EXHIBIT
10.73
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (this "Agreement") is made and entered into as
of this 13th day of December, 2000, by and among New Century Financial
Corporation, a Delaware corporation ("Parent"), PWF Corporation, a California
corporation ("PWF"), Xxxx X. Xxxxx, an individual, and Xxxx Xxxxxxx, an
individual (each a "Former Shareholder" and collectively, the "Former
Shareholders").
W I T N E S S E T H:
WHEREAS, Parent and the Former Shareholders are party to a Merger
Agreement (the "Previous Merger Agreement") dated December 17, 1997, among
Parent, NC Acquisition Corp., PWF and the Former Shareholders, whereby PWF
Corporation was merged with NC Acquisition Corp. Pursuant to the Previous Merger
Agreement, the Former Shareholders are entitled to certain payments of cash and
common stock of Parent (the "Earn-outs") on specified dates and upon the
occurrence of certain events;
WHEREAS, pursuant to the Previous Merger Agreement, each of the Former
Shareholders entered into Employment Agreements (the "Former Employment
Agreements") with PWF;
WHEREAS, the parties hereto wish to terminate the Previous Merger
Agreement, and the payment of Earn-outs thereunder, and the Former Employment
Agreements;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. Earn-outs. In consideration of the Former Shareholders' right to
receive the First Earn-out payable for the fiscal year ended December 31, 2000
(as defined in the Previous Merger Agreement), the Former Shareholder's shall
receive aggregate consideration equal to $100,000. In consideration of the
Former Shareholders' right to receive the Second Earn-Out (as defined in the
Previous Merger Agreement), the Former Shareholder's shall receive aggregate
consideration equal to $1,150,000. In satisfaction thereof, Parent shall issue
to each Former Shareholder (i) a promissory note (each a "Note") in an
outstanding principal amount equal to such Former Shareholder's Prorata Share
(as that term is defined in the Previous Merger Agreement) of $625,000 (the
"Total Note Balance") in the form attached hereto as Exhibit A and (ii) a number
of shares of common stock of Parent (the "Parent Common Stock") equal to each
Former Shareholder's Prorata Share of the quotient of (i) Total Note Balance
(without giving effect to any offsets pursuant to Section 2 below) divided by
(ii) the average of the daily closing prices of the Parent Common Stock as
reported on the Nasdaq National Market for the twenty (20) day trading period
ending on November 29, 2000 (the "Parent Stock Price").
2. Offset for Stock Appreciation Rights. Parent shall satisfy the
obligations of PWF to certain parties to Stock Appreciation Right Agreements (as
listed on Schedule 1 hereto, the "SAR Holders") as set forth below:
(a) Parent shall issue to each SAR Holder a Note with a principal
balance as set forth on Schedule 1 hereto.
(b) Parent shall issue to each SAR Holder a number of shares of
Parent Common Stock as set forth on Schedule 1 hereto.
All such issuances of Notes and Parent Common Stock shall reduce, on a pro rata
basis, the outstanding principal balances of the Notes and the number of shares
of Parent Common Stock issued to the Former Shareholders, as provided in Section
1 hereof.
3. No Fractional Shares. Notwithstanding the provisions of Sections 1 and
2 above, Parent shall not be required to issue fractional shares of Parent
Common Stock. In lieu of any such fractional shares, Parent will add such
fraction multiplied by the Parent Stock Price to the principal balance of the
Note.
4. Profit Sharing. Notwithstanding the immediate termination of the Former
Employment Agreements and the release of PWF from all obligations thereunder,
the Former Shareholders shall be entitled to a prorated portion of profit
sharing amounts earned for the quarter ended December 31, 2000. Any such amounts
shall be calculated in accordance with the Former Employment Agreements and
shall be paid at such time and in such manner as provided therein.
5. Acknowledgments.
(a) The Former Shareholders acknowledge that they have been given
access to all information relating to the business and assets of the Parent that
they have requested.
