EX-10.2






EXHIBIT 10.2




GUARANTY




GUARANTY, dated as of December 12, 2005 (as amended, restated, supplemented or otherwise
modified and in effect from time to time, this “Guaranty”), is made and entered upon the
terms hereinafter set forth by NEW CENTURY FINANCIAL CORPORATION, a corporation duly incorporated
and in good standing in the State of Maryland (the “Guarantor”), in favor of MORGAN STANLEY
BANK (a “Buyer” and “MSB”) and MORGAN STANLEY MORTGAGE CAPITAL INC. (a “Buyer” and,
collectively with MSB, the “Beneficiaries” and each a “Beneficiary”), pursuant to
that certain Master Repurchase Agreement, dated as of December 12, 2005 (as amended, restated,
supplemented or otherwise modified and in effect from time to time, the “Repurchase
Agreement”), by and among NC Capital Corporation (“NC Capital”), New Century Mortgage
Corporation (“New Century”), NC Residual II Corporation (“NC Residual”), Home123
Corporation (“Home123”), New Century Credit Corporation (“NC Credit”, together with
NC Capital, New Century, Home123 and NC Residual, collectively, the “Sellers”, each, a
“Seller”), the Buyers and MORGAN STANLEY MORTGAGE CAPITAL INC., as agent (in such capacity,
the “Agent”).



RECITALS




WHEREAS, the Sellers, the Buyers and the Agent are parties to the Repurchase Agreement;



WHEREAS, the Sellers are members of an affiliated group of entities that includes the
Guarantor; and



WHEREAS, it is a condition precedent to the making of the initial Transaction to NC Credit
under the Repurchase Agreement that the Guarantor shall have executed and delivered this Guaranty.



NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged by the Guarantor, the Guarantor hereby
agrees as follows:



Section 1. Definitions. Capitalized terms used but not defined herein shall have the
meanings specified in the Repurchase Agreement. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 1 or in other provisions of this Guaranty in
the singular to have the same meanings when used in the plural and vice versa):




“Total Indebtedness” shall mean, for any period, the aggregate Indebtedness of
the Guarantor during such period maintained in accordance with GAAP less the aggregate
amount of any such Indebtedness that is reflected on the balance sheet of the Guarantor in
respect of obligations incurred pursuant to a securitization transaction, solely to the
extent such obligations are secured by the assets securitized thereby and are non-recourse
to the Guarantor. In the event that any Indebtedness would be excluded from the calculation
of Total Indebtedness but for the existence of recourse, the Guarantor shall be entitled
nonetheless to exclude the amount of such Indebtedness that is not subject to recourse. The
amount of any recourse shall be the stated or determinable amount thereof or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the Guarantor in good faith.



Section 2. Guarantee. The Guarantor hereby unconditionally and absolutely guarantees
to the Beneficiaries and their respective successors and assigns the full and prompt payment of all
amounts due and owing by the Sellers under the Repurchase Agreement, as and when they shall become
due thereunder (the “Guaranteed Obligations”). This is a guaranty of payment and not of
collection. The liability of the Guarantor hereunder shall be direct and immediate and not
conditional or contingent upon the occurrence of any event.



If at any time any amounts that shall have become due and payable under the Repurchase
Agreement (including but not limited to, (i) the Repurchase Price of all Transactions, the Price
Differential on all Transactions and post-default interest required under Section 2.05 thereof,
(ii) the amount required to cure a Margin Deficiency under Section 2.06 thereof and (iii)
indemnification payments and out-of-pocket expenses incurred pursuant to Section 11.03 and Section
11.15 thereof) and the Sellers shall not have delivered full and timely payment to the
Beneficiaries as required by the Repurchase Agreement, the Beneficiaries, or the Agent on behalf of
the Beneficiaries, shall notify the Guarantor in writing (which may be by telecopy confirmed by a
telephone call as described below) of the amounts that remain due and unpaid (the “Shortfall
Amount”). The Guarantor shall deliver the Shortfall Amount to the Agent, for the benefit of
the applicable Beneficiary, in immediately available funds no later than one (1) Business Day after
such notice is received.



