Document:

EX-10.2

EXHIBIT 10.2

GUARANTY

This GUARANTY (“this Guaranty”), dated as of March 31, 2006, is made by NEW CENTURY
FINANCIAL CORPORATION, a Maryland corporation (“NCFC” or the “Guarantor”),
in favor and for the benefit of BARCLAYS BANK PLC, a public limited company organized under the
laws of England and Wales, as Administrative Agent (in such capacity, together with each of its
successors, the “Administrative Agent”), for its benefit and the ratable benefit of Buyers
referred to below under the Master Repurchase Agreement, dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the “Master Repurchase Agreement”),
among Sheffield Receivables Corporation, as Senior Buyer, Barclays Bank PLC, as Subordinate Buyer
(Senior Buyer and Subordinate Buyer being collectively referred to as “Buyers”), the Administrative
Agent, NC Capital Corporation (“NCCC”), New Century Mortgage Corporation (“NCMC”),
New Century Credit Corporation (“NCC”), Home123 Corporation (“Home123”), and NC
Asset Holding, L.P. (“NCAH,” and together with NCCC, NCMC, NCC, and Home123,
“Sellers”), acknowledged to by NCMC, as Servicer and by the Guarantor. Terms defined in
the Master Repurchase Agreement and not otherwise defined herein are used herein as therein
defined.

Reference is made to the Custody Agreement, the Servicing Agreement, the Electronic Tracking
Agreement, each assignment of any Hedge Instrument, the Side Letter, the Account Agreement and any
other agreement entered into by any Seller and/or the Guarantor, on the one hand, and the
Administrative Agent or Buyers or one of their Affiliates (or the Custodian on their behalf) on the
other, in connection with any such agreements (collectively with the Master Repurchase Agreement,
the Custodial Agreement, the Servicing Agreement, the Electronic Tracking Agreement, the Side
Letter, and the Account Agreement, the “Program Documents”).

Buyers have agreed to enter into Transactions or sets of Related Transactions with each Seller
and to purchase from Sellers Purchased Assets (or Purchased Interests therein) as described in, and
upon the terms and subject to the conditions specified in, the Master Repurchase Agreement.
Sellers are direct and wholly owned subsidiaries of the Guarantor, and the Guarantor acknowledges
that it will derive substantial benefit from the purchase by Buyers of such Purchased Assets (or
Purchased Interests therein). The obligations of Buyers are conditioned on, among other things,
the execution and delivery by the Guarantor of this Guaranty. As consideration therefor and in
order to induce Buyers to enter into sets of Related Transactions and to purchase such Purchased
Assets (and Purchased Interests therein), the Guarantor is willing to execute this Guaranty.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration
(the sufficiency and adequacy of which are hereby acknowledged), the Guarantor hereby agrees with
the Administrative Agent for its benefit and the ratable benefit of Buyers, as follows:

SECTION 1. The Guaranty. (a) The Guarantor hereby guarantees the due and punctual
payment in full (in accordance with Section 8 hereof), or full performance, of the Obligations when
due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that
would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, or any successor provision), of any and all sums, fees, expenses, indemnities and other
amounts (including all reasonable fees and disbursements of counsel to Buyers, the Administrative
Agent and the Custodian), payable by, or required to be performed by, each Seller pursuant to or
arising under, out of or in connection with any of the Program Documents, whether direct or
indirect, absolute or contingent, due or to become due, now existing or hereafter incurred
(Sellers’ Obligations to pay all such sums and perform all such duties are hereafter collectively
referred to as the “Guaranteed Obligations”).

(b) The Guarantor further agrees to pay any and all reasonable expenses (including, without
limitation, all reasonable fees and disbursements of counsel) which may be paid or incurred by
Buyers or by the Administrative Agent on its own behalf and on behalf of Buyers in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor
under this Guaranty.

(c) No payment or payments made by any Seller, the Guarantor, any other guarantor or any other
Person or received or collected by the Administrative Agent from any Seller, the Guarantor, any
other guarantor or any other Person by virtue of any action or proceeding or any setoff or
appropriation or application at any time or from time to time in reduction of or in payment of the
Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability
of the Guarantor hereunder, which shall (notwithstanding any such payment or payments other than
payments made by, or received or collected from, the Guarantor in respect of the Guaranteed
Obligations) remain liable hereunder for the Guaranteed Obligations until (following the
Termination Date) the Guaranteed Obligations are paid in full and the Master Repurchase Agreement
is terminated.

SECTION 2. Liability of Guarantor. The Guarantor agrees that its obligations
hereunder are irrevocable, continuing, absolute, independent and unconditional and shall not be
affected by any circumstance whatsoever (other than the indefeasible payment in full of the
Guaranteed Obligations) which may constitute a defense available to, or a legal or equitable
discharge (whether in whole or in part) of any Seller, the Guarantor or any other guarantor or
surety (whether foreseen or unforeseen and whether similar or dissimilar to any defense, waiver or
circumstance described in this Guaranty, and including without limitation, any statute of
limitations and any existence of or reliance on any representation by the Administrative Agent or
any Buyer). In furtherance of the foregoing and without limiting the generality thereof, the
Guarantor agrees as follows:

(a) Guaranty of Payment. The obligations of the Guarantor under this Guaranty
constitute a guaranty of payment and performance, and not of collection only, without setoff or
counterclaim in U.S. Dollars. The Guarantor waives any requirement that the Administrative Agent,
as a condition of payment by the Guarantor (i) proceed against any Seller, any other guarantor of
the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security
received from any Seller, any other guarantor of the Guaranteed Obligations or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or credit on the books
of the Administrative Agent, any Buyer or the Guarantor in favor of a Seller or the Guarantor, any
other guarantor of the Guaranteed Obligations or any other Person, or (iv) pursue any other remedy
whatsoever in the power of the Administrative Agent or Buyers.

