NEW CENTURY FINANCIAL CORP
EXHIBIT 10.3
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>a2029651zex-10_3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>

<PAGE>


THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (I) AN OPINION OF
COUNSEL SATISFACTORY TO NEW CENTURY FINANCIAL CORPORATION THAT SUCH SALE,
TRANSFER OR OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (II) SUCH
REGISTRATION.

                        NEW CENTURY FINANCIAL CORPORATION

                                     WARRANT
                                   TO PURCHASE
                             SHARES OF COMMON STOCK

         For value received, U. S. Bank National Association, its successors or
assigns ("Holder"), is entitled to purchase from New Century Financial
Corporation, a Delaware corporation (the "Company"), up to Six Hundred and Fifty
Thousand (650,000) fully paid and nonassessable shares (the "Warrant Shares") of
the Company's common stock, $.01 par value per share (the "Common Stock"), or
such greater or lesser number of such shares as may be determined by application
of the vesting and anti-dilution provisions of this Warrant, at the price of
Nine and 9/16ths dollars ($9.5625) per share, subject to adjustments as noted
below (the "Warrant Exercise Price"). This Warrant, dated April 28, 2000, is
issued pursuant to Section 2.1(a) of the Warrant Issuance Agreement dated as of
April 28, 2000 by and between the Company and the initial Holder.

         This Warrant may be exercised as provided below at any time or from
time to time prior to the close of business on April 28, 2005.

         This Warrant is subject to the following terms and conditions:

         1.       VESTING; EXERCISE.

         (a) The rights represented by this Warrant will vest and may be
exercised by the Holder for the number of Warrant Shares and at the times set
forth in the following schedule:

<PAGE>

<TABLE>
<CAPTION>

<S>                                           <C>
            NUMBER OF WARRANT SHARES          VESTING DATE
            ------------------------          ------------

              518,750 shares                  On the date hereof
               43,750 shares                  July 1, 2000
               43,750 shares                  October 1, 2000
               43,750 shares                  January 1, 2001
</TABLE>

         Notwithstanding the foregoing, with respect to Warrants with possible
vesting dates after the date hereof, such Warrants will not vest nor be
exercisable if, as of the relevant date, New Century Mortgage Corporation
("NCMC") has repaid all amounts owed to U.S. Bank National Association pursuant
to the Subordinated Loan Agreement dated as of April 28, 2000 by and between
U.S. Bank National Association and NCMC and the Second Amended and Restated
Subordinated Promissory Note dated as of April 28, 2000 made by NCMC to U.S.
Bank National Association. Warrants that fail to vest on the applicable vesting
date in accordance with the immediately preceding sentence shall terminate as of
such date and shall be of no further force and effect.

         (b) The rights represented by this Warrant may be exercised by the
Holder, in whole or in part, by written election in the form set forth below, by
the surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and by payment to the Company by cash, certified check or
bank draft of the Warrant Exercise Price. The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
Warrant has been exercised by payment to the Company of the Warrant Exercise
Price. Certificates for the Warrant Shares so purchased, bearing an appropriate
restrictive legend, shall be delivered to the Holder within fifteen (15) days
after the rights represented by this Warrant shall have been so exercised, and,
unless this Warrant has expired, a new warrant representing the number of
Warrant Shares, if any, with respect to which this Warrant has not been
exercised shall also be delivered to the Holder hereof within such time. No
fractional shares shall be issued upon the exercise of this Warrant.

         2. WARRANT SHARES. All Warrant Shares that may be issued upon the
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized and issued, fully paid and nonassessable shares. During the period
within which the rights represented by this Warrant may be exercised, the
Company shall at all times have authorized and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.

          3. ADJUSTMENT. The Warrant shall be subject to adjustment from time to
time as hereinafter provided in this Section 3:

                  (a) If the Company at any time divides the outstanding shares
         of its Common Stock into a greater number of shares (whether pursuant
         to a stock split, stock dividend or otherwise), and conversely, if the
         outstanding shares of its Common Stock are combined


                                      -2-
<PAGE>
into a smaller number of shares, or if the Company effects a transaction that
has a similar effect, the Warrant Exercise Price in effect immediately prior to
such division or combination shall be proportionately adjusted to reflect the
reduction or increase in the value of each such common share.