Section 3. Obligations Unconditional. The obligations of the Guarantor under Section
2 hereof are absolute and unconditional irrespective of the value, genuineness, validity,
regularity or enforceability of the Repurchase Agreement or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of any other guarantee of
the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of
any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor (other than any payments made by the Sellers, but subject to the
provisions of Section 4). Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the liability of the
Guarantor hereunder which shall remain absolute and unconditional as described above:



(i) at any time or from time to time, without notice to the Guarantor, the time for any
performance of or the compliance with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;



(ii) any of the acts mentioned in any of the provisions of the Repurchase Agreement or any
other agreement or instrument referred to herein or therein shall be done or omitted (other than
any payments made by the Sellers, but subject to the provisions of Section 4);



(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any
Guaranteed Obligations due and unpaid shall be modified, supplemented or amended in any respect, or
any right under the Repurchase Agreement or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the obligations hereunder or any security
therefor shall be released or exchanged in whole or in part or otherwise dealt with; or



(iv) any lien or security interest granted to, or in favor of the Agent for the benefit of the
Buyers or the Custodian, as the case may be, as security for any of the Guaranteed Obligations
shall fail to be perfected.



The Guarantor hereby expressly waives diligence, presentment, demand of payment and protest
whatsoever, and any requirement that the Beneficiaries exhaust any right, power or remedy or
proceed against any Seller under the Repurchase Agreement or any other agreement or instrument
referred to herein or therein, or against any other Person under any other guarantee of any of the
obligations guaranteed hereunder.



Section 4. Reinstatement. The obligations of the Guarantor shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf of any Seller in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of
any of the Guaranteed Obligations, whether as a result of any proceeding under the Bankruptcy Code
or similar law (“Debtor Relief Law”) and the Guarantor agrees that it will indemnify each
of the Beneficiaries on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by any Beneficiary in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or similar payment under a Debtor
Relief Law.



Section 5. Subrogation. Until such time as Guaranteed Obligations are paid in full,
the Guarantor hereby waives all rights of subrogation or contribution, whether arising by contract
or operation of law (including, without limitation, any such right arising under a Debtor Relief
Law) by reason of any payment by it pursuant to the provisions of this Guaranty.



Section 6. Remedies. The Guarantor agrees that, as between the Guarantor and each of
the Beneficiaries, the obligations of the Sellers under the Repurchase Agreement may be declared to
be forthwith due and payable as provided therein (and shall be deemed to have become automatically
due and payable pursuant thereto) for purposes of Section 2 hereof, notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against any Seller and that, in the event of such declaration (or
such obligations being deemed to have become automatically due and payable), such obligations
(whether or not due and payable by the Sellers) shall forthwith become due and payable by the
Guarantor.



Section 7. Instrument for the Payment of Money. To the extent permitted by applicable
law, the Guarantor hereby acknowledges that the guaranty provided herein constitutes an instrument
for the payment of money, and consents and agrees that each Beneficiary, at such Beneficiary’s sole
option, in the event of a dispute by the Guarantor in the payment of any moneys due hereunder,
shall have the right to bring motion-action under New York CPLR Section 3213.



Section 8. Continuing Guarantee. The guarantee provided herein is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever or however arising and shall
survive the termination of the Repurchase Agreement.



Section 9. General Limitation on Guaranteed Obligations. In any action or proceeding
involving any state, corporate law, or any state or Federal bankruptcy, insolvency, reorganization
or other law affecting the rights of creditors generally, if the Guaranteed Obligations would
otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability hereunder, then, notwithstanding
any other provision hereof to the contrary, the amount of such liability shall, without any further
action by the Guarantor or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.



Section 10. Representations and Warranties.



(i) Existence. The Guarantor (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite
corporate or other power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as proposed to be conducted,
except where the lack of such licenses, authorizations, consents and approvals would not be
reasonably likely to have a Material Adverse Effect, and (c) is qualified to do business and is in
good standing in all other jurisdictions in which the nature of the business conducted by it makes
such qualification necessary, except where failure so to qualify would not be reasonably likely
(either individually or in the aggregate) to have a Material Adverse Effect.



(ii) Financial Condition. The Guarantor has heretofore furnished to the Agent a copy
of its consolidated balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the fiscal year of the Guarantor ended December 31, 2004 and the related
consolidated statements of income and retained earnings and of cash flows for the Guarantor and its
consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the
figures for the previous year, with the opinion thereon of KPMG, LLC. All such financial
statements fairly present, in all material respects, the consolidated financial condition of the
Guarantor and its Subsidiaries and the consolidated results of their operations as at such dates
and for such fiscal periods, all in accordance with GAAP applied on a consistent basis. Since
December 31, 2004, there has been no material adverse change in the consolidated business,
operations or financial condition of the Guarantor and its consolidated Subsidiaries taken as a
whole from that set forth in said financial statements.