(b) Continuing Guaranty. The obligations of the Guarantor under this Guaranty shall
remain in full force and effect until the indefeasible payment in full (after the Termination Date)
of all Sellers’ Obligations and, without duplication, of all of the Guarantor’s obligations accrued
and outstanding under this Guaranty upon such payment in full, in each case even if from time to
time prior thereto Sellers may be free from any of the Guaranteed Obligations. The Guarantor’s
payment of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect,
modify or abridge the Guarantor’s liability for any portion of the Guaranteed Obligations that has
not been completely performed or indefeasibly paid in full.

(c) Absolute and Unconditional Guaranty. The obligations of the Guarantor under this
Guaranty are not subject to any reduction, limitation, impairment, discharge or termination for any
reason (other than the complete indefeasible payment in full (after the Termination Date) of the
Guaranteed Obligations and of the Guarantor’s obligations hereunder in accordance with Section 2(b)
hereof), including, without limitation, the occurrence of any one or more of the following, whether
or not the Guarantor shall have had notice or knowledge of any of them:

(i) any change in the manner, place or terms of payment (including the currency
thereof) of any of the Guaranteed Obligations;

(ii) any settlement, compromise, release or discharge of, or acceptance or refusal of
any offer of performance with respect to, or substitutions for, the Guaranteed Obligations
or any agreement relating thereto or any subordination of the payment of the Guaranteed
Obligations to the payment of any other obligations;

(iii) any rescission, waiver, extension, renewal, alteration, amendment or modification
of, or any consent to departure from, any of the terms or provisions (including, without
limitation, provisions relating to Events of Default) of the Guaranteed Obligations or any
agreement relating thereto, or any other guaranties or security for the Guaranteed
Obligations, in each case whether or not in accordance with the terms thereof;

(iv) the Guaranteed Obligations, the obligations of the Guarantor under this Guaranty,
any other agreement relating thereto, or any Program Document at any time being found to be
illegal, invalid or unenforceable in any respect or any provision of applicable law or
regulation purporting to prohibit the payment by any Seller of any of the Guaranteed
Obligations;

(v) any request or acceptance of other guaranties of the Guaranteed Obligations or the
taking and holding of any security for the payment of Guaranteed Obligations, the
obligations of the Guarantor under this Guaranty, or any other guaranty of the Guaranteed
Obligations or any release, impairment, surrender, exchange, substitution, compromise,
settlement, rescission or subordination thereof;

(vi) any failure to perfect or continue perfection of an ownership or security interest
in any Purchased Assets (or Purchased Interests therein), Collateral or other collateral
which secures any of the Guaranteed Obligations; or any enforcement and application of any
security, rights or remedies (including, without limitation, the rights and remedies set
forth in Section 19 of the Master Repurchase Agreement) in any Purchased Assets (or
Purchased Interests therein), Collateral or Property now or hereafter owned, held or
controlled by the Administrative Agent or Buyers in respect of the obligations of the
Guarantor under this Guaranty, or the Guaranteed Obligations and any direction of the order
or manner of sale thereof, or the exercise of any other right or remedy that the
Administrative Agent or Buyers may have with respect to any such security, rights or
remedies, as the Administrative Agent or Buyers, in their sole discretion may determine,
including foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales;

(vii) any failure or omission to exercise, assert or enforce, or any agreement or
election not to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy (whether arising under the Program Documents, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or
with respect to any other guaranties of or any security for the payment of the Guaranteed
Obligations;

(viii) any change in or reorganization of the organizational or corporate structure of
any Seller or any dissolution, termination, consolidation or merger or sale or other
disposition, whether or not for fair consideration, reasonably equivalent value, fair market
value or any other consideration, of all or substantially all of the assets of any of the
foregoing or any consent of the Administrative Agent or any Buyer thereto or to any
restructuring of the Guaranteed Obligations;

(ix) the election by the Administrative Agent or any Buyer, in any proceeding
instituted under Chapter 11 of Title 11 of the U.S.C., of the application of
Section 1111(b)(2) of Title 11 of the U.S.C.; any borrowing or grant of a security interest
by any Seller, as debtor-in-possession, under Section 364 of Title 11 of the U.S.C.; or the
disallowance, under Section 502 of Title 11 of the U.S.C., of all or any portion of the
claims of the Administrative Agent or Buyers for repayment of the Guaranteed Obligations;

(x) any other act or thing or omission, or delay to do any other act or thing, which
may or might in any manner or to any extent vary the risk of the Guarantor as an obligor in
respect of the Guaranteed Obligations; or

(xi) any defense, setoff or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by a Seller against any
Buyer or the Administrative Agent.

