Exhibit 10.8
PREFERRED SECURITIES PURCHASE AGREEMENT
by and among
NEW CENTURY FINANCIAL CORPORATION,
NEW CENTURY CAPITAL TRUST I
and
KODIAK WAREHOUSE LLC
 
Dated as of September 13, 2006
 

 

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TABLE OF CONTENTS

              Page  
1. Definitions
    1  
 
       
2. Purchase and Sale of the Preferred Securities
    2  
 
       
3. Conditions
    2  
 
       
4. Representations and Warranties of the Company and the Trust
    4  
 
       
5. Representations and Warranties of the Purchaser
    12  
 
       
6. Covenants and Agreements of the Company and the Trust
    13  
 
       
7. Payment of Expenses
    15  
 
       
8. Indemnification
    16  
 
       
9. Termination; Representations and Indemnities to Survive
    17  
 
       
10. Amendments
    18  
 
       
11. Notices
    18  
 
       
12. Parties in Interest; Successors and Assigns
    19  
 
       
13. Applicable Law
    19  
 
       
14. Submission to Jurisdiction
    20  
 
       
15. Counterparts and Facsimile
    20  

SCHEDULES AND EXHIBITS

         
Schedule 4(o)
  -   List of Subsidiaries
Exhibit A
  -   Form of Maryland Counsel’s Opinion Pursuant to Section 3(b)(i)
Exhibit B
  -   Form of Company Special Corporate Counsel’s Opinion Pursuant to
Section 3(b)(ii)
Exhibit C
  -   Form of Company Special Tax Counsel’s Opinion Pursuant to
Section 3(b)(iii)
Exhibit D
  -   Form of Purchaser Tax Counsel’s Opinion Pursuant to Section 3(c)
Exhibit E
  -   Form of Delaware Counsel’s Trust Opinion Pursuant to Section 3(d)
Exhibit F
  -   Form of Property/Indenture Trustee Counsel’s Opinion Pursuant to
Section 3(e)
Exhibit G
  -   Form of Delaware Trustee Counsel’s Opinion Pursuant to Section 3(f)
Exhibit H
  -   Form of Officer’s Financial Certificate Pursuant to Section 6(g)

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PREFERRED SECURITIES PURCHASE AGREEMENT
     This PREFERRED SECURITIES PURCHASE AGREEMENT, dated as of September 13,
2006 (this “Purchase Agreement”), is entered into by and among New Century
Financial Corporation, a Maryland corporation (the “Company”), and New Century
Capital Trust I, a Delaware statutory trust (the “Trust”, and together with the
Company, the “Sellers”), on the one hand, and Kodiak Warehouse LLC, a Delaware
limited liability company (the “Purchaser”), on the other hand.
W I T N E S S E T H:
     WHEREAS, the Trust proposes to issue and sell 50,000 of its preferred
securities, having a stated liquidation amount of One Thousand Dollars ($1,000)
per preferred security, bearing distributions at a fixed rate of 8.65% per annum
of the liquidation amount through the distribution payment date in September,
2011 and thereafter at a variable rate, reset quarterly, equal to LIBOR (as
defined in the Indenture (as defined below)) plus 3.50% per annum of the
liquidation amount (the “Preferred Securities”);
     WHEREAS, the entire proceeds from the sale by the Trust of the Preferred
Securities will be combined with the entire proceeds from the sale to the
Company by the Trust of its common securities, having a stated liquidation
amount of One Hundred Thousand ($1,000) per common security (the “Common
Securities”), and will be used by the Trust to purchase Fifty-One Million Five
Hundred Forty-Five Thousand Dollars ($51,545,000) in principal amount of the
junior subordinated notes of the Company (the “Junior Subordinated Notes”);
     WHEREAS, the Preferred Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the “Trust
Agreement”), dated as of the Closing Date (as defined below), among the Company,
as depositor, Wells Fargo Bank, N.A., a national banking association, as
property trustee (in such capacity, the “Property Trustee”), Wells Fargo
Delaware Trust Company, a Delaware corporation, as Delaware trustee (in such
capacity, the “Delaware Trustee”), and the Administrative Trustees named therein
(in such capacities, the “Administrative Trustees”); and
     WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the “Indenture”), between
the Company and Wells Fargo Bank, N.A., a national banking association, as
indenture trustee (in such capacity, the “Indenture Trustee”).
     NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:
          1. Definitions. The Preferred Securities, the Common Securities and
the Junior Subordinated Notes are collectively referred to herein as the
“Securities.” This Purchase Agreement, the Indenture, the Trust Agreement, the
Junior Subordinated Note Purchase Agreement (as defined below), the Common
Securities Subscription Agreement (as defined in the Trust Agreement) and the
Securities are collectively referred to herein as the “Operative Documents.” All
other capitalized terms used but not defined in this Purchase Agreement shall
have the respective meanings ascribed thereto in the Indenture.

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          2. Purchase and Sale of the Preferred Securities.
          (a) The Trust agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Trust, Fifty Million Dollars ($50,000,000) in
aggregate stated liquidation amount of the Preferred Securities for immediately
available funds in an amount (the “Purchase Price”) equal to Fifty Million
Dollars ($50,000,000). The Trust shall use the Purchase Price, together with the
proceeds from the sale of the Common Securities, to purchase the Junior
Subordinated Notes.
          (b) Delivery or transfer of, and payment for, the Preferred Securities
shall be made at 10:00 A.M. Chicago time (11:00 A.M. New York City time), on
September 13, 2006 or such later date (not later than September 15, 2006) as the
parties may designate (such date and time of delivery and payment for the
Preferred Securities being herein called the “Closing Date”). The Preferred
Securities shall be transferred and delivered to the Purchaser against the
payment of the Purchase Price to the Trust made by wire transfer in immediately
available funds on the Closing Date to a U.S. account designated in writing by
the Company at least two Business Days prior to the Closing Date.
          (c) Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
at least two Business Days in advance of the Closing Date. The Company and the
Trust agree to have the Preferred Securities available for inspection and
checking by the Purchaser in Chicago, Illinois, not later than 1:00 P.M.,
Chicago time (2:00 P.M. New York City time), on the Business Day prior to the
Closing Date. The closing for the purchase and sale of the Preferred Securities
shall occur at the offices of Winston & Strawn LLP, 35 West Wacker Drive,
Chicago, Illinois 60601, or such other place as the parties hereto shall agree.
          3. Conditions. The obligations of the parties under this Purchase
Agreement are subject to the following conditions:
          (a) The representations and warranties contained herein shall be
accurate as of the date of delivery of the Preferred Securities, unless a
representation or warranty is made as of a specific date, in which case it shall
be accurate as of such specific date.
          (b) The Purchaser shall have received the opinion of (i) Ballard Spahr
Andrews & Ingersoll LLP, Maryland counsel for the Company (“Maryland Counsel”),
dated the Closing Date, addressed to the Purchaser and the Indenture Trustee, in
substantially the form set out in Exhibit A hereto (subject to customary
assumptions and qualifications), (ii) O’Melveny & Myers LLP, special corporate
counsel for the Company (the “Company Counsel”), dated the Closing Date,
addressed to the Purchaser, in substantially the form set out in Exhibit B
hereto (subject to customary assumptions and qualifications) and (iii) Greenberg
Traurig, LLP, special tax counsel to the Company, dated the Closing Date,
addressed to the Purchaser in substantially the form set out in Exhibit C hereto
(subject to customary assumptions and qualifications).
          (c) The Purchaser shall have received the opinion of Winston & Strawn
LLP, special tax counsel for the Purchaser, dated the Closing Date, addressed to
the Purchaser and the Indenture Trustee, addressing the matters set out in
Exhibit D hereto (subject to customary assumptions and qualifications).

