EXHIBIT 10.7
FORM OF WARRANT TO PURCHASE COMMON STOCK
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NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
STATE SECURITIES LAW, AND THUS NEITHER THIS WARRANT NOR SUCH COMMON STOCK MAY BE
TRANSFERRED UNLESS REGISTERED UNDER THE ACT OR SUCH SECURITIES LAWS OR UNLESS AN
EXEMPTION THEREFROM IS AVAILABLE. ANY TRANSFER OF THIS WARRANT AND SUCH COMMON
STOCK ARE ALSO SUBJECT TO THE TERMS OF A SHAREHOLDERS AGREEMENT DATED NOVEMBER
22, 1995, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
NEW CENTURY FINANCIAL CORPORATION
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WARRANT TO PURCHASE COMMON STOCK
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NEW CENTURY FINANCIAL CORPORATION, a Delaware corporation (the "Company"),
certifies for value received _______________ (the "Purchaser") is entitled to
purchase from the Company, at any time during the period set forth in Section
2.1 hereof, at $____ per share (the "Purchase Price") ________ shares of Common
Stock of the Company, subject to adjustment as hereinafter provided (the
"Warrant Stock"), on the terms and subject to the conditions herein set forth.
1. Definitions. As used in this Warrant, the following terms shall mean:
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1.1 "Common Stock" refers to the shares of the Company's common stock,
$0.01 par value.
1.2 "Warrant" shall refer to this Warrant and any warrant delivered in
substitution or exchange therefore as provided herein.
2. Exercise.
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2.1 Time of Exercise. This Warrant may be exercised at the office of
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the Company at any time or from time to time, from and after the date hereof and
until 5:00 p.m., Pacific time on December 4, 2001 (the "Expiration Date"), at
which time this Warrant shall expire and be of no further force or effect.
2.2 Manner of Exercise.
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(a) This Warrant is exercisable, in whole or in part, at the
Purchase Price payable in cash or by wire, cashier's check or other good funds
payable to the order of the Company. Upon surrender of the Warrant together with
payment of the Purchase Price for the Warrant Stock purchased (and any
applicable transfer taxes) to the Company, and delivery of the purchase form
attached hereto, the Purchaser shall be entitled to receive a certificate or
certificates for the Warrant Stock so purchased with any appropriate private
placement or other legends thereon, together with a new Warrant for any portion
of this Warrant not exercised.
(b) With the approval of the Board, the Purchaser may elect to (i)
pay all or part of the Purchase Price with securities of the Company (including
the unexercised portion of this Warrant) outstanding prior to the exercise of
this Warrant, with such securities to be credited toward such purchase price at
the fair market value of the securities, in which event the certificates
evidencing the securities delivered shall accompany the notice of exercise and
shall be duly endorsed or accompanied by duly executed stock powers to transfer
the same to the Company; provided, however, that such payment in securities
instead of cash or check shall not be effective and shall be rejected by the
Company if the Company is then prohibited by applicable law from purchasing or
acquiring the tendered securities, or (ii) accept payment of the fair market
value of all or part of the Warrant Stock net of the Purchase Price for such
Warrant Stock in consideration for the cancellation of the corresponding portion
of the rights of Purchaser under this Warrant.
For purposes of this Section 2.2(b), the fair market value of
securities delivered upon exercise of the Warrant shall (i) if "publicly traded"
(as defined below), be valued at either (x) the initial public offering price,
if the Warrant is exercised concurrently with the initial public offering of the
securities, or (y) the average of the closing prices for the securities for the
30-day period immediately preceding the delivery to the Company of the
certificate(s) evidencing such securities, or (ii) if not publicly traded, be
valued in good faith by the Board of Directors of the Company; provided,
however, that if in the good faith judgement of the Warrantholder the valuation
established by the Board of Directors under this clause (ii) does not reasonably
reflect the fair market value of the securities to be delivered in exercise of
this Warrant, then the determination of fair market value shall be made by an
independent appraiser or investment banking institution mutually acceptable to
the Company and to the Warrantholder (or, if such selection cannot be made by
the Company and the Warrantholder, by an independent appraiser or investment
banking firm selected by the American Arbitration Association in accordance with
its rules), with the fees and expenses of such independent appraiser or
investment banking institution to be paid by the Warrantholder. For purposes of
the preceding sentence, the "closing prices" shall mean the closing prices of
securities of the class and series of securities delivered as reported with
respect to the market (or the composite of the markets, if more than one) in
which such securities are then traded, or if no such closing prices are
reported, the lowest independent offer quotation reported therefor in Level 2 of
NASDAQ for trading days during the applicable 30-day averaging period. "Publicly
traded" means a security which is listed or admitted to unlisted trading
privileges on a national securities exchange or as to which sales or bid and
offer quotations are reported in the automated
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quotation system ("NASDAQ") operated by the National Association of Securities
Dealers, Inc.
3. Protection Against Dilution.
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3.1 Adjustment for Stock Splits and Combinations.
