Document:

exv10w7

 

Exhibit 10.7

NEW CENTURY FINANCIAL CORPORATION

2004 PERFORMANCE INCENTIVE PLAN

PERFORMANCE-ACCELERATED STOCK OPTION AGREEMENT

          THIS PERFORMANCE-ACCELERATED STOCK OPTION AGREEMENT (this “Option Agreement”) dated as of
                     (the “Award Date”) by and between NEW CENTURY FINANCIAL CORPORATION, a Maryland
corporation (the “Corporation”), and                      (the “Grantee”) evidences the
performance-accelerated stock option (the “Option”) granted by the Corporation to the Grantee as of
the Award Date.

WITNESSETH

     WHEREAS, pursuant to the New Century Financial Corporation 2004 Performance Incentive Plan
(the “Plan”), the Corporation has granted to the Grantee, effective as of the Award Date and
subject to the terms and conditions set forth herein and in the Plan, a stock option as to                     
shares of the Corporation’s Common Stock.

     NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and the
mutual benefits to be derived here from, the parties agree as follows:

	1.	 	Defined Terms.
	 
	 	 	Capitalized terms are defined in the Plan if not defined herein.
	 
	2.	 	Grant of Option.

     This Option Agreement evidences the Corporation’s grant to the Grantee of the right to
purchase, on the terms and conditions set forth herein and in the Plan, all or any part of an
aggregate number of                                 shares of the Corporation’s Common Stock1 at $                     per
share (the “Exercise Price”)1, exercisable from time to time, subject to the provisions
of this Agreement and the Plan, prior to the close of business on                      (the “Expiration
Date”).1,2 The Option has been granted to the Grantee in addition to, and not in lieu
of, any other form of compensation otherwise payable or to be paid to the Grantee. The Corporation
and the Grantee agree to the terms of the Option set forth herein. The Grantee acknowledges
receipt of a copy of the Plan and the Prospectus for the Plan.

 

			
	1	 	Subject to adjustment under Section 7.1 of the Plan
	 
	2	 	Subject to early termination under Section 6 below and Section 7.4 of the Plan

 

 

	3.	 	Vesting; Limits on Exercise.

     The Option shall become vested as to 100% of the total number of shares of Common Stock
subject to the Option on the fifth (5th) anniversary of the Award Date; provided,
however, that vesting of all or a portion of the shares of Common Stock subject to the Option may
be accelerated pursuant to Exhibit A attached hereto. The Option may be exercised only to
the extent the Option is vested and exercisable.

	 	•	 	Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Grantee has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or earlier
termination of the Option.
	 
	 	•	 	No Fractional Shares. Fractional share interests shall be disregarded, but
may be cumulated.
	 
	 	•	 	Minimum Exercise. No fewer than 1001 shares of Common Stock may
be purchased at any one time, unless the number purchased is the total number at the
time exercisable under the Option.
	 
	 	•	 	Nonqualified Stock Option. The Option is a nonqualified stock option and is
not, and shall not be, an incentive stock option within the meaning of Section 422 of
the Code.

	4.	 	Continuance of Employment/Service Required; No Employment/Service Commitment.

     The vesting schedule requires continued employment or service through each applicable vesting
date as a condition to the vesting of the applicable portion of the Option and the rights and
benefits under this Option Agreement. Employment or service for only a portion of the vesting
period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or
avoid or mitigate a termination of rights and benefits upon or following a termination of
employment or services as provided in Section 6 below or under the Plan.

     Nothing contained in this Option Agreement or the Plan constitutes a continued employment or
service commitment by the Corporation or any of its Subsidiaries, affects the Grantee’s status, if
he or she is an employee, as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to remain employed by or in service to the Corporation or any
Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time
to terminate such employment or service, or affects the right of the Corporation or any Subsidiary
to increase or decrease the Grantee’s other compensation.

	5.	 	Method of Exercise of Option.

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

 

 

	 	•	 	a written notice stating the number of shares of Common Stock to be purchased
pursuant to the Option or by the completion of such other administrative exercise
procedures as the Administrator may require from time to time,
	 
	 	•	 	payment in full for the Exercise Price of the shares to be purchased in cash, check
or by electronic funds transfer to the Corporation, or (subject to compliance with all
applicable laws, rules, regulations and listing requirements and further subject to
such rules as the Administrator may adopt as to any non-cash payment) in shares of
Common Stock already owned by the Grantee, valued at their Fair Market Value on the
exercise date, provided, however, that any shares initially acquired
upon exercise of a stock option or otherwise from the Corporation must have been owned
by the Grantee for at least six (6) months before the date of such exercise;
	 
	 	•	 	any written statements or agreements required pursuant to Section 8.1 of the Plan;
and
	 
	 	•	 	satisfaction of the tax withholding provisions of Section 8.5 of the Plan.