SECTION 3. Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Guarantor hereunder shall be made free and clear of and without reduction or withholding for
any taxes, provided that if the Guarantor shall be required by applicable law to deduct any
taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this section) the Administrative Agent receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Guarantor shall make such deductions and (iii) the
Guarantor shall timely pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

(b) Payment of Other Taxes by Guarantor. Without limiting the provisions of paragraph
(a) above, the Guarantor shall timely pay any taxes due and owing in relation to payments by the
Guarantor hereunder to the relevant Governmental Authority in accordance with applicable law
(excluding income and franchise taxes).

(c) Indemnification by Guarantor. The Guarantor shall indemnify the Administrative
Agent and each Buyer within ten (10) days after demand therefor, for the full amount of any taxes
(including taxes in relation to payments by the Guarantor hereunder imposed or asserted on or
attributable to amounts payable under this section) paid by the Administrative Agent or any Buyer,
and any penalties, interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority (excluding income and franchise taxes). A certificate as to the amount of
such payment or liability delivered to the Guarantor by the Administrative Agent, shall be
conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of taxes, in
relation to payments by the Guarantor hereunder, by the Guarantor to a Governmental Authority
(excluding income and franchise taxes), the Guarantor shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

(e) Treatment of Certain Refunds. If the Administrative Agent or any Buyer
determines, in its sole discretion, that it has received a refund of any taxes as to which it has
been indemnified by the Guarantor or with respect to which the Guarantor has paid additional
amounts pursuant to this section, it shall, as soon as reasonably practicable, pay to the Guarantor
an amount equal to such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Guarantor under this section with respect to the taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such Buyer, as
applicable, and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that the Guarantor, upon the request of
the Administrative Agent or such Buyer, agrees to repay, as soon as reasonably practicable, the
amount paid over to the Guarantor (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Buyer in the event the
Administrative Agent or such Buyer is required to repay such refund to such Governmental Authority.
This Section 3(e) shall not be construed to require the Administrative Agent or any Buyer to make
available its tax returns (or any other information relating to its taxes that it deems
confidential) to the Guarantor or any other Person.

SECTION 4. Waivers of Notices and Defenses. The Guarantor hereby waives, for the
benefit of Buyers and of the Administrative Agent:

(a) any defense arising by reason of the lack of authority of any Seller or any defense
arising by reason of any disability or other defense of any Seller or of any guarantor of the
Guaranteed Obligations or by reason of the cessation or unenforceability of the liability of any
Seller or any such guarantor;

(b) any notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Administrative Agent upon the guaranty set
forth in this Guaranty or acceptance of such guaranty (the Guaranteed Obligations and all dealings
between Sellers and the Guarantor, on the one hand, and the Administrative Agent and Buyers, on the
other hand, being conclusively deemed to have been created, incurred or conducted in reliance upon
the Guarantor’s Obligations under this Guaranty);

(c) any setoff or counterclaim, any demand for performance, notice of nonperformance,
diligence, presentment, protest, notice of protest, notice of dishonor, notice of Defaults or
Events of Default under any Program Document, notice of any amendment, renewal, extension or
modification of Guaranteed Obligations or any agreement related thereto, notice that any portion of
Guaranteed Obligations is due, notice of any collection proceedings, and notice of any other fact
which might increase the risk of the Guarantor;

(d) any defense based upon any statute or rule of law that provides that the obligation of a
surety cannot be larger in amount or in other respects more burdensome than that of the principal;

(e) any benefit of, or any right to participate in, or any notices of exchange, sale,
surrender or other handling of, any security or collateral given to the Administrative Agent or any
Buyer to secure payment or performance of the Guaranteed Obligations or any other liability of a
Seller to the Administrative Agent or any Buyer; and

(f) to the fullest extent permitted by law, any other defenses or benefits that may be derived
from or afforded by law which limit the liability of, or exonerate, the Guarantor, or any other
guarantor or surety, or which may conflict with the terms of the Guarantor’s obligations under this
Guaranty, including, without limitation, failure of consideration, breach of warranty, statute of
frauds, statute of limitations, accord and satisfaction, and usury.

SECTION 5. Bankruptcy, Subordination and Related Matters.

(a) No Proceedings Against any Seller or Servicer. So long as any of the Guaranteed
Obligations remain outstanding or have not been indefeasibly paid in full in cash, the Guarantor
shall not, without the prior written consent of the Administrative Agent, commence or join with any
other Person in commencing any bankruptcy, liquidation, reorganization or insolvency proceedings
of, or against, any Seller or the Servicer.

(b) Guarantor Remains Obligated. The obligations of the Guarantor under this Guaranty
shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding or action, voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, marshalling of assets, assignment for the benefit of creditors, composition with
creditors, readjustment, liquidation or arrangement of a Seller or similar proceedings or actions
or by any defense which a Seller may have by reason of the order, decree or decision of any court
or administrative body resulting from any such proceeding or action. Without limiting the
generality of the foregoing, the Guarantor’s liability shall extend to all amounts and obligations
that constitute the Guaranteed Obligations and would be owed by any Seller but for the fact that
they are unenforceable or not allowable due to the existence of any such proceeding or action.

