Exhibit 10.6

 

Execution Version

 

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GUARANTY

 

THIS GUARANTY (the “Guaranty”) is made and entered into as of December 30, 2014
by Five Oaks Investment Corp. (the “Guarantor”), to and for the benefit of Bank
of America, N.A. (“Bank of America”).

 

RECITALS

 

A.Subject to the terms and conditions of that certain Master Repurchase
Agreement, dated as of December 30, 2014 (including any amendments,
restatements, supplements, modifications or other agreements or other documents
referenced therein, collectively, the “Repurchase Agreement”), Bank of America
has agreed to purchase certain mortgage loans from Five Oaks Acquisition Corp.
(the “Seller”).

 

B.As a condition precedent to Bank of America’s agreement to engage in the
transactions contemplated under the Repurchase Agreement, and, in order to
provide Bank of America with further assurances that Seller will perform its
obligations under the Repurchase Agreement, Guarantor is required to execute and
deliver this Guaranty to Bank of America.

 

NOW, THEREFORE, in consideration of the mutual rights and obligations provided
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Guarantor hereby agrees as follows:

 

1.Guaranty of Obligations. Guarantor hereby irrevocably, absolutely and
unconditionally guarantees:

 

(a)the payment when due, upon maturity, acceleration or otherwise, of all
obligations of Seller to Bank of America under the Repurchase Agreement,
howsoever evidenced, whether now existing or hereafter created or arising,
whether voluntary or involuntary and however arising, absolute or contingent,
liquidated or unliquidated, determined or undetermined; and

 

(b)the prompt, full and faithful performance and discharge by Seller of each and
every term, condition, agreement, representation and warranty on the part of
Seller contained in the Repurchase Agreement,

 

((a) and (b), collectively and severally, the “Obligations”), whether or not (i)
such Obligations are from time to time reduced or extinguished and thereafter
increased or incurred; (ii) Seller may be liable individually or jointly with
others; (iii) recovery upon such Obligations may be or hereafter become barred
by any statute of limitations; and/or (iv) such Obligations may be or hereafter
become unenforceable.

 

2.Guaranty Not Affected by Certain Events. Neither (a) the dissolution,
insolvency or business failure of, or any assignment for the benefit of
creditors by, or commencement of any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceedings by or against Seller nor (b) the
appointment of a receiver for, or the attachment, restraint of or making or
levying of any order of court or legal process affecting, the property of Seller
shall affect the obligations of Guarantor hereunder and Bank of America may
immediately pursue its rights under this Guaranty against Guarantor upon the
occurrence of any such events even though Bank of America may be stayed from
accelerating or collecting the Obligations from Seller. Further, Bank of America
may take any actions it deems necessary in any bankruptcy case by or against
Seller without releasing or exonerating Guarantor from its obligations under
this Guaranty, including, without limitation, any of the following actions: (i)
permit or suffer the impairment of any Obligations, (ii) make an election under
Bankruptcy Code Section 1111(b)(2), (iii) permit or suffer the creation of
secured or unsecured credit or debt under Bankruptcy Code Section 364 or (iv)
permit or suffer the disallowance, avoidance or subordination of any Obligation
or collateral (including, without limitation, the Purchased Assets (as defined
in the Repurchase Agreement).

 

 

 

 

3.Modification of Obligations. Guarantor authorizes Bank of America (whether or
not after termination of this Guaranty), without notice or demand (except as
shall be required by applicable statute which cannot be waived), and without
affecting or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of, Obligations or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Obligations and exchange,
enforce, waive and release any such security; (c) apply such security and direct
the order or manner of sale thereof as Bank of America in its discretion may
determine; and (d) release or substitute any one or more endorsers, guarantors,
Seller or other obligors. Bank of America may, without notice to or the further
consent of Seller or Guarantor, assign this Guaranty in whole or in part to any
person acquiring an interest in the Obligations.