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          (d) The Purchaser shall have received the opinion of Potter Anderson &
Corroon LLP, special Delaware counsel for the Trust, dated the Closing Date,
addressed to the Purchaser, the Indenture Trustee, the Delaware Trustee and the
Company, in substantially the form set out in Exhibit E hereto (subject to
customary assumptions and qualifications).
          (e) The Purchaser shall have received the opinion of Potter Anderson &
Corroon LLP, special counsel for the Property Trustee and the Indenture Trustee,
dated the Closing Date, addressed to the Purchaser and the Company, in
substantially the form set out in Exhibit F hereto (subject to customary
assumptions and qualifications).
          (f) The Purchaser shall have received the opinion of Potter Anderson &
Corroon LLP, special Delaware counsel for the Delaware Trustee, dated the
Closing Date, addressed to the Purchaser, the Indenture Trustee and the Company,
in substantially the form set out in Exhibit G hereto (subject to customary
assumptions and qualifications).
          (g) The Purchaser shall have received a certificate of the Company,
signed by the Chief Executive Officer, President or an Executive Vice President,
and the Chief Financial Officer or Treasurer of the Company, and the Purchaser
shall have received a certificate of the Trust, signed by an Administrative
Trustee of the Trust, in each case dated the Closing Date, and, in the case of
the Company, as to clauses (i)(A) and (ii) below and, in the case of the Trust,
as to clause (i)(B) below:
               (i) (A) the representations and warranties of the Company in this
Purchase Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date, unless a representation or warranty
is made as of a specific date in which case it is true and correct as of such
specific date and the Company has complied in all material respects with all the
agreements and satisfied in all material respects all the conditions on its part
to be performed or satisfied at or prior to the Closing Date; and
                   (B) the representations and warranties of the Trust in this
Purchase Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date, unless a representation or warranty
is made as of a specific date in which case it is true and complete as of such
specific date and the Trust has complied in all material respects with all the
agreements and satisfied in all material respects all the conditions on its part
to be performed or satisfied at or prior to the Closing Date; and
               (ii) subsequent to the execution of this Purchase Agreement,
there has been no material adverse change in the condition (financial or
otherwise), earnings, business, liabilities or assets of the Company and its
subsidiaries taken as a whole (a “Material Adverse Change”).
          (h) Subsequent to the execution of this Purchase Agreement, there
shall not have been any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), earnings,
business, liabilities or assets of the Company and its subsidiaries taken as a
whole, whether or not occurring in the ordinary course of business, the

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effect of which is, in the Purchaser’s judgment, so material and adverse as to
make it impractical or inadvisable to proceed with the purchase of the Preferred
Securities.
          (i) Prior to or on the Closing Date, the Purchaser and its counsel
shall have received such further information, certificates and documents as the
Purchaser or its counsel may reasonably request.
          If any of the conditions specified in this Section 3 shall not have
been fulfilled when and as required by this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser’s
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser. Notice of such cancellation shall be given to the Company
and the Trust in writing or by telephone or facsimile confirmed in writing.
          Each certificate signed by any trustee of the Trust on behalf of the
Trust or any officer of the Company on behalf of the Company and delivered to
the Purchaser or the Purchaser’s counsel in connection with the Operative
Documents and the transactions contemplated hereby and thereby shall be deemed
to be a representation and warranty of the Trust and/or the Company, as the case
may be, and not by such trustee or officer in any individual capacity.
          4. Representations and Warranties of the Company and the Trust. The
Company and the Trust jointly and severally represent and warrant to, and agree
with the Purchaser, as follows (provided that none of the following
representations or warranties apply or relate in any way to the Purchaser or its
Affiliates (as defined below) or their acts or omissions):
          (a) Neither the Company nor the Trust, nor any of their “Affiliates”
(as defined in Rule 501(b) of Regulation D (“Regulation D”) under the Securities
Act (as defined below)) controlled by them, nor any person acting at their
direction (except for the Purchaser and its Affiliates, as to which no
representation or warranty is made), has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of any of the Securities under
the Securities Act of 1933, as amended (the “Securities Act”).
          (b) Neither the Company nor the Trust, nor any of their Affiliates
controlled by them, nor any person acting at their direction (except for the
Purchaser and its Affiliates, as to which no representative or warranty is
made), engaged in any form of “general solicitation” or “general advertising”
(within the meaning of Regulation D) in connection with any offer or sale of any
of the Securities.
          (c) The Securities (i) are not and have not been listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or quoted on a U.S. automated
inter-dealer quotation system and (ii) the Securities are not securities of an
open-end investment company, unit investment trust or face-amount certificate
company that are, or are required to be, registered under Section 8 of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), and
the

