Exhibit 10.7

 

EXECUTION VERSION

 

GUARANTY

 

THIS GUARANTY, dated as of June 28, 2017 (as amended, restated, supplemented, or
otherwise modified from time to time, this “Guaranty”), made by GRANITE POINT
MORTGAGE TRUST INC., a Maryland corporation (“Guarantor”), in favor of MORGAN
STANLEY BANK, N.A., a national banking association, as buyer (“Buyer”).

 

RECITALS

 

A.            Pursuant to that certain Master Repurchase and Securities Contract
Agreement, dated as of February 16, 2016 (as amended, supplemented or otherwise
modified from time to time, the “Repurchase Agreement”), between Buyer and TH
Commercial MS II, LLC, a Delaware limited liability company (“Seller”), Seller
has agreed to sell to Buyer, certain Purchased Assets, as defined in the
Repurchase Agreement, upon the terms and subject to the conditions as set forth
therein.  Pursuant to the terms of that certain Custodial Agreement, dated as of
February 19, 2016 (as amended, supplemented or otherwise modified from time to
time, the “Custodial Agreement”), by and among Buyer, Seller and Wells Fargo
Bank, N.A., a national banking association (“Custodian”), Custodian is required
to take possession of the Purchased Assets, along with certain other documents
specified in the Custodial Agreement, as Custodian of Buyer and any future
purchaser, on several delivery dates, in accordance with the terms and
conditions of the Custodial Agreement.  Pursuant to the terms of that certain
Pledge and Security Agreement, dated as of February 16, 2016 (as amended,
supplemented or otherwise modified from time to time, the “Pledge Agreement”),
made by TH Commercial MS I, LLC, a Delaware limited liability company
(“Pledgor”) in favor of Buyer, Pledgor has pledged to Buyer all of the Pledged
Collateral (as defined in the Pledge Agreement).  The Repurchase Agreement, the
Custodial Agreement, the Depository Agreement, the Servicing Agreement, the Fee
Letter, the Pledge Agreement and this Guaranty shall be referred to herein as
the “Transaction Documents”.

 

B.            Guarantor indirectly owns one hundred percent (100%) of the legal
and beneficial limited liability company interest in, and controls, Seller and
Pledgor, and Guarantor will derive benefits, directly and indirectly, from the
execution, delivery and performance by Seller of the Transaction Documents and
the transactions contemplated by the Repurchase Agreement.

 

C.            Buyer and Two Harbors Investment Corp., a Maryland corporation
(“Original Guarantor”), have previously entered into that certain Guaranty,
dated as of February 18, 2016, made by Original Guarantor in favor of Buyer (the
“Original Guaranty”), and have agreed to terminate the Original Guaranty in
accordance with the terms and provisions of that certain Termination of
Guaranty, dated as of the date hereof.

 

D.            It is a condition precedent to Buyer acquiring the Purchased
Assets pursuant to the Repurchase Agreement and to the termination of the
Original Guaranty that Guarantor shall have executed and delivered this
Guaranty.

 

NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to
enter into the Transaction Documents and to enter into the transactions
contemplated thereunder, Guarantor hereby agrees with Buyer as follows:

 

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1.             Defined Terms.  Each of the defined terms set forth on Exhibit A
hereto are, solely for the purpose of Section 9 hereof, hereby incorporated
herein by reference. Unless otherwise defined herein, capitalized terms used
herein shall have the respective meanings given them in the Repurchase
Agreement.

 

2.             Guaranty.  (a) Subject to Sections 2(b), 2(c) and 2(d) below,
Guarantor hereby unconditionally and irrevocably guarantees to Buyer the prompt
and complete payment and performance when due, whether at stated maturity, by
acceleration of the Repurchase Date or otherwise, of all of the following: 
(i) all payment obligations owing by Seller to Buyer under or in connection with
the Repurchase Agreement or any of the other Transaction Documents or other
agreements relating thereto, (ii) any and all extensions, renewals,
modifications, amendments or substitutions of the foregoing, and (iii) any other
obligations of Seller and Pledgor with respect to Buyer under each of the
Transaction Documents (collectively, the “Obligations”).

 

(b)           Notwithstanding anything herein to the contrary, but subject to
Sections 2(c) and 2(d) below, which shall control, the maximum liability of
Guarantor hereunder and under the Transaction Documents shall in no event exceed
twenty-five percent (25%) of the Obligations.

