NYMTP New York Mortgage Trust Inc

DESCRIPTION OF NOTES

General

The Notes were issued under an indenture, dated April 27, 2021 (the “Indenture”), between us and UMB Bank, National Association, as trustee (the “Trustee”). The following description of the Notes does not purport to be complete and is subject to and qualified in its entirety by reference to the Indenture. You should read the Indenture (including the forms of certificates evidencing the Notes attached thereto as an exhibit), a copy of which is available from us upon request.

The Notes were issued in fully registered form without coupons and in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. We do not intend to apply for the listing of the Notes on any securities exchange. The Notes are unsecured and rank equally with all of our other unsubordinated indebtedness.

The Notes are limited to an aggregate principal amount of $100.0 million.

The Notes will mature at 100% of their principal amount on April 30, 2026 (the “maturity date”). The Notes are not entitled to any sinking fund, which means that the Indenture does not require us to redeem or retire the Notes periodically. We may, subject to compliance with applicable law, at any time and from time to time, purchase Notes in the open market or otherwise.

Payments of principal, interest and premium, if any, to owners of the book-entry interests described below are expected to be made in accordance with the procedures of DTC and its participants.

For purposes of this “Description of Notes” section, references to “we,” “us” and “our” refer only to New York Mortgage Trust, Inc., and references to the “Notes” refer to the Exchange Notes together with the Outstanding Notes.

Interest

The Notes bear interest at an annual rate equal to 5.75%, subject to adjustment for changes in the ratings of the Notes as described below. The interest rate is also subject to increase in the circumstances described under “Exchange Offer; Registration Rights.” All references to interest on the Notes include additional interest on the Notes to the extent payable as described under “Exchange Offer; Registration Rights.”

Interest on the Notes is payable semi-annually in arrears on April 30 and October 30 of each year (each such date, an “interest payment date”), beginning on October 30, 2021, to the persons in whose names the Notes are registered at the close of business on the preceding April 15 and October 15 of each year. Interest on the Notes at the maturity date will be payable to the persons to whom principal is payable. Interest on the Notes is computed on the basis of a 360-day year comprised of twelve 30-day months. Interest payments on the Notes will be the amount of interest accrued from and including April 27, 2021 or the most recent interest payment date on which interest has been paid to, but excluding, the interest payment date, redemption date or the maturity date, as the case may be.

If any interest or other payment date of a Note falls on a day that is not a business day, the required payment of principal, premium, if any, and interest will be made on the next succeeding business day as if made on the date that the payment was due, and no interest will accrue on that payment for the period from and after that interest or other payment date, as the case may be, to the date of that payment on the next succeeding business day. The term “business day” means, when used with respect to any note, any day other than a Saturday, a Sunday or a day on which the Trustee, paying agent or banking institutions in New York City are authorized or required by law, regulation or executive order to close.

The initial annual interest rate of 5.75% per annum is subject to adjustment from time to time based on changes to the ratings of the Notes by one or more “nationally recognized statistical rating organizations” within the meaning of Section 3(a)(62) of the Exchange Act, including but not limited to Egan-Jones Ratings Company and any successor to the credit rating business thereof (“Egan-Jones” and each such organization, an “NRSRO”).

The annual interest rate on the Notes will be equal to the Initial Adjusted Interest Rate beginning on the first day of any Six-Month Interest Period (as defined below) if as of such day an Initial Below Investment Grade Rating Event has occurred and is continuing, and likewise the annual interest rate on the Notes will be equal to the Additional Adjusted Interest Rate beginning on the first day of any Six-Month Interest Period if as of such day, an Additional Below Investment Grade Rating Event has occurred and is continuing. In the event that the annual interest rate on the Notes increases due to one or more Initial Below Investment Grade Rating Events and/or Additional Below Investment Grade Rating Events, the rate will revert to the initial interest rate beginning on the first day of any Six-Month Interest Period if as of such day no Initial Below Investment Grade Rating Event is continuing, and it will revert to the Initial Adjusted Interest Rate beginning on the first day of any Six-Month Interest Period if as of such day no Additional Below Investment Grade Rating Event is continuing. The Company will notify the Trustee and DTC in writing of any change in the ratings of the Notes and the effective dates thereof, and in no event will the Trustee be responsible for monitoring such changes. Further, in no circumstances will the annual interest rate exceed the Additional Adjusted Interest Rate due to changes in ratings of the Notes, and in no event will it ever be less than the initial rate.

Set forth below are the definition of certain terms used in this “—Interest” section.

“Six-Month Interest Period” means the period beginning on each interest payment date for the Notes and ending on the day immediately preceding the commencement of the next following interest payment date for the Notes. The initial Six-Month Interest Period will begin on the first interest payment date for the Notes.

“Initial Adjusted Interest Rate” means 5.75% plus 0.50% per annum.

“Initial Below Investment Grade Rating Event” shall occur if, as of any date of determination, the Notes have a rating of “BB+”, “BB” or “BB-” (or the equivalent) by Egan-Jones or the equivalent by any other NRSRO selected by the Company to maintain a rating of the Notes in accordance with the terms of the Indenture, in each case, without giving effect to any credit watch.