(c) Stay of Acceleration. The Guarantor agrees, that, notwithstanding anything to the
contrary herein, if, upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent or any Buyer is prevented by applicable law from exercising its right to
accelerate the maturity of the Guaranteed Obligations, to collect interest on the Guaranteed
Obligations, to enforce or exercise any other right or remedy with respect to the Guaranteed
Obligations (whether under Section 19 of the Master Repurchase Agreement, elsewhere under the
Program Documents, at law, in equity or otherwise), or the Administrative Agent or any Buyer is
prevented from taking any action (including, without limitation, any action contemplated by Section
19 of the Master Repurchase Agreement) to realize on any Purchased Assets (or Purchased Interests
therein), Collateral or other collateral, Property, or security owned, held or controlled by it or
is prevented from collecting any of the Guaranteed Obligations, shall pay to the Administrative
Agent for its account and the account of Buyers, upon demand therefor, the amount that would
otherwise have been due and payable had such rights and remedies been permitted to be exercised by
a Seller or the Administrative Agent or Buyers.

(d) Post-Petition Interest. Pursuant to (and without limiting) the foregoing, the
Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations
which accrues after the commencement of any proceeding or action referred to in Section 5(b) of
this Guaranty (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of said proceeding or action, such interest as would
have accrued on such portion of the Guaranteed Obligations if said proceedings or actions had not
been commenced) shall be included in the Guaranteed Obligations, it being the intention of the
Guarantor, the Administrative Agent and Buyers that the Guaranteed Obligations which are guaranteed
by the Guarantor pursuant to this Guaranty shall be determined without regard to any rule of law or
order which may relieve a Seller of any portion of such Guaranteed Obligations. The Guarantor will
permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay the Administrative Agent and Buyers, or allow the claims of the
Administrative Agent and Buyers, in respect of, any such interest accruing after the date on which
such proceeding is commenced.

(e) Reinstatement of Guaranty. Notwithstanding anything to the contrary contained
herein, in the event that all or any portion of the Guaranteed Obligations are paid by a Seller,
the obligations of the Guarantor hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, if all or any part of such payment(s) are rescinded or recovered,
directly or indirectly, from the Administrative Agent or Buyers upon the insolvency, bankruptcy or
reorganization of any Seller (whether as a preference, fraudulent transfer or otherwise), and any
such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all
purposes under this Guaranty, all as though such Seller had not made such payment(s).

(f) No Subrogation. Notwithstanding any payment or payments made by any the Guarantor
hereunder, or any set-off or application of funds of the Guarantor by the Administrative Agent or
Buyers, the Guarantor hereby irrevocably waives any claim or other rights that it may now or
hereafter acquire against any Seller or any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of the
Guarantor against any Seller or any other guarantor or any collateral security, whether or not such
claim, remedy or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Seller or any other insider guarantor,
directly or indirectly, in cash or other property or by set off or in any other manner, payment or
security on account of such claim, remedy or right until (following the Termination Date) the
Guaranteed Obligations have indefeasibly been paid in full. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, such amount shall be held by the Guarantor in
trust for the Administrative Agent, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Administrative Agent in the exact
form received by the Guarantor (duly endorsed by the Guarantor to the Administrative Agent, if so
requested by the Administrative Agent), to be applied against the Guaranteed Obligations, whether
matured or unmatured, in such order as set forth in Section 7 of the Master Repurchase Agreement.

(g) Subordination of Other Obligations. The Guarantor hereby agrees that any
Indebtedness or Obligation of any Seller now or hereafter held by the Guarantor is hereby
subordinated in right of payment, on the terms set forth in this Section 5(g), to the Guaranteed
Obligations until (following the Termination Date) the Guaranteed Obligations have indefeasibly
been paid in full. Upon the occurrence and during the continuance of an Event of Default, (i) no
Seller shall pay to the Guarantor any amounts of, or in respect of, such Seller’s or any other
Seller’s Indebtedness or obligation to the Guarantor, and (ii) the Guarantor shall hold in trust
for and shall forthwith pay over to, the Administrative Agent, to be credited and applied against
the Guaranteed Obligations (without in any way affecting, impairing or limiting the Guarantor’s
liability under this Guaranty), any and all amounts of, or in respect of any such Indebtedness and
obligation of any Seller which shall have been collected or received by the Guarantor. So long as
no Event of Default shall have occurred and be continuing, any Seller may pay its Indebtedness to
the Guarantor in accordance with the terms thereof.

SECTION 6. Representations and Warranties. The Guarantor represents and warrants as
follows:

(a) The Guarantor is (i) duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and (ii) is duly qualified and in good standing as a
foreign entity in each other jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed and where, in each case, failure
so to qualify and be in good standing could have a Material Adverse Effect and (iii) has all
requisite corporate power and authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted.