 

(c)           Notwithstanding the foregoing, or any other provision herein to
the contrary, the limitation on recourse liability as set forth in
Section 2(b) above SHALL BECOME NULL AND VOID and shall be of no further force
and effect, and the Obligations shall be full recourse to Seller and Guarantor,
jointly and severally, upon the occurrence of any of the following:

 

(i)            a voluntary bankruptcy or insolvency proceeding is commenced by
Seller, Pledgor or Guarantor under the Bankruptcy Code or any similar federal or
state law;

 

(ii)           an involuntary bankruptcy or insolvency proceeding is commenced
against Seller, Pledgor or Guarantor in connection with which Seller, Pledgor,
Guarantor, or any of their respective Affiliates has or have colluded in any way
with the creditors commencing or filing such proceedings; and

 

(iii)          any breach of the separateness covenants set forth in Article 13
of the Repurchase Agreement that results in the legal or equitable consolidation
of any of the assets and/or liabilities of Seller or Pledgor with any other
Person (including, without limitation, in connection with any proceeding under
any Insolvency Law).

 

(d)           In addition to the foregoing, and notwithstanding the limitations
on recourse liability set forth in Section 2(b) above, Guarantor shall be liable
to Buyer for any costs, claims, expenses or other liabilities actually incurred
by Buyer which are in any way attributable to:

 

(i)            any material breach of the separateness covenants set forth in
Article 13 of the Repurchase Agreement (other than as set forth in
Section 2(c)(iii) above);

 

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(ii)           fraud, intentional misrepresentation, willful misconduct or gross
negligence by Seller or Guarantor, or any Affiliate of Seller or Guarantor in
connection with the execution and delivery of this Guaranty, the Repurchase
Agreement or any of the other Transaction Documents, or any certificate, report,
financial statement or other instrument or document furnished to Buyer at the
time of the closing of the Repurchase Agreement or during the term of the
Repurchase Agreement;

 

(iii)          Seller’s failure to obtain Buyer’s prior written consent to any
subordinate financing or voluntary liens in each case that encumber any or all
of the Purchased Assets that are not permitted under the Transaction Documents;
and

 

(iv)          any material breach of any representations and warranties by
Guarantor contained in any Transaction Document or herein and any material
breach by Seller, Guarantor or any of their respective Affiliates, of any
representations and warranties relating to Environmental Laws, or any indemnity
for costs incurred in connection with the violation of any Environmental Law,
the correction of any environmental condition, or the removal of any Materials
of Environmental Concern, in each case in any way affecting Seller’s or
Guarantor’s properties or any of the Purchased Assets.

 

(e)           Nothing herein shall be deemed a waiver of any right which Buyer
may have under Sections 506(a), 506(b), 1111(b) or any other provision of the
Bankruptcy Code to file a claim for the full amount of the outstanding
obligations under the Repurchase Agreement or to require that all Purchased
Assets shall continue to secure all of the outstanding obligations owing to
Buyer in accordance with the Repurchase Agreement or any other Transaction
Documents.

 

(f)            Guarantor further agrees to pay any and all reasonable
out-of-pocket expenses (including, without limitation, all reasonable fees and
disbursements of external counsel) which may be paid or incurred by Buyer in
enforcing, or obtaining advice of external counsel in respect of, any rights
with respect to, or collecting, any or all of the Obligations and/or enforcing
any rights with respect to, or collecting against, Guarantor under this Guaranty
after the occurrence of a Default and during the continuance of an Event of
Default.  This Guaranty shall remain in full force and effect until the date
upon which the Obligations are paid in full.

 

(g)           No payment or payments made by Seller, Pledgor or any other Person
or received or collected by Buyer from Seller, Pledgor 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 Guarantor hereunder which shall, notwithstanding any such
payment or payments, remain liable for the amount of any outstanding Obligations
under this Agreement until all such outstanding Obligations are paid in full,
but subject to the limitations on Guarantor’s liability under
Section 2(b) above.

 

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

 

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3.             Subrogation.  Upon making any payment hereunder, Guarantor shall
be subrogated to the rights of Buyer against Seller and Pledgor and any
collateral for any Obligations with respect to such payment; provided, that
Guarantor shall not seek to enforce any right or receive any payment by way of
subrogation until all amounts due and payable by Seller or Pledgor to Buyer
under the Transaction Documents or any related documents have been paid in full;
provided, further, that such subrogation rights shall be subordinate in all
respects to all amounts owing to Buyer under the Transaction Documents.

