Document:

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                                                                    EXHIBIT 10.8
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                          REGISTRATION RIGHTS AGREEMENT

                                      among

                       NEW CENTURY FINANCIAL CORPORATION,

                            BEAR, STEARNS & CO. INC.,

                                       and

                 THE OTHER INITIAL PURCHASERS REFERRED TO HEREIN

                            Dated as of July 8, 2003

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     This REGISTRATION RIGHTS AGREEMENT, dated as of July 8, 2003, among NEW
CENTURY FINANCIAL CORPORATION, a Delaware corporation (together with any
successor entity, herein referred to as the "Issuer"), BEAR, STEARNS & CO. INC.
(the "Representative"), and the other parties referred to in Annex A hereto
(each, an "Initial Purchaser" and collectively, the "Initial Purchasers").

     Pursuant to the Purchase Agreement, dated July 2, 2003, between the Issuer
and the Initial Purchasers (the "Purchase Agreement"), the Initial Purchasers
have agreed to purchase from the Issuer $175,000,000 aggregate principal amount
at maturity of 3.50 % Convertible Senior Notes due 2008 (the "Notes") (and, at
the Initial Purchasers' option, up to an additional $35,000,000 aggregate
principal amount of Notes to cover over-allotments, if any). The Notes will be
convertible into fully paid, nonassessable common stock, par value $0.01 per
share, of the Issuer (the "Common Stock") on the terms, and subject to the
conditions, set forth in the Indenture (as defined herein). To induce the
Initial Purchasers to purchase the Notes, and in satisfaction of a condition to
the Initial Purchasers' obligations under the Purchase Agreement, the Issuer has
agreed to provide the registration rights set forth in this Agreement.

     The Company agrees with the Initial Purchasers (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the beneficial owners (including
the Initial Purchasers) from time to time of the Notes and the beneficial owners
from time to time of the Common Stock issued upon conversion of the Notes (each
of the foregoing a "Holder"), as follows:

     1.   Definitions.
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     As used in this Agreement, the following capitalized terms shall have the
following meanings:

     "Additional Amounts" shall have the meaning as defined in Section 3(a)
hereof.

     "Additional Amounts Payment Date" shall mean each interest payment date
with respect to the Notes and each June 30 and December 30 in the case of the
Common Stock.

     "Additional Effectiveness Target Date" shall have the meaning as defined in
Section 2(a)(ii)(B) hereof.

     "Additional Shelf Filing Date" shall have the meaning as defined in Section
2(a)(ii)(A) hereof.

     "Additional Shelf Registration Statement" shall have the meaning as defined
in Section 2(a)(ii)(A) hereof.

     "Advice" shall have the meaning as defined in Section 4(c)(ii) hereof.

     "Affiliate" shall mean with respect to any specified Person, an
"Affiliate," as defined in Rule 144 under the Securities Act, of such Person.

     "Agreement" shall mean this Registration Rights Agreement, as it may be
amended from time to time in accordance with the terms hereof.

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     "Blue Sky Application" shall have the meaning as defined in Section 6(a)(i)
hereof.

     "Broker-Dealer" shall mean any broker or dealer registered under the
Exchange Act.

     "Business Day" shall mean each day of the year other than a Saturday or
Sunday or other day on which banking institutions in the City of New York are
required or authorized by law or regulation to close.

     "Closing Date" shall mean the date of this Agreement.

     "Commission" shall mean the United States Securities and Exchange
Commission.

     "Common Stock" shall mean the shares of common stock, par value $0.001 per
share, of the Issuer and any other shares of capital stock that may constitute
"Common Stock" for purposes of the Indenture.

     "Control" shall mean with respect to a Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ability to exercise voting power,
by contract or otherwise.

     "Effectiveness Period" shall have the meaning as defined in Section
2(a)(iii) hereof.

     "Effectiveness Target Date" shall have the meaning as defined in Section
2(a)(i) hereof.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.

     "Holder" shall mean a Person who owns, beneficially or otherwise,
Registrable Securities.

     "Indemnified Party" shall have the meaning as defined in Section 6(a)
hereof.

     "Indenture" shall mean the Indenture, dated as of June 30, 2003, between
the Issuer and Wells Fargo Bank, N.A., as trustee (the "Trustee"), pursuant to
which the Notes are to be issued, as such Indenture is amended, modified or
supplemented from time to time in accordance with the terms thereof.

     "Initial Purchasers" shall have the meaning as defined in the preamble
hereto.

     "Issuer" shall have the meaning as defined in the preamble hereto.

     "Majority of Holders" shall mean Holders holding over 50% of the aggregate
principal amount of Notes outstanding; provided that, for purposes of this
definition, a Holder of shares of Common Stock that constitute Registrable
Securities and that were issued upon conversion of the Notes shall be deemed to
hold an aggregate principal amount of Notes (in addition to the principal amount
of Notes held by such Holder) equal to the product of (x) the number of such
shares of Common Stock held by such Holder and (y) the prevailing conversion
price at the time

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of such conversion, such prevailing conversion price as determined in accordance
with the Indenture.

     "NASD" shall mean the National Association of Securities Dealers, Inc.

     "Notes" shall have the meaning as defined in the preamble hereto, up to
$210,000,000 aggregate principal amount at maturity.

     "Person" shall mean an individual, partnership, corporation, unincorporated
organization, trust, joint venture or a government or agency or political
subdivision thereof.

     "Prospectus" shall mean the prospectus included in a Shelf Registration
Statement or an Additional Shelf Registration Statement, as applicable,
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 415 promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all materials incorporated by
reference or deemed to be incorporated by reference into such Prospectus.

     "Questionnaire Deadline" shall have the meaning as defined in Section 2(b)
hereof.

     "Record Holder" shall mean with respect to any Additional Amounts Payment
Date, each Person who is a Holder on the record date with respect to the
interest payment date on which such Additional Amounts Payment Date shall occur.
In the case of a Holder of shares of Common Stock issued upon conversion of the
Notes, "Record Holder" shall mean each Person who is a Holder of shares of
Common Stock that constitute Registrable Securities on the May 15 or November 15
immediately preceding the Additional Amounts Payment Date.

     "Registrable Securities" shall mean each Note and each share of Common
Stock issued upon conversion of Notes, and any securities into or for which such
Common Stock has been converted, and any security issued with respect thereto
upon any stock dividend, split or similar event, until, in the case of any such
security, (A) the earliest of (i) its effective registration under the
Securities Act and resale in accordance with the Registration Statement covering
it, (ii) expiration of the holding period that would be applicable thereto under
Rule 144(k) under the Securities Act were it not held by an Affiliate of the
Issuer, (iii) its sale to the public pursuant to Rule 144 under the Securities
Act and (iv) the date that is two years after the later of the original issuance
of the Notes and the last date that the Issuer or any of its Affiliates was the
owner of any such Notes (or any predecessor thereto), and (B) as a result of the
event or circumstance described in any of the foregoing clauses (i) through
(iv), the legends with respect to transfer restrictions required under the
Indenture are removed or removable in accordance with the terms of the Indenture
or such legend, as the case may be.

     "Registration Default" shall have the meaning as defined in Section
3(a)(vi) hereof.

     "Registration Statement" shall mean any registration statement of the
Issuer that covers any of the Registrable Securities pursuant to the provisions
of this Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective

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amendments, all exhibits, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such registration
statement.

     "Sale Notice" shall have the meaning as defined in Section 4(e) hereof.

     "Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.

     "Shelf Filing Deadline" shall have the meaning as defined in Section
2(a)(i) hereof.

     "Shelf Registration Statement" shall have the meaning as defined in Section
2(a)(i) hereof.

     "Stockholder Approval" means (i) the authorization and approval by the
Company's stockholders in accordance with the Company's bylaws and applicable
law of the amendment to the Company's Amended and Restated Certificate of
Incorporation to increase the authorized number of shares of Common Stock to at
least 50,000,000 shares and (ii) the authorization and reservation of an
additional 1,340,000 shares of Common Stock by the Board of Directors of the
Company free from any preemptive rights to be made available for issuance by the
Company upon conversion of the Notes.

     "Suspension Period" shall have the meaning as defined in Section 4(b)(i)
hereof.

     "TIA" shall mean the Trust Indenture Act of 1939, as in effect on the date
the Indenture is qualified under that Act.

     "Underwriting Majority" shall mean on any date, Holders holding at least 66
2/3% of the aggregate principal amount of the Registrable Securities outstanding
on such date; provided, that for the purpose of this definition, a holder of
shares of Common Stock that constitute Registrable Securities and issued upon
conversion of Notes shall be deemed to hold an aggregate principal amount of
Registrable Securities (in addition to the principal amount of Notes held by
such holder) equal to (x) the number of such shares of Common Stock that are
Registrable Securities held by such holder multiplied by (y) the then applicable
Conversion Price (as defined in the Indenture).

         "Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which securities of the Issuer are sold to an underwriter for
reoffering to the public.

     2.   Shelf Registration.
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          (a)  The Issuer shall:

               (i)    Do the following with respect to all Registrable
          Securities that are duly authorized at the Shelf Filing Deadline:

                      (A)  no later than 120 days after the date hereof (the
               "Shelf Filing Deadline"), cause to be filed with the Commission a
               registration statement pursuant to Rule 415 under the Securities
               Act (the "Shelf

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               Registration Statement"), which Shelf Registration Statement
               shall provide for resales from time to time of all Registrable
               Securities held by the Holders thereof;

                      (B)  use its reasonable best efforts to cause the Shelf
               Registration Statement to be declared effective by the Commission
               no later than 210 days after the date hereof (the "Effectiveness
               Target Date");

               (ii)   Do the following with respect to any Registrable
          Securities that are not duly authorized at the Shelf Filing Deadline
          and subsequently are duly authorized by the Stockholder Approval:

                      (A)  no later than 120 days after the Stockholder Approval
               (the "Additional Shelf Filing Deadline"), cause to be filed with
               the Commission a registration statement pursuant to Rule 415
               under the Securities Act (the "Additional Shelf Registration
               Statement"), which Additional Shelf Registration Statement shall
               provide for resales from time to time of all Registrable
               Securities duly authorized by the Stockholder Approval and held
               by the Holders thereof;

                      (B)  use its reasonable best efforts to cause the
               Additional Shelf Registration Statement to be declared effective
               by the Commission no later than 210 days after the Stockholder
               Approval (the "Additional Effectiveness Target Date"); and

               (iii)  subject to Section 4(b)(i) hereof, use its reasonable best
          efforts to keep the Shelf Registration Statement or the Additional
          Shelf Registration Statement, as applicable, continuously effective,
          supplemented and amended as required by the provisions of Section 4(b)
          hereof to the extent necessary to ensure that (A) it is available for
          resales by the Holders of Registrable Securities entitled to the
          benefit of this Agreement and (B) conforms with the requirements of
          this Agreement and the Securities Act and the rules and regulations of
          the Commission promulgated thereunder as announced from time to time
          for a period (the "Effectiveness Period") ending on the earliest of:

                           (1)  two years after the later of the last date of
                      original issuance of any of the Notes and the date on
                      which we or any of our Affiliates owned any of the Notes;

                           (2)  the date on which Holders of Registrable
                      Securities are able to sell all of the Registrable
                      Securities immediately without restriction pursuant to
                      Rule 144(k) under the Securities Act;

                           (3)  the date when all of the Registrable Securities
                      of those Holders that have provided the information
                      required pursuant to the terms of Section 2(b) hereof are
                      registered under the Shelf Registration Statement or the
                      Additional Shelf Registration

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                      Statement, as applicable, and disposed of in accordance
                      with the terms of the Shelf Registration Statement or the
                      Additional Shelf Registration Statement, as applicable;
                      and

                           (4)  the date when all of the Registrable Securities
                      of those Holders that have provided the information
                      required pursuant to the terms of Section 2(b) hereof have
                      ceased to be outstanding (whether as a result of
                      redemption, repurchase and cancellation, conversion or
                      otherwise).

          (b)  No Holder of Registrable Securities may include any of its
     Registrable Securities in the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, pursuant to this
     Agreement unless such Holder furnishes to the Issuer in writing, prior to
     or on the 30th Business Day after receipt of a request therefor (the
     "Questionnaire Deadline"), such information as the Issuer may reasonably
     request for use in connection with the Shelf Registration Statement, the
     Additional Shelf Registration Statement, as applicable, or Prospectus or
     preliminary Prospectus included therein and in any application to be filed
     with or under state securities laws. In connection with all such requests
     for information from Holders of Registrable Securities, the Issuer shall
     notify such Holders of the requirements set forth in the preceding
     sentence. Each Holder as to which the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, is being effected
     agrees to furnish promptly to the Issuer all information required to be
     disclosed in order to make information previously furnished to the Issuer
     by such Holder not materially misleading. Notwithstanding any provision of
     this Agreement to the contrary, the Issuer shall be under no obligation to
     name any Holder in a Registration Statement that does not comply with the
     Questionnaire Deadline of this paragraph 2(b) as further described under
     Section 4(d).

     3.   Additional Amounts.
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          (a)  If:

               (i)    the Shelf Registration Statement has not been filed with
          the Commission prior to or on the Shelf Filing Deadline,

               (ii)   the Shelf Registration Statement has not been declared
          effective by the Commission prior to or on the Effectiveness Target
          Date,

               (iii)  subject to the provisions of Section 4(b)(i) hereof, the
          Shelf Registration Statement is filed and declared effective but,
          during the Effectiveness Period and after the Effectiveness Target
          Date, shall thereafter cease to be effective (without being succeeded
          immediately by an Additional Shelf Registration Statement filed and
          declared effective that provides for resales of all the Registrable
          Securities that were covered by such Shelf Registration Statement) or
          fail to be usable for its intended purpose for a period of time
          (including any Suspension Period) that shall exceed 30 days in the
          aggregate in any 3-month period or 60 days in the aggregate in any
          365-day period,

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               (iv)   the Additional Shelf Registration Statement has not been
          filed with the Commission prior to or on the Additional Shelf Filing
          Deadline,

               (v)    the Additional Shelf Registration Statement has not been
          declared effective by the Commission prior to or on the Additional
          Effectiveness Target Date,

               (vi)   subject to the provisions of Section 4(b)(i) hereof, the
          Additional Shelf Registration Statement is filed and declared
          effective but, during the Effectiveness Period and after the
          Additional Effectiveness Target Date, shall thereafter cease to be
          effective or fail to be usable for its intended purpose for a period
          of time (including any Suspension Period) that shall exceed 30 days in
          the aggregate in any 3-month period or 60 days in the aggregate in any
          365-day period

          (each such event referred to in foregoing clauses (i) through (vi), a
          "Registration Default"), then the Issuer hereby agrees to pay
          additional amounts ("Additional Amounts") to each Holder from and
          including the day following the Registration Default to but excluding
          the day on which the Registration Default has been cured in an amount
          equal to:

                      (A)  with respect to such Holder's Notes, for the first
               90-day period during which a Registration Default shall have
               occurred and be continuing but excluding the day on which all
               Registration Defaults have been cured, an amount equal to 0.25%
               per annum on the applicable principal amount of such Holder's
               then outstanding and not converted Notes, increasing to an amount
               per annum on the principal amount of such Holder's then
               outstanding and not converted Notes equal to 0.50% on the 91st
               day, provided that in no event shall the aggregate Additional
               Amounts pursuant to this clause accrue at a rate per annum
               exceeding 0.50% of the sum of the applicable principal amount of
               the then outstanding Notes;

                      (B)  with respect to such Holder's Common Stock issued
               upon conversion of Notes for the first 90-day period during which
               a Registration Default shall have occurred and be continuing but
               excluding the day on which all Registration Defaults have been
               cured, an amount equal to 0.25% per annum on the applicable
               principal amount of such Holder's converted Notes, increasing to
               an amount per annum on the principal amount of such Holder's
               converted Notes equal to 0.50% on the 91st day, provided that in
               no event shall the aggregate Additional Amounts pursuant to this
               clause accrue at a rate per annum exceeding 0.50% of the sum of
               the applicable principal amount of the then converted Notes.

