EX-10.2






EXHIBIT 10.2




NEW CENTURY FINANCIAL CORPORATION

EXECUTIVE INCENTIVE PLAN




PLAN OBJECTIVE:


The New Century Financial Corporation Executive Incentive Plan (the “Plan”) is designed to maximize
assets available for distribution to creditors by providing incentives to certain executives of New
Century Financial Corporation (the “Company”) maximize the consideration received by the Company
upon the consummation of the sale of the (i) Company’s servicing assets and servicing platform
pursuant to that certain agreement Asset Purchase Agreement with Carrington Capital Management, LLC
and its affiliate, dated April 2, 2007, or the overbid process contemplated therein (the “Servicing
Assets Sale”) (ii) certain mortgage loans originated by the Company, as well as residual interests
in certain securitization trusts owned by the Company pursuant to that certain Asset Purchase
Agreement with Greenwich Capital Financial Products, Inc., dated April 2, 2007, or the overbid
process contemplated therein (the “Mortgage Assets Sale”), (iii) the Company’s wholesale, retail
and other asset classes (other than assets included in the Servicing Assets Sale, the Mortgage
Assets Sale and RPML Sale (as defined below)) (the “WRO Assets Sale”) and (iv) the Company’s REIT
portfolio and miscellaneous loans (other than assets included in the Servicing Assets Sale, the
Mortgage Assets Sale and the WRO Assets Sale) (the “RPML Sale”).



ELIGIBLE EMPLOYEES:


The Plan covers the employees of the Company and its subsidiaries listed on Exhibit A
hereto (the “Plan Participants”).



All payments under the Plan shall be in lieu of any other performance bonus or retention
compensation under any other plan, program, agreement, applicable law or policy otherwise
applicable to the Plan Participants by the Company or any of its subsidiaries (collectively, the
“Debtors”). As a condition precedent of any obligation of the Company to make any payment to a
Plan Participant under the Plan, the Plan Participant shall, upon or within thirty (30) days of the
date that such payment is made to the Plan Participant or such Plan Participant otherwise becomes
entitled to such payment, be required to fully execute and return to the Company a general release
and waiver of claims, excluding those claims specifically excepted from the release and waiver as
described therein, in substantially the form attached hereto as Exhibit B. The Company
shall have no obligation to make any payment under the Plan and shall not make any payment to any
Plan Participant that does not satisfy such release requirement or who otherwise revokes such
release within any revocation period afforded by applicable law.



PLAN POOLS:


The amounts contributed (each a “Contribution”) by the Company, if any, to finance payments under
the Plan (the “Plan Pools”) shall be based on the liquidation prices received for sales (the
“Sales”) of the Company’s various assets and shall be calculated as follows:



Servicing Assets Sale


The Contribution, if any, upon the consummation of the Servicing Assets Sale (the “Servicing Assets
Sale Contribution”) will be calculated based on the extent to which the ratio of (i) the net
liquidation price to (ii) the principal amount of loans held by securitization trusts and third
party whole loan purchasers for which the Company has mortgage service rights (such ratio, “BPS”)
equals or exceeds 50.0. There will be no Servicing Asset Sale Contribution if BPS is less than
50.0. If BPS is equal to 50.0, the Servicing Assets Sale Contribution will be $1,164,405. If BPS
is greater than 50.0, the Servicing Assets Sale Contribution will be increased proportionately e.g.
if BPS is 57.5 (115% of 50.0), the Servicing Assets Sale Contribution will be $1,339,065 (115% of
$1,164,605).



Mortgage Assets Sale


The Contribution, if any, upon the consummation of the Mortgage Assets Sale (the “Mortgage Assets
Sale Contribution”) will be based on the extent to which the liquidation price (the “Mortgage
Assets Sale Price”) equals or exceeds $47,000,000. There will be no Mortgage Asset Sale
Contribution if the Mortgage Assets Sale Price is less than $47,000,000. If the Mortgage Asset
Sale Price is equal to $47,000,000, the Mortgage Asset Sale Contribution will be $419,820. If the
Mortgage Asset Sale Price is greater than $47,000,000, the Mortgage Assets Sale Contribution will
be equal to $419,820 plus 2% of the amount by which the Mortgage Asset Sale Price exceeds
$47,000,000 e.g. if the Mortgage Assets Sale Price is $54,500,000, the Mortgage Assets Sale
Contribution will be $569,820 ($419,820 + (($54,500,000 – $47,000,000) X 2%)).



WRO Assets Sale 


The Contribution, if any, upon the consummation of the WRO Assets Sale (the “WRO Assets Sale
Contribution”) will be based on the extent to which the liquidation price (the “WRO Assets Sale
Price”) equals or exceeds the WRO Assets Sale target price set forth on Exhibit C (the
“Target Price”). There will be no Mortgage Asset Sale Contribution if the WRO Assets Sale Price is
less than the Target Price. If the WRO Asset Sale Price is equal to the Target Price, the WRO
Asset Sale Contribution will be $1,584,225. If the WRO Asset Sale Price is greater than the Target
Price, the WRO Assets Sale Contribution will be equal to $1,584,225 plus 2% of the amount by which
the WRO Asset Sale Price exceeds the Target Price e.g. if the Mortgage Assets Sale Price is $X,
which exceeds the Target Price, the WRO Assets Sale Contribution will be calculated as follows: WRO
Asset Sale Contribution = ($1,584,225 + (($X – Target Price) X 2%)).



RPML Sale


The Contribution upon the consummation of the RPML Sale to the extent that the Company manages to
sell such assets (the “RPML Sale Contribution”) will be equal to 0.5% of the liquidation price (the
“RPML Sale Price”) e.g. if the RPML Sale Price is equal to $63,250,000, the RPML Sale Contribution
will be $316,250 ($63,250,000 X 0.5%).



