Exhibit 10.7

 

EXECUTION VERSION

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of September 30, 2004 (this
“Agreement”) among New Century Mortgage Corporation (“NCMC”), New Century
Financial Corporation (“NCFC”), New Century Funding I (the “Note Issuer”), NC
Capital Corporation (“NCCC”), NC Residual II Corporation (“NCR II”) and New
Century REIT, Inc. (“NC REIT”):

 

Reference is made to:

 

  (i) the Loan Purchase Agreement, dated as of May 10, 2002, as amended (the
“Loan Purchase Agreement”), among NCMC, NCFC, the Note Issuer, NCCC and NCR II;
and

 

  (ii) the Committed Note Purchase and Security Agreement, dated as of May 10,
2002, as amended (the “Note Purchase Agreement”), among New Century Funding I,
each Person party thereto as a Purchaser or a Noteholder from time to time, and
UBS Real Estate Securities Inc. (the “Agent”, f/k/a UBS Warburg Real Estate
Securities Inc.).

 

RECITALS

 

WHEREAS, the parties to this Agreement have agreed to amend the Loan Purchase
Agreement to reflect the reorganization of NCFC and NC REIT through the merger
of NC Merger Sub, Inc., a wholly-owned subsidiary of NC REIT, with and into
NCFC, resulting in NC REIT (thereafter, New Century Financial Corporation, a
Maryland corporation) becoming the parent company of NCFC (thereafter, New
Century TRS Holdings, Inc.) (the “REIT Conversion”).

 

NOW, THEREFORE, in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:

 

1. Effective as of the date on which the REIT Conversion occurs (the “Effective
Date”) and subject to the terms hereof:

 

(a) NCFC hereby conveys, sells, grants, transfers and assigns all of its right,
title and interest in the Loan Purchase Agreement to NC REIT; and

 

(b) NC REIT assumes all of the duties and obligations of NCFC under the Loan
Purchase Agreement.

 

2. NCMC, the Note Issuer, NCCC and NCR II hereby consent to the foregoing
assignment and assumption. As of the Effective Date, NCMC, the Note Issuer, NCCC
and NCR II on the one hand and NCFC on the other hand release one another from
all obligations under the Loan Purchase Agreement, provided that such release
shall not affect any rights or obligations arising on or before such Effective
Date.

 

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3. NCFC and NC REIT each individually warrants and represents as of the date
hereof and on the Effective Date that:

 

(a) It is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization;

 

(b) It has full power and authority to execute, deliver and perform its
obligations under this Agreement.

 

(c) The execution by it of this Agreement is in its ordinary course of business
and will not conflict with, or result in a breach of, any of the terms,
conditions or provisions of its charter or bylaws or any legal restriction, or
any material agreement or instrument to which it is now a party or by which it
is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which it or its property is subject. The execution,
delivery and performance by it of this Agreement have been duly authorized by
all its necessary corporate action. This Agreement has been duly executed and
delivered by it and will constitute the valid and legally binding obligation of,
enforceable against it in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws now or hereafter in effect relating to creditors’ rights generally,
and by general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;

 

(d) No consent, approval, order or authorization of, or declaration, filing or
registration with, any governmental entity is required to be obtained or made by
it in connection with its execution, delivery or performance of this Agreement;
and

 

(e) There is no action, suit, proceeding or investigation pending or, to its
knowledge, threatened against it, before any court, administrative agency or
other tribunal, which would draw into question the validity of this Agreement or
the Loan Purchase Agreement, or which, either in any one instance or in the
aggregate, would result in any material adverse change in its ability to perform
its obligations under this Agreement or the Loan Purchase Agreement and it is
solvent.

 

4. NC REIT warrants and represents as of the date hereof and on the Effective
Date that it has full power and authority to perform its duties and obligations
under the Loan Purchase Agreement.

 

5. Effective as of the Effective Date, Section 3.01(a)(xii) of the Loan Purchase
Agreement shall be replaced with the following:

 

Tangible Net Worth. As of October 1, 2004, the aggregate Tangible Net Worth of
New Century Financial is not less than $750,000,000. As used in this Agreement,
“Tangible Net Worth” shall mean, with respect to any Person, as of any date of
determination, the consolidated Net Worth of such Person and its subsidiaries,
less the consolidated net book value of all assets of such Person and its
subsidiaries (to the extent reflected as an asset on the balance sheet of such
Person or any subsidiary of such Person

 

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at such date) which will be treated as intangibles under GAAP, including,
without limitation, such items as deferred financing expenses, net leasehold
improvements, goodwill, trademarks, trade names, service marks, copyrights,
patents, licenses and unamortized debt discount and expense; provided, that,
residual securities owned by such Person shall not be treated as intangibles for
purposes of this definition.

