuer's Common Stock during the past sixty
(60) days.
(d) Not applicable.
(e) Not applicable.
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 7
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
The information previously reported in this Item of the
Statement with respect to contracts, arrangements,
understandings or relationships with respect to securities of
the Issuer is incorporated by reference herein.
In addition, as described in the Warrant Issuance Agreement
filed as Exhibit 99.3 hereto, the Issuer has agreed to issue
warrants to purchase up to an additional 37,500 shares of its
Common Stock to U.S. Bank under circumstances and on the terms
described in such Warrant Issuance Agreement.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
99.1 Agreement of U.S. Bancorp and U.S. Bank National
Association to joint filing
99.2 Amended Certificate of Designations for Series 1999A
Convertible Preferred Stock
99.3 Warrant Issuance Agreement, including forms of
Warrants to be issued thereunder
99.4 Amended and Restated Registration Rights Agreement
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CUSIP No. 64352 D 10 1 SCHEDULE 13D, AMENDMENT NO. 4 Page 8
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: May 5, 2000
U.S. BANCORP
By /s/ Lee R. Mitau
---------------------------------
Lee R. Mitau
its Executive Vice President -
Corporate Development, General
Counsel and Secretary
U.S. BANK NATIONAL ASSOCIATION
By /s/ Lee R. Mitau
---------------------------------
Lee R. Mitau
its Executive Vice President -
Corporate Development, General
Counsel and Secretary
<PAGE>
ANNEX A
IDENTITY AND BACKGROUND
The following table sets forth the names, addresses and principal
occupations of the executive officers and directors of U.S. Bank National
Association. Except as set forth below, the principal business address of each
such director and executive officer is the address of U.S. Bank National
Association, U.S. Bank Place, 601 Second Avenue South, Minneapolis, Minnesota,
55402-4302. Each of such directors and executive officers is a citizen of the
United States.
NAME AND PRINCIPAL BUSINESS ADDRESS OCCUPATION
<TABLE>
<S> <C>
John F. Grundhofer Director; Chairman and Chief Executive Officer
601 Second Avenue South
Minneapolis, MN 55402
Andrew J. Cecere Vice Chairman, Commercial Services
601 Second Avenue South
Minneapolis, MN 55402
Andrew S. Duff Vice Chairman, Wealth Management and
222 South Ninth Street Capital Markets
Minneapolis, MN 55402
Daniel J. Frate Vice Chairman, President of Payment Services
601 Second Avenue South
Minneapolis, MN 55402
Philip G. Heasley Director; President and Chief Operating Officer
601 Second Avenue South
Minneapolis, MN 55402
J. Robert Hoffmann Director; Executive Vice President and Chief Credit
601 Second Avenue South Officer
Minneapolis, MN 55402
Susan E. Lester Director; Executive Vice President and Chief Financial
601 Second Avenue South Officer
Minneapolis, MN 55402
Peter G. Michielutti Executive Vice President, Information Services
601 Second Avenue South
Minneapolis, MN 55402
Lee. R. Mitau Director; Executive Vice President-Corporate
601 Second Avenue South Development, General Counsel and Secretary
Minneapolis, MN 55402
Daniel M. Quinn Vice Chairman, Commercial Banking
918 17th Street, 2nd Floor
Denver, CO 80202
<PAGE>
Peter E. Raskind Director; Vice Chairman, Branch Channel
601 Second Avenue South
Minneapolis, MN 55402
Daniel C. Rohr Vice Chairman, Corporate Banking
601 Second Avenue South
Minneapolis, MN 55402
Robert H. Sayre Executive Vice President, Human Resources
601 Second Avenue South
Minneapolis, MN 55402
Daniel W. Yohannes Vice Chairman, Consumer Banking
950 17th Street, Suite 530
Denver, CO 80202
</TABLE>
<PAGE>
Exhibit 99.1
AGREEMENT
This will confirm the agreement by and among all the undersigned
that the Schedule 13D filed on or about this date with respect to the
beneficial ownership of the undersigned of shares of common stock of New
Century Financial Corporation is being filed on behalf of each of the
entities named below.
Dated: May 5, 2000
U.S. BANCORP
By /s/ Lee R. Mitau
-----------------------------
Lee R. Mitau
its Executive Vice President
- Corporate Development,
General Counsel
and Secretary
U.S. BANK NATIONAL ASSOCIATION
By /s/ Lee R. Mitau
-----------------------------
Lee R. Mitau
its Executive Vice President
- Corporate Development,
General Counsel
and Secretary
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<PAGE>
Exhibit 99.2
NEW CENTURY FINANCIAL CORPORATION
---------------------
AMENDED CERTIFICATE OF DESIGNATIONS
FOR
SERIES 1999A CONVERTIBLE PREFERRED STOCK
(PURSUANT TO DELAWARE GENERAL CORPORATION LAW, SECTION 242)
---------------------
The undersigned, being respectively the Vice Chairman and President and
the Secretary of New Century Financial Corporation (the "CORPORATION"), a
corporation organized and existing under the Delaware General Corporation Law,
in accordance with the provisions of the Delaware General Corporation Law,
Section 242, do hereby certify that:
Pursuant to the authority vested in the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, the Board of
Directors on July 23, 1999, in accordance with the Delaware General Corporation
Law, Section 151, duly established a series of 20,000 shares of the
Corporation's Preferred Stock, to be designated as its Series 1999A Convertible
Preferred Stock; and
Pursuant to (a) resolutions passed at a meeting of the Board of
Directors of the Corporation on March 27, 2000, (b) resolutions passed at a
meeting of the Executive Committee of the Board of Directors of the Corporation
March 28, 2000 and (c) written consent of the sole holder of all shares of the
Series 1999A Convertible Preferred Stock dated April 27, 2000, the Board of
Directors and all shareholders entitled to vote have authorized the Corporation
to amend and restate the Certificate of Designation for its Series 1999A
Convertible Preferred Stock as follows:
SERIES 1999A CONVERTIBLE PREFERRED STOCK
Section 1. DESIGNATION; NUMBER OF SHARES. The shares of such series
shall be designated as "Series 1999A Convertible Preferred Stock" (the
"CONVERTIBLE PREFERRED STOCK"), and the number of shares constituting the
Convertible Preferred Stock shall be 20,000. Such number of shares may be
decreased by resolution of the Board of Directors adopted and filed pursuant to
the Delaware General Corporation Law, Section 151(g), or any successor
provision; provided, that no such decrease shall reduce the number of authorized
shares of Convertible Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, warrants, convertible or exchangeable
securities or other rights to acquire shares of Convertible Preferred Stock.
<PAGE>
Section 2. STATED CAPITAL. The amount to be represented in the stated
capital of the Corporation for each share of Convertible Preferred Stock shall
be $0.01.
Section 3. RANK. The Convertible Preferred Stock (i) shall rank prior
to all of the Corporation's Common Stock, par value $.01 per share (the "COMMON
STOCK"), now outstanding or hereafter issued, both as to payment of dividends
and as to distributions of assets upon the liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary and (ii) shall rank on
parity with all of the Corporation's Series 1998A Convertible Preferred Stock,
par value $.01 per share (the 1998A Convertible Preferred Stock), now
outstanding or hereafter issued, both as to payment of dividends and as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.
Section 4. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Convertible Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for such purpose, dividends at the rate of $70.00 per
annum per share. Such dividends shall be fully cumulative, shall accumulate
without interest from the date of original issuance of the Convertible Preferred
Stock and shall be payable quarterly in arrears in cash on each January 31,
April 30, July 31 and October 31, commencing October 31, 1999 (provided, that if
any such date is a Saturday, Sunday or legal holiday in the place where such
dividend is to be paid, then such dividend shall be payable without interest on
the next day that is not a Saturday, Sunday or legal holiday) to holders of
record as they appear on the stock books of the Corporation on such record dates
as shall be fixed by the Board of Directors. Such record dates shall be not more
than 60 nor less than 10 days preceding the respective dividend payment dates.
The amount of dividends payable per share of Convertible Preferred Stock for
each full quarterly dividend period shall be computed by dividing the annual
dividend amount by four. The amount of dividends payable for the initial
dividend period and for any other period shorter than a full quarterly dividend
period shall be computed on the basis of a 360-day year of twelve 30-day months.
No dividends or other distributions, other than dividends payable solely in
shares of Common Stock or other capital stock of the Corporation ranking junior
as to payment of dividends to the Convertible Preferred Stock (such Common Stock
and other capital stock being referred to herein collectively as "JUNIOR
DIVIDEND STOCK"), shall be paid or set apart for payment on, and no purchase,
redemption or other acquisition shall be made by the Corporation of, any shares
of Junior Dividend Stock unless and until all accumulated and unpaid dividends
on the Convertible Preferred Stock, including the full dividend for the
then-current quarterly dividend period, shall have been paid or declared and set
apart for payment.
(b) Notwithstanding the provisions of Section 4(a), dividends shall not
be declared or paid, but shall accumulate, on the Convertible Preferred Stock
until such time as the execution and delivery of the Amendment (as defined in
the Preferred Stock Purchase Agreement dated as of July 26, 1999 between the
Corporation and U.S. Bancorp (the "1999 PREFERRED STOCK PURCHASE AGREEMENT")) to
the Fourth Amended and Restated Credit Agreement dated as of May 26, 1999 by and
among New Century Mortgage Corporation, the lenders party thereto and U.S. Bank
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National Association, as Agent (the "CREDIT AGREEMENT"), by the Required Lenders
(as defined in the Credit Agreement).
(c) If at any time any dividend on any capital stock of the Corporation
ranking senior as to payment of dividends to the Convertible Preferred Stock
(such capital stock being referred to herein as "SENIOR DIVIDEND STOCK") shall
be in default, in whole or in part, no dividend shall be paid or declared and
set apart for payment on the Convertible Preferred Stock unless and until all
accumulated and unpaid dividends with respect to the Senior Dividend Stock,
including the full dividend for the then-current dividend period, shall have
been paid or declared and set apart for payment, without interest. No full
dividends shall be paid or declared and set apart for payment on any capital
stock of the Corporation ranking, as to payment of dividends, on a parity with
the Convertible Preferred Stock (such capital stock being referred to herein as
"PARITY DIVIDEND STOCK") for any period unless full cumulative dividends have
been, or contemporaneously are, paid or declared and set apart for payment on
the Convertible Preferred Stock for all dividend periods terminating on or prior
to the date of payment of such full cumulative dividends. No full dividends
shall be paid or declared and set apart for payment on the Convertible Preferred
Stock for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for payment on any Parity
Dividend Stock for all dividend periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not paid in full
upon the Convertible Preferred Stock and any Parity Dividend Stock, all
dividends paid or declared and set apart for payment upon shares of Convertible
Preferred Stock and Parity Dividend Stock shall be paid or declared and set
apart for payment pro rata, so that the amount of dividends paid or declared and
set apart for payment per share on the Convertible Preferred Stock and the
Parity Dividend Stock shall in all cases bear to each other the same ratio that
accumulated and unpaid dividends per share on the shares of Convertible
Preferred Stock and Parity Preferred Stock bear to each other.