“Additional Adjusted Interest Rate” means 5.75% plus 0.75% per annum.

“Additional Below Investment Grade Rating Event” shall occur if, as of any date of determination, the Notes have (x) a Rating of “B+” or below (or the equivalent) by Egan-Jones or the equivalent by any other NRSRO selected by the Company to maintain a rating of the Notes in accordance with the Indenture, in each case, without giving effect to any credit watch or (y) no rating.

We have agreed in the Indenture to use our commercially reasonable efforts at our own expense to maintain a rating of the Notes by at least one NRSRO at all times while the Notes are outstanding.

Payment and Transfer or Exchange

Principal of and premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency maintained by us for such purpose (which initially will be the office of the Trustee located at 5555 San Felipe St, Suite 870, Houston, Texas 77056). Payment of principal of and premium, if any, and interest on a global note registered in the name of or held by DTC or its nominee will be made in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such global note. If any of the Notes is no longer represented by a global note, payment of interest on certificated notes in definitive form may, at our option, be made by check mailed directly to holders at their registered addresses. See “Book-Entry Settlement and Clearance.”

A holder may transfer or exchange any certificated notes in definitive form at the same location given in the preceding paragraph. No service charge will be made for any registration of transfer or exchange of Notes, but we may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. We are not required to transfer or exchange any Note selected for redemption for a period of 15 days before providing a notice of redemption of Notes to be redeemed.

The registered holder of a Note will be treated as the owner of it for all purposes. Only registered holders have rights under the Indenture, and unless otherwise indicated all references to “holders” in this “Description of Notes” section are to registered holders of the Notes.

All amounts of principal of and premium, if any, or interest on the Notes paid by us that remain unclaimed two years after such payment was due and payable will be repaid to us, subject to applicable abandoned property law, and the holders of such Notes will thereafter look solely to us for payment.

Ranking

The Notes are our senior unsecured obligations and rank equally with all of our other unsubordinated indebtedness from time to time outstanding. The Notes are effectively subordinated to our secured indebtedness, to the extent of the value of the collateral securing such indebtedness and are structurally subordinated to the existing and future indebtedness and other liabilities (including trade payables) and preferred equity of our subsidiaries, including any indebtedness and other liabilities that are guaranteed by our subsidiaries.

As of March 31, 2021, we had approximately $0.72 billion of total consolidated indebtedness of which an aggregate of $0.14 billion was senior indebtedness and an aggregate of $0.54 billion was secured indebtedness. As of March 31, 2021, our subsidiaries had $0.08 billion of indebtedness and other liabilities (including trade payables and excluding repurchase agreement indebtedness included in secured indebtedness referenced above) to which the Notes would have been structurally subordinated. After giving effect to the issuance of the Notes and the use of proceeds therefrom, our total consolidated indebtedness, senior indebtedness and secured indebtedness would have been approximately $0.82 billion, $0.24 billion and $0.54 billion, respectively.

Optional Redemption by Us

The Notes may be redeemed by us, at our option, in whole or in part, at any time or from time to time prior to April 30, 2023 (the “First Call Date”), at a redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed, plus a Make-Whole Amount (defined below) plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. At any time or from time to time on or after the First Call Date, we may redeem the Notes in whole or in part by paying 100% of the aggregate principal amount of the Notes to be redeemed, plus the applicable Call Price Amount (defined below) plus accrued and unpaid interest thereon to, but excluding, the redemption date.

“Call Price Amount” means, with respect to any Notes redeemed at the Company’s option on and after the First Call Date:

(1)         in the case of any such redemption that occurs during the period from and including the First Call Date to but excluding April 30, 2024, an amount equal to the principal amount of such Notes multiplied by 2.875%;

(2)         in the case of any such redemption that occurs during the period from and including April 30, 2024, to but excluding April 30, 2025, an amount equal to the principal amount of such Notes multiplied by 1.4375%; and

(3)         in the case of any such redemption that occurs during the period from (and including) and after April 30, 2025, an amount equal to $0.

“Make-Whole Amount” means, with respect to any Notes redeemed at the Company’s option prior to the First Call Date, the amount (not less than zero) calculated by the Company equal to the sum of (a) the present value of all interest (excluding any interest required to be paid on the applicable redemption date) that would have accrued on the principal amount of such Notes, for the period from and including the applicable redemption date to but excluding the First Call Date, calculated as if such Notes had continued to remain outstanding through the First Call Date and based on a rate of interest per annum equal to the interest rate then applicable to the Notes and computed using a discount rate equal to the Treasury Rate as of such date plus 50 basis points discounted to such date on a semi-annual basis (computed on the basis of a 360-day year consisting of twelve 30-day months) and (b) an amount equal to the principal amount of such Notes (calculated as if such principal amount of such Notes had continued to remain outstanding through the First Call Date) multiplied by 2.875%.

“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed, determined as if the Notes matured on the First Call Date (the “Remaining Life”), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of the Notes.

“Comparable Treasury Price” means, with respect to any redemption date for the Notes, (i) the arithmetic average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if we obtain fewer than five such Reference Treasury Dealer Quotations, the arithmetic average of all such quotations for such redemption date.