          (b) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation, or any other similar transaction shall be effected in such a way
that holders of the Company's Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for such Common Stock, then,
as a condition of such reorganization, reclassification, consolidation, merger
or sale, the holder of this Warrant shall have the right to purchase and receive
upon the basis and upon the terms and conditions specified in this Warrant and
in lieu of the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such stock, securities or assets as would have been issued or delivered to the
holder of this Warrant if it had exercised this Warrant and had received such
shares of Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed to the Holder at the last address of
the Holder appearing on the books of the Company, the obligation to deliver to
the Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase.

          (c) Upon each adjustment of the Warrant Exercise Price, the Holder
shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the
Warrant Exercise Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.

          (d) Upon any adjustment of the Warrant Exercise Price, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the Holder at the address of the Holder as shown on the books of
the Company, which notice shall state the Warrant Exercise Price resulting from
such adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.

4.        NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle the Holder to
          any voting rights or other rights as a shareholder of the Company.


                                      -3-
<PAGE>

         5.       ADDITIONAL RIGHT TO CONVERT WARRANT.

         (a) The Holder of this Warrant shall have the right to require the
Company to convert this Warrant (the "Conversion Right") at any time after it is
exercisable, but prior to its expiration, into shares of the Company's Common
Stock as provided for in this Section 5. Upon exercise of the Conversion Right,
the Company shall deliver to the Holder (without payment to the Company of the
Warrant Exercise Price) that number of shares of the Company's Common Stock
equal to the quotient obtained by dividing (x) the value of the Warrant at the
time the Conversion Right is exercised (determined by subtracting the Warrant
Exercise Price for a Warrant Share in effect immediately prior to the exercise
of the Conversion Right from the Fair Market Value of a Warrant Share
immediately prior to the date of the exercise of the Conversion Right and
multiplying that number by the number of Warrant Shares for which the Conversion
Right is being exercised) by (y) the Fair Market Value of a Warrant Share
immediately prior to the date of exercise of the Conversion Right.

         (b) The Conversion Right may be exercised by the Holder, at any time or
from time to time, prior to the expiration of the Warrant, on any business day
by delivering a written notice in the form attached hereto (the "Conversion
Notice") to the Company at the offices of the Company stating that the Holder
desires to exercise the Conversion Right and specifying (i) the total number of
shares with respect to which the Conversion Right is being exercised and (ii) a
place and date not less than five or more than 20 business days from the date of
the Conversion Notice for the closing of such purchase.

         (c) At any closing under Section 5(b) hereof, (i) the Holder will
surrender the Warrant and (ii) the Company will deliver to the Holder (A) a
certificate or certificates for the number of shares of the Company's Common
Stock issuable upon such conversion, together with cash, in lieu of any fraction
of a share and (B) a new warrant representing the number of shares, if any, with
respect to which the Warrant shall not have been exercised.

         (d) For purposes of this Section 5, Fair Market Value of a Warrant
Share as of a particular date (the "Determination Date") shall mean:

                  (i) If the Company's Common Stock is traded on an exchange or
         is quoted on Nasdaq, then the average closing or last sale prices,
         respectively, reported for the ten (10) business days immediately
         preceding the Determination Date, and

                  (ii) If the Company's Common Stock is not traded on an
         exchange or on Nasdaq but is traded on the over-the-counter market,
         then the average closing bid and asked prices reported for the ten (10)
         business days immediately preceding the Determination Date.

         6. TRANSFER. Subject to the requirements of federal and state
securities laws, this Warrant and all rights hereunder are transferable, in
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this


                                      -4-
<PAGE>

Warrant properly endorsed. The bearer of this Warrant, when endorsed, may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company, any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes. The Company shall not be required to pay any tax or other
charge imposed in connection with the transfer of this Warrant, and the Company
shall not be required to issue or deliver any stock certificate hereunder, until
such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.

