Exhibit 10.1

 

NEW CENTURY FINANCIAL CORPORATION

2004 PERFORMANCE INCENTIVE PLAN

DIRECTOR STOCK OPTION AGREEMENT

 

THIS DIRECTOR STOCK OPTION AGREEMENT (this “Option Agreement”) dated
                     by and between NEW CENTURY FINANCIAL CORPORATION, a
Maryland corporation (the “Corporation”), and [                    ] (the
“Grantee”) evidences the nonqualified stock option (the “Option”) granted by the
Corporation to the Grantee as to the number of shares of the Corporation’s
Common Stock first set forth below.

 

Number of Shares of Common Stock: [            ]1 Award Date: [            ,
2005]

 

Exercise Price per Share: $            1 Expiration Date: [            ,
2005]1,2

 

Vesting1, 2 [Alt. 1: The total number of shares of Common Stock subject to the
Option shall be fully vested as of the Award Date.] [Alt. 2: The Option shall
vest and become exercisable in installments as to one-third (1/3rd) of the total
number of shares of Common Stock subject to the Option on each of the first,
second, and third anniversaries of the Award Date.]

 

The Option is granted under the New Century Financial Corporation 2004
Performance Incentive Plan (the “Plan”) and subject to the Terms and Conditions
of Director Stock Option (the “Terms”) attached to this Option Agreement
(incorporated herein by this reference) and to the Plan. Capitalized terms are
defined in the Plan if not defined herein. The parties agree to the terms of the
Option set forth herein. The Grantee acknowledges receipt of a copy of the
Terms, the Plan and the Prospectus for the Plan.

 

“GRANTEE”   NEW CENTURY FINANCIAL CORPORATION     a Maryland corporation

 

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Signature

  By:  

 

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Print Name

  Print Name:  

 

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    Title:  

 

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1 Subject to adjustment under Section 7.1 of the Plan.

2 Subject to early termination under Section 4 of the Terms and Section 7.4 of
the Plan.

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TERMS AND CONDITIONS OF DIRECTOR STOCK OPTION

 

1. Vesting; Limits on Exercise; Incentive Stock Option Status.

 

The Option shall vest and become exercisable as set forth on the cover page of
this Option Agreement. The Option may be exercised only to the extent the Option
is vested and exercisable.

 

•   Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Grantee has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or
earlier termination of the Option.

 

•   No Fractional Shares. Fractional share interests shall be disregarded, but
may be cumulated.

 

•   Minimum Exercise. No fewer than 1001 shares of Common Stock may be purchased
at any one time, unless the number purchased is the total number at the time
exercisable under the Option.

 

•   Nonqualified Stock Option. The Option is a nonqualified stock option and is
not, and shall not be, an incentive stock option within the meaning of Section
422 of the Code.

 

2. Service; No Service Commitment.

 

The Grantee agrees to serve as a member of the Board in accordance with the
Corporation’s Articles of Amendment and Restatement, bylaws, and applicable law.

 

The vesting schedule, if any, requires continued service through each applicable
vesting date as a condition to the vesting of the applicable installment of the
Option and the rights and benefits under this Option Agreement. Service for only
a portion of the vesting period, even if a substantial portion, will not entitle
the Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of services as provided in
Section 4 below or under the Plan. Nothing contained in this Option Agreement or
the Plan constitutes a continued service commitment by the Corporation or
interferes with the right of the Corporation to increase or decrease the
compensation of the Grantee from the rate in existence at any time.

 

3. Method of Exercise of Option.

 

The Option shall be exercisable by the delivery to the Secretary of the
Corporation (or such other person as the Administrator may require pursuant to
such administrative exercise procedures as the Administrator may implement from
time to time) of:

 

•   a written notice stating the number of shares of Common Stock to be
purchased pursuant to the Option or by the completion of such other
administrative exercise procedures as the Administrator may require from time to
time;

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1 Subject to adjustment under Section 7.1 of the Plan.

 

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•   payment in full for the Exercise Price of the shares to be purchased in
cash, check or by electronic funds transfer to the Corporation, or (subject to
compliance with all applicable laws, rules, regulations and listing requirements
and further subject to such rules as the Administrator may adopt as to any
non-cash payment) in shares of Common Stock already owned by the Grantee, valued
at their Fair Market Value on the exercise date, provided, however, that any
shares initially acquired upon exercise of a stock option or otherwise from the
Corporation must have been owned by the Grantee for at least six (6) months
before the date of such exercise;

 

•   any written statements or agreements required pursuant to Section 8.1 of the
Plan; and

 

•   satisfaction of the tax withholding provisions of Section 8.5 of the Plan.