          (b)  All accrued Additional Amounts shall be paid in arrears to Record
     Holders by the Issuer on each Additional Amounts Payment Date by wire
     transfer of immediately

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     available funds or by federal funds check; provided that any Additional
     Amounts accrued with respect to any Registrable Securities or portion
     thereof called for redemption on a redemption date or converted into Common
     Stock on a conversion date prior to the Additional Amounts Payment Date
     shall, in any such event, be paid instead to the Holder who submitted such
     Note or portion thereof for redemption or conversion on the applicable
     redemption date or conversion date, as the case may be, on such date (or
     promptly following the conversion date, in the case of conversions).
     Following the cure of all Registration Defaults relating to any particular
     Note or share of Common Stock, the accrual of Additional Amounts with
     respect to such Note or share of Common Stock will cease.

     The Trustee shall be entitled, on behalf of Holders of Notes, to seek any
available remedy for the enforcement of this Agreement, including for the
payment of any Additional Amounts, provided, that the parties agree that the
sole monetary damages payable if any event described in Sections 3(a)(i)-(iv)
should occur shall be the payment of Additional Amounts. All obligations of the
Issuer set forth in this Section 3 that are outstanding with respect to any
Registrable Security at the time such security ceases to be a Registrable
Security shall survive until such time as all such obligations with respect to
such Registrable Security shall have been satisfied in full. The parties hereto
agree that the Additional Amounts provided for in this section constitutes a
reasonable estimate of the damages that may be incurred by Holders of
Registrable Securities by reason of the failure of the Shelf Registration
Statement or the Additional Shelf Registration Statement, as applicable, to be
filed or declared effective or available for effecting resales of Registrable
Securities in accordance with the provisions hereof.

     4.   Registration Procedures.
          -----------------------

          (a)  In connection with the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, the Issuer shall
     prepare and file with the Commission a Shelf Registration Statement or an
     Additional Shelf Registration Statement, as applicable, on Form S-1 or Form
     S-3 or on any other appropriate form under the Securities Act permitting
     registration of the Registrable Securities for resale by the Holders
     thereof in accordance with the reasonable methods of distribution elected
     by them, and use its reasonable best efforts to cause such Shelf
     Registration Statement or Additional Shelf Registration Statement, as
     applicable, to become effective and remain effective as provided herein. At
     the time the Shelf Registration Statement or the Additional Shelf
     Registration Statement, as applicable, is declared effective, each Holder
     shall be named as a selling securityholder in the Shelf Registration
     Statement or the Additional Shelf Registration Statement, as applicable,
     and the related Prospectus in such a manner as to permit such Holder to
     deliver such Prospectus to purchasers of Registrable Securities in
     accordance with applicable law.

          (b)  In connection with the Shelf Registration Statement, the
     Additional Shelf Registration Statement and any Prospectus required by this
     Agreement to permit the sale or resale of Registrable Securities, the
     Issuer shall:

               (i)    Subject to any notice by the Issuer in accordance with
          this Section 4(b) of the existence of any fact or event of the kind
          described in Section

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          4(b)(iii)(D), use its reasonable best efforts to keep the Shelf
          Registration Statement or the Additional Shelf Registration Statement,
          as applicable, continuously effective during the Effectiveness Period;
          upon the occurrence of any event that would cause the Shelf
          Registration Statement, the Additional Shelf Registration Statement,
          as applicable, or the Prospectus contained therein (A) to contain a
          material misstatement or omission or (B) not be effective and usable
          for resale of Registrable Securities during the Effectiveness Period,
          the Issuer shall file promptly an appropriate amendment to the Shelf
          Registration Statement or the Additional Shelf Registration Statement,
          as applicable, a prospectus supplement or a report filed with the
          Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
          Exchange Act, in the case of clause (A), correcting any such
          misstatement or omission, and, in the case of either clause (A) or
          (B), use its reasonable best efforts to cause such amendment to be
          declared effective and the Shelf Registration Statement, or the
          Additional Shelf Registration Statement, as applicable, and the
          related Prospectus to become usable for their intended purposes as
          soon as practicable thereafter. Notwithstanding the foregoing, the
          Issuer may, by written notice to the Holders, suspend the Holders' use
          of the Prospectus for a period not to exceed an aggregate of 30 days
          in any three-month period (each such period, a "Suspension Period")
          if:

                      (x)  an event occurs and is continuing or fact exists as a
               result of which the Shelf Registration Statement or the
               Additional Shelf Registration Statement, as applicable, would, in
               the Issuer's reasonable judgment, contain an untrue statement of
               a material fact or omit to state a material fact required to be
               stated therein or necessary to make the statements therein not
               misleading; and

                      (y)  the Issuer reasonably determines in good faith that
               the disclosure of such event at such time would have a material
               adverse effect on the business of the Issuer (and its
               subsidiaries, if any, taken as a whole);

          provided, that the Suspension Periods shall not exceed an aggregate of
          60 days in any 365-day period. The Effectiveness Period shall be
          extended by the number of days beginning on the date the Issuer gives
          the Holders notice of the Suspension Period to and including the date
          on which the Holders receive copies of the supplemented or amended
          Prospectus or the date on which the Holders are advised in writing by
          the Issuer that the Prospectus may be used. Each Holder, by its
          acceptance of a Registrable Security, agrees to hold in confidence any
          communication by the Issuer relating to an event described in Section
          4(b)(i)(x) and (y) or Section 4(b)(iii)(D).

               (ii)   Prepare and file with the Commission such amendments and
          post-effective amendments to the Shelf Registration Statement or the
          Additional Shelf Registration Statement, as applicable, as may be
          necessary to keep the Shelf Registration Statement or the Additional
          Shelf Registration Statement, as applicable, effective during the
          Effectiveness Period; cause the Prospectus to be

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          supplemented by any required Prospectus supplement, and as so
          supplemented to be filed pursuant to Rule 424 under the Securities
          Act, and to comply fully with the applicable provisions of Rules 424
          and 430A under the Securities Act in a timely manner, if required by
          the Securities Act or as reasonably requested by the Initial
          Purchasers or by the Trustee on behalf of the Holders of the
          Registrable Securities covered by such Shelf Registration Statement or
          Additional Shelf Registration Statement, as applicable, and comply
          with the provisions of the Securities Act with respect to the
          disposition of all securities covered by the Shelf Registration
          Statement or the Additional Shelf Registration Statement, as
          applicable, during the applicable period in accordance with the
          intended method or methods of distribution by the sellers thereof set
          forth in the Shelf Registration Statement, the Additional Shelf
          Registration Statement, as applicable, or supplement to the
          Prospectus.

               (iii)  As promptly as practicable give notice to the Initial
          Purchasers and the selling Holders, counsel for the selling Holders
          and for the Initial Purchasers (or, if applicable, separate counsel
          for the selling Holders), and any underwriters and, if requested by
          such Persons, confirm such advice in writing:

                      (A)  when the Shelf Registration Statement, the Additional
               Shelf Registration Statement, Prospectus or any Prospectus
               supplement or post-effective amendment has been filed, as
               applicable, and, with respect to the Shelf Registration
               Statement, the Additional Shelf Registration Statement or any
               post-effective amendment thereto, when the same has become
               effective,

                      (B)  of any request by the Commission or any other federal
               or state governmental authority for amendments to the Shelf
               Registration Statement, the Additional Shelf Registration
               Statement or amendments or supplements to the Prospectus or for
               additional information relating thereto, as applicable,

                      (C)  of the issuance by the Commission or any other
               federal or state authority of any stop order suspending the
               effectiveness of the Shelf Registration Statement, or the
               Additional Shelf Registration Statement as applicable, under the
               Securities Act or of the suspension by any state securities
               commission of the qualification of the Registrable Securities for
               offering or sale in any jurisdiction, or the initiation of any
               proceeding for any of the preceding purposes, or

                      (D)  of the existence of any fact or the happening of any
               event, during the Effectiveness Period, that makes any statement
               of a material fact made in the Shelf Registration Statement, the
               Additional Shelf Registration Statement, the Prospectus, any
               amendment or supplement thereto, as applicable, or any document
               incorporated by reference therein untrue, or that requires the
               making of any additions to or changes in the Shelf Registration
               Statement, or the Additional Shelf Registration, as

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               applicable to make the statements therein not misleading or that
               requires the making of any additions to or changes in the
               Prospectus in order to make the statements in the Prospectus in
               light of the circumstances under which they were made not
               misleading (including, in any such case, as a result of the
               non-availability of financial statements).

          If at any time the Commission shall issue any stop order suspending
          the effectiveness of the Shelf Registration Statement or the
          Additional Shelf Registration Statement, as applicable, or any state
          securities commission or other regulatory authority shall issue an
          order suspending the qualification or exemption from qualification of
          the Registrable Securities under state securities or Blue Sky laws, or
          the Shelf Registration Statement or the Additional Shelf Registration
          Statement, as applicable, ceases to be effective for any reason at any
          time during the Effectiveness Period, the Issuer shall use its
          reasonable best efforts to obtain the withdrawal or lifting of such
          order at the earliest possible time, and in any event shall within
          thirty (30) days of such cessation of effectiveness amend the Shelf
          Registration Statement or the Additional Shelf Registration Statement,
          as applicable, in a manner reasonably expected by the Issuer to obtain
          the withdrawal of the order suspending the effectiveness thereof, or
          file an additional Shelf Registration Statement or Additional Shelf
          Registration Statement, as applicable, covering all of the securities
          that as of the date of such filing are Registrable Securities. If a
          subsequent Shelf Registration Statement or Additional Shelf
          Registration Statement, as applicable, is filed, the Issuer shall use
          its reasonable best efforts to cause such Shelf Registration Statement
          to become effective as promptly as is practicable after such filing
          and to keep such Shelf Registration Statement or Additional Shelf
          Registration Statement, as applicable, continuously effective until
          the end of the Effectiveness Period.

               (iv)   Furnish to the Initial Purchasers and counsel for the
          Initial Purchasers, one counsel for the selling Holders and each of
          the underwriter(s), if any, before filing with the Commission, a copy
          of the Shelf Registration Statement, a copy of the Additional Shelf
          Registration Statement, as applicable, and copies of any Prospectus
          included therein or any amendments or supplements to any of the Shelf
          Registration Statement, the Additional Shelf Registration Statement or
          Prospectus, as applicable, (other than documents incorporated by
          reference after the initial filing of the Shelf Registration Statement
          or the Additional Shelf Registration Statement, as applicable), which
          documents will be subject to the review of such persons, counsel and
          underwriter(s), if any, for a period of two Business Days, and the
          Issuer will not file the Shelf Registration Statement, the Additional
          Shelf Registration Statement or Prospectus or any amendment or
          supplement to the Shelf Registration Statement, the Additional Shelf
          Registration Statement or Prospectus, as applicable, (other than
          documents incorporated by reference) to which such counsel or the
          underwriter(s), if any, shall reasonably object within two Business
          Days after the receipt thereof. Such counsel or underwriter, if any,
          shall be deemed to have reasonably objected to such filing if the
          Shelf Registration Statement, Additional Shelf Registration

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          Statement, amendment, Prospectus or supplement, as applicable, as
          proposed to be filed, contains a material misstatement or omission.

               (v)    Subject to the execution of a confidentiality agreement
          reasonably acceptable to the Issuer, make available at reasonable
          times for inspection by one or more representatives of the selling
          Holders, designated in writing by a Majority of Holders whose
          Registrable Securities are included in the Shelf Registration
          Statement or the Additional Shelf Registration Statement, as
          applicable, any underwriter, if any, participating in any distribution
          pursuant to the Shelf Registration Statement or the Additional Shelf
          Registration Statement, as applicable, and any attorney or accountant
          retained by the Majority of Holders or any of the underwriter(s), all
          financial and other records, pertinent corporate documents and
          properties of the Issuer as shall be reasonably necessary to enable
          them to exercise any applicable due diligence responsibilities, and
          cause the Issuer's officers, directors, managers and employees to
          supply all information reasonably requested by any such representative
          or representatives of the selling Holders, underwriter, attorney or
          accountant in connection with the Shelf Registration Statement or the
          Additional Shelf Registration Statement applicable; provided, however,
          that any information designated by the Issuer as confidential at the
          time of delivery of such information shall be kept confidential by the
          recipient thereof.

               (vi)   If requested by the Initial Purchasers or their counsel,
          any selling Holders or the underwriter(s), if any, incorporate in the
          Shelf Registration Statement, the Additional Shelf Registration
          Statement or Prospectus, as applicable, pursuant to a supplement or
          post-effective amendment if necessary, such information as such
          Initial Purchasers, counsel, selling Holders or underwriter(s), if
          any, may reasonably request to have included therein, including,
          without limitation: (1) information relating to the "Plan of
          Distribution" of the Registrable Securities, (2) information with
          respect to the principal amount of Notes or number of shares of Common
          Stock being sold, (3) the purchase price being paid therefor and (4)
          any other terms of the offering of the Registrable Securities to be
          sold in such offering; and make all required filings of such
          Prospectus supplement or post-effective amendment as soon as
          reasonably practicable after the Issuer is notified of the matters to
          be incorporated in such Prospectus supplement or post-effective
          amendment.

               (vii)  As promptly as is reasonably practicable furnish to each
          selling Holder and the Initial Purchasers and their counsel, and each
          of the underwriter(s), if any, without charge, at least one copy of
          the Shelf Registration Statement or the Additional Shelf Registration
          Statement, as applicable, as first filed with the Commission, and of
          each amendment thereto (and any documents incorporated by reference
          therein or exhibits thereto (or exhibits incorporated in such exhibits
          by reference) as such Person may request in writing).

               (viii) Deliver to each selling Holder and the Initial Purchasers,
          and their counsel, and each of the underwriters(s), if any, without
          charge, as many copies of

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          the Prospectus (including each preliminary prospectus) and any
          amendment or supplement thereto as such Persons reasonably may
          request; subject to any notice by the Issuer in accordance with this
          Section 4(b) of the existence of any fact or event of the kind
          described in Section 4(b)(iii)(D) or 4(b)(iii)(C), the Issuer hereby
          consents to the use of the Prospectus and any amendment or supplement
          thereto by each of the selling Holders and each of the underwriter(s),
          if any, in connection with the offering and the sale of the
          Registrable Securities covered by the Prospectus or any amendment or
          supplement thereto.

               (ix)   If an underwriting agreement is entered into and the
          registration is an Underwritten Registration, the Issuer shall:

                      (A)  upon request, furnish to each selling Holder and each
               underwriter, if any, in such substance and scope as they may
               reasonably request and as are customarily made by issuers to
               underwriters in primary underwritten offerings, upon the date of
               closing of any sale of Registrable Securities in an Underwritten
               Registration:

                           (1)  a certificate, dated the date of such closing,
                      signed by (y) the Chairman of the Board, the Chief
                      Executive Officer, the President or a Vice President and
                      (z) the Chief Financial Officer of the Issuer confirming,
                      as of the date thereof, such matters as such parties may
                      reasonably request;

                           (2)  opinions, each dated the date of such closing,
                      of counsel to the Issuer covering such matters as are
                      customarily covered in legal opinions to underwriters in
                      connection with primary underwritten offerings of
                      securities; and

                           (3)  customary comfort letters, dated the date of
                      such closing, from the Issuer's independent accountants
                      (and from any other accountants whose report is contained
                      or incorporated by reference in the Shelf Registration
                      Statement or the Additional Shelf Registration Statement,
                      as applicable), in the customary form and covering matters
                      of the type customarily covered in comfort letters to
                      underwriters in connection with primary underwritten
                      offerings of securities;

                      (B)  set forth in full in the underwriting agreement, if
               any, indemnification provisions and procedures which provide
               rights no less protective than those set forth in Section 6
               hereof with respect to all parties to be indemnified; and

                      (C)  deliver such other documents and certificates as may
               be reasonably requested by such parties to evidence compliance
               with clause (A) above and with any customary conditions contained
               in the

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               underwriting agreement or other agreement entered into by the
               selling Holders pursuant to this clause (ix).

