Document:

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                                                                   EXHIBIT 10.13

                        NEW CENTURY FINANCIAL CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

       (Composite Plan Document Incorporating Amendments through 1999-III)

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                               TABLE OF CONTENTS

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                                                                            PAGE
<S>  <C>                                                                    <C>
1.   PURPOSE................................................................  3

2.   DEFINITIONS............................................................  3

3.   ELIGIBILITY............................................................  5

4.   STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS..........................  5

5.   OFFERING PERIODS.......................................................  5

6.   PARTICIPATION..........................................................  6

7.   METHOD OF PAYMENT OF CONTRIBUTIONS.....................................  6

8.   GRANT OF OPTION........................................................  7

9.   EXERCISE OF OPTION.....................................................  7

10.  DELIVERY...............................................................  8

11.  TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS...................  8

12.  ADMINISTRATION.........................................................  8

13.  DESIGNATION OF BENEFICIARY.............................................  9

14.  TRANSFERABILITY........................................................ 10

15.  USE OF FUNDS; INTEREST................................................. 10

16.  REPORTS................................................................ 10

17.  ADJUSTMENTS OF AND CHANGES IN THE STOCK................................ 10

18.  TERM OF PLAN; AMENDMENT OR TERMINATION................................. 11

19.  NOTICES................................................................ 12

20.  CONDITIONS UPON ISSUANCE OF SHARES..................................... 12

21.  PLAN CONSTRUCTION...................................................... 12

22.  EMPLOYEES' RIGHTS...................................................... 13

23.  MISCELLANEOUS.......................................................... 13

24.  TAX WITHHOLDING........................................................ 13
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                                      -i-
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                        NEW CENTURY FINANCIAL CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

       (Composite Plan Document Incorporating Amendments through 1999-III)

                  The following constitute the provisions of the New Century
Financial Corporation Employee Stock Purchase Plan.

1.  PURPOSE

    The purpose of this Plan is to provide Eligible Employees with an
    incentive to advance the best interests of the Corporation (and those
    Subsidiaries which may be designated by the Committee as "Participating
    Corporations") by providing a method whereby they may voluntarily
    purchase Common Stock at a favorable price and upon favorable terms.

2.  DEFINITIONS

    Capitalized terms used herein which are not otherwise defined shall
    have the following meanings.

             "ACCOUNT" shall mean the bookkeeping account maintained by the
             Corporation, or by a recordkeeper on behalf of the
             Corporation, for a Participant pursuant to Section 7(a).

             "BOARD" shall mean the Board of Directors of the Corporation.

             "CODE" shall mean the Internal Revenue Code of 1986, as amended.

             "COMMITTEE" shall mean the committee appointed by the Board to
             administer this Plan pursuant to Section 12.

             "COMMON STOCK" shall mean the common stock of the Corporation.

             "COMPANY" shall mean the Corporation and its Subsidiaries.

             "COMPENSATION" shall mean an Eligible Employee's regular
             earnings, overtime pay, sick pay, commissions, vacation pay,
             incentive compensation and bonuses. Compensation also includes
             any amounts contributed as salary reduction contributions to a
             plan qualifying under Section 401(k), 125 or 129 of the Code.
             Any other form of remuneration is excluded from Compensation,
             including (but not limited to) the following: prizes, awards,
             housing allowances, stock option exercises, stock appreciation
             rights, restricted stock exercises, performance awards, auto
             allowances, tuition reimbursement and other forms of imputed
             income. Compensation shall be determined before giving effect
             to any deferral election under the Corporation's nonqualified
             Deferred Compensation Plan and

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             Compensation shall not include any amounts paid under such
             plan.

             "CONTRIBUTIONS" shall mean all bookkeeping amounts credited to
             the Account of a Participant pursuant to Section 7(a).

             "CORPORATION" shall mean New Century Financial Corporation, a
             Delaware corporation.

             "ELIGIBLE EMPLOYEE" shall mean any employee of the
             Corporation, or of any Subsidiary which has been designated in
             writing by the Committee as a "Participating Corporation"
             (including any Subsidiaries which have become such after the
             date that this Plan is approved by shareholders).
             Notwithstanding the foregoing, "Eligible Employee" shall not
             include any employee who (i) has not as of the Grant Date
             completed at least 90 days of continuous full-time employment
             with the Company, (ii) whose customary employment is for less
             than 20 hours per week, or (iii) whose customary employment is
             for not more than five months in a calendar year.

             "EFFECTIVE DATE" shall mean October 13, 1997.

             "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
             as amended.

             "EXERCISE DATE" shall mean, with respect to an Offering
             Period, the last day of that Offering Period.

             "FAIR MARKET VALUE" shall mean the closing price of a Share on
             The New York Stock Exchange on such date (or, in the event
             that the Common Stock is not traded on such date, on the
             immediately preceding trading date), as reported in THE WALL
             STREET JOURNAL or, in the event the Common Stock is not listed
             on The New York Stock Exchange, the "Fair Market Value" shall
             be the closing price of the Common Stock for such date (or, in
             the event that the Common Stock is not traded on such date, on
             the immediately preceding trading date), as reported by the
             National Association of Securities Dealers Automated Quotation
             ("NASDAQ") or, if such price is not reported, the mean of the
             bid and asked prices per Share as reported by NASDAQ or, if
             such prices are not so listed or reported, as determined by
             the Committee (or its delegate), in its discretion

             "GRANT DATE" shall mean the first day of each Offering Period.

             "OFFERING PERIOD" shall mean the six-consecutive month period
             commencing on each January 1 and July 1; provided, however,
             that the initial Offering Period shall be a short Offering
             Period which shall commence on the Effective Date and end on
             December 31, 1997.

             "OPTION" shall mean the stock option to acquire Shares granted
             to a Participant pursuant to Section 8.

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             "OPTION PRICE" shall mean the per share exercise price of an
             Option as determined in accordance with Section 8(b).

             "PARTICIPANT" shall mean an Eligible Employee who has elected
             to participate in this Plan and who has filed a valid and
             effective Subscription Agreement to make Contributions
             pursuant to Section 6.

             "PLAN" shall mean this New Century Financial Corporation
             Employee Stock Purchase Plan, as amended from time to time.

             "RULE 16B-3" shall mean Rule 16b-3 promulgated under Section
             16.

             "SECTION 16" shall mean Section 16 of the Exchange Act.

             "SHARE" shall mean a share of Common Stock.

             "SUBSCRIPTION AGREEMENT" shall mean the written agreement
             filed by an Eligible Employee with the Corporation pursuant to
             Section 6 to participate in this Plan.

             "SUBSIDIARY" shall mean any corporation in an unbroken chain
             of corporations (beginning with the Corporation) in which each
             corporation (other than the last corporation) owns stock
             possessing 50% or more of the total combined voting power of
             all classes of stock in one or more of the other corporations
             in the chain.

3.  ELIGIBILITY

    Any person employed as an Eligible Employee as of a Grant Date shall be
    eligible to participate in this Plan during the Offering Period in
    which such Grant Date occurs, subject to the Eligible Employee
    satisfying the requirements of Section 6.

4.  STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS

    The total number of Shares to be made available under this Plan is
    2,000,000 authorized and unissued or treasury shares of Common Stock,
    or Shares repurchased on the open market, subject to adjustments
    pursuant to Section 17. In the event that all of the Shares made
    available under this Plan are subscribed prior to the expiration of
    this Plan, this Plan may be terminated in accordance with Section 18.

5.  OFFERING PERIODS

    During the term of this Plan, the Corporation will offer Options to
    purchase Shares to all Participants during each Offering Period. Each
    Option shall become effective on the Grant Date. The term of each
    Option shall be six months (except with respect to those Options
    granted during the first Offering Period) and shall end on the Exercise
    Date. The first Offering Period shall commence on or after the
    Effective Date. Offering Periods shall continue until this Plan is
    terminated in accordance with Section 18, or, if earlier, until no
    Shares remain available for Options pursuant to Section 4.

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6.  PARTICIPATION

    An Eligible Employee may become a participant in this Plan by
    completing a Subscription Agreement on a form approved by and in a
    manner prescribed by the Committee (or its delegate). To become
    effective, Subscription Agreements must be filed with the Corporation
    prior to the applicable Grant Date and must set forth the amount or
    whole percentage of the Eligible Employee's Compensation (which shall
    not be less than 1% and not more than 10% of such Eligible Employee's
    Compensation) to be credited to the Participant's Account as
    Contributions each pay period. The Committee may permit Eligible
    Employees to make separate Contribution elections with respect to the
    bonus portion of their Compensation, on such terms and conditions as
    the Committee may prescribe. Subscription Agreements shall contain the
    Eligible Employee's authorization and consent to the Corporation's
    withholding from his or her Compensation the amount of his or her
    Contributions. A Participant's Subscription Agreement (as it may
    periodically be changed in accordance with Section 7(d)) shall remain
    valid for all Offering Periods until (i) the Participant terminates his
    or her Contributions in accordance with Section 7(c), (ii) the date the
    Participant's employment with the Company is terminated, or (iii) the
    date the Participant is no longer an Eligible Employee.

7.  METHOD OF PAYMENT OF CONTRIBUTIONS

    (a)      The Corporation shall maintain on its books, or cause to be
             maintained by a recordkeeper, an Account in the name of each
             Participant. The percentage of Compensation elected to be
             applied as Contributions by a Participant shall be deducted
             from such Participant's Compensation on each payday during the
             period for payroll deductions set forth below and such payroll
             deductions shall be credited to that Participant's Account as
             soon as administratively practicable after such date. A
             Participant may not make any additional payments to his or her
             Account. A Participant's Account shall be reduced by any
             amounts used to pay the Option Price of Shares acquired, or by
             any other amounts distributed pursuant to the terms hereof.

    (b)      Payroll deductions with respect to an Offering Period shall
             commence as of the first day of the payroll period which
             coincides with or immediately follows the applicable Grant
             Date and shall end on the last day of the payroll period which
             coincides with or immediately precedes the applicable Exercise
             Date, unless sooner terminated by the Participant as provided
             in this Section or until his or her participation terminates
             pursuant to Section 11.