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Securities otherwise satisfy in all material respects the eligibility
requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act
(“Rule 144A(d)(3)”).
          (d) Neither the Company nor the Trust, nor any of their Affiliates
controlled by them, nor any person acting at their direction (except for the
Purchaser and its Affiliates, as to which no representation is made), has
engaged, or will engage, in any “directed selling efforts” within the meaning of
Regulation S (“Regulation S”) under the Securities Act with respect to the
Securities.
          (e) Neither the Company nor the Trust is, and, based on the
representations and warranties of the Purchaser, immediately following
consummation of the transactions contemplated hereby and the application of the
net proceeds therefrom, neither will be, an “investment company” or an entity
“controlled” by an “investment company,” in each case within the meaning of
Section 3(a) of the Investment Company Act.
          (f) Neither the Company nor the Trust has paid or agreed to pay to any
third party any compensation for soliciting another to purchase any of the
Securities, except for (i) the fees contemplated by the Operative Documents,
(ii) the fee that the Company has agreed to pay to TBC Securities, LLC and
(iii) the fee to be paid by TBC Securities, LLC, to J.P. Morgan Securities Inc.
          (g) The Trust has been duly created and is validly existing in good
standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C.
§3801, et seq. (the “Statutory Trust Act”), with all requisite trust power and
authority to own property and to conduct its business and its proposed business
and to enter into and perform its obligations under the Operative Documents to
which it is a party. The Trust is duly qualified to conduct business as a
foreign entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or assets of the Trust. The Trust is not a party
to or otherwise bound by any agreement other than the Operative Documents and
the other arrangements and agreements contemplated by the Operative Documents
(including, without limitation, the initial trust agreement). The Trust is, and
under current law will continue to be, classified for federal income tax
purposes as a grantor trust and not as an association or publicly traded
partnership taxable as a corporation.
          (h) The Trust Agreement has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the Company
and the Administrative Trustees, and, assuming due authorization, execution and
delivery thereof by the Property Trustee and the Delaware Trustee, will be a
legal, valid and binding obligation of the Company and the Trust, enforceable
against them in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyence, moratorium, reorganization and similar laws
affecting creditors’ rights generally and to general principles of equity (the
“Enforceability Exceptions”). Each of the Administrative Trustees is an employee
of the Company and has been duly authorized by the Company to execute and
deliver the Trust Agreement.

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          (i) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been duly executed and delivered by the Company, and,
assuming due authorization, execution and delivery thereof by the Indenture
Trustee, will be a legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to the
Enforceability Exceptions.
          (j) The Preferred Securities and the Common Securities have been duly
authorized by the Trust and, when authenticated in the manner provided for in
the Trust Agreement and issued and delivered to the Purchaser against payment
therefor on the Closing Date in accordance with this Purchase Agreement, in the
case of the Preferred Securities, and in accordance with the Common Securities
Subscription Agreement, in the case of the Common Securities, will be validly
issued, fully paid and nonassessable and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the Trust
Agreement. The issuance of the Securities is not subject to any preemptive or
other similar rights arising under the organizational documents of the Company
or Trust. On the Closing Date, all of the issued and outstanding Common
Securities will be directly owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance of any kind (each, a
“Lien”).
          (k) The Junior Subordinated Notes have been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture and,
when authenticated in the manner provided for in the Indenture and delivered to
the Trust against payment therefor in accordance with the Junior Subordinated
Note Purchase Agreement (the “Junior Subordinated Note Purchase Agreement”),
dated as of the date hereof, by and between the Company and the Trust, will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to the Enforceability Exceptions.
          (l) This Purchase Agreement has been duly authorized, executed and
delivered by the Company and the Trust, and, assuming due authorization,
execution and delivery thereof by the other parties thereto, constitutes the
legal, valid and binding obligation of the Company and the Trust enforceable
against the Company and the Trust in accordance with its terms, subject to the
Enforceability Exceptions and the effect of any laws or applicable public policy
against the enforcement of the indemnification provisions of this Purchase
Agreement set forth in Section 8.
          (m) Neither the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, nor the purchase of the Common
Securities by the Company and the purchase of the Junior Subordinated Notes by
the Trust, nor the execution and delivery of and compliance with the Operative
Documents by the Company or the Trust, nor the consummation of the transactions
contemplated hereby or thereby, (i) will conflict with or constitute a violation
or breach of, or default under, the Trust Agreement or the charter or bylaws or
similar organizational documents of the Company or any “significant subsidiary”
(as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) (a
“Subsidiary”) of the Company or any applicable material law, statute, rule,
regulation, judgment, order, writ or decree of any government, governmental
authority, agency or instrumentality or court (collectively, the “Governmental
Entities”), or any arbitrator, in each case having jurisdiction over the Trust
or the

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Company or any of the Company’s Subsidiaries or their respective properties or
assets or (ii) will conflict with or constitute a violation or breach of, or a
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any Lien upon any property or assets of the Trust, the Company
or any of the Company’s Subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
(A) the Trust, the Company or any of the Company’s Subsidiaries is a party or by
which it or any of them may be bound, or (B) any of the property or assets of
any of the Trust, the Company or any of the Company’s Subsidiaries is subject,
except, in the case of this clause (ii), for such conflicts, violations,
breaches, defaults, Repayment Events or Liens which (X) would not reasonably be
expected to, singly or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business, liabilities, assets
(taken as a whole) of the Company and its subsidiaries, taken as a whole,
whether or not occurring in the ordinary course of business (a “Material Adverse
Effect”) and (Y) would not reasonably be expected to, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents or (iii) require the consent, approval, authorization or
order of any court or Governmental Entity, except for consents, approvals,
authorizations or orders that (1) have been made or obtained or that will be
obtained on or prior to the Closing Date, (2) the failure to obtain would not
reasonably be expected to (I) result in a Material Adverse Effect or (II) singly
or in the aggregate, adversely affect the consummation of the transactions
contemplated by the Operative Documents, or (3) are required in order to comply
with blue sky laws. As used herein, a “Repayment Event” means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Trust or the Company or any of the Company’s Subsidiaries prior to its
scheduled maturity.
          (n) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Maryland, with all requisite
corporate power and authority to own, lease and operate its properties and
conduct its business and is duly qualified to conduct business and is in good
standing as a foreign corporation in each jurisdiction where such qualification
is necessary, except where the failure of the Company to be so qualified would
not reasonably be expected to, singly or in the aggregate, have a Material
Adverse Effect.
          (o) The Company has no Subsidiaries other than those subsidiaries
listed in Schedule 4(o) hereto. Each Subsidiary has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is organized, with all requisite corporate power and
authority to own, lease and operate its properties and conduct its business.
Each Subsidiary is duly qualified to transact business and is in good standing
as a foreign corporation in each jurisdiction where such qualification is
necessary, except where the failure to be so qualified would not reasonably be
expected to, singly or in the aggregate, have a Material Adverse Effect.
          (p) Each of the Trust, the Company and each of the Company’s
Subsidiaries hold all necessary approvals, authorizations, orders, licenses,
consents, registrations, qualifications, certificates and permits (collectively,
the “Governmental Licenses”) of and from Governmental Entities necessary to
conduct their respective businesses as now being conducted, except where the
failure to hold such approvals, authorizations, orders, licenses, consents,
requirements, qualifications, certificates and permits would not reasonably be
expected to have a Material

