EX-10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT

EXHIBIT 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”) is effective as of December 27, 2005 (the “Effective Date”) between New Century Financial Corporation, a Maryland corporation (the “Company”), and Patrick J. Flanagan (“Executive”) and, as of the Effective Date, supersedes all prior employment agreements between Executive and the Company.

WHEREAS, Executive and Company are currently parties to an Employment Agreement dated January 1, 2004, as subsequently amended (the “Prior Employment Agreement”); and

WHEREAS, Executive and Company desire to continue Executive’s employment with the Company on different terms and conditions that are mutually satisfactory to the parties; and

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, Executive and Company agree as follows:

ARTICLE I

EMPLOYMENT

The Company hereby employs Executive and Executive accepts employment with the Company upon the terms and conditions herein set forth. Executive and Company agree that from and after the Effective Date, the Prior Employment Agreement shall be of no further force and effect and that this Agreement, including Exhibits, shall govern the parties employment relationship and other matters addressed herein.

1.1 Employment . The Company hereby employs Executive, and Executive agrees to serve, as the Company’s Executive Vice President during the Employment Period (as defined below). The term of employment of Executive hereunder (“Employment Period”) will be for the period commencing on the Effective Date and ending on June 30, 2006, subject to earlier termination pursuant to Section 4.2.

1.2 Release . Concurrent with the execution of this Agreement, Executive and the Company shall execute the Mutual General Release Agreement attached hereto as Exhibit A . Notwithstanding anything else contained in this Agreement to the contrary, this Agreement shall be null and void if Executive revokes such Mutual General Release Agreement (or the release contained therein) within any revocation period afforded by applicable law.

ARTICLE II

COMPENSATION

2.1 Base Salary . From the Effective Date through December 31, 2005, the Company shall pay to Executive a base salary (the “Base Salary”) at an annualized rate of $577,500.00. The Base Salary shall be payable in substantially equal semi-monthly installments.

2.2 Bonuses . Executive shall receive the remaining sum payable for his 2005 bonus, pursuant to the terms of the New Century Financial Corporation 2004 Performance Incentive Plan Performance-Based Award Agreed for the 6-Month Period Ending December 31, 2005 (including Exhibit A thereto) by and between the Company and Executive (such amount estimated to be $1.232 million; Total Estimated Award for 2005 is $1,354,814, of which $172,224 was previously paid. Balance remaining due pursuant to 150% cash cap ($866,250) is $694,026; remaining sum exceeding cash cap is currently estimated at $488,564 to be paid in cash or common stock). The final amount shall be approved by the Compensation Committee of the Company’s Board of Directors. Any bonus payment shall be paid pursuant to the Company’s current payroll practices and is subject to tax withholding and other authorized deductions.

2.3 Reimbursement of Expenses . Executive shall be entitled to receive prompt reimbursement of all reasonable expenses incurred by Executive in performing services requested hereunder, including all reasonable expenses of travel, and other reasonable out-of-pocket expenses incurred while in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company.

2.4 Benefits . Executive shall be entitled to participate in and be covered by all health, insurance, pension, disability insurance, physical exam and other employee plans and benefits established by the Company (collectively referred to herein as the “Company Benefit Plans”) on the same terms as are generally applicable to other senior executives of the Company, subject to meeting applicable eligibility requirements. Executive will continue to be covered by the Company’s directors and officers insurance policies with substantially the same coverage as provided to executive officers of the Company.

2.5 Personal Leave of Absence . The Company and Executive agree that from January 1, 2006 through June 30, 2006, Executive shall be on a personal leave of absence (the “Leave”). Notwithstanding anything to the contrary in this Agreement, during the Leave, Executive shall be relieved of all duties and responsibilities as an officer of the Company and its affiliated entities and shall not have authority to bind the Company or any of its affiliated entities, provided, however , Executive agrees that he will during the Employment Period (including the Leave) make himself reasonably available to provide information and answer questions regarding business matters in which he was involved prior to the Leave and to cooperate with the Company in signing such legal documents as the Company requests in operating its on-going business until the Company can make arrangements for new authorized signatories.

(a) During the Leave, Executive shall be paid Base Salary at a rate of $76,445 per month, to be paid in monthly or semi-monthly installments. Executive will continue to be eligible to receive medical benefits including insurance and medical expense reimbursement plans and other medical arrangements in which Executive participated in 2005. Executive shall not be entitled to accrue any vacation benefits or be paid any additional amount for any holidays during the Leave.

(b) During the Leave, Executive will have no bonus opportunity with respect to the first and second quarters of fiscal 2006.