 

4.             Amendments, etc. with Respect to the Obligations.  Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against Guarantor, and without notice to or further assent by
Guarantor, any demand for payment of any of the Obligations made by Buyer may be
rescinded by 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 Buyer and any
Transaction Document and any other document in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, and any
collateral security, guarantee or right of offset at any time held by Buyer for
the payment of the Obligations may be sold, exchanged, waived, surrendered or
released.  Buyer shall have no 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.  Subject to any notice requirements
applicable to Buyer that are set forth in the Transaction Documents, when making
any demand hereunder against Guarantor, Buyer may, but shall be under no
obligation to, make a similar demand on Seller or any other Person, and any
failure by Buyer to make any such demand or to collect any payments from Seller
or any such other Person or any release of Seller or such other Person shall not
relieve 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 Buyer against Guarantor.  For the purposes hereof “demand” shall include
the commencement and continuance of any legal proceedings.

 

5.             Guaranty Absolute and Unconditional.  (a) Guarantor hereby agrees
that its obligations under this Guaranty constitute a guarantee of payment when
due and not of collection.  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 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 in reliance upon this Guaranty; and all dealings between
Seller and Guarantor, on the one hand, and Buyer, on the other hand, shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guaranty.  Guarantor waives promptness, diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon
Seller or the Guaranty with respect to the Obligations.  This Guaranty shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (i) the validity, regularity or enforceability of any
agreement, any of the Obligations or any collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by Buyer, (ii) 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 Seller against Buyer, (iii) any requirement that Buyer exhaust any
right to take any action against Seller or any other Person prior to or
contemporaneously with proceeding to exercise any

 

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right against Guarantor under this Guaranty or (iv) any other circumstance
whatsoever (with or without notice to or knowledge of Seller and Guarantor)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of Seller for the Obligations or of Guarantor under this Guaranty, in
bankruptcy or in any other instance.  When pursuing its rights and remedies
hereunder against Guarantor, Buyer may, but shall be under no obligation, to
pursue such rights and remedies that Buyer may have against Seller or any other
Person or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by Buyer to pursue
such other rights or remedies or to collect any payments from 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 Seller or any such other
Person or any such collateral security, guarantee or right of offset, shall not
relieve 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 Buyer against Guarantor.  This Guaranty shall remain in full force and effect
and be binding in accordance with and to the extent of its terms upon Guarantor
and its successors and assigns thereof, and shall inure to the benefit of Buyer
and its permitted successors, endorsees, transferees and assigns, until all the
Obligations and the obligations of Guarantor under this Guaranty shall have been
satisfied by payment in full.

 

(b)           Without limiting the generality of the foregoing, Guarantor hereby
agrees, acknowledges, and represents and warrants to Buyer as follows:

 

(i)            Guarantor hereby waives any defense arising by reason of, and any
and all right to assert against Buyer any claim or defense based upon, an
election of remedies by Buyer which in any manner impairs, affects, reduces,
releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to
proceed against Seller or any other guarantor for reimbursement or contribution,
and/or any other rights of Guarantor to proceed against Seller, any other
guarantor or any other person or security.

 

(ii)           Guarantor is presently informed of the financial condition of
Seller and of all other circumstances which diligent inquiry would reveal and
which bear upon the risk of nonpayment of the Obligations.  Guarantor hereby
covenants that it will make its own investigation and will continue to keep
itself informed about the financial condition of Seller, the status of other
guarantor, if any, of all other circumstances which bear upon the risk of
nonpayment and that it will continue to rely upon sources other than Buyer for
such information and will not rely upon Buyer for any such information.  Absent
a written request for such information by Guarantor to Buyer, Guarantor hereby
waives the right, if any, to require Buyer to disclose to Guarantor any
information which Buyer may now or hereafter acquire concerning such condition
or circumstances including, but not limited to, the release of or revocation by
any other guarantor.

 

(iii)          Guarantor has independently reviewed the Transaction Documents
and related agreements and has made an independent determination as to the
validity and enforceability thereof, and in executing and delivering this
Guaranty to Buyer, Guarantor is not in any manner relying upon the validity,
and/or enforceability, and/or attachment, and/or perfection of any liens or
security interests of any kind or nature granted by Seller or any other
guarantor to Buyer, now or at any time and from time to time in the future.

 

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6.             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 Buyer upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Seller or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for Seller
or any substantial part of the property of Seller, or otherwise, all as though
such payments had not been made.

