Document:

<PAGE>

                                                                   EXHIBIT 10.84

                     THIRD AMENDED AND RESTATED SUBORDINATED
                                 PROMISSORY NOTE

$40,000,000.00                                                    March 29, 2001

      FOR VALUE RECEIVED, the undersigned, NEW CENTURY MORTGAGE CORPORATION (the
"Borrower"), hereby promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION (the "Lender", which term includes any subsequent holder hereof) at
Minneapolis, Minnesota or at such other place as the Lender may from time to
time hereafter designate to the Borrower in writing the principal sum of all
loans made by the Lender to the Borrower evidenced by this Note. The aggregate
principal amount of all such loans outstanding hereunder shall not exceed FORTY
MILLION DOLLARS AND NO CENTS ($40,000,000.00). The amount and date of each loan
evidenced hereby 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 (12.0%) 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 Lender, 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 two percent
(2.0%) per annum. Interest shall be payable monthly in arrears five (5) business
days after the end of the preceding calendar month, and at final maturity.

      The entire principal balance hereof and all accrued, unpaid interest
hereon is payable on December 31, 2003.

      This Note is the Note referred to in the Subordinated Loan Agreement of
even date herewith between the Borrower and the Lender (as the same may be
amended, modified or restated from time to time, the "Subordinated Loan
Agreement"). Terms capitalized and used herein without being defined will have
the meanings given to them in the Subordinated Loan Agreement.

      Payment of this Note is subordinated to payment of all obligations of the
Borrower to the Lender and certain other lenders who are parties to the
Warehousing Agreement pursuant to that certain Subordination Agreement dated as
of October 14, 1999 made by the Lender in favor of such lenders. This Note is
the "Subordinated Note" referred to in such Subordination Agreement.

      This Note is secured by liens granted pursuant to (i) the Amended and
Restated Pledge and Security Agreement dated as of April 28, 2000, made and
given by the Borrower (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"), (ii) the Amended and Restated
Servicing Security Agreement dated as of April 28, 2000, made and given by the
Borrower (as the same may hereafter be amended, modified or supplemented, or any
agreement

<PAGE>

entered into in substitution or replacement therefor, the "Servicing Security
Agreement"), and (iii) the Amended and Restated Security Agreement dated as of
April 28, 2000, made and given by NC Capital Corporation and NC Residual II
Corporation (as the same may hereafter be amended, modified or supplemented, or
any agreement entered into in substitution or replacement therefor, the
"Residual 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 Lender
may exercise all rights and remedies under the Subordinated Loan Agreement, the
Security Documents and as may otherwise be allowed by applicable law:

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

      (2)   The Borrower 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 Borrower 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 Borrower
            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 Borrower.

      (3)   The maturity of any material indebtedness of the Borrower (other
            than the indebtedness on this Note) shall be accelerated or the
            Borrower 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 Borrower 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 any Security Document and
            shall continue for more than the period of grace, if any, applicable
            thereto.

      (5)   An "Event of Default" as defined in the Warehousing Agreement as in
            effect on the date hereof has occurred, whether or not the
            Warehousing Agreement has been amended, supplemented, restated or
            otherwise modified after the date hereof or remains in effect, and
            whether or not such Event of Default or \the events or circumstances
            which caused it have been waived pursuant to the Warehousing
            Agreement.

      (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
            Borrower and the Borrower 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

                                      -2-
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            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 Borrower shall be taken or attempted to
            be taken and the same shall not have been vacated or stayed within
            30 days after the issuance thereof.

      (8)   The Borrower shall fail to comply in all respects with Article V of
            the Subordinated Loan Agreement, and such failure shall not be cured
            or waived within 10 days after the earlier of: (i) the date the
            Borrower gives notice of such failure to the Lender, and (ii) the
            date the Lender gives notice of such failure to the Borrower.

      (9)   Any representation or warranty made by or on behalf of the Borrower
            in Subordinated Loan Agreement or by or on behalf of the Borrower in
            any certificate, statement, report or document herewith or hereafter
            furnished to the Lender pursuant to this Note or the Subordinated
            Loan Agreement shall prove to have been false or misleading in any
            material respect on the date as of which the facts set forth are
            stated or certified.

      (10)  The Borrower shall fail to comply with any other agreement,
            covenant, condition, provision or term contained in the Subordinated
            Loan Agreement or any other Loan Document or Equity Document (other
            than those hereinabove set forth in clauses (8) or (9)) and such
            failure to comply shall continue for ten calendar days after
            whichever of the following dates is the earliest: (i) the date the
            Borrower gives notice of such failure to the Lender, (ii) the date
            the Borrower should have given notice of such failure to the Lender
            pursuant to the terms of the Subordinated Loan Agreement , or (iii)
            the date the Lender gives notice of such failure to the Borrower.

      (11)  A Change of Control shall occur.

      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 LENDER THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT
OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY OR RAMSEY COUNTY, MINNESOTA;
AND THE BORROWER 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
BORROWER 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 LENDER 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

                                      -3-
<PAGE>

ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

      EACH OF THE BORROWER, BY ITS EXECUTION AND DELIVERY HEREOF, AND THE
LENDER, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

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

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

      This Note amends and restates the remaining unpaid principal indebtedness
of the undersigned to the Lender evidenced by a Second Amended and Restated
Subordinated Promissory Note dated April 28, 2000, in the original principal
amount of $40,000,000 issued by the undersigned to the order of the Lender (the
"Prior Subordinated Note"). The Borrower hereby acknowledges and agrees that the
entire principal balance of the Prior Subordinated Note has been loaned to the
Borrower by the Lender, and is currently due and owing by the Borrower to the
Lender without defense, offset or counterclaim. 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
Lender under the Prior Subordinated Note and accrued and unpaid interest
thereon, and such indebtedness of the undersigned to the Lender heretofore
represented by the Prior Subordinated Note, as of the 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.

                                    NEW CENTURY MORTGAGE
                                    CORPORATION

                                    By /s/ Patrick Flanagan
                                       -------------------------------

                                    Its EVP
                                        ------------------------------

                                      -4-<PAGE>

         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

The Bond Market Association          International Securities Market Association
New York o Washington o London         Rigistrasse 60, P.O. Box, CH-8033, Zurich
www. bondmarkets.com                                                www.isma.org

                                                                    2000 VERSION

                                    TBM/AISMA

                       GLOBAL MASTER REPURCHASE AGREEMENT

                                                      Dated as of March 29, 2001

BETWEEN:    Salomon Smith Barney Inc. as Agent for
            Salomon Brothers International Limited

                           ("PARTY A")
--------------------------

AND

NC Capital Corporation    ("PARTY B")
--------------------------

1.       APPLICABILITY

(a)      From time to time the parties hereto may enter into transactions in
         which one party, acting through a Designated Office, ("Seller") agrees
         to sell to the other, acting through a Designated Office, ("Buyer")
         securities and financial instruments ("Securities") (subject to
         paragraph 1(c), other than equities and Net Paying Securities) against
         the payment of the purchase price by Buyer to Seller, with a
         simultaneous agreement by Buyer to sell to Seller Securities equivalent
         to such Securities at a date certain or on demand against the payment
         of the repurchase price by Seller to Buyer.

(b)      Each such transaction (which may be a repurchase transaction
         ("Repurchase Transaction") or a buy and sell back transaction
         ("Buy/Sell Back Transaction")) shall be referred to herein as a
         "Transaction" and shall be governed by this Agreement, including any
         supplemental terms or conditions contained in Annex I hereto, unless
         otherwise agreed in writing.

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          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

(c)      If this Agreement may be applied to:

         (i)      Buy/Sell Back Transactions, this shall be specified in Annex I
                  hereto, and the provisions of the Buy/Sell Back Annex shall
                  apply to such Buy/Sell Back Transactions;

         (ii)     Net Paying Securities, this shall be specified in Annex I
                  hereto and the provisions of Annex I, paragraph 1(b) shall
                  apply to Transactions involving Net Paying Securities.

(d)      If Transactions are to be effected under this Agreement by either party
         as an agent, this shall be specified in Annex I hereto, and the
         provisions of the Agency Annex shall apply to such Agency Transactions.

2.       DEFINITIONS

(a)      "Act of Insolvency" shall occur with respect to any party hereto upon -

         (i)      its making a general assignment for the benefit of, entering
                  into a reorganisation, arrangement, or composition with
                  creditors; or

         (ii)     its admitting in writing that it is unable to pay its debts as
                  they become due; or

         (iii)    its seeking, consenting to or acquiescing in the appointment
                  of any trustee, administrator, receiver or liquidator or
                  analogous officer of it or any material part of its property;
                  or

         (iv)     the presentation or filing of a petition in respect of it
                  (other than by the counterparty to this Agreement in respect
                  of any obligation under this Agreement) in any court or before
                  any agency alleging or for the bankruptcy, winding-up or
                  insolvency of such party (or any analogous proceeding) or
                  seeking any reorganisation, arrangement, composition,
                  re-adjustment, administration, liquidation, dissolution or
                  similar relief under any present or future statute, law or
                  regulation, such petition (except in the case of a petition
                  for winding-up or any analogous proceeding, in respect of
                  which no such 30 day period shall apply) not having been
                  stayed or dismissed within 30 days of its filing; or

         (v)      the appointment of a receiver, administrator, liquidator or
                  trustee or analogous officer of such party or over all or any
                  material part of such party's property; or

          (vi)    the convening of any meeting of its creditors for the purposes
                  of considering a voluntary arrangement as ferred to in section
                  3 of the Insolvency Act 1986 (or any analogous proceeding);

(b)      "Agency Transaction", the meaning specified in paragraph 1 of the
         Agency Annex;

(c)      "Appropriate Market", the meaning specified in paragraph 10;

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          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

(d)      "Base Currency", the currency indicated in Annex I hereto;

(e)      "Business Day" -

         (i)      in relation to the settlement of any Transaction which is to
                  be settled through Clearstream or Euroclear, a day on which
                  Clearstream or, as the case may be, Euroclear is open to
                  settle business in the currency in which the Purchase Price
                  and the Repurchase Price are denominated;

         (ii)     in relation to the settlement of any Transaction which is to
                  be settled through a settlement system other than Clearstream
                  or Euroclear, a day on which that settlement system is open to
                  settle such Transaction;

         (iii)    in relation to any delivery of Securities not falling within
                  (i) or (ii) above, a day on which banks are open for business
                  in the place where delivery of the relevant Securities is to
                  be effected; and

         (iv)     in relation to any obligation to make a payment not falling
                  within (i) or (ii) above, a day other than a Saturday or a
                  Sunday on which banks are open for business in the principal
                  financial centre of the country of which the currency in which
                  the payment is denominated is the official currency and, if
                  different, in the place where any account designated by the
                  parties for the making or receipt of the payment is situated
                  (or, in the case of a payment in euro, a day on which TARGET
                  operates);

(f)      "Cash Margin", a cash sum paid to Buyer or Seller in accordance with
         paragraph 4;

(g)      "Clearstream", Clearstream Banking, societe anonyme, (previously
         Cedelbank) or any successor thereto;

(h)      "Confirmation", the meaning specified in paragraph 3(b);

(i)      "Contractual Currency", the meaning specified in paragraph 7(a);

(j)      "Defaulting Party", the meaning specified in paragraph 10;

(k)      "Default Market Value", the meaning specified in paragraph 10;

(i)      "Default Notice", a written notice served by the non-Defaulting Party
         on the Defaulting Party under paragraph 10 stating that an event shall
         be treated as an Event of Default for the purposes of this Agreement;

(j)      "Defaulting Party", the meaning specified in paragraph 10;

(k)      "Default Market Value", the meaning specified in paragraph 10;

(l)      "Default Notice", a written notice served by the non-Defaulting Party
         on the Defaulting Party under paragraph 10 stating that an event shall
         be treated as an Event of Default for the purpose of this Agreement;

(m)      "Default Valuation Notice", the meaning specified in paragraph 10;

(n)      "Default Variation Time", the meaning specified in paragraph 10;

(o)      "Deliverable Securities", the meaning specified in paragraph 10;

(p)      "Designated Office", with respect to a party, a branch or office of
         that party which is
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          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         specified as such in Annex I hereto or such other branch or office as
         may be agreed to by the parties;

(q)      "Distributions", the meaning specified in sub-paragraph (w) below;

(r)      "Equivalent Margin Securities", Securities equivalent to Securities
         previously transferred as Margin Securities;

(s)      "Equivalent Securities", with respect to a Transaction, Securities
         equivalent to Purchased Securities under that Transaction. If and to
         the extent that such Purchased Securities have been redeemed, the
         expression shall mean a sum of money equivalent to the proceeds of the
         redemption;