“Independent Investment Banker” means, with respect to any redemption date for the Notes, one of the Reference Treasury Dealers selected by us or, if such firms or any such successors, as the case may be, are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing selected by us.

“Primary Treasury Dealer” means a primary U.S. government securities dealer in the United States.

“Reference Treasury Dealers” means, with respect to any redemption date for the Notes, (i) a Primary Treasury Dealer selected by Piper Sandler & Co. and (ii) four other Primary Treasury Dealers selected by us; provided, however, that if any of the foregoing ceases to be a Primary Treasury Dealer, we shall substitute therefor another Primary Treasury Dealer selected by us.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the arithmetic average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to us by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the second business day preceding such redemption date.

“Treasury Rate” means, with respect to any redemption date for the Notes, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15” or any successor publication which is published weekly by the Federal Reserve and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the First Call Date, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from those yields on a straight line basis, rounding to the nearest month) or (2) if the release referred to in clause (1) (or any successor release) is not published during the week preceding the calculation date or does not contain the yields referred to above, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Company shall calculate the Treasury Rate on the second business day preceding the redemption date.

Notice of any redemption will be sent at least 10 days but not more than 60 days before the redemption date to (w) each holder of Notes to be redeemed at such holder’s registered address, (x) to the Trustee, (y) to the security registrar to forward to each holder of Notes to be redeemed at such holder’s registered address, or (z) otherwise in accordance with the procedures of DTC. If less than all the Notes are to be redeemed at our option, and the Notes are represented by global notes, the Notes to be redeemed will be selected by DTC in accordance with its standard procedures. If the Notes to be redeemed are not global notes held by DTC, the Trustee will select, in such manner as it deems fair and appropriate, the Notes (or portions thereof) to be redeemed. The Trustee shall have no duty to calculate or verify the calculation of the redemption price.

Unless we default in payment of the redemption price, on and after the redemption date interest will cease to accrue on the Notes or portions thereof called for redemption on such redemption date.

Additional Notes

We may from time to time, without notice to or the consent of the holders of the Notes, create and issue additional notes ranking equally with the Notes and otherwise similar in all respects (other than the issue date, offering price or the first payment of interest following the issue date of such additional notes). Such additional notes may be consolidated and form a single series with, and will have similar terms as to ranking, redemption, waivers, amendments or otherwise as the Notes, and will vote together as one class on all matters with respect to the Notes, provided that such additional notes either shall be fungible with the Notes for federal income tax purposes or shall be issued under a different CUSIP number.

Change of Control Offer

Upon the occurrence of a Change of Control Triggering Event (as defined below), each holder of Notes will have the right to require us to purchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of the holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, up to but excluding the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), except to the extent that we have exercised our right to redeem the Notes as described under “—Optional Redemption.”

For purposes of this covenant, “Change of Control” means the occurrence of any one of the following:

Notwithstanding the foregoing, a transaction will not be deemed to involve a “Change of Control” under clause (b) above if (i) we become a direct or indirect wholly owned subsidiary of a holding company and (ii)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following such transaction are substantially the same as the holders of our Voting Stock immediately prior to such transaction or (B) immediately following such transaction no “person” (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of this sentence) is the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the outstanding Voting Stock of such holding company, measured by voting power rather than number of shares or the like.

“Change of Control Triggering Event” means the Notes fail to have at least a rating of BBB- on any date during the period (the “Trigger Period”) commencing on the date of the first public announcement by us of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which 60-day period will be extended for so long as the rating of the Notes is under publicly announced consideration for a possible downgrade as a result of the Change of Control by any of the NRSROs). Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.

Within 60 days following the date upon which the Change of Control Triggering Event has occurred, or, at our option, prior to any Change of Control but after the public announcement of the transaction that constitutes or may constitute the Change of Control, except to the extent that we have exercised our right to redeem the Notes as described under “—Optional Redemption,” we will send a notice (a “Change of Control Offer”) to each holder of Notes with a copy to the Trustee, which notice will govern the terms of the Change of Control Offer, stating:

Holders of Notes electing to have Notes purchased pursuant to a Change of Control Offer will be required to surrender their Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the paying agent at the address specified in the notice, or transfer their Notes to the paying agent by book-entry transfer pursuant to the applicable procedures of the paying agent, prior to the close of business on the third business day prior to the Change of Control Payment Date.

We may make a Change of Control Offer in advance of a Change of Control and the Change of Control Payment Date, and our Change of Control Offer may be conditioned upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.

If holders of not less than 90% in aggregate principal amount of the Notes outstanding validly tender and do not withdraw the Notes in a Change of Control Offer and we, or any third party making a Change of Control Offer in lieu of us, as described below, purchases all of the Notes validly tendered and not withdrawn by such holders, we will have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described above, to redeem all Notes that remain outstanding following such purchase at a redemption price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption (subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date).

We will not be required to make a Change of Control Offer if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by us and such third party purchases all Notes properly tendered and not withdrawn under its offer.

We will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the terms described in this prospectus, we shall comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations by virtue thereof.