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Adverse Effect and neither the Trust, the Company nor any of the Company’s
Subsidiaries has received any written notice of proceedings relating to the
revocation or modification of any such Government License, except where the
failure to be so licensed or approved or the receipt of an unfavorable decision,
ruling or finding, would not reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except where the invalidity or the failure
of such Governmental Licenses to be in full force and effect would not
reasonably be expected to, singly or in the aggregate, have a Material Adverse
Effect; and the Company and its Subsidiaries are in compliance with all
applicable laws, rules, regulations, judgments, orders, decrees and consents,
except where the failure to be in compliance would not reasonably be expected
to, singly or in the aggregate, have a Material Adverse Effect.
          (q) All of the issued and outstanding shares of common stock of the
Company and each of its Subsidiaries are validly issued, fully paid and
nonassessable; all of the issued and outstanding shares of common stock of each
Subsidiary of the Company is owned by the Company, directly or through
subsidiaries, free and clear of any Lien, claim or equitable right; and none of
the issued and outstanding shares of common stock of the Company or any
Subsidiary of the Company was issued in violation of any preemptive or similar
rights arising by operation of law, under the charter or by-laws of such entity.
          (r) Neither the Company nor any of its Subsidiaries is (i) in
violation of its respective charter or by-laws or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any such Subsidiary is a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect.
          (s) Except as set forth in the information filed by the Company with
the Commission (as defined below), there is no action, suit or proceeding before
or by any Governmental Entity or arbitrator, now pending or, to the knowledge of
the Company or the Trust, threatened against or affecting the Trust or the
Company or any of the Company’s Subsidiaries, except for such actions, suits or
proceedings that, if adversely determined, would not reasonably be expected to,
singly or in the aggregate, materially adversely affect the consummation of the
transactions contemplated by the Operative Documents or have a Material Adverse
Effect.
          (t) The auditors of the Company who issued their report on the
Financial Statements (as defined below) are independent public accountants of
the Company and its subsidiaries as required by of the Securities Act, and the
rules and regulations of the Securities and Exchange Commission (the
“Commission”) thereunder.
          (u) The audited consolidated financial statements (including the notes
thereto) and schedules of the Company and its consolidated subsidiaries for the
three (3) fiscal years ended December 31, 2005 (the “Financial Statements”) and
the interim unaudited consolidated financial statements of the Company and its
consolidated subsidiaries for the three and six

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months ended June 30, 2006 (the “Interim Financial Statements”) filed with the
Commission fairly present in all material respects, in accordance with U.S.
generally accepted accounting principles (“GAAP”), the financial position of the
Company and its consolidated subsidiaries, and the results of operations and
changes in financial condition as of the dates and for the periods therein
specified, subject, in the case of Interim Financial Statements, to year-end
adjustments. Such consolidated financial statements and schedules have been
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as otherwise noted therein).
          (v) None of the Trust, the Company nor any of the Company’s
Subsidiaries has any material liability, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due, including any
liability for taxes, except for (i) liabilities set forth in the Financial
Statements or the Interim Financial Statements and the liabilities related to
the Operative Documents, (ii) normal fluctuations in the amount of the
liabilities referred to in clause (i) above occurring in the ordinary course of
affairs of the Trust, the Company and its subsidiaries since the date of the
most recent balance sheet included in such Financial Statements or the Interim
Financial Statements and (iii) liabilities set forth in the 1934 Act Reports (as
defined below).
          (w) Since the respective dates of the Financial Statements and the
Interim Financial Statements and except as disclosed in the 1934 Act Reports,
there has not been (A) any Material Adverse Change or (B) any dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock, except for (1) dividends declared, paid or made by the
Company on its 9.125% Series A Cumulative Redeemable Preferred Stock or its
9.75% Series B Cumulative Redeemable Preferred Stock and (2) dividends disclosed
in the 1934 Act Reports as declared which have been subsequently paid or made.
          (x) The documents of the Company filed with the Commission from and
including January 1, 2006, at the time they were filed by the Company with the
Commission (collectively, the “1934 Act Reports”), complied and will as of the
Closing Date comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder (the
“1934 Act Regulations”), and, at the date of this Purchase Agreement and on the
Closing Date, do not and will 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. The Company complies in all material respects with
all presently applicable provisions of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”) and is actively taking steps to ensure that it will comply
in all material respects with the other applicable provisions of the
Sarbanes-Oxley Act upon the effectiveness of such provisions.
          (y) No labor dispute with the employees of the Trust, the Company or
any of the Company’s Subsidiaries exists or, to the knowledge of the Company, is
imminent, except those which would not reasonably be expected to, singly or in
the aggregate, have a Material Adverse Effect.
          (z) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Governmental Entity, other
than those that (i) have been made or obtained or that will be obtained on or
prior to the Closing Date, (ii) the failure to obtain would

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not reasonably be expected to result in a Material Adverse Effect or adversely
affect the consummation of the transactions contemplated by the Operative
Documents, or (iii) are required in order to comply with the blue sky laws, is
necessary or required for the performance by the Trust or the Company of their
respective obligations under the Operative Documents, as applicable, or the
consummation by the Trust and the Company of the transactions contemplated by
the Operative Documents.
          (aa) Each of the Trust, the Company and each Subsidiary has good and
marketable title to all of its respective material real and personal properties,
in each case free and clear of all Liens and defects, except for those that
would not reasonably be expected to, singly or in the aggregate, have a Material
Adverse Effect or that are granted in properties the purchase of which is funded
under financing arrangements or that do not affect the value or use of such
properties; and all of the leases and subleases under which the Trust, the
Company or the Company’s Subsidiary holds properties are in full force and
effect, except where the failure of such leases and subleases to be in full
force and effect would not reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect or that would not materially affect
the value or use of such properties.
          (bb) Commencing with its taxable year ended December 31, 2004, the
Company has been, and upon the completion of the transactions contemplated
hereby, the Company will continue to be, organized and operated in conformity
with the requirements for qualification and taxation as a real estate investment
trust (a “REIT”) under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the “Code”), and the Company’s proposed method of operation
will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code, and no actions have been taken (or not taken
which are required to be taken) which would cause such qualification to be lost.
The Company currently expects to continue to be organized and to operate in a
manner so as to qualify as a REIT in the taxable year ending December 31, 2006
and in succeeding taxable years.
          (cc) The Company and each of the Subsidiaries have timely and duly
filed all Material Tax Returns (as defined below) required to be filed by them
or have requested an extension thereof, except for those state and local Tax
Returns for which the failure to file would not have a Material Adverse Effect,
and all such Tax Returns are true, correct and complete in all material
respects. The Company and each of the Significant Subsidiaries have timely and
duly paid in full all material Taxes required to be paid by them to the extent
such Taxes have become due and are not being contested in good faith or the
failure to pay such Taxes would not have a Material Adverse Effect (whether or
not such amounts are shown as due on any Tax Return). There are no federal,
state, or other Tax audits or deficiency assessments proposed or pending with
respect to the Company or any of the Significant Subsidiaries, and no such
audits or assessments are threatened. As used herein, the terms “Tax” or “Taxes”
mean (i) all federal, state, local, and foreign taxes, and other assessments of
a similar nature (whether imposed directly or through withholding), including
any interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term “Material Tax Returns” means all material federal, state,
local, and foreign Tax returns, declarations, statements, reports,