2.6 Equity-Based Compensation . Executive shall not be entitled to any new equity-based compensation grants from the Company or any of its affiliates. As to equity-based awards previously granted by the Company to Executive, Executive and the Company agree to the modifications set forth on Exhibit C hereto as to the awards identified therein. Such modifications are effective immediately and no amount is payable with respect thereto or in respect thereof.

ARTICLE III

NON-COMPETITION, CONFIDENTIALITY AND NONDISCLOSURE

3.1 Confidentiality . Executive will not during Executive’s employment by the Company or thereafter at any time disclose, directly or indirectly, to any person or entity or use for Executive’s own benefit any Trade Secrets of the Company or any of its affiliates. The parties agree that the following constitute “Trade Secrets”:

(a) information about the Company’s (or any Company affiliate’s) products, techniques, processes, services, clients, employee relationships, employee compensation, marketing strategy and/or business plans, information relative to client lists, business development plans, business studies, projections, business practices and finances (individually or in the aggregate), and highly confidential personal and financial information of the Company’s (or any of its affiliate’s) customers;

(b) All computer programs and databases belonging to the Company (or any Company affiliate), including, but not limited to:

(c) All business practices and methodologies of the Company and each of its affiliates, which include, but are not limited to:

(d) All business studies performed by the Company (or any of its affiliates) to:

(e) All broker lists and broker information, including, but not limited to:

(f) All loan characteristics reports for production by product and credit grade of the Company (or any Company affiliate).

(g) All preferences of investors for purchasing loan pools.

(h) All strategies pertaining to Secondary Market execution.

(i) All employee lists and employee contact information (including, but not limited to, positions held and home telephone numbers).

(j) All information regarding borrowers of the Company (or any Company affiliate).

(k) All sales and marketing programs and strategies of the Company (or any Company affiliate).

(l) All information regarding the compensation structure for, and amounts paid to, employees of the Company (or any Company affiliate).

(m) All information on the productivity of employees of the Company (or any Company affiliate), including, but not limited to, information regarding the highest producing Account Executives and/or Loan Officers.

(n) All account retention programs for Account Executives and/or Loan Officers of the Company (or any Company affiliate).

(o) All documents and information concerning New Century’s Servicing Division (“Servicing”), including, but not limited to:

(p) All documents and information concerning ratings agency and investor comments and perception of the Company (and any of its affiliates) that is not publicly available in its or their reports.

3.2 Return of Confidential Material . Executive shall promptly deliver to the Company upon the termination of Executive’s employment with the Company, for any reason, or any time the Company may so request, all memoranda, notes, records, reports, manuals, charts, and any other documents of a confidential nature belonging to the Company, including all copies, wherever and however located, including electronically, of such materials which Executive may then possess or have under Executive’s control. Upon termination of Executive’s employment with the Company, Executive shall not take any document, data, or other material of any nature containing or pertaining to the proprietary information of the Company.

3.3 No Competing Employment . During the Employment Period, Executive shall not, without prior written approval of the Company, directly or indirectly own an interest in, manage, operate, join, control, lend money or render financial assistance to, as an officer, employee, partner, stockholder, consultant or otherwise, any individual, partnership, firm, corporation or other business organization or entity that, at such time directly competes with the Company or its affiliates in the business of, underwriting, purchasing, securitizing, selling or servicing residential mortgage loans and lines of credit (a “Competing Company”). Notwithstanding the foregoing, Executive shall be entitled to own up to 5% of the outstanding securities of any entity if such securities are registered under Section 12(b) or (g) of the Securities Exchange Act of 1934, as amended, and, upon approval of the Company’s Board of Directors, Executive shall be entitled to purchase securities of a Competing Company entity if such securities are offered to investors irrespective of any employment or other participation in the entity by the investor.

3.4 Prohibition on Solicitation of Customers . During the term of Executive’s employment with the Company and for a period of one year thereafter, Executive shall not, directly or indirectly, either for Executive or for any other person or entity, solicit any person or entity to terminate such person’s or entity’s contractual and/or business relationship with the Company, nor shall Executive interfere with or disrupt or attempt to interfere with or disrupt any such relationship.

3.5 Prohibition on Solicitation of the Company’s Employees or Independent Contractors After Termination . During the term of Executive’s employment with the Company and for a period of one year thereafter, Executive will not directly or indirectly solicit any of the Company’s employees, agents, or independent contractors to leave the employ of the Company for a Competing Company.

