Document:

EX-10.2

EXHIBIT 10.2

GUARANTY

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

RECITALS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 10. Representations and Warranties.

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

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

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

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

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

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

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

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

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

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

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

Section 11. Covenants.

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

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

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

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

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

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

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

(iii) Existence, etc. The Guarantor will:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[SIGNATURES FOLLOW]

1

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

NEW CENTURY FINANCIAL CORPORATION, as Guarantor

	 	 	 
	By:

	 	/s/ Kevin Cloyd
	
 
	 	 
	
 
	 	Name: Kevin Cloyd

Title: Executive Vice President
	 
	 	 
	By:

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

Title: Vice Chairman, President and COO
	 
	 	 

2

Accepted and Acknowledged:

MORGAN STANLEY MORTGAGE

CAPITAL, INC., as a Beneficiary

	 	 	 
	By:

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

Title: Vice President

MORGAN STANLEY BANK, as a Beneficiary

	 	 	 
	By:

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

Title: Vice President
	 
	 	 

3EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

RAYMOND GUBA

EMPLOYMENT AGREEMENT (the “Agreement”) dated as December 15 , 2005 by and between KRATON
Polymers LLC, (“KRATON” or the “Company”), a Delaware limited liability company, which is a wholly
owned subsidiary of Polymer Holdings LLC (“Parent”), a Delaware limited liability company and
Raymond Guba (the “Executive”).

In consideration of the premises and mutual covenants herein and for other good and valuable
consideration, the parties agree as follows:

1. Term of Employment. Subject to the provisions of Section 7 of this Agreement,
Executive shall continue to be employed by the Company for a period commencing on October 24, 2005
(the “Effective Date”) and ending on the day before the third anniversary of the Effective Date
(the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement;
provided, however, that commencing with the third anniversary of the Effective Date and on each
anniversary thereafter (each an “Extension Date”), the Employment Term shall be automatically
extended for an additional one-year period, unless KRATON or Executive provides the other party
hereto 30 days prior written notice before the next Extension Date that the Employment Term shall
not be so extended.

2. Position.

a. During the Employment Term, Executive shall serve as KRATON’s Vice-President and Chief
Financial Officer. In such position, Executive shall have the duties and authority commensurate
with the position as shall be determined from time to time by the Board of Directors of KRATON
(“Board”). Executive shall report to the President and Chief Executive Officer of KRATON.

b. During the Employment Term, Executive will devote Executive’s full business time and best
efforts to the performance of Executive’s duties hereunder and will not engage in any other
business, profession or occupation for compensation or otherwise which would conflict or interfere
with the rendition of such services either directly or indirectly, without the prior written
consent of the Board; provided that nothing herein shall preclude Executive, subject to the prior
approval of the Board, from accepting appointment to or continue to serve on any board of directors
or trustees of any business corporation or any charitable organization; provided in each case, and
in the aggregate, that such activities do not conflict or interfere with the performance of
Executive’s duties hereunder or conflict with Section 9.

3. Base Salary. During the Employment Term, the Company shall pay Executive a base
salary (the “Base Salary”) at the annual rate of $300,000, payable in regular installments in
accordance with the Company’s usual payment practices. Executive shall be entitled to annual
reviews and increases in Executive’s Base Salary, if any, as may be determined in the sole
discretion of the Board.

4. Incentive Compensation.

a. Annual Bonus. With respect to each fiscal year during the Employment Terms
beginning in 2006, Executive shall be eligible to earn an annual bonus award (an “Annual Bonus”)
equal to (i) 50 % of Executive’s Base Salary (the “Target”) based upon the achievement of
performance objectives established by the Board, and (ii) up to 100 % of the Executive’s Base
Salary if such performance objectives are exceeded due to extraordinary performance, as determined
by the Board.