 

4.Independent Obligation. The obligations of Guarantor hereunder are independent
of the Obligations of Seller, and a separate action or actions may be brought
and prosecuted against Guarantor whether or not action is brought against Seller
and whether or not Seller is joined in any such action.

 

5.Primary Obligation. This Guaranty is one of payment, not of collection, and is
the primary obligation of the undersigned. Guarantor waives any right to require
Bank of America to (a) proceed against Seller or any other party; (b) proceed
against or exhaust any security held from Seller; or (c) pursue any other remedy
in Bank of America’s power whatsoever. Guarantor waives any personal defense
based on or arising out of any personal defense of Seller other than payment in
full of the Obligations, including, without limitation, any defense based on or
arising out of the disability of Seller, or the invalidity or unenforceability
of the Obligations or any part thereof from any cause, or the cessation from any
cause of the liability of Seller other than payment in full of the Obligations.
Bank of America may, at its election, exercise any right or remedy Bank of
America may have against Seller, or any security, without affecting or impairing
in any way the liability of Guarantor hereunder except to the extent the
Obligations have been paid. Guarantor waives any defense arising out of any such
election, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of Guarantor against
Seller or any security.

 

6.Waiver of Rights.

 

(a)Waiver of Subrogation, Reimbursement, Contribution and Similar Rights. As
long as there are outstanding Obligations which have not been paid in full,
Guarantor waives any claim, remedy or rights that Guarantor may now have or may
hereafter acquire against Seller or any guarantor of all or any of the
Obligations, including, without limitation: (i) any rights of subrogation and
contribution, (ii) any rights of reimbursement, (iii) any rights of performance,
(iv) any rights of exoneration and/or any rights of indemnification and (v) any
rights to participate in any claim or remedy that Bank of America has against
Seller or any collateral that Bank of America now has or hereafter acquire for
the Obligations (including, without limitation, the Purchased Assets), whether
or not such claim, remedy or rights arise in equity or under contract, statute
or common law, by any payment made hereunder or otherwise, including, without
limitation, the rights to take or receive from Seller, directly or indirectly,
in cash or other property or by setoff or in any other manner, payment or
security on account of such claim, remedy or rights (such rights, collectively,
the “Guarantor’s Conditional Rights”). If, notwithstanding the foregoing, any
amount shall be paid to Guarantor on account of Guarantor’s Conditional Rights
and either (A) such amount is paid to Guarantor at any time when there are
outstanding Obligations or (B) regardless of when such amount is paid to
Guarantor, any payment made by Seller to Bank of America is at any time
determined to be a preferential payment, then such amount paid to Guarantor
shall be deemed to be held in trust for the benefit of Bank of America and shall
immediately be paid to Bank of America to be credited and applied against the
Obligations, whether matured or unmatured, in such order and manner as Bank of
America, in its sole discretion, shall determine.

 

 

 

 

(b)Waiver Regarding Application of Payments. Guarantor irrevocably waives any
rights that Guarantor may now have or may hereafter acquire to require Bank of
America to apply any amounts received by Bank of America from whatever source on
account of the Obligations in any order or application, it being expressly
acknowledged and agreed by Guarantor that any amounts received by Bank of
America from whatsoever source on account of the Obligations may be applied by
Bank of America toward the payment of such of the Obligations, and in such order
of payment and application, as Bank of America may from time to time elect in
its sole and absolute discretion.

 

(c)Waiver of Notice, Presentment, Demand and Similar Rights. Guarantor
irrevocably waives any rights that Guarantor may now have or may hereafter
acquire with respect to all presentments, demands for performance, protests and
notices, including, without limitation, notices of non-performance, notices of
protest, notices of dishonor, notices of acceptance of this Guaranty and notices
of the existence, creation or incurring of new or additional Obligations.