PLAN PAYMENTS:


Plan Participants shall receive the share of the Plan Pools set forth in Exhibit A;
provided however that a Plan Participant will not be eligible to receive a share of a Plan Pool
upon the consummation of the corresponding sale if such Plan Participant is offered comparable
employment by the purchaser in such sale. Awards will be paid within 50 days following the
consummation of each respective Sale.



TERMINATION OF EMPLOYMENT:


Awards under the Plan are offered as discretionary incentive amounts. If a Plan Participant
voluntarily terminates employment or is involuntarily terminated for any reason before the date
that any Sale described above in the Section titled “Plan Pools” is consummated, the Plan
Participant will not receive any payment under the Plan for the consummation of such Sale.
Additionally, if there is any ongoing investigation by the Audit Committee (the “Audit Committee”)
of the Company’s Board of Directors (the “Board”) into the actions or omissions of a Plan
Participant at the time such Plan Participant becomes entitled to any payment under the Plan, which
could result in the Company having the right to terminate such Plan Participant “for cause”, the
Company will be entitled to delay such payment (without any interest accruing thereon) until the
matter is determined by the Audit Committee. If the Company would have the right to terminate such
Plan Participant “for cause” based on the findings of the Audit Committee, then the Company will
not be obligated to make and will not make any payments (even if such Plan Participant’s employment
had terminated for other reasons) to such Plan Participant under the Plan.



For purposes of the Plan, the term “for cause” means, either before or after the adoption of the
Plan:




	 	•	 	Commission of a crime against the Company or its affiliates, customers or employees,
whether prosecuted or not;






	 	•	 	a finding by the Audit Committee that the Plan Participant engaged in willful
misconduct, or was grossly negligent, in the performance of his or her duties;






	 	•	 	Conviction of (or pleading guilty or nolo contendere to, or entering a similar plea
to) any other crime or violation of law, statute or regulation that creates an
inability to perform job duties;






	 	•	 	Failure or inability to perform job duties due to intoxication by drugs or alcohol
during working hours;






	 	•	 	A material and direct conflict of interest, not specifically waived in advance by
the Company;






	 	•	 	Unauthorized use or disclosure of confidential information that belongs to the
Company or its affiliates, customers or employees;






	 	•	 	Habitual neglect of duties or repeated absences from work;






	 	•	 	Refusal to follow the instructions of a supervisor or the Board (or a committee
thereof); or






	 	•	 	Other material misconduct including, but not limited to: falsification of Company
records; theft; sexual harassment; or possession of firearms, controlled substances or
illegal drugs on Company premises or while performing Company business.





FURTHER ACTIONS:


As a condition to each Plan Participants participation in the Plan, such Plan Participant shall
agree to take such further actions as are reasonably requested by the Company, including such
actions as the Company may request subsequent to the termination of such Plan Participant’s
employment with the Company or its subsidiaries, as the case may be, to assist the Company and its
subsidiaries in the conduct of the bankruptcy cases filed under chapter 11 of the United
States Bankruptcy Code to which they are currently parties.



CHANGE OF ADDRESS:


The Plan Participants shall be responsible for notifying the Company of any change of address
before payment is made by mail notification to [Name].



NO PROMISE OF CONTINUED EMPLOYMENT, FULL-TIME ATTENTION, AND GOOD STANDING:


The Plan and any Plan Participant’s selection as a participant in the Plan does not, and is in no
manner intended to constitute, a promise of employment for any period of time or to change a Plan
Participant’s status, if applicable, as an at will employee subject to termination of employment by
his or her employer at any time for any reason.



TAXES:


All payments will be subject to standard withholding and deductions. Neither the Company nor any
of its subsidiaries, officers or agents makes or has made any representation about the tax
consequences of any payments or benefits offered by the Company to any Plan Participant to the
Plan.



SEVERABILITY:


If any provision of the Plan is determined to be invalid or unenforceable, in whole or in part,
this determination will not affect any other provision of the Plan and the provision in question
shall be modified so as to be rendered enforceable in a manner consistent with the intent of the
parties insofar as possible. Any waiver of or breach of any of the terms of the Plan shall not
operate or be construed as a waiver of any other breach of such terms or conditions or of any other
terms and conditions, nor shall any failure to enforce any provision hereof operate or be construed
as a waiver of such provision or of any other provision.



CHOICE OF LAW AND VENUE:


The Plan will be governed by the laws of the State of California, notwithstanding that State’s
conflict of law provisions. The Company and each of the Plan Participants shall irrevocably and
unconditionally consent to the exclusive jurisdiction of the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”). The Company and each of the Plan Participants shall
irrevocably and unconditionally waive any objection to the laying of venue of any action, suit, or
proceeding arising out of or related to the Plan in the Bankruptcy Court and shall further
irrevocably and unconditionally waive and agree not to plead or claim that any such action, suit or
proceeding brought in the Bankruptcy Court has been brought in an inconvenient forum.



ENTIRE AGREEMENT AND AMENDMENT:


This document constitutes the complete, final and exclusive embodiment of the terms and conditions
of the Plan and may only be modified in writing signed by an authorized officer of the Company.
Any agreement between any Plan Participant and the Company or any of its subsidiaries with regard
to the Plan and its subject matter is superseded in its entirety by this document.



No Assignment:


The rights of a Plan Participant or any other person to any payment or other benefits under the
Plan may not be assigned, transferred, pledged, or encumbered except by will or the laws of decent
or distribution.