(b) The execution, delivery and performance by the Guarantor of this Guaranty, is within its
corporate powers, has been duly authorized by all necessary corporate action, and does not
(i) contravene the Guarantor’s certificate of incorporation of bylaws, (ii) contravene any
contractual restriction binding on the Guarantor or require any consent under any agreement or
instrument to which the Guarantor or any related Affiliate is a party or by which any of its
properties or assets is bound, other than any such consents the failure of which to be obtained
would not have a Material Adverse Effect, or (iii) violate any law (including, without limitation,
the Securities Act of 1933 and the Exchange Act and the regulations thereunder), or writ, judgment,
injunction, decree, determination or award applicable to it. The Guarantor is not in violation of
any such law, writ, judgment, injunction, decree, determination or award or in breach of any
contractual restriction binding upon it, except for such violation or breach which would not have a
Material Adverse Effect.

(c) No order, consent, approval, license, authorization or validation of, or filing, recording
or registration with, or exemption or waiver by, any Governmental Authority or any other third
party (except as have been obtained or made and are in full force and effect), is required to
authorize, or is required in connection with, the execution, delivery and performance by the
Guarantor of the Guaranteed Obligations.

(d) This Guaranty is a legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws generally affecting creditors’ rights and by the application of a Governmental Authority or
arbitrator of equitable principles (regardless of whether enforcement is sought in equity or law).

(e) There is no pending or, to the best knowledge of the Guarantor, threatened action or
proceeding affecting the Guarantor or any of it Subsidiaries before any Governmental Authority or
arbitrator which (i) is reasonably likely to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Guaranty or the transactions contemplated
hereby.

(f) The Guarantor and its Subsidiaries have filed all income tax returns and other material
tax returns which are required to be filed by it in all jurisdictions and has paid all taxes or
claims imposed on it or its or their properties, except for taxes contested in good faith as to
which adequate reserves have been provided, if required, in accordance with GAAP. Neither the
Guarantor nor any of its Subsidiaries has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of limitations relating to the payment or
collection of its taxes or is aware of any circumstances that would cause the taxable years or
other taxable periods of the Guarantor not to be subject to the normally applicable statute of
limitations.

(g) All written information prepared by the Guarantor and provided to the Administrative Agent
or Buyers in connection with the negotiation, execution and delivery of this Guaranty or the
transactions contemplated hereby was, on or as of the applicable date of provision thereof,
complete and correct in all material respects and did not contain any untrue statement of a
material fact or omit to state a fact necessary to make the statements contained therein not
misleading in light of the time and circumstances under which such statements were made.

(h) The Guarantor has not engaged in any “prohibited transactions” as defined in Section
857(b)(6)(B)(iii) and (C) of the Code. The Guarantor for its current “tax year” (as defined in the
Code) is entitled to a dividends paid deduction under the requirements of Section 857 of the Code
with respect to any dividends paid by it with respect to each such year for which it claims a
deduction in its Form 1120-REIT filed with the United States Internal Revenue Service for such
year.

(i) Each Seller is, on the date hereof, and will remain, a wholly owned indirect Subsidiary of
the Guarantor.

SECTION 7. Covenants. So long as (following the Termination Date) any of the
Guaranteed Obligations remain outstanding or have not been indefeasibly paid in full in cash:

(a) The Guarantor will maintain its legal existence and, unless non-compliance will not result
in a Material Adverse Effect, comply with all applicable laws.

(b) The Guarantor will pay and discharge, before the same shall become delinquent, all income
taxes and other material taxes imposed upon it or upon its property, provided,
however, that the Guarantor shall not be required to pay or discharge any such tax,
assessment, claim or charge that is being diligently contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained, if required, in accordance
with GAAP.

(c) All written information prepared by the Guarantor and provided to the Administrative Agent
or Buyers in connection with the negotiation, execution and delivery of this Guaranty or the
transactions contemplated hereby will be, on or as of the applicable date of provision thereof,
complete and correct in all material respects and will not contain any untrue statement of a
material fact or omit to state a fact necessary to make the statements contained therein not
misleading in light of the time and circumstances under which such statements were made.

SECTION 8. Payment by Guarantor. Any and all payments by the Guarantor shall be made
to the Administrative Agent in U.S. dollars (in immediately available federal funds) to an account
designated by the Administrative Agent or (if not so designated) at the address set forth in
Section 35 of the Master Repurchase Agreement for the giving of notice to the Administrative Agent
or at any other address that may be specified in writing from time to time by the Administrative
Agent and shall be credited and applied to the Guaranteed Obligations.

SECTION 9. Benefit of Guaranty. The provisions of this Guaranty are for the benefit
of the Administrative Agent and Buyers and their respective successors, transferees, endorsees and
assigns, and nothing herein contained shall impair, as between Sellers and Buyers, the obligations
of any Seller under the Program Documents.

SECTION 10. Further Assurances. The Guarantor agrees, upon the request of the
Administrative Agent, to execute and deliver to the Administrative Agent, from time to time, any
additional instruments or documents reasonably considered necessary by the Administrative Agent to
cause the obligations of the Guarantor under this Guaranty to be, become or remain valid and
effective in accordance with its terms.

SECTION 11. Amendment of Guaranty. No provision of this Guaranty may be waived,
amended or modified except pursuant to an agreement or agreements in writing entered into by the
Administrative Agent (acting at the request or with the consent of Required Buyers) and the
Guarantor.

SECTION 12. Governing Law; Submission to Jurisdiction.