 

7.             Payments.  Guarantor hereby agrees that the Obligations will be
paid to Buyer, without set-off or counterclaim in United States Dollars at the
address specified in writing by Buyer.

 

8.             Representations and Warranties.  Guarantor represents and
warrants that:

 

(a)           It is duly organized, validly existing and in good standing under
the laws and regulations of its jurisdiction of incorporation or organization,
as the case may be.  It is duly licensed, qualified, and in good standing in
every state where such licensing or qualification is necessary for the
transaction of its business, except to the extent that the failure to be
licensed or qualified could not reasonably be expected to have a Material
Adverse Effect.  It has the power to own and hold the assets it purports to own
and hold, and to carry on its business as now being conducted and proposed to be
conducted, and has the power to execute, deliver, and perform its obligations
under this Guaranty and the other Transaction Documents;

 

(b)          This Guaranty has been duly executed by it, for good and valuable
consideration.  This Guaranty constitutes a legal, valid and binding obligation
of Guarantor enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity (whether enforcement is sought in proceedings in
equity or at law);

 

(c)           Guarantor does not believe, nor does it have any reason or cause
to believe, that it cannot perform in all respects all covenants and obligations
contained in this Guaranty applicable to it;

 

(d)           The execution, delivery and performance of this Guaranty will not
violate (i) its organizational documents, (ii) any contractual obligation to
which it is now a party or constitute a default thereunder, or result thereunder
in the creation or imposition of any lien upon any of its assets, (iii) any
judgment or order, writ, injunction, decree or demand of any court applicable to
it, or (iv) any applicable Requirement of Law, except to the extent that the
failure to comply could not reasonably be expected to have a Material Adverse
Effect;

 

(e)           There is no action, suit, proceeding, litigation, investigation,
arbitration or proceeding of or before any arbitrator or Governmental Authority
is pending or, to the knowledge of Guarantor, threatened by or against Guarantor
or against its assets (i) with respect to any of the Transaction Documents or
any of the transactions contemplated hereby or thereby or (ii) that could have a
Material Adverse Effect.  Guarantor is in compliance in all material respects
with all Requirements of Law.  Guarantor is not in default in any material
respect with

 

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respect to any judgment, order, writ, injunction, decree, rule, or regulation of
any arbitrator or Governmental Authority;

 

(f)            Guarantor has timely filed (taking into account all applicable
extensions) all required federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
taxes, assessments, fees, and other governmental charges payable by it, or with
respect to any of its properties or assets, that have become due and payable
except to the extent such amounts are being contested in good faith by
appropriate proceedings for which appropriate reserves have been established in
accordance with GAAP, and there is no claim relating to any such taxes now
pending that was made in writing by any Governmental Authority and that is not
being contested in good faith as provided above;

 

(g)          No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any Governmental
Authority or any other Person is required to authorize, or is required in
connection with, (i) the execution and performance of this Guaranty, (ii) the
legality, validity, binding effect or enforceability of this Guaranty against it
or (iii) the consummation of the transactions contemplated by this Guaranty,
except filing obligations with the Securities and Exchange Commission arising in
the ordinary course of Guarantor’s business as a public company, including,
without limitation, 8K, 10Q and 10K filings, which have been obtained and are in
full force and effect; and

 

(h)           There are no judgments against Guarantor unsatisfied of record or
docketed in any court located in the United States of America that could
reasonably be expected to have a Material Adverse Effect and no Act of
Insolvency has ever occurred with respect to it.

 

Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by Guarantor on the date of each Transaction under the
Repurchase Agreement, on and as of such date of the Transaction, as though made
hereunder on and as of such date.

 

9.             Financial Covenants.

 

(a)           Guarantor (on a consolidated basis, but adjusted to remove the
impact of consolidating any variable interest entities under the requirements of
Accounting Standards Codification (“ASC”) Section 810 and/or transfers of
financial assets accounted for as secured borrowings under ASC Section 860, as
both of such ASC sections are amended, modified and/or supplemented from time to
time) shall not permit any of the following to be breached, as determined
quarterly on a consolidated basis in conformity with GAAP:

 

(i)            Unrestricted Cash.  Guarantor shall not, with respect to itself
and its consolidated Subsidiaries, directly or indirectly, permit its
Unrestricted Cash to be less than the greater of: (i) Thirty Million and No/100
Dollars ($30,000,000.00), and (ii) five percent (5.0%) of Guarantor’s Recourse
Indebtedness;