(d) Any reference to "distribution" contained in this Section 4 shall
not be deemed to include any distribution made in connection with a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
Section 5. LIQUIDATION PREFERENCE. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Convertible Preferred Stock shall be entitled to receive out of
the assets of the Corporation, whether such assets constitute stated capital or
surplus of any nature, an amount equal to the dividends accumulated and unpaid
thereon to the date of final distribution to such holders, whether or not
declared, without interest, plus a sum equal to $1,000 per share, and no more,
before any payment shall be made or any assets distributed to the holders of
Common Stock or any other capital stock of the Corporation ranking junior as to
liquidation rights to the Convertible Preferred Stock (such Common Stock and
other capital stock being referred to herein collectively as "JUNIOR LIQUIDATION
STOCK"); provided, that such rights shall accrue to the holders of Convertible
Preferred Stock only in the event that the Corporation's payments with respect
to the liquidation preferences of the holders of capital stock of the
Corporation ranking senior as to liquidation rights to the Convertible Preferred
Stock (such capital stock being referred to herein as "SENIOR LIQUIDATION
STOCK") are fully met. If upon liquidation, dissolution or winding up of
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<PAGE>
the Corporation, the assets of the Corporation available for distribution after
the liquidation preferences of any Senior Liquidation Stock are insufficient to
pay the holders of the Convertible Preferred Stock and any other capital stock
of the Corporation which ranks on a parity as to liquidation rights with the
Convertible Preferred Stock, the entire assets of the Corporation then available
for distribution shall be distributed ratably among the holders of the
Convertible Preferred Stock and any other capital stock of the Corporation which
ranks on a parity as to liquidation rights with the Convertible Preferred Stock
in proportion to the respective preferential amounts to which each is entitled
(but only to the extent of such preferential amounts). After payment in full of
the liquidation preference of the shares of the Convertible Preferred Stock, the
holders of such shares shall not be entitled to any further participation in any
distribution of assets by the Corporation. Neither a consolidation or merger of
the Corporation with another corporation nor a sale or transfer of all or part
of the Corporation's assets for cash, securities or other property will be
deemed a liquidation, dissolution or winding up of the Corporation for purposes
of this Section 5.
Section 6. REDEMPTION AT OPTION OF THE CORPORATION.
(a) Subject to Section 6(b), the Corporation may not redeem the
Convertible Preferred Stock prior to July 26, 2003. The Corporation, at its
option, may, on or after July 26, 2003, redeem at any time all, or from time to
time any portion, of the Convertible Preferred Stock on any date set by the
Board of Directors, at $1,000 per share, plus an amount per share in cash equal
to all dividends on the Convertible Preferred Stock accumulated and unpaid on
such share, whether or not declared, to the date fixed for redemption (such sum
being hereinafter referred to as the "REDEMPTION PRICE").
(b) The Corporation may, at its option, redeem the Convertible
Preferred Stock concurrently with an Acquisition Event (as defined herein) if
each of the following conditions are met: (i) the Corporation has complied with
the covenants contained in Sections 8.4 and 8.5 of the Preferred Stock Purchase
Agreement dated October 18, 1998 between the Corporation and U.S. Bancorp (the
"1998 PREFERRED STOCK PURCHASE AGREEMENT") in all material respects; (ii) the
Purchaser (as defined in the 1998 Preferred Stock Purchase Agreement) has been
notified in writing of all material terms of the Acquisition Proposal (as
defined herein) that relates to such Acquisition Event; and (iii) either (A)
such Purchaser, within 15 days of the first date on which it had been so
notified of such Acquisition Proposal, failed to make an offer that is similar
to, and on terms no less favorable to the Company and its shareholders than, the
Acquisition Proposal; or (B) prior to the date of a definitive agreement with
respect to an Acquisition Transaction with Purchaser or an affiliate of
Purchaser, (x) the terms of the Acquisition Proposal are improved or a new
proposal regarding an Acquisition Transaction that is financially superior to
such original proposal (a "SUPERIOR PROPOSAL") is received by the Company and
the Purchaser fails to match such improved terms or such Superior Proposal
within five business days of Purchaser's receipt of written notice of all
material terms thereof or (y) the Purchaser withdraws its offer. Any redemption
pursuant to this Section 6(b) shall be at the Redemption Price, and the
redemption date for any such redemption shall not be earlier than, but may be
concurrent with, the effective time of the Acquisition Event. For purposes of
this Section 6(b), the following terms shall have the following meanings:
"ACQUISITION PROPOSAL" shall mean a proposal relating to any of the
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following actions: (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company; or
(B) a sale, lease or transfer of a material amount of assets of the Company, or
a reorganization, recapitalization, dissolution or liquidation of the Company;
"ACQUISITION TRANSACTION" shall mean any of the actions described in (A) or (B)
of the definition of "ACQUISITION PROPOSAL"; and "ACQUISITION EVENT" shall mean
the consummation of an Acquisition Transaction.
(c) The following provisions will apply to any redemption pursuant to
Section 6(a) or 6(b):
(i) In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall designate by lot, or in such
other manner as the Board of Directors may determine, the shares to be redeemed,
or shall effect such redemption pro rata. Notwithstanding the foregoing, the
Corporation shall not redeem less than all of the Convertible Preferred Stock at
any time outstanding until all dividends accumulated and in arrears upon all
Convertible Preferred Stock then outstanding shall have been paid for all past
dividend periods.
(ii) Not more than 60 nor less than 30 days prior to the redemption
date, notice by first class mail, postage prepaid, shall be given to the holders
of record of the Convertible Preferred Stock to be redeemed, addressed to such
shareholders at their last addresses as shown on the stock books of the
Corporation. Each such notice of redemption shall specify the date fixed for
redemption; the redemption price; the place or places of payment; the
then-effective Conversion Rate and Conversion Price (as defined in Section 7);
that the right of holders of Convertible Preferred Stock called for redemption
to exercise their conversion right pursuant to Section 7 shall expire as to such
shares at the close of business on the date fixed for redemption (provided that
there is no default in payment of the Redemption Price); that payment of the
Redemption Price will be made upon presentation and surrender of certificates
representing the shares of Convertible Preferred Stock; that accumulated but
unpaid dividends to the date fixed for redemption will be paid on the date fixed
for redemption; that accumulated but unpaid dividends will not be paid in the
case of a conversion of Convertible Preferred Stock; and that on and after the
redemption date, dividends will cease to accumulate on such shares.
(iii) On or after the date fixed for redemption as stated in such
notice, each holder of the shares called for redemption (other than shares which
have been duly surrendered for conversion at or before the close of business on
the date fixed for redemption) shall surrender the certificate or certificates
evidencing such shares to the Corporation at the place designated in such notice
and shall thereupon be entitled to receive payment of the Redemption Price. If
fewer than all the shares represented by any such surrendered certificate or
certificates are redeemed, a new certificate shall be issued representing the
unredeemed shares. If, on the date fixed for redemption, funds necessary for the
redemption shall be available therefor and shall have been irrevocably deposited
or set aside, then, notwithstanding that the certificates evidencing any shares
so called for redemption shall not have been surrendered, the dividends with
respect to the shares so called shall cease to accumulate on and after the date
fixed for redemption, such shares shall no longer be deemed outstanding, the
holders thereof shall cease to be shareholders, and all
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<PAGE>
rights whatsoever with respect to such shares (except the right of the holders
thereof to receive the Redemption Price without interest upon surrender of their
certificates) shall terminate.
Section 7. CONVERSION AT OPTION OF HOLDERS. Holders of Convertible
Preferred Stock may, at their option upon surrender of the certificates
therefor, convert any or all of their shares of Convertible Preferred Stock into
fully paid and nonassessable shares of Common Stock (and such other securities
and property as they may be entitled to, as hereinafter provided) at any time
after issuance thereof; provided, that such conversion right shall expire at the
close of business on the date, if any, fixed for the redemption of Convertible
Preferred Stock in any notice of redemption given pursuant to Section 6 hereof
if there is no default in payment of the Redemption Price. Each share of
Convertible Preferred Stock shall be convertible at the office of any transfer
agent for the Convertible Preferred Stock, and at such other office or offices,
if any, as the Board of Directors may designate, into that number of fully paid
and nonassessable shares of Common Stock (calculated as to each conversion to
the nearest 1/100th of a share) as shall be equal to the Conversion Rate,
determined as hereinafter provided, in effect at the time of conversion. Shares
of Convertible Preferred Stock may initially be converted into full shares of
Common Stock at the rate of 69.98 shares of Common Stock for each share of
Convertible Preferred Stock, subject to adjustment from time to time as provided
in Section 8 (such conversion rate, as so adjusted from time to time, being
referred to herein as the "CONVERSION RATE"). The "CONVERSION PRICE" shall be
equal to $1,000 divided by the Conversion Rate. Upon conversion, no adjustment
or payment shall be made in respect of accumulated and unpaid dividends on the
Convertible Preferred Stock surrendered for conversion.
The right of holders of Convertible Preferred Stock to convert their
shares shall be exercised by surrendering for such purpose to the Corporation or
its agent, as provided above, certificates representing shares to be converted,
duly endorsed in blank or accompanied by proper instruments of transfer. The
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of Common Stock or other
securities or property upon conversion of Convertible Preferred Stock in a name
other than that of the holder of the shares of Convertible Preferred Stock being
converted, nor shall the Corporation be required to issue or deliver any such
shares or other securities or property unless and until the person or persons
requesting the issuance thereof shall have paid to the Corporation the amount of
any such tax or shall have established to the satisfaction of the Corporation
that such tax has been paid.
A number of shares of the authorized but unissued Common Stock
sufficient to provide for the conversion of the Convertible Preferred Stock
outstanding upon the basis hereinbefore provided shall at all times be reserved
by the Corporation, free from preemptive rights, for such conversion, subject to
the provisions of the next paragraph. If the Corporation shall issue any
securities or make any change in its capital structure which would change the
number of shares of Common Stock into which each share of the Convertible
Preferred Stock shall be convertible as herein provided, the Corporation shall
at the same time also make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Convertible Preferred Stock
on the new basis. The Corporation shall comply with all securities laws
regulating the offer and
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<PAGE>
delivery of shares of Common Stock upon conversion of the Convertible Preferred
Stock and shall use its best efforts to list such shares on each national
securities exchange on which the Common Stock is listed or to have such shares
admitted for quotation on the Nasdaq National Market if the Common Stock is
admitted for quotation thereon.
Upon the surrender of certificates representing shares of Convertible
Preferred Stock to be converted, duly endorsed or accompanied by proper
instruments of transfer as provided above, the person converting such shares
shall be deemed to be the holder of record of the Common Stock issuable upon
such conversion, and all rights with respect to the shares surrendered shall
forthwith terminate except the right to receive the Common Stock or other
securities, cash or other assets as herein provided.
No fractional shares of Common Stock shall be issued upon conversion of
Convertible Preferred Stock but, in lieu of any fraction of a share of Common
Stock which would otherwise be issuable in respect of the aggregate number of
such shares surrendered for conversion at one time by the same holder, the
Corporation shall pay in cash an amount equal to the product of (a) the Closing
Price of a share of Common Stock (as defined in the next sentence) on the last
trading day before the conversion date and (b) such fraction of a share. The
"CLOSING PRICE" for such day shall be the last reported sale price regular way
or, in case no sale takes place on such day, the average of the closing bid and
asked prices regular way on such day, in either case as reported on the New York
Stock Exchange Composite Tape, or, if the Common Stock is not listed or admitted
to trading on such Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or, if the Common Stock
is not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market System, or, if the Common Stock is not admitted for
quotation on the Nasdaq National Market System, the average of the high bid and
low asked prices on such day as recorded by the National Association of
Securities Dealers, Inc. through Nasdaq, or, if the National Association of
Securities Dealers, Inc. through Nasdaq shall not have reported any bid and
asked prices for the Common Stock on such day, the average of the bid and asked
prices for such day as furnished by any New York Stock Exchange member firm
selected from time to time by the Corporation for such purpose, or, if no such
bid and asked prices can be obtained from any such firm, the fair market value
of one share of the Common Stock on such day as determined in good faith by the
Board of Directors of the Corporation.
Section 8. ADJUSTMENTS TO CONVERSION RATE. Notwithstanding anything in
this Section 8 to the contrary, no change in the Conversion Rate shall be made
until the cumulative effect of the adjustments called for by this Section 8
since the date of the last change in the Conversion Rate would change the
Conversion Rate by more than 1%. However, once the cumulative effect would
result in such a change, then the Conversion Rate shall be changed to reflect
all adjustments called for by this Section 8 and not previously made. Subject to
the foregoing, the Conversion Rate shall be adjusted from time to time as
follows:
(a) In case of any consolidation or merger of the Corporation
with any other corporation (other than a wholly owned subsidiary of the
Corporation), or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, or in case of any
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<PAGE>
share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into other securities or property, the
Corporation shall, prior to or at the time of such transaction, make
appropriate provision or cause appropriate provision to be made so that
holders of each share of Convertible Preferred Stock then outstanding
shall have the right thereafter to convert such share of Convertible
Preferred Stock into the kind and amount of shares of stock and other
securities and property receivable upon such consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of
Common Stock into which such share of Convertible Preferred Stock could
have been converted immediately prior to the effective date of such
consolidation, merger, sale, transfer or share exchange. If in
connection with any such consolidation, merger, sale, transfer or share
exchange, each holder of shares of Common Stock is entitled to elect to
receive either securities, cash or other assets upon completion of such
transaction, the Corporation shall provide or cause to be provided to
each holder of Convertible Preferred Stock the right to elect the
securities, cash or other assets into which the Convertible Preferred
Stock held by such holder shall be convertible after completion of any
such transaction on the same terms and subject to the same conditions
applicable to holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on the period in
which such election shall be made and the effect of failing to exercise
the election).