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schedules, forms, and information returns and any amendments thereto filed or
required to be filed with any Governmental Entity.
          (dd) There are no rulemaking or similar proceedings before the United
States Internal Revenue Service or comparable federal, state, local or foreign
government bodies which involve or affect the Company or any of its
subsidiaries, which, if the subject of an action unfavorable to the Company or
any such subsidiary, could result in a Material Adverse Effect.
          (ee) The books, records and accounts of the Company and the Company’s
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and the Company’s Subsidiaries. The Company and each
of the Company’s Subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
          (ff) The Company and the Company’s Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts in all material respects as are customary in the businesses
in which they are engaged or propose to engage after giving effect to the
transactions contemplated hereby. All policies of insurance and fidelity or
surety bonds insuring the Company or any of the Subsidiaries or the Company’s or
Subsidiaries’ respective businesses, assets, employees, officers and directors
are in full force and effect except where the failure of such insurance policies
and fidelity or surety bonds to be in full force and effect would not reasonably
be expected to result in a Material Adverse Effect.
          (gg) The Company and the Company’s Subsidiaries, or, to the knowledge
of the Company, any person acting on behalf of the Company and the Company’s
Subsidiaries including, without limitation, any director, officer, agent or
employee of the Company or the Company’s Subsidiaries has not, directly or
indirectly, while acting on behalf of the Company and the Company’s Subsidiaries
(i) used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds, (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(iv) made any other unlawful payment, except for such actions as would not
reasonably be expected to result in a Material Adverse Effect.
          (hh) The information provided by the Company and the Trust pursuant to
this Purchase Agreement and the Operative Documents when read together with the
information in the 1934 Act Reports does not, as of the date hereof, and will
not as of the Closing Date, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

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          (ii) Neither the Company nor, to the Company’s knowledge, any of its
Subsidiaries has violated or received written notice of any violation with
respect to any applicable environmental, safety or similar law applicable to
their respective businesses, the violation of which of which would reasonably be
expected to result in a Material Adverse Effect.
          5. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to, and agrees with, the Company and the Trust as
follows:
          (a) The Purchaser is aware that the Preferred Securities have not been
and will not be registered under the Securities Act and may not be offered or
sold within the United States or to “U.S. persons” (as defined in Regulation S)
except in accordance with Rule 903 of Regulation S or pursuant to an exemption
from the registration requirements of the Securities Act.
          (b) The Purchaser is an “accredited investor,” as such term is defined
in Rule 501(a) of Regulation D.
          (c) Neither the Purchaser, nor any of the Purchaser’s Affiliates, nor
any person acting on the Purchaser’s or the Purchaser’s Affiliate’s behalf has
engaged, or will engage, (i) in any form of “general solicitation or general
advertising” (within the meaning of Regulation D) or (ii) in any “directed
selling efforts” (within the meaning of Regulation S), in each case promulgated
under the Securities Act in connection with any offer or sale of the Preferred
Securities.
          (d) The Purchaser understands and acknowledges that (i) no public
market exists for any of the Preferred Securities and that it is unlikely that a
public market will ever exist for the Preferred Securities, (ii) the Purchaser
is purchasing the Preferred Securities for its own account, for investment and
not with a view to, or for offer or sale in connection with, any distribution
thereof in violation of the Securities Act or other applicable securities laws,
subject to any requirement of law that the disposition of its property be at all
times within its control and subject to its ability to resell such Preferred
Securities pursuant to an effective registration statement under the Securities
Act or pursuant to an exemption therefrom or in a transaction not subject
thereto, and the Purchaser agrees to the legends and transfer restrictions
applicable to the Preferred Securities contained in the Trust Agreement and the
Preferred Securities and the Purchaser shall not transfer the Preferred
Securities except in accordance with the Trust Agreement and the Preferred
Securities, and (iii) the Purchaser has had the opportunity to ask questions of,
and receive answers and request additional information from, the Company and is
aware that it may be required to bear the economic risk of an investment in the
Preferred Securities until the maturity thereof.
          (e) The Purchaser is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with all
requisite (i) limited liability company power and authority to execute, deliver
and perform this Purchase Agreement and the other Operative Documents to which
it is a party, to make the representations, warranties and covenants and
agreements specified herein and therein and to consummate the transactions
contemplated herein, including, without limitation, the purchase of the
Preferred Securities and (ii) right and power to purchase the Preferred
Securities.

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          (f) This Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser and no filing with, or authorization, approval,
consent, license, order registration, qualification or decree of, any
governmental entity, agency or court having jurisdiction over the Purchaser,
other than those that have been made or obtained, is necessary or required for
the performance by the Purchaser of its obligations under the Operative
Documents to which it is a party or to consummate the transactions contemplated
herein or for the resale of the Preferred Securities.
          (g) The Purchaser is a “Qualified Purchaser” as such term is defined
in Section 2(a)(51) of the Investment Company Act.
          6. Covenants and Agreements of the Company and the Trust. The Company
and the Trust jointly and severally covenant and agree with the Purchaser as
follows (provided that none of the following covenants apply or relate to the
Purchaser or its Affiliates or any of their acts or omissions):
          (a) The Company and the Trust will arrange for the qualification of
the Preferred Securities for sale under the state blue sky laws of such
jurisdictions as the Purchaser may reasonably designate and will maintain such
qualifications in effect so long as required for the sale of the Preferred
Securities; provided, that neither the Company nor the Trust shall be required
to qualify as a foreign corporation or to consent to the service of process
under the laws of any such jurisdiction. The Company or the Trust, as the case
may be, will promptly advise the Purchaser of the receipt by the Company or the
Trust, as the case may be, of any notification with respect to the suspension of
the qualification of the Preferred Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose.
          (b) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates to, nor will either of them permit any person
acting on its or their behalf (other than the Purchaser and its Affiliates) to,
directly or indirectly, resell any Preferred Securities that have been acquired
by any of them.
          (c) Neither the Company nor the Trust will, nor will either of them
permit any of their Affiliates or any person acting on their behalf (other than
the Purchaser and its Affiliates) to, engage in any “directed selling efforts”
within the meaning of Regulation S with respect to the Securities.
          (d) Neither the Company nor the Trust will, nor will either of them
permit any of their Affiliates or any person acting on their behalf to, directly
or indirectly, make offers or sales of any security, or solicit offers to buy
any security, under circumstances that would require the registration of any of
the Securities under the Securities Act.
          (e) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates or any person acting on their behalf (other than
the Purchaser and its Affiliates) to, engage in any form of “general
solicitation” or “general advertising” (within the meaning of Regulation D) in
connection with any offer or sale of the any of the Securities.
          (f) So long as any of the Preferred Securities are outstanding,
(i) the Company shall not take any action to have the Preferred Securities
listed on a national securities exchange