               (x)    Before any public offering of Registrable Securities,
          cooperate with the selling Holders, the underwriter(s), if any, and
          their respective counsel in connection with the registration and
          qualification of the Registrable Securities under the securities or
          Blue Sky laws of such jurisdictions as the selling Holders or
          underwriter(s), if any, may reasonably request and do any and all
          other acts or things necessary or advisable to enable the disposition
          in such jurisdictions of the Registrable Securities covered by the
          Shelf Registration Statement or the Additional Shelf Registration
          Statement, as applicable; provided, however, that the Issuer shall not
          be required (A) to register or qualify as a foreign corporation or a
          dealer of securities where it is not now so qualified or to take any
          action that would subject it to the service of process in any
          jurisdiction where it is not now so subject or (B) to subject itself
          to taxation in any such jurisdiction if it is not now so subject.

               (xi)   Cooperate with the selling Holders and the underwriter(s),
          if any, to facilitate the timely preparation and delivery of
          certificates representing Registrable Securities to be sold and not
          bearing any restrictive legends (unless required by applicable
          securities laws); and enable such Registrable Securities to be in such
          denominations and registered in such names as the Holders or the
          underwriter(s), if any, may reasonably request at least three Business
          Days before any sale of Registrable Securities.

               (xii)  Use its reasonable best efforts to cause the Registrable
          Securities covered by the Shelf Registration Statement or the
          Additional Shelf Registration Statement, as applicable, to be
          registered with or approved by such other U.S. governmental agencies
          or authorities as may be necessary to enable the selling Holders or
          the underwriter(s), if any, to consummate the disposition of such
          Registrable Securities, subject to the proviso in clause (x) above
          (other than laws generally not applicable to all Holders of
          Registrable Securities wishing to sell Registrable Securities pursuant
          to the Shelf Registration Statement or the Additional Shelf
          Registration Statement, as applicable, and the related Prospectus).

               (xiii) Subject to Section 4(b)(i) hereof, if any fact or event
          contemplated by Section 4(b)(iii)(D) hereof shall exist or have
          occurred, use its reasonable best efforts to prepare a supplement or
          post-effective amendment to the Shelf Registration Statement, the
          Additional Shelf Registration Statement or related Prospectus or any
          document incorporated therein by reference, as applicable, or file any
          other required document so that, as thereafter delivered to the
          purchasers of Registrable Securities, the Prospectus will not contain
          an untrue statement of a material fact or omit to state any material
          fact required to be stated in the Prospectus or necessary to make the
          statements in the Prospectus, in light of the circumstances under
          which they were made, not misleading (including, in any such case, as
          a result of the non-availability of financial statements).

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               (xiv)  Provide CUSIP numbers for all Registrable Securities not
          later than the effective date of the Shelf Registration Statement or
          the Additional Shelf Registration Statement, as applicable, and
          provide the Trustee under the Indenture with certificates for the
          Notes that are in a form eligible for deposit with The Depository
          Trust Company.

               (xv)   Cooperate and assist in any filings required to be made
          with the NASD and in the performance of any due diligence
          investigation by any underwriter that is required to be retained in
          accordance with the rules and regulations of the NASD.

               (xvi)  Otherwise use its reasonable best efforts to comply with
          all applicable rules and regulations of the Commission and all
          reporting requirements under the rules and regulations of the Exchange
          Act and make generally available to its security holders earning
          statements (which need not be audited) satisfying the provisions of
          Section 11(a) of the Securities Act and Rule 158 (or similar rule
          promulgated under the Securities Act) thereunder no later than 45 days
          after the end of any 12 month period (or 90 days after the end of any
          12-month period if such period is a fiscal year) commencing on the
          first day of the first fiscal quarter of the Issuer commencing after
          the effective date of a Shelf Registration Statement or Additional
          Shelf Registration Statement, as applicable, which statements shall
          cover said 12-month periods.

               (xvii) Cause the Indenture to be qualified under the TIA not
          later than the effective date of the Shelf Registration Statement,
          and, in connection therewith, cooperate with the Trustee and the
          holders of Notes to effect such changes to the Indenture as may be
          required for such Indenture to be so qualified in accordance with the
          terms of the TIA; and execute and use its reasonable best efforts to
          cause the Trustee thereunder to execute all documents that may be
          required to effect such changes and all other forms and documents
          required to be filed with the Commission to enable such Indenture to
          be so qualified in a timely manner.

               (xviii) Cause all Registrable Securities covered by the Shelf
          Registration Statement or the Additional Shelf Registration Statement,
          as applicable, to be listed or quoted, as the case may be, on each
          securities exchange or automated quotation system on which securities
          issued by the Issuer of the same series are then listed or quoted.

               (xix)  Provide promptly to each Holder upon written request each
          document filed with the Commission pursuant to the requirements of
          Section 13 and Section 15 of the Exchange Act after the effective date
          of the Shelf Registration Statement or the Additional Shelf
          Registration Statement, as applicable, unless such documents are
          available from EDGAR.

               (xx)   If requested by the underwriters in an underwritten
          offering, make appropriate officers of the Issuer reasonably available
          to the underwriters for meetings with prospective purchasers of the
          Registrable Securities and prepare

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          and present to potential investors customary "road show" material in a
          manner consistent with other new issuances of other securities similar
          to the Registrable Securities.

               (xxi)  Enter into such customary agreements and take all such
          other necessary actions in connection therewith (including those
          requested by the holders of a majority of the Registrable Securities
          being sold) in order to expedite or facilitate disposition of such
          Registrable Securities.

               (xxii) Upon the filing of the Shelf Registration Statement or the
          Additional Shelf Registration Statement, as applicable, and the
          effectiveness of the Shelf Registration Statement or the Additional
          Shelf Registration Statement, as applicable, announce the same by
          issuing a news release to Reuters Economic Services and Bloomberg
          Business News.

          (c)  Each Holder agrees by acquisition of a Registrable Security that,
     upon receipt of any notice from the Issuer in accordance with Section 4(b)
     of the existence of any fact of the kind described in Section 4(b)(iii)(D)
     or 4(b)(iii)(C) hereof, such Holder will, and will use its reasonable best
     efforts to cause any underwriter(s) in an Underwritten Offering to,
     forthwith discontinue disposition of Registrable Securities pursuant to the
     Shelf Registration Statement or the Additional Shelf Registration
     Statement, as applicable, until:

               (i)    such Holder has received copies of the supplemented or
          amended Prospectus contemplated by Section 4(b)(xiii) hereof; or

               (ii)   such Holder is advised in writing (the "Advice") by the
          Issuer that the use of the Prospectus may be resumed, and has received
          copies of any additional or supplemental filings that are incorporated
          by reference in the Prospectus.

     If so directed by the Issuer, each Holder will deliver to the Issuer (at
     the Issuer's expense) all copies, other than permanent file copies then in
     such Holder's possession, of the Prospectus covering such Registrable
     Securities that was current at the time of receipt of such notice of
     suspension.

          (d)  The Issuer is required to send a questionnaire in the form
     attached hereto as Annex B to each Holder of Registrable Securities at
     least 30 Business Days before the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, is declared
     effective. Each Holder who intends to be named as a selling Holder in the
     Shelf Registration Statement or the Additional Shelf Registration
     Statement, as applicable, shall furnish to the Issuer in writing, within 30
     Business Days after receipt of a request therefor as set forth in a
     questionnaire in the form attached hereto as Annex B, such information
     regarding such Holder and the proposed distribution by such Holder of its
     Registrable Securities as the Issuer may reasonably request for use in
     connection with the Shelf Registration Statement, the Additional Shelf
     Registration Statement or Prospectus or preliminary Prospectus included
     therein, as applicable.

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     Holders that do not complete the questionnaire and deliver it to the Issuer
     shall not be named as selling securityholders in the Prospectus or
     preliminary Prospectus included in the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, and therefore shall
     not be permitted to sell any Registrable Securities pursuant to the Shelf
     Registration Statement or the Additional Shelf Registration Statement, as
     applicable, so long as the Issuer has requested, in accordance with this
     Agreement, such information from such Holder and such Holder has had
     adequate time to respond to the Issuer's request. Each Holder who intends
     to be named as a selling Holder in the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, shall promptly
     furnish to the Issuer in writing all information required to be disclosed
     in order to make information previously furnished to the Issuer by such
     Holder not materially misleading and such other information as the Issuer
     may from time to time reasonably request in writing.

          (e)  Upon the effectiveness of the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, each Holder shall
     notify the Issuer at least three Business Days prior to any intended
     distribution of Registrable Securities pursuant to the Shelf Registration
     Statement or the Additional Shelf Registration Statement, as applicable, (a
     "Sale Notice"), which notice shall be effective for five Business Days.
     Each Holder of this Security, by accepting the same, agrees to hold any
     communication by the Issuer in response to a Sale Notice in confidence.

          (f)  Notwithstanding anything in this Agreement to the contrary, each
     party to this Agreement (and any employee, representative or other agent of
     such party) may disclose to any and all persons, without limitation of any
     kind, the U.S. federal income tax treatment and tax structure of the
     transactions contemplated by this offering memorandum and all materials of
     any kind (including opinions or other tax analyses) that are provided to it
     relating to such tax treatment and tax structure. However, any such
     information relating to the U.S. federal income tax treatment or tax
     structure is required to be kept confidential to the extent necessary to
     comply with any applicable federal or state securities laws.

     5.   Registration Expenses.
          ---------------------

          (a)  All expenses incident to the Issuer's performance of or
     compliance with this Agreement shall be borne by the Issuer regardless of
     whether a Shelf Registration Statement or an Additional Shelf Registration
     Statement, as applicable, becomes effective, including, without limitation:

               (i)    all registration and filing fees and expenses (including
          without limitation fees and expenses with respect to filings required
          to be made with the NASD);

               (ii)   all fees and expenses of compliance with federal
          securities and state Blue Sky or securities laws (including without
          limitation reasonable fees and disbursements of counsel for the
          Holders in connection with blue sky qualifications of the Registrable
          Securities);

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               (iii)  all expenses of printing (including printing of
          Prospectuses and certificates for the Common Stock to be issued upon
          conversion of the Notes), messenger and delivery services, and
          telephone;

               (iv)   all reasonable fees and disbursements of counsel to the
          Issuer and, subject to Section 5(b) below, the Holders of Registrable
          Securities;

               (v)    fees and disbursements of the Trustee and its counsel and
          of the registrar and transfer agent for the Common Stock;

               (vi)   all application and filing fees in connection with listing
          (or authorizing for quotation) the Common Stock on a national
          securities exchange or automated quotation system pursuant to the
          requirements hereof; and

               (vii)  all fees and disbursements of independent certified public
          accountants of the Issuer (including the expenses of any special audit
          and comfort letters required by or incident to such performance).

          The Issuer shall bear its internal expenses (including, without
     limitation, all salaries and expenses of its officers and employees
     performing legal, accounting or other duties), the expenses of any annual
     audit and the fees and expenses of any Person, including special experts,
     retained by the Issuer.

          (b)  In connection with the Shelf Registration Statement or the
     Additional Shelf Registration Statement, as applicable, required by this
     Agreement, the Issuer shall reimburse the Initial Purchasers and the
     Holders of Registrable Securities being registered pursuant to the Shelf
     Registration Statement or the Additional Shelf Registration Statement, as
     applicable, for the reasonable fees and disbursements of not more than one
     counsel, which shall be Manatt, Phelps & Phillips, LLP or such other
     counsel chosen by a Majority of Holders for whose benefit the Shelf
     Registration Statement or the Additional Shelf Registration Statement, as
     applicable, is being prepared and is reasonably acceptable to the Issuer.
     The Issuer shall not be required to pay any underwriter discount,
     commission or similar fees related to the sale of the Securities.

     6.   Indemnification and Contribution.
          --------------------------------

          (a)  The Issuer shall indemnify and hold harmless the Initial
     Purchasers, each Holder and each person, if any, who controls any of such
     parties within the meaning of Section 15 of the Securities Act or Section
     20 of the Exchange Act and each of their respective directors, officers,
     employees, representatives and agents (each, an "Indemnified Party"), from
     and against any loss, claim, damage, expense or liability, joint or
     several, or any action in respect thereof (including, but not limited to,
     any loss, claim, damage, expense, liability or action relating to resales
     of the Registrable Securities), to which such Indemnified Party may become
     subject, under the Securities Act or otherwise, insofar as any such loss,
     claim, damage, expense, liability or action arises out of, or is based
     upon:

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               (i)    any untrue statement or alleged untrue statement of a
          material fact contained in (A) the Shelf Registration Statement, the
          Additional Shelf Registration Statement or Prospectus or any amendment
          or supplement thereto or any preliminary prospectus, as applicable, or
          (B) any blue sky application or other document or any amendment or
          supplement thereto prepared or executed by the Issuer (or based upon
          written information furnished by or on behalf of the Issuer expressly
          for use in such blue sky application or other document or amendment on
          supplement) filed in any jurisdiction specifically for the purpose of
          qualifying any or all of the Registrable Securities under the
          securities law of any state or other jurisdiction (such application or
          document being hereinafter called a "Blue Sky Application"); or

               (ii)   the omission or alleged omission to state in the Shelf
          Registration Statement, the Additional Shelf Registration Statement,
          as applicable, or amendments thereto any material fact required to be
          stated therein or necessary to make the statements therein not
          misleading, or the omission or alleged omission to state in the
          Prospectus or any amendment or supplement thereto or any preliminary
          prospectus any material fact required to be stated therein or
          necessary to make the statements therein, in the light of the
          circumstances under which they were made, not misleading,

     and shall reimburse each Indemnified Party promptly upon demand for any
     legal or other expenses reasonably incurred by such Indemnified Party in
     connection with investigating or defending or preparing to defend against
     any such loss, claim, damage, liability or action as such expenses are
     incurred; provided, however, that the Issuer shall not be liable to an
     Indemnified Party in any such case to the extent that any such loss, claim,
     damage, expense, liability or action arises out of, or is based upon, any
     untrue statement or alleged untrue statement or omission or alleged
     omission made in the Shelf Registration Statement, the Additional Shelf
     Registration Statement or Prospectus or amendment or supplement thereto or
     Blue Sky Application, as applicable, in reliance upon and in conformity
     with written information furnished to the Issuer by or on behalf of such
     Indemnified Party specifically for use therein; provided, further, that
     this indemnity shall not inure to the benefit of any Indemnified Party any
     director, officer, employee, representative and agent of that Indemnified
     Party if such loss, claim, damage, expense, liability or action arises from
     the sale of Registrable Securities by such Indemnified Party during a
     Suspension Period or during the period when a stop order is in effect,
     provided that such Indemnified Party shall have received notice from the
     Company of such Suspension Period or stop order in accordance with Section
     4(b) prior to such sale; provided, further, that as to any preliminary
     Prospectus, this indemnity agreement shall not inure to the benefit of any
     Indemnified Party or any officer, employee, representative, agent, director
     or controlling person of that Indemnified Party on account of any loss,
     claim, damage, expense, liability or action arising from the sale of the
     Registrable Securities sold pursuant to the Shelf Registration Statement or
     the Additional Shelf Registration Statement, as applicable, to any person
     by such Indemnified Party if (i) that Indemnified Party failed to send or
     give a copy of the Prospectus, as the same may be amended or supplemented,
     to that person within the time required by the Securities Act and (ii) the
     untrue statement or alleged untrue statement of a material fact or omission
     or

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     alleged omission to state a material fact in such preliminary Prospectus
     was corrected in the Prospectus or a supplement or amendment thereto, as
     the case may be, unless in each case, such failure resulted from
     noncompliance by the Issuer with Section 4. The foregoing indemnity
     agreement is in addition to any liability that the Issuer may otherwise
     have to any Indemnified Party.