(b) In case the Corporation shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its capital stock, (ii)
subdivide its outstanding Common Stock into a greater number of shares,
(iii) combine the shares of its outstanding Common Stock into a smaller
number of shares, or (iv) issue by reclassification of its Common Stock
any shares of its capital stock, then in each such case the Conversion
Rate in effect immediately prior thereto shall be proportionately
adjusted so that the holder of any Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive, to
the extent permitted by applicable law, the number and kind of shares
of capital stock of the Corporation which such holder would have owned
or have been entitled to receive after the happening of such event had
such Convertible Preferred Stock been converted immediately prior to
the record date for such event (or if no record date is established in
connection with such event, the effective date for such action). An
adjustment pursuant to this subparagraph (b) shall become effective
immediately after the record date in the case of a stock dividend or
distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification.
(c)(i) In case the Corporation shall issue Additional Shares
of Common Stock (as defined herein) (including, without limitation,
Additional Shares of Common Stock deemed to be issued pursuant to
Section 8(c)(iii)) without consideration or for a consideration per
share less than the Current Market Price (as defined herein) calculated
as provided herein as of the date of and immediately prior to such
issue, then in each such case the Conversion Rate in effect on such
issue date shall be adjusted in accordance with the formula:
-8-
<PAGE>
O + N
-----
C(1) = C X
O + N X P
-----
M
where
C1 = the adjusted Conversion Rate.
C = the current Conversion Rate.
O = the number of shares of Common Stock outstanding
immediately prior to such issue.
N = the number of additional shares of Common Stock
offered.
P = the offering price per share of the additional
shares.
M = the Current Market Price per share of Common Stock
immediately prior to such issue.
For the purpose of such calculation, the number of shares of Common
Stock outstanding immediately prior to such issue shall be calculated
on a fully diluted basis, as if all shares of Convertible Preferred
Stock and all Convertible Securities had been fully converted into
shares of Common Stock immediately prior to such issuance and any
outstanding warrants, options or other rights for the purchase of
shares of stock or convertible securities had been fully exercised
immediately prior to such issuance (and the resulting securities fully
converted into shares of Common Stock, if so convertible) as of such
date.
(ii) For purposes of this Section 8(c), the following
definitions shall apply: (A) "OPTIONS" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible Securities; (B) "CONVERTIBLE SECURITIES" shall
mean any evidences of indebtedness, shares or other securities
convertible into or exchangeable for Common Stock; (C) "ADDITIONAL
SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued
(or, pursuant to Section 8(c)(iii), deemed to be issued) by the
Corporation after July 26, 1999, other than shares of Common Stock
issued or issuable: (1) upon conversion of shares of the Convertible
Preferred Stock or upon conversion of shares of 1998A Convertible
Preferred Stock; (2) pursuant to a stock grant, option plan or purchase
plan, other employee stock incentive program or agreement approved by
the Board of Directors which was disclosed in Schedule 5.3 of the 1999
Preferred Stock Purchase Agreement (the "OPTION POOL"); or (3) pursuant
to the terms of any stock grant, option, warrant, employment agreement
or other written obligation, agreement or commitment to which the
Corporation was a party as of July 26, 1999 and which was disclosed in
Schedule 5.3 of the 1999 Preferred Stock Purchase Agreement; and (D)
"CURRENT MARKET PRICE" shall mean the average of the daily Closing
Prices of the Common Stock (as defined in Section 7) on the 30
consecutive business days commencing 45 business days before such issue
date, as applicable.
(iii) In the event the Corporation at any time or from time to
time after July 26, 1999 shall issue any Options (other than the
issuance of Options pursuant to the Option Pool) or Convertible
Securities or shall fix a record date for the determination of holders
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<PAGE>
of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth
in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common
Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such
record date, provided that Additional Shares of Common Stock shall not
be deemed to have been issued unless the consideration per share of
such Additional Shares of Common Stock would be less than the Current
Market Price calculated as provided herein as of the date of and
immediately prior to such issue, or such record date, as the case may
be, and provided further that in any such case in which Additional
Shares of Common Stock are deemed to be issued no further adjustment in
the Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of
such Options or conversion or exchange of such Convertible Securities.
(iv) Upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Price and Conversion Rate
computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if:
(A) in the case of Convertible Securities or Options
for Common Stock the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all
such Options, whether or not exercised, plus the consideration actually
received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged,
plus the additional consideration, if any, actually received by the
Corporation upon such conversion or exchange; and
(B) in the case of Options for Convertible Securities
only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and
the consideration received by the Corporation for the Additional Shares
of Common Stock deemed to have been then issued was the consideration
actually received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to have been
received by the Corporation upon the issue of the Convertible
Securities or Convertible Preferred Stock with respect to which such
Options were actually exercised.
(e) All calculations hereunder shall be made to the nearest
cent or to the nearest 1/100 of a share, as the case may be.
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<PAGE>
(f) In the event that at any time, as a result of an
adjustment made pursuant to subparagraph (a) or (b) above, the holder
of any Convertible Preferred Stock thereafter surrendered for
conversion shall become entitled to receive securities, cash or assets
other than Common Stock, the number or amount of such securities or
property so receivable upon conversion shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in subparagraphs (a) through (e) above.
Except as otherwise provided above in this Section 8, no adjustment in
the Conversion Rate shall be made in respect of any conversion for share
distributions or dividends theretofore declared and paid or payable on the
Common Stock.
Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall send to each transfer agent for the Convertible Preferred
Stock and the Common Stock, and to the principal securities exchange, if any, on
which the Convertible Preferred Stock and the Common Stock is traded, or the
Nasdaq National Market if the Convertible Preferred Stock or Common Stock is
admitted for quotation thereon, a statement signed by the Chairman of the Board,
the President or any Vice President of the Corporation and by its Treasurer or
its Secretary stating the adjusted Conversion Rate determined as provided in
this Section 8; and any adjustment so evidenced, given in good faith, shall be
binding upon all shareholders and upon the Corporation. Whenever the Conversion
Rate is adjusted, the Corporation shall give notice by mail at the time of, and
together with, the next dividend payment to the holders of record of Convertible
Preferred Stock, setting forth the adjustment and the new Conversion Rate and
Conversion Price. Notwithstanding the foregoing notice provisions, failure by
the Corporation to give such notice or a defect in such notice shall not affect
the binding nature of such corporate action of the Corporation.
Whenever the Corporation shall propose to take any of the actions
specified in subparagraphs (a), (b) or (c) of the first paragraph of this
Section 8 which would result in any adjustment in the Conversion Rate, the
Corporation shall cause a notice to be mailed at least 20 days prior to the date
on which the books of the Corporation will close or on which a record will be
taken for such action to the holders of record of the outstanding Convertible
Preferred Stock on the date of such notice. Such notice shall specify the action
proposed to be taken by the Corporation and the date as of which holders of
record of the Common Stock shall participate in any such actions or be entitled
to exchange their Common Stock for securities or other property, as the case may
be. Failure by the Corporation to give such notice or any defect in such notice
shall not affect the validity of the transaction.
Anything herein to the contrary notwithstanding, no adjustment will be
made to the Conversion Price or Conversion Rate by reason of (i) the issuance of
Common Stock, Options or Convertible Securities to employees, directors,
officers or consultants of the Corporation or any subsidiary of the Corporation
pursuant to the Option Pool or the issuance of Common Stock upon the conversion,
exercise or exchange thereof, (ii) the issuance of Common Stock upon the
conversion, exercise or exchange of Options or Convertible Securities issued and
outstanding on July 26, 1999, including, without limitation, the issuance of
Common Stock upon the conversion
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<PAGE>
of any shares of 1998A Convertible Preferred Stock, (iii) the issuance of Common
Stock upon the conversion of the Convertible Preferred Stock, (iv) rights to
purchase Common Stock pursuant to a Corporation plan for reinvestment of
dividends or interest, (v) the issuance of Common Stock upon the exercise,
conversion or exchange of Options or Convertible Securities of the Corporation
where the Conversion Price had previously been adjusted pursuant to this Section
8 upon the initial issuance of such Options or Convertible Securities. In
addition, no adjustment in the Conversion Price need be made for a change in the
par value of the Common Stock.
Section 9. CONVERTIBLE PREFERRED STOCK NOT REDEEMABLE AT OPTION OF
HOLDERS OR EXCHANGEABLE; NO SINKING FUND. The Convertible Preferred Stock shall
not be redeemable upon the request of holders thereof or exchangeable for other
capital stock or indebtedness of the Corporation or other property. The shares
of Convertible Preferred Stock shall not be subject to the operation of a
purchase, retirement or sinking fund.
Section 10. VOTING RIGHTS. Except as herein provided or as otherwise
required by law, holders of Convertible Preferred Stock shall be entitled to the
same voting rights as, and shall vote together as one class with, holders of
Common Stock, with each holder of shares of Convertible Preferred Stock having
such voting rights as are attributable to the number of whole shares of Common
Stock into which such shares of Convertible Preferred Stock are convertible in
accordance with Sections 7 and 8 hereof as of the date of such vote.
In addition to any matters requiring a separate vote of the Convertible
Preferred Stock as a single class under applicable law, the approval of the
holders of a majority of the issued and outstanding shares of Convertible
Preferred Stock, voting as a class, shall be required as set forth in Section 11
hereof with respect to the priority and rights of the Convertible Preferred
Stock hereunder and under the Corporation's Certificate of Incorporation, as
amended.
At each meeting of shareholders at which the holders of shares of
Convertible Preferred Stock shall have the right, voting separately as a single
class, to take any action, the presence in person or by proxy of the holders of
record of at least 50% of the shares of Convertible Preferred Stock outstanding
and entitled to vote on the matter shall be necessary and sufficient to
constitute a quorum. At each such meeting, each holder of shares of Convertible
Preferred Stock shall be entitled to vote for each share of Convertible
Preferred Stock then held. In the absence of a quorum of the holders of shares
of Convertible Preferred Stock, a majority of the holders of such shares present
in person or by proxy shall have the power to adjourn the meeting as to the
actions to be taken by the holders of shares of Convertible Preferred Stock from
time to time and place to place without notice other than announcement at the
meeting until a quorum shall be present.
Section 11. CERTAIN ACTIONS NOT TO BE TAKEN WITHOUT VOTE OF HOLDERS OF
CONVERTIBLE PREFERRED STOCK. Without the consent or affirmative vote of the
holders of at least a majority of the outstanding shares of Convertible
Preferred Stock, voting separately as a class, the Corporation shall not
authorize, create or issue any shares of any other class or series of capital
stock ranking senior to the Convertible Preferred Stock as to dividends or upon
liquidation. The affirmative vote or consent of the holders of at least a
majority of the outstanding shares of the
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<PAGE>
Convertible Preferred Stock, voting separately as a class, shall be required for
any amendment, alteration or repeal, whether by merger or consolidation or
otherwise, of the Corporation's Certificate of Incorporation (including any
certificate of designations establishing any class or series of Preferred Stock
of the Corporation) if the amendment, alteration or repeal adversely affects the
rights or preferences of the Convertible Preferred Stock; provided, however,
that any increase in the authorized Preferred Stock of the Corporation or the
creation and issuance of any other capital stock of the Corporation ranking on a
parity with or junior to the Convertible Preferred Stock shall not be deemed to
materially affect such powers, preferences or special rights.