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If, while this Warrant is outstanding, the Company effects a
subdivision of the outstanding Common Stock, the Purchase Price then in effect
shall be proportionately decreased and the number of shares of Warrant Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase of outstanding shares, and conversely, if, during such time, the
Company combines the outstanding shares of Common Stock, the Purchase Price then
in effect shall be proportionately increased and the number of shares of Warrant
Stock issuable on exercise of this Warrant shall be decreased in proportion to
such decrease in outstanding shares. Any adjustment under this Section 3.1 shall
become effective as of the record date for such event and if such subdivision or
combination is not consummated in full the Purchase Price shall be readjusted
accordingly. For purposes of this Section 3.1 a stock dividend shall be
considered a stock split.
3.2 Adjustments for Other Dividends and Distributions. If, while
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this Warrant is outstanding, the Company makes a dividend or other distribution
payable in securities of the Company other than shares of Common Stock, then and
in each such event provision shall be made so that the Purchaser shall receive
upon exercise of the Warrant (but only to the extent the Warrant is exercised),
in addition to the Warrant Stock receivable thereupon, the amount of securities
of the Company which the Purchaser would have received had it owned such Warrant
Stock on the date of such event.
3.3 Adjustment for Reclassification, Exchange and Substitution. If
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the Warrant Stock issuable upon the exercise of this Warrant is changed into the
same or a different number of shares of the same or any other class or classes
of stock, whether by recapitalization, reclassification or otherwise (other than
a subdivision or combination of shares or a merger, consolidation or sale of
assets, provided for elsewhere in this section), then and in any such event
Purchaser shall have the right thereafter, upon exercise of the Warrant to
receive in lieu of Warrant Stock the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change, in an amount equal to the amount that such Purchaser would have
been entitled to had this Warrant been exercised to such extent prior to such
event.
3.4 Reorganizations, Mergers, Consolidations or Sales of Assets.
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If, while this Warrant is outstanding, there is a capital reorganization of the
Common Stock (other than as
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provided for elsewhere in this Section 3) or merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties and assets to any other person then, as a part
of such transaction, the Board of Directors of the Company may, but shall not be
obligated to, make provision so that the Purchaser shall thereafter be entitled
to receive, upon exercise of this Warrant (but only to the extent the Warrant is
exercised), the number of shares of stock or other securities or property of the
Company, or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon the
exercise of this Warrant would have been entitled in such transaction. If the
Board of Directors does not make provision for the preservation of the purchase
rights of the Warrant holder, then any Warrant rights not exercised as of the
effective date of the closing of the subject transaction (the "Effective Date")
shall be cancelled and of no further force or effect; provided that: (1) the
election of the Board to cause cancellation of the Warrants shall be evidenced
by a resolution of the Board approved by seven-ninths of the directors, (2) the
holder of this Warrant shall receive written notice from the Company not less
than 30 days prior to the Effective Date stating (a) the proposed Effective
Date, (b) which of the rights evidenced by this Warrant are proposed to be
cancelled, and (c) a description of the transaction which would result in the
full or partial cancellation of this Warrant, and (3) if the subject transaction
does not close within 120 days of the Effective Date stated in the notice, then
the notice of cancellation, as well as any notices of intended exercise of this
Warrant by the holder, shall be deemed rescinded.
4. Fractional Interests.
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The Company shall not be required to issue fractional shares of
Common Stock on the exercise of Warrants. If more than one Warrant shall be
presented for exercise in full at the same time by the same Holder, the number
of full shares of Common Stock which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of shares of Common Stock
represented by the Warrants so presented. If any fraction of a share would,
except for the provisions of this Section 4, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
equal to the current fair market value per share of Common Stock multiplied by
such fraction.
5. Transfer of Securities.
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5.1 Restriction on Transfer. The Purchaser, by its acceptance
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hereof, represents, warrants, covenants and agrees that (i) the Purchaser has
knowledge of the business and affairs of the Company, and (ii) this Warrant and
the Warrant Stock issuable upon the exercise of this Warrant are being acquired
for
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investment for the Purchaser's own account and not with a view to the
distribution hereof, and that absent an effective registration statement under
the Act covering the disposition of this Warrant or the Warrant Stock issued or
issuable upon exercise of this Warrant, they will not be sold, transferred,
assigned, hypothecated or otherwise disposed of without first providing the
Company with evidence satisfactory to the Company, including, at the Company's
discretion, an opinion of counsel, satisfactory to the Company, to the effect
that such sale, transfer, assignment, hypothecation or other disposal will be
exempt from the registration and prospectus delivery requirements, of applicable
Federal and state securities laws and regulations and the Purchaser consents to
the Company making a notation in its records or giving to any transfer agent of
this Warrant or the Warrant Stock an order to implement such restriction on
transferability.