b. Signing Incentive. Executive will receive a $75,000 signing bonus and a $30,000
relocation bonus as soon as practicable after the Effective Date. In the event Executive’s
employment is terminated by KRATON For Cause or by Executive’s Resignation without Good Reason
within one year from the Effective Date of this Agreement, Executive agrees to repay these amounts
to Company. Additionally, Executive will receive an award of 150,000 Notional Units (“Notional
Units”) (each Notional Unit will be the equivalent of one notional membership unit of TJ Chemical
Holdings LLC). These Notional Units will vest 20% on each of the first five anniversaries of the
Effective Date, provided that the Executive remains employed by the Company through the vesting
date. Distribution of membership units representing the portion of vested Notional Units shall
occur as soon as practicable after the earlier of a Change in Control (as defined in the
TJ Chemical 2004 Option Plan) or termination of the Executive’s employment, provided that following
a Change in Control, unvested Notional Units shall remain outstanding and continue to vest as
provided above until the Executive’s employment terminates. Executive shall execute documentation
requested by the Company in connection with such award of the Restricted Units.

5. Employee Benefits.

a. General. During the Employment Term, Executive shall be entitled to participate in
the Company’s employee benefit plans, as amended from time to time, (other than bonus, incentive or
severance plans) as in effect from time to time (collectively “Employee Benefits”), on the same
basis as those benefits are generally made available to other senior executives of the Company.

b. Other. During the Employment Term, Executive shall be eligible to participate in
the equity incentive plans of the Company, its Parent and TJ Chemical Holdings LLC.

c. Relocation. In this position you will be expected to relocate to Houston, Texas
and will be eligible for reimbursement for certain relocation expenses in accordance with the
KRATON Experienced New Employee Relocation Policy.

6. Business Expenses. During the Employment Term, reasonable business expenses
incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the
Company in accordance with Company policies.

7. Termination. The Employment Term and Executive’s employment hereunder may be
terminated by either party at any time and for any reason; provided that Executive will be required
to give KRATON at least 60 days advance written notice of any resignation of Executive’s
employment. Notwithstanding any other provision of this Agreement, the provisions of this Section
7 shall exclusively govern Executive’s rights upon termination of employment with the Company and
its affiliates.

a. By KRATON For Cause or By Executive Resignation without Good Reason.

(i) The Employment Term and Executive’s employment hereunder may be terminated
by KRATON for Cause (as defined below) and shall terminate automatically upon
Executive’s resignation without Good Reason (as defined below), provided that
Executive will be required to give KRATON at least 60 days advance written notice
of any such resignation, and provided further that KRATON may elect to waive such
notice period and to pay Executive in lieu of such notice.

(ii) For purposes of this Agreement “Cause” shall mean (A) Executive’s
continued failure substantially to perform Executive’s duties hereunder (other than
as a result of total or partial incapacity due to physical or mental illness) for a
period of 30 days following written notice by KRATON to Executive of such failure;
provided that it is understood that this clause (A) shall not permit KRATON to
terminate Executive’s employment for Cause because of dissatisfaction with the
quality of services provided by or disagreement with the actions taken by Executive
in the good faith performance of Executive’s duties to KRATON, (B) failure of
Executive to maintain his principal residence in the same metropolitan area as
KRATON’s principal headquarters, which is currently located in Houston, Texas, or
elsewhere as mutually agreed to by Executive and Company, (C) theft or embezzlement
of Company property, (D) Executive’s conviction of or plea of guilty or no contest
to (x) a felony or (y) a crime involving moral turpitude, (E) Executive’s willful
malfeasance or willful misconduct in connection with Executive’s duties hereunder
or any act or omission which is materially injurious to the financial condition or
business reputation of the Company or any of its subsidiaries or affiliates, or (F)
Executive’s breach of the provisions of Sections 9 or 10 of this Agreement.

(iii) If Executive’s employment is terminated by KRATON for Cause, or if
Executive resigns without Good Reason, Executive shall be entitled to receive,
within 30 days following such termination with respect to (A)-(C) below and at such
time, if any, as the Employee Benefits under (D) below become due in accordance
with the applicable terms thereof:

(A) the Base Salary through the date of termination, to the extent not
already paid;

(B) any Annual Bonus earned but unpaid as of the date of termination
for any previously completed fiscal year;

(C) reimbursement for any unreimbursed business expenses properly
incurred by Executive in accordance with KRATON policy prior to the date of
Executive’s termination; and

(D) such vested Employee Benefits, if any, as to which Executive may
be entitled under the employee benefit plans of the Company as described in
Section 5(a) (including, without limitation, any retirement benefits,
medical, life insurance or disability benefits, accrued but unpaid vacation
or other benefits Executive is entitled to pursuant to the terms of the
applicable plans then in effect (the amounts described in clauses (A)
through (D) hereof being referred to as the “Accrued Obligations”).