(a) Governing law. This Guaranty shall be governed by, and construed in accordance
with, the law of the State of New York, without giving effect to its conflict of laws provisions
other than Section 5-1401 of the New York General Obligations Law.

(b) Submission to Jurisdiction. The Guarantor irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive personal jurisdiction of the courts of
the United States District Court for the Southern District of New York (and all appropriate
appellate courts), or if jurisdiction in such court is lacking, any New York State court of
competent jurisdiction sitting in New York City (and all appropriate appellate courts), in any
action or proceeding arising out of or relating to this Guaranty or any other Program Document, or
for recognition or enforcement of any judgment, the Guarantor irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard and determined in
such New York State court or, to the fullest extent permitted by applicable law, in such Federal
court. The Guarantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Guaranty or in any other Program Document shall affect any
right that the Administrative Agent or any Buyer may otherwise have to bring any action or
proceeding relating to this Guaranty or any other Program Document against the Guarantor or its
properties in the courts of any jurisdiction.

(c) Waiver of Venue. The Guarantor irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, any objection that it may now or hereafter have to the
laying of venue of any action or proceeding arising out of or relating to this Guaranty or any
other Program Document in any court referred to in paragraph (b) of this section. The Guarantor
hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Service of Process. The Guarantor irrevocably consents to service of process in
the manner provided for notices in Section 35 of the Master Repurchase Agreement. Nothing in this
Guaranty will affect the right of any party hereto to serve process in any other manner permitted
by applicable law.

(e) WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE GUARANTOR CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER.

SECTION 13. Setoff Rights. If an Event of Default shall have occurred and be
continuing, the Administrative Agent, each Buyer and their respective Affiliates are hereby
authorized at any time and from time to time, to the fullest extent permitted by applicable law, to
set off and apply any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever currency) at any time
owing by the Administrative Agent or such Buyer or any such Affiliate to or for the credit or the
account of the Guarantor against any and all of the obligations of the Guarantor now or hereafter
existing under the Master Repurchase Agreement or any other Program Document to the Administrative
Agent or such Buyer and their respective Affiliates, irrespective of whether or not the
Administrative Agent or such Buyer or their respective Affiliates shall have made any demand under
the Master Repurchase Agreement or any other Program Document and even though such obligations of
the Guarantor may be contingent or unmatured or are owed to a branch or office of the
Administrative Agent or such Buyer different from the branch or office holding such deposit or
obligated on such indebtedness. The rights of the Administrative Agent or such Buyer and their
respective Affiliates under this Section are in addition to other rights and remedies (including
other rights of setoff) that the Administrative Agent, such Buyer or their respective Affiliates
may have. The Administrative Agent agrees to notify the Guarantor promptly after any such setoff
and application, provided that the failure to give such notice shall not affect the validity of
such setoff and application.

SECTION 14. Severability. Whenever possible, each provision of this Guaranty shall be
interpreted in such a manner to be effective and valid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

1

IN WITNESS WHEREOF, the Guarantor has executed and delivered this Guaranty as of the
date first above written.

	 
	 

	NEW CENTURY FINANCIAL CORPORATION

By: /s/ Kevin Cloyd

Name: Kevin Cloyd

Title: Executive Vice President

	 

	By: /s/ Edward F. Gotschall

Name: Edward F. Gotschall

Title: Vice Chairman — Finance

	 

2EX-10.1

EXHIBIT 10.1

FRE 408 SETTLEMENT COMMUNICATION MAY
BE FILED WITH MOTION TO APPROVE
SETTLEMENT AGREEMENT

SETTLEMENT AGREEMENT

In order to fully and finally resolve any and all disputes under, concerning or arising out of or
related to, in any way, and to satisfy, waive and release any and all claims, if any, related to:
(i) the debtor in possession financing agreements between Xybernaut Corp. and Xybernaut Solutions,
Inc. (together, “Xybernaut” or the “Debtors”), on the one hand, and LC Capital Master Fund, Ltd.
(“LC Fund”), on the other hand (the “Existing DIP Loan Documents”) and the order of the Bankruptcy
Court entered October 27, 2005 approving the Existing DIP Loan Documents (the “DIP Order”); (ii)
the replacement debtor in possession financing from East River Capital (the “Replacement DIP
Facility”); (iii) the Official Committee of Equity Security Holders’ (the “Equity Committee”)
objection/cross-motion to the Debtors’ request to approve the amendments to the Existing DIP Loan
Documents (including any other documents filed by the Equity Committee in connection therewith, the
“Equity Committee Objection/Motion”); and (iv) the Debtors’ complaint against LC Fund filed with
the Bankruptcy Court on March 24, 2006 (including any other documents and motions filed by the
Debtors in connection therewith or related thereto, the “Complaint”), the Debtors, the Official
Committee of Unsecured Creditors (the “Creditors Committee”), the Equity Committee and LC Fund
agree to the following, which agreement represents a fair compromise and resolution for good and
valuable consideration of the issues addressed herein, which agreement shall promptly be presented
to the Bankruptcy Court for approval:

	 	A)	 	On Monday, April 3, 2006, the Debtors shall irrevocably pay
to LC Fund, by wire transfer of good funds, $100,000 in respect of LC Fund’s
expenses, including legal fees and expenses, which the parties hereto agree
are reasonable and due and owing under the Existing DIP Loan Documents;