    (c)      A Participant may terminate his or her Contributions during an
             Offering Period by completing and filing with the Corporation,
             in such form and on such terms as the Committee (or its
             delegate) may prescribe, a written withdrawal form which shall
             be signed by the Participant. Such termination shall be
             effective as soon as administratively practicable after its
             receipt by the Corporation.

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    (d)      A Participant may discontinue or otherwise change the level of
             his or her Contributions (within Plan limits) during an
             Offering Period by completing and filing with the Corporation,
             in such form and on such terms as the Committee (or its
             delegate) may prescribe, a written change in Contributions
             election which shall be signed by the Participant. Such change
             shall be effective as soon as administratively practicable
             after its receipt by the Corporation. A Participant shall make
             no more than two elections pursuant to this Section 7(d) in
             any one Offering Period and any elections in excess of such
             limit shall be invalid.

8.  GRANT OF OPTION

    (a)      On each Grant Date, each Eligible Employee who is a
             participant during that Offering Period shall be granted an
             Option to purchase a number of Shares. The Option shall be
             exercised on the Exercise Date. The number of Shares subject
             to the Option shall be determined by dividing the
             Participant's Account balance as of the applicable Exercise
             Date by the Option Price.

    (b)      The Option Price per Share of the Shares subject to an Option
             shall be the lesser of: (i) 90% of the Fair Market Value of a
             Share on the applicable Grant Date; or (ii) 90% of the Fair
             Market Value of a Share on the applicable Exercise Date.

    (c)      Notwithstanding anything else contained herein, a person who
             is otherwise an Eligible Employee shall not be granted any
             Option or other right to purchase Shares under this Plan to
             the extent (i) it would, if exercised, cause the person to own
             "stock" (as such term is defined for purposes of Section
             423(b)(3) of the Code) possessing 5% or more of the total
             combined voting power or value of all classes of stock of the
             Corporation, or any Subsidiary, or (ii) such Option causes
             such individual to have rights to purchase stock under this
             Plan and any other plan of the Company qualified under Section
             423 of the Code which accrue at a rate which exceeds $25,000
             of the fair market value of the stock of the Corporation or of
             a Subsidiary (determined at the time the right to purchase
             such Stock is granted) for each calendar year in which such
             right is outstanding. For this purpose a right to purchase
             Shares accrues when it first become exercisable during the
             calendar year. In determining whether the stock ownership of
             an Eligible Employee equals or exceeds the 5% limit set forth
             above, the rules of Section 424(d) of the Code (relating to
             attribution of stock ownership) shall apply.

9.  EXERCISE OF OPTION

    Unless a Participant's Plan participation is terminated as provided in
    Section 11, his or her Option for the purchase of Shares shall be
    exercised automatically on the Exercise Date for that Offering Period,
    without any further action on the Participant's part, and the maximum
    number of Shares subject to such Option shall be purchased at the
    Option Price with the balance of such Participant's Account. The
    Committee, in its discretion and prior to the applicable Offering
    Period, may limit the purchase of fractional Shares under the Plan;
    provided that if any amount (which is not sufficient to purchase a
    whole Share)

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    remains in a Participant's Account after the exercise of his or her
    Option on the Exercise Date: (i) such amount shall be credited to such
    Participant's Account for the next Offering Period, if he or she is
    then a Participant; or (ii) if such Participant is not a Participant in
    the next Offering Period, or if the Committee so elects, such amount
    shall be refunded to such Participant as soon as administratively
    practicable after such date.

10. DELIVERY

    As soon as administratively practicable after the Exercise Date, the
    Corporation shall deliver to each Participant a certificate
    representing the Shares purchased upon exercise of his or her Option.
    The Corporation may make available an alternative arrangement for
    delivery of Shares to a recordkeeping service. The Committee (or its
    delegate), in its discretion, may either require or permit the
    Participant to elect that such certificates be delivered to such
    recordkeeping service. In the event the Corporation is required to
    obtain from any commission or agency authority to issue any such
    certificate, the Corporation will seek to obtain such authority.
    Inability of the Corporation to obtain from any such commission or
    agency authority which counsel for the Corporation deems necessary for
    the lawful issuance of any such certificate shall relieve the
    Corporation from liability to any Participant except to return to the
    Participant the amount of the balance in his or her Account.

11. TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS

    (a)      Upon a Participant's termination from employment with the
             Company for any reason or in the event that a Participant is
             no longer an Eligible Employee or if the Participant elects to
             terminate Contributions pursuant to Section 7(c), at any time
             prior to the last day of an Offering Period in which he or she
             participates, such Participant's Account shall be paid to him
             or her or in cash, or, in the event of such Participant's
             death, paid to the person or persons entitled thereto under
             Section 13, and such Participant's Option for that Offering
             Period shall be automatically terminated.

    (b)      A Participant's termination from Plan participation precludes
             the Participant from again participating in this Plan during
             that Offering Period. However, such termination shall not have
             any effect upon his or her ability to participate in any
             succeeding Offering Period, provided that the applicable
             eligibility and participation requirements are again then met.
             A Participant's termination from Plan participation shall be
             deemed to be a revocation of that Participant's Subscription
             Agreement and such Participant must file a new Subscription
             Agreement to resume Plan participation in any succeeding
             Offering Period.

12. ADMINISTRATION

    (a)      The Board shall appoint the Committee, which shall be composed
             of not less than two members of the Board. Each member of the
             Committee, in respect of any transaction at a time when an
             affected Participant may be subject to Section 16 of

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             the Exchange Act, shall be a "non-employee director" within
             the meaning of Rule 16b-3 promulgated under Section 16. The
             Board may, at any time, increase or decrease the number of
             members of the Committee, may remove from membership on the
             Committee all or any portion of its members, and may appoint
             such person or persons as it desires to fill any vacancy
             existing on the Committee, whether caused by removal,
             resignation, or otherwise. The Board may also, at any time,
             assume or change the administration of this Plan.

    (b)      The Committee shall supervise and administer this Plan and
             shall have full power and discretion to adopt, amend and
             rescind any rules deemed desirable and appropriate for the
             administration of this Plan and not inconsistent with the
             terms of this Plan, and to make all other determinations
             necessary or advisable for the administration of this Plan.
             The Committee shall act by majority vote or by unanimous
             written consent. No member of the Committee shall be entitled
             to act on or decide any matter relating solely to himself or
             herself or any of his or her rights or benefits under this
             Plan. The Committee shall have full power and discretionary
             authority to construe and interpret the terms and conditions
             of this Plan, which construction or interpretation shall be
             final and binding on all parties including the Corporation,
             Participants and beneficiaries. The Committee may delegate
             ministerial non-discretionary functions to third parties,
             including officers of the Corporation.

    (c)      Any action taken by, or inaction of, the Corporation, the
             Board or the Committee relating to this Plan shall be within
             the absolute discretion of that entity or body. No member of
             the Board or Committee, or officer of the Corporation shall be
             liable for any such action or inaction.

13. DESIGNATION OF BENEFICIARY

    (a)      A Participant may file, in a manner prescribed by the
             Committee (or its delegate), a written designation of a
             beneficiary who is to receive any Shares or cash from such
             Participant's Account under this Plan in the event of such
             Participant's death. If a Participant's death occurs
             subsequent to the end of an Offering Period but prior to the
             delivery to him or her of any Shares deliverable under the
             terms of this Plan, such Shares and any remaining balance of
             such Participant's Account shall be paid to such beneficiary
             (or such other person as set forth in Section 13(b)) as soon
             as administratively practicable after the Corporation receives
             notice of such Participant's death and any outstanding
             unexercised Option shall terminate. If a Participant's death
             occurs at any other time, the balance of such Participant's
             Account shall be paid to such beneficiary (or such other
             person as set forth in Section 13(b)) in cash as soon as
             administratively practicable after the Corporation receives
             notice of such Participant's death and such Participant's
             Option shall terminate. If a Participant is married and the
             designated beneficiary is not his or her spouse, spousal
             consent shall be required for such designation to be
             effective.

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    (b)      Beneficiary designations may be changed by the Participant
             (and his or her spouse, if required) at any time on forms
             provided and in the manner prescribed by the Committee (or its
             delegate). If a Participant dies with no validly designated
             beneficiary under this Plan who is living at the time of such
             Participant's death, the Corporation shall deliver all Shares
             and/or cash payable pursuant to the terms hereof to the
             executor or administrator of the estate of the Participant, or
             if no such executor or administrator has been appointed, the
             Corporation, in its discretion, may deliver such Shares and/or
             cash to the spouse or to any one or more dependents or
             relatives of the Participant, or if no spouse, dependent or
             relative is known to the Corporation, then to such other
             person as the Corporation may designate.

14. TRANSFERABILITY

    Neither Contributions credited to a Participant's Account nor any
    Options or rights with respect to the exercise of Options or right to
    receive Shares under this Plan may be anticipated, alienated,
    encumbered, assigned, transferred, pledged or otherwise disposed of in
    any way (other than by will, the laws of descent and distribution, or
    as provided in Section 13) by the Participant. Any such attempt at
    anticipation, alienation, encumbrance, assignment, transfer, pledge or
    other disposition shall be without effect and all amounts shall be paid
    and all shares shall be delivered in accordance with the provisions of
    this Plan. Amounts payable or Shares deliverable pursuant to this Plan
    shall be paid or delivered only to the Participant or, in the event of
    the Participant's death, to the Participant's beneficiary pursuant to
    Section 13.

15. USE OF FUNDS; INTEREST

    All Contributions received or held by the Corporation under this Plan
    will be included in the general assets of the Corporation and may be
    used for any corporate purpose. No interest will be paid to any
    Participant or credited to his or her Account under this Plan.

16. REPORTS

    Statements shall be provided to Participants as soon as
    administratively practicable following each Exercise Date. Each
    Participant's statement shall set forth, as of such Exercise Date, that
    Participant's Account balance immediately prior to the exercise of his
    or her Option, the Fair Market Value of a Share, the Option Price, the
    number of Shares purchased and his or her remaining Account balance, if
    any.