(t)      Securities are "equivalent to" other Securities for the purposes of
         this Agreement if they are: (i) of the same issuer; (ii) part of the
         same issue; and (iii) of an identical type, nominal value, description
         and (except where otherwise stated) amount as those other Securities,
         provided that -

         (A)      Securities will be equivalent to other Securities
                  notwithstanding that those Securities have been redenominated
                  into euro or that the nominal value of those Securities has
                  changed in connection with such redenomination; and

         (B)      where Securities have been converted, subdivided or
                  consolidated or have become the subject of a takeover or the
                  holders of Securities have become entitled to receive or
                  acquire other Securities or other property or the Securities
                  have become subject to any similar event, the expression
                  "equivalent to" shall mean Securities equivalent to (as
                  defined in the provisions of this definition preceding the
                  proviso) the original Securities together with or replaced by
                  a sum of money or Securities or other property equivalent to
                  (as so defined) that receivable by holders of such original
                  Securities resulting from such event;

(u)      "Euroclear", Morgan Guaranty Trust Company of New York, Brussels
         office, as operator of the Euroclear System or any successor thereto;

(v)      "Event of Default", the meaning specified in paragraph 10;

(w)      "Income", with respect to any Security at any time, all interest,
         dividends or other distributions thereon, but excluding distributions
         which are a payment or repayment of principal in respect of the
         relevant securities ("Distributions");

(x)      "Income Payment Date", with respect to any Securities, the date on
         which Income is paid in respect of such Securities or, in the case of
         registered Securities, the date by reference to which particular
         registered holders are identified as being entitled to payment of
         Income;

(y)      "LIBOR", in relation to any sum in any currency, the one month London
         Inter Bank Offered Rate in respect of that currency as quoted on page
         3750 on the Bridge
<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         Telerate Service (or such other page as may replace page 3750 on that
         service) as of 11:00 a.m., London time, on the date on which it is to
         be determined;

(z)      "Margin Ratio", with respect to a Transaction, the Market Value of the
         Purchased Securities at the time when the Transaction was entered into
         divided by the Purchase Price (and so that, where a Transaction relates
         to Securities of different descriptions and the Purchase Price is
         apportioned by the parties among Purchased Securities of each such
         description, a separate Margin Ratio shall apply in respect of
         Securities of each such description), or such other proportion as the
         parties may agree with respect to that Transaction;

(aa)     "Margin Securities", in relation to a Margin Transfer, Securities
         reasonably acceptable to the party calling for such Margin Transfer;

(bb)     "Margin Transfer", any, or any combination of, the payment or repayment
         of Cash Margin and the transfer of Margin Securities or Equivalent
         Margin Securities;

(cc)     "Market Value", with respect to any Securitibs as of any time on any
         date, the price for such Securities at such time on such date obtained
         from a generally recognised source agreed to by the parties (and where
         different prices are obtained for different delivery dates, the price
         so obtainable for the earliest available such delivery date) (provided
         that the price of Securities that are suspended shall (for the purposes
         of paragraph 4) be nil unless the parties otherwise agree and (for all
         other purposes) shall be the price of those Securities as of close of
         business on the dealing day in the relevant market last preceding the
         date of suspension) plus the aggregate amount of Income which, as of
         such date, has accrued but not yet been paid in respect of the
         Securities to the extent not included in such price as of such date,
         and for these purposes any sum in a currency other than the Contractual
         Currency for the Transaction in question shall be converted into such
         Contractual Currency at the Spot Rate prevailing at the relevant time;

(dd)     "Net Exposure", the meaning specified in paragraph 4(c);

(ee)     the "Net Margin" provided to a party at any time, the excess (if any)
         at that time of (i) the sum of the amount of Cash Margin paid to that
         party (including accrued interest on such Cash Margin which has not
         been paid to the other party) and the Market Value of Margin Securities
         transferred to that party under paragraph 4(a) (excluding any Cash
         Margin which has been repaid to the other party and any Margin
         Securities in respect of which Equivalent Margin Securities have been
         transferred to the other party) over (ii) the sum of the amount of Cash
         Margin paid to the other party (including accrued interest on such Cash
         Margin which has not been paid by the other party) and the Market Value
         of Margin Securities transferred to the other party under paragraph
         4(a) (excluding any Cash Margin which has been repaid by the other
         party and any Margin Securities in respect of which Equivalent Margin
         Securities have been transferred by the other party) and for this
         purpose any amounts not denominated in the Base Currency shall be
         converted into the Base Currency at the Spot Rate
<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         prevailing at the relevant time;

(ff)     "Net Paying Securities", Securities which are of a kind such that, were
         they to be the subject of a Transaction to which paragraph 5 applies,
         any payment made by Buyer under paragraph 5 would be one in respect of
         which either Buyer would or might be required to make a withholding or
         deduction for or on account of taxes or duties or Seller might be
         required to make or account for a payment for or on account of taxes or
         duties (in each case other than tax on overall net income) by reference
         to such payment;

(gg)     "Net Value", the meaning specified in paragraph 10;

(hh)     "New Purchased Securities", the meaning specified in paragraph 8(a);

(ii)     "Price Differential", with respect to any Transaction as of any date,
         the aggregate amount obtained by daily application of the Pricing Rate
         for such Transaction to the Purchase Price for such Transaction (on a
         360 day basis or 365 day basis in accordance with the applicable ISMA
         convention, unless otherwise agreed between the parties for the
         Transaction), for the actual number of days during the period
         commencing on (and including) the Purchase Date for such Transaction
         and ending on (but excluding) the date of calculation or, if earlier,
         the Repurchase Date;

(jj)     "Pricing Rate", with respect to any Transaction, the per annum
         percentage rate for calculation of the Price Differential agreed to by
         Buyer and Seller in relation to that Transaction;

(kk)     "Purchase Date", with respect to any Transaction, the date on which
         Purchased Securities are to be sold by Seller to Buyer in relation to
         that Transaction;

(ll)     "Purchase Price", on the Purchase Date, the price at which Purchased
         Securities are sold or are to be sold by Seller to Buyer;

(mm)     "Purchased Securities", with respect to any Transaction, the Securities
         sold or to be sold by Seller to Buyer under that Transaction, and any
         New Purchased Securities transferred by Seller to Buyer under paragraph
         8 in respect of that Transaction;

(nn)     "Receivable Securities", the meaning specified in paragraph 10;

(oo)     "Repurchase Date", with respect to any Transaction, the date on which
         Buyer is to sell Equivalent Securities to Seller in relation to that
         Transaction;

(pp)     "Repurchase Price", with respect to any Transaction and as of any date,
         the sum of the Purchase Price and the Price Differential as of such
         date;

(qq)     "Special Default Notice", the meaning specified in paragraph 14;
<PAGE>

          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

(rr)     "Spot Rate", where an amount in one currency is to be converted into a
         second currency on any date, unless the parties otherwise agree, the
         spot rate of exchange quoted by Barclays Bank PLC in the London
         inter-bank market for the sale by it of such second currency against a
         purchase by it of such first currency;

(ss)     "TARGET", the Trans-European Automated Real-time Gross Settlement
         Express Transfer System;

(tt)     "Term", with respect to any Transaction, the interval of time
         commencing with the Purchase Date and ending with the Repurchase Date;

(uu)     "Termination", with respect to any Transaction, refers to the
         requirement with respect to such Transaction for Buyer to sell
         Equivalent Securities against payment by Seller of the Repurchase Price
         in accordance with paragraph 3(f), and reference to a Transaction
         having a "fixed term" or being "terminable upon demand" shall be
         construed accordingly;

(vv)     "Transaction Costs", the meaning specified in paragraph 10;

(ww)     "Transaction Exposure", with respect to any Transaction at any time
         during the period from the Purchase Date to the Repurchase Date (or, if
         later, the date on which Equivalent Securities are delivered to Seller
         or the Transaction is terminated under paragraph 10(g) or 10(h)), the
         difference between (i) the Repurchase Price at such time multiplied by
         the applicable Margin Ratio (or, where the Transaction relates to
         Securities of more than one description to which different Margin
         Ratios apply, the amount produced by multiplying the Repurchase Price
         attributable to Equivalent Securities of each such description by the
         applicable Margin Ratio and aggregating the resulting amounts, the
         Repurchase Price being for this purpose attributed to Equivalent
         Securities of each such description in the same proportions as those in
         which the Purchase Price was apportioned among the Purchased
         Securities) and (ii) the Market Value of Equivalent Securities at such
         time. If (i) is greater than (ii), Buyer has a Transaction Exposure for
         that Transaction equal to that excess. If (ii) is greater than (i),
         Seller has a Transaction Exposure for that Transaction equal to that
         excess; and

(xx)     except in paragraphs 14(b)(i) and 18, references in this Agreement to
         "written" communications and communications "in writing" include
         communications made through any electronic system agreed between the
         parties which is capable of reproducing such communication in hard copy
         form.

3.       INITIATION; CONFIRMATION; TERMINATION

(a)      A Transaction may be entered into orally or in writing at the
         initiation of either Buyer or Seller.

(b)      Upon agreeing to enter into a Transaction hereunder Buyer or Seller (or
         both), as shall have been agreed, shall promptly deliver to the other
         party written confirmation

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         of such Transaction (a "Confirmation").

         The Confirmation shall describe the Purchased Securities (including
         CUSIP or ISIN or other identifying number or numbers, if any), identify
         Buyer and Seller and set forth -

         (i)      the Purchase Date;

         (ii)     the Purchase Price;

         (iii)    the Repurchase Date, unless the Transaction is to be
                  terminable on demand (in which case the Confirmation shall
                  state that it is terminable on demand);

         (iv)     the Pricing Rate applicable to the Transaction;

         (v)      in respect of each party the details of the bank account[s] to
                  which payments to be made hereunder are to be credited;

         (vi)     where the Buy/Sell Back Annex applies, whether the Transaction
                  is a Repurchase Transaction or a Buy/Sell Back Transaction;

         (vii)    where the Agency Annex applies, whether the Transaction is an
                  Agency Transaction and, if so, the identity of the party which
                  is acting as agent and the name, code or identifier of the
                  Principal; and

         (viii)   any additional terms or conditions of the Transaction;

         and may be in the form of Annex II hereto or may be in any other form
         to which the parties agree.

         The Confirmation relating to a Transaction shall, together with this
         Agreement, constitute prima facie evidence of the terms agreed between
         Buyer and Seller for that Transaction, unless objection is made with
         respect to the Confirmation promptly after receipt thereof. In the
         event of any conflict between the terms of such Confirmation and this
         Agreement, the Confirmation shall prevail in respect of that
         Transaction and those terms only.

(c)      On the Purchase Date for a Transaction, Seller shall transfer the
         Purchased Securities to Buyer or its agent against the payment of the
         Purchase Price by Buyer.

(d)      Termination of a Transaction will be effected, in the case of on demand
         Transactions, on the date specified for Termination in such demand,
         and, in the case of fixed term Transactions, on the date fixed for
         Termination.

(e)      In the case of on demand Transactions, demand for Termination shall be
         made by Buyer or Seller, by telephone or otherwise, and shall provide
         for Termination to occur after not less than the minimum period as is
         customarily required for the settlement or delivery of money or
         Equivalent Securities of the relevant kind.

(f)      On the Repurchase Date, Buyer shall transfer to Seller or its agent
         Equivalent
<PAGE>

          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         Securities against the payment of the Repurchase Price by Seller (less
         any amount then payable and unpaid by Buyer to Seller pursuant to
         paragraph 5).

4.       MARGIN MAINTENANCE

(a)      If at any time either party has a Net Exposure in respect of the other
         party it may by notice to the other party require the other party to
         make a Margin Transfer to it of an aggregate amount or value at least
         equal to that Net Exposure.

(b)      A notice under sub-paragraph (a) above may be given orally or in
         writing.

(c)      For the purposes of this Agreement a party has a Net Exposure in
         respect of the other party if the aggregate of all the first party's
         Transaction Exposures plus any amount payable to the first party under
         paragraph 5 but unpaid less the amount of any Net Margin provided to
         the first party exceeds the aggregate of all the other party's
         Transaction Exposures plus any amount payable to the other party under
         paragraph 5 but unpaid less the amount of any Net Margin provided to
         the other party; and the amount of the Net Exposure is the amount of
         the excess. For this purpose any amounts not denominated in the Base
         Currency shall be converted into the Base Currency at the Spot Rate
         prevailing at the relevant time.

(d)      To the extent that a party calling for a Margin Transfer has previously
         paid Cash Margin which has not been repaid or delivered Margin
         Securities in respect of which Equivalent Margin Securities have not
         been delivered to it, that party shall be entitled to require that such
         Margin Transfer be satisfied first by the repayment of such Cash Margin
         or the delivery of Equivalent Margin Securities but, subject to this,
         the composition of a Margin Transfer shall be at the option of the
         party making such Margin Transfer.