(iii) Litigation. Except as otherwise disclosed to the Agent in writing prior to the
date of this Guaranty, there is no action, proceeding or investigation by or before any
Governmental Authority affecting the Guarantor or any of its Affiliates or affecting any of the
Property of any of them, which is reasonably likely to be adversely determined and which, if
decided adversely, would have a reasonable likelihood of having a Material Adverse Effect.



(iv) No Breach. Neither (a) the execution and delivery of this Guaranty nor (b) the
consummation of the transactions herein contemplated in compliance with the terms and provisions
hereof will conflict with or result in a breach of the charter or by-laws of the Guarantor, or any
applicable law, rule or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or other material agreement or instrument to which the Guarantor or any of its
Affiliates is a party or by which any of them or any of their Property is bound or to which any of
them is subject, or constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien upon any Property of the Guarantor or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.



(v) Action. The Guarantor has all necessary corporate or other power, authority and
legal right to execute, deliver and perform its obligations hereunder; the execution, delivery and
performance by the Guarantor of this Guaranty has been duly authorized by all necessary corporate
or other action on its part and this Guaranty has been duly and validly executed and delivered by
the Guarantor and constitutes a legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms.



(vi) Approvals. No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority or any securities exchange are necessary for the
execution, delivery or performance by the Guarantor hereunder or for the legality, validity or
enforceability hereof.



(vii) Taxes. The Guarantor and its Subsidiaries have filed all Federal income tax
returns and all other material tax returns that are required to be filed by them and have paid all
taxes due pursuant to such returns or pursuant to any assessment received by any of them, except
for any such taxes as are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Guarantor and its Subsidiaries in respect of taxes and
other governmental charges are, in the opinion of the Guarantor, adequate.



(viii) Investment Company Act. Neither the Guarantor nor any of its Subsidiaries is
an “investment company”, or a company “controlled” by an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.



(ix) True and Complete Disclosure. The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of the Guarantor to any Beneficiary in
connection with the negotiation, preparation or delivery of this Guaranty and the other Repurchase
Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a
whole, do not contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the date hereof by or on behalf
of the Guarantor to any Beneficiary in connection with this Guaranty and the other Repurchase
Documents and the transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact known to a Responsible
Officer of the Guarantor, after due inquiry, that could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Repurchase Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to
Agent or any Buyer for use in connection with the transactions contemplated hereby or thereby.



(x) Tangible Net Worth. On the date hereof, the Tangible Net Worth of the Guarantor
is not less than $750,000,000.



(xi) ERISA. Each Plan to which the Guarantor or its Subsidiaries make direct
contributions, and, to the knowledge of the Guarantor, each other Plan and each Multiemployer Plan
is in compliance in all material respects with, and has been administered in all material respects
in compliance with, the applicable provisions of ERISA, the Code and any other Federal or state
law.



Section 11. Covenants.




(i) Financial Statements. The Guarantor shall deliver to the Agent:




(a) as soon as available and in any event within 90 days after the end of each fiscal
year of the Guarantor, the consolidated balance sheets of the Guarantor and its consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated statements of
income and retained earnings and of cash flows for the Guarantor and its consolidated
Subsidiaries for such year, setting forth in each case in comparative form the figures for
the previous year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall not be qualified as to
scope of audit or going concern and shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations of the
Guarantor and its consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge, except as specifically
stated, of any Default or Event of Default under the Repurchase Agreement;




(b) as soon as available and in any event within 30 days after the end of each month,
the unaudited consolidated balance sheets of the Guarantor and its consolidated Subsidiaries
as at the end of such month and the related unaudited consolidated statements of income and
retained earnings and of cash flows of the Guarantor and its consolidated Subsidiaries for
such month and the portion of the fiscal year through the end of such month, setting forth
in each case in comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of the Guarantor, which certificate shall state that
said consolidated financial statement fairly represents the consolidated financial condition
and results of operation of the Guarantor and its consolidated Subsidiaries in accordance
with GAAP, consistently applied, as of the end of, and for, such month (subject to normal
year-end audit adjustments);




(c) from time to time such other information regarding the financial condition,
operations, or business of the Guarantor as the Agent may reasonably request; and