 

(d)Waiver of Priority of Collection and Election of Remedies. Guarantor
irrevocably waives any rights that Guarantor may now have or may hereafter
acquire to require Bank of America to: (i) proceed against Seller or any other
party; (ii) proceed against or exhaust any security held from Seller; or (iii)
pursue any other remedy in Bank of America’s power whatsoever. Bank of America
may, at its election, exercise any right or remedy Bank of America may have
against Seller without affecting or impairing in any way the liability of
Guarantor under this Guaranty except to the extent the Obligations have been
indefeasibly paid in full. Without expanding any rights of subrogation which
Guarantor may possess as set forth in subsection (a) above, Guarantor
understands that the exercise by Bank of America of certain rights and remedies
contained in the Repurchase Agreement may affect or eliminate any such rights of
subrogation against Seller and that Guarantor may therefore incur a partially or
totally non-reimbursable liability hereunder, nevertheless, Guarantor hereby
authorizes and empowers Bank of America to exercise, in its sole discretion, any
rights and remedies, or any combination thereof, which may be available to Bank
of America, since it is the intent and purpose of Guarantor that the obligations
of Guarantor hereunder are absolute. Guarantor irrevocably waives all rights and
any defenses arising out of any such election of remedies by Bank of America,
even though such election of remedies, such as a nonjudicial foreclosure with
respect to security for an Obligation, operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of Guarantor
against Seller or any guarantor of the Obligations or any security.

 

(e)Waiver of Defenses. To the fullest extent permitted by law, Guarantor
irrevocably waives any defense based on or arising out of any defense of Seller
other than payment in full of the Obligations, including, without limitation,
any defense based upon or arising out of the unenforceability of the Obligations
or any part thereof from any cause, or the cessation from any cause of the
liability of Seller other than payment in full of the Obligations.

 

(f)Waiver of Termination. Guarantor irrevocably waives any right it has to
terminate or revoke the continuing nature of this Guaranty and its application
to any Obligations.

 

(g)Waiver of Certain Statutory Rights. Guarantor waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by Seller or other
circumstance that operate to toll any statute of limitations as to Seller shall
operate to toll the statute of limitations as to Guarantor.

 

 

 

 

(h)Subordination if Any Waiver is Invalid or Void. Guarantor further agrees that
to the extent that any waiver of the rights described in this Guaranty is found
by a court of competent jurisdiction to be unenforceable, invalid, void or
voidable for any reason, any rights that Guarantor may have against Seller or
against any collateral (including, without limitation, the Purchased Assets) or
security, and any rights Guarantor may have against any guarantor of all or some
of the Obligations, shall be junior and subordinate to any rights that Bank of
America may have against Seller, any collateral (including, without limitation,
the Purchased Assets) or security or any other guarantor of all or some of the
Obligations, and no such rights shall be exercised by Guarantor until such time
as Bank of America shall have received indefeasible payment of the full amount
of all Obligations and any obligations of Guarantor under this Guaranty.

 

7.Subordination of Debt and Obligations; Receipt of Payments. Any indebtedness
or obligations of (i) Seller to Guarantor or (ii) any guarantor of all or some
of the Obligations to Guarantor, now or hereafter existing, is hereby
subordinated to the obligations of Seller to Bank of America. Upon the
occurrence of an Event of Default under the Repurchase Agreement and for as long
as such event is occurring, Guarantor agrees that, until the Obligations have
been fully satisfied, it will not seek, accept or retain for its own accounts,
any payment from Seller or any such guarantor on account of such subordinated
debt. Any payments received by Guarantor on account of such subordinated debt
during such Event of Default shall be collected and received in trust for Bank
of America and shall be immediately paid over by Guarantor to Bank of America
without impairing or releasing the obligations of Guarantor hereunder.

 

8.Release of Guarantor.

 

(a)Release of Guarantor’s Obligations. This Guaranty shall in all respects be
continuing, absolute and unconditional, and shall remain in full force and
effect with respect to Guarantor until all Obligations shall have been fully
satisfied and paid and Bank of America shall have executed and delivered to
Guarantor an express written release or cancellation of this Guaranty. No
compromise, settlement, release or discharge of, or indulgence with respect to,
or failure, neglect or omission to enforce or exercise any right against
Guarantor, or the fact that at any time or from time to time all the Obligations
may have been paid in full, shall release or discharge Guarantor.