(e)      Any Cash Margin transferred shall be in the Base Currency or such other
         currency as the parties may agree.

(f)      A payment of Cash Margin shall give rise to a debt owing from the party
         receiving such payment to the party making such payment. Such debt
         shall bear interest at such rate, payable at such times, as may be
         specified in Annex I hereto in respect of the relevant currency or
         otherwise agreed between the parties, and shall be repayable subject to
         the terms of this Agreement.

(g)      Where Seller or Buyer becomes obliged under sub-paragraph (a) above to
         make a Margin Transfer, it shall transfer Cash Margin or Margin
         Securities or Equivalent Margin Securities within the minimum period
         specified in Annex I hereto or, if no period is there specified, such
         minimum period as is customarily required for the settlement or
         delivery of money, Margin Securities or Equivalent Margin Securities of
         the relevant kind.

(h)      The parties may agree that, with respect to any Transaction, the
         provisions of subparagraphs (a) to (g) above shall not apply but
         instead that margin may be provided

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

        separately in respect of that Transaction in which case -

         (i)      that Transaction shall not be taken into account when
                  calculating whether either party has a Net Exposure;

         (ii)     margin shall be provided in respect of that Transaction in
                  such manner as the parties may agree; and

         (iii)    margin provided in respect of that Transaction shall not be
                  taken into account for the purposes of sub-paragraphs (a) to
                  (g) above.

(i)      The parties may agree that any Net Exposure which may arise shall be
         eliminated not by Margin Transfers under the preceding provisions of
         this paragraph but by the repricing of Transactions under sub-paragraph
         (j) below, the adjustment of Transactions under sub-paragraph (k) below
         or a combination of both these methods.

(j)      Where the parties agree that a Transaction is to be repriced under this
         sub-paragraph, such repricing shall be effected as follows -

         (i)      the Repurchase Date under the relevant Transaction (the
                  "Original Transaction") shall be deemed to occur on the date
                  on which the repricing is to be effected (the "Repricing
                  Date");

         (ii)     the parties shall be deemed to have entered into a new
                  Transaction (the "Repriced Transaction") on the terms set out
                  in (iii) to (vi) below;

         (iii)    the Purchased Securities under the Repriced Transaction shall
                  be Securities equivalent to the Purchased Securities under the
                  Original Transaction;

         (iv)     the Purchase Date under the Repriced Transaction shall be the
                  Repricing Date;

         (v)      the Purchase Price under the Repriced Transaction shall be
                  such amount as shall, when multiplied by the Margin Ratio
                  applicable to the Original Transaction, be equal to the Market
                  Value of such Securities on the Repricing Date;

         (vi)     the Repurchase Date, the Pricing Rate, the Margin Ratio and,
                  subject as aforesaid, the other terms of the Repriced
                  Transaction shall be identical to those of the Original
                  Transaction;

         (vii)    the obligations of the parties with respect to the delivery of
                  the Purchased Securities and the payment of the Purchase Price
                  under the Repriced Transaction shall be set off against their
                  obligations with respect to the delivery of Equivalent
                  Securities and payment of the Repurchase Price under the
                  Original Transaction and accordingly only a net cash sum shall
                  be paid by one party to the other. Such net cash sum shall be
                  paid within the period specified in sub-paragraph (g) above.

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

(k)      The adjustment of a Transaction (the "Original Transaction") under this
         sub-paragraph shall be effected by the parties agreeing that on the
         date on which the adjustment is to be made (the "Adjustment Date") the
         Original Transaction shall be terminated and they shall enter into a
         new Transaction (the "Replacement Transaction") in accordance with the
         following provisions -

         (i)      the Original Transaction shall be terminated on the Adjustment
                  Date on such terms as the parties shall agree on or before the
                  Adjustment Date;

         (ii)     the Purchased Securities under the Replacement Transaction
                  shall be such Securities as the parties shall agree on or
                  before the Adjustment Date (being Securities the aggregate
                  Market Value of which at the Adjustment Date is substantially
                  equal to the Repurchase Price under the Original Transaction
                  at the Adjustment Date multiplied by the Margin Ratio
                  applicable to the Original Transaction):

         (iii)    the Purchase Date under the Replacement Transaction shall be
                  the Adjustment Date;

         (iv)     the other terms of the Replacement Transaction shall be such
                  as the parties shall agree on or before the Adjustment Date;
                  and

         (v)      the obligations of the parties with respect to payment and
                  delivery of Securities on the Adjustment Date under the
                  Original Transaction and the Replacement Transaction shall be
                  settled in accordance with paragraph 6 within the minimum
                  period specified in sub-paragraph (g) above.

5.       INCOME PAYMENTS

         Unless otherwise agreed -

         (i)      where the Term of a particular Transaction extends over an
                  Income Payment Date in respect of any Securities subject to
                  that Transaction, Buyer shall on the date such Income is paid
                  by the issuer transfer to or credit to the account of Seller
                  an amount equal to (and in the same currency as) the amount
                  paid by the issuer;

         (ii)     where Margin Securities are transferred from one party ("the
                  first party") to the other party ("the second party") and an
                  Income Payment Date in respect of such Securities occurs
                  before Equivalent Margin Securities are transferred by the
                  second party to the first party, the second party shall on the
                  date such Income is paid by the issuer transfer to or credit
                  to the account of the first party an amount equal to (and in
                  the same currency as) the amount paid by the issuer;

         and for the avoidance of doubt references in this paragraph to the
         amount of any Income paid by the issuer of any Securities shall be to
         an amount paid without any
<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         withholding or deduction for or on account of taxes or duties
         notwithstanding that a payment of such Income made in certain
         circumstances may be subject to such a withholding or deduction.

6.       PAYMENT AND TRANSFER

(a)      Unless otherwise agreed, all money paid hereunder shall be in
         immediately available freely convertible funds of the relevant
         currency. All Securities to be transferred hereunder (i) shall be in
         suitable form for transfer and shall be accompanied by duly executed
         instruments of transfer or assignment in blank (where required for
         transfer) and such other documentation as the transferee may reasonably
         request, or (ii) shall be transferred through the book entry system of
         Euroclear or Clearstream, or (iii) shall be transferred through any
         other agreed securities clearance system or (iv) shall be transferred
         by any other method mutually acceptable to Seller and Buyer.

(b)      Unless otherwise agreed, all money payable by one party to the other in
         respect of any Transaction shall be paid free and clear of, and without
         withholding or deduction for, any taxes or duties of whatsoever nature
         imposed, levied, collected, withheld or assessed by any authority
         having power to tax, unless the withholding or deduction of such taxes
         or duties is required by law. In that event, unless otherwise agreed,
         the paying party shall pay such additional amounts as will result in
         the net amounts receivable by the other party (after taking account of
         such withholding or deduction) being equal to such amounts as would
         have been received by it had no such taxes or duties been required to
         be withheld or deducted.

(c)      Unless otherwise agreed in writing between the parties, under each
         Transaction transfer of Purchased Securities by Seller and payment of
         Purchase Price by Buyer against the transfer of such Purchased
         Securities shall be made simultaneously and transfer of Equivalent
         Securities by Buyer and payment of Repurchase Price payable by Seller
         against the transfer of such Equivalent Securities shall be made
         simultaneously.

(d)      Subject to and without prejudice to the provisions of sub-paragraph
         6(c), either party may from time to time in accordance with market
         practice and in recognition of the practical difficulties in arranging
         simultaneous delivery of Securities and money waive in relation to any
         Transaction its rights under this Agreement to receive simultaneous
         transfer and/or payment provided that transfer and/or payment shall,
         notwithstanding such waiver, be made on the same day and provided also
         that no such waiver in respect of one Transaction shall affect or bind
         it in respect of any other Transaction.

(e)      The parties shall execute and deliver all necessary documents and take
         all necessary steps to procure that all right, title and interest in
         any Purchased Securities, any Equivalent Securities, any Margin
         Securities and any Equivalent Margin Securities shall pass to the party
         to which transfer is being made upon transfer of the same in accordance
         with this Agreement, free from all liens, claims, charges and
         encumbrances.
<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

(f)      Notwithstanding the use of expressions such as "REPURCHASE DATE",
         "REPURCHASE PRICE", "MARGIN", "NET MARGIN", "MARGIN RATIO" and
         "SUBSTITUTION", which are used to reflect terminology used in the
         market for transactions of the kind provided for in this Agreement, all
         right, title and interest in and to Securities and money transferred or
         paid under this Agreement shall pass to the transferee upon transfer or
         payment, the obligation of the party receiving Purchased Securities or
         Margin Securities being an obligation to transfer Equivalent Securities
         or Equivalent Margin Securities.

(g)      Time shall be of the essence in this Agreement.

(h)      Subject to paragraph 10, all amounts in the same currency payable by
         each party to the other under any Transaction or otherwise under this
         Agreement on the same date shall be combined in a single calculation of
         a net sum payable by one party to the other and the obligation to pay
         that sum shall be the only obligation of either party in respect of
         those amounts.

(i)      Subject to paragraph 10, all Securities of the same issue,
         denomination, currency and series, transferable by each party to the
         other under any Transaction or hereunder on the same date shall be
         combined in a single calculation of a net quantity of Securities
         transferable by one party to the other and the obligation to transfer
         the net quantity of Securities shall be the only obligation of either
         party in respect of the Securities so transferable and receivable.

(j)      If the parties have specified in Annex I hereto that this paragraph
         6(j) shall apply, each obligation of a party under this Agreement
         (other than an obligation arising under paragraph 10) is subject to the
         condition precedent that none of those events specified in paragraph
         10(a) which are identified in Annex I hereto for the purposes of this
         paragraph 6(j) (being events which, upon the serving of a Default
         Notice, would be an Event of Default with respect to the other party)
         shall have occurred and be continuing with respect to the other party.

7.       CONTRACTUAL CURRENCY

(a)      All the payments made in respect of the Purchase Price or the
         Repurchase Price of any Transaction shall be made in the currency of
         the Purchase Price (the "Contractual Currency") save as provided in
         paragraph 10(c)(ii). Notwithstanding the foregoing, the payee of any
         money may, at its option, accept tender thereof in any other currency,
         provided, however, that, to the extent permitted by applicable law, the
         obligation of the payer to pay such money will be discharged only to
         the extent of the amount of the Contractual Currency that such payee
         may, consistent with normal banking procedures, purchase with such
         other currency (after deduction of any premium and costs of exchange)
         for delivery within the customary delivery period for spot transactions
         in respect of the relevant currency.

(b)      If for any reason the amount in the Contractual Currency received by a
         party, including amounts received after conversion of any recovery
         under any judgment or

<PAGE>

          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         order expressed in a currency other than the Contractual Currency,
         falls short of the amount in the Contractual Currency due and payable,
         the party required to make the payment will, as a separate and
         independent obligation, to the extent permitted by applicable law,
         immediately transfer such additional amount in the Contractual Currency
         as may be necessary to compensate for the shortfall.

(c)      If for any reason the amount in the Contractual Currency received by a
         party exceeds the amount of the Contractual Currency due and payable,
         the party receiving the transfer will refund promptly the amount of
         such excess.

8.       SUBSTITUTION

(a)      A Transaction may at any time between the Purchase Date and Repurchase
         Date, if Seller so requests and Buyer so agrees, be varied by the
         transfer by Buyer to Seller of Securities equivalent to the Purchased
         Securities, or to such of the Purchased Securities as shall be agreed,
         in exchange for the transfer by Seller to Buyer of other Securities of
         such amount and description as shall be agreed ("New Purchased
         Securities") (being Securities having a Market Value at the date of the
         variation at least equal to the Market Value of the Equivalent
         Securities transferred to Seller).

(b)      Any variation under sub-paragraph (a) above shall be effected, subject
         to paragraph 6(d), by the simultaneous transfer of the Equivalent
         Securities and New Purchased Securities concerned.

(c)      A Transaction which is varied under sub-paragraph (a) above shall
         thereafter continue in effect as though the Purchased Securities under
         that Transaction consisted of or included the New Purchased Securities
         instead of the Securities in respect of which Equivalent Securities
         have been transferred to Seller.