The definition of Change of Control includes a phrase relating to the sale, assignment, transfer, lease or other conveyance of “all or substantially all” of the properties and assets of us and our subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require us to repurchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the properties and assets of us and the subsidiaries taken as a whole to another person may be uncertain.

Restrictive Covenants

The Indenture contains the covenants set forth below. For the definition of certain terms used in this “—Restrictive Covenants” section, see “—Certain Definitions” below. Notwithstanding any provision to the contrary contain in this prospectus, the Indenture or any Note, if Indebtedness (“Refinancing Indebtedness”) has been incurred, the proceeds of which have been set aside, escrowed or otherwise segregated pending a refinancing, redemption or tender of/for other Indebtedness (such other Indebtedness, “Refinanced Indebtedness”), then each calculation under the restrictive covenants made at any time that both the Refinancing Indebtedness and Refinanced Indebtedness shall be outstanding, shall exclude the Refinanced Indebtedness.

Maintenance of Minimum Net Asset Value

The Indenture provides that our Net Asset Value as of the close of business on the last day of each of our fiscal quarters must be equal to or greater than $1,150,000,000 plus the greater of (i) $0 and (ii) 50% of Net Equity Capital Activity.

Maintenance of Senior Debt Service Coverage Ratio

The Indenture provides that we will maintain a Senior Debt Service Coverage Ratio, as of the close of business on the last day of each our fiscal quarters, calculated on a pro forma basis for the incurrence and retirement of Indebtedness (other than revolving Indebtedness) during the applicable Testing Period, equal to or greater than 1.25 to 1.00. In giving pro forma effect to the incurrence of any Indebtedness during the applicable Testing Period (i) Operating Cash Flow for such Testing Period shall be increased by an amount equal to the product of (x) the initial aggregate principal amount of such Indebtedness and (y) our and our subsidiaries’ average yield on earning assets during such Testing Period and (ii) Senior Debt Service shall be increased by the Senior Debt Service that would have been paid on such Indebtedness had it been incurred on the first day of such Testing Period. In giving pro forma effect to the retirement of any Indebtedness during the applicable Testing Period, Senior Debt Service shall be decreased by the Senior Debt Service in respect of such retired Indebtedness as if such Indebtedness had been retired on the day before first day of such Testing Period.

Maintenance of Total Unencumbered Assets

The Indenture provides that we will maintain a ratio of (1) our Total Unencumbered Assets as of the close of business on the last day of each of our fiscal quarters to (2) the lesser of (i) the aggregate principal amount of our and our subsidiaries’ Unsecured Indebtedness as of such date and (ii) the aggregate principal amount of the Notes as of such date, equal to or greater than 1.25 to 1.00.

Maintenance of Net Debt to Equity Ratio

The Indenture provides that we will not permit our Net Debt to Equity Ratio as of the last day of each of our fiscal quarters to be greater than 4.00 to 1.00.

Merger, Consolidation or Sale of Assets

The Indenture provides that we shall not, in any transaction or series of related transactions, consolidate with or merge into any person or sell, assign, transfer, lease or otherwise convey all or substantially all of our properties and assets to any person unless:

Upon any consolidation by us with or merger of us into any other person or any sale, assignment, transfer, lease or other conveyance of all or substantially all of our properties and assets to any person in accordance with the provisions described in the preceding paragraph, the successor person or the person to which such sale, assignment, transfer or lease or other conveyance is made shall succeed to, and be substituted for, us under the Indenture and the Notes and, thereafter, except in the case of a lease, we shall be released from all obligations under the Indenture and the Notes.

For purposes of this covenant, the sale, assignment, transfer, lease or conveyance of all or substantially all of the properties and assets of one or more of our subsidiaries, which properties and assets, if held by us instead of such subsidiaries, would constitute all or substantially all of our properties and assets on a consolidated basis, will be deemed to be the sale, assignment, transfer, lease or conveyance of all or substantially all of our properties and assets.

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the properties and assets of a person.

Delivery of Rule 144A Information

The Indenture provides that, if at any time we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, we will prepare and will furnish to any holder of Notes, any beneficial owner of an interest in a global note and any prospective purchaser or other prospective transferee of Notes designated by a holder of Notes or a beneficial owner of an interest in a global note, promptly upon request and at our expense, the financial statements and other information specified in Rule 144A(d)(4) (or any successor provision thereto) under the Securities Act, in each case to the extent necessary to permit the resale or other transfer of Notes by such holder or beneficial owner to be made in compliance with Rule 144A under the Securities Act.

Certain Definitions

Set forth below are the definitions of certain terms used in this “Description of Notes” section. Reference is made to the Indenture for the definition of certain other terms defined in the Indenture and used in this “Description of Notes” section for which no definitions are provided herein.