 

(b)Release of Liability. The liability of Guarantor hereunder is exclusive and
independent of any security for or other guarantee of the Obligations, whether
executed by Guarantor or by any other party, and the liability of Guarantor
hereunder is not affected, impaired or released by (i) any direction of
application of payment by Seller or by any other party; (ii) any other
guarantee, undertaking or maximum liability of Guarantor or of any other party
as to the Obligations; (iii) any payment on or in reduction of any other
guarantor of all or some of the Obligations; (iv) any revocation or release of
any obligations of any other guarantor of all or some of the Obligations; (v)
any dissolution, termination or increase, decrease or change in personnel of
Seller; (vi) any payment made to Bank of America on the Obligations that is
required to be repaid to Seller pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
Guarantor waives any right to the deferral or modification of Guarantor’s
obligations hereunder by reason of any such proceeding; (vii) any acceptance by
Bank of America of any security or collateral for, or other guarantors or
obligors upon, any Obligation; (viii) any change, modification or amendment of
the Repurchase Agreement; (ix) any failure, neglect or omission to perfect,
protect, secure or insure any of the foregoing security interests, liens or
encumbrances or the properties, or interest in properties, subject thereto; (x)
an increase in the individual or aggregate transaction limits in excess of the
amounts initially set forth in the Repurchase Agreement; (xi) any change in
Seller’s name or legal structure or the merger of Seller into another legal
entity or (xii) any act or omission of any kind or at any time upon the part of
Bank of America with respect to any matter whatsoever, other than the execution
and delivery by Bank of America to Guarantor of an express written release or
cancellation of this Guaranty.

 

 

 

 

9.Financial Statements. On or prior to the date of this Guaranty, and on any
subsequent date requested by Bank of America, Guarantor agrees to promptly
provide Bank of America with financial statements as of a recent date relative
to the date of the applicable request by Bank of America. Guarantor represents
and warrants that the financial statements provided to Bank of America on or
prior to the date of this Guaranty, and the financial statements provided on any
date subsequently requested by Bank of America, have in each case been prepared
in conformity with GAAP consistently applied and present fairly the financial
position and assets and liabilities of Guarantor as of the date and period
specified therein. Guarantor further agrees that no material portion of the
assets of Guarantor represented on any such financial statement shall (a) be
sold, transferred or otherwise disposed of for less than fair value without
prior written notice to, and the consent of, Bank of America or (b) pledged or
encumbered to any person or entity without prior written notice to, and the
consent of Bank of America.

 

10.Representations and Warranties of Guarantor. Guarantor hereby represents,
warrants and covenants to Bank of America that:

 

(a)Guarantor is duly formed, validly existing and in good standing under the
laws of the jurisdiction in which it is formed.

 

(b)Guarantor has the power and authority and the legal right to execute, deliver
and perform this Guaranty and has taken all necessary action to authorize the
execution, delivery and performance of this Guaranty.

 

(c)The Guarantor’s execution, delivery and performance of this Guaranty does not
contravene any applicable law, and will not conflict with or result in a breach
of the terms of its organizational documents.

 

(d)All filings and registrations, authorizations, approvals and consents
necessary for the Guarantor’s execution, delivery and performance of this
Guaranty and for the validity and enforceability thereof, have been made or
obtained and are in full force and effect.

 

(e)This Guaranty has been duly and validly executed and delivered by Guarantor
and is the legal, valid and binding obligation of Guarantor, enforceable against
Guarantor, in accordance with its terms, subject to bankruptcy, insolvency and
similar laws and to the availability of equitable remedies.