(d)      Where either party has transferred Margin Securities to the other party
         it may at any time before Equivalent Margin Securities are transferred
         to it under paragraph 4 request the other party to transfer Equivalent
         Margin Securities to it in exchange for the transfer to the other party
         of new Margin Securities having a Market Value at the time of transfer
         at least equal to that of such Equivalent Margin Securities. If the
         other party agrees to the request, the exchange shall be effected,
         subject to paragraph 6(d), by the simultaneous transfer of the
         Equivalent Margin Securities and new Margin Securities concerned. Where
         either or both of such transfers is or are effected through a
         settlement system in circumstances which under the rules and procedures
         of that settlement system give rise to a payment by or for the account
         of one party to or for the account of the other party, the parties
         shall cause such payment or payments to be made outside that settlement
         system, for value the same day as the payments made through that
         settlement system, as shall ensure that the exchange of Equivalent
         Margin Securities and new Margin Securities effected under this
         sub-paragraph does not give rise to any net payment of cash by either
         party to the other.

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

9.       REPRESENTATIONS

         Each party represents and warrants to the other that -

(a)      it is duly authorised to execute and deliver this Agreement, to enter
         into the Transactions contemplated hereunder and to perform its
         obligations hereunder and thereunder and has taken all necessary action
         to authorise such execution, delivery and performance;

(b)      it will engage in this Agreement and the Transactions contemplated
         hereunder (other than Agency Transactions) as principal;

(c)      the person signing this Agreement on its behalf is, and any person
         representing it in entering into a Transaction will be, duly authorised
         to do so on its behalf;

(d)      it has obtained all authorisations of any governmental or regulatory
         body required in connection with this Agreement and the Transactions
         contemplated hereunder and such authorisations are in full force and
         effect;

(e)      the execution, delivery and performance of this Agreement and the
         Transactions contemplated hereunder will not violate any law,
         ordinance, charter, by-law or rule applicable to it or any agreement by
         which it is bound or by which any of its assets are affected;

(f)      it has satisfied itself and will continue to satisfy itself as to the
         tax implications of the Transactions contemplated hereunder;

(g)      in connection with this Agreement and each Transaction -

         (i)      unless there is a written agreement with the other party to
                  the contrary, it is not relying on any advice (whether written
                  or oral) of the other party, other than the representations
                  expressly set out in this Agreement;

         (ii)     it has made and will make its own decisions regarding the
                  entering into of any Transaction based upon its own judgment
                  and upon advice from such professional advisers as it has
                  deemed it necessary to consult;

         (iii)    it understands the terms, conditions and risks of each
                  Transaction and is willing to assume (financially and
                  otherwise) those risks; and

(h)      at the time of transfer to the other party of any Securities it will
         have the full and unqualified right to make such transfer and that upon
         such transfer of Securities the other party will receive all right,
         title and interest in and to those Securities tree of any lien, claim,
         charge or encumbrance.

         On the date on which any Transaction is entered into pursuant hereto,
         and on each day on which Securities, Equivalent Securities, Margin
         Securities or Equivalent Margin Securities are to be transferred under
         any Transaction, Buyer and Seller shall each be

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         deemed to repeat all the foregoing representations. For the avoidance
         of doubt and notwithstanding any arrangements which Seller or Buyer may
         have with any third party, each party will be liable as a principal for
         its obligations under this Agreement and each Transaction.

10.      EVENTS OF DEFAULT

(a)      If any of the following events (each an "Event of Default") occurs in
         relation to either party (the "Defaulting Party", the other party being
         the "non-Defaulting Party") whether acting as Seller or Buyer -

        (i)      Buyer fails to pay the Purchase Price upon the applicable
                 Purchase Date or Seller fails to pay the Repurchase Price upon
                 the applicable Repurchase Date, and the non-Defaulting Party
                 serves a Default Notice on the Defaulting Party; or

        (ii)     if the parties have specified in Annex I hereto that this
                 sub-paragraph shall apply, Seller fails to deliver Purchased
                 Securities on the Purchase Date or Buyer fails to deliver
                 Equivalent Securities on the Repurchase Date, and the
                 non-Defaulting Party serves a Default Notice on the Defaulting
                 Party; or

         (iii)    Seller or Buyer fails to pay when due any sum payable under
                  sub-paragraph (g) or (h) below, and the non-Defaulting Party
                  serves a Default Notice on the Defaulting Party; or

         (iv)     Seller or Buyer fails to comply with paragraph 4 and the
                  non-Defaulting Party serves a Default Notice on the Defaulting
                  Party; or

         (v)      Seller or Buyer fails to comply with paragraph 5 and the
                  non-Defaulting Party serves a Default Notice on the Defaulting
                  Party; or

         (vi)     an Act of Insolvency occurs with respect to Seller or Buyer
                  and (except in the case of an Act of Insolvency which is the
                  presentation of a petition for winding-up or any analogous
                  proceeding or the appointment of a liquidator or analogous
                  officer of the Defaulting Party in which case no such notice
                  shall be required) the non-Defaulting Party serves a Default
                  Notice on the Defaulting Party; or

         (vii)    any representations made by Seller or Buyer are incorrect or
                  untrue in any material respect when made or repeated or deemed
                  to have been made or repeated, and the non-Defaulting Party
                  serves a Default Notice on the Defaulting Party; or

         (viii)   Seller or Buyer admits to the other that it is unable to, or
                  intends not to, perform any of its obligations hereunder
                  and/or in respect of any Transaction and the non-Defaulting
                  Party serves a Default Notice on the Defaulting Party; or

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         (ix)     Seller or Buyer is suspended or expelled from membership of or
                  participation in any securities exchange or association or
                  other self regulating organisation, or suspended from dealing
                  in securities by any government agency, or any of the assets
                  of either Seller or Buyer or the assets of investors held by,
                  or to the order of, Seller or Buyer are transferred or ordered
                  to be transferred to a trustee by a regulatory authority
                  pursuant to any securities regulating legislation and the
                  non-Defaulting Party serves a Default Notice on the Defaulting
                  Party; or

         (x)      Seller or Buyer fails to perform any other of its obligations
                  hereunder and does not remedy such failure within 30 days
                  after notice is given by the non-Defaulting Party requiring
                  it to do so, and the non-Defaulting Party serves a Default
                  Notice on the Defaulting Party;

         then sub-paragraphs (b) to (f) below shall apply.

(b)      The Repurchase Date for each Transaction hereunder shall be deemed
         immediately to occur and, subject to the following provisions, all Cash
         Margin (including interest accrued) shall be immediately repayable and
         Equivalent Margin Securities shall be immediately deliverable (and so
         that, where this sub-paragraph applies, performance of the respective
         obligations of the parties with respect to the delivery of Securities,
         the payment of the Repurchase Prices for any Equivalent Securities and
         the repayment of any Cash Margin shall be effected only in accordance
         with the provisions of sub-paragraph (c) below).

(c)      (i)      The Default Market Values of the Equivalent Securities and any
                  Equivalent Margin Securities to be transferred, the amount of
                  any Cash Margin (including the amount of interest accrued) to
                  be transferred and the Repurchase Prices to be paid by each
                  party shall be established by the non-Defaulting Party for all
                  Transactions as at the Repurchase Date; and

         (ii)     on the basis of the sums so established, an account shall be
                  taken (as at the Repurchase Date) of what is due from each
                  party to the other under this Agreement (on the basis that
                  each party's claim against the other in respect of the
                  transfer to it of Equivalent Securities or Equivalent Margin
                  Securities under this Agreement equals the Default Market
                  Value therefor) and the sums due from one party shall be set
                  off against the sums due from the other and only the balance
                  of the account shall be payable (by the party having the claim
                  valued at the lower amount pursuant to the foregoing) and such
                  balance shall be due and payable on the next following
                  Business Day. For the purposes of this calculation, all sums
                  not denominated in the Base Currency shall be converted into
                  the Base Currency on the relevant date at the Spot Rate
                  prevailing at the relevant time.

(d)      For the purposes of this Agreement, the "Default Market Value" of any
         Equivalent Securities or Equivalent Margin Securities shall be
         determined in accordance with

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         sub-paragraph (e) below, and for this purpose -

         (i)      the "Appropriate Market" means, in relation to Securities of
                  any description, the market which is the most appropriate
                  market for Securities of that description, as determined by
                  the non-Defaulting Party;

         (ii)     the "Default Valuation Time" means, in relation to an Event of
                  Default, the close of business in the Appropriate Market on
                  the fifth dealing day after the day on which that Event of
                  Default occurs or, where that Event of Default is the
                  occurrence of an Act of Insolvency in respect of which under
                  paragraph 10(a) no notice is required from the non-Defaulting
                  Party in order for such event to constitute an Event of
                  Default, the close of business on the fifth dealing day after
                  the day on which the non-Defaulting Party first became aware
                  of the occurrence of such Event of Default;

         (iii)    "Deliverable Securities" means Equivalent Securities or
                  Equivalent Margin Securities to be delivered by the Defaulting
                  Party;

         (iv)     "Net Value" means at any time, in relation to any Deliverable
                  Securities or Receivable Securities, the amount which, in the
                  reasonable opinion of the non-Defaulting Party, represents
                  their fair market value, having regard to such pricing sources
                  and methods (which may include, without limitation, available
                  prices for Securities with similar maturities, terms and
                  credit characteristics as the relevant Equivalent Securities
                  or Equivalent Margin Securities) as the non-Defaulting Party
                  considers appropriate, less, in the case of Receivable
                  Securities, or plus, in the case of Deliverable Securities,
                  all Transaction Costs which would be incurred in connection
                  with the purchase or sale of such Securities;

         (v)      "Receivable Securities" means Equivalent Securities or
                  Equivalent Margin Securities to be delivered to the Defaulting
                  Party; and

         (vi)     "Transaction Costs" in relation to any transaction
                  contemplated in paragraph 10(d) or (e) means the reasonable
                  costs, commission, fees and expenses (including any mark-up or
                  mark-down) that would be incurred in connection with the
                  purchase of Deliverable Securities or sale of Receivable
                  Securities, calculated on the assumption that the aggregate
                  thereof is the least that could reasonably be expected to be
                  paid in order to carry out the transaction;

(e)      (i)      If between the occurrence of the relevant Event of Default and
                  the Default Valuation Time the non-Defaulting Party gives to
                  the Defaulting Party a written notice (a "Default Valuation
                  Notice") which --

                  (A)      states that, since the occurrence of the relevant
                           Event of Default, the non-Defaulting Party has sold,
                           in the case of Receivable Securities, or purchased,
                           in the case of Deliverable Securities, Securities
                           which form

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         part of the same issue and are of an identical type and description as
         those Equivalent Securities or Equivalent Margin Securities, and that
         the non-Defaulting Party elects to treat as the Default Market Value -

         (aa)     in the case of Receivable Securities, the net proceeds of such
                  sale after deducting all reasonable costs, fees and expenses
                  incurred in connection therewith (provided that, where the
                  Securities sold are not identical in amount to the Equivalent
                  Securities or Equivalent Margin Securities, the non-Defaulting
                  Party may either (x) elect to treat such net proceeds of sale
                  divided by the amount of Securities sold and multiplied by the
                  amount of the Equivalent Securities or Equivalent Margin
                  Securities as the Default Market Value or (y) elect to treat
                  such net proceeds of sale of the Equivalent Securities or
                  Equivalent Margin Securities actually sold as the Default
                  Market Value of that proportion of the Equivalent Securities
                  or Equivalent Margin Securities, and, in the case of (y), the
                  Default Market Value of the balance of the Equivalent
                  Securities or Equivalent Margin Securities shall be determined
                  separately in accordance with the provisions of this paragraph
                  10(e) and accordingly may be the subject of a separate notice
                  (or notices) under this paragraph 10(e)(i)); or

         (bb)     in the case of Deliverable Securities, the aggregate cost of
                  such purchase, including all reasonable costs, fees and
                  expenses incurred in connection therewith (provided that,
                  where the Securities purchased are not identical in amount to
                  the Equivalent Securities or Equivalent Margin Securities, the
                  non-Defaulting Party may either (x) elect to treat such
                  aggregate cost divided by the amount of Securities sold and
                  multiplied by the amount of the Equivalent Securities or
                  Equivalent Margin Securities as the Default Market Value or
                  (y) elect to treat the aggregate cost of purchasing the
                  Equivalent Securities or Equivalent Margin Securities actually
                  purchased as the Default Market Value of that proportion of
                  the Equivalent Securities or Equivalent Margin Securities,
                  and, in the case of (y), the Default Market Value of the
                  balance of the Equivalent Securities or Equivalent Margin
                  Securities shall be determined separately in accordance with
                  the provisions of this paragraph 10(e) and accordingly may be
                  the subject of a separate notice (or notices) under this
                  paragraph 10(e)(i));

(B)      states that the non-Defaulting Party has received, in the case of
         Deliverable Securities, offer quotations or, in the case of Receivable
<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         Securities, bid quotations in respect of Securities of the relevant
         description from two or more market makers or regular dealers in the
         Appropriate Market in a commercially reasonable size (as determined by
         the non-Defaulting Party) and specifies -