	 	B)	 	On the earlier of April 26, 2006 or the second business day
after final approval of the Replacement DIP Facility, the Debtors shall
irrevocably pay to LC Fund, by wire transfer of good funds, $300,000 in
respect of LC Fund’s expenses, including legal fees and expenses, which the
parties hereto agree are reasonable and due and owing under the Existing DIP
Loan Documents, and any amount in excess of such expenses shall be in
consideration of the concessions made by LC Fund herein;

	 	C)	 	The Debtors shall pay to LC Fund 2.5% of all gross sale
proceeds from the sale of the Debtors’ assets or their businesses, in whole or
in part, in excess in the aggregate of $5 million and up to $10 million and
3.5% of any gross sale proceeds in excess of $10 million (the “Senior Secured
Sale Proceeds Interest”); the Senior Secured Sale Proceeds Interest shall be a
senior secured lien right of LC Fund and shall be payable whether the sale(s)
were conducted under 11 USC § 363, through or under a chapter 11 plan, under
state law foreclosure rules or any other mechanism that would transfer
ownership or control of the Debtors’ assets in a manner that would satisfy the
claims of East River Capital under the Replacement DIP Facility; this right
shall continue though and including one year after confirmation of a chapter
11 plan or plans for Xybernaut;

	 	D)	 	The Equity Committee shall withdraw with prejudice the Equity
Committee Objection/Motion, as defined above, promptly after entry of the
order approving this settlement agreement;

	 	E)	 	The Debtors shall withdraw with prejudice the Complaint, as
defined above, promptly after entry of the order approving this settlement
agreement;

	 	F)	 	LC Fund will withdraw with prejudice its Notice of Appeal of
the order approving the Replacement DIP Facility and any related motions,
promptly after entry of the order approving this settlement agreement;

	 	G)	 	With respect to the Stipulation and Order entered by the
Bankruptcy Court on March 28, 2006, among the Debtors, the Creditors Committee
and the Equity Committee that provided for certain rights to the general
unsecured creditors, the parties thereto shall execute, file and request the
Court to enter a superseding Stipulation and Order that does not refer to LC
Fund except solely to identify the Existing DIP Facility and DIP Order;

	 	H)	 	Full releases substantially in the form appended hereto shall
be exchanged upon the execution hereof by the Debtors and the Official
Committee, on the one hand, and LC Fund, on the other hand;

	 	I)	 	The Debtors and their Investment Bankers shall promptly
submit to LC Fund affidavits that there are no offers for or expressions of
interest in, whether written or oral, the Debtors’ assets or businesses other
than as has been already fully disclosed to LC Fund and are set forth in such
affidavits;

	 	J)	 	The form of settlement order and motion to approve this
settlement shall be reasonably satisfactory to LC Fund and the other parties
hereto and the settlement order shall contain findings from the Bankruptcy
Court that this settlement has been negotiated in good faith and at
arms-length and that it is a fair full and final settlement of all issues as
between the parties (excluding only the parties’ rights created herein);

	 	K)	 	No press releases shall be issued by any party without the
approval of LC Fund without LC Fund’s approval of the contents thereof to the
extent, and insofar as, they directly or indirectly refer or relate to LC Fund
and no disparaging comments will be made by any party hereto with respect any
other party hereto concerning the matters addressed herein; subject to the
foregoing, the Debtors shall use commercially reasonable efforts to provide LC
Fund with an advance copy of, and opportunity to comment on, filings with the
SEC that the Debtors by law are required to make that directly or indirectly
refer or relate to LC Fund;

	 	L)	 	Upon the Bankruptcy Court’s entry of an order approving this
settlement in full, the parties shall immediately and without delay take the
actions described in paragraphs D, E and F above;

	 	M)	 	All parties hereto will fully and in good faith support the
Bankruptcy Court’s approval of (i) this settlement and (ii) the Replacement
DIP Facility;

	 	N)	 	Should between the time of full execution hereof and the
Bankruptcy Court’s approval hereof any party hereto violate its agreements
hereunder and/or disavow this agreement or seek to preclude the Bankruptcy
Court’s approval hereof, it shall be responsible for any other party’s fees
and expenses, including legal fees and expenses, incurred as a result thereof;

	 	O)	 	Upon the Court’s entry of a final order approving this
settlement agreement, the Existing DIP Facility and the DIP Order shall be of
no further force or effect, such that neither the Debtors nor LC Fund shall
have any further rights or obligations thereunder, including, by way of
example, that LC Fund shall have no further funding obligations and shall have
no rights to receive warrants under a reorganization plan. The parties’
rights and obligations to one another on and after such time shall be solely
as set forth herein, in the order approving this settlement agreement, and the
releases;

	 	P)	 	This settlement agreement expires at 5:00 p.m. est April 7,
2006, should the Court not have entered an Order approving the settlement
agreement by that time, unless the parties agree in writing to extend such
deadline; provided, however, that the time of expiration will automatically
extend to 5:00 p.m. est April 11, 2006 if the hearing on the Replacement DIP
Facility and the Equity Committee Objection/Motion is adjourned to April 26,
2006; and