Section 12. OUTSTANDING SHARES. For purposes of this Certificate of
Designations, all shares of Convertible Preferred Stock shall be deemed
outstanding except for (a) shares of Convertible Preferred Stock held of record
or beneficially by the Corporation or any subsidiary of the Corporation; (b)
from the date of surrender of certificates representing Convertible Preferred
Stock for conversion pursuant to Section 7, all shares of Convertible Preferred
Stock which have been converted into Common Stock or other securities or
property pursuant to Section 7; and (c) from the date fixed for redemption
pursuant to Section 6, all shares of Convertible Preferred Stock which have been
called for redemption, provided that funds necessary for such redemption are
available therefor and have been irrevocably deposited or set aside for such
purpose.
Section 13. STATUS OF CONVERTIBLE PREFERRED STOCK UPON RETIREMENT.
Shares of Convertible Preferred Stock which are acquired or redeemed by the
Corporation or converted pursuant to Section 7 shall be retired pursuant to the
Delaware General Corporation Law, Section 243, or any successor provision, and
thereupon shall return to the status of authorized and unissued shares of
Preferred Stock of the Corporation without designation as to series. Upon the
acquisition or redemption by the Corporation or conversion pursuant to Section 7
of all outstanding shares of Convertible Preferred Stock, all provisions of this
Certificate of Designations shall cease to be of further effect. Upon the
occurrence of such event, the Board of Directors of the Corporation shall have
the power, pursuant to the Delaware General Corporation Law, Section 151(g), or
any successor provision and without shareholder action, to cause this
Certificate of Designations to be eliminated from the Corporation's Certificate
of Incorporation.
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<PAGE>
IN WITNESS WHEREOF, New Century Financial Corporation has caused this
certificate to be signed by Brad A. Morrice, its Vice Chairman and President,
and attested by Stergios Theologides, its Secretary, this 27th day of April,
2000.
NEW CENTURY FINANCIAL
CORPORATION
By /s/ Brad A. Morrice
---------------------------
Brad A. Morrice
Vice Chairman and President
Attest:
By /s/ Stergios Theologides
-----------------------------
Stergios Theologides
Secretary
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<PAGE>
Exhibit 99.3
WARRANT ISSUANCE AGREEMENT
This Warrant Issuance Agreement dated as of April 28, 2000 is
made by and among New Century Financial Corporation, a Delaware corporation (the
"Company"), U.S. Bancorp, a Delaware corporation ("USB"), and U.S. Bank National
Association, a national banking association and a wholly owned subsidiary of USB
("US Bank").
WHEREAS, the Company proposes to issue warrants as hereinafter
described (the "Warrants") to purchase up to 725,000 shares (the "Warrant
Shares") of the Company's Common Stock, $.01 par value per share (the "Common
Stock"), in connection with the Subordinated Loan Agreement dated as of April
28, 2000 (the "Subordinated Loan Agreement") by and between US Bank and New
Century Mortgage Corporation ("NCMC");
WHEREAS, the Company has taken all necessary action to permit
the issuance of the Warrants and the issuance of the Warrant Shares issuable
upon exercise or conversion of the Warrants; and
WHEREAS, the parties hereto desire to provide for the issuance
of the Warrants to US Bank as herein provided and to set forth certain
agreements of the Company in connection with the issuance of the warrants and
other matters relating to its Common Stock.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. In addition to the definitions set
forth elsewhere herein, as used herein:
"AGREEMENT" shall mean this Warrant Issuance Agreement.
"EXPIRATION DATE" shall mean 5:00 p.m., Minneapolis time, on
April 28, 2005.
"FIRST FUNDING DATE" shall mean such date, if any, during the
second calendar quarter of 2000 that US Bank advances funds to NCMC pursuant to
the Subordinated Loan Agreement.
"PREFERRED STOCK" shall mean the Company's Series 1998A
Convertible Preferred Stock and/or the Company's Series 1999A Convertible
Preferred Stock.
<PAGE>
"REGISTERED HOLDER" or "HOLDER" shall mean the person in whose
name any Warrant Certificate shall be registered on the books maintained by the
Company.
"SECOND FUNDING DATE" shall mean such date, if any, during the
third calendar quarter of 2000 that US Bank advances funds to NCMC pursuant to
the Subordinated Loan Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"THIRD FUNDING DATE" shall mean such date, if any, during the
fourth calendar quarter of 2000 that US Bank advances funds to NCMC pursuant to
the Subordinated Loan Agreement.
"WARRANT CERTIFICATE" shall mean the certificates representing
the Warrants issued as herein provided.
"WARRANTS" shall mean the Warrants issued pursuant to this
Agreement.
ARTICLE II
ISSUANCE OF WARRANTS; WARRANT CERTIFICATES
Section 2.1 ISSUANCE OF WARRANTS. Subject to the conditions
and on the terms specified herein, the Company shall issue Warrants as follows:
(a) On the date hereof, the Company shall issue to US Bank
Warrants to purchase 650,000 Warrant Shares at an exercise price of $9.5625 per
Common Share with vesting to be in accordance with the following schedule:
<TABLE>
<CAPTION>
Number of Warrant Shares Vesting Date
------------------------ ------------
<S> <C>
518,750 shares On the date hereof
43,750 shares July 1, 2000
43,750 shares October 1, 2000
43,750 shares January 1, 2001
</TABLE>
Notwithstanding the foregoing, with respect to Warrants vesting after
the date hereof, such Warrants will not vest nor be exercisable if as of the
relevant vesting date NCMC has repaid all amounts owed to US Bank pursuant to
the Subordinated Loan Agreement and the Second Amended and Restated Subordinated
Promissory Note dated as of April 28, 2000 made by NCMC to US Bank. Warrants
that fail to vest on the applicable vesting date in accordance with the
immediately preceding sentence shall terminate as of such date and shall be of
no further force and effect.
(b) On the First Funding Date, the Company shall issue to US
Bank Warrants to purchase that number of Warrant Shares equal to the product of
(i) 75,000 times (ii) a fraction
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<PAGE>
equal to the amount funded by US Bank under the Subordinated Loan Agreement on
such date divided by $10 million.
(c) On the Second Funding Date, the Company shall issue to US
Bank Warrants to purchase that number of Warrant Shares equal to the product of
(i) 75,000 times (ii) a fraction equal to the amount funded by US Bank under the
Subordinated Loan Agreement on such date divided by $10 million.
(d) On the Third Funding Date, the Company shall issue to US
Bank Warrants to purchase that number of Warrant Shares equal to the product of
(i) 75,000 times (ii) a fraction equal to the amount funded by US Bank under the
Subordinated Loan Agreement on such date divided by $10 million.
Section 2.2 WARRANT CERTIFICATES. The Company shall execute
and deliver the Warrant Certificates in accordance with the terms of, and
subject to the conditions contained in, Section 2.1. The Warrant Certificates
for Warrants issued pursuant to Section 2.1(a) shall be substantially as set
forth in Exhibit A hereto and Warrants issued pursuant to Sections 2.1(b), (c)
and (d) shall be substantially as set forth in Exhibit B hereto. Such Warrant
Certificates may have such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement. The Warrant Certificates shall be dated as of the date of
their issuance.
Section 2.3 WARRANT TERMS AND CONDITIONS. The Warrants shall
have the terms and shall be subject to the conditions set forth herein and in
the form of Warrant Certificate attached hereto as Exhibit A or Exhibit B, as
applicable. The exercise price per Warrant Share for any Warrant issued pursuant
to Section 2.1(b), (c) or (d) hereof shall be equal to the closing price per
share of Common Stock as reported on the Nasdaq Stock Market on the trading date
immediately preceding the First Funding Date, the Second Funding Date or the
Third Funding Date, respectively.
Section 2.4 EXECUTION OF WARRANT CERTIFICATES. The Warrants
shall be executed on behalf of the Company by a duly authorized officer of the
Company.
ARTICLE III
EXERCISE OR CONVERSION OF WARRANTS
Section 3.1 EXERCISE OR CONVERSION. Any or all of the Warrants
represented by each Warrant Certificate which have vested pursuant to Section
2.1 may be exercised or converted, upon the terms and subject to the conditions
set forth herein and in such Warrant Certificate, at any time on or after the
date of such Warrant and before the Expiration Date. Each Warrant not exercised
or converted on or before the Expiration Date shall thereupon become void and
all rights of the Holder thereunder and under this Agreement shall cease. In the
event that less than all of the Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Warrants are exercised at any time prior to the
Expiration Date, a new Warrant
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<PAGE>
Certificate or Certificates will be issued for the remaining number of Warrants
evidenced by the Warrant Certificate so surrendered.
Section 3.2 TIME OF EXERCISE OR CONVERSION. Each exercise or
conversion of Warrants shall be deemed to have been effective immediately prior
to the close of business on the business day on which the Warrant Certificate
relating to such Warrant shall have been surrendered as provided in Section 3.1
and in such Warrant Certificate. Thereafter, the Holder shall have, with respect
to the Warrant Shares purchased or otherwise acquired upon exercise or
conversion, all the rights and obligations of any other stockholder of the
Company holding Common Stock.
ARTICLE IV
CERTAIN OBLIGATIONS OF THE COMPANY
Section 4.1 PERFORMANCE BY THE COMPANY.
(a) The Company has reserved and shall at times keep reserved,
out of the authorized and unissued capital stock of the Company, such number of
Warrant Shares sufficient to provide for the exercise of the rights of purchase
represented by all Warrants issued pursuant to this Agreement. The Company shall
authorize and direct the transfer agent for the Common Stock (and any successor
thereto, the "Transfer Agent") at all times to reserve such number of Warrant
Shares as may be issuable upon exercise of outstanding Warrants under this
Agreement. The Company shall provide a copy of this Agreement and each Warrant
Certificate issued hereunder to the Transfer Agent. The Company shall, at its
expense, use its best efforts to cause the Warrant Shares to be listed (subject
to official notice of issuance) on the Nasdaq Stock Market and such other stock
exchanges, if any, or markets on which the Common Stock may become listed from
and after the date of issuance of such Warrants through the Expiration Date.
(b) The Company will not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Agreement or the Warrant Certificate, but will at all times in good faith assist
in the carrying out of all such terms. Without limiting the generality of the
foregoing, the Company (i) shall take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue the Warrant
Shares upon the exercise of all Warrants from time to time outstanding, and (ii)
will not (A) transfer all or substantially all of its properties and assets to
any other person or entity, (B) consolidate with or merge into any other entity
where the Company is not the surviving entity, or (C) permit any other entity to
consolidate with or merge into the Company, where the Company is not the
surviving entity, where in connection with such transfer, consolidation or
merger, the Warrant Shares then issuable upon the exercise of the Warrant shall
be changed into or exchanged for shares or other securities or property of any
other entity unless, in any such case, the other entity acquiring such
properties and assets, continuing or surviving after such consolidation or
merger or issuing or distributing such shares or other securities or property,
as the case may be, shall expressly assume in writing and be bound by all the
terms of this Agreement and the Warrant Certificates.
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<PAGE>
Section 4.2 REPURCHASE OR REDEMPTION OF COMMON STOCK. The
Company will not repurchase or otherwise redeem outstanding shares of its Common
Stock if such repurchase or redemption would cause USB's ownership of Common
Stock (assuming conversion of all shares of Preferred Stock) to exceed 24.99% of
the outstanding shares of Common Stock, without the consent of USB, unless or
until the Company has made provision to redeem or otherwise repurchase a
sufficient number of shares of the Preferred Stock or Common Stock then held by
USB such that USB's ownership of Common Stock (assuming conversion of all shares
of Preferred Stock) does not exceed 24.99% of the outstanding shares of Common
Stock.
Section 4.3 NO PREDATORY LENDING. For so long as USB owns any
of the Preferred Stock or Common Stock of the Company, (i) the Company will not,
and will not allow NCMC or any other subsidiary, to engage in any "predatory
behaviors" (as defined in that certain letter dated April 4, 2000 from USB to
the Company), and (ii) the Company will provide USB with a quarterly report, on
or as soon as reasonably practicable after the last business day of each fiscal
quarter, regarding the Company's and its subsidiaries' adherence to
non-predatory lending practices during that fiscal quarter.