Following such termination of Executive’s employment by KRATON for Cause or resignation by
Executive without Good Reason, except as set forth in this Section 7(a)(iii), Executive shall have
no further rights to any compensation or any other benefits in the nature of severance or
termination pay or in connection with the termination of his employment.

b. Disability or Death.

(i) The Employment Term and Executive’s employment hereunder shall terminate
upon Executive’s death and may be terminated by KRATON if Executive becomes
physically or mentally incapacitated and is therefore unable for a period of six
(6) consecutive months or for an aggregate of nine (9) months in any twenty-four
(24) consecutive month period to perform Executive’s duties (such incapacity is
hereinafter referred to as “Disability”); provided that a termination on the basis
of a Disability must occur within 90 days of the date when Executive is subject to
termination due to Disability. Any question as to the existence of the Disability
of Executive as to which Executive and KRATON cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to Executive and
KRATON. If Executive and KRATON cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination of
Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of the Agreement.

(ii) Upon termination of Executive’s employment hereunder for either
Disability or death, Executive or Executive’s estate (as the case may be) shall be
entitled to receive:

(A) at the times set forth in Section 7(a)(iii) hereof, the Accrued
Obligations;

(B) a pro rata portion of any Annual Bonus that Executive would have
been entitled to receive pursuant to Section 4 hereof in such year based
upon the percentage of the fiscal year that shall have elapsed through the
date of Executive’s termination of employment, payable when such Annual
Bonus would have otherwise been payable had Executive’s employment not
terminated.

Following Executive’s termination of employment due to death or Disability, except as set
forth in this Section 7(b)(ii), Executive shall have no further rights to any compensation or any
other benefits in the nature of severance or termination pay or in connection with the termination
of his employment.

c. By KRATON Without Cause or Resignation by Executive for Good Reason.

(i) The Employment Term and Executive’s employment hereunder may be terminated
by KRATON without Cause or by Executive’s resignation for Good Reason.

(ii) If Executive’s employment is terminated by KRATON without Cause (other
than by reason of death or Disability) or by Executive’s resignation for Good
Reason, Executive shall be entitled to receive:

(A) At the times set forth in Section 7(a)(iii) hereof, the Accrued
Obligations;

(B) continuation of Executive’s annual Base Salary for a period of six
(6) months following such termination date, (the “Severance Continuation
Period”), provided that such Severance Continuation Period will be extended
for an additional six (6) months if Executive has not secured employment
within such initial six (6) month Severance Continuation Period
(“Additional Severance Continuation Period”); and

(C) medical benefits for Executive and his eligible dependents
comparable to those medical benefits Executive participated in on the date
of termination during the Severance Continuation Period, provided in any
case such medical benefits shall cease if Executive becomes entitled to
medical benefits from a new employer. KRATON may provide such medical
benefits by paying the Executive’s COBRA continuation coverage through such
Severance Continuation Period.

(iii) For purposes of this Agreement, “Good Reason” shall mean (A) the failure
of the Company to pay or cause to be paid Executive’s Base Salary or Annual Bonus
(if any) when due, (B) a reduction in Executive’s Base Salary, the Target Annual
Bonus opportunity described in Section 4 herein, or Employee Benefits other than an
across-the-board reduction in salary or bonus opportunity for all of the members of
the Company’s management team and other than a decrease in Employee Benefits that
applies to all employees otherwise eligible to participate in the affected plan,
(C) a relocation of Executive’s primary work location more than 50 miles from the
work location on the date hereof, without written consent, or (D) a material
reduction in Executive’s duties and responsibilities as described in Section 2(a)
of this Agreement; provided that none of these events shall constitute Good Reason
unless the Company fails to cure such event within 30 days after receipt from
Executive of written notice specifying in reasonable detail the event which
constitutes Good Reason; provided, further, that “Good Reason” shall cease to exist
for an event on the 60th day following the later of its occurrence or
Executive’s knowledge thereof, unless Executive has given KRATON written notice
thereof prior to such date.