 

(ii)           Minimum Tangible Net Worth.  Guarantor shall not, with respect to
itself and its consolidated Subsidiaries, directly or indirectly, permit its
Tangible Net Worth to be less than the sum of (x) seventy-five percent (75%) of
the Tangible Net Worth as of the Closing Date, plus (y) seventy-five percent
(75%) of the aggregate net cash proceeds of any equity issuances

 

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made by Guarantor after the Closing Date (net of underwriting discounts and
commissions and other out-of-pocket costs and expenses incurred by Guarantor and
its Affiliates in connection with such equity issuance);

 

(iii)          Total Debt to Total Assets Ratio.  Guarantor shall not, with
respect to itself and its Subsidiaries, directly or indirectly, permit the
ratio, expressed as a percentage, (i) the numerator of which shall equal the
Indebtedness of Guarantor and its consolidated Subsidiaries associated with its
Target Investments and (ii) the denominator of which shall equal the Total
Assets of Guarantor and its consolidated Subsidiaries associated with its Target
Investments, to at any time be greater than seventy-five percent (75.00%);
provided, that notwithstanding the foregoing, Guarantor and its consolidated
Subsidiaries may from time to time acquire Highly Rated CMBS and enter into
secured Indebtedness in connection therewith pursuant to which the ratio,
expressed as a percentage, (i) the numerator of which equals the Indebtedness of
Guarantor and its consolidated Subsidiaries associated with its Highly Rated
CMBS and (ii) the denominator of which equals the Total Assets of Guarantor and
its consolidated Subsidiaries associated with its Highly Rated CMBS exceeds
seventy five percent (75.00%) but is not greater than ninety percent (90.00%),
subject to the condition that at any such time, Guarantor shall not, with
respect to itself and its Subsidiaries, directly or indirectly, permit the
ratio, expressed as a percentage, (i) the numerator of which shall equal the
Indebtedness of Guarantor and its consolidated Subsidiaries and (ii) the
denominator of which shall equal the Total Assets of Guarantor and its
consolidated Subsidiaries to be greater than eighty percent (80.00%); and

 

(iv)          Minimum Interest Expense Coverage Ratio.  Guarantor shall not,
with respect to itself and its consolidated Subsidiaries, directly or
indirectly, permit the ratio of (i) all amounts set forth on an income statement
of Guarantor and its consolidated Subsidiaries prepared in accordance with GAAP
for interest income for the period of four (4) consecutive fiscal quarters ended
on or most recently prior to such date of determination to (ii) the Interest
Expense of Guarantor and its consolidated Subsidiaries for such period, to be
less than 1.50 to 1.00.

 

(b)           Guarantor’s compliance with the covenants set forth in this
Section 9 must be evidenced by the financial statements and by a Financial
Covenant Compliance Certificate in the form of Exhibit VI to the Repurchase
Agreement furnished together therewith, as provided by Seller to Buyer pursuant
to Sections 3(f) and 12(g) of the Repurchase Agreement and compliance with all
such covenants are subject to continuing verification of Buyer and Guarantor
shall provide information that is reasonably requested by Buyer with respect to
any lawsuits and/or other matters disclosed in any financial statements of
Guarantor delivered to Buyer or disclosed in any Form 8-K filed by Guarantor
with the Securities and Exchange Commission which would reasonably be expected
to have a material  adverse effect  on Guarantor’s ability to comply with the
covenants set forth in this Section 9; provided, that, for the avoidance of
doubt, such continued verification shall not obligate Guarantor or Seller to
provide additional financial statements or Financial Covenant Compliance
Certificates other than those required under Sections 3(f) and 12(g)  of the
Repurchase Agreement.

 

(c)           Notwithstanding anything to the contrary contained in this
Guaranty, in the event that Guarantor, Seller or any Affiliate thereof that is a
Subsidiary of Guarantor has

 

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entered into or shall enter into or amend any other commercial real estate loan
repurchase agreement, warehouse facility or credit facility with any other
lender or repurchase buyer with terms more restrictive to the repurchase seller
or borrower thereunder than the covenants in this Section 9, then this Section 9
shall be deemed to be automatically modified to such more restrictive terms.