Section 4.4 COOPERATION; FURTHER ASSURANCES. The Company shall
cooperate with USB and use its commercially reasonable efforts to take such
actions, or to cause to be made such amendments to this Agreement and the
agreements and certificates referred to herein, as may be reasonably requested
by USB as necessary, proper or advisable under applicable regulations, policies
and guidelines of the Board of Governors of the Federal Reserve System, the
Office of the Comptroller of the Currency or other applicable bank regulatory
authority.
ARTICLE V
CERTAIN OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANT CERTIFICATES
Section 5.1 NO RIGHTS OF HOLDERS OF COMMON STOCK. The Warrant
Certificates shall be issued in registered form only. No Warrant Certificate
shall entitle the Holder thereof to any of the rights of a holder of Common
Stock of the Company, including, without limitation, the right to vote, to
receive other distributions, to elect directors of the Company or to receive
notice of or to attend the meetings of stockholders or any other proceeding of
the Company.
Section 5.2 LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
CERTIFICATES. In case any of the Warrant Certificates shall be lost, stolen,
destroyed or mutilated, the Company will issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest, but (a) in the case of such loss, theft or
destruction, only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, also satisfactory to it or (b) in the case of any such mutilation,
only upon surrender to and cancellation by the Company of such Warrant
Certificate.
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ARTICLE VI
TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES
Section 6.1 TRANSFER OR EXCHANGE OF WARRANT CERTIFICATES. The
Warrants, the rights thereunder and the Warrant Shares may be sold, transferred
or otherwise disposed of or in any manner transferred upon the books of the
Company, in whole or in part, (a) to a successor to US Bank or any affiliate of
US Bank and (b) to any other person or entity, subject to the requirements of
the Securities Act and any applicable state securities law. Any such transfer
may be made at the principal office of the Company by the Holder of such Warrant
in person or by duly authorized attorney, upon surrender of the Warrant properly
endorsed. Upon surrender for transfer or exchange of any Warrant Certificate,
properly endorsed, to the Company, the Company will issue and deliver to or upon
the order of the Holder thereof a new Warrant Certificate of like tenor, in the
name of such Holder or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct. Any Warrant Certificate surrendered for
transfer or exchange shall be canceled by the Company.
ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 REGISTRATION RIGHTS AGREEMENT. The Warrant Shares
shall be subject to the registration rights as set forth in that Amended and
Restated Registration Rights Agreement dated as of April 28, 2000 (the
"Registration Rights Agreement") by and between USB and the Company (subject in
all cases to any restrictions or limitations set forth in Section 9 thereof).
ARTICLE VIII
OTHER MATTERS
Section 8.1 SUCCESSORS AND ASSIGNS. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the Holder
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 8.2 NOTICES. Any notice or demand authorized by this
Agreement to be given or made by the Holder of any Warrant Certificate to the
Company shall be sufficiently given or made if sent by first-class or registered
mail, postage prepaid, addressed as follows:
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<PAGE>
New Century Financial Corporation
18400 Von Karman, Suite 1000
Irvine, California 92612
Attention: Brad A. Morrice
Telecopy: 949-440-7033
Any notice pursuant to this Agreement to be given or made by
the Company to the Holder of any Warrant shall be sufficiently given or made
(unless otherwise specifically provided for herein) if sent by first-class or
registered mail, postage prepaid, addressed to said registered Holder at his or
her address appearing on the Warrant register.
Section 8.3 GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be governed by and construed in accordance
with the laws of the State of Delaware.
Section 8.4 NO BENEFITS CONFERRED. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or to give to any person or
entity other than the Company, USB and the Holders of Warrant Certificates any
legal or equitable right, remedy or claim under or by reason of this Agreement,
or of any covenant, condition, stipulation, promise or agreement herein; and all
covenants, conditions, stipulations, promises and agreements in this Agreement
shall be for the sole and exclusive benefit of the Company and its successors,
USB and its successors and the Holders of Warrant Certificates and the
Registrable Securities (as defined in the Registration Rights Agreement).
Section 8.5 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 8.6 HEADINGS. The descriptive headings used in this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
NEW CENTURY FINANCIAL CORPORATION
By:_________________________________________
Its:_____________________________________
U.S. BANCORP
By:_________________________________________
Its:_____________________________________
U.S. BANK NATIONAL ASSOCIATION
By:_________________________________________
Its:_____________________________________
-8-
<PAGE>
EXHIBIT A
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF
COUNSEL SATISFACTORY TO NEW CENTURY FINANCIAL CORPORATION THAT SUCH SALE,
TRANSFER OR OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH
REGISTRATION.
NEW CENTURY FINANCIAL CORPORATION
WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
For value received, U. S. Bank National Association, its successors or
assigns ("Holder"), is entitled to purchase from New Century Financial
Corporation, a Delaware corporation (the "Company"), up to Six Hundred and Fifty
Thousand (650,000) fully paid and nonassessable shares (the "Warrant Shares") of
the Company's common stock, $.01 par value per share (the "Common Stock"), or
such greater or lesser number of such shares as may be determined by application
of the vesting and anti-dilution provisions of this Warrant, at the price of
Nine and 9/16ths dollars ($9.5625) per share, subject to adjustments as noted
below (the "Warrant Exercise Price"). This Warrant, dated April 28, 2000, is
issued pursuant to Section 2.1(a) of the Warrant Issuance Agreement dated as of
April 28, 2000 by and between the Company and the initial Holder.
This Warrant may be exercised as provided below at any time or from
time to time prior to the close of business on April 28, 2005.
This Warrant is subject to the following terms and conditions:
1. VESTING; EXERCISE.
(a) The rights represented by this Warrant will vest and may be
exercised by the Holder for the number of Warrant Shares and at the times set
forth in the following schedule:
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NUMBER OF WARRANT SHARES VESTING DATE
518,750 shares On the date hereof
43,750 shares July 1, 2000
43,750 shares October 1, 2000
43,750 shares January 1, 2001
Notwithstanding the foregoing, with respect to Warrants with possible
vesting dates after the date hereof, such Warrants will not vest nor be
exercisable if, as of the relevant date, New Century Mortgage Corporation
("NCMC") has repaid all amounts owed to U.S. Bank National Association pursuant
to the Subordinated Loan Agreement dated as of April 28, 2000 by and between
U.S. Bank National Association and NCMC and the Second Amended and Restated
Subordinated Promissory Note dated as of April 28, 2000 made by NCMC to U.S.
Bank National Association. Warrants that fail to vest on the applicable vesting
date in accordance with the immediately preceding sentence shall terminate as of
such date and shall be of no further force and effect.
(b) The rights represented by this Warrant may be exercised by the
Holder, in whole or in part, by written election in the form set forth below, by
the surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and by payment to the Company by cash, certified check or
bank draft of the Warrant Exercise Price. The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
Warrant has been exercised by payment to the Company of the Warrant Exercise
Price. Certificates for the Warrant Shares so purchased, bearing an appropriate
restrictive legend, shall be delivered to the Holder within fifteen (15) days
after the rights represented by this Warrant shall have been so exercised, and,
unless this Warrant has expired, a new warrant representing the number of
Warrant Shares, if any, with respect to which this Warrant has not been
exercised shall also be delivered to the Holder hereof within such time. No
fractional shares shall be issued upon the exercise of this Warrant.
2. WARRANT SHARES. All Warrant Shares that may be issued upon the
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized and issued, fully paid and nonassessable shares. During the period
within which the rights represented by this Warrant may be exercised, the
Company shall at all times have authorized and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
3. ADJUSTMENT. The Warrant shall be subject to adjustment from time to
time as hereinafter provided in this Section 3:
(a) If the Company at any time divides the outstanding shares
of its Common Stock into a greater number of shares (whether pursuant
to a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its Common Stock are combined
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<PAGE>
into a smaller number of shares, or if the Company effects a
transaction that has a similar effect, the Warrant Exercise Price in
effect immediately prior to such division or combination shall be
proportionately adjusted to reflect the reduction or increase in the
value of each such common share.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of
its assets to another corporation, or any other similar transaction
shall be effected in such a way that holders of the Company's Common
Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for such Common Stock, then, as a condition
of such reorganization, reclassification, consolidation, merger or
sale, the holder of this Warrant shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified in
this Warrant and in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such stock, securities or
assets as would have been issued or delivered to the holder of this
Warrant if it had exercised this Warrant and had received such shares
of Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof
the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets
shall assume by written instrument executed and mailed to the Holder at
the last address of the Holder appearing on the books of the Company,
the obligation to deliver to the Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions,
the Holder may be entitled to purchase.
(c) Upon each adjustment of the Warrant Exercise Price, the
Holder shall thereafter be entitled to purchase, at the Warrant
Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Exercise Price resulting
from such adjustment.
(d) Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the Holder at the address of the Holder as shown
on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle the Holder
to any voting rights or other rights as a shareholder of the Company.
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<PAGE>
5. ADDITIONAL RIGHT TO CONVERT WARRANT.
(a) The Holder of this Warrant shall have the right to require the
Company to convert this Warrant (the "Conversion Right") at any time after it is
exercisable, but prior to its expiration, into shares of the Company's Common
Stock as provided for in this Section 5. Upon exercise of the Conversion Right,
the Company shall deliver to the Holder (without payment to the Company of the
Warrant Exercise Price) that number of shares of the Company's Common Stock
equal to the quotient obtained by dividing (x) the value of the Warrant at the
time the Conversion Right is exercised (determined by subtracting the Warrant
Exercise Price for a Warrant Share in effect immediately prior to the exercise
of the Conversion Right from the Fair Market Value of a Warrant Share
immediately prior to the date of the exercise of the Conversion Right and
multiplying that number by the number of Warrant Shares for which the Conversion
Right is being exercised) by (y) the Fair Market Value of a Warrant Share
immediately prior to the date of exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the Holder, at any
time or from time to time, prior to the expiration of the Warrant, on any
business day by delivering a written notice in the form attached hereto (the
"Conversion Notice") to the Company at the offices of the Company stating that
the Holder desires to exercise the Conversion Right and specifying (i) the total
number of shares with respect to which the Conversion Right is being exercised
and (ii) a place and date not less than five or more than 20 business days from
the date of the Conversion Notice for the closing of such purchase.
(c) At any closing under Section 5(b) hereof, (i) the Holder will
surrender the Warrant and (ii) the Company will deliver to the Holder (A) a
certificate or certificates for the number of shares of the Company's Common
Stock issuable upon such conversion, together with cash, in lieu of any fraction
of a share and (B) a new warrant representing the number of shares, if any, with
respect to which the Warrant shall not have been exercised.
(d) For purposes of this Section 5, Fair Market Value of a Warrant
Share as of a particular date (the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange or
is quoted on Nasdaq, then the average closing or last sale prices,
respectively, reported for the ten (10) business days immediately
preceding the Determination Date, and
(ii) If the Company's Common Stock is not traded on an
exchange or on Nasdaq but is traded on the over-the-counter market,
then the average closing bid and asked prices reported for the ten (10)
business days immediately preceding the Determination Date.
6. TRANSFER. Subject to the requirements of federal and state
securities laws, this Warrant and all rights hereunder are transferable, in
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
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Warrant properly endorsed. The bearer of this Warrant, when endorsed, may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company, any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes. The Company shall not be required to pay any tax or other
charge imposed in connection with the transfer of this Warrant, and the Company
shall not be required to issue or deliver any stock certificate hereunder, until
such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.
7. REGISTRATION RIGHTS. Holder shall be entitled to the
registration rights as set forth in the Amended and Restated Registration Rights
Agreement dated as of April 28, 2000, subject to the limitations and
restrictions set forth in Section 9 thereof.
8. WRITING. This Warrant may not be changed, waived, discharged
or terminated orally but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
The Holder, by its acceptance hereof, represents, warrants, covenants
and agrees that the Warrant and Warrant Shares are being acquired for investment
for the Holder's own account and not with a view to the distribution thereof,
and that absent an effective registration statement under the Securities Act of
1933, as amended, covering the disposition of this Warrant or the Warrant
Shares, they will not be sold, transferred, assigned, hypothecated or otherwise
disposed of without first providing the Company with evidence satisfactory to
the Company, including, at the Company's discretion, an opinion of counsel,
satisfactory to the Company, to the effect that such sale, transfer, assignment,
hypothecation or other disposal will be exempt from the registration and
prospectus delivery requirements of applicable federal and state securities laws
and regulations; and the Holder consents to the Company making a notation in its
records or giving to any transfer agent of this Warrant or the Warrant Shares an
order to implement such restriction on transferability.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and delivered by a duly authorized officer.