5.2 Transfer. Subject to the terms hereof and the application of
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any shareholders' agreement or other agreement that may restrict
transferability, this Warrant and all rights hereunder are transferable, in
whole or in part, on the books of the Company maintained for such purpose by the
Purchaser, or by duly authorized attorney or representative (accompanied by
proper evidence of succession, assignment or authority to transfer), upon
surrender of this Warrant properly endorsed, payment of any necessary transfer
tax or other governmental charge imposed upon such transfer and delivery of the
Form of Assignment attached hereto. Upon any partial transfer, the Company will
issue and deliver to the Purchaser a new Warrant with respect to the Warrant
Stock not so transferred. Each taker and Purchaser of the Warrant, by taking or
holding the same, consents and agrees that the Warrant when endorsed in blank
shall be deemed negotiable and that when the Warrant shall have been so
endorsed, the Purchaser hereof may be treated by the Company and all other
persons dealing with this Warrant, as the absolute owner hereof for all
purposes, any notice to the contrary notwithstanding.
6. Payment of Taxes.
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All Warrant Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and nonassessable, and the Company shall pay all
taxes and other governmental charges that may be imposed upon the issue or
delivery thereof (but not on income related thereto). The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer of this Warrant or the issue of any certificate for Warrant Stock in
any name other than that of the Purchaser, and the Company shall not be required
to issue or deliver any stock certificate until such tax or the charge has been
paid or it has been established to the Company's satisfaction that no tax or
other charge is due.
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7. Affirmative Duties of the Company.
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7.1 Reservation of Warrant Stock. The Company shall at all times
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reserve and keep available out of its authorized but unissued Common Stock,
solely for the purpose of issuance upon the exercise of this Warrant, such
number of Shares of Common Stock as shall be issuable upon the exercise hereof.
The Company covenants and agrees that, upon exercise of this Warrant and payment
of the Purchase Price for the Warrant Stock, all shares of Warrant Stock
issuable upon such exercise shall be duly and validly issued, fully paid and
non-assessable.
7.2 No Impairment. The Company will not amend its Certificate of
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Incorporation, reorganize, dissolve, or take any other voluntary action, a
primary purpose of which is to avoid or seek to avoid the observance or
performance of any of the terms of this Warrant.
8. Notices to Warrant Holders.
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8.1 Notice to be Given. Nothing contained in this Warrant shall be
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construed as conferring upon the Purchaser the right to vote or to consent or to
receive notice as a shareholder in respect of any meetings of shareholders for
the election of directors or any other matter or as having any rights whatsoever
as a shareholder of the Company. If, however, at any time prior to the
expiration of this Warrant and prior to its exercise, any of the following
events shall occur:
(a) The Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution; or
(b) The Company shall offer to the holders of its Common
Stock, or others, any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefore; or
(c) The Company proposes to register any of its securities
under the Securities Act; or
(d) A capital reorganization or reclassification of the Common
Stock, a merger or consolidation of the Company with any other entity,
dissolution, liquidation or winding up of the Company or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then the Company shall give written notice of such event to the
Purchaser of this Warrant at least 30 days prior to the date fixed as the record
date or the date of closing the transfer books in connection with such
transaction unless greater notice is required pursuant to the terms of Section
3.4 hereof. Such notice shall specify such record date or the date of closing
the
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transfer books, as the case may be. Such notice shall also set forth such facts
as shall indicate the effect of such action (to the extent such effect may be
known at the date of such notice) on the Purchase Price and the kind and amount
of the Common Stock and other securities and property deliverable upon exercise
of this Warrant. Such notice shall also specify the date as of which the
holders of the Common Stock of record shall participate in any such distribution
or subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon any such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up, as the case may be (on which date, in the event of voluntary or
involuntary dissolution, liquidation or winding up of the Company, the right to
exercise this Warrant shall terminate).
9. Addresses. All notices, requests, consents and other communications
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hereunder shall be in writing and shall be deemed to have been duly made when
delivered or three days after mailing by registered or certified mail, postage
prepaid, return receipt requested addressed to the parties at the following
addresses or at such other addresses as shall be specified in writing and in
accordance with this Section:
If to the Purchaser:
If to the Company: New Century Financial Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
10. Miscellaneous.
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10.1 Replacement of Warrants. Upon receipt of evidence reasonably
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satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and upon delivery of an indemnity agreement in an
amount reasonably satisfactory to the Company, or upon surrender and
cancellation of the mutilated Warrant, the Company will execute and deliver, in
lieu thereof, a new Warrant of like tenor.
10.2 Successors. All the covenants, agreements, representations
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and warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
10.3 Change; Waiver. Neither this Warrant nor any term hereof may
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be changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
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10.4 Headings. The section headings in this Warrant are inserted
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for purposes of convenience only and shall have no substantive effect.
10.5 Law Governing. This Warrant is deliverable in the State of
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California, but shall for all purposes be construed and enforced in accordance
with, and governed by the internal laws of the State of Delaware, without giving
effect to principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer effective as of December 4, 1996.
NEW CENTURY FINANCIAL CORPORATION
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto ____________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________ Attorney,
to transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: __________________, 19__
Signature
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NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Warrant certificate.)
The undersigned hereby irrevocably elects to exercise _______________
Warrants represented by this Warrant Certificate to purchase the shares of
Common Stock issuable upon the exercise of such Warrants and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
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(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, a new Warrant Certificate for the balance remaining of
such Warrants shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
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--------------------------------------------------------------------------------
(Please print name and address)
Dated: ___________________, 19__
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Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate)
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