         (aa)     the price or prices quoted by each of them for, in the case of
                  Deliverable Securities, the sale by the relevant market marker
                  or dealer of such Securities or, in the case of Receivable
                  Securities, the purchase by the relevant market maker or
                  dealer of such Securities;

         (bb)     the Transaction Costs which would be incurred in connection
                  with such a transaction; and

         (cc)     that the non-Defaulting Party elects to treat the price so
                  quoted (or, where more than one price is so quoted, the
                  arithmetic mean of the prices so quoted), after deducting, in
                  the case of Receivable Securities, or adding, in the case of
                  Deliverable Securities, such Transaction Costs, as the Default
                  Market Value of the relevant Equivalent Securities or
                  Equivalent Margin Securities: or

 (C)     states--

         (aa)     that either (x) acting in good faith, the non-Defaulting Party
                  has endeavoured but been unable to sell or purchase Securities
                  in accordance with sub-paragraph (i)(A) above or to obtain
                  quotations in accordance with sub-paragraph (i)(B) above (or
                  both) or (y) the non-Defaulting Party has determined that it
                  would not be commercially reasonable to obtain such
                  quotations, or that it would not be commercially reasonable to
                  use any quotations which it has obtained under sub-paragraph
                  (i)(B) above; and

         (bb)     that the non-Defaulting Party has determined the Net Value of
                  the relevant Equivalent Securities or Equivalent Margin
                  Securities (which shall be specified) and that the non-
                  Defaulting Party elects to treat such Net Value as the Default
                  Market Value of the relevant Equivalent Securities or
                  Equivalent Margin Securities,

        then the Default Market Value of the relevant Equivalent Securities or
        Equivalent Margin Securities shall be an amount equal to the Default
        Market Value specified in accordance with (A), (B)(cc) or, as the case
        may be, (C)(bb) above.
<PAGE>

          THE
         BOND                                                        [LOGO]
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  ASSOCIATION                                                        I S M A

         (ii)     If by the Default Valuation Time the non-Defaulting Party has
                  not given a Default Valuation Notice, the Default Market Value
                  of the relevant Equivalent Securities or Equivalent Margin
                  Securities shall be an amount equal to their Net Value at the
                  Default Valuation Time; provided that, if at the Default
                  Valuation Time the non-Defaulting Party reasonably determines
                  that, owing to circumstances affecting the market in the
                  Equivalent Securities or Equivalent Margin Securities in
                  question, it is not possible for the non-Defaulting Party to
                  determine a Net Value of such Equivalent Securities or
                  Equivalent Margin Securities which is commercially reasonable,
                  the Default Market Value of such Equivalent Securities or
                  Equivalent Margin Securities shall be an amount equal to their
                  Net Value as determined by the non-Defaulting Party as soon as
                  reasonably practicable after the Default Valuation Time.

(f)      The Defaulting Party shall be liable to the non-Defaulting Party for
         the amount of all reasonable legal and other professional expenses
         incurred by the non-Defaulting Party in connection with or as a
         consequence of an Event of Default, together with interest thereon at
         LIBOR or, in the case of an expense attributable to a particular
         Transaction, the Pricing Rate for the relevant Transaction if that
         Pricing Rate is greater than LIBOR.

(g)      If Seller fails to deliver Purchased Securities to Buyer on the
         applicable Purchase Date Buyer may -

         (i)      if it has paid the Purchase Price to Seller, require Seller
                  immediately to repay the sum so paid;

         (ii)     if Buyer has a Transaction Exposure to Seller in respect of
                  the relevant Transaction, require Seller from time to time to
                  pay Cash Margin at least equal to such Transaction Exposure;

         (iii)    at any time while such failure continues, terminate the
                  Transaction by giving written notice to Seller. On such
                  termination the obligations of Seller and Buyer with respect
                  to delivery of Purchased Securities and Equivalent Securities
                  shall terminate and Seller shall pay to Buyer an amount equal
                  to the excess of the Repurchase Price at the date of
                  Termination over the Purchase Price.

(h)      If Buyer fails to deliver Equivalent Securities to Seller on the
         applicable Repurchase Date Seller may -

         (i)      if it has paid the Repurchase Price to Buyer, require Buyer
                  immediately to repay the sum so paid;

         (ii)     if Seller has a Transaction Exposure to Buyer in respect of
                  the relevant Transaction, require Buyer from time to time to
                  pay Cash Margin at least equal to such Transaction Exposure;
<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         (iii)    at any time while such failure continues, by written notice to
                  Buyer declare that that Transaction (but only that
                  Transaction) shall be terminated immediately in accordance
                  with sub-paragraph (c) above (disregarding for this purpose
                  references in that sub-paragraph to transfer of Cash Margin
                  and delivery of Equivalent Margin Securities and as if
                  references to the Repurchase Date were to the date on which
                  notice was given under this subparagraph).

(i)      The provisions of this Agreement constitute a complete statement of the
         remedies available to each party in respect of any Event of Default.

(j)      Subject to paragraph 10(k), neither party may claim any sum by way of
         consequential loss or damage in the event of a failure by the other
         party to perform any of its obligations under this Agreement.

(k)      (i)      Subject to sub-paragraph (ii) below, if as a result of a
                  Transaction terminating before its agreed Repurchase Date
                  under paragraphs 10(b), 10(g)(iii) or 10(h)(iii), the
                  non-Defaulting Party, in the case of paragraph 10(b), Buyer,
                  in the case of paragraph 10(g)(iii), or Seller, in the case of
                  paragraph 10(h)(iii), (in each case the "first party") incurs
                  any loss or expense in entering into replacement transactions,
                  the other party shall be required to pay to the first party
                  the amount determined by the first party in good faith to be
                  equal to the loss or expense incurred in connection with such
                  replacement transactions (including all fees, costs and other
                  expenses) less the amount of any profit or gain made by that
                  party in connection with such replacement transactions;
                  provided that if that calculation results in a negative
                  number, an amount equal to that number shall be payable by the
                  first party to the other party.

         (ii)     If the first party reasonably decides, instead of entering
                  into such replacement transactions, to replace or unwind any
                  hedging transactions which the first party entered into in
                  connection with the Transaction so terminating, or to enter
                  into any replacement hedging transactions, the other party
                  shall be required to pay to the first party the amount
                  determined by the first party in good faith to be equal to the
                  loss or expense incurred in connection with entering into such
                  replacement or unwinding (including all fees, costs and other
                  expenses) less the amount of any profit or gain made by that
                  party in connection with such replacement or unwinding;
                  provided that if that calculation results in a negative
                  number, an amount equal to that number shall be payable by the
                  first party to the other party.

(l)      Each party shall immediately notify the other if an Event of Default,
         or an event which, upon the serving of a Default Notice, would be an
         Event of Default, occurs in relation to it.

<PAGE>

          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

11.      TAX EVENT

(a)      This paragraph shall apply if either party notifies the other that -

         (i)      any action taken by a taxing authority or brought in a court
                  of competent jurisdiction (regardless of whether such action
                  is taken or brought with respect to a party to this
                  Agreement); or

         (ii)     a change in the fiscal or regulatory regime (including, but
                  not limited to, a change in law or in the general
                  interpretation of law but excluding any change in any rate of
                  tax),

         has or will, in the notifying party's reasonable opinion, have a
         material adverse effect on that party in the context of a Transaction.

(b)      If so requested by the other party, the notifying party will furnish
         the other with an opinion of a suitably qualified adviser that an event
         referred to in sub-paragraph (a)(i) or (ii) above has occurred and
         affects the notifying party.

(c)      Where this paragraph applies, the party giving the notice referred to
         in sub-paragraph (a) may, subject to sub-paragraph (d) below, terminate
         the Transaction with effect from a date specified in the notice, not
         being earlier (unless so agreed by the other party) than 30 days after
         the date of the notice, by nominating that date as the Repurchase Date.

(d)      If the party receiving the notice referred to in sub-paragraph (a) so
         elects, it may override that notice by giving a counter-notice to the
         other party. If a counter-notice is given, the party which gives the
         counter-notice will be deemed to have agreed to indemnify the other
         party against the adverse effect referred to in sub-paragraph (a) so
         far as relates to the relevant Transaction and the original Repurchase
         Date will continue to apply.

(e)      Where a Transaction is terminated as described in this paragraph, the
         party which has given the notice to terminate shall indemnify the other
         party against any reasonable legal and other professional expenses
         incurred by the other party by reason of the termination, but the other
         party may not claim any sum by way of consequential loss or damage in
         respect of a termination in accordance with this paragraph.

(t)      This paragraph is without prejudice to paragraph 6(b) (obligation to
         pay additional amounts if withholding or deduction required); but an
         obligation to pay such additional amounts may, where appropriate, be a
         circumstance which causes this paragraph to apply.

12.      INTEREST

         To the extent permitted by applicable law, ii any sum of money payable
         hereunder or under any Transaction is not paid when due, interest shall
         accrue on the unpaid sum

<PAGE>

          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         as a separate debt at the greater of the Pricing Rate for the
         Transaction to which such sum relates (where such sum is referable to a
         Transaction) and LIBOR on a 360 day basis or 365 day basis in
         accordance with the applicable ISMA convention, for the actual number
         of days during the period from and including the date on which payment
         was due to, but excluding, the date of payment.

13.      Single Agreement

         Each party acknowledges that, and has entered into this Agreement and
         will enter into each Transaction hereunder in consideration of and in
         reliance upon the fact that all Transactions hereunder constitute a
         single business and contractual relationship and are made in
         consideration of each other. Accordingly, each party agrees (i) to
         perform all of its obligations in respect of each Transaction
         hereunder, and that a default in the performance of any such
         obligations shall constitute a default by it in respect of all
         Transactions hereunder, and (ii) that payments, deliveries and other
         transfers made by either of them in respect of any Transaction shall be
         deemed to have been made in consideration of payments, deliveries and
         other transfers in respect of any other Transactions hereunder.

14.      NOTICES AND OTHER COMMUNICATIONS

(a)      Any notice or other communication to be given under this Agreement -

         (i)      shall be in the English language, and except where expressly
                  otherwise provided in this Agreement, shall be in writing;

         (ii)     may be given in any manner described in sub-paragraphs (b) and
                  (c) below;

         (iii)    shall be sent to the party to whom it is to be given at the
                  address or number, or in accordance with the electronic
                  messaging details, set out in Annex I hereto.

(b)      Subject to sub-paragraph (c) below, any such notice or other
         communication shall be effective -

         (i)      if in writing and delivered in person or by courier, at the
                  time when it is delivered;

         (ii)     if sent by telex, at the time when the recipient's answerback
                  is received;

         (iii)    if sent by facsimile transmission, at the time when the
                  transmission is received by a responsible employee of the
                  recipient in legible form (it being agreed that the burden of
                  proving receipt will be on the sender and will not be met by a
                  transmission report generated by the sender's facsimile
                  machine);

         (iv)     if sent by certified or registered mail (airmail, if overseas)
                  or the equivalent (return receipt requested), at the time when
                  that mail is delivered or its delivery is attempted;

<PAGE>

          THE
         BOND                                                         [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

         (v)      if sent by electronic messaging system, at the time that
                  electronic message is received;

         except that any notice or communication which is received, or delivery
         of which is attempted, after close of business on the date of receipt
         or attempted delivery or on a day which is not a day on which
         commercial banks are open for business in the place where that notice
         or other communication is to be given shall be treated as given at the
         opening of business on the next following day which is such a day.

(c)      If -

         (i)      there occurs in relation to either party an event which, upon
                  the service of a Default Notice, would be an Event of Default;
                  and

         (ii)     the non-Defaulting Party, having made all practicable efforts
                  to do so, including having attempted to use at least two of
                  the methods specified in sub-paragraph (b)(ii), (iii) or (v),
                  has been unable to serve a Default Notice by one of the
                  methods specified in those sub-paragraphs (or such of those
                  methods as are normally used by the non-Defaulting Party when
                  communicating with the Defaulting Party),

         the non-Defaulting Party may sign a written notice (a "Special Default
         Notice") which -

                  (aa)     specifies the relevant event referred to in paragraph
                           10(a) which has occurred in relation to the
                           Defaulting Party;

                  (bb)     states that the non-Defaulting Party, having made all
                           practicable efforts to do so, including having
                           attempted to use at least two of the methods
                           specified in sub-paragraph (b)(ii), (iii) or (v), has
                           been unable to serve a Default Notice by one of the
                           methods specified in those sub-paragraphs (or such of
                           those methods as are normally used by the
                           non-Defaulting Party when communicating with the
                           Defaulting Party);

                  (cc)     specifies the date on which, and the time at which,
                           the Special Default Notice is signed by the
                           non-Defaulting Party; and

                  (dd)     states that the event specified in accordance with
                           sub-paragraph (aa) above shall be treated as an Event
                           of Default with effect from the date and time so
                           specified.