“Cash Management Obligations” means obligations of any of our subsidiaries or us in relation to (1) treasury, depository or cash management services, arrangements or agreements (including, without limitation, credit, debt or other purchase card programs and intercompany cash management services) or any automated clearinghouse (“ACH”) transfers of funds (including reimbursement and indemnification obligations with respect to letters of credit or similar instruments), and (2) netting services, overdraft protections, controlled disbursement, ACH transactions, return items, interstate deposit network services, supplier services, cash pooling and operational foreign exchange management, Society for Worldwide Interbank Financial Telecommunication transfers and similar programs.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests or equivalents (however designated, including any instrument treated as equity for U.S. federal income tax purposes) in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“Full Margin Derivative Contract” means a derivative contract between our subsidiary or us (an “NYMT Party”) and a counterparty (the “Derivative Counterparty”) under which the Derivative Counterparty has the right on any business day to demand that the NYMT Party maintain variation margin for the benefit of the Derivative Counterparty in an amount equal to the net mark-to-market value of all derivative contracts between the NYMT Party and the Derivative Counterparty (subject, if applicable, to minimum threshold amounts and/or minimum transfer amounts each not to exceed $1 million).

“GAAP” means generally accepted accounting principles in the United States of America.

“Indebtedness” means, with respect to us or any of our subsidiaries, without duplication:

(1)    all then-outstanding indebtedness of such Person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services (other than trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices);

(2)    any other then-outstanding indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument;

(3)    all then-outstanding obligations of such Person under Finance Lease Obligations;

(4)    all then-outstanding obligations of such Person in respect of letters of credit, acceptances or similar instruments issued or created for the account of such Person;

(5)    all repurchase obligations (excluding accrued interest or any portion of such obligations representing accrued interest) of such Person under Repurchase Agreements to which it is party; and

(6)    all then-outstanding liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof;

provided, however, that, notwithstanding anything to the contrary contained in the Indenture, Indebtedness shall not include:

For purposes of determining the amount of Indebtedness under any covenants, definitions or other provisions of the Indenture: (a) guarantees of, and obligations in respect of, letters of credit, bankers’ acceptances and other similar instruments relating to, or Liens securing, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included and the incurrence or creation of any such guarantees, obligations or Liens shall not be deemed to be the incurrence of Indebtedness; (b) unless otherwise expressly provided in the Indenture, the amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP; (c) the amount of a guarantee of Indebtedness of another Person shall be the amount of such liability as determined in accordance with GAAP; (d) the amount of any commitment to make loans, advances or other investments, or to purchase investments, Persons or other securities or assets shall be the amount of such liability as determined in accordance with GAAP; (e) for a group of derivative contracts (which may be one derivative contract) constituting Indebtedness between an NYMT Party and a Derivative Counterparty, the amount of Indebtedness for such group shall be the excess, if any, of the aggregate liabilities in such group over the aggregate assets in such group, each as determined in accordance with GAAP; and (f) if any Person shall own, directly or indirectly, less than 100% of the outstanding common Equity Interests of any subsidiary of such Person, then only a pro rata portion of the Indebtedness of such subsidiary shall be included for purposes of determining the amount of Indebtedness of such Person and its subsidiaries on a consolidated basis. For the avoidance of doubt, it is understood and agreed that, anything in this Indenture to the contrary notwithstanding, (A) Indebtedness of VIEs and (B) Indebtedness pursuant to any operating lease shall not be deemed Indebtedness of any Person or any of its subsidiaries.

“Insolvency Event” means, with respect to any Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises with respect to such Person or any part of its assets or property in an involuntary case under any applicable Insolvency Law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any part of its assets or property, or ordering the winding up or liquidation of such Person’s affairs, (b) the commencement by such Person of a voluntary case under any applicable Insolvency Law, (c) the consent by such Person to the entry of an order for relief in an involuntary case under any applicable Insolvency Law, (d) the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any part of its assets or property, (e) the making by such Person of any general assignment for the benefit of creditors, (f) the admission in a legal proceeding of the inability of such Person to pay its debts generally as they become due, (g) the failure by such Person generally to pay its debts as they become due, or (h) the taking of any action by such Person in furtherance of any of the foregoing.

“Insolvency Laws” means Title 11 of the United States Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“Intercompany Indebtedness” means Indebtedness to which the only parties are any of the Company and any consolidated subsidiary.

“Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).

“Net Asset Value” means, as of the date of determination, the total value of the assets less the total value of the liabilities shown on our consolidated statement of assets, liabilities and equity on such date, as calculated and determined in accordance with GAAP.

“Net Cash Proceeds” means with respect to any issuance or sale of Equity Interests or incurrence of Indebtedness, the cash proceeds of such issuance, sale or incurrence, as the case may be, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts and commissions and brokerage, consultant and other fees and expenses incurred in connection with such issuance, sale or incurrence, as the case may be, and net of taxes paid or payable as a result thereof.

“Net Equity Capital Activity” means the aggregate Net Cash Proceeds from the sale by us of our Equity Interests at any time after the date of the Indenture less (i) the aggregate amount paid by us after the date of the Indenture to repurchase our Equity Interests and (ii) the aggregate amount of cash distributions made by us to the holders of our Equity Interests (other than any of our subsidiaries) at any time after the date of the Indenture.

“Non-Recourse Exclusions” means, with respect to any Securitization or Indebtedness, (a) such representations, warranties, covenants and indemnities which are customarily (as determined by us) made by sellers of financial assets or other Securitization Assets, including without limitation, Securitization Repurchase Obligations, (b) such customary (as determined by us) carve-out matters for which we or any of our subsidiaries acts as guarantor in connection with any such Securitization or Indebtedness, such as fraud, misappropriation and misapplication of funds, misrepresentation, criminal acts, repurchase obligations for breach of representations or warranties, environmental indemnities, Insolvency Events, non-approved transfers, material adverse effect clauses, and regulatory proceedings.