 

(f)The execution, delivery and performance of this Guaranty will not violate in
any material respect any requirement of law or contractual obligation of
Guarantor or any of its subsidiaries and will not result in, or require, the
creation or imposition of any lien on any of its or their respective properties
or revenues pursuant to any such requirement of law or contractual obligation.

 

(g)Guarantor will not declare or pay any dividends upon any shares of
Guarantor’s stock now or hereafter outstanding, except dividends payable in the
capital stock or stock rights of Guarantor, or make any distribution of assets
to its stockholders including, without limitation, pursuant to any stock
repurchase, whether in cash, property or securities if; at the date of such
payment or distribution, there shall exist an Event of Default or Potential
Default under the Repurchase Agreement.

 

(h)There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, or before or by any court, public board or body pending or, to
Guarantor’s knowledge, threatened against or affecting Guarantor (or, to
Guarantor’s knowledge, any basis therefor) wherein an unfavorable decision,
ruling or finding would adversely affect the validity or enforceability of this
Guaranty or Guarantor’s ability to carry out its obligations hereunder.

 

 

 

 

(i)Guarantor has reviewed and approved the Repurchase Agreement.

 

(j)Guarantor shall at all times comply with the (i) financial covenants and/or
financial ratios as set forth in the Transactions Terms Letter (as defined in
the Repurchase Agreement) (ii) the Payment of Dividends and Retirement of Stock
provisions set forth in the Transactions Terms Letter and (iii) the delivery of
all financial statements of the Guarantor set forth in the Repurchase Agreement.

 

11.Events of Default. It is hereby understood and agreed that an Event of
Default under Section 11.1(p) of the Repurchase Agreement shall be deemed to
have occurred if (i) Guarantor shall default in the payment of any amount
required to be paid by it hereunder, (ii) any representation, warranty or
certification made or deemed made herein by Guarantor shall prove to have been
false or misleading in any material respect as of the time made or furnished, or
(iii) Guarantor shall fail to observe or perform or comply with any other
covenant or provision contained in this Guaranty.

 

12.Authorization for Background Information. For as long as this Guaranty is in
effect, Guarantor authorizes Bank of America to conduct periodic background
investigations regarding Guarantor at any time and for any reason without
further authorization from Guarantor, including, without limitation, obtaining
an updated consumer report(s) about Guarantor from a credit reporting agency.

 

13.Set-off. Guarantor hereby irrevocably authorizes Bank of America at any time
and from time to time after the Obligations are due from Seller, without notice
to Guarantor, any such notice being expressly waived by Guarantor, to set-off
and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by Bank of America to or for the credit or the account of Guarantor, or
any part thereof in such amounts as Bank of America may elect, against and on
account of the obligations and liabilities of Guarantor to Bank of America
hereunder, whether or not Bank of America has made any demand for payment. Bank
of America shall notify Guarantor promptly of any such set-off and the
application made by Bank of America; provided, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of Bank of America under this Section 13 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
parties may have.

 

14.Intent. Guarantor intends and acknowledges that this Guaranty is a
“repurchase agreement” as that term is defined in Section 101(47)(A)(v) of the
Bankruptcy Code and a “securities contract” as that term is defined in Section
741(7)(A)(xi) of the Bankruptcy Code. It is understood and agreed that this
Guaranty constitutes a “master netting agreement” as that term is defined in
Section 101 of the Bankruptcy Code, and that any party’s right to cause the
termination, liquidation or acceleration of, or to offset net termination
values, payment amounts or other transfer obligations arising under or in
connection with this Guaranty is in each case a contractual right to cause the
termination, liquidation or acceleration of, or to offset net termination
values, payment amounts or other transfer obligations arising under or in
connection with this Guaranty as described in Section 561 of the Bankruptcy
Code.

 

15.General.