 

10.          Further Covenants of Guarantor:

 

(a)           Taxes.  Guarantor has timely filed (taking into account all
applicable extensions) all required federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all taxes, assessments, fees, and other governmental charges payable by it,
or with respect to any of its properties or assets, that have become due and
payable except to the extent such amounts are being contested in good faith by
appropriate proceedings diligently conducted and for which appropriate reserves
have been established in accordance with GAAP. No tax liens have been filed
against Guarantor or any of Guarantor’s assets (other than liens for taxes not
yet due or the amount or validity of which are being contested in good faith by
appropriate proceedings diligently conducted and for which appropriate reserves
have been established in accordance with GAAP), and, to the knowledge of
Guarantor, as of the date hereof, no claims are being asserted with respect to
any such taxes, fees or other charges.

 

(b)           Anti-Money Laundering, Anti-Corruption and Economic Sanctions.

 

(i)            Guarantor is in compliance, in all material respects, with
(A) the Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any other applicable enabling legislation or
executive order relating thereto, (B) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT Act of 2001), and (C) the United States Foreign Corrupt Practices Act of
1977, as amended, and any other applicable anti-bribery laws and regulations. 
No part of the proceeds of any Transaction will be used, directly or indirectly,
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

 

(ii)           Guarantor agrees that, from time to time upon the prior written
request of Buyer, it shall execute and deliver such further documents, provide
such additional information and reports and perform such other acts as Buyer may
reasonably request in order to insure compliance with the provisions hereof
(including, without limitation, compliance with the USA Patriot Act of 2001 and
to fully effectuate the purposes of this Agreement); provided, however, that
nothing in this Section 10(b)(ii) shall be construed as requiring Buyer to
conduct any inquiry or decreasing Guarantor’s responsibility for its statements,
representations, warranties or covenants hereunder.  In order to enable Buyer
and its Affiliates to comply with any anti-money laundering program and related
responsibilities including, but not limited to, any obligations under the USA
Patriot Act of 2001 and regulations thereunder, Guarantor on behalf of itself
and its Affiliates makes the following representations and covenants to Buyer
and its Affiliates, that

 

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neither Guarantor, nor, any of its Affiliates, is a Prohibited Investor and 
Guarantor is not acting on behalf of or on behalf of any Prohibited Investor. 
Guarantor agrees to promptly notify Buyer or a person appointed by Buyer to
administer their anti-money laundering program, if applicable, of any change in
information affecting this representation and covenant.

 

(c)           Office of Foreign Assets Control.  Guarantor warrants, represents
and covenants that neither Seller, any of its Affiliates or the Assets are or
will be an entity or Person that is or is owned or controlled by a Person that
is the subject of any Sanctions.  Guarantor covenants and agrees that, with
respect to the Transactions under this Agreement, none of Guarantor or, to
Guarantor’s Knowledge, any of its Affiliates will conduct any business, nor
engage in any transaction, Assets or dealings, with any Person who is the
subject of Sanctions.  Guarantor further covenants and agrees that it will not,
directly or indirectly, use the proceeds of the facility, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other Person to fund or facilitate any activities or business of or with any
Person or in any country or territory that, at the time of such funding or
facilitation, is the subject of Sanctions.

 

(d)           Financial Reporting.  Upon Buyer’s request, Guarantor shall
provide, or cause to be provided, to Buyer copies of Guarantor’s consolidated
Federal Income Tax returns, if any, delivered within thirty (30) days after the
earlier of (A) filing or (B) the last filing extension period.

 

(e)           Limitation on Distributions.  After the occurrence and during the
continuation of any monetary or material non-monetary Default or any Event of
Default, Guarantor shall not declare or make any payment on account of, or set
apart assets for, a sinking or other analogous fund for the purchase,
redemption, defeasance, retirement or other acquisition of any equity or
partnership interest of Guarantor, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Guarantor.

 

11.          Right of Set-Off.  Guarantor hereby irrevocably authorizes Buyer
and its Affiliates, without notice to Guarantor, any such notice being expressly
waived by Guarantor to the extent permitted by applicable law, upon any
Obligations becoming due and payable by Guarantor (whether at stated maturity,
by acceleration or otherwise), 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 Buyer to or for the credit or the
account of Guarantor, or any part thereof in such amounts as Buyer may elect,
against and on account of the obligations and liabilities of Guarantor to Buyer
hereunder and claims of every nature and description of Buyer against Guarantor,
in any currency, arising under any Transaction Document, as Buyer may elect,
whether or not Buyer has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. Buyer shall
notify Guarantor promptly of any such set-off and the application made by Buyer,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of Buyer under this Section 11 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that the Buyer may have.

 

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12.          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.

 

13.          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.