“Non-Recourse Indebtedness” means Indebtedness in respect of which recourse for payment (except for Non-Recourse Exclusions) is contractually limited to specific assets encumbered by a Lien securing such Indebtedness.

“Operating Cash Flow” means for any period of determination, with respect to us and our subsidiaries, on a consolidated basis, net cash provided by operating activities, exclusive of the effects from changes in operating assets and liabilities, plus cash paid for income taxes and interest payments, determined in accordance with GAAP.

“Permitted Indebtedness” means, without duplication, Indebtedness of any of our subsidiaries or us to the extent the Net Cash Proceeds from such Indebtedness are, within 120 days after such Indebtedness is incurred:

Accrual of interest, accretion or amortization of original issue discount and payment of interest on any Indebtedness in the form of additional Indebtedness with substantially the same terms will not be deemed to be an incurrence of Indebtedness for purposes of the definition of “Permitted Indebtedness.”

“Permitted Liens” means:

“Refinance” means, in respect of any security or Indebtedness, to refinance, extend, renew, replace or refund (including pursuant to any defeasance, covenant defeasance or satisfaction, discharge or similar mechanism), or to issue a security or incur new Indebtedness in exchange or replacement for such security or Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Repurchase Agreement” means an agreement between us and/or any of our subsidiaries, as seller (in any such case, the “Repo Seller”), and one or more banks, other financial institutions and/or other investors, lenders or other Persons, as buyer (in any such case, the “Repo Buyer”), and any other parties thereto, under which we and/or such subsidiary or subsidiaries, as the case may be, are permitted to finance the origination or acquisition of loans, investments, Equity Interests, other securities, servicing rights and/or any other tangible or intangible property or assets and interests in any of the foregoing (collectively, “Applicable Assets”) by means of repurchase transactions (including reverse repos) pursuant to which the Repo Seller sells, on one or more occasions, Applicable Assets to the Repo Buyer with an obligation of the Repo Seller to repurchase such Applicable Assets on a date or dates and at a price or prices specified in or pursuant to such agreement, and which may also provide for payment by the Repo Seller of interest, fees, expenses, indemnification payments and other amounts, and any other similar agreement, instrument or arrangement, together with any and all existing and future documents related thereto (including, without limitation, any promissory notes, security agreements, intercreditor agreements, mortgages, other collateral documents and guarantees), in each case as the same may have been or may be amended, restated, amended and restated, supplemented, modified or Refinanced in any manner (whether before, upon or after termination or otherwise) in whole or in part from time to time (including successive amendments, restatements, amendments and restatements, supplements, modifications or Refinancings of any of the foregoing), and whether or not with the original or other sellers, buyers, guarantors, agents, lenders, banks, financial institutions, investors or other parties.

“Securitization” means a public or private transfer, sale or financing of servicing advances, mortgage loans, installment contracts, other loans and related assets, accounts receivable, real estate assets, mortgage receivables, corporate loans, consumer loans, investments or any other assets capable of being securitized (collectively, “Securitization Assets”) by which we and/or any of our subsidiaries directly or indirectly participates as a seller or transferor in the securitization of a pool of specified Securitization Assets or incurs Non-Recourse Indebtedness secured by specified Securitization Assets, including any such transaction involving the sale of Securitization Assets.

“Securitization Indebtedness” means (i) Indebtedness of any of our Affiliates or us incurred pursuant to Securitizations and (ii) any Indebtedness consisting of advances made to any of our Affiliates or us based upon securities issued in a Securitization and acquired or retained by any of our Affiliates or us.

“Securitization Repurchase Obligation” means any obligation of a seller of Securitization Assets in a Securitization to repurchase Securitization Assets arising as a result of a breach of a representation, warranty or covenant or otherwise, including, without limitation, as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, offset or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

“Senior Debt Service” means, for any Testing Period, the sum of: (a) the interest paid in cash or required to be paid in cash by us and our subsidiaries, on a consolidated basis, for such Testing Period with respect to all Indebtedness for borrowed money, minus the interest paid in cash or required to be paid in cash by us and our subsidiaries, on a consolidated basis, for such Testing Period with respect to all subordinated Indebtedness for borrowed money, in each case, determined in accordance with GAAP; plus (b) regularly scheduled principal amortization payments made or required to be made by us and our subsidiaries, on a consolidated basis, on account of Indebtedness for borrowed money for such Testing Period (exclusive of pay-offs or pay-downs on account of such Indebtedness), minus regularly scheduled principal amortization payments made or required to be made by the Company and its subsidiaries, on a consolidated basis, on account of subordinated Indebtedness for borrowed money for such Testing Period (exclusive of pay-offs or pay-downs on account of such Indebtedness), in each case determined in accordance with GAAP.