          (b)  Each Holder severally and not jointly, shall indemnify and hold
     harmless the Initial Purchasers, the Issuer and each person, if any, who
     controls any of such parties within the meaning of Section 15 of the
     Securities Act or Section 20 of the Exchange Act and each of their
     respective directors, officers, employees, representatives and agents, from
     and against any loss, claim, damage, expense or liability, joint or
     several, or any action in respect thereof, to which the Issuer or any such
     officer, employee, representative, agent or controlling person may become
     subject, insofar as any such loss, claim, damage, expense, liability or
     action arises out of, or is based upon:

               (i)    any untrue statement or alleged untrue statement of any
          material fact contained in the Shelf Registration Statement, the
          Additional Shelf Registration Statement or Prospectus or any amendment
          or supplement thereto or any Blue Sky Application, as applicable; or

               (ii)   the omission or the alleged omission to state in the Shelf
          Registration Statement or the Additional Shelf Registration Statement,
          as applicable, any material fact required to be stated therein or
          necessary to make the statements therein not misleading, or the
          omission or alleged omission to state in the Prospectus any material
          fact required to be stated therein or necessary to make the statements
          therein, in light of the circumstances under which they were made, not
          misleading,

     but in each case only to the extent that such untrue statement or alleged
     untrue statement or omission or alleged omission was made in reliance upon
     and in conformity with written information furnished to the Issuer by or on
     behalf of such Holder (or its related Indemnified Party) specifically for
     use therein, and shall reimburse the Issuer and any such director, officer,
     employee, representative, agent or controlling person promptly upon demand
     for any legal or other expenses reasonably incurred by the Issuer or any
     such officer, employee or controlling person in connection with
     investigating or defending or preparing to defend against any such loss,
     claim, damage, liability or action as such expenses are incurred. The
     foregoing indemnity agreement is in addition to any liability that any
     Holder may otherwise have to the Issuer and any such director, officer,
     employee or controlling person. In no event shall the liability of any
     selling Holder of Registrable Securities hereunder be greater in amount
     than the dollar amount of the proceeds received by such Holder upon the
     sale of the Registrable Securities pursuant to the Shelf Registration
     Statement or the Additional Shelf Registration Statement, as applicable,
     giving rise to such indemnification obligation.

          (c)  Promptly after receipt by an indemnified party under this Section
     6 of notice of any claim or the commencement of any action, the indemnified
     party shall, if a claim in respect thereof is to be made against the
     indemnifying party under this Section 6,

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     notify the indemnifying party in writing of the claim or the commencement
     of that action; provided, however, that the failure to notify the
     indemnifying party shall not relieve it from any liability that it may have
     under this Section 6 except to the extent it has been materially prejudiced
     by such failure and, provided, further, that the failure to notify the
     indemnifying party shall not relieve it from any liability that it may have
     to an indemnified party otherwise than under this Section 6. If any such
     claim or action shall be brought against an indemnified party, and it shall
     notify the indemnifying party thereof, the indemnifying party shall be
     entitled to participate therein and, to the extent that it wishes, jointly
     with any other similarly notified indemnifying party, to assume the defense
     thereof with counsel satisfactory to the indemnified party. After notice
     from the indemnifying party to the indemnified party of its election to
     assume the defense of such claim or action, the indemnifying party shall
     not be liable to the indemnified party under this Section 6 for any legal
     or other expenses subsequently incurred by the indemnified party in
     connection with the defense thereof other than reasonable costs of
     investigation; provided, however, that the indemnified party shall have the
     right to employ counsel to represent jointly the indemnified party and its
     respective directors, employees, officers and controlling persons who may
     be subject to liability arising out of any claim in respect of which
     indemnity may be sought by the indemnified party against the indemnifying
     party under this Section 6 if (1) employment of such counsel has been
     authorized in writing by the indemnifying party, or (2) such indemnifying
     party shall not have employed counsel to have charge of the defense of such
     proceeding within 30 days of the receipt of notice thereof, or (3) such
     indemnified party shall have reasonably concluded that the representation
     of such indemnified party and those directors, employees, officers and
     controlling persons by the same counsel representing the indemnifying party
     would be inappropriate under applicable standards of professional conduct
     due to actual or potential differing interests between them or where there
     may be one or more defenses available to them that are different from,
     additional to or in conflict with those available to the indemnifying
     party, and in any such event ((1), (2) or (3)) the fees and expenses of
     such separate counsel shall be paid by the indemnifying party as incurred.
     It is understood that the indemnifying party shall not be liable for the
     fees and expenses of more than one separate firm (in addition to local
     counsel in each jurisdiction) for all indemnified parties in connection
     with any proceeding or related proceedings. No indemnifying party shall:

               (i)    without the prior written consent of the indemnified
          parties (which consent shall not be unreasonably withheld) effect any
          settlement of any pending or threatened action in respect of which
          indemnification or contribution may be sought hereunder (whether or
          not the indemnified parties are actual or potential parties to such
          claim or action) unless such settlement, compromise or consent
          includes an unconditional release of such indemnified party from all
          liability arising out of such claim, action, suit or proceeding and
          does not include a statement as to or an admission of fault,
          culpability or failure to act by or on behalf of any indemnified
          party, or

               (ii)   be liable for any settlement of any such action effected
          without its written consent (which consent shall not be unreasonably
          withheld), but if settled with its written consent or if there be a
          final judgment for the plaintiff in any such

                                      B-21

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          action, the indemnifying party agrees to indemnify and hold harmless
          any indemnified party from and against any loss of liability by reason
          of such settlement or judgment in accordance with this Section 6.

          (d)  If the indemnification provided for in this Section 6 is
     unavailable or insufficient to hold harmless an indemnified party under
     subsections (a) or (b) above, then each indemnifying party shall contribute
     to the amount paid or payable by such indemnified party as a result of the
     losses, claims, damages, expenses or liabilities (or actions in respect
     thereof) referred to in subsection (a) or (b) above (i) in such proportion
     as is appropriate to reflect the relative benefits received by the
     indemnifying party or parties on the one hand and the indemnified party on
     the other from the registration of the Registrable Securities pursuant to
     the Shelf Registration, or (ii) if the allocation provided by the foregoing
     clause (i) is not permitted by applicable law, in such proportion as is
     appropriate to reflect not only the relative benefits referred to in clause
     (i) above but also the relative fault of the indemnifying party or parties
     on the one hand and the indemnified party on the other in connection with
     the statements or omissions that resulted in such losses, claims, damages
     or liabilities (or actions in respect thereof) as well as any other
     relevant equitable considerations. The relative fault of the parties shall
     be determined by reference to, among other things, whether the untrue or
     alleged untrue statement of a material fact or the omission or alleged
     omission to state a material fact relates to information supplied by the
     Issuer on the one hand or such Holder or such other indemnified party, as
     the case may be, on the other, and the parties' relative intent, knowledge,
     access to information and opportunity to correct or prevent such statement
     or omission. The amount paid by an indemnified party as a result of the
     losses, claims, damages or liabilities referred to in the first sentence of
     this subsection (d) shall be deemed to include any legal or other expenses
     reasonably incurred by such indemnified party in connection with
     investigating or defending any action or claim which is the subject of this
     subsection (d). The Issuer and the Holders agree that it would not be just
     and equitable if contribution pursuant to this Section 6(d) were determined
     by pro rata allocation or by any other method of allocation which does not
     take account of the equitable considerations referred to herein.
     Notwithstanding any other provision of this Section 6(d), the Holders of
     the Registrable Securities shall not be required to contribute any amount
     in excess of the amount by which the gross proceeds received by such
     Holders from the sale of the Registrable Securities pursuant to the Shelf
     Registration Statement or the Additional Shelf Registration Statement, as
     applicable, exceeds the amount of damages which such Holders have otherwise
     been required to pay by reason of such untrue or alleged untrue statement
     or omission or alleged omission. No person guilty of fraudulent
     misrepresentation (within the meaning of Section 11(f) of the Securities
     Act) shall be entitled to contribution from any person who was not guilty
     of such fraudulent misrepresentation. For purposes of this paragraph (d),
     each person, if any, who controls such indemnified party within the meaning
     of the Securities Act or the Exchange Act shall have the same rights to
     contribution as such indemnified party and each person, if any, who
     controls the Issuer within the meaning of the Securities Act or the
     Exchange Act shall have the same rights to contribution as the Issuer. The
     Holders' respective obligations to contribute pursuant to this Section 6
     are several in proportion to the respective amount of Registrable
     Securities they have sold pursuant to a Registration Statement and not
     joint. The remedies provided for in this Section 6 are not exclusive

                                      B-22

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     and shall not limit any rights or remedies which may otherwise be available
     to any indemnified party at law or in equity.

          (e)  If at any time an indemnified party shall have requested an
     indemnifying party to reimburse such indemnified party for fees and
     expenses of counsel as contemplated herein, then such indemnifying party
     agrees that it shall be liable for any settlement of any proceeding
     effected without its written consent if (i) such settlement is entered into
     more than 30 days after receipt by such indemnifying party of the aforesaid
     request, (ii) such indemnifying party shall not have reimbursed such
     indemnified party in accordance with such request prior to the date of such
     settlement, and (iii) such indemnified party shall have given such
     indemnifying party at least 30 days' prior notice of its intention to
     settle.

          (f)  The indemnity and contribution provisions contained in this
     Section 6 shall remain operative and in full force and effect regardless of
     (i) any termination of this Agreement, (ii) any investigation made by or on
     behalf of any Initial Purchaser, any Holder or any person controlling any
     Initial Purchaser or any Holder, or by or on behalf of the Issuer, its
     officers or directors or any person controlling the Issuer, and (iii) any
     sale of Registrable Securities pursuant to the Shelf Registration Statement
     or the Additional Shelf Registration Statement, as applicable.

     7.   Information Requirements.
          ------------------------

     The Issuer covenants that, if at any time before the end of the
Effectiveness Period it is not subject to the reporting requirements of the
Exchange Act, it will cooperate with any Holder of Registrable Securities and
take such further action as any Holder of Registrable Securities may reasonably
request in writing (including, without limitation, making such representations
as any such Holder may reasonably request), all to the extent required from time
to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemptions
provided by Rule 144 and Rule 144A under the Securities Act and customarily
taken in connection with sales pursuant to such exemptions.

     In addition, in the event the Issuer is not subject to Section 13 or 15(d)
of the Exchange Act, the Issuer hereby agrees with each Holder, for so long as
any Registrable Securities remain outstanding, to make available to any Holder
or beneficial owner of Registrable Securities in connection with any sale
thereof and any prospective purchaser of such Registrable Securities from such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.

     The Issuer shall file the reports required to be filed by it under the
Exchange Act and shall comply with all other requirements set forth in the
instructions to Form S-1 or Form S-3, as the case may be, in order to allow the
Issuer to be eligible to file registration statements on Form S-1 or Form S-3.

     8.   Underwritten Registrations.
          --------------------------

          (a)  The Underwriting Majority may sell its Registrable Securities in
     an Underwritten Offering pursuant to the Shelf Registration Statement or
     the Additional

                                      B-23

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     Shelf Registration Statement, as applicable, only with the Issuer's
     consent, which consent may not be unreasonably withheld, delayed or
     conditioned.

          (b)  Participation of Holders. No Holder may participate in any
     Underwritten Registration hereunder unless such Holder:

               (i)    agrees to sell such Holder's Registrable Securities on the
          basis provided in any underwriting arrangements approved by the
          Persons entitled hereunder to approve such arrangements; and

               (ii)   completes and executes all reasonable questionnaires,
          powers of attorney, indemnities, underwriting agreements, lock-up
          letters and other documents reasonably required under the terms of
          such underwriting arrangements.

          (c)  Selection of Underwriters. In any such Underwritten Offering, the
     investment banker or investment bankers and manager or managers that will
     administer the offering will be selected by a Majority of Holders whose
     Registrable Securities are included in such Underwriting Offering;
     provided, that such investment bankers and managers must be reasonably
     satisfactory to the Issuer.

     9.   Miscellaneous.
          -------------

          (a)  Remedies. The Issuer acknowledges and agrees that any failure by
     the Issuer to comply with its obligations under Section 2 hereof may result
     in material irreparable injury to the Initial Purchasers or the Holders for
     which there is no adequate remedy at law, that it will not be possible to
     measure damages for such injuries precisely and that, in the event of any
     such failure, the Initial Purchasers or any Holder may obtain such relief
     as may be required to specifically enforce the Issuer's obligations under
     Section 2 hereof. The Issuer further agrees to waive the defense in any
     action for specific performance that a remedy at law would be adequate.

          (b)  No Inconsistent Agreements. The Issuer is not a party to, as of
     the date hereof, and will not enter into, on or after the date of this
     Agreement, any agreement with respect to its securities that conflicts with
     the rights granted to the Holders in this Agreement. In addition, the
     Issuer shall not grant to any of its security holders (other than the
     holders of Registrable Securities in such capacity) the right to include
     any of its securities in the Shelf Registration Statement or the Additional
     Shelf Registration Statement, as applicable, provided for in this Agreement
     other than the Registrable Securities. The Issuer has not previously
     entered into any agreement (which has not expired or been terminated)
     granting any registration rights with respect to its securities to any
     Person, which rights conflict with the provisions hereof.

          (c)  Adjustments Affecting Registrable Securities. The Issuer shall
     not, directly or indirectly, take any action with respect to the
     Registrable Securities as a class that would adversely affect the ability
     of the Holders of Registrable Securities to include such Registrable
     Securities in a registration undertaken pursuant to this Agreement.

                                      B-24

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          (d)  Amendments and Waivers. This Agreement may not be amended,
     modified or supplemented, and waivers or consents to or departures from the
     provisions hereof may not be given, unless the Issuer has obtained the
     written consent of a Majority of Holders; provided, however, that no
     amendment, modification, supplement, waiver or consent to or departure from
     the provisions of Section 6 that materially and adversely affects a Holder
     hereof shall be effective as against any such Holder of Registrable
     Securities unless consented to in writing by such Holder; provided,
     further, that with respect to any matter that directly or indirectly
     adversely affects the rights of any Initial Purchaser hereunder, the Issuer
     shall obtain the written consent of each such Initial Purchaser against
     which such amendment, modification, supplement, waiver or consent is to be
     effective.

          (e)  Notices. All notices and other communications provided for or
     permitted hereunder shall be made in writing by hand-delivery, first-class
     mail (registered or certified, return receipt requested), telex,
     telecopier, or air courier guaranteeing overnight delivery:

               (i)    if to a Holder, at the address set forth on the records of
          the registrar under the Indenture or the transfer agent of the Common
          Stock, as the case may be; and

               (ii)   if to the Issuer:

               New Century Financial Corporation
               18400 Von Karman, Suite 100
               Irvine, California 92612
               Fax No.: (949) 440-7033
               Attention:  Stergios Theologides, General Counsel

               With a copy to:

               O'Melveny & Myers LLP
               610 Newport Center Drive, 17th Floor
               Newport Beach, California 92660
               Fax No.:  (949) 823-6994
               Attention:  David A. Krinsky, Esq.