17. ADJUSTMENTS OF AND CHANGES IN THE STOCK

    (a)      The following provisions will apply if any extraordinary
             dividend or other extraordinary distribution occurs in respect
             of the Shares (whether in the form of cash, Common Stock,
             other securities, or other property), or any reclassification,
             recapitalization, stock split (including a stock split in the
             form of a stock dividend), reverse stock split,
             reorganization, merger, combination, consolidation,

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             split-up, spin-off, combination, repurchase, or exchange of
             Common Stock or other securities of the Corporation, or any
             similar, unusual or extraordinary corporate transaction (or
             event in respect of the Common Stock) or a sale of
             substantially all the assets of the Corporation as an entirety
             occurs. The Committee will, in such manner and to such extent
             (if any) as it deems appropriate and equitable

             (i)      proportionately adjust any or all of (1) the number
                      and type of Shares (or other securities) that
                      thereafter may be made the subject of Options
                      (including the specific maxima and numbers of Shares
                      set forth elsewhere in this Plan), (2) the number,
                      amount and type of Shares (or other securities or
                      property) subject to any or all outstanding Options,
                      (3) the Option Price of any or all outstanding
                      Options, or (4) the securities, cash or other
                      property deliverable upon exercise of any outstanding
                      Options, or

             (ii)     in the case of an extraordinary dividend or other
                      distribution, recapitalization, reclassification,
                      merger, reorganization, consolidation, combination,
                      sale of assets, split up, exchange, or spin off, make
                      provision for the substitution, settlement, or
                      exchange of any or all outstanding Options or the
                      cash, securities or property deliverable to the
                      holder of any or all outstanding Options based upon
                      the distribution or consideration payable to holders
                      of the Common Stock upon or in respect of such event.

             In each case, no such adjustment will be made that would cause
             this Plan to violate Section 423 of the Code or any successor
             provisions without the written consent of the holders
             materially adversely affected thereby. In any of such events,
             the Committee may take such action sufficiently prior to such
             event if necessary to permit the Participant to realize the
             benefits intended to be conveyed with respect to the
             underlying shares in the same manner as is available to
             stockholders generally.

    (b)      Upon a dissolution of the Corporation, or any other event
             described in Section 17(a) that the Corporation does not
             survive, the Plan and, if prior to the last day of an Offering
             Period, any outstanding Option granted with respect to that
             Offering Period shall terminate, subject to any provision that
             has been expressly made by the Committee through a plan or
             reorganization approved by the Board or otherwise for the
             survival, substitution, assumption, exchange or other
             settlement of the Plan and Options. In the event a
             Participant's Option is terminated pursuant to this Section
             17(b), such Participant's Account shall be paid to him or her
             in cash.

18. TERM OF PLAN; AMENDMENT OR TERMINATION

    (a)      This Plan shall become effective as of the Effective Date. No
             new Offering Periods shall commence on or after the tenth
             anniversary of the Effective Date and

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             this Plan shall terminate on such date unless sooner
             terminated pursuant to this Section 18.

    (b)      The Board may amend, modify or terminate this Plan at any time
             without notice. Shareholder approval for any amendment or
             modification shall not be required, except to the extent
             required by Section 423 of the Code or other applicable law,
             or deemed necessary or advisable by the Board. No amendment,
             modification, or termination pursuant to this Section 18(b)
             shall, without written consent of the Participant, affect in
             any manner materially adverse to the Participant any rights or
             benefits of such Participant or obligations of the Corporation
             under any Option granted under this Plan prior to the
             effective date of such change. Changes contemplated by Section
             17 shall not be deemed to constitute changes or amendments
             requiring Participant consent. Notwithstanding the foregoing,
             the Committee shall have the right to designate from time to
             time the Subsidiaries whose employees may be eligible to
             participate in this Plan and such designation shall not
             constitute any amendment to this Plan requiring shareholder
             approval.

19. NOTICES

    All notices or other communications by a Participant to the Corporation
    contemplated by this Plan shall be deemed to have been duly given when
    received in the form and manner specified by the Committee (or its
    delegate) at the location, or by the person, designated by the
    Committee (or its delegate) for that purpose.

20. CONDITIONS UPON ISSUANCE OF SHARES

    Shares shall not be issued with respect to an Option unless the
    exercise of such Option and the issuance and delivery of such Shares
    complies with all applicable provisions of law, domestic or foreign,
    including, without limitation, the Securities Act of 1933, as amended,
    the Exchange Act, any applicable state securities laws, the rules and
    regulations promulgated thereunder, and the requirements of any stock
    exchange upon which the Shares may then be listed.

    As a condition precedent to the exercise of any Option, if, in the
    opinion of counsel for the Corporation such a representation is
    required under applicable law, the Corporation may require any person
    exercising such Option to represent and warrant that the Shares subject
    thereto are being acquired only for investment and without any present
    intention to sell or distribute such Shares.

21. PLAN CONSTRUCTION

    (a)      It is the intent of the Corporation that transactions in and
             affecting Options in the case of Participants who are or may
             be subject to the prohibitions of Section 16 satisfy any then
             applicable requirements of Rule 16b-3 so that such persons
             (unless they otherwise agree) will be entitled to the
             exemptive relief of Rule 16b-3 in respect of those
             transactions and will not be subject to avoidable liability

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             thereunder. Accordingly, this Plan shall be deemed to contain
             and the Shares issued upon exercise thereof shall be subject
             to, such additional conditions and restrictions as may be
             required by Rule 16b-3 to qualify for the maximum exemption
             from Section 16 with respect to Plan transactions.

    (b)      This Plan and Options are intended to qualify under Section
             423 of the Code.

    (c)      If any provision of this Plan or of any Option would otherwise
             frustrate or conflict with the intents expressed above, that
             provision to the extent possible shall be interpreted so as to
             avoid such conflict. If the conflict remains irreconcilable,
             the Committee may disregard the provision if it concludes that
             to do so furthers the interest of the Corporation and is
             consistent with the purposes of this Plan as to such persons
             in the circumstances.

22. EMPLOYEES' RIGHTS

    Nothing in this Plan (or in any agreement related to this Plan) shall
    confer upon any Eligible Employee or Participant any right to continue
    in the service or employ of the Company or constitute any contract or
    agreement of service or employment, or interfere in any way with the
    right of the Company to reduce such person's compensation or other
    benefits or to terminate the services or employment or such Eligible
    Employee or Participant, with or without cause, but nothing contained
    in this Plan or any document related hereto shall affect any other
    contractual right of any Eligible Employee or Participant. No
    Participant shall have any rights as a shareholder until a certificate
    for Shares has been issued in the Participant's name following exercise
    of his or her Option. No adjustment will be made for dividends or other
    rights as a shareholder for which a record date is prior to the
    issuance of such Share certificate. Nothing in this Plan shall be
    deemed to create any fiduciary relationship between the Corporation and
    any Participant.

23. MISCELLANEOUS

    (a)      This Plan and related documents shall be governed by, and
             construed in accordance with, the laws of the State of
             California. If any provision shall be held by a court of
             competent jurisdiction to be invalid and unenforceable, the
             remaining provisions of this Plan shall continue to be fully
             effective.

    (b)      Captions and headings are given to the sections of this Plan
             solely as a convenience to facilitate reference. Such captions
             and headings shall not be deemed in any way material or
             relevant to the construction of interpretation of this Plan or
             any provision hereof.

    (c)      The adoption of this Plan shall not affect any other
             compensation or incentive plans in effect for the Company.
             Nothing in this Plan shall be construed to limit the right of
             the Company (i) to establish any other forms of incentives or
             compensation for employees of the Company, or (ii) to grant or
             assume options

                                  13
<PAGE>

             (outside the scope of and in addition to those contemplated by
             this Plan) in connection with any proper corporate purpose.

24. TAX WITHHOLDING

    Notwithstanding anything else contained in this Plan herein to the
    contrary, the Company may deduct from a Participant's Account balance
    as of an Exercise Date, before the exercise of the Participant's Option
    is given effect on such date, the amount of any taxes which the Company
    reasonably determines it may be required to withhold with respect to
    such exercise. In such event, the maximum number of whole Shares
    subject to such Option (subject to the other limits set forth in this
    Plan) shall be purchased at the Option Price with the balance of the
    Participant's Account (after reduction for the tax withholding amount).

    Should the Company for any reason be unable, or elect not to, satisfy
    its tax withholding obligations in the manner described in the
    preceding paragraph with respect to a Participant's exercise of an
    Option, or should the Company reasonably determine that it has a tax
    withholding obligation with respect to a disposition of Shares acquired
    pursuant to the exercise of an Option prior to satisfaction of the
    holding period requirements of Section 423 of the Code, the Company
    shall have the right at its option to (i) require the Participant to
    pay or provide for payment of the amount of any taxes which the Company
    reasonably determines that it is required to withhold with respect to
    such event or (ii) deduct from any amount otherwise payable to or for
    the account of the Participant the amount of any taxes which the
    Company reasonably determines that it is required to withhold with
    respect to such event.

                                  14<PAGE>
                                                                   EXHIBIT 10.47
                               THIRD AMENDMENT TO
                          PLEDGE AND SECURITY AGREEMENT

         THIS THIRD AMENDMENT TO PLEDGE AND SECURITY AGREEMENT (the "Amendment")
dated as of February 17, 2000 by and among NEW CENTURY MORTGAGE CORPORATION, a
California corporation (the "Company"), the lenders party to the Credit
Agreement referred to below (collectively, the "Lenders" and individually, a
"Lender") and U.S. BANK NATIONAL ASSOCIATION, a national banking association, in
its capacity as agent for the Lenders (in such capacity, together with any
successor agents appointed thereunder, the "Agent").