(d) as soon as reasonably possible, and in any event within thirty (30) days after a
Responsible Officer of the Guarantor knows, or with respect to any Plan or Multiemployer
Plan to which the Guarantor or any of its Subsidiaries makes direct contributions, has
reason to believe, that any of the events or conditions specified below with respect to any
Plan or Multiemployer Plan has occurred or exists, a statement signed by a senior financial
officer of the Guarantor setting forth details respecting such event or condition and the
action, if any, that the Guarantor or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or given to PBGC by
the Guarantor or an ERISA Affiliate with respect to such event or condition): (i) any
reportable event, as defined in Section 4043(c) of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the
occurrence of such event (provided that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA, including, without limitation, the failure
to make on or before its due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code); and any request for a waiver under
Section 412(d) of the Code for any Plan; (ii) the distribution under Section 4041(c) of
ERISA of a notice of intent to terminate any Plan or any action taken by the Guarantor or an
ERISA Affiliate to terminate any Plan; (iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by the Guarantor or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan; (iv) the complete or partial withdrawal from a Multiemployer Plan by the
Guarantor or any ERISA Affiliate that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by the Guarantor or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of
ERISA; (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against
the Guarantor or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days; and (vi) the adoption of an amendment to any Plan that would
result in the loss of tax-exempt status of the Plan and trust of which such Plan is a part
if the Guarantor or an ERISA Affiliate fails to provide timely security to such Plan if and
as required by the provisions of Section 401(a)(29) of the Code or Section 307 of ERISA.




The Guarantor will furnish to the Agent, at the time it furnishes each set of financial
statements pursuant to paragraphs (a) and (b) above, a certificate of a Responsible Officer
of the Guarantor (x) setting forth in reasonable detail, all calculations necessary to show
compliance with the requirements set forth in paragraphs (ix) through (xiii) of Section 11
as of the end of such period (or, if the Guarantor is not in compliance with such
paragraphs, (A) showing the extent of non-compliance, (B) specifying the period of
non-compliance and (C) setting forth what actions, if any, the Guarantor has taken, is
taking or proposes to take with respect thereto), and (y) to the effect that, to the best of
such Responsible Officer’s knowledge, the Guarantor during such fiscal period or year has
observed or performed all of its covenants and other agreements, and satisfied every
condition, contained in this Guaranty and the other Repurchase Documents to be observed,
performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate (and, if any Default
or Event of Default has occurred and is continuing, describing the same in reasonable detail
and describing the action the Sellers have taken or proposes to take with respect thereto).



(ii) Litigation. The Guarantor will promptly, and in any event within ten (10) days
after service of process on any of the following, give to the Agent notice of all litigation,
actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing
which are pending or threatened) or other legal or arbitrable proceedings affecting the Guarantor
or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental
Authority (collectively, “Litigation Matters”) that (i) makes a claim or claims in an
aggregate amount greater than $5,000,000, (ii) is styled as a class action, (iii) individually or
in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse
Effect or (iv) requires filing with the Securities and Exchange Commission in accordance with the
1934 Act or any rules thereunder. In addition, the Guarantor shall promptly, and in any event
within ten (10) days after service of process on the Guarantor or any of its Affiliates, give to
the Agent notice of any Litigation Matter that questions or challenges the validity or
enforceability of any of the Repurchase Documents or any action to be taken in connection with the
transactions contemplated hereby.




(iii) Existence, etc. The Guarantor will:




(a) preserve and maintain its legal existence and all of its material rights,
privileges, licenses and franchises;




(b) comply with the requirements of all applicable laws, rules, regulations and orders
of Governmental Authorities (including, without limitation, all environmental laws) if
failure to comply with such requirements would be reasonably likely (either individually or
in the aggregate) to have a Material Adverse Effect;




(c) keep adequate records and books of account, in which complete entries will be made
in accordance with GAAP consistently applied;




(d) pay and discharge all taxes, assessments and governmental charges or levies imposed
on it or on its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and against which adequate
reserves are being maintained; and




(e) permit representatives of the Agent, during normal business hours, to examine, copy
and make extracts from its books and records, to inspect any of its Properties, and to
discuss its business and affairs with its officers, all to the extent reasonably requested
by the Agent.



(iv) Prohibition of Fundamental Changes. The Guarantor shall not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its
assets; provided, that the Guarantor may merge or consolidate with (a) any wholly owned subsidiary
of the Guarantor or (b) any other Person if the Guarantor is the surviving corporation and the
Guarantor’s Tangible Net Worth would not be adversely affected by such merger or consolidation; and
provided further, that if after giving effect thereto, no Default would exist under the Repurchase
Agreement.



(v) Payment of Shortfall Amounts. The Guarantor shall pay all Shortfall Amounts to or
at the direction of the Agent in immediately available funds no later than one Business Day of
notice from the Agent.