 

6. Effective as of the Effective Date, Section 4.01(i) of the Loan Purchase
Agreement shall be replaced with the following:

 

Maintenance of Tangible Net Worth. As of the end of each calendar quarter
following September 30, 2004, the aggregate Tangible Net Worth of New Century
Financial shall be at least $750,000,000 plus 50% of net new capital received
(whether in the form of equity or subordinated debt which the Agent determines
has substantial equity features), for each such quarter on a cumulative basis.

 

7. This Agreement and all matters arising with respect to it shall be governed
by and construed in accordance with the laws of the State of New York
(including, without limitation, Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York) without otherwise giving effect to the
conflict of laws principles thereof, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.

 

8. No term or provision of this Agreement may be waived or modified unless such
waiver or modification is in writing and signed by the party against whom such
waiver or modification is sought to be enforced.

 

9. This Agreement shall inure to the benefit of (i) the successors and assigns
of the parties hereto and (ii) the Agent as a third-party beneficiary.

 

10. Each of the Loan Purchase Agreement and this Agreement shall survive the
assignment of the Loan Purchase Agreement (to the extent assigned hereunder),
and the Loan Purchase Agreement, as modified by this Agreement, shall remain in
full force and effect.

 

11. The Agent shall be an express third-party beneficiary of this Agreement, and
shall be entitled to rely upon and directly enforce any rights granted to it
hereunder or under the Note Purchase Agreement.

 

12. This Agreement may be executed simultaneously in any number of counterparts.
Each counterpart shall be deemed to be an original and all such counterparts
shall constitute one and the same instrument.

 

13. In the event that any provision of this Agreement conflicts with any
provision of the Loan Purchase Agreement, the terms of this Agreement shall
control.

 

14. For all purposes of this Agreement, except as otherwise expressly provided
herein, capitalized terms not otherwise defined herein shall have the meanings
assigned

 

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to such terms in the Loan Purchase Agreement or the Note Purchase Agreement,
which definitions are incorporated by reference herein.

 

15. It is expressly understood and agreed by the parties that (a) this Agreement
is executed and delivered by Wilmington Trust Company, not individually or
personally, but solely as Owner Trustee, in the exercise of the powers and
authority conferred and vested in it, pursuant to the Trust Agreement, (b) each
of the representations, undertakings and agreements herein made on the part of
the Note Issuer is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust Company but is made and intended
for the purpose of binding the Note Issuer with respect thereto, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, individually or personally, to perform any covenant either
expressly or impliedly contained herein, and the right to claim any and all such
liability, if any, being expressly waived by the parties hereto and by any
person claiming by, through or under the parties hereto, and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Note Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Note Issuer hereunder or under any other related documents.
Nothing expressed or implied in the preceding sentence, however, shall alter the
terms and conditions of Section 5.1 of the Trust Agreement.

 

16. All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at, faxed or mailed by
first class mail, postage prepaid, or by express delivery service, to (a) in the
case of NCMC, NCCC, NC REIT and NCFC and NCR II, 18400 Von Karman, Suite 1000,
Irvine CA 92612, Attn: Ralph W. Flick, and (b) in the case of the Note Issuer,
c/o New Century Mortgage Corporation, 18400 Von Karman, Suite 1000, Irvine CA
92612 and a copy to Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, DE 19890-0001, Attn: Corporate Trust Administration.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.

 

NEW CENTURY MORTGAGE CORPORATION

     

NEW CENTURY REIT, INC

By:

 

/s/ Patrick Flanagan

     

By:

 

/s/ Patrick Flanagan

Name:

 

Patrick Flanagan

     

Name:

 

Patrick Flanagan

Title:

 

President

     

Title:

 

Executive Vice President

NEW CENTURY FUNDING I

     

NC CAPITAL CORPORATION

By:

  Wilmington Trust Company, not in its individual capacity, but solely as Owner
Trustee under the Trust Agreement            

By:

 

/s/ Dorri E. Wolhar

     

By:

 

/s/ Patrick Flanagan

Name:

 

Dorri E. Wolhar

     

Name:

 

Patrick Flanagan

Title:

 

Financial Services Officer

     

Title:

 

Chief Executive Officer

NC RESIDUAL II CORPORATION

     

NEW CENTURY FINANCIAL CORPORATION

By:

 

/s/ Patrick Flanagan

     

By:

 

/s/ Patrick Flanagan

Name:

 

Patrick Flanagan

     

Name:

 

Patrick Flanagan

Title:

 

President

     

Title:

 

Executive Vice President

Acknowledged and consented to by:

           

Agent

     

Noteholder and Note Purchaser

UBS REAL ESTATE SECURITIES INC.

     

UBS REAL ESTATE SECURITIES INC.

By:

 

/s/ Robert Carpenter

     

By:

 

/s/ Robert Carpenter

Name:

 

Robert Carpenter

     

Name:

 

Robert Carpenter

Title:

 

Director

     

Title:

 

Director

By:

 

/s/ George A. Mangiaracina

     

By:

 

/s/ George A. Mangiaracina

Name:

 

George A. Mangiaracina

     

Name:

 

George A. Mangiaracina

Title:

 

Managing Director

     

Title:

 

Managing Director