"Senior Debt Service Coverage Ratio: means, with respect to us and our consolidated subsidiaries, at any date of determination, the ratio of (a) Operating Cash Flow during the Testing Period to (b) Senior Debt Service for the Testing Period; provided that, in the case of any date of determination prior to March 31, 2022, (x) Annualized Operating Cash Flow shall be used instead of Operating Cash Flow for purposes of clause (a) above and (y) Annualized Senior Debt Service shall be used instead of Senior Debt Service for purposes of clause (b) above. “subsidiary” means (i) any corporation a majority of whose outstanding Voting Stock is at the time owned, directly or indirectly, by us, or by one or more of our subsidiaries, or by us and one or more of our subsidiaries, (ii) any general partnership, limited liability company, joint venture or similar entity, a majority of whose outstanding partnership, membership or similar interests is at the time owned by us, or by one or more of our subsidiaries, or by us and one or more of our subsidiaries and (iii) any limited partnership of which we or any of our subsidiaries is a general partner.

“Testing Period” means the trailing four fiscal quarter period most recently ended prior to required delivery date of each applicable quarterly or annual Officer’s Certificate pursuant to the Indenture, as applicable.

“Total Unencumbered Assets” as of any date, means the value of all of the assets (excluding (x) intangibles and (y) the assets of VIEs (but not excluding, for the avoidance of doubt, the Equity Interests of VIEs held by us and our subsidiaries or any other investments of us and our subsidiaries in any VIEs)) of ours and our subsidiaries that are not subject to a Lien (other than a Permitted Lien) securing Indebtedness for borrowed money, all on a consolidated basis for us and our subsidiaries in accordance with GAAP.

“VIEs” means variable interest entities (within the meaning of GAAP).

“Voting Stock,” as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

Events of Default, Notice and Waiver

An “Event of Default” with respect to the Notes is defined in the Indenture as being:

The Indenture provides that the Trustee may withhold notice to the holders of the Notes of the occurrence of a default with respect to the Notes (except a default in payment of principal, premium, if any, or interest) if the Trustee considers it in the interest of the holders to do so.

If an Event of Default with respect to the Notes (other than an Event of Default specified in paragraph (v) above) occurs and is continuing, either the Trustee by written notice to us or the holders of at least 25% of the aggregate principal amount of the Notes then outstanding by written notice to us (with a copy to the Trustee) may declare the principal of all the Notes, and accrued and unpaid interest, if any, thereon, to be due and payable immediately. If an Event of Default specified in paragraph (v) above occurs and is continuing, then the principal of all the Notes, and accrued and unpaid interest, if any, thereon, shall be automatically due and payable. At any time after the Notes have been accelerated, but before a judgment or decree based on acceleration has been obtained, the holders of a majority of the aggregate principal amount of Notes then outstanding may, under certain circumstances, rescind and annul such acceleration.

If a default occurs with respect to any covenant described under “Maintenance of Minimum Net Asset Value,” “Maintenance of Senior Debt Service Coverage Ratio,” “Maintenance of Total Unencumbered Assets,” and “Maintenance of Net Debt to Equity Ratio,” in “— Restrictive Covenants” above, such default and all consequences thereof will be annulled, waived and rescinded automatically, without any action by the Trustee or the holders of the Notes and without giving rise to an Event of Default, if within the 60-day cure period following the giving of written notice to the Company of such default, the Company delivers an officer’s certificate to the Trustee stating that, as of a specified date subsequent to the end of the applicable fiscal quarter, such default has been cured.

The Indenture provides that, subject to the duty of the Trustee during the continuance of an Event of Default to act with the required standard of care, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders of Notes unless such holders shall have offered to the Trustee satisfactory security or indemnity. Subject to the foregoing, the holders of a majority of the aggregate principal amount of the Notes then outstanding will have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture with respect to the Notes.

No holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless: (i) such holder previously has given written notice to the Trustee of a continuing Event of Default with respect to the Notes; (ii) the holders of at least 25% in aggregate principal amount of the Notes then outstanding have made written request to institute such proceeding as Trustee, and offered to the Trustee reasonably satisfactory indemnity against costs, expenses and liabilities incurred in compliance with such request; (iii) in the 60-day period following receipt of the notice, request and offer of indemnity referred to above, the Trustee has failed to initiate such proceeding; and (iv) during such 60-day period, the Trustee has not received from the holders of a majority of the aggregate principal amount of the Notes then outstanding a direction inconsistent with such request.

Notwithstanding the provisions described in the immediately preceding paragraph or any other provision of the Indenture, the holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and premium, if any, and interest on such Note on the respective dates such payments are due and to institute suit for enforcement of any such payment, and such right shall not be impaired without the consent of such holder.

We are required to furnish to the Trustee an officer’s certificate within 60 days of the end of each of our first three fiscal quarters as to our compliance with the four maintenance covenants in the Indenture. We are also required to furnish to the Trustee an officer’s certificate within 120 days of the end of each fiscal year as to our performance of, or compliance with, all of our obligations under the Indenture, including the four maintenance covenants. The Trustee shall have no duty to monitor, inquire as to or ascertain compliance with, or the performance of, our obligations under the Indenture other than our obligations with respect to payment of principal or interest due on any Note, provided that the Trustee remains the paying agent for the Notes.