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

The Grantee may irrevocably elect, in such manner and at such time or times prior to any applicable
tax date as may be permitted or required under Section 8.5 of the Plan and rules established by the
Administrator (and subject to the requirements of applicable law), to have the Corporation withhold
shares of Common Stock issuable on exercise of the Option at their fair market value at the time of
exercise to satisfy any minimum withholding obligations of the Corporation or its Subsidiaries with
respect to such exercise.

	6.	 	Early Termination of Option.

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

     6.2 Termination of Option upon a Termination of Grantee’s Employment or Services. Subject to
earlier termination on the Expiration Date of the Option or pursuant to Section 6.1 above or
Section 6.3 below, if the Grantee ceases to be employed by or ceases to provide services to the
Corporation or a Subsidiary, the following rules shall apply (the last day that the Grantee is
employed by or provides services to the Corporation or a Subsidiary is referred to as the Grantee’s
“Severance Date”):

	 	•	 	other than as expressly provided below in this Section 6.2, (a) the Grantee will
have until the date that is 30 days after his or her Severance Date to exercise the
Option (or portion thereof) to the extent that it was vested on the Severance Date, (b)
the Option, to the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the 30-day period
following the Severance Date and not exercised during such period, shall terminate at
the close of business on the last day of the 30-day period;

 

 

	 	•	 	if the termination of the Grantee’s employment or services is the result of the
Grantee’s voluntary Retirement (as defined below and other than a termination by the
Corporation or a Subsidiary for Cause as provided below), then (a) the Grantee will
have until the date that is 3 years after his or her Severance Date to exercise the
Option (or portion thereof) to the extent that it was vested on the Severance Date or
becomes vested pursuant to the following, (b) any portion of the Option that was
scheduled to vest during the 3-year period following the Severance Date shall
automatically become fully vested and exercisable as of the Severance Date, (c) to the
extent the Option was not vested on the Severance Date or scheduled to vest during such
3-year period, such portion of the Option shall terminate on the Severance Date, and
(d) the Option, to the extent exercisable and not exercised at the end of such 3-year
period, shall terminate at the close of business on the last day of the 3-year period;
	 
	 	•	 	if the termination of the Grantee’s employment is the result of the Grantee’s
voluntary Early Retirement (as defined below and other than a termination by the
Corporation or a Subsidiary for Cause as provided below), then (a) the Grantee will
have until the date that is 3 years after his or her Severance Date to exercise the
Option (or portion thereof) to the extent that it was vested on the Severance Date or
becomes vested pursuant to the following, (b) the Administrator may, in its sole
discretion, provide that all or any portion of the Option that was scheduled to vest
during the 3-year period following the Severance Date shall automatically become fully
vested and exercisable as of the Severance Date, (c) to the extent the Option was not
vested on the Severance Date (after giving effect to any accelerated vesting pursuant
to the foregoing clause (b)), such portion of the Option shall terminate on the
Severance Date, and (d) the Option, to the extent exercisable and not exercised at the
end of such 3-year period, shall terminate at the close of business on the last day of
the 3-year period;
	 
	 	•	 	if the termination of the Grantee’s employment is the result of the Grantee’s death
or Disability (as defined below), then (a) the Grantee (or his beneficiary or personal
representative, as the case may be) will have until the date that is 3 years after the
Grantee’s Severance Date to exercise the Option, (b) the Option, to the extent not
otherwise vested on the Severance Date, shall become fully vested as of the Severance
Date, and (c) the Option, to the extent exercisable for the 3-year period following the
Severance Date and not exercised during such period, shall terminate at the close of
business on the last day of the 3-year period;
	 
	 	•	 	if the Grantee’s employment or services are terminated by the Corporation or a
Subsidiary for Cause (as defined below), the Option (whether vested or not) shall
terminate on the Severance Date.

