**Exhibit 10.4**

 

**NEW CENTURY FINANCIAL CORPORATION**

**2004 PERFORMANCE INCENTIVE PLAN**

**EMPLOYEE RESTRICTED STOCK AWARD AGREEMENT**

 

**THIS EMPLOYEE RESTRICTED STOCK AWARD AGREEMENT** (this “**AwardAgreement**”) is dated as of February 2, 2005 (the “**Award Date**”), by and between New Century Financial Corporation, a Maryland corporation (the “**Corporation**”), and Brad A. Morrice (the“**Participant**”). 

 

**WITNESSETH**

 

**WHEREAS**, pursuant to the New Century Financial Corporation 2004Performance Incentive Plan (the “**Plan**”), the Corporation hereby grants to the Participant, effective as of the date hereof, a restricted stock award (the “**Award**”), upon the terms and conditions set forth herein andin the Plan. 

 

**NOW THEREFORE**, in consideration ofservices rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows: 

 

**1.****Defined Terms**. Capitalized terms used herein and not otherwise defined herein shall have the meaningassigned to such terms in the Plan. 

 

**2.****Grant**. Subject to the terms of this Award Agreement, the Corporation hereby grants to the Participant an Award with respect to an aggregate of 41,585 restricted shares of Common Stock of the Corporation (the “**RestrictedStock**”). 

 

**3.****Vesting**. Subject toSection 8 below, the Award shall vest, and restrictions (other than those set forth in Section 8.1 of the Plan) shall lapse, with respect to one-third of the total number of shares of Restricted Stock (subject to adjustment under Section 7.1 of thePlan) on each of the first, second and third anniversaries of the Award Date. 

 

**4.****Continuance of Employment**. The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of theAward and the rights and benefits under this Award Agreement. Partial employment or service, even if substantial, during any vesting period will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rightsand benefits upon or following a termination of employment or services as provided in Section 8 below or under the Plan. 

 

Nothing contained in this Award Agreement or the Plan constitutes an employment or service commitment by the Corporation, affects the Participant’sstatus as an employee at will who is subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of theCorporation or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant’s other compensation or benefits. Nothing inthis paragraph, 

 

1 

however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto. 

 

**5.****Dividend and Voting Rights**. After the Award Date, theParticipant shall be entitled to cash dividends and voting rights with respect to the shares of Restricted Stock subject to the Award even though such shares are not vested, provided that such rights shall terminate immediately as to any shares ofRestricted Stock that are forfeited pursuant to Section 8 below. 

 

**6.****Restrictions on Transfer**. Prior to the time that they have become vested pursuant to Section 3, neither the Restricted Stock, nor any interest therein, amount payable in respect thereof, or Restricted Property (asdefined in Section 9 hereof) may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to transfers to theCorporation. 

 

**7.****Stock Issuance**.

 

(a) Book Entry Form. The Corporationshall issue the shares of Restricted Stock subject to the Award in book entry form, registered in the name of the Participant with notations regarding the applicable restrictions on transfer imposed under this Award Agreement; provided, however,that the Corporation may, in its discretion, elect to issue such shares in certificate form as provided in Section 7(b) below. 

 

(b) Certificates to be Held by Corporation; Legend. Any certificates representing shares of Restricted Stock that may be deliveredto the Participant by the Corporation prior to vesting shall be redelivered to the Corporation to be held by the Corporation until the restrictions on such shares shall have lapsed and the shares shall thereby have become vested or the sharesrepresented thereby have been forfeited hereunder. Such certificates shall bear the following legend: 

 

*“The ownership of this certificate and the shares of stock evidenced hereby and any interest therein are subject to substantial restrictions ontransfer under an Agreement entered into between the registered owner and New Century Financial Corporation. A copy of such Agreement is on file in the office of the Secretary of New Century Financial Corporation.”*******

 

(c) Delivery of Certificates Upon Vesting.Promptly after the vesting of any shares of Restricted Stock pursuant to Section 3, the Corporation shall, as applicable, either remove the notations on any shares of Restricted Stock issued in book entry form which have vested or deliver to theParticipant a certificate or certificates evidencing the number of shares of Restricted Stock which have vested (or, in either case, such lesser number of shares as may be permitted pursuant to Section 8.5 of the Plan). The Participant (or thebeneficiary or personal representative of the Participant in the event of the Participant’s death or disability, as the case may be) shall deliver to the Corporation any representations or other documents or assurances required pursuant toSection 8.1 of the Plan. The shares so delivered shall no longer be restricted shares hereunder. 

 

2 

(d) Stock Power; Power of Attorney. If the Corporation elects to issue sharecertificates to the Participant, the Participant shall be required to execute a stock power, in a form prescribed by the Corporation, with respect to such shares. The Corporation shall not deliver any share certificates in accordance with this AwardAgreement unless and until the Corporation shall have received such stock power executed by such Participant. The Participant, by acceptance of the Award, shall be deemed to appoint, and does so appoint by execution of this Award Agreement, theCorporation and each of its authorized representatives as the Participant’s attorney(s)-in-fact to effect any transfer of unvested forfeited shares (or shares otherwise reacquired by the Corporation hereunder) to the Corporation as may berequired pursuant to the Plan or this Award Agreement and to execute such documents as the Corporation or such representatives deem necessary or advisable in connection with any such transfer. 