3.6 Right to Injunctive and Equitable Relief . Executive’s obligations not to disclose or use Confidential Information and to refrain from the solicitations described in this Article III are of a special and unique character, which gives them a peculiar value. The Company cannot be reasonably or adequately compensated in damages in an action at law in the event Executive breaches such obligations, and the breach of such obligations would cause irreparable harm to the Company. Therefore, Executive expressly agrees that the Company shall be entitled to injunctive and other equitable relief without bond or other security in the event of such breach in addition to any other rights or remedies which the Company may possess. Furthermore, the obligations of Executive and the rights and remedies of the Company under this Article III are cumulative and in addition to, and not in lieu of, any obligations, rights, or remedies created by applicable law relating to misappropriation or theft of trade secrets or confidential information.

3.7 Cooperation . Executive agrees that during his employment (including during the Leave) and thereafter, he shall respond to all inquiries of the Company about any matters concerning the Company or its affairs that occurred or arose during Executive’s employment by the Company, and Executive further agrees to cooperate fully with the Company in investigating, prosecuting and defending any charges, claims, demands, liabilities, causes of action, lawsuits or other proceedings by, against or involving the Company relating to the period during which Executive was employed by the Company or relating to matters of which Executive has or should have knowledge or information. Executive further agrees that, except as required by law, Executive will at no time voluntarily serve as a witness or offer written or oral testimony against the Company in conjunction with any complaints, charges or lawsuits brought against the Company by or on behalf of any current or former employees, or any governmental or administrative agencies and will provide the Company with notice of any subpoena or other request for such information or testimony.

3.8 Remedy for Breach of Article 3 . In the event Executive breaches any provision contained in Article III, and notwithstanding anything else to the contrary, then, in addition to any other legal remedies the Company may have, the Company shall have the right, in its sole discretion, to take any or all of the following actions: (a) terminate the payments and benefits contemplated by this Agreement and/or (b) terminate any and all stock options and other equity-based awards theretofore granted to Executive by the Company (to the extent not theretofore exercised or paid, as applicable); provided, however, that if a cure is reasonably possible in the circumstances, the Company shall provide Executive with written notice of the breach and shall not take any of the above actions unless Executive fails to cure the breach within ten (10) business days’ after such notice.

ARTICLE IV

TERMINATION

4.1 Expiration . Unless Executive and the Company mutually agree to continue Executive’s employment on mutually acceptable terms and conditions and subject to earlier termination pursuant to Section 4.2, Executive’s employment with the Company shall terminate on June 30, 2006 (the “Expiration Date”). In the event Executive’s employment terminates on the Expiration Date, then on or before the Expiration Date the Company shall pay to Executive (i) his Base Salary through the last day of his employment by the Company, (ii) any vacation earned but not taken through the last day of his employment by the Company, (iii) the earned, but unpaid Incentive Compensation Bonus, if any, for 2005, and (iv) any amounts due Executive pursuant to Section 2.4 through the last day of his employment by the Company (collectively, the amounts in clauses (i) through (iv) are referred to as the “Accrued Obligations”). The Company shall thereafter have no further obligations to Executive under this Agreement; provided, however, that the Company will continue to honor any obligations that may have vested or accrued under the existing Company Benefit Plans or any other Agreements or arrangements applicable to Executive. Without limiting the generality of the foregoing Executive acknowledges that he shall not be entitled to any severance payments upon the termination of Executive’s employment on the Expiration Date.

4.2 Other Terminations of Employment . In the event of Executive’s death during the Employment Period, Executive’s employment by the Company shall automatically terminate. In addition, the Company or Executive may terminate Executive’s employment by the Company at any time by written notice to the other; provided that the Company shall only terminate Executive’s employment pursuant to this Section 4.2 for a legitimate business reason that is not a punitive action against Executive. In the event of any termination of Executive’s employment pursuant to this Section 4.2, the Company shall pay the Accrued Obligations to Executive. In addition, if the termination of Executive’s employment is by the Company other than for Cause (and, for purposes of clarity, such termination is not pursuant to Section 4.1), then Executive’s then-outstanding and otherwise unvested equity-based compensation awards theretofore granted by the Company shall automatically become fully vested and the Company shall promptly pay Executive a cash lump sum amount equal to the Base Salary Executive would have otherwise been entitled to receive from the Company after the date of such termination had he continued to be employed through June 30, 2006 (including the period of the Leave); provided that Executive deliver to the Company a Separation and General Release Agreement in a form satisfactory to the Company. After any termination of Executive’s employment pursuant to this Section 4.2, the Company shall thereafter have no further obligations to Executive under this Agreement; provided, however, that the Company will continue to honor any obligations that may have vested or accrued under the existing Company Benefit Plans or any other Agreements or arrangements applicable to Executive. Without limiting the generality of the foregoing Executive acknowledges that he shall not be entitled to any severan