     For purposes of the Option, “Disability” means a “permanent and total disability” (within the
meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator). For
purposes of the Option, “Retirement” means a termination of employment by the Grantee that occurs
upon or after the Grantee’s attainment of age 65 and in accordance with the retirement policies of
the Corporation (or the Subsidiary that employs the Grantee) then in effect.

 

 

For purposes of the Option, “Early Retirement” means a termination of employment by the
Grantee that occurs upon or after the date the Grantee attains age 55 and has performed at least 5
Years of Service (as such term is defined for purposes of determining vesting under the
Corporation’s 401(k) Profit-Sharing Plan). For purposes of the Option, “Cause” means that the
Grantee: (a) has been negligent in the discharge of his or her duties to the Corporation or a
Subsidiary or has refused or failed to adequately perform stated or assigned duties (other than by
reason of a disability or analogous condition), which shall be determined by the Corporation or a
Subsidiary in its sole discretion; (b) has been dishonest or committed or engaged in any act of
theft, embezzlement, dishonesty or fraud, breach of confidentiality, or unauthorized disclosure or
use of inside information, customer lists, associate information, trade secrets or other
confidential information of the Corporation or a Subsidiary or any other misuse of data,
information or documents acquired in connection with employment by the Corporation or a Subsidiary;
(c) has breached a fiduciary duty, or otherwise violated any duty, law, rule, regulation or policy
of the Corporation or a Subsidiary; (d) has misused or misappropriated the assets of the
Corporation or a Subsidiary; (e) has been convicted of, or pled guilty or nolo contendere to, any
felony or any misdemeanor involving moral turpitude or otherwise causing embarrassment to the
Corporation or a Subsidiary; (f) has materially breached any of the provisions of any agreement
with the Corporation or a Subsidiary; (g) has engaged in unfair competition with, or otherwise
acted intentionally or negligently in a manner injurious to the reputation, goodwill, business or
assets of, the Corporation or a Subsidiary; or (h) has induced a vendor or customer to breach or
terminate any contract with the Corporation or a Subsidiary or induced a principal for whom the
Corporation or a Subsidiary acts as agent to breach or terminate such agency relationship. “Cause”
shall also include any resignation by the Grantee in anticipation of a discharge for “Cause” (as
provided above) or resignation by the Grantee accepted by the Corporation or a Subsidiary in lieu
of a formal discharge for “Cause.”

     In all events the Option is subject to earlier termination on the Expiration Date of the
Option or as contemplated by Section 6.1 or Section 6.3. The Administrator shall be the sole judge
of whether the Grantee continues to render employment or services for purposes of this Option
Agreement.

     6.3 Termination of Option upon Grantee’s Engagement in Competition or Breach of Agreement.
Subject to earlier termination on the Expiration Date of the Option or pursuant to Section 6.1
above, if at any time during any post-termination exercise period of the Option provided for in
Section 6.2 above the Grantee (a) engages in any business for the Grantee’s own account or
otherwise derives any personal benefit from any business that competes with the business of the
Corporation or any of its Subsidiaries, (b) enters the employ of, or renders any services to, any
person engaged in any business that competes with the business of the Corporation or any of its
Subsidiaries or (c) breaches his or her obligations relating to disclosure, use or ownership of
intellectual property or proprietary information, competition, the solicitation of employees or
customers or non-disparagement of the Corporation or any of its Subsidiaries, in each case pursuant
to any agreement with the Corporation or any of its Subsidiaries, then the Option shall immediately
terminate on the date of such action, and the Grantee shall have no rights thereafter under or with
respect to the Option or this Option Agreement.

 

 

	7.	 	Non-Transferability.

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

	8.	 	Notices.

     Any notice to be given under the terms of this Option Agreement shall be in writing and
addressed to the Corporation at its principal office to the attention of the Secretary, and to the
Grantee at the address last reflected on the Corporation’s payroll records, or at such other
address as either party may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by the United States Government. Any such
notice shall be given only when received, but if the Grantee is no longer employed by the
Corporation or a Subsidiary, 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 8.

	9.	 	Plan.

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

	10.	 	Entire Agreement.

     This Option Agreement and the Plan together constitute the entire agreement and supersede all
prior understandings and agreements, written or oral, of the parties hereto with respect to the
subject matter hereof. The Plan and this Option Agreement may be amended pursuant to Section 8.6
of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation
may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not
adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any other provision
hereof.

