exv10w8



 



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




 






 









 





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)







i









 








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).




2









 








          (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

3









 








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

4









 








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.




5









 








          (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

6









 








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

7









 








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

8









 








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

9









 








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,

10









 








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.




11









 








          (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.




12









 








          (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

13









 








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

14









 








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




15









 







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

16









 








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

17









 








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




18









 







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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