Exhibit10.2

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT, dated as of December 29, 2004, (as amended,
supplemented and otherwise modified from time to time, this “Guaranty”), is made
by and between NEW CENTURY FINANCIAL CORPORATION (f/k/a New Century REIT, Inc.)
(together with its successors and permitted assigns, the “Guarantor”) and
CITIGROUP GLOBAL MARKETS REALTY CORP. (the “Buyer”, which term shall include its
successors and assigns and any Buyer for whom the Buyer acts as Agent as defined
and provided for in the Master Repurchase Agreement referred to below).

 

RECITALS

 

WHEREAS, pursuant to the Amended and Restated Master Repurchase Agreement, dated
as of December 29, 2004 (as amended, supplemented or otherwise modified from
time to time, the “Master Repurchase Agreement”), among New Century Mortgage
Corporation (the “Seller”), the Guarantor and the Buyer, the Buyer has agreed to
purchase certain loans and related assets (as more particularly defined in the
Master Repurchase Agreement, the “Loans”) from the Seller and the Seller has
agreed to repurchase such Loans upon the terms and subject to the conditions set
forth therein; and

 

WHEREAS, as of the date hereof, the Seller is an indirect wholly-owned
subsidiary of the Guarantor, and the Guarantor will therefore derive a
substantial direct and indirect benefit from the Buyer’s purchase and sale of
Loans from and to the Seller pursuant to the Master Repurchase Agreement. To
induce the Buyer to enter into the Master Repurchase Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor has agreed (subject to certain limitations) to
guaranty the Seller’s obligations with respect to the Master Repurchase
Agreement and the documents referenced therein; and

 

WHEREAS, it is a condition precedent to the obligation of the Buyer entering
into the Master Repurchase Agreement and to the obligation of Buyer to purchase
the Loans from the Seller under the Master Repurchase Agreement that the
Guarantor shall have executed and delivered this Guaranty to the Buyer.

 

NOW, THEREFORE, for good and valuable consideration, receipt of which by the
parties hereto is hereby acknowledged, the parties hereto hereby agree as
follows:

 

1. Defined Terms.

 

(a) Unless otherwise defined herein, terms defined in the Master Repurchase
Agreement and used herein shall have the meanings given to them in the Master
Repurchase Agreement.

 

(b) “Expiration Date” shall have the meaning set forth in Section 2(d) herein.

 

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(c) “Obligations” shall mean the obligations and liabilities of the Seller and
the Guarantor to the Buyer, including, without limitation, the obligations
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, or out of or in
connection with the Master Repurchase Agreement, this Guaranty, any other
Program Documents and any other document made, delivered or given in connection
therewith or herewith, whether on account of covenants, Repurchase Prices,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to the Buyer that are
required to be paid by the Seller pursuant to the terms of the Master Repurchase
Agreement) or otherwise.

 

(d) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Guaranty shall refer to this Guaranty as a whole and not to
any particular provision of this Guaranty, and section and paragraph references
are to this Guaranty unless otherwise specified.

 

(e) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

2. Guaranty.

 

(a) The Guarantor hereby, unconditionally and irrevocably, guarantees to the
Buyer and its successors, indorsees, transferees and assigns the prompt and
complete payment and performance by the Seller when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.

 

(b) The Guarantor further agrees to pay any and all expenses (including, without
limitation, all reasonable fees and disbursements of counsel) which may be paid
or incurred by the Buyer in enforcing any rights with respect to, or collecting,
any or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, the Guarantor under this Guaranty. This Guaranty shall
remain in full force and effect until the Obligations are paid in full,
notwithstanding that from time to time prior thereto the Seller may be free from
any Obligations.

 

(c) The Guarantor agrees that the Obligations may at any time and from time to
time exceed the amount of the liability of the Guarantor hereunder without
impairing this Guaranty or affecting the rights and remedies of the Buyer
hereunder.

 

(d) No payment or payments made by the Seller, the Guarantor, any other the
Guarantor or any other Person or received or collected by the Buyer from the
Seller, the Guarantor, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder which shall, notwithstanding any such payment or payments
other than payments made by the Guarantor in respect of the Obligations or
payments received or collected from the Guarantor in respect of the Obligations
remain liable for the Obligations up to the maximum liability of the Guarantor
hereunder until the Obligations paid in full and the Master Repurchase Agreement
is terminated (such date, the “Expiration Date”).

 

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(e) The Guarantor agrees that whenever, at any time, or from time to time, it
shall make any payment to the Buyer on account of its liability hereunder, it
will notify the Buyer in writing that such payment is made under this Guaranty
for such purpose.

 

3. [Reserved]

 

4. Representations and Warranties of the Guarantor. The Guarantor hereby
represents and warrants that:

 

(a) It is duly organized and validly existing in good standing under the laws of
the jurisdiction under which it is organized and is duly qualified to do
business and is in good standing in every other jurisdiction as to which the
nature of the business conducted by it makes such qualification necessary.

 

(b) It has the full power, authority and legal right to execute, deliver and
perform its obligations under this Guaranty. This Guaranty has been duly
authorized, executed and delivered by it, has not been amended or otherwise
modified, is in full force and effect and is the legal, valid and binding
obligation of the Guarantor, enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).