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registered under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system, (ii) neither the Company nor the Trust shall be
an open-end investment company, unit investment trust or face-amount certificate
company that is, or is required to be, registered under Section 8 of the
Investment Company Act, and, the Preferred Securities shall otherwise satisfy
the eligibility requirements of Rule 144A(d)(3) and (iii) neither the Company
nor the Trust shall engage, or permit any of the Company’s subsidiaries to
engage, in any activity that would cause the Company or the Trust to be an
“investment company” under the provisions of the Investment Company Act.
          (g) So long as any of the Preferred Securities are outstanding, each
of the Company and the Trust shall furnish to (i) the holder, and subsequent
holders, of the Preferred Securities, (ii) Kodiak Capital Management Company
LLC, 2107 Wilson Boulevard, Suite 450, Arlington, Virginia 22201, Attention:
Robert M. Hurley, or such other address as designated by Kodiak Capital
Management Company LLC) and (iii) any beneficial owner of the Preferred
Securities reasonably identified to the Company and the Trust (which
identification may be made by either such beneficial owner or by Kodiak Capital
Management Company LLC), (A) a duly completed and executed officer’s financial
certificate in the form attached hereto as Exhibit H, including the financial
statements referenced in such Exhibit, which certificate and financial
statements shall be so furnished by the Company and the Trust not later than
forty-five (45) days after the end of each of the first three fiscal quarters of
each fiscal year of the Company and not later than ninety (90) days after the
end of each fiscal year of the Company; provided, however, that so long as the
Company is a publicly reporting company, the Company has filed with the
Commission the relevant annual or quarterly report referenced in such
certificate and such report is publicly available on the EDGAR system, then the
Company shall not be required to furnish such certificate and financial
statements and (B) a current organizational chart of the Company and its
subsidiaries within ninety (90) days after the end of each fiscal year of the
Company.
          (h) Each of the Company and the Trust, during any period in which it
is not subject to and in compliance in all material respects with Section 13 or
15(d) of the Exchange Act, or it is not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, shall
provide to each holder of the Preferred Securities and to each prospective
purchaser (as designated by such holder) of the Preferred Securities, upon the
written request of such holder or prospective purchaser meeting the requirements
of a holder under the Trust Agreement, any information required to be provided
by Rule 144A(d)(4) under the Securities Act, if applicable. If the Company and
the Trust are required to register under the Exchange Act, such reports filed in
compliance with Rule 12g3-2(b) shall be sufficient information as required
above. This covenant is intended to be for the benefit of the Purchaser, the
holders of the Preferred Securities, and the prospective purchasers designated
by the Purchaser and such holders, from time to time, of the Preferred
Securities.
          (i) Neither the Company nor the Trust will, until one hundred eighty
(180) days following the Closing Date, without the Purchaser’s prior written
consent, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Preferred Securities or
other securities substantially similar to the Preferred Securities other than as
contemplated by this Purchase Agreement or (ii) any other securities convertible
into, or exercisable or exchangeable for, any Preferred Securities or other
securities substantially similar to the Preferred Securities, unless the Company
shall deliver to Purchaser an opinion of counsel

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stating that such offer, sale, contract to sell, option to purchase or
disposition will not be integrated with the offering and sale of the Preferred
Securities under this Purchase Agreement in a manner that would require or would
have required registration of such offering and sale of the Preferred Securities
under the Securities Act.
          (j) The Company intends that the Trust is, and under current law will
continue to be, classified for federal income tax purposes as a grantor trust
and not as a business entity or as an association or publicly traded partnership
taxable as a corporation and the Company agrees not to take any action
inconsistent with such intention, unless otherwise required by law.
          (k) Neither the Company nor the Trust will identify any of the
Indemnified Parties (as defined below) in a press release or any other public
statement without the consent of such Indemnified Party (which consent shall not
unreasonably withheld or delayed) except as required by applicable law, and if
so required, the Company or the Trust, as applicable, shall provide such
Indemnified Party with a copy of such press release or public statement prior to
the release thereof if practicable and permitted by applicable law.
          (l) The Purchaser shall have the right under this Purchase Agreement,
the Indenture and the Trust Agreement to request the substitution of new notes
for all or a portion of the Junior Subordinated Notes held by the Trust. The
Trust shall be required under the terms of this Purchase Agreement, the
Indenture and the Trust Agreement to accept such newly issued notes (the
“Replacement Notes”) from the Company and surrender a like amount of Junior
Subordinated Notes to the Company. The Replacement Notes shall bear terms
identical to the Junior Subordinated Notes with the sole exception of interest
payment dates (and corresponding redemption date and maturity date), which will
be specified by the Purchaser but shall in any event be quarterly. In no event
will the interest payment dates (and corresponding redemption date and maturity
date) on the Replacement Notes vary by more than sixty (60) calendar days from
the original interest payment dates (and corresponding redemption date and
maturity date) under the Junior Subordinated Notes. Each of the Company and the
Trust acknowledges and agrees that, to the extent of the principal amount of the
Replacement Notes issued to the Trust under the Indenture, the Purchaser (and
each successor to the Purchaser’s interest in the Preferred Securities) will
require the Trust to issue a new series of Preferred Securities having a
principal amount related to the principal amount of the Replacement Notes (the
“Replacement Securities”) to designated holders of Preferred Securities,
provided that any such Replacement Securities, and any distributions from the
Trust to the holders of Replacement Securities, must relate solely to the
Trust’s interest in the Replacement Notes and in no event will the Preferred
Securities other than the Replacement Securities share in the returns from any
Replacement Notes. The Replacement Securities shall have payment dates (and
corresponding redemption date and maturity date) that relate to the Replacement
Notes. Each of the Company and the Trust agrees to cooperate with all reasonable
requests of the Purchaser in connection with any of the foregoing; provided,
that, except as set forth herein, no action requested of the Company or the
Trust in connection with such cooperation shall otherwise modify the obligations
or the rights of the Company pursuant to such documents. The Purchaser shall pay
all reasonable expenses in connection with the issuance of the Replacement Notes
and the Replacement Securities.
          7. Payment of Expenses. The Company, as depositor of the Trust, agrees
to pay all costs and expenses incident to the performance of the obligations of
the Company and the