(b) The Former Shareholders understand that the Parent Common Stock
to be issued in accordance with Section 1 hereof shall be issued and delivered
pursuant to an exemption from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"); and that for such purpose Parent
will rely upon the representations, warranties, covenants and agreements
contained herein; and that such exemption may not be available unless such
representations and warranties are correct and such covenants and agreements
performed.
(c) The Former Shareholders understand that, under existing rules of
the Securities and Exchange Commission (the "SEC"), there are substantial
restrictions on the transferability of Parent Common Stock; such shares will not
be, and the Former Shareholders will have no rights to require that such shares
be, registered under the Securities Act; such shares may be transferred only if
registered under the Securities Act or if an exemption from such registration is
available; the Former Shareholders may not be able to avail themselves of the
provisions of Rule 144 promulgated by the SEC under the Securities Act with
respect to the transfer of such shares; and, accordingly, the Former
Shareholders may have to hold such shares indefinitely.
(d) The Former Shareholders are sophisticated investors familiar
with the type of risks inherent in the acquisition of securities such as Parent
Common Stock; the Former
Shareholders are "accredited investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act; and the financial positions of the Former
Shareholders are such that they can afford to retain the Parent Common Stock for
an indefinite period of time without realizing any direct or indirect cash
return on their investments.
(e) The Former Shareholders will acquire the Parent Common Stock for
their own account and not with a view to, or for sale in connection with, the
distribution thereof within the meaning of the Securities Act.
(f) The Former Shareholders understand that the certificates
evidencing the Parent Common Stock will bear appropriate restrictive legends.
5. Release of Obligations. Upon the satisfaction of the obligations of
Parent and PWF to the Former Shareholders and the SAR Holders as set forth
above, the Previous Merger Agreement and the Employment Agreements shall
automatically terminate and be of no further force and effect; provided,
however, that the Former Shareholders shall continue to be subject to the
provisions of Section 7.4 of the Previous Merger Agreement. Moreover, the Former
Shareholders hereby to release Parent and PWF from all obligations under the
Previous Merger Agreement and the Employment Agreements. Furthermore, the Former
Shareholders shall cause each of the SAR Holders to execute a document affirming
his/her release of PWF from any further obligation under the Stock Appreciation
Right Agreements, a form of which is attached hereto as Exhibit B.
6. Employment Agreements. Concurrently with the execution and delivery of
this Agreement, each Former Shareholder shall enter into an Employment Agreement
with New Century Mortgage Corporation in the form attached hereto as Exhibit C.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
"Parent"
NEW CENTURY FINANCIAL CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
President
"PWF"
PWF CORPORATION,
a California corporation
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Xxxx Xxxxxxx
Chief Executive Officer
"Former Shareholders"
/s/ Xxxx X. Xxxxx
--------------------------------------------
Xxxx X. Xxxxx
/s/ Xxxx Xxxxxxx
--------------------------------------------
Xxxx Xxxxxxx
SCHEDULE 1
--------------------------------------------------------------------------------
Holder SAR Units Note Balance NCEN Shares
--------------------------------------------------------------------------------
Xxxxxxx Xxxx 350 $ 5,760.06 506
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 700 $ 11,508.78 1,013
--------------------------------------------------------------------------------
Xxxx Xxxxxxxxx 220 $ 3,621.26 318
--------------------------------------------------------------------------------
Xxxxxx Xxxxx 520 $ 8,543.87 753
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 000 $ 4,605.78 405
--------------------------------------------------------------------------------
Xxxx Xxxxxx 520 $ 8,543.87 753
--------------------------------------------------------------------------------
Xxxx Xxxxx 350 $ 5,760.06 506
--------------------------------------------------------------------------------
Xxxx XxXxxxxxx 250 $ 4,107.85 362
--------------------------------------------------------------------------------
Xxxxx Xxxx 400 $ 6,574.83 579
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxxx 280 $ 4,605.78 405
--------------------------------------------------------------------------------
Xxxxxxx Xxxxx 520 $ 8,543.87 753
--------------------------------------------------------------------------------
Xxxxx Xxxxx 620 $ 10,196.08 897
--------------------------------------------------------------------------------