         WITNESSETH THAT:

         WHEREAS, the Company, the Lenders and the Agent are parties to a Fourth
Amended and Restated Credit Agreement dated as of May 26, 1999, a First
Amendment to Fourth Amended and Restated Credit Agreement and a Second Amendment
to Fourth Amended and Restated Credit Agreement and Pledge and Security
Agreement dated as of October 14, 1999 (as amended, the "Credit Agreement"),
pursuant to which the Lenders provide the Company with a revolving mortgage
warehousing credit facility; and

         WHEREAS, the Company and the Agent are parties to a Pledge and Security
Agreement dated as of May 29, 1998 and a First Amendment to Fourth Amended and
Restated Credit Agreement and Pledge and Security Agreement (as amended, the
APledge and Security Agreement"); and

         WHEREAS, the Company and the Lenders have agreed to amend the Pledge
and Security Agreement upon the terms and conditions herein set forth;

         NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Lenders agree as follows:

         1. CERTAIN DEFINED TERMS. Each capitalized term used herein without
being defined herein that is defined in the Credit Agreement shall have the
meaning given to it therein.

         2. AMENDMENTS TO PLEDGE AND SECURITY AGREEMENT. The Pledge and Security
Agreement is hereby amended as follows:

                  (a) Section 1 of the Pledge and Security Agreement is hereby
         amended to add the following definitions thereto in the appropriate
         alphabetical order:

<PAGE>

                           "SUBORDINATED NOTE": The promissory note dated as of
                  October 14, 1999 made by the Company in the original principal
                  amount of $20,000,000 as amended and restated pursuant to the
                  promissory note dated as of February , 2000 made by the
                  Company in the original principal amount of $30,000,000.

                           "SUBORDINATED NOTE OBLIGATIONS": The obligations of
                  the Company to pay principal and interest on the Subordinated
                  Note and all fees, costs, expenses and indemnities for which
                  the Company is liable in connection therewith.

                  (b) The first paragraph of Section 2 is hereby amended in its
entirety to read as follows:

                           As collateral security for the due and punctual
                  payment and performance of all of the Obligations, Lease
                  Obligations and Subordinated Note Obligations, the Company
                  does hereby pledge, hypothecate, assign, transfer and convey
                  to the Agent, for the benefit of the Lenders, the Lessor and
                  the holders of the Subordinated Note, and grants to the Agent,
                  for the benefit of the Lenders, the Lessor and the holders of
                  the Subordinated Note, a security interest in and to, the
                  following described property (the "Collateral")

                  (c) Clause Fifth of Section 17 of the Pledge and Security
Agreement is hereby amended in its entirety as follows:

                           Fifth: to the payment of the Subordinated Note
                  Obligations until all of the Subordinated Note Obligations
                  have been paid in full;

         3. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This Amendment shall
become effective when the Agent shall have received at least thirteen (13)
counterparts of this Amendment, duly executed by the Company and the Required
Lenders, provided the following conditions are satisfied:

                  (a) Before and after giving effect to this Amendment, the
         representations and warranties of the Company in Section 3 of the
         Credit Agreement, Section 5 of the Pledge and Security Agreement and
         Section 4 of the Servicing Security Agreement, of NCFC in Section 15 of
         the Guaranty, and of NCCC in Section 15 of the NCCC Guaranty shall be
         true and correct as though made on the date hereof, except for changes
         that are permitted by the terms of the Credit Agreement.

                                      -2-
<PAGE>

                  (b) The Agent shall have received the consent of the Required
         Lenders to the increase of the Subordinated Note.

                  (c) The Agent shall have received such other documents,
         instruments, opinions and approvals as the Agent may reasonably
         request.

         4. ACKNOWLEDGMENTS. The Company and each Lender acknowledge that, as
amended hereby, the Pledge and Security Agreement remains in full force and
effect with respect to the Company and the Lenders, and that each reference to
the Pledge and Security Agreement in the Loan Documents shall refer to the
Pledge and Security Agreement as amended hereby. The Company confirms and
acknowledges that it will continue to comply with the covenants set out in the
Credit Agreement and the other Loan Documents, as amended hereby, and that its
representations and warranties set out in the Credit Agreement and the other
Loan Documents, as amended hereby, are true and correct as of the date of this
Amendment. The Company represents and warrants that (i) the execution, delivery
and performance of this Amendment is within its corporate powers and has been
duly authorized by all necessary corporate action; (ii) this Amendment has been
duly executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms (subject to limitations as to enforceability which might result
from bankruptcy, insolvency, or other similar laws affecting creditors' rights
generally and general principles of equity) and (iii) no Events of Default or
Unmatured Events of Default exist.

         5.       GENERAL.

                  (a) The Company agrees to reimburse the Agent upon demand for
         all reasonable expenses (including reasonable attorneys fees and legal
         expenses) incurred by the Agent in the preparation, negotiation and
         execution of this Amendment and any other document required to be
         furnished herewith, and to pay and save the Lenders harmless from all
         liability for any stamp or other taxes which may be payable with
         respect to the execution or delivery of this Amendment, which
         obligations of the Company shall survive any termination of the Credit
         Agreement.

                  (b) This Amendment may be executed in as many counterparts as
         may be deemed necessary or convenient, and by the different parties
         hereto on separate counterparts, each of which, when so executed, shall
         be deemed an original but all such counterparts shall constitute but
         one and the same instrument.

                  (c) Any provision of this Amendment which is prohibited or
         unenforceable in any jurisdiction shall, as to such jurisdiction, be
         ineffective to the extent of such prohibition or unenforceability
         without invalidating the remaining

                                      -3-
<PAGE>

         portions hereof or affecting the validity or enforceability of such
         provisions in any other jurisdiction.

                  (d) This Amendment shall be governed by, and construed in
         accordance with, the internal law, and not the law of conflicts, of the
         State of Minnesota, but giving effect to federal laws applicable to
         national banks.

                  (e) This Amendment shall be binding upon the Company, the
         Lenders, the Agent and their respective successors and assigns, and
         shall inure to the benefit of the Company, the Lenders, the Agent and
         the successors and assigns of the Lenders and the Agent.

                                      -4-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the day and year first above written.

<TABLE>
<S><C>
                                                     NEW CENTURY MORTGAGE
                                                     CORPORATION

                                                     By  /s/ [ILLEGIBLE]
                                                        -------------------------------------------
                                                          Its  Vice President
                                                             --------------------------------------

                                                     U.S. BANK NATIONAL ASSOCIATION,

                                                     By  /s/ [ILLEGIBLE]
                                                        --------------------------------------------
                                                          Its  Senior Vice President
                                                              --------------------------------------

                                                     GUARANTY FEDERAL BANK, FSB

                                                     By  /s/ W. James Meintjes
                                                        --------------------------------------------
                                                          Its  Vice President
                                                              --------------------------------------

                     [Signature Page for Third Amendment to
                         Pledge and Security Agreement]

<PAGE>

                                   BANK UNITED

                                                     By  /s/ [ILLEGIBLE]
                                                        ---------------------------------------------
                                                          Its   Vice President
                                                              ---------------------------------------

                                                     RESIDENTIAL FUNDING CORPORATION

                                                     By  /s/ [ILLEGIBLE]
                                                        ---------------------------------------------
                                                          Its   Director
                                                              ---------------------------------------

                                                     BANK ONE, TEXAS, N.A.

                                                     By   /s/ [ILLEGIBLE]
                                                         --------------------------------------------
                                                          Its   Senior Vice President
                                                              ---------------------------------------

                                                     UNION BANK OF CALIFORNIA

                                                     By   /s/ [ILLEGIBLE]
                                                         --------------------------------------------
                                                          Its   Vice President
                                                              ---------------------------------------
</TABLE>

                     [Signature Page for Third Amendment to
                         Pledge and Security Agreement]

<PAGE>

                        AMENDED AND RESTATED SUBORDINATED
                                 PROMISSORY NOTE

$30,000,000.00                                                 February 17, 2000

         FOR VALUE RECEIVED, the undersigned, NEW CENTURY MORTGAGE CORPORATION
(the "Maker"), hereby promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION (the "Payee", which term includes any subsequent holder hereof) at
Minneapolis, Minnesota or at such other place as the Payee may from time to time
hereafter designate to the Maker in writing the principal sum of all loans made
by the Payee to the Maker under the terms of this Note (each an "Advance" and
collectively, the "Advances"). The aggregate principal amount of all Advances
outstanding hereunder shall not exceed THIRTY MILLION DOLLARS AND NO CENTS
($30,000,000.00). The amount and date and each Advance shall be entered by the
Lender into its records, which records shall be conclusive evidence of the
subject matter thereof absent manifest error.

         The unpaid principal balance hereof from time to time outstanding shall
bear interest at the rate of twelve percent (12%) per annum. Interest shall be
computed on the basis of actual days elapsed and a year of 360 days. Upon the
happening of any Event of Default, this Note, at the option of the Payee, shall
bear interest until paid in full at a rate per annum equal to the rate of
interest applicable immediately prior to such Event of Default plus 2.0%.

         The principal hereof is payable on June 1, 2000 in the amount of the
entire principal balance.

         Interest shall be payable monthly in arrears five (5) business days
after the end of the preceding calendar month, and at final maturity.

         Except with the prior written consent of the Payee, this Note may not
be prepaid.

         This Note is secured by liens granted pursuant to (i) the Pledge and
Security Agreement dated as of May 29, 1998, made and given by the Maker (as the
same may hereafter be amended, modified or supplemented, or any agreement
entered into in substitution or replacement therefor, the "Pledge and Security
Agreement") and (ii) the Security Agreement dated as of February , 2000, made
and give by NC Capital Corporation (as the same may hereafter be amended,
modified or supplemented, or any agreement entered into in substitution or
replacement therefor, the "NCCC Security Agreement").

         The occurrence of any one or more of the following events shall
constitute an Event of Default, and upon the occurrence of any Event of Default
the Payee may declare this

<PAGE>

Note to be, and the same shall forthwith become, immediately due and payable and
the Payee may exercise all rights and remedies under the Pledge and Security
Agreement and the NCCC Security Agreement and as may otherwise be allowed by
applicable law:

         (1)      The Maker shall fail to make any payment of principal or
                  interest hereon when due.