Dated: April 28, 2000
NEW CENTURY FINANCIAL
CORPORATION
By
-----------------------------------
President
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<PAGE>
WARRANT EXERCISE
(To be signed only upon exercise of Warrant)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _________ of the shares of Common Stock of New
Century Financial Corporation, to which such Warrant relates and herewith makes
payment of $_________ therefor in cash, certified check or bank draft and
requests that the certificates for such shares be issued in the name of, and be
delivered to _______________________, whose address is set forth below the
signature of the undersigned.
Dated:
-----------------------
-----------------------------
Signature
-----------------------------
-----------------------------
-----------------------------
[Print Name and Address of Holder above]
If shares are to be issued other Social Security or other Tax
than to Holder: Identification No.
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
[Print Name and Address of Holder above]
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WARRANT ASSIGNMENT
(To be signed only upon exercise of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________ the right represented by the foregoing Warrant to purchase
the shares of Common Stock of New Century Financial Corporation, to which such
Warrant relates and appoints ____________________ attorney to transfer such
right on the books of New Century Financial Corporation, with full power of
substitution in the premises.
Dated:
-----------------------
-----------------------------
Signature
-----------------------------
-----------------------------
-----------------------------
[Print Name and Address of Holder above]
If shares are to be issued other Social Security or other Tax
than to Holder: Identification No.
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
[Print Name and Address of Holder above]
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<PAGE>
WARRANT CONVERSION NOTICE
(To be signed only upon conversion of Warrant pursuant to
Section 5)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the Conversion Right as provided for in Section 5
of the foregoing Warrant, with respect to ________ of the previously unexercised
shares, which shall result pursuant to the conversion provisions of Section 5 in
the purchase thereunder of _______ shares of Common Stock of New Century
Financial Corporation, and herewith tenders the Warrant in full payment for the
purchased shares, as provided for in Section 5 of the foregoing Warrant. If said
number of shares shall not be all the shares purchasable under the Warrant, a
new warrant is to be issued in the name of the undersigned for the remaining
balance of the unexercised shares. The undersigned hereby requests that the
certificates for such shares be issued in the name of, and be delivered to
_________________ whose address is set forth below the signature of the
undersigned.
Dated:
-----------------------
-----------------------------
Signature
-----------------------------
-----------------------------
-----------------------------
[Print Name and Address of Holder above]
If shares are to be issued other Social Security or other Tax
than to Holder: Identification No.
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
[Print Name and Address of Holder above]
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EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF
COUNSEL SATISFACTORY TO NEW CENTURY FINANCIAL CORPORATION THAT SUCH SALE,
TRANSFER OR OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH
REGISTRATION.
NEW CENTURY FINANCIAL CORPORATION
WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
For value received, U. S. Bank National Association, its successors or
assigns ("Holder"), is entitled to purchase from New Century Financial
Corporation, a Delaware corporation (the "Company"), _____________ (________)
fully paid and nonassessable shares (the "Warrant Shares") of the Company's
common stock, $.01 par value per share (the "Common Stock"), or such greater or
lesser number of such shares as may be determined by application of the
anti-dilution provisions of this Warrant, at the price of _______________
dollars ($________) per share, subject to adjustments as noted below (the
"Warrant Exercise Price"). This Warrant, dated _______________, 200___, is
issued pursuant to Section 2.1[(b), (c) or (d)] of the Warrant Issuance
Agreement dated as of April 28, 2000 by and between the Company and the initial
Holder.
This Warrant may be exercised in full or in part at any time or from
time to time after the date hereof and prior to the close of business on April
28, 2005.
This Warrant is subject to the following terms and conditions:
1. EXERCISE.
The rights represented by this Warrant may be exercised by the Holder,
in whole or in part, by written election in the form set forth below, by the
surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and by payment to the Company by
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cash, certified check or bank draft of the Warrant Exercise Price. The shares so
purchased shall be deemed to be issued as of the close of business on the date
on which this Warrant has been exercised by payment to the Company of the
Warrant Exercise Price. Certificates for the Warrant Shares so purchased,
bearing an appropriate restrictive legend, shall be delivered to the Holder
within fifteen (15) days after the rights represented by this Warrant shall have
been so exercised, and, unless this Warrant has expired, a new warrant
representing the number of Warrant Shares, if any, with respect to which this
Warrant has not been exercised shall also be delivered to the Holder hereof
within such time. No fractional shares shall be issued upon the exercise of this
Warrant.
2. WARRANT SHARES. All Warrant Shares that may be issued upon the
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized and issued, fully paid and nonassessable shares. During the period
within which the rights represented by this Warrant may be exercised, the
Company shall at all times have authorized and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
3. ADJUSTMENT. The Warrant shall be subject to adjustment from time to
time as hereinafter provided in this Section 3:
(a) If the Company at any time divides the outstanding shares
of its Common Stock into a greater number of shares (whether pursuant
to a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its Common Stock are combined into a smaller
number of shares, or if the Company effects a transaction that has a
similar effect, the Warrant Exercise Price in effect immediately prior
to such division or combination shall be proportionately adjusted to
reflect the reduction or increase in the value of each such common
share.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of
its assets to another corporation, or any other similar transaction
shall be effected in such a way that holders of the Company's Common
Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for such Common Stock, then, as a condition
of such reorganization, reclassification, consolidation, merger or
sale, the holder of this Warrant shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified in
this Warrant and in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such stock, securities or
assets as would have been issued or delivered to the holder of this
Warrant if it had exercised this Warrant and had received such shares
of Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof
the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets
shall assume by written
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<PAGE>
instrument executed and mailed to the Holder at the last address of
the Holder appearing on the books of the Company, the obligation to
deliver to the Holder such shares of stock, securities or assets as,
in accordance with the foregoing provisions, the Holder may be
entitled to purchase.
(c) Upon each adjustment of the Warrant Exercise Price, the
Holder shall thereafter be entitled to purchase, at the Warrant
Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Exercise Price resulting
from such adjustment.
(d) Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the Holder at the address of the Holder as shown
on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle the Holder
to any voting rights or other rights as a shareholder of the Company.
5. ADDITIONAL RIGHT TO CONVERT WARRANT.
(a) The Holder of this Warrant shall have the right to require the
Company to convert this Warrant (the "Conversion Right") at any time after it is
exercisable, but prior to its expiration, into shares of the Company's Common
Stock as provided for in this Section 5. Upon exercise of the Conversion Right,
the Company shall deliver to the Holder (without payment to the Company of the
Warrant Exercise Price) that number of shares of the Company's Common Stock
equal to the quotient obtained by dividing (x) the value of the Warrant at the
time the Conversion Right is exercised (determined by subtracting the Warrant
Exercise Price for a Warrant Share in effect immediately prior to the exercise
of the Conversion Right from the Fair Market Value of a Warrant Share
immediately prior to the date of the exercise of the Conversion Right and
multiplying that number by the number of Warrant Shares for which the Conversion
Right is being exercised) by (y) the Fair Market Value of a Warrant Share
immediately prior to the date of exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the Holder, at any time or
from time to time, prior to the expiration of the Warrant, on any business day
by delivering a written notice in the form attached hereto (the "Conversion
Notice") to the Company at the offices of the Company stating that the Holder
desires to exercise the Conversion Right and specifying (i) the total number of
shares with respect to which the Conversion Right is being exercised and (ii) a
place and date not less than five or more than 20 business days from the date of
the Conversion Notice for the closing of such purchase.
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<PAGE>
(c) At any closing under Section 5(b) hereof, (i) the Holder will
surrender the Warrant and (ii) the Company will deliver to the Holder (A) a
certificate or certificates for the number of shares of the Company's Common
Stock issuable upon such conversion, together with cash, in lieu of any fraction
of a share and (B) a new warrant representing the number of shares, if any, with
respect to which the Warrant shall not have been exercised.
(d) For purposes of this Section 5, Fair Market Value of a Warrant
Share as of a particular date (the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange or
is quoted on Nasdaq, then the average closing or last sale prices,
respectively, reported for the ten (10) business days immediately
preceding the Determination Date, and
(ii) If the Company's Common Stock is not traded on an
exchange or on Nasdaq but is traded on the over-the-counter market,
then the average closing bid and asked prices reported for the ten (10)
business days immediately preceding the Determination Date.
6. TRANSFER. Subject to the requirements of federal and state
securities laws, this Warrant and all rights hereunder are transferable, in
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant properly
endorsed. The bearer of this Warrant, when endorsed, may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; but until such transfer on
such books, the Company may treat the registered owner hereof as the owner for
all purposes. The Company shall not be required to pay any tax or other charge
imposed in connection with the transfer of this Warrant, and the Company shall
not be required to issue or deliver any stock certificate hereunder, until such
tax or other charge has been paid or it has been established to the Company's
satisfaction that no tax or other charge is due.
7. REGISTRATION RIGHTS. Holder shall be entitled to the registration
rights as set forth in the Amended and Restated Registration Rights Agreement
dated as of April 28, 2000, subject to the limitations and restrictions set
forth in Section 9 thereof.
8. WRITING. This Warrant may not be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
The Holder, by its acceptance hereof, represents, warrants, covenants
and agrees that the Warrant and Warrant Shares are being acquired for investment
for the Holder's own account and not with a view to the distribution thereof,
and that absent an effective registration statement under the Securities Act of
1933, as amended, covering the disposition of this Warrant or the Warrant
Shares, they will not be sold, transferred, assigned, hypothecated or otherwise
disposed of without first providing the Company with evidence satisfactory to
the Company, including, at
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<PAGE>
the Company's discretion, an opinion of counsel, satisfactory to the Company, to
the effect that such sale, transfer, assignment, hypothecation or other disposal
will be exempt from the registration and prospectus delivery requirements of
applicable federal and state securities laws and regulations; and the Holder
consents to the Company making a notation in its records or giving to any
transfer agent of this Warrant or the Warrant Shares an order to implement such
restriction on transferability.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and delivered by a duly authorized officer.
Dated:______________________, 2000
NEW CENTURY FINANCIAL
CORPORATION
By__________________________________
President
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<PAGE>
WARRANT EXERCISE
(To be signed only upon exercise of Warrant)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _________ of the shares of Common Stock of New
Century Financial Corporation, to which such Warrant relates and herewith makes
payment of $_________ therefor in cash, certified check or bank draft and
requests that the certificates for such shares be issued in the name of, and be
delivered to _______________________, whose address is set forth below the
signature of the undersigned.
Dated:_______________________
_____________________________
Signature
_____________________________
_____________________________
_____________________________
[Print Name and Address of Holder above]
If shares are to be issued other Social Security or other Tax
than to Holder: Identification No.
________________________________ ____________________________
________________________________
________________________________
[Print Name and Address of Holder above]
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<PAGE>
WARRANT ASSIGNMENT
(To be signed only upon exercise of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________ the right represented by the foregoing Warrant to purchase
the shares of Common Stock of New Century Financial Corporation, to which such
Warrant relates and appoints ____________________ attorney to transfer such
right on the books of New Century Financial Corporation, with full power of
substitution in the premises.
Dated:_______________________
_____________________________
Signature
_____________________________
_____________________________
_____________________________
[Print Name and Address of Holder above]
If shares are to be issued other Social Security or other Tax
than to Holder: Identification No.
________________________________ ____________________________
________________________________
________________________________
[Print Name and Address of Holder above]
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<PAGE>
WARRANT CONVERSION NOTICE
(To be signed only upon conversion of Warrant pursuant to
Section 5)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the Conversion Right as provided for in Section 5
of the foregoing Warrant, with respect to ________ of the previously unexercised
shares, which shall result pursuant to the conversion provisions of Section 5 in
the purchase thereunder of _______ shares of Common Stock of New Century
Financial Corporation, and herewith tenders the Warrant in full payment for the
purchased shares, as provided for in Section 5 of the foregoing Warrant. If said
number of shares shall not be all the shares purchasable under the Warrant, a
new warrant is to be issued in the name of the undersigned for the remaining
balance of the unexercised shares. The undersigned hereby requests that the
certificates for such shares be issued in the name of, and be delivered to
_________________ whose address is set forth below the signature of the
undersigned.