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Trust under this Purchase Agreement, whether or not the transactions
contemplated herein are consummated or this Purchase Agreement is terminated,
including all costs and expenses incident to (i) the authorization, issuance and
delivery of the Common Securities and the Preferred Securities and any taxes
payable in connection therewith excluding any taxes in connection with the sale
of the Preferred Securities by the Purchaser and the subsequent holders,
(ii) the fees and expenses of qualifying the Preferred Securities under the
securities laws of the several jurisdictions as provided in Section 6(a),
(iii) the fees and expenses of the counsel, the accountants and any other
experts or advisors retained by the Company, (iv) the fees and all reasonable
expenses of the Property Trustee, the Delaware Trustee, the Indenture Trustee
and any other trustee or paying agent appointed under the Operative Documents
(including the fees and disbursements of counsel for such trustees), which fees
and expenses shall not exceed a $2,000 acceptance fee, $5,500 for the fees and
expenses of Potter Anderson & Corroon LLP, special counsel retained by the
Indenture Trustee and Property Trustee and Special Delaware counsel retained by
the Delaware Trustee in connection with the Closing, and $4,000 in
administrative fees annually, and (v) the reasonable costs and expenses incurred
in connection with issuing the Preferred Securities in book-entry form including
all costs and expenses of The Depositary Trust Company and Portal and related to
obtaining CUSIP numbers.
          If the sale of the Preferred Securities provided for in this Purchase
Agreement is not consummated because any condition set forth in Section 3 hereof
to be satisfied by either the Company or the Trust is not satisfied, because
this Purchase Agreement is terminated pursuant to Section 9 or because of any
failure, refusal or inability on the part of the Company or the Trust to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder other than by reason of a default by the Purchaser, the
Company will reimburse the Purchaser upon demand for all reasonable
out-of-pocket expenses that shall have been incurred by the Purchaser in
connection with the proposed purchase and sale of the Preferred Securities;
provided that such expenses shall not exceed $30,000. Neither the Company nor
the Trust shall in any event be liable to the Purchaser for the loss of
anticipated profits from the transactions contemplated by this Purchase
Agreement.
          8. Indemnification. (a) The Company and the Trust agree jointly and
severally to indemnify and hold harmless the Purchaser, the Purchaser’s
Affiliates and Kodiak Capital Management Company LLC (collectively, the
“Indemnified Parties”), each person, if any, who “controls” any of the
Indemnified Parties within the meaning of either the Securities Act or the
Exchange Act, and the Indemnified Parties’ respective directors, officers,
employees and agents (collectively, the “Indemnified Group”), against any and
all losses, claims, damages or liabilities, joint or several, to which the
Indemnified Parties or any of them may become subject under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of, are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
information or documents furnished or made available to the Purchaser by or on
behalf of the Company in connection with this Purchase Agreement or the
transactions contemplated hereby, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) the breach or alleged breach of any
representation, warranty or agreement of either Seller contained herein or
(iv) the execution and delivery by the Company and/or the Trust of this Purchase
Agreement or any of the other Operative Documents and/or the consummation

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of the transactions contemplated hereby and thereby; provided, however, that
none of the Company or the Trust shall be liable to the extent that any such
loss, claim, damage or liability arises out of or is based on any statement, act
or omission of the Indemnified Group or any member thereof, and agree to
reimburse each such Indemnified Party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. The indemnity
agreements contained in this Section 8 are in addition to any liability which
the Company or the Trust may otherwise have.
          (b) The Company agrees to indemnify the Trust against all loss, claim,
damage, liability and expense whatsoever due from the Trust under paragraph
(a) above.
          (c) Promptly after receipt by a member of the Indemnified Group under
this Section 8 of notice of the commencement of any action, such member will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 8, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve the indemnifying party from liability under paragraph (a)
above unless and to the extent that such failure prejudices the indemnifying
party and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any member of the Indemnified Group other than the
indemnification obligation provided in paragraph (a) above. The indemnifying
party shall be entitled to assume the defense of such action, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all reasonable fees and expenses of such counsel, as incurred. Any
Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
Indemnified Party or (iii) the named parties to any such action (including any
impleaded parties) include both the Indemnified Party and the indemnifying
party, and the Indemnified Party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Indemnified Party. In no event shall the indemnifying party be
liable for fees and expenses of more than one counsel (in addition to one
(1) local counsel, if necessary) separate from their own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions arising out of the same general allegations or circumstances. An
indemnifying party will not, without the prior written consent of the
Indemnified Parties, which shall not be unreasonably withheld or delayed, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding. Any decisions to be made by an indemnifying party pursuant
to this Section 8 shall be made by the Company.
          9. Termination; Representations and Indemnities to Survive. This
Purchase Agreement shall be subject to termination in the absolute discretion of
the Purchaser, by written

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notice given to the Company and the Trust prior to delivery of and payment for
the Preferred Securities, if prior to such time (i) a downgrading shall have
occurred in the rating accorded the Company’s debt securities or preferred stock
by any “nationally recognized statistical rating organization,” as that term is
used by the Commission in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or
such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of the Company’s debt
securities or preferred stock, (ii) the Trust shall be unable to sell and
deliver to the Purchaser at least Fifty Million Dollars ($50,000,000) in
aggregate stated liquidation amount of the Preferred Securities, (iii) a
suspension or material limitation in trading in securities generally shall have
occurred on the New York Stock Exchange, (iv) a suspension or material
limitation in trading in any of the Company’s securities shall have occurred on
the exchange or quotation system upon which the Company’ securities are traded,
if any, (v) a general moratorium on commercial business activities shall have
been declared either by federal or Maryland authorities or (vi) there shall have
occurred any outbreak or escalation of hostilities, or declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the Purchaser’s judgment,
impracticable or inadvisable to proceed with the offering or purchase of the
Preferred Securities. The respective agreements, representations, warranties,
indemnities and other statements of the Company and the Trust or their
respective officers or trustees and of the Purchaser set forth in or made
pursuant to this Purchase Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Purchaser, the
Company or the Trust or any of the their respective officers, directors,
trustees or controlling persons, and will survive delivery of and payment for
the Preferred Securities. The provisions of Sections 7 and 8 shall survive the
termination or cancellation of this Purchase Agreement.
          10. Amendments. This Purchase Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement by each of the parties hereto.
          11. Notices. All communications hereunder shall be in writing and
effective only on receipt, and shall be mailed, delivered by hand or courier or
sent by facsimile and confirmed:
If to the Purchaser, to:
c/o Kodiak Capital Management Company, LLC
2107 Wilson Boulevard
Suite 450
Arlington, Virginia 22201
Attention: Mr. Robert M. Hurley
Facsimile: (703) 351-7901