 

**8. Effect of Termination of Employment or Services**. Subject toearlier vesting as provided in Section 7 of the Plan and Section 9 hereof, if the Participant ceases to be employed by or ceases to provide services to the Corporation or a Subsidiary, the Participant’s shares of Restricted Stock (and relatedRestricted Property as defined in Section 9 hereof) shall be forfeited to the Corporation to the extent such shares have not become vested pursuant to Section 3 upon the date the Participant’s employment or services terminate (regardless of thereason for such termination, whether with or without cause, voluntarily or involuntarily, or due to death or disability). Upon the occurrence of any forfeiture of shares of Restricted Stock hereunder, such unvested, forfeited shares and relatedRestricted Property shall be automatically transferred to the Corporation, without any other action by the Participant (or the Participant’s beneficiary or personal representative in the event of the Participant’s death or disability, asapplicable); no consideration shall be paid by the Corporation with respect to such transfer. The Corporation may exercise its powers under Section 7(d) hereof and take any other action necessary or advisable to evidence such transfer. TheParticipant (or the Participant’s beneficiary or personal representative in the event of the Participant’s death or disability, as applicable) shall deliver any additional documents of transfer that the Corporation may request to confirmthe transfer of such unvested, forfeited shares and related Restricted Property to the Corporation. 

 

**9.****Adjustments Upon Specified Events**. Upon the occurrence of certain events relating to the Corporation’s stock contemplated bySection 7.1 of the Plan, the Administrator shall make adjustments if appropriate in the number and kind of securities that may become vested under the Award. If any adjustment shall be made under Section 7.1 of the Plan or an event described inSection 7.3 of the Plan shall occur and the shares of Restricted Stock are not fully vested upon such event or prior thereto, the restrictions applicable to such shares of Restricted Stock shall continue in effect with respect to any considerationor other securities (the “**Restricted Property**” and, for the purposes of this Award Agreement, “Restricted Stock” shall include “Restricted Property”, unless the context otherwise requires) received in respect ofsuch Restricted Stock. Such Restricted Property shall vest at such times and in such proportion as the shares of Restricted Stock to which the Restricted Property is attributable vest, or would have vested pursuant to the terms hereof if such sharesof Restricted Stock had remained outstanding. To the extent that the Restricted Property includes any cash (other than regular cash dividends provided for in Section 5 hereof), such cash shall be invested, pursuant to policies established by theAdministrator, in interest bearing, FDIC-insured (subject to applicable insurance limits) deposits of a depository institution selected by the Administrator, the earnings on which shall be added to and become a part of the Restricted Property.

 

3 

**10.****Tax Withholding**. The Corporation (or any of its Subsidiaries last employing theParticipant) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to thevesting of any Restricted Stock. Alternatively, the Participant or other person in whom the Restricted Stock vests may irrevocably elect, in such manner and at such time or times prior to any applicable tax date as may be permitted or required underSection 8.5 of the Plan and rules established by the Administrator, to have the Corporation withhold and reacquire shares of Restricted Stock at their fair market value at the time of vesting to satisfy any withholding obligations of the Corporationor its Subsidiaries with respect to such vesting. Any election to have shares so held back and reacquired shall be subject to such rules and procedures, which may include prior approval of the Administrator, as the Administrator may impose, andshall not be available if the Participant makes or has made an election pursuant to Section 83(b) of the Code with respect to such Award. 

 

**11.****Notices**. Any notice to be given under the terms of this Award Agreement shall be in writing and addressed to the Corporation atits principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Corporation’s payroll records. Any notice shall be delivered in person or shall be enclosed in a properlysealed 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 begiven only when received, but if the Participant is no longer an Eligible Person, 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 11. 

 

**12.****Plan**. The Award and all rights of the Participantunder this Award Agreement are subject to all of the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Participant agrees to be bound by the terms of the Plan and this Award Agreement. The Participantacknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Award Agreement. Unless otherwise expressly provided in other sections of this Award Agreement, provisions of the Plan that confer discretionary authority onthe Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred byappropriate action of the Board or the Administrator under the Plan after the date hereof. 

 

**13.****Entire Agreement**. This Award Agreement and the Plan together constitute the entire agreement and supersede all priorunderstandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Award Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed bythe 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 Participant hereunder, but no such waiver shall operate as or be construed tobe a subsequent waiver of the same provision or a waiver of any other provision hereof. 

 

**14.****Counterparts**. This Award 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 andthe same instrument. 

 

4 

**15.****Section Headings**. The section headings of this Award Agreement are forconvenience of reference only and shall not be deemed to alter or affect any provision hereof. 

 

**16.****Governing Law**. This Award 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 principlesthereunder. 

 

**IN WITNESS WHEREOF**, the Corporation hascaused this Award Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date and year first above written. 

 
**NEW CENTURY FINANCIAL CORPORATION**
a Maryland corporation
/s/ Robert K. Cole
By:
 Robert K. Cole
Title:
 Chairman and Chief Executive Officer
 
**PARTICIPANT**
/s/ Brad A. Morrice
*Signature*
Brad A. Morrice
*Print Name*
 

5