 

14.          No Waiver; Cumulative Remedies.  Buyer shall not by any act (except
by a written instrument pursuant to Section 15 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 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 Buyer of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Buyer would otherwise have on any future occasion. 
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by law.

 

15.          Waivers and Amendments; Successors and Assigns; Governing Law. 
None of the terms or provisions of this Guaranty may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Guarantor and Buyer.  This Guaranty shall be binding upon the heirs, personal
representatives, successors and assigns of Guarantor and shall inure to the
benefit of Buyer, and their respective successors and permitted assigns.  THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.

 

16.          Notices.  Unless otherwise provided in this Agreement, all notices,
consents, approvals and requests required or permitted hereunder shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) hand delivery, with proof of delivery, (b) certified or registered United
States mail, postage prepaid, (c) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of delivery or (d) by
telecopier (with answerback acknowledged) or e-mail provided that such
telecopied or e-mailed notice must also be delivered by one of the means set
forth above, to the address specified below or at such other address and person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section 16.  A notice shall be deemed to have been given: (w) in the
case of hand delivery, at the time of delivery, (x) in the case of registered or
certified mail, when delivered or the first attempted delivery on a Business
Day, (y) in the case of expedited prepaid delivery upon the first attempted
delivery on a Business Day, or (z) in the case of telecopier, upon receipt of
answerback confirmation, provided that such telecopied notice was also delivered
as required in

 

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this Section 16.  A party receiving a notice that does not comply with the
technical requirements for notice under this Section 16 may elect to waive any
deficiencies and treat the notice as having been properly given.

 

Buyer:

 

Morgan Stanley Bank, N.A.

1585 Broadway, 25th Floor

New York, New York 10036

 

 

Attention:

Mr. Anthony Preisano

 

 

Telecopy:

(718) 233-3307

 

 

Email:

Anthony.Preisano@morganstanley.com

 

 

 

with copies to:

 

Morgan Stanley Bank, N.A.

One Utah Center, 201 South Main Street

Salt Lake City, Utah 84111

 

 

 

and to:

 

Paul Hastings LLP

75 East 55th Street

New York, NY 10022

 

 

Attention:

Lisa A. Chaney, Esq.

 

 

Telecopy:

(212) 230-7793

 

 

Email:

lisachaney@paulhastings.com

 

 

 

Guarantor:

 

Granite Point Mortgage Trust Inc.

590 Madison Avenue, 36th Floor

New York, NY 10022

 

 

Attention:

General Counsel

 

 

Telephone:

(612) 629-2500

 

 

Facsimile:

(612) 629-2501

 

 

Email:

Legal.two@twoharborsinvestment.com

 

 

 

with copies to:

 

Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

 

 

Attention:

Brian Krisberg

 

 

Telephone:

212-839-8735

 

 

Email:

bkrisberg@sidley.com

 

17.          SUBMISSION TO JURISDICTION; WAIVERS.  EACH OF GUARANTOR AND BUYER
HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(A)          SUBMITS TO THE NON- EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE COURTS OF THE UNITED

 

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STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS
FROM ANY THEREOF, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING
BROUGHT TO ENFORCE ITS OBLIGATIONS UNDER THIS GUARANTY OR RELATING IN ANY WAY TO
THIS GUARANTY, THE REPURCHASE AGREEMENT OR ANY TRANSACTION UNDER THE REPURCHASE
AGREEMENT;

 

(B)          CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR
DOMICILE;

 

(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 IN SECTION 16 HEREOF OR AT SUCH OTHER ADDRESS OF WHICH 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.

 

18.          Integration.  This Guaranty represents the agreement of Guarantor
with respect to the subject matter hereof and there are no promises or
representations by Buyer relative to the subject matter hereof not reflected
herein.

 

19.          Counterparts.  This Guaranty may be executed in counterparts, each
of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument. Delivery
by telecopier or other electronic transmission (including a .pdf e-mail
transmission) of an executed counterpart of a signature page to this Guaranty
shall be effective as delivery of an original executed counterpart of this
Guaranty.

 

20.          Acknowledgments.  Guarantor hereby acknowledges that:

 

(a)           Guarantor has been advised by counsel in the negotiation,
execution and delivery of this Guaranty and the related documents;

 

(b)           Buyer does not have any fiduciary relationship to Guarantor, and
the relationship between Buyer, on the one hand, and Guarantor, on the other, is
solely that of creditor and surety; and

 

(c)           no joint venture exists between or among any of Buyer, Guarantor
and/or Seller.