         (2)      The Maker shall become insolvent or shall generally not pay
                  its debts as they mature or shall apply for, shall consent to,
                  or shall acquiesce in the appointment of a custodian, trustee
                  or receiver for the Maker or for a substantial part of the
                  property thereof or, in the absence of such application,
                  consent or acquiescence, a custodian, trustee or receiver
                  shall be appointed for the Maker or for a substantial part of
                  the property thereof; or any bankruptcy, reorganization, debt
                  arrangement or other proceedings under any bankruptcy or
                  insolvency law shall be instituted by or against the Maker.

         (3)      The maturity of any material indebtedness of the Maker (other
                  than the indebtedness on this Note) shall be accelerated or
                  the Maker shall fail to pay any such material indebtedness
                  when due or, in the case of indebtedness payable on demand,
                  when demanded. For these purposes, indebtedness of the Maker
                  shall be deemed material if it exceeds $250,000 as to any item
                  of indebtedness or in the aggregate for all items of
                  indebtedness with respect to which any of the events described
                  in this paragraph has occurred.

         (4)      Any default shall occur under the terms of the Pledge and
                  Security Agreement and shall continue for more than the period
                  of grace, if any, applicable thereto.

         (5)      Any default shall occur under the terms of the NCCC Security
                  Agreement and shall continue for more than the period of
                  grace, if any, applicable thereto.

         (6)      A judgment or judgments for the payment of money in excess of
                  the sum of $250,000 in the aggregate shall be rendered against
                  the Maker and the Maker shall not discharge the same or
                  provide for its discharge, or procure a stay of execution
                  thereof, prior to any execution on such judgment, within 60
                  days from the date of entry thereof, and within said period of
                  60 days, or such longer period during which execution shall be
                  stayed, appeal therefrom and cause the execution to be stayed
                  during such appeal.

         (7)      Any execution or attachment shall be issued whereby any
                  substantial part of the property of the Maker shall be taken
                  or attempted to be taken and the

                                      -2-
<PAGE>

                  same shall not have been vacated or stayed within 30 days
                  after the issuance thereof.

         (8)      An "Event of Default" as defined in that certain Subordination
                  Agreement dated as of October 14, 1999 given by U.S. Bank
                  National Association (the "Subordination Agreement") shall
                  occur and continue thereunder.

         This Note is subject to the terms set forth in the Subordination
Agreement and is the Subordinated Note as defined in the Subordination
Agreement.

         THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF.

         AT THE OPTION OF THE PAYEE THIS NOTE MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY OR RAMSEY COUNTY,
MINNESOTA; AND THE MAKER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT THE VENUE IN SUCH FORUMS IS NOT CONVENIENT.
IF THE MAKER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY
TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS NOTE, THE PAYEE AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR, IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

         The Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest.

         If this Note is not paid when due, the Maker shall pay all of the
Payee's costs of collection including reasonable attorneys' fees.

         This Note amends and restates the remaining unpaid principal
indebtedness of the undersigned to the Bank evidenced by a Subordinated
Promissory Note dated October 14, 1999, in the original principal amount of
$20,000,000 issued by the undersigned to the order of the Payee (the "Prior
Subordinated Note"). It is expressly intended, understood and agreed that this
note shall replace the Prior Subordinated Note as evidence of the remaining
unpaid principal indebtedness of the undersigned to Payee under the Prior
Subordinated Note and accrued and unpaid interest thereon, and such indebtedness
of the undersigned to the Payee heretofore represented by the Prior Subordinated
Note, as of the

                                      -3-
<PAGE>

date hereof, shall be considered outstanding hereunder from and after the date
hereof and shall not be considered paid (nor shall the undersigned's obligation
to pay the same be considered discharged or satisfied) as a result of the
issuance of this note.

                                             MAKER:

                                             New Century Mortgage Corporation

                                             By      /s/ BRAD A. MORRICE
                                                --------------------------------
                                                Its      CHIEF EXECUTIVE OFFICER
                                                    ----------------------------

                                      -4-
<PAGE>

                               SECURITY AGREEMENT

         SECURITY AGREEMENT dated as of February 17, 2000 by and between NC
CAPITAL CORPORATION, a California corporation ("NCCC" or a "Grantor"), NC
RESIDUAL II CORPORATION , a Delaware corporation ("NCRC" or a "Grantor" and
together with NCCC, the "Grantors"), and U.S. BANK NATIONAL ASSOCIATION, a
national banking association ("USBNA"), as collateral agent (in such capacity,
together with any successor agent under the Credit Agreement referred to below,
which shall also be a successor collateral agent hereunder, the "Agent") for (A)
the Lenders (as defined below), (B) U.S. Bancorp Leasing & Financial, successor
in interest to FBS Business Finance Corp. (the "Lessor"), as lessor under any
present or future leases of equipment by the Lessor, as the lessor, to New
Century Mortgage Corporation (the "Company") or New Century Financial
Corporation ("NCFC"), as lessee, or as lender under any present or future loan
by the Lessor, as lender, to the Company or NCFC, as Company, secured by
equipment, and (C) the holder(s) of the Subordinated Note (as defined below).

                                    RECITALS

         A. The Company, the lenders party thereto (the "Lenders") and the Agent
are party to the Fourth Amended and Restated Credit Agreement dated as of May
26, 1999 (as the same has heretofore been amended and as may hereafter be
amended, modified, extended or restated and in effect from time to time, the
"Credit Agreement").

         B. The Lessor has, and may from time to time hereafter, lease equipment
to the Company or NCFC, or make loans to the Company or NCFC secured by
equipment.

         C. The Company has requested that USBNA make additional loans to the
Company under the promissory note dated as of October 14, 1999 made by the
Company in the original principal amount of $20,000,000 as amended and restated
pursuant to the promissory note dated as of February 17, 2000 made by the
Company in the original principal amount of $30,000,000 (the "Subordinated
Note").

         D. It is a condition precedent to the agreement of the holder(s) of the
Subordinated Note to loan or advance additional monies under the Subordinated
Note that each Grantor executes and delivers this Security Agreement granting
the Agent a security interest in the property of the Grantors hereinafter
described.

         E. NCCC is a wholly owned subsidiary of the Company and NCRC is a
wholly owned subsidiary of NCCC. Each Grantor participates with the Company in
Company Securitization Transactions, and has concluded that it is in its best
interests that the Company borrow the additional loans from USBNA.

         Accordingly, each Grantor and the Agent hereby agree as follows:

<PAGE>

         Section 1.  DEFINED TERMS.

         Section 1.01. TERMS DEFINED IN CREDIT AGREEMENT. All terms used herein
that are not otherwise defined herein but that are defined in the Credit
Agreement, including Exhibit E thereto, shall have the respective meanings
assigned to them therein unless otherwise expressly defined herein.

         Section 1.02. DEFINITION OF CERTAIN TERMS. As used herein, the
following terms shall have the following respective meanings (such terms to be
equally applicable to both the singular and plural forms of the terms defined):

         "BANKRUPTCY CODE" shall mean 11 U.S.C. Section 101 ET. SEQ., as
amended from time to time.

         "COLLATERAL" shall mean all property and rights in property now owned
or hereafter at any time acquired by either Grantor in or upon which a Lien is
granted to the Agent by such Grantor under this Security Agreement or under any
other document or instrument executed by such Grantor pursuant to this Security
Agreement, including, without limitation, the property described in Section 2.

         "COMPANY" shall have the meaning assigned to it in the first recital
hereto.

         "FINANCING STATEMENT" shall have the meaning given to such term in
Section 4(c).

         "GCFPI" shall mean Greenwich Capital Financial Products, Inc., a
Delaware corporation.

         "GRANTOR ADDRESS" shall mean 18400 Von Karman, Suite 1000, Irvine,
California 92612.

         "LEASE AGREEMENT" shall mean each and any agreement for the lease of
equipment or for the making of a loan secured by equipment now existing or at
anytime entered into between the Lessor, as lessor or lender, and the Company or
NCFC, as lessee or Company.

         "LEASE OBLIGATIONS" shall mean all of the obligations now or hereafter
arising owed by the Company or NCFC to the Lessor in connection with any lease
of equipment or loan secured by equipment.

         "PROCEEDS" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property which constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any

                                       2
<PAGE>

insurer or other person or entity as a result of the destruction, loss, theft,
damage or other involuntary conversion of whatever nature of any asset or
property which constitutes Collateral, and shall include all cash and negotiable
instruments received or held on behalf of the Agent pursuant to this Security
Agreement.

         "RESIDUAL FINANCING" shall have the meaning assigned to it in Section
4(c).

         "SBI": Salomon Brothers International, Limited, an English corporation.

         "SECURED PARTIES" shall mean the Agent, the Lenders, the Lessor, and
the holder(s) of the Subordinated Note.

         "SECURITIZATION DOCUMENTS" shall mean all agreements, instruments,
certificates, and other documents executed and delivered in connection with any
Company Securitization Transaction, as the same may be amended, modified,
extended or restated and in effect from time to time.

         "SUBORDINATED NOTE" shall have the meaning assigned to it in the
Recital C hereto.

         "SUBORDINATED NOTE OBLIGATIONS" shall mean the obligations of the
Company to pay principal and interest on the Subordinated Note and all fees,
costs, expenses and indemnities for which the Company is liable in connection
therewith.

         Section 1.03. TERMS DEFINED IN UNIFORM COMMERCIAL CODE. All other terms
used in this Agreement that are not specifically defined herein or the
definitions of which are not incorporated herein by reference shall have the
meaning assigned to such terms in the Uniform Commercial Code in effect in the
State of Minnesota as of the date first above written (the "Uniform Commercial
Code") to the extent such other terms are defined therein.

         Section 1.04. RULES OF INTERPRETATION. Unless the context of this
Security and Agreement otherwise clearly requires, references to "or" has the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereunder," and similar terms in this Security Agreement refer to
this Security Agreement as a whole and not to any particular provision of this
Security Agreement. References to Sections, Attachments and Schedules are
references to Sections in, and Attachments and Schedules to, this Security
Agreement unless otherwise provided.