               (iii)  if to the Initial Purchasers:

               c/o Bear, Stearns & Co. Inc.
               383 Madison Avenue
               New York, New York  10179
               Fax No.:  (212) 272-3092
               Attention:  Steve Parish, Equity Capital Markets

               With a copy to:

                                      B-25

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                                                                  Execution Copy
================================================================================

               Manatt, Phelps & Phillips, LLP
               11355 West Olympic Boulevard
               Los Angeles, California  90064
               Fax No.:  (310) 914-5772
               Attention:  Gordon Bava

     All such notices and communications shall be deemed to have been duly
     given: at the time delivered by hand, if personally delivered; five
     Business Days after being deposited in the mail, postage prepaid, if
     mailed; when answered back, if telexed; when receipt acknowledged, if
     telecopied; and on the next Business Day, if timely delivered to an air
     courier guaranteeing overnight delivery.

     Copies of all such notices, demands or other communications shall be
     concurrently delivered by the Person giving the same to the Trustee at the
     address specified in the Indenture.

     A document or notice shall be deemed to have been furnished to the Holders
     of the Registrable Securities if it is provided to the registered holders
     of the Registrable Securities at the address set forth in clause (i) above.

          (f)  Successors and Assigns. Any person who purchases any Registrable
     Securities from the Initial Purchasers or any Holder shall be deemed, for
     purposes of this Agreement, to be an assignee of the Initial Purchasers or
     such Holder, as the case may be. This Agreement shall inure to the benefit
     of and be binding upon the successors, assigns and transferees of each of
     the parties, including without limitation and without the need for an
     express assignment, subsequent Holders of Registrable Securities; provided,
     however, that (i) nothing contained herein shall be deemed to permit any
     assignment, transfer or other disposition of Registrable Securities in
     violation of the terms of the Purchase Agreement or the Indenture and (ii)
     this Agreement shall not inure to the benefit of or be binding upon a
     successor or assign of a Holder unless and to the extent such successor or
     assign acquired Registrable Securities from such Holder. If any transferee
     of any Holder shall acquire Registrable Securities, in any manner, whether
     by operation of law or otherwise, such Registrable Securities shall be held
     subject to all of the terms of this Agreement, and by taking and holding
     such Registrable Securities such person shall be conclusively deemed to
     have agreed to be bound by and to perform all of the terms and provisions
     of this Agreement and such Person shall be entitled to receive the benefits
     hereof. The Initial Purchasers (in their capacity as Initial Purchasers)
     shall have no liability or obligation to the Issuer with respect to any
     failure by a Holder to comply with, or breach by any Holder of, any of the
     obligations of such Holder under this Agreement.

          (g)  Purchases and Sales of Notes. The Issuer shall not, and shall use
     its reasonable best efforts to cause its affiliates (as defined in Rule 405
     under the Securities Act) within its Control not to, resell or otherwise
     transfer any Notes acquired by the Company or such affiliates, except
     pursuant to an effective registration statement under the Securities Act or
     an exemption therefrom.

                                      B-26

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          (h)  Third Party Beneficiary. The Holders shall be third party
     beneficiaries to the agreements made hereunder between the Issuer and the
     Initial Purchasers, and such Initial Purchasers shall have the right to
     enforce such agreements directly to the extent they deem such enforcement
     necessary or advisable to protect their rights or the rights of Holders
     hereunder.

          (i)  Counterparts. This Agreement may be executed in any number of
     counterparts and by the parties hereto in separate counterparts, each of
     which when so executed shall be deemed to be an original and all of which
     taken together shall constitute one and the same agreement.

          (j)  Securities Held by the Issuer or Their Affiliates. Whenever the
     consent or approval of Holders of a specified percentage of Registrable
     Securities is required hereunder, Registrable Securities held by the Issuer
     or its affiliates (as such term is defined in Rule 405 under the Securities
     Act) shall not be counted in determining whether such consent or approval
     was given by the Holders of such required percentage.

          (k)  Headings. The headings in this Agreement are for convenience of
     reference only and shall not limit or otherwise affect the meaning hereof.

          (l)  Governing Law. This agreement shall be governed by, and construed
     in accordance with, the laws of the State of New York.

          (m)  Consent to Jurisdiction. Each party irrevocably agrees that any
     legal suit, action or proceeding arising out of or based upon this
     Agreement or the transactions contemplated hereby ("Related Proceedings")
     may be instituted in the federal courts of the United States of America
     located in the City of New York or the courts of the State of New York in
     each case located in the Borough of Manhattan in the City of New York
     (collectively, the "Specified Courts"), and irrevocably submits to the
     exclusive jurisdiction (except for proceedings instituted in regard to the
     enforcement of a judgment of any such court (a "Related Judgment"), as to
     which such Jurisdiction is non-exclusive) of such courts in any such suit,
     action or proceeding. The parties further agree that service of any
     process, summons, notice or document by mail to such party's address set
     forth above shall be effective service of process for any lawsuit, action
     or other proceeding brought in any such court. The parties hereby
     irrevocably and unconditionally waive any objection to the laying of venue
     of any lawsuit, action or other proceeding in the Specified Courts, and
     hereby further irrevocably and unconditionally waive and agree not to plead
     or claim in any such court that any such lawsuit, action or other
     proceeding brought in any such court has been brought in an inconvenient
     forum.

          (n)  Severability. If any one or more of the provisions contained
     herein, or the application thereof in any circumstance, is held invalid,
     illegal or unenforceable, the validity, legality and enforceability of any
     such provision in every other respect and of the remaining provisions
     contained herein shall not be affected or impaired thereby, and the parties
     hereto shall use its reasonable best efforts to find and employ an
     alternative means to achieve the same or substantially the same result as
     that contemplated by such

                                      B-27

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     term, provision, covenant or restriction, it being intended that all of the
     rights and privileges of the parties shall be enforceable to the fullest
     extent permitted by law.

          (o)  Entire Agreement. This Agreement, together with the Purchase
     Agreement and the Indenture, is intended by the parties as a final
     expression of their agreement and intended to be a complete and exclusive
     statement of the agreement and understanding of the parties hereto in
     respect of the subject matter contained herein. There are no restrictions,
     promises, warranties or undertakings, other than those set forth or
     referred to herein with respect to the registration rights granted by the
     Issuer with respect to the Registrable Securities. This Agreement
     supersedes all prior agreements and understandings between the parties with
     respect to such subject matter.

                           [Signature page to follow]

                                      B-28

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                        Very truly yours,

                                        NEW CENTURY FINANCIAL CORPORATION

                                        By:     /s/  Edward F. Gotschall
                                           -------------------------------------
                                                   Edward F. Gotschall
                                             Vice Chairman and Chief Financial
                                                          Officer

     The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first written above.

                                        BEAR, STEARNS & CO. INC.,
                                        on behalf of the Initial Purchasers

                                        By:         /s/  Steve Parish
                                           -------------------------------------
                                                       Steve Parish
                                                 Senior Managing Director

                                      B-29<PAGE>

                                                                    EXHIBIT 10.9

                        NEW CENTURY FINANCIAL CORPORATION

                             1995 STOCK OPTION PLAN

                       (Amended and Restated May 30, 1997)

      Composite Plan document reflecting Amendments to the Plan approved by
        shareholders on May 18, 1998, May 17, 1999, May 15, 2000, May 15,
       2001, May 7, 2002, and May 21, 2003, Amendments approved by the
           Board of Directors on November 29, 2000 and March 26, 2002,
                     and the Company's 2003 stock dividend.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                PAGE

<S>         <C>                                                                                  <C>
I.          THE PLAN..............................................................................1

      1.1                Purpose..................................................................1

      1.2                Administration...........................................................1

      1.3                Participation............................................................2

      1.4                Shares Available Under the Plan..........................................2

      1.5                Grant of Awards..........................................................2

      1.6                Exercise of Awards.......................................................3

      1.7                No Transferability; Limited Exception to Transfer Restrictions...........3

II.         OPTIONS...............................................................................4

      2.1                Grants...................................................................4

      2.2                Option Price.............................................................4

      2.3                Option Period............................................................5

      2.4                Exercise of Options......................................................5

      2.5                Limitations on Grant of Incentive Stock Options..........................5

      2.6                Non-Employee Director Options............................................6

      2.7                No Repricing.............................................................8

III.        STOCK APPRECIATION RIGHTS.............................................................8

      3.1                Grants...................................................................8

      3.2                Exercise of Stock Appreciation Rights....................................8

      3.3                Payment..................................................................9

IV.         RESTRICTED STOCK AWARDS..............................................................10

      4.1                Grants..................................................................10

      4.2                Restrictions............................................................10

V.          PERFORMANCE SHARE AWARDS.............................................................10

      5.1                Grants of Performance Share Awards......................................10

      5.2                Grants of Performance-Based Share Awards................................11
</TABLE>

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                PAGE
<S>         <C>                                                                                  <C>
VI.         OTHER PROVISIONS.....................................................................12

      6.1                Rights of Eligible Employees, Participants and Beneficiaries............12

      6.2                Adjustments Upon Changes in Capitalization..............................13

      6.3                Termination of Employment...............................................14

      6.4                Acceleration of Awards..................................................16

      6.5                Government Regulations..................................................16

      6.6                Tax Withholding.........................................................16

      6.7                Amendment, Termination and Suspension...................................17

      6.8                Privileges of Stock Ownership...........................................18

      6.9                Effective Date of the Plan..............................................18

      6.10               Term of the Plan........................................................18

      6.11               Governing Law...........................................................18

      6.12               Plan Construction.......................................................18

      6.13               Non-Exclusivity of Plan.................................................19

VII.        DEFINITIONS..........................................................................19

      7.1                Definitions.............................................................19
</TABLE>

                                      -ii-

<PAGE>

                        NEW CENTURY FINANCIAL CORPORATION
                             1995 STOCK OPTION PLAN
                       (Amended and Restated May 30, 1997)

      Composite Plan document reflecting Amendments to the Plan approved by
     shareholders on May 18, 1998, May 17, 1999, May 15, 2000, May 15, 2001,
     May 7, 2002, and May 21, 2003, Amendments approved by the Board of
               Directors on November 29, 2000 and March 26, 2002,
                     and the Company's 2003 stock dividend.

I.      THE PLAN.

        1.1     PURPOSE.

        The purpose of this Plan is to promote the success of the Company by
providing an additional means to attract, motivate and retain key personnel,
consultants, advisors and knowledgeable directors through the grant of Options
and other Awards that provide added long term incentives for high levels of
performance and for significant efforts to improve the financial performance of
the Company. Capitalized terms are defined in Article VII.

        1.2     ADMINISTRATION.

                (a) This Plan shall be administered by the Committee. Action of
        the Committee with respect to the administration of this Plan shall be
        taken pursuant to a majority vote or the unanimous written consent of
        its members. In the event action by the Committee is taken by written
        consent, the action shall be deemed to have been taken at the time
        specified in the consent or, if none is specified, at the time of the
        last signature. The Committee may delegate administrative functions to
        individuals who are officers or employees of the Company.

                (b) Subject to the express provisions of this Plan, the
        Committee shall have the authority to construe and interpret this Plan
        and any agreements defining the rights and obligations of the Company
        and Participants under this Plan, to further define the terms used in
        this Plan, to prescribe, amend and rescind rules and regulations
        relating to the administration of this Plan, to determine the duration
        and purposes of leaves of absence which may be granted to Participants
        without constituting a termination of their employment or consulting
        services for purposes of this Plan, to accelerate or extend the
        exercisability or extend the term of any or all outstanding Awards
        within the maximum term of such Awards required by Section 2.3 or
        applicable law, and to make all other determinations necessary or
        advisable for the administration of this Plan. The determination of the
        Committee on any of the foregoing matters shall be conclusive.

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

<PAGE>

        officer of the Company or any Subsidiary, shall be liable for any such
        action or inaction.

                (d) In making any determination or in taking or not taking any
        action under this Plan, the Company, any Subsidiary, the Board or the
        Committee may obtain and rely upon the advice of experts, including
        professional advisors to the Company. No member of the Board or
        Committee, or officer of the Company or any Subsidiary, shall be liable
        for any such action or determination made or omitted.

                (e) Subject to the requirements of Section 7.1(h), the Board, at
        any time it so desires, may increase or decrease the number of members
        of the Committee, may remove from membership on the Committee all or any
        portion of its members, and may appoint such person or persons as it
        desires to fill any vacancy existing on the Committee, whether caused by
        removal, resignation or otherwise.

        1.3     PARTICIPATION.

        Awards may be granted only to Eligible Employees. An Eligible Employee
who has been granted an Award may, if otherwise eligible, be granted additional
Awards if the Committee shall so determine. Except as provided in Section 2.6
below, members of the Board who are not officers or employees of the Company
shall not be eligible to receive Awards.

        1.4     SHARES AVAILABLE UNDER THE PLAN.

        Subject to the provisions of Section 6.2, the capital stock that may be
delivered under this Plan shall be shares of the Company's authorized but
unissued Common Stock and any shares of its Common Stock held as treasury
shares. The aggregate maximum number of shares of Common Stock that may be
issued or transferred pursuant to Awards (including Incentive Stock Options)
granted under this Plan shall not exceed 9,750,000 shares. The maximum number of
shares of Common Stock that may be delivered pursuant to options qualified as
Incentive Stock Options granted under the Plan is 9,750,000 shares. The maximum
number of shares that may be subject to Options and Stock Appreciation Rights
that are granted during any calendar year to any individual shall not exceed
750,000 shares. Each of the foregoing numerical limits shall be subject to
adjustment as contemplated by this Section 1.4 and Section 6.2. If any Option
and any related Stock Appreciation Right shall lapse or be cancelled or
terminate without having been exercised in full, or any Common Stock subject to
a Restricted Stock Award shall not vest or any Common Stock subject to a
Performance Share Award shall not have been transferred, the unpurchased,
unvested or nontransferred shares subject thereto shall again be available for
purposes of this Plan.

        1.5     GRANT OF AWARDS.

        Subject to the express provisions of this Plan, the Committee shall
determine from the class of Eligible Employees those individuals to whom Awards
under this Plan shall be granted, the terms of Awards (which need not be
identical) and the number of shares

                                        2

<PAGE>

of Common Stock subject to each Award. Each Award shall be subject to the terms
and conditions set forth in this Plan and such other terms and conditions
established by the Committee as are not inconsistent with the purpose and
provisions of this Plan. The grant of an Award is made on the Award Date.

        1.6     EXERCISE OF AWARDS.

        An Option or Stock Appreciation Right shall be deemed to be exercised
when the Secretary of the Company receives written notice of such exercise from
the Participant, together with payment of the purchase price made in accordance
with Section 2.2(a), except to the extent payment may be permitted to be made
following delivery of written notice of exercise in accordance with Section
2.2(b). Notwithstanding any other provision of this Plan, the Committee may
impose, by rule and in Awards Agreements, such conditions upon the exercise of
Awards (including, without limitation, conditions limiting the time of exercise
to specified periods) as may be required to satisfy applicable regulatory
requirements.

        1.7     NO TRANSFERABILITY; LIMITED EXCEPTION TO TRANSFER RESTRICTIONS.

                (a) Unless otherwise expressly provided below (or pursuant to)
        this Section 1.7, by applicable law and by the Award Agreement, as the
        same may be amended, (i) all Awards are non-transferable and shall not
        be subject in any manner to sale, transfer, anticipation, alienation,
        assignment, pledge, encumbrance or charge; Awards shall be exercised
        only by the Participant; and (ii) amounts payable or shares issuable
        pursuant to an Award shall be delivered only to (or for the account of)
        the Participant.