         On the signature of a Special Default Notice the relevant event shall
         be treated with effect from the date and time so specified as an Event
         of Default in relation to the Defaulting Party, and accordingly
         references in paragraph 10 to a Default Notice shall be treated as
         including a Special Default Notice. A Special Default Notice shall be
         given to the Defaulting Party as soon as practicable after it is
         signed.

<PAGE>

          THE
         BOND                                                        [LOGO]
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  ASSOCIATION                                                        I S M A

(d)      Either party may by notice to the other change the address, telex or
         facsimile number or electronic messaging system details at which
         notices or other communications are to be given to it.

15.      ENTIRE AGREEMENT; SEVERABILITY

         This Agreement shall supersede any existing agreements between the
         parties containing general terms and conditions for Transactions. Each
         provision and agreement herein shall be treated as separate from any
         other provision or agreement herein and shall be enforceable
         notwithstanding the unenforceability of any such other provision or
         agreement.

16.      NON-ASSIGNABILITY; TERMINATION

(a)      Subject to sub-paragraph (b) below, neither party may assign, charge or
         otherwise deal with (including without limitation any dealing with any
         interest in or the creation of any interest in) its rights or
         obligations under this Agreement or under any Transaction without the
         prior written consent of the other party. Subject to the foregoing,
         this Agreement and any Transactions shall be binding upon and shall
         inure to the benefit of the parties and their respective successors and
         assigns.

(b)      Sub-paragraph (a) above shall not preclude a party from assigning,
         charging or otherwise dealing with all or any part of its interest in
         any sum payable to it under paragraph 10(c) or (f) above.

(c)      Either party may terminate this Agreement by giving written notice to
         the other, except that this Agreement shall, notwithstanding such
         notice, remain applicable to any Transactions then outstanding.

(d)      All remedies hereunder shall survive Termination in respect of the
         relevant Transaction and termination of this Agreement.

(e)      The participation of any additional member State of the European Union
         in economic and monetary union after 1 January 1999 shall not have the
         effect of altering any term of the Agreement or any Transaction, nor
         give a party the right unilaterally to alter or terminate the Agreement
         or any Transaction.

17.      GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
         the laws of England. Buyer and Seller hereby irrevocably submit for all
         purposes of or in connection with this Agreement and each Transaction
         to the jurisdiction of the Courts of England.

         Party A hereby appoints the person identified in Annex I hereto as its
         agent to receive on its behalf service of process in such courts. If
         such agent ceases to be its agent,

<PAGE>

          THE
         BOND                                                        [LOGO]
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  ASSOCIATION                                                        I S M A

         Party A shall promptly appoint, and notify Party B of the identity of,
         a new agent in England.

         Party B hereby appoints the person identified in Annex I hereto as its
         agent to receive on its behalf service of process in such courts. If
         such agent ceases to be its agent, Party B shall promptly appoint, and
         notify Party A of the identity of, a new agent in England.

         Each party shall deliver to the other, within 30 days of the date of
         this Agreement in the case of the appointment of a person identified in
         Annex I or of the date of the appointment of the relevant agent in any
         other case, evidence of the acceptance by the agent appointed by it
         pursuant to this paragraph of such appointment.

         Nothing in this paragraph shall limit the right of any party to take
         proceedings in the courts of any other country of competent
         jurisdiction.

18.      NO WAIVERS, ETC.

         No express or implied waiver of any Event of Default by either party
         shall constitute a waiver of any other Event of Default and no exercise
         of any remedy hereunder by any party shall constitute a waiver of its
         right to exercise any other remedy hereunder. No modification or waiver
         of any provision of this Agreement and no consent by any party to a
         departure herefrom shall be effective unless and until such
         modification, waiver or consent shall be in writing and duly executed
         by both of the parties hereto. Without limitation on any of the
         foregoing, the failure to give a notice pursuant to paragraph 4(a)
         hereof will not constitute a waiver of any right to do so at a later
         date.

19.      WAIVER OF IMMUNITY

         Each party hereto hereby waives, to the fullest extent permitted by
         applicable law, all immunity (whether on the basis of sovereignty or
         otherwise) from jurisdiction, attachment (both before and after
         judgment) and execution to which it might otherwise be entitled in any
         action or proceeding in the Courts of England or of any other country
         or jurisdiction, relating in any way to this Agreement or any
         Transaction, and agrees that it will not raise, claim or cause to be
         pleaded any such immunity at or in respect of any such action or
         proceeding.

20.      RECORDING

         The parties agree that each may electronically record all telephone
         conversations between them.

21.      THIRD PARTY RIGHTS

         No person shall have any right to enforce any provision of this
         Agreement under the Contracts (Rights of Third Parties) Act 1999.

<PAGE>

          THE
         BOND                                                        [LOGO]
       MARKET
  ASSOCIATION                                                        I S M A

<TABLE>
<CAPTION>
Salomon Smith Barney Inc. as Agent for                       NC Capital Corporation
Salomon Brothers International Limited
<S>                                                         <C>

By:    /s/ Bruce Rose                                       By:    /s/ Patrick Flanagan
       --------------------------------------                      --------------------------------------
Title: Managing Director                                    Title: President
       --------------------------------------                      --------------------------------------
Date:  March 29, 2001                                       Date:  March 29, 2001
       --------------------------------------                      --------------------------------------

</TABLE>

<PAGE>

YOUR COUNTERPARTY IN ANY TRANSACTION ENTERED PURSUANT TO THIS MASTER AGREEMENT
IS SALOMON BROTHERS INTERNATIONAL LIMITED. SALOMON BROTHERS INTERNATIONAL
LIMITED IS NOT REGISTERED AS A BROKER-DEALER UNDER THE SECURITIES EXCHANGE ACT
OF 1934.

                                 ANNEX 1, PART I

                        Supplemental Terms or Conditions

1.   The following elections shall apply:

     (a)  Paragraph 1(d). Salomon Smith Barney Inc. shall act as agent for
          Salomon Brothers International Limited.

     (b)  Paragraph 2 (d). The Base Currency shall be: US Dollars.

     (c)  Paragraph 2 (1). Salomon Brothers International Limited's Designated
          Offices shall be: Victoria Plaza, 111 Buckingham Palace Road, London,
          SW1W OSB.

          NC Capital Corporation's Designated Offices shall be:

          18400 Von Karman, Suite 1000
          Irvine, California 92612

     (d)  Paragraph 6(j) terms shall apply.

     (e)  Paragraph 10(a)(ii) terms shall apply.

     (f)  Paragraph 14. For purposes of paragraph 14 of this Agreement --

          (i)  Address for notices and other communications for the Buyer

               Address: 390 Greenwich Street, 4th Floor, New York,
                        New York 10013
               Attention: Mortgage Finance
               Telephone: (212) 723-6375
               Facsimile:  (212) 723-8604
               Telex:
               Answerback:
               Other: matthew.r.bollo@ssmb.com

          (ii) Address for notices and other communications for the Seller --

               Address: 18400 Von Karman, Suite 1000, Irvine, California 92612
               Attention: Patrick Flanagan
               Telephone: (949) 225-7843

<PAGE>

               Facsimile: (949) 440-7033
               Telex:
               Answerback:
               Other: pflanaga@ncen.com

     (g)  All other elections shall be made by the Parties prior to a particular
          Transaction or pursuant to a separate agreement.

2.   The following Supplemental Terms and Conditions shall apply:

     (a)  Paragraph 4 is hereby deleted in its entirety.

     (b)  With effect from the date of execution of the Agreement, paragraphs 8
          (Substitution) and 10 (Events of Default) of the Agreement shall apply
          to all repurchase transactions and buy/sell back transactions into
          which the Parties have entered before that date and which are
          outstanding at that date in substitution for any corresponding
          provisions in any previous master agreement between the Parties
          governing such transactions.

     (c)  ADDITIONAL DEFINITIONS.

          (i)  Notwithstanding the definition in Paragraph 1(a) of the
               Agreement, "Securities" shall mean certain non-investment grade
               rated and unrated securities acceptable to the Buyer in its sole
               discretion and generated from the securitization of mortgage
               loans underwritten by Buyer.

          (ii) Notwithstanding the definition set forth in Paragraph 2(oo) of
               the Agreement, "REPURCHASE DATE" shall mean the calendar day of
               each month (or the next succeeding business day thereto) as
               determined by the Buyer and the Sellers on or prior to the
               initial purchase date.

         (iii) Notwithstanding the definition set forth in Paragraph 2(w) of
               the Agreement, "INCOME" shall mean, with respect to any Purchased
               Security, any principal thereof and all interest, dividends or
               other distributions thereon.

          (iv) "ADJUSTED LEVERAGE RATIO" shall mean on any date of
               determination, the ratio of (a) Total Liabilities to (b) Adjusted
               Tangible Net Worth.

          (v)  "ADJUSTED TANGIBLE NET WORTH": on any date of determination, the
               Tangible Net Worth of NCFC minus 25% of the amount by which the
               book value of Junior Securitization Interests included in
               calculating Tangible Net Worth exceeds Indebtedness of the type
               described in paragraph 2(s) of this Annex.

                                       2
<PAGE>

          (vi) "AFFILIATE" shall mean with respect to any Person, any other
               Person directly or indirectly controlling, controlled by, or
               under common control with, such Person, whether through the
               ownership of voting securities, by contract or otherwise.

         (vii) "DAILY LEVERAGE RATIO" shall mean as of any date of
               determination, the ratio of (a) Total Liabilities of NCFC and its
               Subsidiaries on such date to (b) Tangible Net Worth of NCFC and
               its Subsidiaries as of the last day of the most recently
               completed month.

        (viii) "GAAP" shall mean generally accepted accounting principles in
               the United States set forth in the opinions and pronouncements of
               the Accounting Principles Board of the American Institute of
               Certified Public Accountants and statements and pronouncements of
               the Financial Accounting Standards Board or in such other
               statements by such other entity as may be approved by a
               significant segment of the accounting profession, which are
               applicable to the circumstances as of the date of determination

          (ix) "GREENWICH"shall mean Greenwich Capital Financial Products, Inc.

          (x)  "GUARANTOR" shall mean New Century Mortgage Corporation.

          (xi) "GUARANTOR SECURITIZATION TRANSACTION" shall mean an issuance of
               Mortgage-backed Securities by either Borrower, or by SBRC, Paine
               Webber, or Greenwich or an Affiliate of any of them on behalf of
               either Borrower, through a trust or other entity created by
               either Borrower, SBRC, Paine Webber or Greenwich, which
               Mortgage-backed Securities are either secured (in whole or in
               part) by Mortgage Loans originated or acquired by such Borrower
               or evidence the entire beneficial ownership interest therein, and
               in connection with which one or more Junior Securitization
               Interests are issued to such Borrower or an Affiliate of such
               Borrower.

         (xii) "GUARANTY" shall mean that certain guaranty, dated March 29,
               2001, between Guarantor and Salomon Smith Barney Inc. as agent
               for Salomon Brothers International Limited.

        (xiii) "INITIAL PURCHASE DATE" shall mean the date of the Initial
               Purchase.

         (xiv) "INITIAL PURCHASE PRICE" shall mean the price paid in connection
               with the one time initial purchase of the securities.

          (xv) "JUNIOR SECURITIZATION INTERESTS" shall mean a Mortgage-backed
               Security created in a Guarantor Securitization Transaction that
               represents a subordinated right to receive principal or interest
               payments on the underlying Mortgage Loans (whether or not such
               subordination arises only under particular circumstances).

                                       3
<PAGE>

         (xvi) "LENDERS" shall have the meaning assigned to it in paragraph
               2(s) of this Annex.

        (xvii) "LEVERAGE RATIO" shall mean on any date of determination, the
               ratio of (a) Total Liabilities to (b) Tangible Net Worth.

       (xviii) "NCFC" shall mean New Century Financial Corporation, a
               Delaware corporation.

         (xix) "OBLIGATIONS" shall have the meaning assigned to it in paragraph
               2(s) of this Annex.

          (xx) "PAINE WEBBER" shall mean Paine Webber Real Estate Securities
               Inc.

         (xxi) "PRICING MARGIN", unless otherwise set forth in the related
               Confirmation, shall equal 1.65% per annum for all Purchased
               Securities.

        (xxii) Unless otherwise set forth in the related Confirmation,
               "PRICING RATE" shall mean one month LIBOR, plus the applicable
               Pricing Margin; provided that upon the occurrence of an Event of
               Default, the Pricing Rate shall equal the Pricing Rate as set
               forth herein (or in the related Confirmation) plus 2.00% per
               annum.