	11.	 	Governing Law.

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

 

 

	12.	 	Effect of this Agreement.

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

	13.	 	Section Headings.

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

     IN WITNESS WHEREOF, the Corporation has caused this Option Agreement to be executed on its
behalf by a duly authorized officer and the Grantee has executed this Option Agreement by his or
her electronic acceptance hereof.

	 	 	 	 	 
	 	

NEW CENTURY FINANCIAL CORPORATION

a Maryland corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Brad Morrice 	 
	 	 	Title:  	Vice Chairman, President and Chief

Operating Officer 	 
	 

	 	 	 	 	 
	 	PARTICIPANT

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT A

PERFORMANCE-ACCELERATED VESTING

     Subject to early termination of the Option under Section 6 of this Option Agreement, the
Option shall immediately become vested as to the percentage of the total number of shares of Common
Stock subject to the Option set forth on the table below (the “Vesting Percentage”) at the end of
any period of ten (10) consecutive trading days on which the Common Stock is actively listed or
traded on a national securities exchange or on the New York Stock Exchange Reporting System and the
closing or last price, as applicable, for a share of the Common Stock (“Stock Price”) on each of
such trading days equals or exceeds the applicable threshold amount set forth below (the “Stock
Price Threshold”). For avoidance of doubt, the Option may vest only once with respect to any Stock
Price Threshold so that, for example, if the Stock Price equals or exceeds the 25% Stock Price
Threshold below for ten (10) consecutive trading days and 25% of the shares subject to the Option
vest accordingly, no additional shares subject to the Option shall vest if the Stock Price declines
below the 25% Stock Price Threshold and subsequently increases above the 25% Stock Price Threshold.
Furthermore, the Vesting Percentages do not cumulate so that, for example, if the Stock Price
equals or exceeds the 25% Stock Price Threshold for ten (10) consecutive trading days and 25% of
the shares subject to the Option vest accordingly, an additional 25% of the shares subject to the
Option (not an additional 50% of such shares) shall vest if the Stock Price subsequently equals or
exceeds the 50% Stock Price Threshold for ten (10) consecutive trading days.

	 	 	 	 	 
	Vesting Percentage	 	Stock Price Threshold	 
	25%
	 	$	46.00	 
	50%
	 	$	53.00	 
	75%
	 	$	60.00	 
	100%
	 	$	67.00	 

     Adjustments. The Administrator shall adjust the Stock Price Thresholds referenced above to
the extent (if any) it determines that the adjustment is necessary or advisable to preserve the
intended incentives and benefits to reflect (1) any stock split, reverse stock split, stock
dividend, material change in corporate capitalization, any material corporate transaction (such as
a reorganization, combination, separation, merger, acquisition, or any combination of the
foregoing), or any complete or partial liquidation of the Corporation, (2) any change in accounting
policies or practices, (3) the effects of any special charges to the Corporation’s earnings, or (4)
any other similar special circumstances.exv10w8

 

Exhibit 10.8

NEW CENTURY FINANCIAL CORPORATION

2004 PERFORMANCE INCENTIVE PLAN

PERFORMANCE-ACCELERATED RESTRICTED STOCK AWARD AGREEMENT

     THIS PERFORMANCE-ACCELERATED RESTRICTED STOCK AWARD AGREEMENT (this “Award Agreement”) is
dated as of                      (the “Award Date”) by and between New Century Financial Corporation, a
Maryland corporation (the “Corporation”), and                      (the “Participant”).

WITNESSETH

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

     NOW THEREFORE, in consideration of services 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 meaning assigned 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 ___restricted shares of Common
Stock of the Corporation (the “Restricted Stock”). The Corporation acknowledges that the
consideration for the Restricted Stock shall be the services rendered to the Corporation or any of
its Subsidiaries by the Participant prior to the applicable vesting date, the fair value of which
is not less than the par value per share of the Corporation’s Common Stock.

     3. Vesting. Subject to Section 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 100% of the total
number of shares of Restricted Stock (subject to adjustment under Section 7.1 of the Plan) on the
seventh (7th) anniversary of the Award Date; provided, however, that vesting of all or a
portion of the shares of Restricted Stock may be accelerated pursuant to Exhibit A attached
hereto.