                (b) The Committee may permit Awards to be exercised by and paid
        to certain persons or entities related to the Participant, including but
        not limited to members of the Participant's immediate family and/or
        charitable institutions, or to such other persons or entities as may be
        approved by the Committee, pursuant to such conditions and procedures as
        the Committee may establish. Any permitted transfer shall be subject to
        the condition that the Committee receive evidence satisfactory to it
        that the transfer is being made for estate and/or tax planning purposes
        on a gratuitous or donative basis and without consideration (other than
        minimal consideration). Notwithstanding the foregoing, Incentive Stock
        Options and Restricted Stock Awards shall be subject to any and all
        additional transfer restrictions under the Code.

                (c) The exercise and transfer restrictions in Section 1.7(a)
        shall not apply to:

                        (i)     transfers to the Company;

                        (ii)    the designation of a beneficiary to receive
                benefits in the event of the Participant's death or, if the
                Participant has died, transfers to or exercise by the
                Participant's beneficiary, or in the absence of a validly

                                        3

<PAGE>

                designated beneficiary, transfers by will or the laws of descent
                and distribution;

                        (iii)   transfers pursuant to a QDRO order if approved
                or ratified by the Committee;

                        (iv)    if the Participant has suffered a Total
                Disability, permitted transfers or exercises on behalf of the
                Participant by his legal representative;

                        (v)     the authorization by the Committee of "cashless
                exercise" procedures with third parties who provide financing
                for the purpose of (or who otherwise facilitate) the exercise of
                Awards consistent with applicable laws and the express
                authorization of the Committee.

II.     OPTIONS.

        2.1     GRANTS.

        One or more Options may be granted to any Eligible Employee. Each Option
so granted shall be designated by the Committee as either a Nonqualified Stock
Option or an Incentive Stock Option; provided, however, that consultants or
advisors may not be granted Incentive Stock Options under the Plan.

        2.2     OPTION PRICE.

                (a) The purchase price per share of Common Stock covered by each
        Option shall be determined by the Committee, but in the case of
        Incentive Stock Options shall not be less than 100% (110% in the case of
        a Participant who owns more than 10% of the total combined voting power
        of all classes of stock of the Company) of the Fair Market Value of the
        Common Stock on the date the Incentive Stock Option is granted. The
        purchase price of any shares purchased shall be paid in full at the time
        of each purchase in one or a combination of the following methods: (i)
        in cash or by check payable to the order of the Company, (ii) if
        authorized by the Committee or specified in the Option being exercised,
        by a promissory note made by the Participant in favor of the Company,
        upon the terms and conditions determined by the Committee, and secured
        by the Common Stock issuable upon exercise in compliance with applicable
        law (including, without limitation, state corporate law and federal
        margin requirements) or (iii) if authorized by the Committee or
        specified in the Option being exercised, by shares of Common Stock of
        the Company already owned by the Participant; provided, however, that
        any shares delivered which were initially acquired upon exercise of a
        stock option must have been owned by the Participant at least six months
        as of the date of delivery. Shares of Common Stock used to satisfy the
        exercise price of an Option shall be valued at their Fair Market Value
        on the date of exercise.

                (b) In addition to the payment methods described in subsection
        (a), the Option may provide that the Option can be exercised and payment
        made by

                                        4

<PAGE>

        delivering a properly executed exercise notice together with irrevocable
        instructions to a bank or broker to promptly deliver to the Company the
        amount of sale or loan proceeds necessary to pay the exercise price and,
        unless otherwise allowed by the Committee, any applicable tax
        withholding under Section 6.6. The Company shall not be obligated to
        deliver certificates for the shares unless and until it receives full
        payment of the exercise price therefor.

        2.3     OPTION PERIOD.

        Each Option and all rights or obligations thereunder shall expire on
such date as shall be determined by the Committee, but not later than 10 years
after the Award Date, and shall be subject to earlier termination as hereinafter
provided.

        2.4     EXERCISE OF OPTIONS.

                (a) Subject to Sections 6.2 and 6.4, an Option may become
        exercisable or vest, in whole or in part, on the date or dates specified
        in the Award Agreement and thereafter shall remain exercisable until the
        expiration or earlier termination of the Option. An Option may be
        exercisable or vest on the Award Date.

                (b) The Committee may, at any time after grant of the Option and
        from time to time, increase the number of shares exercisable at any time
        so long as the total number of shares subject to the Option is not
        increased. No Option shall be exercisable except in respect of whole
        shares, and fractional share interests shall be disregarded. Not less
        than 10 shares of Common Stock may be purchased at one time unless the
        number purchased is the total number at the time available for purchase
        under the terms of the Option.

        2.5     LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS.

                (a) To the extent that the aggregate fair market value of stock
        with respect to which incentive stock options first become exercisable
        by a Participant in any calendar year exceeds $100,000, taking into
        account both Common Stock subject to Incentive Stock Options under this
        Plan and stock subject to incentive stock options under all other plans
        of the Company, such options shall be treated as nonqualified stock
        options. For purposes of determining whether the $100,000 limit is
        exceeded, the fair market value of stock subject to options shall be
        determined as of the date the options are awarded. In reducing the
        number of options treated as incentive stock options to meet the
        $100,000 limit, the most recently granted options shall be reduced
        first. To the extent a reduction of simultaneously granted options is
        necessary to meet the $100,000 limit, the Company may, in the manner and
        to the extent permitted by law, designate which shares of Common Stock
        are to be treated as shares acquired pursuant to the exercise of an
        Incentive Stock Option.

                (b) There shall be imposed in any Award Agreement relating to
        Incentive Stock Options such terms and conditions as are required in
        order that the Option be an "incentive stock option" as that term is
        defined in Section 422 of the Code.

                                        5

<PAGE>

                (c) No Incentive Stock Option may be granted to any person who,
        at the time the Incentive Stock Option is granted, owns shares of
        outstanding Common Stock possessing more than 10% of the total combined
        voting power of all classes of stock of the Company, unless the exercise
        price of such Option is at least 110% of the Fair Market Value of the
        stock subject to the Option and such Option by its terms is not
        exercisable after the expiration of five years from the date such Option
        is granted.

        2.6     NON-EMPLOYEE DIRECTOR OPTIONS.

                (a) Participation. Options under this Section 2.6 shall be
        granted only to Non-Employee Directors. Options granted pursuant to this
        Section 2.6 will be evidenced by Award Agreements the forms of which
        have been approved by the Board. Option grants contemplated by this
        Section 2.6 shall be made without any further action by the Board or the
        Committee.

                (b) 2001 Option Grants. Upon the date of the Company's annual
        meeting of stockholders in 2001, each Non-Employee Director then in
        office (or elected to office at such meeting) who continues as a
        Non-Employee Director after such meeting shall automatically be granted
        a Nonqualified Stock Option (the Award Date of which shall be the date
        of such meeting) to purchase 25,000 shares of Common Stock.

                (c) Initial Option Grants. Upon an individual's initial election
        to the Board as a Non-Employee Director (or initial appointment to the
        Board as a Non-Employee Director), such Non-Employee Director shall
        automatically be granted a Nonqualified Stock Option (the Award Date of
        which shall be the date of such election or appointment) to purchase
        22,500 shares of Common Stock. Notwithstanding the foregoing, a
        Non-Employee Director whose initial election or appointment to the Board
        as a Non-Employee Director occurs in 2001 and on or before the date of
        the Company's annual meeting of stockholders in 2001 shall be eligible
        to be granted an Option under Section 2.6(b) but shall not be granted an
        Option under this Section 2.6(c) (or the predecessor provision to this
        Section 2.6(c)).

                (d) Annual Option Grants. Each Non-Employee Director then
        continuing in office shall automatically be granted on the day of the
        Company's annual stockholders meeting in each year during the term of
        this Plan commencing in 2002 a Nonqualified Stock Option (the Award Date
        of which shall be the date of such meeting) to purchase 15,000 shares of
        Common Stock. Notwithstanding the foregoing, a Non-Employee Director
        shall not be granted an Option under this Section 2.6(d) if, during the
        same calendar year, he or she had been granted or is then entitled to an
        Option grant under Section 2.6(b) or under Section 2.6(c) (or the
        predecessor provision to Section 2.6(c)).

                (e) Option Price. The purchase price per share of the Common
        Stock covered by each Option granted pursuant to this Section 2.6 shall
        be one hundred

                                        6

<PAGE>

        percent of the Fair Market Value of the Common Stock on the Award Date.
        The purchase price of any shares purchased shall be paid in full at the
        time of each purchase in cash or by check or in shares of Common Stock
        valued at their Fair Market Value on the business day next preceding the
        date of exercise of the Option, or partly in such shares and partly in
        cash.

                (f) Option Period. Each Option granted under this Section 2.6
        and all rights or obligations thereunder shall expire on the tenth
        anniversary of the Award Date and shall be subject to earlier
        termination as provided below.

                (g) Exercise of Options. Except as otherwise provided in the
        applicable Award Agreement and Sections 2.6(h) and 2.6(i), each Option
        granted under this Section 2.6 shall become exercisable according to the
        following schedule: (i) one-third of the total number of shares subject
        to the Option shall become exercisable on the May 1 that occurs in the
        first calendar year following the calendar year in which the Award Date
        occurs, (ii) an additional one-third of the total number of shares
        subject to the Option shall become exercisable on the May 1 that occurs
        in the second calendar year following the calendar year in which the
        Award Date occurs, and (iii) the remaining number of shares subject to
        the Option shall become exercisable on the May 1 that occurs in the
        third calendar year following the calendar year in which the Award Date
        occurs.

                (h) Termination of Directorship. If a Non-Employee Director
        Participant's services as a member of the Board terminate, each Option
        granted pursuant to this Section 2.6 to such Non-Employee Director
        Participant which is not then exercisable shall terminate; provided,
        however, that if a Non-Employee Director Participant's services as a
        member of the Board terminate by reason of death or Total Disability,
        either the Board or the Committee may, in its discretion, consider to be
        exercisable a greater portion of any such Option than would otherwise be
        exercisable, upon such terms as the Board or the Committee shall
        determine. If a Non-Employee Director Participant's services as a member
        of the Board terminate by reason of death or Total Disability, any
        portion of any such Option which is then exercisable may be exercised
        for one year after the date of such termination or the balance of such
        Option's term, whichever period is shorter. If a Non-Employee Director
        Participant's services as a member of the Board terminate for any other
        reason, any portion of any such Option which is then exercisable may be
        exercised for six months after the date of such termination or the
        balance of such Option's term, whichever period is shorter.

                (i) Acceleration Upon an Event. Immediately prior to the
        occurrence of an Event, in order to protect the holders of Options
        granted under this Section 2.6, each Option granted under this Section
        2.6 and then outstanding shall become exercisable in full.

                (j) Adjustments. The specific numbers of shares stated in
        Sections 2.6(b), 2.6(c) and 2.6(d) and the consideration payable for
        such shares shall be subject to adjustment in certain events as provided
        in Section 6.2 of this Plan.

                                        7

<PAGE>

                (k) Prior Option Grants. Options granted under this Section 2.6
        prior to the amendment of this Section 2.6 in 2001 shall be governed by
        the provisions of this Section 2.6 as in effect on the Award Date of the
        respective Option.

                (l) Limits. Option grants under this Section 2.6 that would
        otherwise exceed the maximum number of shares otherwise available for
        Award grants under this Plan shall be prorated within such limitation.

        2.7     NO REPRICING.

        Subject to Section 1.4 and Section 6.7 and the specific limitations on
Options contained in this Plan, the Committee from time to time may authorize,
generally or in specific cases only, for the benefit of any Eligible Employee,
any adjustment in the exercise price, the number of shares subject to or the
term of, an Option granted under this Plan by cancellation of an outstanding
Option and a subsequent regranting of an Option, by amendment, by substitution
of an outstanding Option, by waiver or by other legally valid means; provided,
however, that no such amendment or other action (other than adjustments
contemplated by Section 6.2) shall constitute or result in a repricing of an
outstanding Option to a per share exercise price that is less than the Fair
Market Value of a share of Common Stock on the original Award Date of the
initial Option at issue without stockholder approval of such amendment or other
action.

III.    STOCK APPRECIATION RIGHTS.

        3.1     GRANTS.

        In its discretion, the Committee may grant Stock Appreciation Rights
concurrently with the grant of Options. A Stock Appreciation Right shall extend
to all or a portion of the shares covered by the related Option. A Stock
Appreciation Right shall entitle the Participant who holds the related Option,
upon exercise of the Stock Appreciation Right and surrender of the related
Option, or portion thereof, to the extent the Stock Appreciation Right and
related Option each were previously unexercised, to receive payment of an amount
determined pursuant to Section 3.3. Any Stock Appreciation Right granted in
connection with an Incentive Stock Option shall contain such terms as may be
required to comply with the provisions of Section 422 of the Code and the
regulations promulgated thereunder. In its discretion, the Committee may also
grant Stock Appreciation Rights independently of any Option subject to such
conditions as the Committee may in its absolute discretion provide.

        3.2     EXERCISE OF STOCK APPRECIATION RIGHTS.

                (a) A Stock Appreciation Right granted concurrently with an
        Option shall be exercisable only at such time or times, and to the
        extent, that the related Option shall be exercisable and only when the
        Fair Market Value of the stock subject to the related Option exceeds the
        exercise price of the related Option.

                (b) In the event that a Stock Appreciation Right granted
        concurrently with an Option is exercised, the number of shares of Common
        Stock subject to the

                                        8

<PAGE>

        related Option shall be charged against the maximum amount of Common
        Stock that may be issued or transferred pursuant to Awards under this
        Plan. The number of shares subject to the Stock Appreciation Right and
        the related Option of the Participant shall also be reduced by such
        number of shares.

                (c) If a Stock Appreciation Right granted concurrently with an
        Option extends to less than all the shares covered by the related Option
        and if a portion of the related Option is thereafter exercised, the
        number of shares subject to the unexercised Stock Appreciation Right
        shall be reduced only if and to the extent that the remaining number of
        shares covered by such related Option is less than the remaining number
        of shares subject to such Stock Appreciation Right.

                (d) A Stock Appreciation Right granted independently of any
        Option shall be exercisable pursuant to the terms of the Award
        Agreement.

        3.3     PAYMENT.

                (a) Upon exercise of a Stock Appreciation Right and surrender of
        an exercisable portion of the related Option, the Participant shall be
        entitled to receive payment of an amount determined by multiplying

                        (i)     the difference obtained by subtracting the
                exercise price per share of Common Stock under the related
                Option from the Fair Market Value of a share of Common Stock on
                the date of exercise of the Stock Appreciation Right, by

                        (ii)    the number of shares with respect to which the
                Stock Appreciation Right shall have been exercised.

                (b) The Committee, in its sole discretion, may settle the amount
        determined under paragraph (a) above solely in cash, solely in shares of
        Common Stock (valued at Fair Market Value on the date of exercise of the
        Stock Appreciation Right), or partly in such shares and partly in cash,
        provided that the Committee shall have determined that such exercise and
        payment are consistent with applicable law. In any event, cash shall be
        paid in lieu of fractional shares. Absent a determination to the
        contrary, all Stock Appreciation Rights shall be settled in cash as soon
        as practicable after exercise. The exercise price for the Stock
        Appreciation Right shall be the exercise price of the related Option.
        Notwithstanding the foregoing, the Committee may, in the Award
        Agreement, determine the maximum amount of cash or stock or a
        combination thereof which may be delivered upon exercise of a Stock
        Appreciation Right.

                (c) Upon exercise of a Stock Appreciation Right granted
        independently of any Option, the Participant shall be entitled to
        receive payment of an amount based on a percentage, specified in the
        Award Agreement, of the difference obtained by subtracting the Fair
        Market Value per share of Common Stock on the Award Date from the Fair
        Market Value per share of Common Stock on the date

                                        9

<PAGE>

        of exercise of the Stock Appreciation Right. Such amount shall be paid
        as described in paragraph (b) above.