Dated:_______________________
_____________________________
Signature
_____________________________
_____________________________
_____________________________
[Print Name and Address of Holder above]
If shares are to be issued other Social Security or other Tax
than to Holder: Identification No.
________________________________ ____________________________
________________________________
________________________________
[Print Name and Address of Holder above]
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<PAGE>
Exhibit 99.4
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is entered into as of April 28, 2000, by and among New Century
Financial Corporation, a Delaware corporation (the "Company"), and U.S.
Bancorp, a Delaware corporation ("USB") and U.S. Bank National Association
("US Bank").
WHEREAS, the Company and USB are a party to the Amended and Restated
Registration Rights Agreement dated as of July 26, 1999 (the "Registration
Rights Agreement") relating to the Company's agreements to register under the
Securities Act the shares of the Company's Common Stock issuable upon
conversion of the Company's outstanding Series 1998A Convertible Preferred
Stock and the Series 1999A Convertible Preferred Stock.
WHEREAS, in connection with a Subordinated Loan Agreement dated as
of April 28, 2000 between New Century Mortgage Corporation (a wholly owned
subsidiary of the Company) and US Bank, the Company has agreed to issue to US
Bank warrants to purchase up to an aggregate of 725,000 shares of the
Company's Common Stock, $.01 par value per share, upon the terms and subject
to the conditions set forth in the Warrant Issuance Agreement dated as of
April 28, 2000 among the Company, USB and US Bank.
WHEREAS, in connection with the issuance of such warrants, the
Company and USB desire to amend and restate the Registration Rights Agreement
to include certain arrangements with respect to the registration for public
sale under the Securities Act of 1933, as amended (the "Securities Act"), of
the shares of the Company's Common Stock issuable upon conversion of the
warrants and to make US Bank a party to such Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company,
USB and US Bank hereby agree as follows:
1. DEFINITIONS.
1.1 "AFFILIATE" shall mean any person that directly or
indirectly controls or is controlled by, or is under common control with,
another specified person.
1.2 "COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
1.3 "COMPANY" shall mean New Century Financial
Corporation, a Delaware corporation.
<PAGE>
1.4 "COMMON SHARES" shall mean the shares of common
stock, par value $.01 per share, authorized by the Company's Certificate of
Incorporation and any additional shares of common stock which may be
authorized in the future by the Company, and any stock into which such Common
Shares may hereafter be changed, and shall also include capital stock of any
other class of the Company which is not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption.
1.5 "FOUNDING MANAGERS" shall mean Robert K. Cole, Brad
A. Morrice, Steven G. Holder and Edward F. Gotschall.
1.6 "OTHER SHAREHOLDERS" shall mean Paul B. Akers and
Kirk Redding, and their successors in interest, under that certain Merger
Agreement, dated as of December 17, 1997, among the Company, NC Acquisition
Corp., PFW Corporation and the shareholders named therein.
1.7 "PREFERRED STOCK" shall mean all outstanding shares
of (a) the Series 1999A Convertible Preferred Stock, par value $.01 per
share, of the Company, and any securities (other than Common Shares) into
which such shares may hereafter be changed and (b) the Series 1998A
Convertible Preferred Stock, par value $.01 per share, of the Company, and
any Securities (other than the Common Shares) into which such shares may
hereafter be changed.
1.8 "PUBLIC OFFERING" shall mean any offering of Common
Shares to the public, either on behalf of the Company or any of its security
holders, pursuant to an effective registration statement under the Securities
Act.
1.9 "REGISTRABLE SECURITIES" shall mean (a) the Common
Shares at any time issued or subject to issuance upon the conversion of the
Preferred Stock, (b) the Common Shares at any time issued or subject to
issuance upon exercise or conversion of the Warrants, and (c) any additional
securities issued with respect to the above-described securities upon any
stock split, stock dividend, recapitalization, or similar event. Registrable
Securities shall cease to be Registrable Securities when (w) a registration
statement with respect to the sale of such securities shall have been
declared effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (x) such
securities shall be eligible to be distributed pursuant to Rule 144(k) under
the Securities Act, (y) such securities shall have ceased to be outstanding,
or (z) such securities are transferred in a transaction in which the rights
hereunder are not assigned as permitted by Section 9.
1.10 "REGISTRATION EXPENSES" shall mean the expenses
described in Section 5.
1.11 "SECURITIES ACT" shall mean the Securities Act of
1933, as amended.
1.12 "STOCK PURCHASE AGREEMENT" shall mean the Preferred
Stock Purchase Agreement dated October 18, 1998 between the Company and USB.
1.13 "USB" shall mean U.S. Bancorp, a Delaware
corporation.
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<PAGE>
1.14 "WARRANTS" shall mean the warrants to purchase up to
725,000 Common Shares issued or to be issued pursuant to the Warrant Issuance
Agreement dated as of April 28, 2000 among the Company, USB and US Bank.
2. DEMAND REGISTRATION.
2.1 Subject to Sections 2.3, 2.4, 2.5 and 2.6, if at any
time the Company shall receive a written request therefor from the record
holder or holders of an aggregate of at least 51% of the Registrable
Securities, the Company shall prepare and file a registration statement under
the Securities Act covering such number of Registrable Securities as are the
subject of such request and shall use its best efforts to cause such
registration statement to become effective. Upon the receipt of a
registration request meeting the requirements of this Section 2.1, the
Company shall promptly give written notice to all other record holders of
Registrable Securities that such registration is to be effected. The Company
shall include in such registration statement such additional Registrable
Securities as such other record holders request in writing within fifteen
(15) days after the date of the Company's written notice to them. If (a) the
holders of a majority of the Registrable Securities for which registration
has been requested pursuant to this Section 2.1 determine for any reason not
to proceed with the registration at any time before the related registration
statement has been declared effective by the Commission, (b) such
registration statement, if theretofore filed with the Commission, is
withdrawn and (c) the holders of the Registrable Securities subject to such
registration statement agree to bear their own Registration Expenses incurred
in connection therewith and to reimburse the Company for the Registration
Expenses incurred by it in such connection or if such registration statement,
if theretofore filed with the Commission, is withdrawn at the initiative of
the Company, then the holders of the Registrable Securities shall not be
deemed to have exercised their demand registration right pursuant to this
Section 2.1.
2.2 At the request of the holders of a majority of the
Registrable Securities to be registered, the method of disposition of all
Registrable Securities included in such registration shall be an underwritten
Public Offering. The managing underwriter of any such Public Offering shall
be selected by the majority of the Registrable Securities, provided that such
managing underwriter is reasonably acceptable to the Company.
2.3 The Company shall be obligated to prepare, file and
cause to be effective not more than two registration statements pursuant to
Section 2.1.
2.4 Notwithstanding the foregoing, the Company may delay
initiating the preparation and filing of any registration statement requested
pursuant to Section 2.1 for a period not to exceed one hundred eighty (180)
days if, in the good faith judgment of the Company's Board of Directors,
filing the registration statement would reasonably be expected to have a
Material Adverse Effect (as defined in the Stock Purchase Agreement), which
Material Adverse Effect could reasonably be expected to be avoided by
delaying such filing for such period.
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<PAGE>
2.5 Notwithstanding anything to the contrary contained
herein, at any time within thirty (30) days after receiving a demand for
registration pursuant to Section 2.1, the Company may elect to effect an
underwritten primary registration in lieu of the requested registration. If
the Company so elects, the Company shall give prompt written notice to all
holders of Registrable Securities of its intention to effect such a
registration and shall afford such holders the rights contained in Article 3
with respect to "piggyback" registrations. In such event, the demand for
registration pursuant to Section 2.1 shall be deemed to have been withdrawn.
2.6 The Company shall not be obligated to effect a demand
registration within 180 days after the effective date of a previous demand
registration or a previous registration in which the holders of Registrable
Securities were given piggy-back registration rights pursuant to this
Agreement and in which there was no reduction in the number of Registrable
Securities requested to be included.
3. PIGGYBACK REGISTRATION.
3.1 Each time the Company shall determine to proceed with
the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for money of
any of its securities by it or any of its security holders (other than a
registration statement on Form S-8, Form S-4 or other limited purpose form),
the Company will give written notice of its determination to all record
holders of Registrable Securities. Upon the written request of a record
holder of any Registrable Securities given within 15 days after the date of
the receipt of any such notice from the Company, the Company will, except as
herein provided, use its best efforts to cause all Registrable Securities the
registration of which is requested to be included in such registration
statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Registrable
Securities to be so registered; PROVIDED, HOWEVER, that nothing herein shall
prevent the Company from, at any time, abandoning or delaying in its sole and
absolute discretion any registration.
3.2 If any registration pursuant to Section 3.1 is
underwritten in whole or in part, the Company may require that the
Registrable Securities included in the registration be included in the
underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. If, in the good faith judgment of the
managing underwriter of the Public Offering, marketing factors require a
limitation of the number of shares to be underwritten, the managing
underwriter may exclude some or all of the Registrable Securities from such
registration and underwriting. Any reduction in the number of securities of
the Company included in such registration and underwriting shall be borne (i)
first by the Founding Managers and the Other Shareholders pro rata based on
the number of shares, if any, for which registration was requested by the
Founding Managers and the Other Shareholders, (ii) second by the holders of
Registrable Securities pro rata based on the number of shares, if any, for
which registration was requested by such holders, and (iii) then equally by
the other holders of securities of the Company requested to be included in
such registration and underwriting, as a group, pro rata based on the number
of shares for which registration was requested by such holders. The
Registrable Securities which are thus excluded from the underwritten Public
Offering shall be
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<PAGE>
withheld from the market by the holders thereof for a period which the
managing underwriter reasonably determines is necessary in order to effect
the Public Offering.
4. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Article 2 or Article 3 to effect a registration
of Registrable Securities under the Securities Act, the Company will use its
best efforts to effect the registration and sale of such Registrable
Securities in accordance with the intended methods of disposition specified
by the holders participating therein. Without limiting the foregoing, the
Company in each such case will, as expeditiously as possible:
4.1 In the case of a demand registration pursuant to
Section 2.1, prepare and file with the Commission the requisite registration
statement to effect such registration (including such audited financial
statements as may be required by the Securities Act or the rules and
regulations thereunder) and use its best efforts to cause such registration
statement to become effective; PROVIDED, HOWEVER, that as far in advance as
practical before filing such registration statement or any amendment thereto,
the Company will furnish counsel for the requesting holders of Registrable
Securities with copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits), and any such holder shall have the
opportunity to object to any information pertaining solely to such holder
that is contained therein and the Company will make the corrections
reasonably requested by such holder with respect to such information prior to
filing such registration statement or amendment.
4.2 Prepare and file with the Commission such amendments
and supplements to such registration statement and any prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
included in such registration statement, in accordance with the intended
methods of disposition thereof, until the earlier of (a) such time as all of
the Registrable Securities included in such registration statement have been
disposed of in accordance with the intended methods of disposition by the
holder or holders thereof as set forth in such registration statement or (b)
180 days (or, if the filing was on a Form S-3 registration statement, 365
days) after such registration statement becomes effective; provided, that, in
the event the holder of Registrable Securities is required to discontinue
such holder's disposition of Registrable Securities pursuant to Section 4.11
hereof, such 180-days (or 365 days, if applicable) shall be extended for such
additional period as is equal to the period during which such holders was
required to discontinue such disposition.
4.3 Promptly notify each requesting holder and the
underwriter or underwriters, if any, of:
(a) when such registration statement or any prospectus
used in connection therewith, or any amendment or supplement thereto, has
been filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
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<PAGE>
(b) any written request by the Commission for amendments
or supplements to such registration statement or prospectus;
(c) any notification received by the Company from the
Commission regarding the Commission's initiation of any proceeding with
respect to, or of the issuance by the Commission of, any stop order
suspending the effectiveness of such registration statement; and
(d) the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Securities
for sale under the applicable securities or blue sky laws of any jurisdiction.