     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
portion of the Award 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 rights and 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’s status 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

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with the right of the Corporation 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 in this paragraph,
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, the Participant 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 of Restricted 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 (as defined 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 (a)
transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

     7. Stock Issuance.

          (a) Book Entry Form. The Corporation shall 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 delivered to 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 shares represented 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 on transfer 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 the Participant 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 the beneficiary 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

2

 

required pursuant to Section 8.1 of the Plan. The shares so delivered shall no longer be
restricted shares hereunder.

          (d) Stock Power; Power of Attorney. If the Corporation elects to issue share
certificates 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 Award Agreement 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,
the Corporation 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 be required 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.

          (a) General. Subject to earlier vesting as provided in Section 7 of the Plan and
other than as expressly provided below in this Section 8, 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 related Restricted 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 the reason for such
termination, whether with or without cause, voluntarily or involuntarily).

          (b) Death or Disability. Notwithstanding Section 8(a), if the Participant ceases to
be employed by or ceases to provide services to the Corporation or a Subsidiary as a result of the
Participant’s death or Disability, the Participant’s shares of Restricted Stock that have not
become vested pursuant to Section 3 as of the date of such death or Disability shall vest on a
prorated basis determined in the following manner. For purposes of this Section 8(b) only, a
hypothetical vesting schedule shall be created in which the number of such unvested shares of
Restricted Stock shall be divided into eighty-four (84) substantially equal installments with each
such installment vesting on the last day of each month, commencing with the first month following
the month in which the Award Date occurs through and including the eighty-fourth (84th)
month following the month in which the Award Date occurs. Each such installment of shares of
Restricted Stock that would have vested pursuant to the foregoing schedule as of the date of the
Participant’s death or Disability shall automatically become vested as of such date. Fractional
share interests shall be disregarded, but may be cumulated. The Participant’s shares of Restricted
Stock (and related Restricted Property) that would not have vested pursuant to the foregoing
schedule as of the date of the Participant’s death or Disability shall be forfeited to the
Corporation as of such date. For purposes of the Award, “Disability” means a permanent disability
(within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the
Administrator).

          (c) Attainment of Age 65. Subject to earlier vesting as provided in Section 7 of the
Plan, if the Participant continues to be employed by or provide services to the Corporation or a
Subsidiary upon the date the Participant attains age sixty-five (65), the Participant’s shares

3

 

of Restricted Stock that have not become vested pursuant to Section 3 as of such date shall
vest on a prorated basis determined in the following manner. For purposes of this Section 8(c)
only, a hypothetical vesting schedule shall be created in which the number of such unvested shares
of Restricted Stock shall be divided into eighty-four (84) substantially equal installments with
each such installment vesting on the last day of each month, commencing with the first month
following the month in which the Award Date occurs through and including the eighty-fourth
(84th) month following the month in which the Award Date occurs. Each such installment
of shares of Restricted Stock that would have vested pursuant to the foregoing schedule as of the
date the Participant attains age 65 shall automatically become vested as of such date. Subject to
earlier vesting as provided in Section 3 hereof or Section 7 of the Plan, the remaining shares of
Restricted Stock will continue to vest in monthly installments according to the foregoing schedule,
provided that the Participant continues to be employed by or provide services to the Corporation or
a Subsidiary through the applicable vesting date. In the event that the Participant becomes
entitled to performance-accelerated vesting of the Award pursuant to Section 3 hereof, the number
of shares of Restricted Stock that shall become vested as of the date of such acceleration shall
equal: (1) the total number of shares of Restricted Stock subject to the Award that would have
vested pursuant to Exhibit A hereto (assuming for this purpose that no shares had previously vested
pursuant to this Section 8(c)) after giving effect to such acceleration, less (2) the number of
shares of Restricted Stock subject to the Award that had previously vested (determined immediately
before giving effect to such acceleration, and including any shares that had previously vested
pursuant to this Section 8(c) and any shares that would otherwise vest as of the date of such
acceleration pursuant to this Section 8(c)). The shares of Restricted Stock that do not become
vested after giving effect to the foregoing sentence (if any) shall continue to vest in monthly
installments in accordance with the foregoing vesting schedule, and the number of shares subject to
each installment shall be adjusted accordingly so that the remaining unvested shares of Restricted
Stock are scheduled to vest in substantially equal installments. Fractional share interests that
result from any calculation pursuant to this Section 8(c) shall be disregarded, but may be
cumulated. Upon the date the Participant ceases to be employed by or provide services to the
Corporation and its Subsidiaries, any shares of Restricted Stock (and related Restricted Property)
that have not vested in accordance with this Section 8(c) (or any other provision of this Award
Agreement or the Plan) shall be forfeited to the Corporation as of such date.