IV.     RESTRICTED STOCK AWARDS.

        4.1     GRANTS.

        Subject to Section 1.4, the Committee may, in its discretion, grant one
or more Restricted Stock Awards to any Eligible Employee. Each Restricted Stock
Award agreement shall specify the number of shares of Common Stock to be issued
to the Participant, the date of such issuance, the price, if any, to be paid for
such shares by the Participant and the restrictions imposed on such shares,
which restrictions shall not terminate earlier than six months after the Award
Date.

        4.2     RESTRICTIONS.

                (a) Shares of Common Stock included in Restricted Stock Awards
        may not be sold, assigned, transferred, pledged or otherwise disposed of
        or encumbered, either voluntarily or involuntarily, until such shares
        have vested.

                (b) Participants receiving Restricted Stock shall be entitled to
        dividend and voting rights for the shares issued even though they are
        not vested, provided that such rights shall terminate immediately as to
        any forfeited Restricted Stock.

                (c) In the event that the Participant shall have paid cash in
        connection with the Restricted Stock Award, the Award Agreement shall
        specify whether and to what extent such cash shall be returned upon a
        forfeiture (with or without an earnings factor).

V.      PERFORMANCE SHARE AWARDS.

        5.1     GRANTS OF PERFORMANCE SHARE AWARDS.

        The Committee may, in its discretion, grant Performance Share Awards to
Eligible Employees based upon such factors as the Committee shall determine. A
Performance Share Award agreement shall specify the number of shares of Common
Stock (if any) subject to the Performance Share Award, the price, if any, to be
paid for any such shares by the Participant and the conditions upon which
payment or issuance to the Participant shall be based. The amount of cash or
shares or other property that may be deliverable pursuant to a Performance Share
Award shall be based upon the degree of attainment over a specified period of
not more than 10 years (a "performance cycle") as may be established by the
Committee of such measure(s) of the performance of the Company (or any part
thereof) or the Participant as may be established by the Committee. The
Committee may provide for full or partial credit, prior to completion of such
performance cycle or the attainment of the performance achievement specified in
the Award in the event of the Participant's death, Retirement, or Total
Disability, an Event or in such other circumstances as the Committee, consistent
with Section 6.12, may determine.

                                       10

<PAGE>

        5.2     GRANTS OF PERFORMANCE-BASED SHARE AWARDS.

        Without limiting the generality of the foregoing, and in addition to
Options and Stock Appreciation Rights granted under other provisions of this
Plan which are intended to satisfy the exception for "performance-based
compensation" under Section 162(m) of the Code (with such Awards hereinafter
referred to as "Qualifying Options" or "Qualifying Stock Appreciation Rights,"
respectively), other performance-based awards within the meaning of Section
162(m) of the Code ("Performance-Based Awards"), whether in the form of
Cash-Based Awards, restricted stock, performance stock, phantom stock or other
rights, the grant, vesting, exercisability, or payment of which depends on the
degree of achievement of the Performance Goals relative to preestablished
targeted levels for the Company or a consolidated segment, subsidiary, or
division of the Company, may be granted under this Plan. Any Qualifying Option
or Qualifying Stock Appreciation Right shall be subject only to the requirements
of subsections (a) and (c) below in order for such Awards to satisfy the
requirements for Performance-Based Awards under this Section 5.2. With the
exception of any Qualifying Option or Qualifying Stock Appreciation Right, an
Award that is intended to satisfy the requirements of this Section 5.2 shall be
designated as a Performance-Based Award at the time of grant.

                (a) The eligible class of persons for Performance-Based Awards
        under this Section shall be executive officers of the Company.

                (b) The applicable performance goals for Performance-Based
        Awards (other than Qualifying Options) shall be, on an absolute or
        relative basis, one or more of the Performance Goals, as selected by the
        Committee in its sole discretion. The Committee shall establish in the
        applicable Award Agreement the specific performance targets(s) relative
        to the Performance Goal(s) which must be attained before the
        compensation under the Performance-Based Award becomes payable. The
        specific targets shall be determined within the time period permitted
        under Section 162(m) of the Code (and any regulations issued thereunder)
        so that such targets are considered to be preestablished and so that the
        attainment of such targets is substantially uncertain at the time of
        their establishment. The applicable performance measurement period may
        not be less than one nor more than 10 years.

                (c) Notwithstanding any other provision of the Plan to the
        contrary, the maximum number of shares of Common Stock which may be
        delivered pursuant to Awards qualified as Performance-Based Awards to
        any Participant in any calendar year shall not exceed 750,000 shares,
        either individually or in the aggregate, subject to adjustment as
        provided in Section 6.2. Awards that are cancelled during the year shall
        be counted against this limit to the extent required by Section 162(m)
        of the Code. In addition, the aggregate amount of compensation to be
        paid to any Participant in any calendar year in respect of any
        Cash-Based Awards granted during any calendar year as Performance-Based
        Awards shall not exceed $1,000,000.

                                       11

<PAGE>

                (d) Before any Performance-Based Award under this Section 5.2 is
        paid (other than a Qualifying Option or Qualifying Stock Appreciation
        Right), the Committee must certify in writing that the Performance Goals
        and any other material terms of the Performance-Based Award were
        satisfied; provided, however, that a Performance-Based Award may be paid
        without regard to the satisfaction of the applicable Performance Goal(s)
        with respect to an Event in accordance with Section 6.4.

                (e) The Committee will have discretion to determine the
        restrictions or other limitations of the individual Awards under this
        Section 5.2 (including the authority to reduce Awards, payouts or
        vesting or to pay no Awards, in its sole discretion, if the Committee
        preserves such authority at the time of grant by language to this effect
        in its authorizing resolutions or otherwise).

                (f) In the event of a change in corporate capitalization, such
        as a stock split or stock dividend, or a corporate transaction, such as
        a merger, consolidation, spinoff, reorganization or similar event, or
        any partial or complete liquidation of the Company, or any similar event
        consistent with the regulations issued under Section 162(m) of the Code
        including, without limitation, any material change in accounting
        policies or practices affecting the Company and/or the Performance Goals
        or targets, then the Committee may make adjustments to the Performance
        Goals and targets relating to outstanding Performance-Based Awards to
        the extent such adjustments are made to reflect the occurrence of such
        an event; provided, however, that adjustments described in this
        subsection may be made only to the extent that the occurrence of an
        event described herein was unforeseen at the time the targets for a
        Performance-Based Award were established by the Committee.

VI.     OTHER PROVISIONS.

        6.1     RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES.

                (a) Status as an Eligible Employee shall not be construed as a
        commitment that any Award will be granted under this Plan to any
        Eligible Employee generally.

                (b) Nothing contained in this Plan (or in Award Agreements or in
        any other documents related to this Plan or to Awards) shall confer upon
        any Eligible Employee or Participant any right to continue in the
        service or employ of the Company or a Subsidiary or constitute any
        contract or agreement of service or employment, or interfere in any way
        with the right of the Company or a Subsidiary to reduce such person's
        compensation or other benefits or to terminate the services or
        employment of such Eligible Employee or Participant, with or without
        cause, but nothing contained in this Plan or any document related
        thereto shall affect any independent contractual right of any Eligible
        Employee or Participant. Nothing contained in this Plan or any document
        related hereto shall influence the construction or interpretation of the
        Company's Certificate of Incorporation or Bylaws regarding service on
        the Board.

                                       12

<PAGE>

                (c) Options payable under this Plan shall be payable in shares
        and no special or separate reserve, fund or deposit shall be made to
        assure payment of such Options. No Participant, Beneficiary or other
        person shall have any right, title or interest in any fund or in any
        specific asset (including shares of Common Stock) of the Company by
        reason of any Award granted hereunder. Neither the provisions of this
        Plan (or of any documents related hereto), nor the creation or adoption
        of this Plan, nor any action taken pursuant to the provisions of this
        Plan shall create, or be construed to create, a trust of any kind or a
        fiduciary relationship between the Company (or any Subsidiary) and any
        Participant, Beneficiary or other person. To the extent that a
        Participant, Beneficiary or other person acquires a right to receive an
        Award hereunder, such right shall be no greater than (and will be
        subordinate to) the right of any unsecured general creditor of the
        Company.

        6.2     ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

                (a) If the outstanding shares of Common Stock are changed into
        or exchanged for cash or a different number or kind of shares or
        securities of the Company or of another issuer, or if additional shares
        or new or different securities are distributed with respect to the
        outstanding shares of the Common Stock, through a reorganization or
        merger to which the Company is a party, or through a combination,
        consolidation, recapitalization, reclassification, stock split, stock
        dividend, reverse stock split, stock consolidation or other capital
        change or adjustment, an appropriate adjustment shall be made in the
        number and kind of shares or other consideration that is subject to or
        may be delivered under this Plan and pursuant to outstanding Awards. A
        corresponding adjustment to the consideration payable with respect to
        Awards granted prior to any such change and to the price, if any, paid
        in connection with Restricted Stock Awards or Performance Share Awards
        shall also be made. Any such adjustment, however, shall be made without
        change in the total payment, if any, applicable to the portion of the
        Award not exercised but with a corresponding adjustment in the price for
        each share. Corresponding adjustments shall be made with respect to
        Stock Appreciation Rights based upon the adjustments made to the Options
        to which they are related or, in the case of Stock Appreciation Rights
        granted independently of any Option, based upon the adjustments made to
        Common Stock.

                (b) Upon the dissolution or liquidation of the Company, or upon
        a reorganization, merger or consolidation of the Company with one or
        more corporations as a result of which the Company is not the surviving
        corporation, the Plan shall terminate. Notwithstanding the foregoing,
        the Committee may provide in writing in connection with, or in
        contemplation of, any such transaction for any or all of the following
        alternatives (separately or in combinations): (i) for the assumption by
        the successor corporation of the Awards theretofore granted or the
        substitution by such corporation for such Awards of Awards covering the
        stock of the successor corporation, or a parent or subsidiary thereof,
        with appropriate adjustments as to the number and kind of shares and
        prices; (ii) for the

                                       13

<PAGE>

        continuance of this Plan by such successor corporation in which event
        this Plan and the Options shall continue in the manner and under the
        terms so provided; or (iii) for the payment in cash or shares of Common
        Stock in lieu of and in complete satisfaction of such Awards.

                (c) In adjusting Awards to reflect the changes described in this
        Section 6.2, or in determining that no such adjustment is necessary, the
        Committee may rely upon the advice of independent counsel and
        accountants of the Company, and the determination of the Committee shall
        be conclusive. No fractional shares of stock shall be issued under this
        Plan on account of any such adjustment.

        6.3     TERMINATION OF EMPLOYMENT.

                (a) If the Participant's service to or employment by the Company
        and its Subsidiaries terminates for any reason other than Retirement,
        death or Total Disability, the Participant shall have, subject to
        earlier termination pursuant to or as contemplated by Section 2.3,
        thirty days or such shorter period as is provided in the Award
        Agreements from the date of termination of services or employment to
        exercise any Option to the extent it shall have become exercisable on
        the date of termination of employment, and any Option not exercisable on
        that date shall terminate. Notwithstanding the preceding sentence, in
        the event the Participant is discharged for cause as determined by the
        Committee in its sole discretion, all Options shall lapse immediately
        upon such termination of services or employment.

                (b) If the Participant's service to or employment by the Company
        and its Subsidiaries terminates as a result of Retirement or Total
        Disability, the Participant or Participant's Personal Representative, as
        the case may be, shall have, subject to earlier termination pursuant to
        or as contemplated by Section 2.3, 3 months or such shorter period as is
        provided in the Award Agreements from the date of termination of
        services or employment to exercise any Option to the extent it shall
        have become exercisable by the date of termination of services or
        employment and any Option not exercisable on that date shall terminate.

                (c) If the Participant's service to or employment by the Company
        and its Subsidiaries terminates as a result of death while the
        Participant is rendering services to the Company (or a Subsidiary) or is
        employed by the Company (or a Subsidiary) or during the 3 month period
        referred to in subsection (b) above, the Participant's Option shall be
        exercisable by the Participant's Beneficiary, subject to earlier
        termination pursuant to or as contemplated by Section 2.3, during the 3
        month period or such shorter period as is provided in the Award
        Agreements following the Participant's death, as to all or any part of
        the shares of Common Stock covered thereby to the extent exercisable on
        the date of death (or earlier termination).

                (d) Each Stock Appreciation Right granted concurrently with an
        Option shall have the same termination provisions and exercisability
        periods as the

                                       14

<PAGE>

        Option to which it relates. The termination provisions and
        exercisability periods of any Stock Appreciation Right granted
        independently of an Option shall be established in accordance with
        Section 3.2(d). The exercisability period of a Stock Appreciation Right
        shall not exceed that provided in Section 2.3 or in the related Award
        Agreement and the Stock Appreciation Right shall expire at the end of
        such exercisability period.

                (e) In the event of termination of services to or employment
        with the Company and its Subsidiaries for any reason, (i) shares of
        Common Stock subject to the Participant's Restricted Stock Award shall
        be forfeited in accordance with the provisions of the related Award
        Agreement to the extent such shares have not become vested on that date;
        and (ii) shares of Common Stock subject to the Participant's Performance
        Share Award shall be forfeited in accordance with the provisions of the
        related Award Agreement to the extent such shares have not been issued
        or become issuable on that date.

                (f) In the event of termination of services to or employment
        with the Company and its Subsidiaries for any reason, other than
        discharge for cause, the Committee may, in its discretion, increase the
        portion of the Participant's Award available to the Participant, or
        Participant's Beneficiary or Personal Representative, as the case may
        be, upon such terms as the Committee shall determine.

                (g) If an entity ceases to be a Subsidiary, such action shall be
        deemed for purposes of this Section 6.3 to be a termination of services
        or employment of each consultant or employee of that entity who does not
        continue as a consultant or as an employee of another entity within the
        Company.

                (h) Upon forfeiture of a Restricted Stock Award pursuant to this
        Section 6.3, the Participant, or his or her Beneficiary or Personal
        Representative, as the case may be, shall transfer to the Company the
        portion of the Restricted Stock Award not vested at the date of
        termination of services or employment, without payment of any
        consideration by the Company for such transfer unless the Participant
        paid a purchase price in which case repayment, if any, of that price
        shall be governed by the Award Agreement. Notwithstanding any such
        transfer to the Company, or failure, refusal or neglect to transfer, by
        the Participant, or his or her Beneficiary or Personal Representative,
        as the case may be, such nonvested portion of any Restricted Stock Award
        shall be deemed transferred automatically to the Company on the date of
        termination of services or employment. The Participant's original
        acceptance of the Restricted Stock Award shall constitute his or her
        appointment of the Company and each of its authorized representatives as
        attorney(s)-in-fact to effect such transfer and to execute such
        documents as the Company or such representatives deem necessary or
        advisable in connection with such transfer.

                                       15

<PAGE>

        6.4     ACCELERATION OF AWARDS.

                (a) Unless prior to an Event the Board determines that, upon its
        occurrence, there shall be no acceleration of Awards or determines those
        selected Awards which shall be accelerated and the extent to which they
        shall be accelerated, upon the occurrence of an Event (i) each Option
        and each related Stock Appreciation Right shall become immediately
        exercisable to the full extent theretofore not exercisable, (ii)
        Restricted Stock shall immediately vest free of restrictions and (iii)
        the number of shares covered by each Performance Share Award shall be
        issued to the Participant; subject, however, to compliance with
        applicable regulatory requirements, including without limitation Section
        422 of the Code. For purposes of this section only, the Board shall mean
        the Board as constituted immediately prior to the Event.