         Section 2. GRANT OF SECURITY INTEREST. As security for the payment and
performance of all of the Obligations (as defined in the Credit Agreement),
Lease Obligations, and Subordinated Note Obligations, each Grantor hereby
assigns and pledges to the Agent for

                                       3
<PAGE>

the benefit of the Lenders, the Lessor, the holder(s) of the Subordinated Note
and their respective successors and assigns, and hereby grants to the Agent for
the benefit of the Lenders, the Lessor, the holder(s) of the Subordinated Note
and their respective successors and assigns, a security interest in and to, all
of such Grantor's right, title, and interest in and to the following:

                  (a) all Junior Securitization Interests described on Schedule
         1 and 2 hereto, and all Junior Securitization Interests hereafter
         arising (the "Pledged Junior Securitization Interests");

                  (b) all rights, remedies and other interests of such Grantor
         to and under any agreement pursuant to which any Pledged Junior
         Securitization Interest was, is or may be acquired, sold or financed,
         either before or after the date hereof;

                  (c) all rights, remedies and other interests of such Grantor
         in any Securitization Documents related to the Pledged Junior
         Securitization Interests;

                  (d) all sums paid or payable to such Grantor under or by
         virtue of any Pledged Junior Securitization Interests;

                  (e) all books, correspondence, credit files, records,
         invoices, bills of lading, and other documents, including, without
         limitation, all tapes, cards, computer runs, and other papers and
         documents in the possession or control of such Grantor or any computer
         bureau from time to time acting for such Grantor relating to the
         foregoing;

                  (f) any and all Hedging Arrangements related to the Pledged
         Junior Securitization Interests or the Mortgage Loans backing the
         related Company Securitization Transactions, and any and all rights,
         remedies and other interests of such Grantor therein or thereunder;

                  (g) any and all balances, credits, deposits, accounts or
         moneys of, or in the name of, such Grantor representing or evidencing
         the foregoing or any proceeds thereof; and

                  (h) all Proceeds of any of the foregoing;

provided, however, that with respect to the Junior Securitization Interests
listed on Schedule 1 hereto, and any related Collateral described in clauses
(b), (c), (d), (e), (f), (g) and (h) above, such security interest shall not
take effect until consented to by GCFPI.

                                       4
<PAGE>

         Section 3. THE GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Security Agreement had not been executed, (b) the exercise by the Agent of any
of the rights hereunder shall not release either Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral,
and (c) none of the Agent or the Lenders shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Security Agreement, nor shall the Agent or the Lenders be obligated to perform
any of the obligations or duties of either Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.

         Section 4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants as follows:

                  (a) The chief place of business and the office where each
         Grantor keeps its books and records concerning the Collateral is
         located at the Grantor Address. The chief executive office of each
         Grantor is located at the Grantor Address.

                  (b) Each Junior Securitization Interest described in Schedule
         1 or 2, or which is at any time hereafter created or acquired by either
         Grantor is, or upon the creation or acquisition thereof by such Grantor
         will be, in full force and effect without modification or amendment of
         any kind.

                  (c) Each Grantor is the legal and beneficial owner of the
         Collateral free and clear of any Lien except for the security interests
         created by this Security Agreement and (i) in the case of Junior
         Securitization Interests listed on Schedule 1, a Lien in favor of
         GCFPI, (ii) in the case of Junior Securitization Interests listed on
         Schedule 2, a Lien in favor of SBI, and (iii) in the case of future
         Junior Securitization Interests, a Lien in favor of the Person(s)
         providing financing described in Section 4.08(d) of the Credit
         Agreement ("Residual Financing") secured by such Junior Securitization
         Interests. No effective financing statement or other similar document
         used to perfect and preserve a security interest under the laws of any
         jurisdiction (a "Financing Statement") covering all or any part of the
         Collateral is on file in any recording office, except such as may have
         been filed in favor of the Agent relating to this Security Agreement or
         to perfect permitted Liens as described above.

                  (d) Each Grantor has good right, power and lawful authority to
         pledge, assign and deliver the Collateral in the manner hereby done or
         contemplated.

                                       5
<PAGE>

                  (e) No consent or approval of any governmental body,
         regulatory authority, person, trust, or entity is or will be (i)
         necessary to the validity of the rights created hereunder or (ii)
         required prior to the assignment, transfer and delivery of any of the
         Collateral to the Agent, except for the consent of SBI and GCFPI to the
         Agent's security interest in the Junior Securitization Interests listed
         on Schedule 2, which has been obtained.

                  (f) To each Grantor's knowledge, no material dispute, right of
         setoff, counterclaim or defense exists with respect to all or any part
         of the Collateral.

                  (g) This Security Agreement constitutes the legal, valid and
         binding obligation of each Grantor enforceable against such Grantor and
         the Collateral in accordance with its terms (subject to limitations as
         to enforceability which might result from bankruptcy, reorganization,
         arrangement, insolvency or other similar laws affecting creditors'
         rights generally and general principles of equity).

                  (h) Immediately upon the acquisition by either Grantor of
         rights in the Collateral and the filing of an appropriate financing
         statement in the appropriate filing office or offices, the Agent shall
         have a valid, perfected security interest and lien in the Collateral,
         subject to no other security interest or lien except as provided in
         this Security Agreement.

                  (i) Neither Grantor has used any trade names and styles in its
         business during the last five years. No such trade names or styles and
         no trademarks or other similar marks owned by either Grantor are or
         have been registered with any governmental unit during the last five
         years.

         Section 5. COVENANTS OF THE GRANTORS.

                  (a) NAME CHANGE. Without the prior written consent of the
         Agent, neither Grantor will change its name from that set forth in the
         first paragraph of this Security Agreement nor use any other name.

                  (b) CHANGE OF LOCATION. Each Grantor shall give at least 30
         days' prior written notification to the Agent of the opening of a new
         place of business where any of the Collateral or records relating
         thereto are to be located, any other change in the location of the
         office where it keeps its books and records concerning the Collateral,
         and of any change in the location of its chief executive office.

                                       6
<PAGE>

                  (c) USE OF TRADE NAMES OR STYLES. Neither Grantor will, except
         after giving at least 30 days' prior written notice to the Agent, use
         any trade names or styles in its business in any state.

                  (d) INSPECTION AND VERIFICATION OF BOOKS RECORDS AND
         COLLATERAL. The Agent, or any persons designated by the Agent, shall
         have the right, at reasonable times, without hindrance or delay, to
         inspect the books and records of each Grantor relating to the
         Collateral. The Agent, or any persons designated by the Agent, shall
         have the right to make such verifications concerning each Grantor's
         business and the Collateral as may be reasonable.

                  (e) MARKING COLLATERAL AND RECORDS. Promptly upon the request
         of the Agent, each Grantor will mark, or will permit the Agent to mark
         in a reasonable manner, such Grantor's books, records and accounts
         showing or dealing with the Collateral with a notation clearly setting
         forth that a security interest in the Collateral has been granted to
         the Agent for the benefit of the Lenders and of the Subordinated
         Lender, which notations shall be in form and substance reasonably
         satisfactory to the Agent.

                  (f) REPORTS AND SCHEDULES. Each Grantor will from time to time
         as the Agent may reasonably request, deliver to the Agent such
         schedules and such certificates and reports respecting all or any of
         the Collateral, and the items or amounts received by such Grantor in
         full or partial payment, or otherwise as proceeds of any of the
         Collateral, all to such extent as the Agent may reasonably request. Any
         such schedule, certificate or report shall be executed by a duly
         authorized officer of such Grantor and shall be in such form and detail
         as the Agent may reasonably specify. Each Grantor will also furnish the
         Agent such additional information concerning the Collateral as it may
         from time to time reasonably request.

                  (g) MAINTENANCE OF SECURITY INTEREST. Each Grantor will do all
         acts and things, and will execute and file or record all instruments
         (including, but not limited to, mortgages, pledges, assignments,
         security agreements, financing statements, amendments to financing
         statements, continuation statements, etc.) required, or reasonably
         requested by the Agent, to establish, perfect, maintain and continue
         the perfection and priority of the interests of the Agent in the
         Collateral. Each Grantor will also pay the costs and expenses of: all
         filings and recordings, including taxes thereon; all searches
         necessary, or reasonably deemed necessary by the Agent, to establish
         and determine the validity and the priority of such interests; and also
         to satisfy all other liens which in the reasonable opinion of the Agent
         might prejudice, imperil or otherwise affect the Collateral or the
         existence or priority of such

                                       7
<PAGE>

         interests. A carbon, photographic or other reproduction of this
         Security Agreement or of a financing statement shall be sufficient as a
         financing statement and may be filed in lieu of the original in any or
         all jurisdictions which accept such reproductions. On or before April
         30, 2000, the Grantors shall cause SBI to enter into intercreditor and
         agency agreements, on terms reasonably acceptable to the Agent,
         concerning the Agent's security interest in the Junior Securitization
         Interests described in Schedules 2.

                  (h) COLLECTIONS. Until notified in writing by the Agent to the
         contrary, each Grantor shall, at its own expense, endeavor to collect
         as and when due, all amounts due with respect to amounts payable under
         or with respect to the Collateral, including the taking of such action
         with respect to collection as such Grantor may deem advisable. Whenever
         an Event of Default shall have occurred and be continuing, all
         collections of the Collateral received by either Grantor shall be held
         in trust for the Agent and shall be promptly remitted to the Agent in
         the form received, properly endorsed, or as the Agent may otherwise
         direct in writing.

                  (i) INDEMNITY. Each Grantor will indemnify and save and hold
         the Secured Parties harmless from and against any and all claims,
         damages, losses, liability or judgments which may be incurred or
         sustained by, or asserted against, any one or more of the Secured
         Parties, directly or indirectly, in connection with the existence of or
         the exercise of any of its or their rights under this Security
         Agreement; PROVIDED, that such Grantor shall not be liable to any
         Secured Party for any portion of such claims, damages, losses,
         liabilities or judgments resulting from (i) the gross negligence or
         willful misconduct of the Secured Party seeking indemnification, (ii)
         any breach by the Secured Party seeking indemnification of the terms of
         the Loan Documents to which such Secured Party is a party, or (iii) any
         violation of law by the Secured Party seeking indemnification.