 

(c) Neither the execution and delivery of this Guaranty nor the consummation of
the transactions contemplated herein will conflict with or result in a breach
of, or require any consent under, any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any material agreement or instrument to which the Guarantor is a
party or by which the Guarantor or its property is bound or to which the
Guarantor is subject, or constitute a default under any such material agreement
or instrument, or (except for the liens created pursuant hereto) result in the
creation or imposition of any lien or encumbrance upon the Guarantor’s revenues
or assets pursuant to the terms of any such material agreement or instrument.

 

(d) It has received and reviewed copies of the Program Documents.

 

(e) There is no action, suit or proceeding at law or in equity by or before any
governmental authority, arbitral tribunal or other body now pending, or to the
best of the Guarantor’s knowledge, threatened against or affecting the Guarantor
or its property that has a reasonable likelihood of having a material adverse
effect on the Guarantor’s condition, financial or otherwise.

 

(f) No authorizations, approvals or consents of, and no filings or registrations
with, any governmental authority are necessary for the execution, delivery or
performance by the Guarantors of this Guaranty.

 

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(g) In exchange for the guaranty hereunder, it will derive a benefit from the
sale, transfer and assignment of the Loans to the Buyer.

 

(h) It is solvent on the date hereof.

 

(i) It is a qualified real estate investment trust (“REIT”) under Section 856 of
the Internal Revenue Code of 1986, as amended and it is in compliance with all
provisions of the Code governing its REIT status.

 

5. Covenants of the Guarantor.

 

5.01 The Guarantor covenants and agrees that:

 

(a) It shall pay and discharge all taxes now or hereafter imposed on it, on its
income or profits, on any of its property or upon the liens provided herein
prior to the date on which penalties attach thereto; it shall promptly pay any
valid, final judgment enforcing any such tax and cause the same to be satisfied
of record and shall also pay, or cause to be paid, when due all claims for
labor, material, supplies or services that, if unpaid, could by law result in a
mechanics’ lien.

 

(b) It shall notify the Buyer promptly upon obtaining knowledge of any material
action, suit or proceeding at law or in equity by or before any government
authority, arbitral tribunal or other body pending or threatened against it or
the Seller.

 

(c) It will take all steps necessary to maintain its status as a REIT.

 

6. Right of Set-off. Upon the occurrence of any Event of Default, the Guarantor
hereby irrevocably authorizes the Buyer or any of its Affiliates at any time and
from time to time without notice to the Guarantor, any such notice being
expressly waived by the 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 the Buyer or any of its Affiliates to or
for the credit or the account of the Guarantor, or any part thereof in such
amounts as the Buyer may elect, against and on account of the obligations and
liabilities of the Guarantor to the Buyer hereunder and claims of every nature
and description of the Buyer or any of its Affiliates against the Guarantor, in
any currency, whether arising hereunder, under the Master Repurchase Agreement,
as the Buyer may elect, whether or not the Buyer has made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured. The Buyer shall notify the Guarantor promptly of any such set-off and
the application made by the Buyer; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Buyer and its Affiliates under this Section are in addition to other rights and
remedies (including without limitation, other rights of set-off) which the Buyer
and its Affiliates may have.

 

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7. No Subrogation. Notwithstanding any payment or payments made by the Guarantor
hereunder or any set-off or application of funds of the Guarantor by the Buyer
or any of its Affiliates, the Guarantor shall not be entitled to be subrogated
to any of the rights of the Buyer against the Seller or any other guarantor or
any collateral security or guarantee or right of offset held by the Buyer for
the payment of the Obligations, nor shall the Guarantor seek or be entitled to
seek any contribution or reimbursement from the Seller or any other guarantor in
respect of payments made by the Guarantor hereunder, until all amounts owing to
the Buyer by the Seller on account of the Obligations are paid in full and the
Master Repurchase Agreement is terminated. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by the
Guarantor in trust for the Buyer, segregated from other funds of the Guarantor,
and shall, forthwith upon receipt by the Guarantor, be turned over to the Buyer
in the exact form received by the Guarantor (duly indorsed by the Guarantor to
the Buyer, if required), to be applied against the Obligations, whether matured
or unmatured, in such order as the Buyer may determine.

 

8. Amendments, Etc. with Respect to the Obligations. The Guarantor shall remain
obligated hereunder notwithstanding that, without any reservation of rights
against the Guarantor and without notice to or further assent by the Guarantor,
any demand for payment of any of the Obligations made by the Buyer may be
rescinded by the Buyer and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Buyer, and the Master Repurchase Agreement and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Buyer may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Buyer for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Buyer shall not have any obligation to protect,
secure, perfect or insure any lien at any time held by it as security for the
Obligations or for this Guaranty or any property subject thereto. When making
any demand hereunder against the Guarantor, the Buyer may, but shall be under no
obligation to, make a similar demand on the Seller or any other the Guarantor,
and any failure by the Buyer to make any such demand or to collect any payments
from the Seller or any such other the Guarantor or any release of the Seller or
such other guarantor shall not relieve the Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the Buyer against the Guarantor.
For the purposes hereof “demand” shall include the commencement and continuance
of any legal proceedings.