	 	Q)	 	Upon (i) full execution hereof and the general releases
appended hereto (which shall be effective upon the Court’s approval of the
settlement agreement), (ii) the filing by the Debtors, with the express
consent and support of the parties hereto, with the Bankruptcy Court on April
3, 2006 of an expedited motion (seeking an immediate hearing, the week of
April 3, 2006, if at all possible) and order to approve the settlement
embodied herein, and (iii) LC Fund’s receipt of the payment described in
paragraph A and the affidavits required under paragraph I, the parties agree
that all deadlines in the agreed Scheduling Order and deadlines with respect
to the Complaint, are extended by seven (7) calendar days, except that the
deadlines in paragraph 10 and 11 of the agreed Scheduling Order with respect
to exhibit lists, exhibits and witness lists and objections thereto shall
remain the same.

Counsel for each party executing this Settlement Agreement represents that he/she has the authority
to do so and bind his/her client.

FULLY AGREED this 31st day of March, 2006:

XYBERNAUT CORP.

XYBERNAUT SOLUTIONS, INC.

By Counsel

/s/ Thomas Cabaniss     

By: Thomas Cabaniss, Esq.

THE OFFICIAL COMMITTEE OF

EQUITY SECURITY HOLDERS

By Counsel

/s/ Kevin O’Donnell     

By: Kevin O’Donnell, Esq.

THE OFFICIAL COMMITTEE OF

UNSECURED CREDITORS

By Counsel

/s/ David W. Carickhoff, Jr., Esq.     

By: Michael Schaedle, Esq.

LC CAPITAL MASTER FUND, LTD.

By Counsel

/s/ John Ashmead     

1

By: John Ashmead, Esq.RELEASE

Effective upon the Bankruptcy Court’s entry of an Order approving (the “Approval Order”) the
Settlement Agreement, dated March 31, 2006, attached hereto (the “Settlement Agreement”), LC
Capital Master Fund, Ltd. (“LC Fund”), its subsidiaries and affiliates, successors and
assigns, and any other person that claims or might claim through, on behalf of, or for the benefit
of any of the foregoing (collectively, the “LC Fund Releasors”) hereby irrevocably and
unconditionally, fully, finally and forever waive, release, acquit and discharge Xybernaut Corp.
and Xybernaut Solutions, Inc. (the “Debtors”), the Official Committee of Unsecured
Creditors, and the Official Committee of Equity Security Holders and each of their past or present
parents, subsidiaries, affiliates, directors, officers, employees, and their successors and assigns
(collectively, the “Debtor/Committee Releasees”) from any and all claims, demands, rights,
liabilities, or causes of action of any and every kind, character or nature whatsoever, in law or
in equity, known or unknown (including unknown claims), whether asserted or unasserted, which the
LF Fund Releasors, or any of them, or anyone claiming through them, on their behalf or for their
benefit have or may have or claim to have, now or in the future, against any Debtor/Committee
Releasee that are based upon, relate to, or arise out of or in connection with any claim, act,
fact, transaction, occurrence, statement, or omission in connection with any transaction or
business dealing between LC Fund and the Debtors. Specifically excluded from this release are any
rights and obligations created under the Settlement Agreement or Approval Order.

LC CAPITAL MASTER FUND, LTD.

     

By:

2

RELEASE

Effective upon the Bankruptcy Court’s entry of an Order approving (the “Approval Order”) the
Settlement Agreement, dated March 31, 2006, attached hereto (the “Settlement Agreement”), Xybernaut
Corp. and Xybernaut Solutions, Inc. (the “Debtors”), each of their subsidiaries and
affiliates, successors and assigns, the Official Committee of Unsecured Creditors, and the Official
Committee of Equity Holders, and any other person that claims or might claim through, on behalf
of, or for the benefit of any of the foregoing (collectively, the “Debtor/Committee
Releasors”) hereby irrevocably and unconditionally, fully, finally and forever waive, release,
acquit and discharge LC Capital Master Fund, Ltd. (the “LC Fund”), its past or present
parents, subsidiaries, affiliates, directors, officers, employees, and its successors and assigns
(collectively, the “LC Fund Releasees”) from any and all claims, demands, rights,
liabilities, or causes of action of any and every kind, character or nature whatsoever, in law or
in equity, known or unknown (including unknown claims), whether asserted or unasserted, which the
Debtor/Committee Releasors, or any of them, or anyone claiming through them, on their behalf or for
their benefit have or may have or claim to have, now or in the future, against any LC Fund Releasee
that are based upon, relate to, or arise out of or in connection with any claim, act, fact,
transaction, occurrence, statement, or omission in connection with any transaction or business
dealing between LC Fund and the Debtors. Specifically excluded from this release are any rights
and obligations created under the Settlement Agreement or Approval Order.

XYBERNAUT CORP.

XYBERNAUT SOLUTIONS, INC.

     

By: Perry L. Nolen

Chief Executive Officer

THE OFFICIAL COMMITTEE OF

EQUITY SECURITY HOLDERS

     

By:

[Its Counsel]

THE OFFICIAL COMMITTEE OF

UNSECURED CREDITORS

     

By:

[Its Counsel]

3

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