                  (j) THIRD-PARTY CLAIMS. Each Grantor will defend the
         Collateral and the security interests therein against all claims and
         demands of all Persons, at any time claiming any adverse interest with
         respect thereto, except for claims of (i) GCFPI with respect to the
         Junior Securitization Interests listed on Schedule 1 and (ii) SBI with
         respect to the Junior Securitization Interests listed on Schedule 2,
         and (iii) in the case of future Junior Securitization Interests, the
         Person(s) providing Residual Financing secured by such Junior
         Securitization Interests.

                  (k) TAXES. Each Grantor will promptly pay any and all taxes,
         assessments and governmental charges upon the Collateral prior to the
         date that penalties are attached thereto or the same become a lien on
         any of the Collateral, except to the

                                       8
<PAGE>

         extent that such taxes, assessments and charges shall be contested by
         such Grantor in good faith and through appropriate proceedings.

                  (l) ADDITIONAL JUNIOR SECURITIZATION INTERESTS. With respect
         to any Junior Securitization Interests created or acquired after the
         date hereof, the Grantors will promptly deliver the following documents
         to the Agent: (i) copies of all Securitization Documents relating
         thereto, (ii) such amendments to this Security Agreement and the
         related financing statements as the Agent may deem necessary to
         describe more fully such Junior Securitization Interests and any
         related Hedging Arrangements or other Collateral, and (iii) a consent
         of the Person providing Residual Financing to either Grantor with
         respect to such Junior Securitization Interests.

                  (m) DISPOSITION OF COLLATERAL. Neither Grantor will sell or
         offer to sell or otherwise assign, transfer or dispose of any of the
         Collateral or any interest therein except as and to the extent
         permitted under the Credit Agreement and the Repurchase Agreements.

         Section 6.  REMEDIES.

                  (a)      COLLECTIONS.

                           (i) Each Grantor shall have the right to collect all
                  amounts payable under the Collateral in the ordinary course of
                  its business; PROVIDED, HOWEVER, that during the occurrence
                  and continuation of an Event of Default, each Grantor agrees,
                  upon the request of the Agent, promptly to deposit all
                  payments received by such Grantor on account of the
                  Collateral, whether in the form of cash, checks, notes,
                  drafts, bills of exchange, money orders or otherwise, in one
                  or more accounts designated by the Agent in precisely the form
                  received (but with any endorsements of such Grantor necessary
                  for deposit or collection), subject to withdrawal by the Agent
                  only, as hereinafter provided, and until they are deposited,
                  such payments shall be deemed to be held in trust by such
                  Grantor for and as the property of the Lenders and shall not
                  be commingled with any of such Grantor's other funds.
                  Notwithstanding the occurrence and continuation of an Event of
                  Default, each Grantor agrees to perform under all
                  Securitization Documents in accordance with its normal
                  collection practices, whether the remittances received in
                  connection with the Junior Subordination Interests are
                  transferred to an account for the benefit of the Agent or
                  otherwise.

                                       9
<PAGE>

                           (ii) Upon receipt by the Agent of notice that an
                  Event of Default has occurred and is continuing, the Agent
                  shall have the right, as the true and lawful agent of each
                  Grantor, with power of substitution for each Grantor and in
                  either Grantor's name, the Agent's name or otherwise, for the
                  use and benefit of the Secured Parties, (A) to receive,
                  endorse, assign and/or deliver any and all notes, acceptances,
                  checks, drafts, money orders or other evidences of payment
                  relating to the Collateral or any part thereof; (B) to demand,
                  collect, receive payment of, give receipt for and give
                  discharges and releases of all or any of the Collateral; (C)
                  to sign the name of either Grantor on any invoice or bill of
                  lading relating to any of the Collateral; (D) to commence and
                  prosecute any and all suits, actions or proceedings at law or
                  in equity in any court of competent jurisdiction to collect or
                  otherwise realize on all or any of the Collateral or to
                  enforce any rights in respect of any Collateral; (E) to
                  settle, compromise, compound, adjust or defend any actions,
                  suits or proceedings relating to all or any of the Collateral;
                  (F) to notify, or to require either Grantor to notify, the
                  Person obligated on any of or all the Collateral to make
                  payment thereof directly to the Agent; and (G) to use, sell,
                  assign, transfer, pledge, make any agreement with respect to
                  or otherwise deal with all or any of the Collateral, and to do
                  all other acts and things necessary to carry out the purposes
                  of this Security Agreement, as fully and completely as though
                  the Agent were the absolute owner of the Collateral for all
                  purposes; PROVIDED, HOWEVER, that nothing herein contained
                  shall be construed as requiring or obligating the Agent or the
                  Secured Parties to make any commitment or to make any inquiry
                  as to the nature or sufficiency of any payment received by the
                  Agent or the Secured Parties, or to present or file any claim
                  or notice, or to take any action with respect to the
                  Collateral or any part thereof or the moneys due or to become
                  due in respect thereof or any property covered thereby, and no
                  action taken or omitted to be taken by the Agent or the
                  Secured Parties with respect to the Collateral or any part
                  thereof shall give rise to any defense, counterclaim or offset
                  in favor of either Grantor or to any claim or action against
                  the Agent or the Secured Parties. It is understood and agreed
                  that the appointment of the Agent as the agent of each Grantor
                  for the purposes set forth above is coupled with an interest
                  and is irrevocable. The provisions of this Section 6(a) shall
                  in no event relieve either Grantor of any of its obligations
                  hereunder or under any of the other Loan Documents with
                  respect to the Collateral or any part thereof or impose any
                  obligation on the Agent or the Secured Parties to proceed in
                  any particular manner with respect to the Collateral or any
                  part thereof, or in any way limit the exercise by the Agent or
                  any Secured Party of any other or further right which it may
                  have on the date of this Security

                                       10
<PAGE>

         Agreement or hereafter, whether hereunder, under any Loan Documents or
         by law or otherwise.

                           (iii) the rights of the Agent set forth in clauses
                  (i) and (ii) above, in Section 5(h) above and in Section 6(c)
                  below are subject to (A) with respect to the Junior
                  Securitization Interests described on Schedule 1, the rights
                  of GCFPI, and (B) with respect to the Junior Securitization
                  Interests described on Schedule 2, the rights of SBI, and (C)
                  with respect to future Junior Securitization Interests, the
                  rights of the Person providing Residual Financing therefor.

                  (b) RIGHT TO USE CERTAIN ASSETS OF THE GRANTORS. Upon receipt
         by the Agent of notice that an Event of Default has occurred and is
         continuing, the Agent and any representatives of the Agent shall have,
         in addition to all its other rights under this Security Agreement, the
         right to obtain access to each Grantor's data processing equipment,
         computer hardware and software relating to the Collateral and to use
         all of the foregoing and the information contained therein in any
         manner the Agent deems necessary for the purpose of effectuating its
         rights under this Security Agreement and any other Loan Documents. Each
         Grantor agrees that the Agent has no obligation to preserve rights to
         the Collateral against any other parties. The Agent is hereby granted a
         license or other right to use, without charge, each Grantor's labels,
         patents, copyrights, rights of use of any name, trade secrets, trade
         names, trademarks, service marks and advertising matter, or any
         property of a similar nature, as it pertains to the Collateral, in
         advertising for sale and selling any Collateral and each Grantor's
         rights under all licenses and all franchise agreements shall inure to
         the Agent's benefit until the Obligations are paid in full.

                  (c) OTHER REMEDIES. Upon receipt by the Agent of notice that
         an Event of Default has occurred and is continuing, the Agent may, in
         addition to any other right or remedy available to the Agent or the
         Secured Parties under any Loan Documents, exercise any and all rights
         and remedies available to it and/or the Secured Parties under the
         Uniform Commercial Code as in effect in the State of Minnesota and any
         other applicable law to the fullest extent permitted thereby. Without
         limiting the foregoing, upon receipt of notice by the Agent that an
         Event of Default has occurred and is continuing, the Agent may exercise
         any of the following rights and remedies: (a) in the name of either
         Grantor, any Secured Party or otherwise, to demand, collect, receive
         and receipt for, compound, compromise, settle and give acquittance for,
         and prosecute and discontinue any suits or proceedings in respect of
         any or all of the Collateral; (b) upon written notice to either Grantor
         and any other Person entitled to receive such notice under any Junior
         Securitization Interest or the related Securitization Documents,
         specifying the effective date of any assumption thereof,

                                       11
<PAGE>

         to assume, become bound by, and agree to perform and observe the
         covenants, agreements, obligations and conditions to be performed and
         observed under any Servicing Contract specified in such notice and to
         exercise all of the rights, powers and privileges of such Grantor
         thereunder; (c) to sell and assign to any other Person or Persons the
         right, title and interest of either Grantor in any Servicing Contract
         or Servicing Rights; (d) to require each Grantor to, and each Grantor
         hereby agrees that it will at its expense and upon request of the Agent
         forthwith, assemble all or part of the Collateral as directed by the
         Agent and make it available to the Agent at a place to be designated by
         the Agent that is reasonably convenient to both the Agent and the
         Grantors; (e) without notice except as specified below, to sell the
         Collateral or any part thereof in one or more parcels at public or
         private sale, at any of the Agent's offices or elsewhere, for cash, on
         credit, or for future delivery, and upon such other terms as the Agent
         may reasonably believe are commercially reasonable; (f) to occupy any
         premises owned or leased by either Grantor where the Collateral or any
         part thereof or any books and records relating thereto is assembled for
         a reasonable period in order to effectuate the Agent's rights and
         remedies hereunder or under law, without obligation to compensate such
         Grantor for such occupation; (g) to take any action which the Agent may
         reasonably deem necessary or desirable in order to realize on the
         Collateral, including, the power to endorse in the name of either
         Grantor any checks, drafts, notes or other instruments or documents
         received in payment of or on account of the Collateral; and (h) to
         exercise any and all rights and remedies of either Grantor under or in
         connection with the Collateral. Each Grantor agrees that, to the extent
         notice of sale shall be required by law, at least ten days' prior
         written notice to such Grantor (which such Grantor agrees is reasonable
         notification within the meaning of Section 9-504(3) of the Uniform
         Commercial Code) of the time and place of any public sale or the time
         after which any private sale is to be made shall constitute reasonable
         notification. The Agent shall not be obligated to make any sale of
         Collateral regardless of notice of sale having been given. The Agent
         may adjourn any public or private sale from time to time by
         announcement at the time and place fixed therefor, and such sale may,
         without further notice, be made at the time and place to which it was
         so adjourned.