                (b) If any Option or other right to acquire Common Stock under
        this Plan has been fully accelerated as permitted by Section 6.4(a) but
        is not exercised prior to (i) a dissolution of the Corporation, or (ii)
        an event described in Section 6.2 that the Corporation does not survive,
        such Option or right shall thereupon terminate, subject to any provision
        that has been expressly made by the Committee pursuant to Section 6.2(b)
        for the survival, substitution, exchange or other settlement of such
        Option or right.

        6.5     GOVERNMENT REGULATIONS.

        This Plan, the granting and vesting of Awards under this Plan and the
issuance or transfer of shares of Common Stock (and/or the payment of money)
pursuant thereto are subject to compliance with all applicable federal and state
laws, rules and regulations (including but not limited to state and federal
securities law and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements.

        6.6     TAX WITHHOLDING.

                (a) Upon the disposition by a Participant or other person of
        shares of Common Stock acquired pursuant to the exercise of an Incentive
        Stock Option prior to satisfaction of the holding period requirements of
        Section 422 of the Code, or upon the exercise of a Nonqualified Stock
        Option, the exercise of a Stock Appreciation Right, the vesting of a
        Restricted Stock Award or the payment of a Performance Share Award the
        Company shall have the right at its option to (i) require such
        Participant or such other person to pay by cash or check payable to the
        Company, the amount of any taxes which the Company or a Subsidiary may
        be required to withhold with respect to such transactions or (ii) deduct
        from amounts paid in cash the amount of any taxes which the Company or a
        Subsidiary

                                       16

<PAGE>

        may be required to withhold with respect to such cash amounts. The above
        notwithstanding, in any case where a tax is required to be withheld in
        connection with the issuance or transfer of shares of Common Stock under
        this Plan, the Participant may elect, pursuant to such rules as the
        Committee may establish, to have the Company reduce the number of such
        shares issued or transferred by the appropriate number of shares to
        accomplish such withholding.

                (b) The Committee may, in its discretion, permit a loan from the
        Company to a Participant in the amount of any taxes which the Company or
        a Subsidiary may be required to withhold with respect to shares of
        Common Stock received pursuant to a transaction described in subsection
        (a) above. Such a loan will be for a term, at a rate of interest and
        pursuant to such other terms and rules as the Committee may establish.

        6.7     AMENDMENT, TERMINATION AND SUSPENSION.

                (a) The Board may, at any time, terminate or, from time to time,
        amend, modify or suspend this Plan (or any part hereof). In addition,
        the Committee may, from time to time, amend or modify any provision of
        this Plan except Section 6.4 and, with the consent of the Participant,
        make such modifications of the terms and conditions of such
        Participant's Award as it shall deem advisable. The Committee, with the
        consent of the Participant, may also amend the terms of any Option to
        provide that the Option price of the shares remaining subject to the
        original Award shall be reestablished at a price not less than 100% of
        the Fair Market Value of the Common Stock on the effective date of the
        amendment. No modification of any other term or provision of any Option
        which is amended in accordance with the foregoing shall be required,
        although the Committee may, in its discretion, make such further
        modifications of any such Option as are not inconsistent with or
        prohibited by this Plan. No Awards may be granted during any suspension
        of this Plan or after its termination.

                (b) If an amendment would materially (i) increase the benefits
        accruing to Participants, (ii) increase the aggregate number of shares
        which may be issued under this Plan, or (iii) modify the requirements of
        eligibility for participation in this Plan, the amendment shall be
        approved by the Board and, to the extent then required by applicable law
        or deemed necessary or desirable by the Board, by a majority of the
        shareholders.

                (c) In the case of Awards issued before the effective date of
        any amendment, suspension or termination of this Plan, such amendment,
        suspension or termination of the Plan shall not, without specific action
        of the Board or the Committee and the consent of the Participant, in any
        way modify, amend, alter or impair any rights or obligations under any
        Award previously granted under the Plan.

                                       17

<PAGE>

        6.8     PRIVILEGES OF STOCK OWNERSHIP.

        Except as otherwise expressly authorized by the Committee or under this
Plan, a Participant shall not be entitled to any privilege of stock ownership as
to any shares of Common Stock not actually delivered to and held of record by
him or her. No adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to such date of delivery.

        6.9     EFFECTIVE DATE OF THE PLAN.

        This Plan shall be effective upon its approval by the Board, subject to
approval by the shareholders of the Company within twelve months from the date
of such Board approval.

        6.10    TERM OF THE PLAN.

        Unless previously terminated by the Board, this Plan shall terminate ten
years after the Effective Date of the Plan, and no Awards shall be granted under
it thereafter, but such termination shall not affect any Award theretofore
granted.

        6.11    GOVERNING LAW.

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

        6.12    PLAN CONSTRUCTION.

                (a) It is the intent of the Company that transactions in and
        affecting Awards in the case of Participants who are or may be subject
        to Section 16 of the Exchange Act satisfy any then applicable
        requirements of Rule 16b-3 so that such persons (unless they otherwise
        agree) will be entitled to the benefits of such rule or other exemptive
        rules under Section 16 of the Exchange Act in respect of those
        transactions and will not be subjected to avoidable liability
        thereunder. If any provision of the Plan or of any Award would frustrate
        or otherwise conflict with the intent expressed above, that provision to
        the extent possible shall be interpreted as to avoid such conflict. If
        the conflict remains irreconcilable, the Committee may disregard the
        provision if it concludes that to do so furthers the interest of the
        Company and is consistent with the purposes of the Plan as to such
        persons in the circumstances.

                (b) It is the further intent of the Company that Options and
        Stock Appreciation Rights with an exercise or base price not less than
        Fair Market Value on the date of grant and Performance Share Awards
        under Section 5.2 of this Plan that are granted to or held by a person
        subject to Section 16 of the

                                       18

<PAGE>

        Exchange Act shall qualify as performance-based compensation under
        Section 162(m) of the Code, and this Plan shall be interpreted
        consistent with such intent.

        6.13    NON-EXCLUSIVITY OF PLAN.

        Nothing in this plan shall limit or be deemed to limit the authority of
the Board to grant options, stock awards or authorize any other compensations
under any other plan or authority.

VII.    DEFINITIONS.

        7.1     DEFINITIONS.

                (a) "Award" means an Option, which may be designated as a
        Nonqualified Stock Option or an Incentive Stock Option, a Stock
        Appreciation Right, Restricted Stock Award, Performance Share Award or
        Performance-Based Award.

                (b) "Award Agreement" means a written agreement setting forth
        the terms of an Award.

                (c) "Award Date" means the date upon which the Committee took
        the action granting an Award or such later date as is prescribed by the
        Committee or, in the case of Options granted under Section 2.6, the date
        specified in such Section 2.6.

                (d) "Beneficiary" means the person, persons, trust or trusts
        entitled by will or the laws of descent and distribution to receive the
        benefits specified under this Plan in the event of a Participant's
        death.

                (e) "Board" means the Board of Directors of the Company.

                (f) "Cash-Based Awards" mean Awards that, if paid, must be paid
        in cash and that are neither denominated in nor have derived the value
        of, nor an exercise or conversion privilege at a price related to,
        shares of Common Stock.

                (g) "Cash Flow" shall mean cash and cash equivalents derived
        from either (i) net cash flow from operations, or (ii) net cash flow
        from operations, financings and investing activities, as determined by
        the Committee at the time the Award is granted.

                (h) "Code" means the Internal Revenue Code of 1986, as amended
        from time to time.

                (i) "Commission" means the Securities and Exchange Commission.

                                       19

<PAGE>

                (j) "Committee" means the Board or a committee appointed by the
        Board to administer this Plan, which committee shall be comprised only
        of two or more directors or such greater number of directors as may be
        required under applicable law, each of whom (i) in respect of any
        transaction at a time when the affected Participant may be subject to
        Section 162(m) of the Code, shall be an "outside director" within the
        meaning of Section 162(m) of the Code, and (ii) in respect of any
        transaction at a time when the affected Participant may be subject to
        Section 16 of the Exchange Act, shall be a "Non-Employee Director"
        within the meaning of Rule 16b-3(b)(3) under the Exchange Act.

                (k) "Common Stock" means the Common Stock of the Company.

                (l) "Company" means New Century Financial Corporation, a
        Delaware corporation, and its successors.

                (m) "Director" means member of the board of Directors of the
        Company or any person performing similar functions with respect to the
        Company.

                (n) "Earnings Per Share" shall mean earnings per share of Common
        Stock on a fully diluted basis determined by dividing (i) net earnings,
        less dividends on any preferred stock of the Company, by (ii) the
        weighted average number of common shares and common share equivalents
        outstanding.

                (o) "Eligible Employee" means (i) an officer or key employee of
        the Company or a Subsidiary and (ii) any individual consultant or
        advisor who renders or has rendered bona fide services (other than
        services in connection with the offering or sale of securities of the
        Company in a capital raising transaction) to the Company, and who is
        selected to participate in this Plan by the Committee.

                (p) "Event" means any of the following:

                        (i)     Approval by the shareholders of the Company of
                the dissolution or liquidation of the Company;

                        (ii)    Approval by the shareholders of the Company of
                an agreement to merge or consolidate, or otherwise reorganize,
                with or into one or more entities other than Subsidiaries, as a
                result of which less than 50% of the outstanding voting
                securities of the surviving or resulting entity are, or are to
                be, owned by former shareholders of the Company; or

                        (iii)   Approval by the shareholders of the Company of
                the sale of substantially all of the Company's business assets
                to a person or entity which is not a Subsidiary.

                (q) "Exchange Act" means the Securities Exchange Act of 1934, as
        amended.

                                       20

<PAGE>

                (r) "Fair Market Value" means (i) if the stock is listed or
        admitted to trade on a national securities exchange, the closing price
        of the stock on the Composite Tape, as published in the Western Edition
        of The Wall Street Journal, of the principal national securities
        exchange on which the stock is so listed or admitted to trade, on such
        date, or, if there is no trading of the stock on such date, then the
        closing price of the stock as quoted on such Composite Tape on the next
        preceding date on which there was trading in such shares; (ii) if the
        stock is not listed or admitted to trade on a national securities
        exchange, the last price for the stock on such date, as furnished by the
        National Association of Securities Dealers, Inc. ("NASD") through the
        NASDAQ National Market Reporting System or a similar organization if the
        NASD is no longer reporting such information; (iii) if the stock is not
        listed or admitted to trade on a national securities exchange and is not
        reported on the National Market Reporting System, the mean between the
        bid and asked price for the stock on such date, as furnished by the
        NASD; or (iv) if the stock is not listed or admitted to trade on a
        national securities exchange, is not reported on the National Market
        Reporting System and if bid and asked prices for the stock are not
        furnished by the NASD or a similar organization, the values established
        by the Committee for purposes of the Plan.

                (s) "Gain on Sale of Loans" means the total gain recognized on
        loans sold through whole loan transactions or through securitizations,
        net of premiums paid to acquire such loans and net of expenses
        associated with the sale of such loans, as reported in the Company's
        quarterly and/or annual financial statements.

                (t) "Incentive Stock Option" means an option which is designated
        as an incentive stock option within the meaning of Section 422 of the
        Code, the award of which contains such provisions as are necessary to
        comply with that section.

                (u) "Loan Production Volume" means loans funded during any given
        period as reported in the Company's quarterly and/or annual financial
        statements.

                (v) "Loan Quality" means the number of loans originated in
        accordance with the Company's underwriting policies and procedures and
        is measured as loans sold, either individually, through bulk sales
        transactions, or through securitizations, at a premium price as a
        percentage of total loans sold, based on information as reported in the
        Company's quarterly and/or annual financial statements.

                (w) "Non-Employee Director" means a member of the Board who is
        not an officer or employee of the Company or a Subsidiary.

                (x) "Non-Employee Director Participant" means a Non-Employee
        Director who has been granted an Option under Section 2.6.

                (y) "Nonqualified Stock Option" means an option which is
        designated as a Nonqualified Stock Option and shall include any Option
        intended as an Incentive Stock Option that fails to meet applicable
        legal requirements thereof. Any Option

                                       21

<PAGE>

        granted hereunder that is not designated as an Incentive Stock Option
        shall be deemed to be designated a Nonqualified Stock Option under this
        Plan and not an incentive stock option under the Code.

                (z) "Officer" means a president, vice-president, secretary,
        treasurer or principal financial officer, comptroller or principal
        accounting officer and any person routinely performing corresponding
        functions with respect to the Company.

                (aa) "Option" means an option to purchase Common Stock under
        this Plan. An Option shall be designated by the Committee as a
        Nonqualified Stock Option or an Incentive Stock Option.

                (bb) "Participant" means an Eligible Employee who has been
        granted an Award or a Non-Employee Director Participant.

                (cc) "Performance-Based Award" means an Award of a right to
        receive shares of Common Stock or other compensation (including cash)
        under Section 5.2, the issuance or payment of which is contingent upon,
        among other conditions, the attainment of performance objectives
        specified by the Committee.

                (dd) "Performance Goal" shall mean Cash Flow, Earnings Per
        Share, Gain on Sale of Loans, Loan Production Volume, Loan Quality,
        Return on Equity, Total Stockholder Return, or any combination thereof.

                (ee) "Performance Share Award" means an award of a right to
        receive shares of cash or Common Stock under Section 5.1, or to receive
        shares of Common Stock or other compensation (including cash) under
        Section 5.2, the issuance or payment of which is contingent upon, among
        other things, the attainment of performance objectives specified by the
        Committee.

                (ff) "Personal Representative" means the person or persons who,
        upon the disability or incompetence of a Participant, shall have
        acquired on behalf of the Participant by legal proceeding or otherwise
        the power to exercise the rights and receive the benefits specified in
        this Plan.

                (gg) "Plan" means the New Century Financial Corporation 1995
        Stock Option Plan, as amended.

                (hh) "QDRO" means an order requiring the transfer of an Award or
        portion thereof pursuant to a state domestic relations law to the
        spouse, former spouse, child or other dependent of a Participant. Such
        order must be in a form substantially identical to a qualified domestic
        relations order as defined by the Code or Title I of the Employee
        Retirement Income Security Act of 1974, as amended.

                                       22

<PAGE>

                (ii) "Restricted Stock" means those shares of Common Stock
        issued pursuant to a Restricted Stock Award which are subject to the
        restrictions set forth in the related Award Agreement.

                (jj) "Restricted Stock Award" means an award of a fixed number
        of shares of Common Stock to the Participant subject, however, to
        payment of such consideration, if any, and such forfeiture provisions,
        as are set forth in the Award Agreement.

                (kk) "Retirement" means retirement from employment by or
        providing services to the Company or any Subsidiary after age 65 and, in
        the case of employees, in accordance with the retirement policies of the
        Company then in effect.

                (ll) "Return on Equity" means consolidated net income of the
        Company (less any preferred dividends), divided by the average
        consolidated common shareholders equity.

                (mm) "Rule 16b-3" means Rule 16b-3 as promulgated by the
        Commission pursuant to the Exchange Act as amended from time to time.

                (nn) "Securities Act" means the Securities Act of 1933, as
        amended.

                (oo) "Stock Appreciation Right" means a right to receive a
        number of shares of Common Stock or an amount of cash, or a combination
        of shares and cash, determined as provided in Section 3.3 (a).

                (pp) "Subsidiary" means any corporation or other entity a
        majority or more of whose outstanding voting stock or voting power is
        beneficially owned directly or indirectly by the Company.

                (qq) "Total Disability" means a "permanent and total disability"
        within the meaning of Section 22(e)(3) of the Code.

                (rr) "Total Stockholder Return" means, with respect to the
        Company or other entities (if measured on a relative basis), the (i)
        change in the market price of its Common Stock (as quoted on the
        principal market on which it is traded as of the beginning and ending of
        the period) plus dividends and other distributions paid, divided by (ii)
        the beginning quoted market price, all of which is adjusted for any
        changes in equity structure, including but not limited to stock splits
        and stock dividends.

                                       23

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