Modification of the Indenture

The Indenture contains provisions permitting us and the Trustee, with the consent of the holders of a majority in aggregate principal amount of the Notes then outstanding, to modify or amend any of the provisions of the Indenture or of the Notes or the rights of the holders of the Notes under the Indenture, provided that no such modification or amendment shall, among other things:

without in each case obtaining the consent of the holder of each Note then outstanding that is so affected.

The Indenture also contains provisions permitting us and the Trustee, without notice to or the consent of the holders of any Notes, to modify or amend the Indenture in order to, among other things:

The holders of a majority in aggregate principal amount of the Notes then outstanding may, on behalf of all holders of Notes, waive compliance by us with certain provisions of the Indenture, including the covenants described above under “—Restrictive Covenants.” The holders of a majority in aggregate principal amount of the Notes then outstanding may, on behalf of all holders of Notes, waive any past default under the Indenture and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on any notes or in respect of a covenant or provision which cannot be modified or amended without the consent of the holder of each Note.

The Indenture contains provisions for convening meetings of the holders of Notes. A meeting may be called at any time by the Trustee and also, upon request, by us or the holders of at least 10% in aggregate principal amount of the Notes then outstanding, in any such case upon notice given in accordance with the provisions of the Indenture. Except for any consent which must be given by the holder of each Note affected thereby, as described above, any resolution presented at a meeting or adjourned meeting duly reconvened at which a quorum (as described below) is present may be adopted by the affirmative vote of the holders of a majority in aggregate principal amount of the Notes then outstanding. Any resolution passed or decision taken at any meeting of holders of Notes duly held in accordance with the Indenture will be binding on all holders of Notes. The quorum at any meeting called to adopt a resolution, and at any reconvened meeting, will be persons holding or representing a majority in aggregate principal amount of the Notes then outstanding.

In determining whether the holders of the requisite aggregate principal amount of the Notes then outstanding have given any request, demand, authorization, direction, notice, consent or waiver under the Indenture, any Note owned by us or any other obligor on the Notes or any affiliate of ours or such other obligor shall be deemed not to be outstanding.

Discharge, Defeasance and Covenant Defeasance

Upon our direction, the Indenture shall cease to be of further effect (subject to the survival of certain provisions thereof) when (i) either (A) all Notes then outstanding have been delivered to the Trustee for cancellation (subject to certain exceptions) or (B) all Notes then outstanding have become due and payable or will become due and payable at their stated maturity within one year or are to be called for redemption within one year and we have deposited with the Trustee, in trust, money in an amount sufficient to pay the entire indebtedness on the Notes in respect of principal, premium, if any, and interest to the date of such deposit (if the Notes have become due and payable) or to the stated maturity or redemption date thereof, as the case may be, (ii) we have paid all other sums payable under the Indenture, and (iii) certain other conditions are met.

Subject to the satisfaction of certain conditions set forth in the Indenture, we may elect either (a) to defease and be discharged from any and all obligations with respect to the Notes (except for, among other things, the obligations to register the transfer or exchange of the Notes, to replace temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office or agency in respect of the Notes and to hold money for payment in trust) (“defeasance”), or (b) to be released from our obligations with respect to the Notes described above under “—Restrictive Covenants” and certain other restrictive covenants in the Indenture, and any omission to comply with such obligations shall not constitute a default or an Event of Default (“covenant defeasance”), in either case upon the irrevocable deposit with the Trustee (or other qualifying trustee), in trust for such purpose, of money and/or U.S. government obligations which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient, in the opinion of a nationally-recognized firm of independent public accountants, investment bank or appraisal firm expressed in a written certification thereof delivered to the Trustee, to pay the principal of and any premium and interest on the Notes on the scheduled due dates therefor or the applicable redemption date, as the case may be. Such conditions to defeasance or covenant defeasance include the delivery to the Trustee of an opinion of independent counsel in the United States to the effect that the beneficial owners of the Notes then outstanding will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred.

In the event we effect covenant defeasance with respect to the Notes and the Notes are declared due and payable because of the occurrence of any Event of Default other than an Event of Default resulting from a breach of a covenant as to which there has been covenant defeasance, the amount of money and/or U.S. government obligations deposited with the Trustee to effect such covenant defeasance may not be sufficient to pay amounts due on the Notes at the time of any acceleration resulting from such Event of Default. However, we would remain liable to make payment of such amounts due at the time of acceleration.

Trustee, Paying Agent and Security Registrar

UMB Bank, National Association acts as Trustee, paying agent and security registrar for the Notes. From time to time, we and some of our subsidiaries may maintain deposit accounts and conduct other banking transactions, including lending transactions, with the Trustee and its affiliates in the ordinary course of business. Upon the occurrence of a default or an Event of Default under the Notes, the Trustee may be deemed to have a conflicting interest with respect to any of our other debt securities as to which it acts as trustee and we are not in default for purposes of the Trust Indenture Act of 1939, as amended, and, accordingly, may be required to resign as trustee under the Indenture. In that event, we would be required to appoint a successor trustee.

Governing Law

The Indenture and the Notes are governed by, and construed in accordance with, the laws of the State of New York.