The payments and benefits described in subparagraphs (B) — (C) above shall be subject to and
conditioned upon the Executive’s execution and delivery of a valid and effective general release
and waiver, in a form satisfactory to the Company, waiving all claims the Executive may have
against the Company, its affiliates and their respective executives, directors, partners, members,
shareholders, successors and assigns. Following Executive’s termination of employment by the
Company without Cause (other than by reason of Executive’s death or Disability) or by Executive’s
resignation for Good Reason, except as set forth in Section 7(c)(ii), Executive shall have no
further rights to any compensation or any other benefits in the nature of severance or termination
pay or in connection with the termination of his employment.

d. Expiration of Employment Term.

(i) Election Not to Extend the Employment Term. In the event either
party elects not to extend the Employment Term pursuant to Section 1, unless
Executive’s employment is earlier terminated pursuant to paragraphs (a), (b) or (c)
of this Section 7, Executive’s termination of employment hereunder (whether or not
Executive continues as an employee of the Company thereafter) shall be deemed to
occur on the close of business on the day immediately preceding the next scheduled
Extension Date. If Executive’s employment is terminated due to Executive’s
election not to extend the Employment Term, Executive shall be entitled to receive
the Accrued Obligations. If Executive’s employment is terminated by KRATON other
than for Cause following KRATON ’s election not to extend the Employment Term,
Executive shall be entitled to receive (1) at the times set forth in Section
7(a)(iii) hereof, the Accrued Obligations, (2) continuation of Executive’s annual
Base Salary during the Severance Continuation Period at the same time and in the
same manner as if Executive had remained employed by KRATON during such period, and
(3) medical benefits for Executive and his eligible dependents comparable to those
medical benefits Executive participated in on the date of termination during the
Severance Continuation Period, provided in any case such medical benefits shall
cease if Executive becomes entitled to medical benefits from a new employer.
KRATON may provide such medical benefits by paying the Executive’s COBRA
continuation coverage through such Severance Continuation Period.

The payments and benefits described in this subparagraph (i) shall be subject
to and conditioned upon the Executive’s execution and delivery of a valid and
effective general release and waiver, in a form satisfactory to the Company,
waiving all claims the Executive may have against the Company, its affiliates and
their respective executives, directors, partners, members, shareholders, successors
and assigns. Following such termination of Executive’s employment hereunder as a
result either party’s election not to extend the Employment Term, except as set
forth in this Section 7(d)(i), Executive shall have no further rights to any
compensation or any other benefits in the nature of severance or termination pay or
in connection with the termination of his employment.

(ii) Continued Employment Beyond the Expiration of the Employment
Term. Unless the parties otherwise agree in writing, continuation of
Executive’s employment with the Company beyond the expiration of the Employment
Term shall be deemed an employment at-will and shall not be deemed to extend any of
the provisions of this Agreement and Executive’s employment may thereafter be
terminated at will by either Executive or the Company; provided that the provisions
of Sections 8, 9 and 10 of this Agreement (and the Company’s potential severance
obligation under Section 7(d)(i) if applicable) shall survive any termination of
this Agreement or Executive’s termination of employment hereunder.

e. Notice of Termination. Any purported termination of employment by the Company or
by Executive (other than due to Executive’s death) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 11(h) hereof. For purposes of
this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of employment under the
provision so indicated.

f. Equity Investment. Nothwithstanding anything herein to the contrary, upon a
termination of employment, the Executive shall have such rights and obligations with respect to any
options to purchase membership units of TJ Chemical Holdings LLC (“TJ Chemical”) then held by the
Executive and with respect to Executive’s investment in TJ Chemical and/or KRATON Management LLC
(including with respect to profits units and/or membership units, as applicable) in accordance with
the applicable governing documents thereof.