(vi) Notices. The Guarantor shall give notice to each Beneficiary (unless the Sellers
have already given such notice under the Repurchase Agreement):




(a) promptly upon receipt of notice or knowledge other than from a Beneficiary of the
occurrence of any Default or Event of Default under the Repurchase Agreement;




(b) promptly upon receipt of notice other than from a Beneficiary or knowledge of the
occurrence of any breach of a representation or warranty or the failure to observe or
perform any covenant or agreement contained herein;




(c) promptly upon receipt of notice other than from a Beneficiary or knowledge of (A)
any default related to any Collateral, (B) any Lien or security interest (other than
security interests created by the Repurchase Agreement or other Repurchase Documents) on, or
claim assert against, any of the Collateral or (C) any event or change in circumstances
which could reasonably be expected to have a Material Adverse Effect; and




(d) promptly upon any material change in the market value of any or all of the
Guarantor’s assets.




Each notice pursuant to this provision shall be accompanied by a statement of a
Responsible Officer of the Guarantor setting forth details of the occurrence referred to
therein and stating what action the Guarantor has taken or proposes to take with respect
thereto.



(vii) Transactions with Affiliates. The Guarantor will not enter into any
transaction, including without limitation any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate unless such transaction is (a) not a violation of any
provision under this Guaranty or the Repurchase Agreement, as the case may be, (b) in the ordinary
course of the Guarantor’s business and (c) upon fair and reasonable terms no less favorable to the
Guarantor than it would obtain in a comparable arm’s length transaction with a Person which is not
an Affiliate, or make a payment that is not otherwise permitted by this clause (vii) to any
Affiliate.



(viii) Limitation on Distributions. After the occurrence and during the continuation
of any breach of a representation, warranty or covenant contained herein, the Guarantor shall not
make any payment on the account of, or set apart the assets for, a sinking or other analogous fund
for the purchase, redemption, defeasance retirement or other acquisition of any equity interest of
the Guarantor, whether now or hereafter outstanding, or make any other distribution in respect of
any of the foregoing or to any shareholder or equity owner of the Guarantor, either directly or
indirectly, whether in cash or property or in obligations of the Guarantor or any of the
Guarantor’s consolidated Subsidiaries, other than dividends paid by the Guarantor on its Series
1998A Convertible Preferred Stock and its Series 1999A Convertible Preferred Stock in an aggregate
amount not to exceed $3,000,000 per annum.



(ix) Maintenance of Tangible Net Worth. The Guarantor shall not permit its Tangible
Net Worth at any time to be less than the sum of (x) $750,000,000 and (y) an amount equal to 50% of
any Equity Proceeds received by the Guarantor from and after the Reorganization Effective Date.



(x) Maintenance of Ratio of Total Indebtedness to Tangible Net Worth. The Guarantor
shall not permit its ratio of Total Indebtedness to Tangible Net Worth at any time to be greater
than 12:1.



(xi) Minimum Liquidity. The Guarantor shall not permit its cash and pledgeable
collateral, at any time, to be less than 1.5% of its transaction receivables held for sale (net
allowance for transaction loss).



(xii) Maximum Residual Interest in Securitizations. The Guarantor shall not permit
its ratio of residual interests in securitizations to Tangible Net Worth at any time to be greater
than 1:1.



(xiii) Maintenance of Profitability. The Guarantor shall not permit, for any period
of two consecutive fiscal quarters (each such period, a “Test Period”), Net Income for such
Test Period, before income taxes for such Test Period and distributions made during such Test
Period, to be less than $1.00.



(xiv) Required Filings. The Guarantor shall promptly provide the Agent with copies of
all documents which the Guarantor or any Affiliate of the Guarantor is required to file with the
Securities and Exchange Commission in accordance with the 1934 Act or any rules thereunder.



Section 12. Limitation of Liability. The liability of the Guarantor hereunder shall
in no way be affected by (i) the release or discharge of any Seller in any creditors’,
receivership, bankruptcy or other proceedings, (ii) the impairment, limitation or modification of
the liability of any Seller in bankruptcy, or of any remedy for enforcement of any obligations of
the Agent or the Buyers under the Repurchase Agreement resulting from the operation of any present
or future provision of the federal bankruptcy law or any other statute or the decision of any
court, (iii) the rejection or disaffirmance of any instrument, document or agreement evidencing any
of the Agent’s or the Buyers’ rights or obligations under the Repurchase Agreement in any such
proceedings, (iv) the assignment or transfer of the Agent’s or the Buyers’ obligations under the
Repurchase Agreement by the Agent, the Buyers or (v) the cessation from any cause whatsoever of the
liability of the Agent or the Buyers with respect to any such party’s obligations under the
Repurchase Agreement.