4.4 Furnish to each holder of Registrable Securities
included in such registration statement such number of conformed copies of
such registration statement and of each amendment and supplement thereto, and
such number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary prospectus)
and any other prospectus filed under Rule 424 promulgated under the
Securities Act relating to such seller's Registrable Securities, and such
other documents, as such holder may reasonably request to facilitate the
disposition of its Registrable Securities.
4.5 Use its best efforts to register or qualify all
Registrable Securities included in such registration statement under the
securities or "blue sky" laws of such states as each holder of Registrable
Securities shall reasonably request within twenty (20) days following the
original filing of such registration statement and to keep such registration
or qualification in effect for so long as such registration statement remains
in effect, and take any other action which may be reasonably necessary or
advisable to enable such holder to consummate the disposition in such states
of the Registrable Securities owned by such holder, except that the Company
shall not for any such purpose be required (a) to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this Section 4.5 be obligated to be so qualified,
(b) to consent to general service of process in any such jurisdiction or (c)
to subject itself to taxation in any such jurisdiction by reason of such
registration or qualification.
4.6 Use its best efforts to cause all Registrable
Securities included in such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable each holder thereof to consummate the disposition of such
Registrable Securities.
4.7 Notify each holder whose Registrable Securities are
included in such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which any prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and at the request
of any such holder promptly prepare and furnish to such holder a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to each holder of such
Registrable Securities, such
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<PAGE>
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
4.8 Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission.
4.9 Use its best efforts to cause all Registrable
Securities included in such registration statement to be listed, upon
official notice of issuance, on any securities exchange or quotation system
on which any of the securities of the same class as the Registrable
Securities are then listed.
4.10 The Company may require each holder whose
Registrable Securities are being registered to, and each such holder, as a
condition to including Registrable Securities in such registration statement,
shall, furnish the Company and the underwriters with such information and
affidavits regarding such holder and the distribution of such Registrable
Securities as the Company and the underwriters may from time to time
reasonably request in writing in connection with such registration statement.
At any time during the effectiveness of any registration statement covering
Registrable Securities offered by a holder, if such holder becomes aware of
any change materially affecting the accuracy of the information contained in
such registration statement or the prospectus (as then amended or
supplemented) relating to such holder, it will immediately notify the Company
of such change.
4.11 Upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.7, each holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until such holder receives the copies of the supplemented or
amended prospectus contemplated by Section 4.7 and, if so directed by the
Company, shall deliver to the Company all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities.
4.12 As used in this Agreement, the term "best efforts"
shall not mean efforts which require the performing party to do any act that
is unreasonable under the circumstances or to expend any funds other than
reasonable out-of-pocket expenses incurred in satisfying its obligations
hereunder, including but not limited to the fees, expenses and disbursements
of its accountants, counsel and other professionals.
5. EXPENSES. With respect to any registration requested pursuant
to Article 2 (except as otherwise provided in such Article with respect to a
registration voluntarily terminated at the request of the requesting holders
of Registrable Securities) the Company shall bear all of the expenses
("Registration Expenses") incident to the Company's performance of or
compliance with its obligations under this Agreement in connection with such
registration including, without limitation, all registration, filing,
securities exchange listing and NASD fees, all registration, filing,
qualification and other fees and expenses or complying with state securities
or "blue sky" laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses,
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the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance,
premiums and other costs of any policies of insurance against liabilities
arising out of the Public Offering of the Registrable Securities being
registered obtained by the Company (it being understood that the Company
shall have no obligation to obtain such insurance) and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities; but excluding underwriting discounts and commissions and transfer
taxes, if any, in respect of Registrable Securities and any fees and
disbursements of counsel and accountants to the holders of the Registrable
Securities, which discounts, commissions, transfer taxes, fees and
disbursements shall in any registration be payable by the holders of the
Registrable Securities being registered, PRO RATA in proportion to the number
of Registrable Securities being sold by them.
6. INDEMNIFICATION.
6.1 The Company will, to the full extent permitted by
law, indemnify and hold harmless each holder of Registrable Securities which
are included in a registration statement pursuant to the provisions of this
Agreement, and its directors, officers and partners and each other person, if
any, who controls such holder within the meaning of the Securities Act, from
and against any and all losses, claims, damages, expenses or liabilities,
joint or several (collectively, "Losses") to which such holder or any such
director, officer, partner or controlling person may become subject under the
Securities Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in a registration statement prepared and filed
hereunder, any preliminary, final or summary prospectus contained therein or
any amendment or supplement thereto or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, and the Company
will reimburse the holder and each such director, officer, partner and
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending against any such Losses
(or action or proceeding in respect thereof); PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such
Losses arise out of or are based upon (a) an untrue statement or alleged
untrue statement or omission or alleged omission made in conformity with
written information furnished by such holder specifically for use in the
preparation of the registration statement or (b) such holder's failure to
send or give a copy of the final prospectus to the persons asserting an
untrue statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of Registrable Securities
to such person if such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such holder or any such
director, officer, partner or controlling person of such holder and shall
survive the transfer of such securities by such holder. The Company shall
also indemnify each other person who participates (including as an
underwriter) in the offering or sale of Registrable Securities, their
officers and directors, and partners, and each other person, if any, who
controls any such participating person
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within the meaning of the Securities Act to the same extent provided above
with respect to holders of Registrable Securities.
6.2 Each holder of Registrable Securities which are
included in a registration pursuant to the provisions of this Agreement will,
to the full extent permitted by law, indemnify and hold harmless the Company,
its officers, directors and each other person, if any, who controls the
Company within the meaning of the Securities Act from and against any and all
Losses to which the Company or any such officer, director or controlling
person may become subject under the Securities Act or otherwise, insofar as
such Losses (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in a registration statement prepared
and filed hereunder, any preliminary, final or summary prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in the light of the circumstances under which they
were made) not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in strict conformity with
written information furnished by such holder specifically for use in the
preparation of such registration statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling person of the
Company. The holder of Registrable Securities included in a registration
statement shall also indemnify each other person who participates (including
as an underwriter) in the offering or sale of Registrable Securities, their
officers and directors, and partners, and each other person, if any, who
controls any such participating person within the meaning of the Securities
Act to the same extent as provided above with respect to the Company. In no
event shall the liability of any holder under this Section 6.2 exceed the
gross proceeds received by such holder from the sale of their Registrable
Securities.
6.3 Promptly after receipt by a party indemnified
pursuant to the provisions of Section 6.1 or Section 6.2 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of Section
6.1 or Section 6.2, promptly notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have
to any indemnified party except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action
is brought against any indemnified party, the indemnifying party shall have
the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that if the defendants in any action include both the indemnified party and
the indemnifying party and the indemnified party reasonably concludes that
there is a conflict of interest that would prevent counsel for the
indemnifying party from also representing the indemnified party, the
indemnified party shall have the right to select one separate counsel to
participate in the defense of such action on behalf of the indemnified party
or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party
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<PAGE>
will not be liable to such indemnified party pursuant to the provisions of
Section 6.1 or Section 6.2 for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense thereof
unless (a) the indemnified party shall have employed counsel in accordance
with the proviso of the preceding sentence, (b) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of
the commencement of the action or (c) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party. If the indemnifying party is not entitled to, or elects
not to, assume the defense of a claim, it will not be obligated to pay the
fees and expenses of more than one counsel for the indemnified parties with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
additional counsel or counsels for the indemnified parties, but only to the
extent necessary to cure such conflict of interest. No indemnifying party
shall consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation without the consent of the indemnified
party. No indemnifying party shall be subject to any liability for any
settlement made without its consent. An indemnified party may at any time
elect to participate in the defense of any claim or proceeding at its own
expense.
7. UNDERWRITTEN OFFERINGS. If a distribution of Registrable
Securities pursuant to a registration statement is to be underwritten, the
holders whose Registrable Securities are to be distributed by such
underwriters shall be parties to such underwriting agreement. No requesting
holder may participate in such underwritten offering unless such holder
agrees to sell its Registrable Securities on the basis provided in such
underwriting agreement and completes and executes all questionnaires, powers
of attorney, indemnities and other documents reasonably required under the
terms of such underwriting agreement. If any requesting holder disapproves of
the terms of an underwriting, such holder may elect to withdraw therefrom and
from such registration by notice to the Company and the managing underwriter,
and each of the remaining requesting holders shall be entitled to increase
the number of Registrable Securities being registered to the extent of the
Registrable Securities so withdrawn in the proportion which the number of
Registrable Securities being registered by such remaining requesting holder
bears to the total number of Registrable Securities being registered by all
such remaining requesting holders.
8. STAND-OFF AGREEMENT. Each holder of Registrable Securities
agrees, so long as such holder holds at least 5% of the Company's outstanding
voting equity securities, in connection with a Public Offering, upon request
of the Company or the underwriters managing such Public Offering, not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Common Shares of the Company without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not exceeding 180 days) from the effective date of the
registration statement relating to such Public Offering as may be requested
by the underwriters; PROVIDED, HOWEVER, that all other persons with
registration rights (whether or not pursuant to this Agreement) and all of
the executive officers
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<PAGE>
and directors of the Company who own stock of the Company must also agree to
not less onerous restrictions.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register the Registrable Securities pursuant to this Agreement may
not be assigned by USB or US Bank except (a) to an Affiliate of USB or US
Bank without limitation or (b) to a transferee or assignee of Registrable
Securities representing or convertible into 5% or more of the Company's
outstanding Common Shares. In the case of either (a) or (b) USB or US Bank
shall, within a reasonable time after such transfer or assignment, furnish to
the Company written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights
are being assigned. Any transferee asserting registration rights hereunder
shall be bound by the applicable provisions of this Agreement.
10. AMENDMENT. The Company shall not amend this Agreement without
the written consent of the holders of more than 50% of the Registrable
Securities.
11. TERMINATION. This Agreement, and all of the Company's
obligations hereunder (other than its obligations pursuant to Article 6,
which obligations shall survive such termination), shall terminate upon the
earlier to occur of (i) the date on which there are no Registrable Securities
outstanding and (ii) April 28, 2005.
12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law or rule, the
validity, legality and enforceability of the other provision of this
Agreement will not be affected or impaired thereby.
13. NOTICES. All notices, consents, requests, instructions,
approvals or other communications provided for herein shall be in writing and
delivered by personal delivery, overnight courier, mail or electronic
facsimile addressed to the receiving party at the address set forth herein.
All such communications shall be effective when received.
(a) If to any holder of any Registrable Securities
addressed to such holder at its address as shown on the books
of the Company, or at such other address as such holder may
specify by written notice to the Company, or
(b) if to the Company, at New Century Financial
Corporation, 18400 Von Karman, Suite 1000, Irvine, California
92612, Attention: Brad A. Morrice, Fax: 949-440-7033; or at
such other address as the Company may specify by written
notice to the holders of Registrable Securities hereunder.
14. COUNTERPARTS. This Agreement may be executed concurrently in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Facsimile
signatures shall constitute original signatures for all purposes of this
Agreement.
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15. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
16. GOVERNING LAW. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the internal
laws, and not the laws pertaining to the conflicts or choice of laws, of the
State of Delaware.
17. ENTIRE AGREEMENT; EFFECTIVENESS. This Agreement is intended by
the parties hereto to be the final expression of their agreement and
constitutes and embodies the entire agreement and understanding between the
parties hereto with regard to the subject matter hereof and is a complete and
exclusive statement of the terms and conditions thereof, and shall supersede
any and all prior oral or written correspondence, conversations,
negotiations, agreements and understandings relating to the same subject
matter. This Agreement shall take effect upon its execution by the Company,
USB and US Bank and shall amend and replace the Registration Rights
Agreement. Upon the effectiveness of this Agreement, the Registration Rights
Agreement shall be of no further force and effect.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized representatives as
of the day and year first above written.
NEW CENTURY FINANCIAL
CORPORATION
By
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Its
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U.S. BANCORP
By
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Its
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U.S. BANK NATIONAL ASSOCIATION
By
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Its
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