 

The Administrator also may, but is not required to, authorize a non-cash payment
alternative by notice and third party payment in such manner as may be
authorized by the Administrator.

 

4. Early Termination of Option.

 

4.1 Possible Termination of Option upon Change in Control. The Option is subject
to termination in connection with a Change in Control Event or certain similar
reorganization events as provided in Section 7.4 of the Plan.

 

4.2 Termination of Option upon a Termination of Grantee’s Services. If the
Grantee ceases to be a member of the Board (regardless of the reason), the
following rules shall apply (the last day that the Grantee is a member of the
Board is, except as otherwise provided below, referred to as the Grantee’s
“Severance Date”):

 

•   the Grantee (or, in the event of the Grantee’s death, his or her
beneficiary) will have until the day before the third (3rd) anniversary of his
or her Severance Date to exercise the Option (or portion thereof) to the extent
that it was vested on the Severance Date,

 

•   the Option, to the extent not vested on the Severance Date, shall terminate
on the Severance Date, and

 

•   the Option, to the extent not exercised during the 3-year period following
the Severance Date as provided above, shall terminate at the close of business
on the day before the third (3rd) anniversary of the Grantee’s Severance Date.

 

Notwithstanding anything above to the contrary, in all cases the Option remains
subject to earlier termination on the first to occur of the Expiration Date of
the Option or the termination of the Option pursuant to Section 4.1 above.

 

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Furthermore, if the Grantee ceases to be a member of the Board (regardless of
the reason) but, immediately thereafter, is employed by the Corporation or one
of its Subsidiaries, the Grantee’s Severance Date shall not be the date the
Grantee ceases to be a member of the Board but instead shall be the last day
that the Grantee is either or both (1) a member of the Board and/or (2) employed
by the Corporation or a Subsidiary.

 

5. Non-Transferability.

 

The Option and any other rights of the Grantee under this Option Agreement or
the Plan are nontransferable and exercisable only by the Grantee, except as set
forth in Section 5.7 of the Plan. For purposes of clarity, the Administrator has
not authorized any transfer exceptions as contemplated by Section 5.7.2 of the
Plan.

 

6. Notices.

 

Any notice to be given under the terms of this Option Agreement shall be in
writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Grantee at the address last reflected on
the Corporation’s payroll records, or at such other address as either party may
hereafter designate in writing to the other. Any such notice shall be delivered
in person or shall be enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government. Any such notice shall be given only
when received, but if the Grantee is no longer a member of the Board, shall be
deemed to have been duly given five (5) business days after the date mailed in
accordance with the foregoing provisions of this Section 6.

 

7. Plan.

 

The Option and all rights of the Grantee under this Option Agreement are subject
to, and the Grantee agrees to be bound by, all of the terms and conditions of
the Plan, incorporated herein by this reference. In the event of a conflict or
inconsistency between the terms and conditions of this Option Agreement and of
the Plan, the terms and conditions of the Plan shall govern. The Grantee agrees
to be bound by the terms of the Plan and this Option Agreement. The Grantee
acknowledges having read and understanding the Plan, the Prospectus for the
Plan, and this Option Agreement. Unless otherwise expressly provided in other
sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Administrator do not and shall not
be deemed to create any rights in the Grantee unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Administrator so conferred by appropriate action of the Board or the
Administrator under the Plan after the date hereof.

 

8. Entire Agreement.

 

This Option Agreement and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof. The Plan and this
Option Agreement may be

 

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amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing
and signed by the Corporation. The Corporation may, however, unilaterally waive
any provision hereof in writing to the extent such waiver does not adversely
affect the interests of the Grantee hereunder, but no such waiver shall operate
as or be construed to be a subsequent waiver of the same provision or a waiver
of any other provision hereof.

 

9. Governing Law.

 

This Option Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Maryland without regard to conflict of
law principles thereunder.

 

10. Effect of this Agreement.

 

Subject to the Corporation’s right to terminate the Option pursuant to Section
7.4 of the Plan, this Option Agreement shall be assumed by, be binding upon and
inure to the benefit of any successor or successors to the Corporation.

 

11. Counterparts.

 

This Option Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

12. Section Headings.

 

The section headings of this Option Agreement are for convenience of reference
only and shall not be deemed to alter or affect any provision hereof.

 

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