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with a copy to:
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Facsimile: (312) 558-5700
if to the Company or the Trust, to:
New Century Financial Corporation
18400 Von Karman, Suite 1000
Irvine, California 92612
Facsimile: (949) 440-7033
Attention: General Counsel
with a copy to:
O’Melveny & Myers LLP
Embarcadero West
275 Battery Street, Suite 2600
San Francisco, California 94111
Facsimile: (415) 984-8701
Attention: C. Brophy Christensen, Esq.
          All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
(5) Business Days after being deposited in the mail, postage prepaid, if mailed,
(iii) if telecopied, as soon as transmission has been confirmed (which
confirmation may be machine generated) if such confirmation confirms receipt
prior to 5:00 p.m (New York time) and the next Business Day after being
telecopied if such confirmation confirms receipt after 5:00 P.M. (New York City
time) or (iv) the next Business Day after timely delivery to a courier, if sent
by overnight air courier guaranteeing next-day delivery.
          12. Parties in Interest; Successors and Assigns. This Purchase
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing expressed or
mentioned in this Purchase Agreement is intended or shall be construed to give
any person other than the parties hereto and the affiliates, directors,
officers, employees, agents and controlling persons referred to in Section 8
hereof and their successors, assigns, heirs and legal representatives, any right
or obligation hereunder. None of the rights or obligations of the Company or the
Trust under this Purchase Agreement may be assigned, whether by operation of law
or otherwise, without the Purchaser’s prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Company’s or the Trust’s consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase Agreement.
          13. Applicable Law. This Purchase Agreement will be governed by and
construed and enforced in accordance with the law of the State of New York
without reference to principles of conflicts of law (other than Section 5-1401
of the General Obligations Law).

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          14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK,
IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.
          15. Counterparts and Facsimile. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.
          16. Confidentiality. (a) For the purposes hereof, “Confidential
Information” means information delivered to the Purchaser, any subsequent holder
of the Securities or any beneficial owner of the Securities by or on behalf of
the Company or the Trust pursuant to the Operative Documents; provided, that
such term does not include information that (a) was publicly known or otherwise
known to the Purchaser, any subsequent holder of the Securities or any
beneficial owner of the Securities prior to the time of such disclosure without
any obligation of confidentiality with respect to such information,
(b) subsequently becomes publicly known through no act or omission in violation
of any obligation of confidentiality by the Purchaser, any subsequent holder of
the Securities or any beneficial owner of the Securities or any person acting on
their behalf or (c) otherwise becomes known to the Purchaser, any subsequent
holder of the Securities or any beneficial owner of the Securities other than
through disclosure by the Company or the Trust. The Purchaser, any subsequent
holder of the Securities and any beneficial owner of the Securities shall
maintain the confidentiality of such Confidential Information and shall not
share, deliver or otherwise disclose the Confidential Information to any other
person or entity; provided, that the Purchaser, any subsequent holder of the
Securities or any beneficial owner of the Securities may, subject to
Section 16(b), share, deliver or disclose Confidential Information to (i)
(A) their directors, officers, employees and affiliates, (B) rating agencies and
(C) to the extent such disclosure relates to their investment contemplated by
this Agreement, outside advisors, lenders, proposed transferees and a subsequent
holder or beneficial owner of the Securities; provided, that such person or
entity is or agrees to be bound to confidentiality restrictions substantially
similar to this Section 16(a), or (ii) any other person to which such sharing,
delivery or disclosure is required (x) to effect compliance with any applicable
law, rule, regulation or order or (y) in response to any subpoena or other legal
process; provided, further, that in the case of (x) or (y), the party subject to
such obligation shall promptly notify the Company and the Trust of the details
of the required disclosure and cooperate with the Company or the Trust to
intervene to oppose, limit or condition such disclosure or (iii) any attorney,
inside or outside auditors or accountants of the recipient of Confidential
Information or of any person described in clause (i)

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hereof; provided, that such person or entity is or agrees to be bound to
confidentiality restrictions substantially similar to this Section 16(a).
          (b) Notwithstanding anything to the contrary contained herein, the
Purchaser, any subsequent holder of the Securities and any beneficial owner of
the Securities shall maintain the confidentiality of the organizational chart
delivered pursuant to Section 6(g) and shall not share, deliver or otherwise
disclose such organizational chart to any other person or entity; provided,
however, that the Purchaser, any subsequent holder of the Securities or any
beneficial owner of the Securities may share, deliver or disclose such
organizational chart to (I) (a) rating agencies and (b) to their directors,
officers and employees to the extent necessary in connection with any disclosure
pursuant to clause (I)(a) or (II) to the extent required by applicable law, but
only after written notice has been provided to the Company if practicable and
permitted by applicable law.
[signature page follows]

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          IN WITNESS WHEREOF, the parties hereto have executed this Preferred
Securities Purchase Agreement as of the date first written above.

                  NEW CENTURY FINANCIAL CORPORATION    
 
           
 
  By:   /s/ Patti M. Dodge
 
         Name: Patti M. Dodge         Title: Executive Vice President and Chief
Financial
          Officer    
 
                NEW CENTURY CAPITAL TRUST I    
 
           
 
  By:   /s/ Brad A. Morrice    
 
                Name: Brad A. Morrice         Title: Administrative Trustee    
 
                KODIAK WAREHOUSE LLC    
 
           
 
  By:   Kodiak Funding, LP    
 
      Its: Sole Member    

         
 
  By:   Kodiak Funding Company, Inc.
 
      Its: General Partner
 
       

             
 
  By:   /s/ Robert M. Hurley
 
        Name: Robert M. Hurley         Title: Chief Financial Officer    

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