                  (d) WAIVER OF CERTAIN CLAIMS. Each Grantor acknowledges that
         because of present or future circumstances, a question may arise under
         the Securities Act of 1933, as from time to time amended (the
         "Securities Act"), with respect to any disposition of the Collateral
         permitted hereunder. Each Grantor understands that compliance with the
         Securities Act may very strictly limit the course of conduct of the
         Agent if the Agent were to attempt to dispose of all or any portion of
         the Collateral and may also limit the extent to which or the manner in
         which any subsequent transferee of the Collateral or any portion
         thereof may dispose of the same. There may be other legal restrictions
         or limitations affecting the Agent in any

                                       12
<PAGE>

         attempt to dispose of all or any portion of the Collateral under the
         applicable Blue Sky or other securities laws or similar laws analogous
         in purpose or effect. The Agent may be compelled to resort to one or
         more private sales to a restricted group of purchasers who will be
         obliged to agree, among other things, to acquire such Collateral for
         their own account for investment only and not to engage in a
         distribution or resale thereof. Each Grantor agrees that the Agent
         shall not incur any liability, and any liability of either Grantor for
         any deficiency shall not be impaired, as a result of the sale of the
         Collateral or any portion thereof at any such private sale in a manner
         that in all other respects is commercially reasonable (within the
         meaning of Section 9-504(3) of the Uniform Commercial Code). Each
         Grantor hereby waives any claims against the Agent arising by reason of
         the fact that the price at which the Collateral may have been sold at
         such sale was less than the price that might have been obtained at a
         public sale or was less than the aggregate amount of the Obligations,
         even if the Agent shall accept the first offer received and does not
         offer any portion of the Collateral to more than one possible
         purchaser. Each Grantor further agrees that the Agent has no obligation
         to delay sale of any Collateral for the period of time necessary to
         permit the issuer of such Collateral to qualify or register such
         Collateral for public sale under the Securities Act, applicable Blue
         Sky laws and other applicable state and federal securities laws, even
         if said issuer would agree to do so. Without limiting the generality of
         the foregoing, the provisions of this Section would apply if, for
         example, the Agent were to place all or any portion of the Collateral
         for private placement by an investment banking firm, or if such
         investment banking firm purchased all or any portion of the Collateral
         for its own account, or if the Agent placed all or any portion of the
         Collateral privately with a purchaser or purchasers.

         Section 7. APPLICATION OF PROCEEDS. The Agent shall apply the proceeds
         of any collection, sale or other disposition of the Collateral as
         follows:

                  FIRST, ratably to the payment of the costs and expenses of the
         Agent and the Lenders in connection with the enforcement of this
         Agreement (including, without limitation, the sale or other disposition
         of the Collateral) and the reasonable fees and out of pocket expenses
         of counsel employed in connection therewith, to the payment of all
         costs and expenses incurred by the Agent in connection with the
         administration of this Agreement and to the payment of all advances
         made by the Agent and the Lenders for the account of the Company
         hereunder, to the extent that such costs, expenses and advances have
         not been reimbursed to the Agent and the Lenders, as the case may be;

                  SECOND, to the payment in full of the principal of and any
         Balances Deficiency Fees, Usage Fees, facility fees and interest on the
         Notes;

                                       13
<PAGE>

                  THIRD, to the payment of all other Obligations, as provided in
         the Credit Agreement or otherwise, as the Agent or the Lenders may
         determine;

                  FOURTH, to the payment in full of the Lease Obligations, as
         provided in the Lease Agreements, or otherwise, as the Lessor may
         determine

                  FIFTH, to the payment in full of the Subordinated Note
         Obligations until all of the Subordinated Note Obligations have been
         paid in full;

                  SIXTH, the balance (if any) of such proceeds shall be paid to
         the Grantors, their successors or assigns, or as a court of competent
         jurisdiction may direct; PROVIDED, that if such proceeds are not
         sufficient to satisfy the Obligations, the Lease Obligations and the
         Subordinated Note Obligations in full, the Company shall remain liable
         to the Agent, the Lenders, the Lessor and the holder(s) of the
         Subordinated Note, as applicable, for any deficiency.

The Agent shall apply any such proceeds, moneys or balances in accordance with
this Security Agreement as promptly as is reasonably practicable. Upon any sale
of the Collateral by the Agent (including, pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of the Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Agent or such officer or be answerable in any way for the
misapplication thereof.

         Section 8.  MISCELLANEOUS.

                  (a) BENEFIT OF AGREEMENT. This Agreement shall be binding upon
         and inure to the benefit of each Grantor and the Agent and their
         respective successors and assigns, and shall inure to the benefit of
         the Lenders, the Lessor, USBNA and their respective successors and
         assigns, except that neither Grantor may assign or transfer any of its
         rights or obligations under this Agreement without the prior written
         consent of the Lenders.

                  (b) NO COMMITMENT BY LESSOR OR USBNA. Nothing in this
         agreement shall be construed as a commitment on the part of the Lessor
         to lease any equipment or make any loan, or on the part of USBNA to
         extend any loan pursuant to the Subordinated Note, under any existing
         agreement or otherwise, to or for the account of the Company or NCFC.

                                       14
<PAGE>

                  (c) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
         representations, warranties and covenants made by either Grantor to the
         Agent, the Lenders, the Lessor or USBNA in connection with this
         Agreement shall survive the execution and delivery of this Agreement.
         All statements contained in any certificate or other instrument
         delivered to the Agent, the Lenders, the Lessor or USBNA pursuant to
         this Agreement shall be deemed representations, warranties and
         covenants hereunder of such Grantor.

                  (d) HEADINGS. Section headings in this Agreement are for
         convenience of reference only, and shall not govern the interpretation
         of any of the provisions of this Agreement.

                  (e) EXECUTION IN COUNTERPARTS. This Agreement may be executed
         in any number of counterparts, all of which taken together shall
         constitute one and the same instrument and either of the parties hereto
         may execute this Agreement by signing any such counterpart.

                                       15
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Security Agreement as of the day and year first above written.

<TABLE>
<S><C>
                                             NC CAPITAL  CORPORATION

                                             By: /s/ Brad A. Morrice
                                                --------------------------------------------------
                                             Name: Brad A. Morrice
                                                  ------------------------------------------------
                                             Title: CHIEF EXECUTIVE OFFICER
                                                   -----------------------------------------------

                                             NC RESIDUAL II  CORPORATION

                                             By: /s/ Brad A. Morrice
                                                --------------------------------------------------
                                             Name: Brad A. Morrice
                                                  ------------------------------------------------
                                             Title: CHIEF EXECUTIVE OFFICER
                                                   -----------------------------------------------

                                             U.S. BANK NATIONAL ASSOCIATION, as Agent

                                             By:     /s/ Edwin D. Jenkins
                                                --------------------------------------------------
                                             Name: Edwin D. Jenkins
                                                  ------------------------------------------------
                                             Title: Senior Vice President
                                                   -----------------------------------------------
</TABLE>

                     [Signature Page to Security Agreement]

<PAGE>

SCHEDULES

1.       GCFPI Junior Securitization Interests

2.       SBI Junior Securitization Interests

<PAGE>

                                   SCHEDULE 1

                      GCFPI Junior Securitization Interests

<PAGE>
                                   SCHEDULE 1

GCFPI has a Lien on the following Junior Securitization Interest:

<TABLE>
<CAPTION>

OWNER                  SECURITY            CERTIFICATE NAME
-----                  --------            ----------------
<S>                    <C>                 <C>
NCCC                   1999-NCA            New Century Home Equity Loan Trust, Series 1999-NCA Asset Backed Pass-
                                           Through Certificates Series 1999-NCA, Class A-810

NCRC                   1999-NCD            New Century Home Equity Loan Trust, Series 1999-NCD Asset Backed Pass-
                                           Through Certificates Series 1999-D, Class R
</TABLE>

                     [Schedule 1 to the Security Agreement]

<PAGE>

                                   SCHEDULE 2

                       SBI Junior Securitization Interests

<PAGE>

                                   SCHEDULE 2

SBI has a Lien on the following Junior Securitization Interest:

<TABLE>
<CAPTION>

OWNER                 SECURITY            CERTIFICATE NAME
-----                 --------            ----------------
<S>                   <C>                 <C>

NCCC                  NCFT 1998-I         NC Finance Trust 1998-1 NC Finance CE Bonds, Series 1998-I

NCRC                  NCFT 1998-II        NC Finance Trust 1998-2 NC Finance CE Bonds, Series 1998-II

NCRC                  NCFT 1999-I         NC Finance Trust 1999-1 Class D Bonds, Series 1999-I

NCRC                  1999-NC1            Salomon Brothers Mortgage Securities VII, Inc. Mortgage Pass-Through
                                          Certificates Series 1999-NC1, Class CE, Class P

NCRC                  1999-NC2            Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
                                          Through Certificates Series 1999-NC2, Class CE, Class P

NCRC                  1999-NC3            Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
                                          Through Certificates Series 1999-NC3, Class CE, Class P

NCRC                  1999-NC4            Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
                                          Through Certificates Series 1999-NC4, Class CE, Class P

NCRC                  1999-NC5            Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
                                          Through Certificates Series 1999-NC5, Class CE, Class P
</TABLE>

                     [Schedule 2 to the Security Agreement]

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