          (d) Forfeiture of Shares. Upon the occurrence of any forfeiture of shares of
Restricted Stock under this Section 8, such unvested, forfeited shares and related Restricted
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, as applicable); 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. The
Participant (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 confirm the 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 by Section 7.1 of the Plan, the Administrator

4

 

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 in Section 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 consideration or 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 of such
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 shares of 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
the Administrator, 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. Furthermore, the Administrator shall adjust
the performance measures and performance goals referenced on Exhibit A hereto to the extent (if
any) it determines that the adjustment is necessary or advisable to preserve the intended
incentives and benefits to reflect (1) any material change in corporate capitalization, any
material corporate transaction (such as a reorganization, combination, separation, merger,
acquisition, or any combination of the foregoing), or any complete or partial liquidation of the
Corporation, (2) any change in accounting policies or practices, (3) the effects of any special
charges to the Corporation’s earnings, or (4) any other similar special circumstances.

     10. Tax Withholding. The Corporation (or any of its Subsidiaries last employing the
Participant) 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 the vesting 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
under Section 8.5 of the Plan and rules established by the Administrator (and subject to the
requirements of applicable law), to have the Corporation withhold and reacquire shares of
Restricted Stock at their fair market value at the time of vesting to satisfy any minimum
withholding obligations of the Corporation or 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, and shall
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 at its 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 properly sealed
envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly maintained by the
United States Government. Any such notice shall be given only when received, but if the
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.

5

 

     12. Plan. The Award and all rights of the Participant under this Award Agreement are
subject to 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 Participant acknowledges 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 on the 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 by appropriate 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 prior understandings 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 by the
Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to
the extent such waiver does not adversely affect the interests of the Participant hereunder, but no
such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a
waiver of any other provision hereof.

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

     15. 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
principles thereunder.

     16. Stockholder Approval. Notwithstanding anything else contained herein to the
contrary, the effectiveness of the Award is subject to approval by the Corporation’s stockholders
at the Corporation’s 2006 annual meeting of stockholders, or an adjournment thereof, of the
proposed Plan amendments submitted for stockholder approval at that meeting. If such stockholder
approval is not obtained, any shares issued with respect to the Award shall immediately be
forfeited and returned to the Corporation.

[Signature page follows.]

6

 

     IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be executed on its
behalf by a duly authorized officer and the Participant has executed this Award Agreement by his or
her electronic acceptance hereof.

	 	 	 	 	 
	 	NEW CENTURY FINANCIAL CORPORATION,

a Maryland corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Brad Morrice 	 
	 	 	Title:  	Vice Chairman, President and Chief Operating

Officer 	 
	 

	 	 	 	 	 
	 	PARTICIPANT

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	 	 

7

 

	 	 	 	 	 

EXHIBIT A

PERFORMANCE-ACCELERATED VESTING

     Subject to Section 8 of this Award Agreement, the Award shall be subject to accelerated
vesting as follows:

	 	(a)	 	If the Corporation’s Before-Tax Net Income (as defined in Appendix A of the
Plan) equals or exceeds $500 million for any period of four (4) consecutive fiscal
quarters of the Corporation that commences on or after the Award Date, 33 1/3% of the
Restricted Shares shall become vested on the last day of such period.
	 
	 	(b)	 	If vesting of the Award accelerates pursuant to clause (a) above and the
Corporation’s Before-Tax Net Income equals or exceeds $600 million for any subsequent
period of four (4) consecutive fiscal quarters of the Corporation that commences after
the last day of the period referred to in clause (a), an additional 33 1/3% of the
Restricted Shares shall become vested on the last day of such subsequent period.
	 
	 	(c)	 	If vesting of the Award accelerates pursuant to clause (b) above and the
Corporation’s Before-Tax Net Income equals or exceeds $720 million for any subsequent
period of four (4) consecutive fiscal quarters of the Corporation that commences after
the last day of the period referred to in clause (b), the Award shall become fully
vested on the last day of such subsequent period.

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