 

9. Waiver of Rights. The Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations, and notice of or proof
of reliance by the Buyer upon this Guaranty or acceptance of this Guaranty; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guaranty; and all dealings between the Seller and the Guarantor, on
the one hand, and the Buyer, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guaranty. The
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Seller or the Guarantor with respect to
the Obligations.

 

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10. Guaranty Absolute and Unconditional. The Guarantor understands and agrees
that this Guaranty shall be construed as a continuing, absolute and
unconditional guarantee of the full and punctual payment and performance by the
Seller of the Obligations and not of their collectibility only and is in no way
conditioned upon any requirement that the Buyer first attempt to collect any of
the obligations from the Seller, without regard to (a) the validity, regularity
or enforceability of the Master Repurchase Agreement, any of the Obligations or
any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Buyer, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the Seller
against the Buyer, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Seller or the Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the Seller
from the Obligations, or of the Guarantor from this Guaranty, in bankruptcy or
in any other instance. When pursuing its rights and remedies hereunder against
the Guarantor, the Buyer may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Seller or any other Person or any
other collateral security or guarantee for the Obligations or any right of
offset with respect thereto, and any failure by the Buyer to pursue such other
rights or remedies or to collect any payments from the Seller or any such other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Seller or any such
other Person or any such collateral security, guarantee or right of offset,
shall not relieve the Guarantor of any liability hereunder, and shall not impair
or affect the rights and remedies, whether express, implied or available as a
matter of law, of the Buyer against the Guarantor. This Guaranty shall remain in
full force and effect and be binding in accordance with and to the extent of its
terms upon the Guarantor and the successors and assigns thereof, and shall inure
to the benefit of the Buyer, and its successors, indorsees, transferees and
assigns, until all the Obligations and the obligations of the Guarantor under
this Guaranty shall have been satisfied by payment in full and the Master
Repurchase Agreement shall be terminated, notwithstanding that from time to time
during the term of the Master Repurchase Agreement the Seller may be free from
any Obligations.

 

11. Reinstatement. This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Buyer upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Seller or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Seller or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

 

12. Payments. The Guarantor hereby guarantees that payments hereunder will be
paid to the Buyer without set-off or counterclaim, in U.S. Dollars in accordance
with the wiring instructions of the Buyer.

 

13. Notices. All notices, requests and other communications provided for herein
(including without limitation any modifications of, or waivers, requests or
consents under, this Guaranty) shall be given or made in writing (including
without limitation by telex or telecopy) and delivered to the intended recipient
at the “Address for Notices” specified on the signature page hereto; or, as to
any party, at such other address as shall be designated by such party in a

 

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written notice to each other party. All such communications shall be deemed to
have been duly given when transmitted by telex or telecopy or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.

 

14. Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

15. Integration. This Guaranty and the Master Repurchase Agreement represent the
agreement of the Guarantor with respect to the subject matter hereof and thereof
and there are no promises or representations by the Buyer relative to the
subject matter hereof or thereof not reflected herein or therein.

 

16. Amendments in Writing; No Waiver; Cumulative Remedies.

 

(a) None of the terms or provisions of this Guaranty may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Guarantor, and the Buyer; provided that any provision of this Guaranty may
be waived by the Buyer.

 

(b) The Buyer shall not by any act (except by a written instrument pursuant to
Section 16(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of the Buyer,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Buyer of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Buyer would otherwise have on any future occasion.

 

(c) 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.

 

17. Section Headings. The section headings used in this Guaranty are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

 

18. Successors and Assigns. This Guaranty shall be binding upon the successors
and assigns of the Guarantor and shall inure to the benefit of the Buyer and its
successors and assigns. This Guaranty may not be assigned by the Guarantor
without the express written consent of the Buyer.

 

19. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY NEW YORK LAW WITHOUT
REFERENCE TO CHOICE OF LAW DOCTRINE.

 

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20. SUBMISSION TO JURISDICTION; WAIVERS. THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

 

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

 

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

 

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

 

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

 

21. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, THE MASTER
REPURCHASE AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

22. Agents. The Buyer may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.

 

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

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed and delivered as of the day and year first above written.

 

NEW CENTURY FINANCIAL

CORPORATION (f/k/a New Century REIT, Inc.)

By:  

/s/ Kevin Cloyd

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Name:   Kevin Cloyd Title:   Executive Vice President By:  

/s/ Edward F. Gotschall

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Name:   Edward F. Gotschall Title:   Vice Chairman, Finance Address for Notices:
18400 Von Karman, Suite 1000 Irvine, California 92612 Attention: Stergios
Theologides, Esq. Telecopier No.: (949) 863-7243 Telephone No.: (949) 440-7030
CITIGROUP GLOBAL MARKETS REALTY CORP. By:  

/s/ James Xanthos

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Name:   James Xanthos Title:   Authorized Signer Address for Notices: 390
Greenwich Street, 6th Floor New York, New York 10013 Attention: James Xanthos
Telephone: 212-723-4144 Facsimile: 212-723-8591