          7. REGISTRATION RIGHTS. Holder shall be entitled to the registration
rights as set forth in the Amended and Restated Registration Rights Agreement
dated as of April 28, 2000, subject to the limitations and restrictions set
forth in Section 9 thereof.

          8. WRITING. This Warrant may not 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.

         The Holder, by its acceptance hereof, represents, warrants, covenants
and agrees that the Warrant and Warrant Shares are being acquired for investment
for the Holder's own account and not with a view to the distribution thereof,
and that absent an effective registration statement under the Securities Act of
1933, as amended, covering the disposition of this Warrant or the Warrant
Shares, 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 Holder consents to the Company making a notation in its
records or giving to any transfer agent of this Warrant or the Warrant Shares an
order to implement such restriction on transferability.


                                      -5-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and delivered by a duly authorized officer.

Dated:  April 28, 2000


                                                     NEW CENTURY FINANCIAL
                                                        CORPORATION

                                                      By /s/ Patrick Flanagan
                                                 ------------------------------
                                                      Executive Vice President



                                      -6-
<PAGE>

                                WARRANT EXERCISE

                  (To be signed only upon exercise of Warrant)

         The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _________ of the shares of Common Stock of New
Century Financial Corporation, to which such Warrant relates and herewith makes
payment of $_________ therefor in cash, certified check or bank draft and
requests that the certificates for such shares be issued in the name of, and be
delivered to _______________________, whose address is set forth below the
signature of the undersigned.

Dated:
        ---------------------------------------------

                                        ---------------------------------------
                                        Signature

                                        ---------------------------------------

                                        ---------------------------------------

                                        ---------------------------------------
                                        [Print Name and Address of Holder above]


If shares are to be issued other than to    Social Security or other Tax
Holder:                                     Identification No.

----------------------------------------     ----------------------------------

---------------------------------------

---------------------------------------
[Print Name and Address of Holder above]


                                      -7-
<PAGE>

                               WARRANT ASSIGNMENT

                  (To be signed only upon exercise of Warrant)

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________ the right represented by the foregoing Warrant to purchase
the shares of Common Stock of New Century Financial Corporation, to which such
Warrant relates and appoints ____________________ attorney to transfer such
right on the books of New Century Financial Corporation, with full power of
substitution in the premises.

Dated:
     ---------------------------------------------

                                        ---------------------------------------
                                        Signature

                                        ---------------------------------------

                                        ---------------------------------------
                                        [Print Name and Address of Holder above]


If shares are to be issued other than to     Social Security or other Tax
Holder:                                      Identification No.

----------------------------------------   ------------------------------------

----------------------------------------

----------------------------------------
[Print Name and Address of Holder above]


                                      -8-
<PAGE>

                            WARRANT CONVERSION NOTICE

      (To be signed only upon conversion of Warrant pursuant to Section 5)

         The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the Conversion Right as provided for in Section 5
of the foregoing Warrant, with respect to ________ of the previously unexercised
shares, which shall result pursuant to the conversion provisions of Section 5 in
the purchase thereunder of _______ shares of Common Stock of New Century
Financial Corporation, and herewith tenders the Warrant in full payment for the
purchased shares, as provided for in Section 5 of the foregoing Warrant. If said
number of shares shall not be all the shares purchasable under the Warrant, a
new warrant is to be issued in the name of the undersigned for the remaining
balance of the unexercised shares. The undersigned hereby requests that the
certificates for such shares be issued in the name of, and be delivered to
_________________ whose address is set forth below the signature of the
undersigned.

Dated:
     ------------------------------

                                        ---------------------------------------
                                        Signature

                                        ---------------------------------------

                                        ---------------------------------------

                                        ----------------------------------------
                                        [Print Name and Address of Holder above]


If shares are to be issued other than to    Social Security or other Tax
Holder:                                     Identification No.

-----------------------------------------   -----------------------------------

----------------------------------------

----------------------------------------
[Print Name and Address of Holder above]



                                      -9-
</TEXT>
</DOCUMENT>