8. Non-Competition.

a. Executive acknowledges and recognizes the highly competitive nature of the businesses of
the Company and accordingly agrees as follows:

(i) During the Employment Term and, for a period of one year following the
date Executive ceases to be employed by the Company (the “Restricted Period”),
Executive will not, whether on Executive’s own behalf or on behalf of or in
conjunction with any person, company, business entity or other organization engaged
in a Competitive Business (as defined below), directly or indirectly solicit or
assist in soliciting on behalf of any entity engaged in a Competitive Business, the
business of any client or prospective client:

(A) with whom Executive had personal contact or dealings on behalf of
the Company during the one year period preceding Executive’s termination of
employment;

(B) with whom employees reporting to Executive have had personal
contact or dealings on behalf of the Company during the one-year period
immediately preceding the Executive’s termination of employment; or

(C) for whom Executive had direct or indirect responsibility during
the one-year period immediately preceding Executive’s termination of
employment.

(ii) During the Restricted Period, Executive will not directly or indirectly:

(A) engage in a Competitive Business;

(B) enter the employ of, or render any services to, any person or
entity (or any division of any person or entity) who or which engages in a
Competitive Business; provided that Executive shall not be prohibited from
rendering any services to any company that derives less than 10% of its
revenues from a Competitive Business (a “Permitted Company”), if such
services or employment relate solely to a business of the Company that is
not in competition with a Competitive Business;

(C) acquire a financial interest in, or otherwise become actively
involved with, any Competitive Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent,
trustee or consultant; provided, however, a Competitive Business shall not
include a Permitted Company, or

(D) interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the date of this
Agreement) between the Company and customers, clients, suppliers partners,
members or investors of the Company of which it is reasonable to expect
that Executive is aware.

(iii) For purposes of this Agreement, “Competitive Business” means the
development, manufacture, license, sale or provision of products or services that
the Company currently, or at any time during the Employment Term, sells,
manufactures, licenses or provides, or has specific plans to do so, including
without limitation styrenic block copolymers made by anionic polymerization.

(iv) Notwithstanding anything to the contrary in this Agreement, Executive
may, directly or indirectly own, solely as an investment, securities of any person
engaged in a Competitive Business which is publicly traded on a national or
regional stock exchange or on the over-the-counter market if Executive (i) is not a
controlling person of, or a member of a group which controls, such person and (ii)
does not, directly or indirectly, own 5% or more of any class of securities of such
person.

(v) During the Restricted Period, Executive will not, whether on Executive’s
own behalf or on behalf of or in conjunction with any person, company, business
entity or other organization whatsoever, directly or indirectly:

(A) solicit or encourage any employee of the Company to leave the
employment of the Company or

(B) hire any such employee who was employed by the Company as of the
date of Executive’s termination of employment with the Company or who left
the employment of the Company coincident with, or within six months prior
to or after, the termination of Executive’s employment with the Company.
Notwithstanding the foregoing, following a Change in Control, Executive
will not be restricted from hiring any employee who is terminated without
Cause following such Change in Control.

(vi) During the Restricted Period, Executive will not, directly or indirectly,
solicit or encourage to cease to work with the Company any individual consultant
then under contract with the Company.

b. It is expressly understood and agreed that although Executive and the Company consider the
restrictions contained in this Section 8 to be reasonable, if a final judicial determination is
made by a court of competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive, the provisions of
this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum
time and territory and to such maximum extent as such court may judicially determine or indicate to
be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the other restrictions
contained herein.

9. Confidentiality; Inventions.

a. Confidentiality. During the Employment Term and thereafter, Executive will not
disclose or use for Executive’s own benefit or purposes or the benefit or purposes of any other
person, firm, partnership, joint venture, association, corporation or other business organization,
entity or enterprise other than the Company, any trade secrets, or other confidential information
or data of the Company relating to the Company’s customers, development programs, costs, marketing,
trading, investment, sales activities, promotion, credit and financial data, manufacturing
processes, financing methods, plans, or the business and affairs of the Company generally; provided
that the foregoing shall not apply to information which is not unique to the Company or which is
generally known to the industry or the public other than as a result of Executive’s breach of this
covenant. Except as required by law, Executive will not disclose to anyone, other than his
immediate family, legal or financial advisors or any subsequent employer, the contents of this
Agreement. Executive agrees that upon termination of Executive’s employment with the Company for
any reason, he will return to the Company immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom, in any way relating to
the business of the Company, except that he may retain personal notes, notebooks and diaries and
personally owned books, reference material or information of a similar nature, that do not contain
confidential information of the type described in the preceding sentence of this section.
Executive further agrees that he will not retain or use for Executive’s account at any time any
trade names, trademark or other proprietary business designation used or owned in connection with
the business of the Company.