 

(a)Entire Agreement; Severability. This Guaranty contains the entire agreement
between Guarantor and Bank of America, is the final expression of its intentions
and supersedes all negotiations, representations, warranties, commitments,
offers, contracts (of any kind or nature, whether oral or written) prior to or
contemporaneous with the execution hereof. No prior or contemporaneous
representations, warranties, understandings, offers or agreements of any kind or
nature, whether oral or written, have been made by Bank of America or relied
upon by Guarantor in connection with the execution hereof. Each provision and
agreement herein shall be treated as separate and independent from any other
provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.

 

 

 

 

(b)Amendments. No modification, waiver, amendment, discharge or change of this
Guaranty shall be valid unless the same is in writing and signed by Bank of
America.

 

(c)Costs and Expenses. In addition to the Obligations, Guarantor agrees to pay
all costs and expenses, including, without limitation, attorneys’ fees, incurred
by Bank of America in enforcing this Guaranty in any action or proceeding
arising out of, or relating to, this Guaranty.

 

(d)No Assignment. This Guaranty may not be assigned by Guarantor.

 

(e)Successors and Assigns. This Guaranty and the liability and obligations of
Guarantor hereunder are binding upon Guarantor and its successors and assigns,
and this Guaranty inures to the benefit of and is enforceable by Bank of America
and its successors, transferees and assigns.

 

(f)No Waiver; Cumulative Remedies. No right or power of Bank of America
hereunder shall be deemed to have been waived by any act or conduct on the part
of Bank of America, or by any neglect to exercise such right or power, or by any
delay in so doing, and every right or power shall continue in full force and
effect until specifically waived or released by an instrument in writing
executed by Bank of America. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

 

(g)Seller’s Financial Condition. Guarantor assumes all responsibility for being
and keeping itself informed of Seller’s financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risks that Guarantor assumes and incurs
hereunder, and agrees that Bank of America shall have no duty to advise
Guarantor of information known to it regarding such circumstances or risks.

 

(h)Taxes. All payments made by Guarantor under this Guaranty shall be made
without set-off or counterclaim and free and clear of and without deductions for
any present or future taxes, fees, withholdings or conditions of any nature
(“Taxes”). Guarantor shall pay any such Taxes, including Taxes on any amounts so
paid, and will promptly furnish Bank of America with copies of any tax receipts
or such other evidence of payment as Bank of America may require.

 

(i)Cooperation. Guarantor agrees to execute any and all further documents,
instruments and agreements as Bank of America from time to time request to
evidence Guarantor’s obligations hereunder.

 

(j)Governing Law. This Guaranty shall be deemed to be made under and shall be
governed by the laws of the State of New York without regard to principles of
conflicts of laws (except for Section 5-1401 of the New York General Obligations
Law which shall govern). All legal actions between or among the parties
regarding this Guaranty, including, without limitation, legal actions to enforce
this Guaranty or because of a dispute, breach or default of this Guaranty, shall
be brought in the federal or state courts located in New York County, New York,
which courts shall have sole and exclusive in personam, subject matter and other
jurisdiction in connection with such legal actions and the parties acknowledged
and agree that venue in such courts shall be convenient and appropriate for all
purposes.

 

 

 

 

(k)Waiver of Jury Trial. Each of Guarantor and Bank of America hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Guaranty.

 

(l)Invalidity. In case any one or more of the provisions contained in this
Guaranty shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and this Guaranty shall be construed as if such
invalid, illegal or unenforceable provision had not been included.

 

(m)Capitalized Terms. Capital terms not otherwise defined herein shall have the
meanings assigned such terms in the Repurchase Agreement.

 

(n)Joint and Several Liability. If there are two or more Guarantors, each of
them shall be jointly and severally liable for the obligations of Guarantor
hereunder.

 

(o)Counterparts. This Guaranty may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same agreement. Facsimile signatures
shall be deemed valid and binding to the same extent as the original.

 

[signature page follows]

 

 

 

 

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

 

Five Oaks Investment Corp., as Guarantor       By: /s/ David Carroll   Name:   
  Title:    

 

Signature Page to Guaranty