       (xxiii) "QUARTERLY AVERAGE LEVERAGE RATIO" shall mean for each
               three-month period ending on March 31, June 30, September 30 or
               December 31 of any year during the term of this Agreement, the
               ratio of (a) the average daily amount of Total Liabilities of
               NCFC and it Subsidiaries outstanding during such three-month
               period to (b) the average of the Tangible Net Worth of NCFC and
               its Subsidiaries at the end of each month during such three-month
               period.

        (xxiv) "REO SUB" shall mean New Century REO Corp., a California
               corporation.

         (xxv) "SALOMON REO AGREEMENT": shall mean a Master Loan and Security
               Agreement dated as of April 1, 2000 by and among the Guarantor,
               NC Capital Corporation and SBRC, as the same may be amended,
               supplemented, restated or otherwise modified in accordance with
               this Agreement and in effect from time to time.

                                       4
<PAGE>

        (xxvi) "SBRC" shall mean Salomon Brothers Realty Corp., a Delaware
               corporation.

       (xxvii) "SERVICER" shall mean Ocwen Financial Corporation or its
               successors or assigns.

       (xxviii)"TANGIBLE NET WORTH" shall mean Guarantor will at all times
               during each fiscal year maintain Tangible Net Worth of not less
               than (a) the greater of (i) $85,000,000 or (ii) eighty-five
               percent (85%) of the Tangible Net Worth at the end of its most
               recently completed fiscal year (or, in the case of the Tangible
               Net Worth at the end of any fiscal year, its prior fiscal year)
               plus (b) ninety percent (90%) of capital contributions made
               during such fiscal year plus (c) fifty percent (50%) of positive
               year-to-date net income. NCFC will at all times during each
               fiscal year maintain Tangible Net Worth of not less than (a) the
               greater of (i) $130,000,000 or (ii) eighty-five percent (85%) of
               the Tangible Net Worth at the end of its most recently completed
               fiscal year (or, in the case of Tangible Net Worth at the end of
               any fiscal year, its prior fiscal year) plus (b) ninety percent
               (90%) of capital contributions made during such fiscal year plus
               (c) fifty percent (50%) of positive year-to-date net income. The
               Seller will at all times during each fiscal year maintain
               Tangible Net Worth of not less than $1.00.

        (xxix) "TOTAL LIABILITIES" shall mean at any time of determination,
               the amount, on a consolidated basis, of the liabilities of the
               Guarantor or NCFC, as applicable, and its respective
               Subsidiaries, determined in accordance with GAAP, minus
               subordinated debt.

         (xxx) "UNDERLYING CREDIT AGREEMENT" shall have the meaning assigned to
               it in paragraph 2(s) of this Annex.

     (d)  EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" shall, in addition to
          the definition set forth in the Agreement, include the following
          events:

          (i)  Seller shall default under, or fail to perform as requested
               under, or shall otherwise breach the material terms of any
               instrument, agreement or contract relating to indebtedness
               (including repurchase agreements), and such default, failure or
               breach shall entitle any counterparty to declare such
               indebtedness to be due and payable prior to the maturity thereof
               and the aggregate amount of such potentially accelerated
               indebtedness shall equal at least $5,000,000 or such lesser
               amount included in the cross acceleration provisions of any other
               material instrument, agreement or contract relating to
               indebtedness (including repurchase agreements);

          (ii) Seller or Guarantor shall default under, or fail to perform as
               requested under, or shall otherwise breach the material terms of
               any instrument, agreement or

                                       5
<PAGE>

               contract relating to indebtedness (including repurchase
               agreements) between Seller or its affiliates, on the one hand,
               and Buyer or its affiliates on the other;

         (iii) in the good faith judgment of Buyer any material adverse change
               shall have occurred with respect to Seller, Guarantor or Seller
               and Seller's subsidiaries taken as a whole; or

          (iv) the GAAP net worth of Guarantor is less than $40,000,000.

     (e)  REMEDIES/SET-OFF. After the occurrence and during the continuation of
          an Event of Default, in addition to its rights pursuant to the
          Agreement, Buyer shall have the right to proceed against any of
          Seller's or the Guarantor's assets which may be in the possession of
          Buyer, any of Buyer's Affiliates or its designee, including the right
          to liquidate such assets and to set-off the proceeds against monies
          owed by Seller or Guarantor to Buyer pursuant to the Agreement. Buyer
          may set off cash, the proceeds of the liquidation of the Purchased
          Securities, any other collateral or its proceeds and all other sums or
          obligations owed by Buyer to Seller under the Agreement against all of
          Seller's or Guarantor's obligations to Buyer, whether under the
          Agreement, under a Transaction, or under any other agreement between
          the parties, or otherwise, whether or not such obligations are then
          due, without prejudice to Buyer's right to recover any deficiency.

     (f)  EXPENSES. Seller agrees to pay on demand (i) all out-of-pocket costs
          and expenses of Buyer in connection with the preparation, negotiation,
          execution, delivery, modification and amendment of this Agreement
          (including, without limitation, the fees and expenses of counsel for
          Buyer with respect thereto), (ii) Buyer's actual and reasonable due
          diligence expenses (not to exceed $10,000 per quarter), (iii) Buyer's
          custodial fees and expense, and (iv) all costs and expenses of Buyer
          in connection with the enforcement of this Agreement, whether in any
          action, suit or litigation, any bankruptcy, insolvency or other
          similar proceeding affecting creditors' rights generally (including,
          without limitation, the fees and expenses of counsel for Buyer)
          whether or not the transactions contemplated hereby are consummated.

     (g)  COMMITMENT FEE. The Seller agrees to pay to the Buyer, a commitment
          fee equal to 2% of the Initial Purchase Price (the "COMMITMENT FEE").
          The Commitment Fee shall be earned and owing on the Initial Purchase
          Date and shall be payable in three equal installments due on (i) the
          Initial Purchase Date, (ii) the 30 day anniversary of the initial
          Payment Date (or the next succeeding business day thereto if such date
          is not a business day), and (iii) the 60 day anniversary of the
          initial Payment Date (or the next succeeding business day thereto if
          such date is not a business day). The Commitment Fee shall be paid in
          dollars, in immediately available funds, in accordance with the
          Buyer's instructions. At the option of the Buyer, any installment due
          may be netted out of any Purchase Price to be paid to the Seller.

                                       6
<PAGE>

     (h)  INTENT/SECURITY INTEREST. Seller and Buyer intend that the
          Transactions hereunder be sales to Buyer of the Purchased Securities
          and not loans from Buyer to Seller secured by the Purchased
          Securities. However, in order to preserve Buyer's rights under the
          Agreement in the event that a court or other forum recharacterizes the
          Transactions hereunder as other than sales, and as security for
          Seller's performance of all of its obligations hereunder, Seller
          hereby grants Buyer a fully perfected first priority security interest
          in the Purchased Securities, the records, and all related property,
          insurance, Income, accounts (including any interest of Seller in
          escrow accounts) and any other contract rights, payments, rights to
          payment (including payments of interest or finance charges) general
          intangibles and other assets relating to the Purchased Securities
          (including, without limitation, any other accounts) or any interest in
          the Purchased Securities and any proceeds and distributions with
          respect to any of the foregoing and any other property, rights, titles
          or interests as are specified on a Transaction Notice.

     (i)  COVENANTS. In addition to all other obligations of the Seller and
          Guarantor pursuant to the Agreement, the Seller and Guarantor hereby
          covenants with the Buyer as follows:

          (i)  The Seller and Guarantor will cause the Servicer to provide
               monthly performance reporting to the Buyer, in form acceptable to
               the Buyer.

          (ii) Seller will provide monthly compliance certificates to the Buyer
               substantially in the form currently provided to U.S. Bank
               National Association under the credit agreement between the
               Guarantor, U.S. Bank National Association and the lenders named
               therein.

         (iii) If an Event of Default has occurred and is occurring, the Seller
               and Guarantor shall not pay any dividends or distributions with
               respect to any capital stock or other equity interests in Seller,
               whether now or hereafter outstanding, or make any other
               distribution in respect thereof, either directly or indirectly,
               whether in cash or property or in obligations of Seller.

          (iv) Without the prior written consent of the Buyer, there shall not
               occur any change of executive management of the Seller or the
               Guarantor.

          (v)  FINANCIAL COVENANTS

                    (A)  TANGIBLE NET WORTH. Guarantor will at all times during
                         each fiscal year maintain Tangible Net Worth of not
                         less than (a) the greater of (i) $85,000,000 or (ii)
                         eighty-five percent (85%) of the Tangible Net Worth at
                         the end of its most recently completed fiscal year (or,
                         in the case of the Tangible Net Worth at the end of any
                         fiscal year, its prior fiscal year) plus (b) ninety
                         percent (90%) of capital contributions made during such
                         fiscal year plus (c) fifty percent (50%) of positive

                                       7
<PAGE>

                         year-to-date net income. NCFC will at all times during
                         each fiscal year maintain Tangible Net Worth of not
                         less than (a) the greater of (i) $130,000,000 or (ii)
                         eighty-five percent (85%) of the Tangible Net Worth at
                         the end of its most recently completed fiscal year
                         (or, in the case of Tangible Net Worth at the end of
                         any fiscal year, its prior fiscal year) plus (b)
                         ninety percent (90%) of capital contributions made
                         during such fiscal year plus (c) fifty percent (50%)
                         of positive year-to-date net income. The Seller will
                         at all times during each fiscal year maintain Tangible
                         Net Worth of not less than $1.00.

                    (B)  MINIMUM LIQUIDITY. The Guarantor will not permit the
                         amount of cash held by the Guarantor at any time to be
                         less than $10,000,000.

                    (C)  LEVERAGE RATIO. The Guarantor will not permit the
                         Leverage Ratio of the Guarantor to be greater than 8.0
                         to 1.0 as of the last day of each fiscal quarter of the
                         Seller. NCFC will not permit (i) the Quarterly Average
                         Leverage Ratio for any period of measurement to be
                         greater than 10.0 to 1.0, (ii) the Daily Leverage Ratio
                         on any date to be greater than 15.0 to 1.0, or (iii)
                         the Adjusted Leverage Ratio as of the last day of each
                         fiscal quarter to be greater than 12.0 to 1.0.

     (j)  ROLLOVER TRANSACTIONS. Provided that all conditions in the Agreement
          have been satisfied, including the requirements set forth in this
          Paragraph 2(j), each Purchased Security that is repurchased by Seller
          on the applicable Repurchase Date shall automatically become subject
          to a new Transaction and the Repurchase Date for such new Transaction
          shall be the immediately subsequent Repurchase Date, provided that if
          the Repurchase Date so determined is later than the Termination Date,
          the Repurchase Date for such Transaction shall automatically reset to
          the Termination Date, and the provisions of this sentence as it might
          relate to a new Transaction shall expire on such date; PROVIDED, THAT,
          the Repurchase Price paid by the Seller on each Repurchase Date, shall
          be sufficient so that the purchase price of the new Transaction
          entered into on such Repurchase Date shall equal an amount which is at
          least $2,000,000 less than the Purchase Price from the immediately
          preceding Purchase Date; PROVIDED FURTHER, THAT, the Repurchase Price
          paid by the Seller on each Repurchase Date occurring in every third
          month following the initial Purchase Date, shall be sufficient so that
          the Purchase Price of the new Transaction entered into on such
          Repurchase Date shall equal an amount which is at least $9,000,000
          less than the Purchase Price from the Purchase Date occurring three
          months prior. In the event that the Seller repurchases the
          Certificates prior to any Repurchase Date, the Seller shall not be
          required to pay any breakage fees with respect to any such early
          repurchase.

                                       8
<PAGE>

     (k)  CONDITIONS PRECEDENT. (A) The following conditions shall apply to the
          initial purchase:

          The Seller shall cause each of following conditions to occur:

          (i)  the execution of the Guaranty by the Guarantor.

          (ii) U.S. Bank National Association shall have extended the maturity
               of its subordinated debt of New Century Financial Corporation to
               at least December 31, 2003.

         (iii) Guarantor shall have closed the sale of its mortgage servicing
               rights to Ocwen Financial Corporation.

          (iv) The Buyer shall have received an opinion of counsel in form and
               substance satisfactory to Buyer and its counsel.

          (v)  The Buyer shall have received all fees and expenses payable to
               buyer (including the first installment of the Commitment Fee).

          (vi) The representations and warranties contained in the Agreement
               shall be true and correct and all covenants shall be complied
               with.

          (B)  Prior to entering into each Transaction (including the Initial
               Purchase) pursuant to the Agreement, the following conditions
               shall apply:

          (i)  No default or Event of Default shall have occurred or be
               continuing.

