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.
"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:
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 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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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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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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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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New Century Financial Corporation
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy: 000-000-0000
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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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:_____________________________________
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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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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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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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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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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]
-16-
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]
-17-
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
-18-
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
-19-
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.
-20-
(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
-21-
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.
-22-
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
-23-
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]
-24-
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]
-25-
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]
-26-