Section 13. No Waiver. No failure on the part of any Beneficiary to exercise and no
course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by any Beneficiary of
any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein are cumulative and not exclusive of any
remedies provided by law.



Section 14. Notices. Notices sent to the Guarantor (including notices of Shortfall
Amounts) via telecopy and telephone shall be sent to the attention of Kevin Cloyd (or such other
person as may hereafter be prescribed by the Guarantor to the Agent in writing) to the telecopy
number of (949) 862-7749 (or such other telecopy number as may hereafter be prescribed by the
Guarantor to the Agent in writing).



Section 15. Expenses. The Guarantor agrees to indemnify each Beneficiary for all
reasonable costs and expenses of such Beneficiary (including, without limitation, the reasonable
fees and expenses of legal counsel) in connection with (i) any non-payment of Shortfall Amounts as
they shall become due and any enforcement or collection proceeding resulting therefrom, including,
without limitation, all manner of participation in or other involvement with (x) bankruptcy,
insolvency, receivership, foreclosure, winding up or liquidation proceeding, (y) judicial or
regulatory proceedings and (z) workout, restructuring or other negotiations or proceedings (whether
or not the workout, restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 15.



Section 16. No Petition. The Guarantor hereby covenants and agrees that, prior to the
date which is one year and one day after the payment in full of all outstanding commercial paper,
extendible notes and any other debt securities of Concord, rated at the request of Concord by an
internationally recognized rating agency, it will not institute against, or join any other Person
in instituting against, Concord any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of any jurisdiction. The
provisions of this Section 16 shall survive the termination of this Guaranty.



Section 17. Assignment. The Guarantor may not assign its obligations hereunder
without the prior written consent of each Beneficiary. Any Beneficiary may assign its rights under
this Guaranty to any successor to such Beneficiary under the Repurchase Agreement, and any
assignment of any Beneficiary’s obligations under the Repurchase Agreement or any portion thereof
by such Beneficiary shall operate to vest in the assignee, the rights and powers of the
Beneficiaries hereunder to the extent of such assignment. This Guaranty shall be binding upon the
Guarantor and the Guarantor’s successors and assigns, and shall inure to the benefit of each
Beneficiary and its respective representatives, successors, successors-in-title and assigns.



Section 18. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



Section 19. Submission To Jurisdiction; Waivers. The Guarantor hereby irrevocably and
unconditionally:



(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
GUARANTY, THE NOTE AND THE OTHER REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;



(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE
EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;



(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN THE REPURCHASE AGREEMENT OR AT SUCH OTHER ADDRESS OF
WHICH THE AGENT SHALL HAVE BEEN NOTIFIED; AND



(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.



Section 20. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND EACH BENEFICIARY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER REPURCHASE
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.



Section 21. Amendments. No amendment or modification hereof shall be effective unless
evidenced by a writing signed by the Guarantor and each Beneficiary.



Section 22. Severability. If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction and (ii) the invalidity or unenforceability of
any provisions hereof in any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.



Section 23. Counterparts. This Guaranty may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Guaranty by signing any such counterpart.



[SIGNATURES FOLLOW]




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IN WITNESS WHEREOF, the undersigned has executed this Guaranty, or has caused this
Guaranty to be executed by its duly authorized representative, as of the date first above written.



NEW CENTURY FINANCIAL CORPORATION, as Guarantor



	 	 	 
	By:

	 	/s/ Kevin Cloyd
	
 
	 	 
	
 
	 	Name: Kevin Cloyd

Title: Executive Vice President
	 
	 	 
	By:

	 	/s/ Brad A. Morrice
	
 
	 	 
	
 
	 	Name: Brad A. Morrice

Title: Vice Chairman, President and COO
	 
	 	 






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Accepted and Acknowledged:



MORGAN STANLEY MORTGAGE


CAPITAL, INC., as a Beneficiary



	 	 	 
	By:

	 	/s/ Paul J. Najarian
	
 
	 	 
	
 
	 	Name: Paul J. Najarian

Title: Vice President






MORGAN STANLEY BANK, as a Beneficiary



	 	 	 
	By:

	 	/s/ Paul J. Najarian
	
 
	 	 
	
 
	 	Name: Paul J. Najarian

Title: Vice President
	 
	 	 







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