b. Prior Inventions. Executive has attached hereto, as Exhibit A, a list describing
all material creations, inventions, and developments which were created or contributed to by
Executive either solely or jointly with others prior to Executive’s employment with the Company
which relate to the Company’ proposed or current business, services, products or research and
development (collectively referred to as “Prior Inventions”). If no such list is attached,
Executive either will advise the Company that Prior Inventions exist but cannot be disclosed
because of prior existing confidentiality obligations or, absent such advice, will be understood to
represent that there are no such Prior Inventions. If in the course of Executive’s employment with
the Company, Executive uses or relies upon a Prior Invention, or any works of authorship (including
software, related items, data bases, documentation, site content, text or graphics), developments,
improvements or trade secrets which were created or contributed to by Executive either solely or
jointly with others prior to Executive’s employment with the Company (“Prior Intellectual
Property”) in Executive’s creation or contribution to any work of authorship, invention, product,
service, process, machine or other property of the Company, Executive will inform the Company
promptly and, upon request, use Executive’s best efforts to procure any consents of third parties
necessary for the Company’ use of such Prior Intellectual Property. To the fullest extent
permissible by law, and to the extent not in contravention of any prior legal obligation of
Executive to others all of which are disclosed to KRATON on Exhibit B, attached hereto, Executive
hereby grants the Company a non-exclusive royalty-free, irrevocable, perpetual, worldwide license
under all of Executive’s Prior Inventions to make, have made, copy, modify, distribute, use and
sell works of authorship, products, services, processes and machines and to otherwise operate the
Company’ current and future business.

c. Ownership of Inventions. Executive agrees that Executive will promptly make full
written disclosure to the Company, and hereby assigns to the Company, or its designee, all of
Executive’s right, title, and interest in and to any and all creations, inventions or developments,
whether or not patentable, which Executive may solely or jointly conceive or develop or reduce to
practice, during the period of time Executive is in the employ of the Company (collectively
referred to as “the Company Inventions”), other than (and the Company Inventions shall not include)
any such creations, inventions or developments which demonstrably bear no relationship whatsoever
to the business of the Company, the chemical industry, or the application of technologies, ideas,
or processes directly or indirectly related to the business of the Company or the chemical industry
to any other industries or disciplines. For the avoidance of doubt, the Company Inventions shall
include any creations, inventions or developments that relate directly or indirectly to a
Competitive Business. Executive further acknowledges that all original works of authorship which
are created or contributed to by Executive (solely or jointly with others) within the scope of and
during the period of Executive’s employment with the Company (“the Company Copyrights”) are to be
deemed “works made for hire,” as that term is defined in the United States Copyright Act, and the
copyright and all intellectual property rights therein shall be the sole property of the Company.
To the extent any of such works are deemed not to be “works made for hire,” Executive hereby
assigns the copyright and all other intellectual property rights in such works to the Company.

d. Contracts with the United States. Executive agrees to execute any licenses or
assignments of the Company Inventions or the Company Copyrights as required by any contract between
the Company and the United States or any of its agencies.

e. Maintenance of Records. Executive agrees to keep and maintain adequate and current
written records of all the Company Inventions made by Executive (solely or jointly with others)
during the term and within the scope of Executive’s employment with the Company. The records will
be in the form of notes, sketches, drawings, and any other format that may be specified to
Executive or within the Company’ policies, manuals or procedures by the Company. The records will
be available to and remain the sole property and intellectual property of the Company at all times.

f. Further Assurances. Executive covenants to take all requested actions and execute
all requested documents to assist the Company, or its designee, at the Company’ expense, in every
way; consistent with applicable law, (1) to secure the Company’s above rights in the Prior
Intellectual Property and Company Inventions and any of the Company’s Copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and all countries, and
(2) to pursue any patents or registrations with respect thereto. This covenant shall survive the
termination of this Agreement. If the Company is unable for any reason, after reasonable efforts,
to secure Executive’s signature on any document for this purpose, then Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents as Executive’s
agent and attorney in fact, for the limited purpose of acting for and in Executive’s behalf and
stead to execute such documents and to do all other lawfully permitted acts in connection with the
execution of such documents.