 

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21.          Intent.  Guarantor intends for this Guaranty to be a credit
enhancement related to a repurchase agreement, within the meaning of
Section 101(47) of the Bankruptcy Code and, therefore, for this Guaranty to be
itself a repurchase agreement, within the meaning of Section 101(47) and
Section 559 of the Bankruptcy Code.

 

22.          WAIVERS OF JURY TRIAL.  EACH OF GUARANTOR AND BUYER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTY OR ANY RELATED DOCUMENT AND FOR ANY
COUNTERCLAIM HEREIN OR THEREIN.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed
and delivered as of the date first above written.

 

 

GUARANTOR:

 

 

 

GRANITE POINT MORTGAGE TRUST INC., a Maryland corporation

 

 

 

 

 

By:

/s/ John A. Taylor

 

 

Name: John A. Taylor

 

 

Title: President and CEO

 

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Exhibit A

 

Definitions

 

“Cash and Cash Equivalents” shall mean any of the following: (a) cash, (b) fully
federally insured demand deposits, and (c) securities with maturities of thirty
(30) days or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof.

 

“CMBS” shall mean Mortgage pass-through certificates or other securities issued
pursuant to a securitization of commercial real estate loans.

 

“Highly Rated CMBS” shall mean CMBS rated at least “AA” (or any comparable
rating) by any Rating Agency.

 

“Interest Expense” shall mean, with respect to any Person in respect of any
period of four consecutive fiscal quarters, ended on the last day of any fiscal
quarter of such Person, determined on a consolidated basis without duplication,
consolidated interest expense, whether paid or accrued, without deduction of
consolidated interest income, including, without limitation or duplication, or,
to the extent not so included, with the addition of: (i) interest expense
associated with any interest rate hedging activity; (ii) the amortization of
debt discounts by such Person; and (iii) prepayment penalties and debt
extinguishment charges paid by such Person, in all cases as reflected in the
applicable consolidated financial statements and all as determined in accordance
with GAAP.

 

“Rating Agency” shall mean any of Standard & Poor’s Ratings Services, Moody’s
Investor’s Service, Inc. Morningstar, Inc. or Fitch Ratings, Inc., or any
successors thereto.

 

“Recourse Indebtedness” shall mean, with respect to any Person, on any date of
determination, the amount of Indebtedness for which such Person has recourse
liability (such as through a guarantee agreement), exclusive of any such
Indebtedness for which such recourse liability is limited to obligations
relating to or under agreements containing customary nonrecourse carve-outs.

 

“Tangible Net Worth” shall mean, with respect to any Person on any date of
determination, (A) the sum of all amounts that would be included under capital
or shareholder’s equity (or any like caption) on a balance sheet of such Person
and its consolidated Subsidiaries at such date, minus (B) the sum of (i) amounts
owing to such Person or any such consolidated Subsidiary from any Affiliate
thereof, or from officers, employees, partners, members, directors, shareholders
or other Persons similarly affiliated with such Person or any Affiliate thereof,
(ii) intangible assets of such Person and its consolidated Subsidiaries, if any,
and (iii) prepaid Taxes and/or expenses, all on or as of such date and all
without duplication as determined in accordance with GAAP.

 

“Target Investments” shall mean any of the following: (i) whole mortgage loans,
(ii) senior pari passu “A notes” or participations in whole mortgage loans,
(iii) mezzanine loans, (iv) preferred equity investments, (v) subordinated
mortgage interests (including “B notes” and junior

 

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participations in whole mortgage loans, and (vi) real estate securities
(including commercial mortgage backed securities and collateralized loan
obligations); provided that the foregoing shall exclude Highly Rated CMBS.

 

“Total Assets” shall mean, with respect to any Person, on any date of
determination, an amount equal to the aggregate book value of all assets owned
by such Person and the proportionate share of such Person of all assets owned by
Affiliates of such Person as consolidated in accordance with GAAP, less
(a) amounts owing to such Person from any Affiliate thereof, or from officers,
employees, partners, members, directors, shareholders or other Persons similarly
affiliated with such Person or any Affiliate thereof, (b) intangible assets, and
(c) prepaid Taxes and expenses, all on or as of such date.

 

“Unrestricted Cash” shall mean, with respect to any Person and any date, the
amount of unrestricted and unencumbered Cash and Cash Equivalents held by such
Person and its consolidated Subsidiaries.

 

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