          (ii) All representations and warranties shall be true and correct and
               all covenants shall be complied with.

         (iii) Seller shall:

               (A)  provide all documents necessary (including but not limited
                    to, bond powers, transferor certificates and opinions of
                    counsel) to register the Purchased Securities in the name of
                    the Buyer; and

               (B)  deliver an instruction letter to the related trustees
                    instructing that all payments be remitted to Buyer with
                    respect to the Purchased Securities.

                                       9
<PAGE>

(l)  INCOME PAYMENTS. Notwithstanding the provisions set forth in Paragraph 5(i)
     of the Agreement, any income received by the Buyer shall be applied as
     follows:

     (i)  first to reduce the amount of any unpaid expenses owed the Buyer;

     (ii) second to reduce the amount of any accrued and unpaid Price
          Differential; and

    (iii) third to reduce the remaining amount to be transferred to the Buyer
          by the Seller upon termination of such transaction.

     Buyer and Seller hereby acknowledge and agree that all Income shall be
     property of the Buyer and in the event that any Income is received by the
     Seller (i) the Seller shall hold such Income separate and apart from the
     assets of the Seller, in trust for the Buyer, and (ii) the Seller shall
     immediately remit such Income to the Buyer.

(m)  TERMINATION DATE. Notwithstanding the provisions set forth in Paragraph
     16(c) of the Agreement, the Agreement shall terminate on the earlier of (i)
     December 31, 2002, or (ii) at the non-defaulting party's option upon the
     occurrence of an Event of Default caused by the other party hereto.

(n)  Each party to this agreement (such party, "Party X") agrees that, upon the
     insolvency of Party X or any of its affiliates or the default of Party X or
     any of its affiliates under any transaction with the other party hereto or
     any of such other party's affiliates (such other party or any of its
     affiliates, a "Non-Defaulting Party"), each Non-Defaulting Party may,
     without prior notice to Party X: (a) liquidate any transaction between
     Party X and any Non-Defaulting Party (which liquidation may include the
     conversion of amounts denominated in multiple currencies into a single
     currency if deemed necessary or desirable by the Non-Defaulting Party), (b)
     reduce any amounts due and owing to Party X under any transaction between
     Party X and any Non-Defaulting Party by setting off against such amounts
     due and owing to a Non-Defaulting Party by Party X, and (c) treat all
     security for, and all amounts due and owing to Party X under any
     transaction between Party X and any Non-Defaulting Party as security for
     all transactions between Party X and any Non-Defaulting Party; provided,
     however, that the exercise of the remedies described in clauses (a), (b)
     and (c) above (or in any other similar provision in any agreement between
     the parties) shall be deemed to occur immediately subsequent to, but
     independent of, the exercise of any netting, liquidation, set-off or other
     similar provision contained in any master agreement between the parties;
     provided further that each provision and agreement hereof shall be treated
     as independent from any other provision or agreement herein and shall be
     enforceable notwithstanding the unenforceability of any such other
     provision or agreement.

                                       10
<PAGE>

     For purposes of the foregoing, the term "affiliate" shall not include any
     entity that controls or is under common control with Salomon Smith Barney
     Holdings Inc., but in any event such term shall include Salomon Smith
     Barney Holdings Inc. and any entity controlled by it.

     Clauses (a), (b) and (c) of this paragraph 2(n) shall be deemed not to
     include any references to the affiliates of the Non-Defaulting Party and
     Party X to the extent that their inclusion would prejudice the
     enforceability of this paragraph 2(n).

(o)  In the event that the Parties enter into a hold in custody repo Transaction
     hereunder in which Salomon Brothers International Limited acts as the
     Seller, segregation of the Securities the subject of such repo Transaction
     shall take place by movement of such Securities from Salomon Brothers
     International Limited's firm account within the relevant settlement system
     to its customer account within such relevant settlement system. The Buyer
     hereby consents to such segregation arrangements.

(p)  Paragraph 8 of the Agreement shall be amended by adding at the end of the
     paragraph the following paragraphs (e), (f) and (g):

     (e)  In the case of any transaction for which the Repurchase Date is not
          the Business Day immediately following the Purchase Date and with
          respect to which Seller does not have any existing right to vary the
          Transaction, Seller shall have the right (subject to the proviso to
          this sub-paragraph) by notice to Buyer (such notice to be given at or
          prior to 12 pm (London time) on that Business Day) to vary that
          Transaction in accordance with sub-paragraphs (a) and (b) above,
          provided however that Buyer may elect by close of business on the
          Business Day notice is received (or by close of business on the next
          Business Day if notice is received after 12 pm (London time) on that
          day) not to vary that Transaction. If Buyer elects not to vary the
          Transaction, Seller shall have the right by notice to Buyer to
          terminate the Transaction on the Business Day specified in that
          notice, such Business Day (unless the parties otherwise agree) not to
          be later than two Business Days after the date of the notice.

     (f)  If Seller exercises its right to vary the Transaction or to terminate
          the Transaction under sub-paragraph (e) above, notwithstanding
          paragraph 10(h), Seller shall be required to pay to Buyer by close of
          business on the Business Day of such variation or termination an
          amount equal to:

          (i)  Buyer's actual cost (including all fees, expenses and
               commissions) of (aa) entering into replacement transactions; (bb)
               entering into or terminating hedge transactions; and (cc)
               terminating or varying transactions with third parties in
               connection with or as a result of such variation or termination,
               and

          (ii) to the extent that Buyer party does not enter into replacement
               transactions, the loss incurred by Buyer directly arising or
               resulting from such variation or termination,

                                       11
<PAGE>

               in each case as determined and calculated in good faith by Buyer.

     (g)  Where one party (the "Requesting Party") has requested the other party
          to transfer Equivalent Margin Securities to it in exchange for the
          transfer to the other party of new Margin Securities in accordance
          with paragraph 8(d) but the other party does not agree to the request
          if the Requesting Party so elects by written notice specifying the
          Equivalent Margin. Securities to be transferred and the Business Day
          on which those Equivalent Margin Securities are to be transferred
          (such Business Day (unless the parties otherwise agree) not to be
          later than two Business Days after the date of the notice) the other
          party shall, unless otherwise agreed, transfer those Equivalent Margin
          Securities to the Requesting Party in exchange for the transfer to the
          other party of Cash Margin of an amount equal to the Market Value of
          the Equivalent Margin Securities so transferred.

(q)  If assets of an employee benefit plan subject to any provision of the
     Employee Retirement Income Security Act of 1974 ("ERISA") are intended to
     be used by either party hereto (the "Plan Party") in a Transaction, the
     Plan Party shall so notify the other party prior to the Transaction. The
     Plan Party shall represent in writing to the other party that the
     transaction does not constitute a prohibited transaction under ERISA or is
     otherwise exempt therefrom, and the other party may proceed in reliance
     thereon but shall not be required to so proceed.

(r)  Seller shall maintain Hedging Amounts reasonably acceptable to the Buyer
     with respect to the Securities and shall pledge such Hedge Amounts to the
     buyer on the related Purchase Date.

(s)  INDEBTEDNESS. The Guarantor and NCFC will not, and will not permit any of
     their Subsidiaries to, directly or indirectly, create, incur, assume,
     guarantee, or otherwise become or remain directly or indirectly liable with
     respect to, any Indebtedness, except:

     (i)  any Obligations pursuant to the Fourth Amended and Restated Credit
          Agreement, dated as of May 26, 1999, among the Guarantor, the lenders
          from time to time party thereto(the "Lenders"), and U.S. Bank National
          Association, as agent for the Lenders (the "Agent"); as amended by the
          First Amendment to the Fourth Amended and Restated Credit Agreement,
          dated as of August 31, 1999, among the Guarantor, the Lenders, and the
          Agent; as amended by the Second Amendment to the Fourth Amended and
          Restated Credit Agreement, dated as of October 14, 1999, among the
          Guarantor, the Lenders, and the Agent; as amended by the Third
          Amendment to the Fourth Amended and Restated Credit Agreement, dated
          as of May 24, 2000, between the Guarantor, the Lenders, and the Agent;
          and as further amended by the Fourth Amendment to the Fourth Amended
          and Restated Credit Agreement, dated as of June 29, 2000, among the
          Guarantor, NC Capital Corporation, the Lenders, and the
          Agent(collectively, the "Underlying Credit Agreement").

                                       12
<PAGE>

     (ii) current liabilities not more than 90 days overdue, unless contested in
          good faith by appropriate proceedings and any reserves required by
          GAAP have been established, incurred by NCFC, the Guarantor or New
          Century Capital Corporation in the ordinary course of business
          otherwise than for money borrowed;

    (iii) Indebtedness incurred to finance the purchase of equipment and
          secured solely by Liens on such equipment, in an aggregate amount not
          to exceed $10,000,000;

     (iv) Indebtedness incurred to finance Junior Securitization Interests which
          Indebtedness is secured only by such Junior Securitization Interests,
          provided, such Indebtedness does not exceed 65% of the value of such
          Junior Securitization Interests determined in accordance with GAAP;

     (v)  intercompany Indebtedness of NCFC to the Guarantor or New Century
          Capital Corporation in an aggregate amount not to exceed $1,000,000;

     (vi) intercompany Indebtedness of the Guarantor or New Century Capital
          Corporation to NCFC incurred in the ordinary course of business;

    (vii) obligations under gestation repurchase agreements or similar
          arrangements of the type described in paragraph 2(t)(vi) of this
          Annex;

   (viii) obligations in respect of letters of credit issued by USBNA for the
          account of the Guarantor or NCFC with an aggregate face amount not to
          exceed $1,250,000;

     (ix) Indebtedness incurred by the Guarantor in connection with the Salomon
          REO Agreement in an aggregate amount not to exceed $3,000,000; and

     (x)  intercompany Indebtedness between the Guarantor and the Seller
          incurred in the ordinary course of business.

(t)  LIENS. The Guarantor and NCFC will not, and will not permit any of their
     Subsidiaries to, directly or indirectly, create, incur, assume or permit to
     exist any Lien with respect to any property now owned or hereafter acquired
     by NCFC, the Guarantor or the Seller, or any income or profits therefrom,
     except:

          (i)  the security interests granted to the Agent for the benefit of
               the Lenders pursuant to the Underlying Credit Agreement;

          (ii) Liens in connection with deposits or pledges to secure payment of
               workers' compensation, unemployment insurance, old age pensions
               or other

                                       13
<PAGE>

               social security obligations, in the ordinary course of business
               of NCFC or the Guarantor;

         (iii) Liens for taxes, fees, assessments and governmental charges not
               delinquent or which are being contested in good faith by
               appropriate proceedings and for which appropriate reserves have
               been established in accordance with GAAP;

          (iv) encumbrances consisting of zoning regulations, easements, rights
               of way, survey exceptions and other similar restrictions on the
               use of real property and minor irregularities in title thereto
               which do not materially impair their use in the operation of its
               business;

          (v)  Liens on equipment arising under any capitalized lease obligation
               or other purchase money Liens on equipment acquired after the
               Signing Date to secure Indebtedness permitted pursuant to
               paragraph 2(s)(iii);

          (vi) Liens incurred in connection with gestation repurchase agreements
               or similar arrangements, including, without limitation, (i)
               arrangements under which NCFC or its Subsidiaries are required to
               repurchase Mortgage-backed Securities or Mortgage Loans from any
               Lender or fother counterparty reasonably satisfactory to the
               Agent, or (ii) credit facilities structured as loan and security
               agreements; provided, that (x) such gestation repurchase
               agreements or similar arrangements are not used to fund wet
               Mortgage Loans, and (y) such gestation repurchase agreements or
               similar arrangements are entered into in the ordinary course of
               business in contemplation of the subsequent non-recourse sale of
               such Mortgage-backed Securities or Mortgage Loans;

         (vii) Liens on Junior Securitization Interests which secure
               Indebtedness permitted by paragraph 2(s)(iv); and

        (viii) a pledge of the stock of REO Sub to SBRC pursuant to the
               Salomon REO Agreement.

                                       14
<PAGE>

SALOMON SMITH BARNEY INC. AS AGENT FOR
SALOMON BROTHERS INTERNATIONAL LIMITED

Accepted as of

By: /s/ Jeffrey B. Lown II
    ---------------------------------
    Authorized Signatory
    Title: VP

NC CAPITAL CORPORATION
Accepted as of    March 29, 2001

By: /s/ Patrick Flanegan
    ---------------------------------
    Authorized Signatory
    Title: President

ACCEPTED AND ACKNOWLEDGED

NEW CENTURY MORTGAGE CORPORATION
Accepted as of    March 29, 2001

By: /s/ Patrick Flanegan
    ---------------------------------
    Authorized Signatory
    Title: EVP

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