10. Specific Performance. Executive acknowledges and agrees that the Company’s
remedies at law for a breach or threatened breach of any of the provisions of Sections 8 through 10
would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable remedy which may then
be available and in the event of a breach of Sections 8 through 10, shall be entitled to cease
making any payments or providing any benefit otherwise required by this Agreement.

11. Miscellaneous.

a. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to conflicts of laws principles thereof.

b. Entire Agreement/Amendments. Except for the documents related to the Company and
its affiliates’ equity incentive plans, this Agreement contains the entire understanding of the
parties with respect to the employment of Executive by the Company, there are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties hereto, except
that if the Company reasonably determines that certain provisions of the Agreement may result in a
violation of Section 409A of the Internal Revenue Code, then the Company may make reasonable
modifications to the Agreement without the Executive’s consent, to attempt to comply with Section
409A and avoid the excise taxes that may be imposed thereunder without giving rise to any claim
that such modification adversely affected Executive’s rights under the Agreement.

c. No Waiver. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive
such party of the right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.

d. Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Agreement shall not be affected
thereby.

e. Assignment. This Agreement shall not be assignable by Executive. This Agreement
may be assigned by the Company to a person or entity which is an affiliate or a successor in
interest to substantially all of the business operations of the Company. Upon such assignment, the
rights and obligations of the Company hereunder shall become the rights and obligations of such
affiliate or successor person or entity.

f. Set Off. The Company’s obligation to pay Executive the amounts provided and to
make the arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of
amounts owed by Executive to the Company or its affiliates.

g. Successors; Binding Agreement. This Agreement shall inure to the benefit of and be
binding upon personal or legal representatives, executors, administrators, successors, heirs,
distributes, devises and legatees.

h. Notice. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered by hand or overnight courier or three days after it has been mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the respective addresses
set forth below Agreement, or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall be effective only
upon receipt.

If to the Company:

KRATON Polymers LLC

c/o Texas Pacific Group

301 Commerce Street, suite 3300

Fort Worth, Texas 76102

With copy to:

KRATON Polymers LLC

700 Milam Street, North Tower, 13th Floor

PO Box 61070

Houston, TX 77208

Attention: Vice President & General Counsel

If to Executive:

To the most recent address of Executive set forth in the personnel records of the
Company.

i. Executive Representation. Executive hereby represents to the Company that the
execution and delivery of this Agreement by Executive and the Company and the performance by
Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise
contravene, the terms of any employment agreement or other agreement or policy to which Executive
is a party or otherwise bound.

j. Cooperation. Executive shall at the Company’s expense provide his reasonable
cooperation in connection with any action or proceeding (or any appeal from any action or
proceeding) which relates to events occurring during Executive’s employment hereunder. This
provision shall survive any termination of this Agreement.

k. Withholding Taxes. The Company may withhold from any amounts payable under this
Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.

l. Counterparts. This Agreement may be signed in counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were upon the same
instrument.

m. Insurance. Notwithstanding anything to the contrary herein:

(i) All rights the Executive has to indemnification as a director, officer or
fiduciary pursuant to any agreement, applicable statue, Company by-laws or articles
of organization as in effect from time to time shall not be impacted by the
provisions of this Agreement and all such rights, if any, shall survive the
termination and/or expiration of this Agreement and/or the termination of the
Executive’s employment with the Company; and

(ii) So long as the Executive is employed by the Company and for a period of
six (6) years following the Executive’s termination of employment, the Company
agrees to purchase and maintain insurance for the Executive’s benefit, covering
director, officer and fiduciary liability on the same basis as active directors,
officers and/or fiduciaries, as applicable, of the Company.

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

	 	 	 
	KRATON POLYMERS LLC

	 	Raymond Guba
	 
	 	 
	/s/ George Gregory

	 	/s/ Raymond Guba
	 

	 	 
	 
	 	 
	By: George Gregory

	 	

	 
	 	 
	Title: President

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