Forbearance Agreement

On April 10, 2020, AG Mortgage Investment Trust, Inc. and certain of its affiliates (the “Company”) entered into a Forbearance Agreement (the “Forbearance Agreement”) with each of the following financing counterparties Bank of America, N.A., BofA Securities, Inc., Credit Suisse Securities (USA) LLC, Credit Suisse AG, Credit Suisse International, Barclays Capital Inc., Barclays Bank PLC, Société Général S.A., Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, Goldman Sachs Bank USA and Goldman, Sachs & Co. (each, a “Participating Counterparty,” and collectively, the “Participating Counterparties”). The Company’s aggregate outstanding financing arrangements with the Participating Counterparties included under the Forbearance Agreement are approximately $750 million as of April 9, 2020, representing approximately 82% of the Company’s recourse financing arrangements outstanding as of the date of the Forbearance Agreement, exclusive of recourse financing arrangements relating to unsettled security sales, which are scheduled to settle Monday, April 13. The Company believes that it has good working relationships with certain other counterparties that are not participating in the Forbearance Agreement and is engaged in continuing discussions with those counterparties.

Capitalized terms used herein and not otherwise defined have the meanings ascribed thereto in the Forbearance Agreement.

to the terms of the Forbearance Agreement and related ancillary documents, subject to certain conditions, (i) each Participating Counterparty agrees to forbear from exercising any of its rights and remedies in respect of events of default and any and all other defaults under the applicable repurchase agreement with the Company until the earlier of (a) 6:30 p.m. Eastern Daylight Time on the first business day that is 15 calendar days after the Effective Date of the Forbearance Agreement or (b) the occurrence and continuance of a Triggering Event (the “Forbearance Period”) and (ii) the Company grants to the Collateral Agent, for the benefit of the Participating Counterparties in accordance with their respective Pro Rata Realized Losses, a security interest in and lien on all right, title or interest in or to all assets of the Company, including the proceeds of the Note (as defined below)(the “Collateral”). During the Forbearance Period, the Company shall have full power and authority to use cash Collateral in accordance with a cash budget set forth in a schedule to the Forbearance Agreement. Additionally, nothing contained in the Forbearance Agreement will prevent a Participating Counterparty from exercising any rights or remedies required by FINRA Rule 4210 as long as the applicable Participating Counterparty has exercised good faith efforts to obtain a waiver of, or an extension to, or to otherwise excuse compliance with, FINRA Rule 4210.

Wilmington Trust, National Association (the “Collateral Agent”) has been appointed as the Collateral Agent for the Participating Counterparties under the terms of that certain Security and Collateral Agency Agreement dated April 10, 2020 (the “Security Agreement”), entered into by the Company and the Participating Counterparties, for whom the Collateral Agent is acting as agent, simultaneously with the execution of Forbearance Agreement. The Security Agreement includes customary covenants and agreements from the Company with respect to the Collateral.

A “Triggering Event” under the Forbearance Agreement includes (i) failure of the Company to comply with the terms of the Forbearance Agreement or any of the Security Documents or the related Intercreditor Agreement entered into in relation to the Collateral; (ii) inaccuracy of representations and warranties made by the Company in the Forbearance Agreement; (iii) filing of a voluntary or involuntary bankruptcy petition with respect to the Company, and such petition is not controverted within 10 days or is not dismissed within fifteen (15) days after the filing thereof; (iv) appointment of a custodian, receiver, liquidator, trustee, monitor, sequestrator or similar official for the Company or all or any substantial part of its assets or properties; (v) the CMBX.NA.AAA.13 Index remains 20% below the level of such index as of the commencement of the Forbearance Period for three (3) consecutive trading days; (vi) the Company makes a dividend or other distribution on any preferred or common stock; (vii) the independent directors of the Company (other than independent directors of certain special purpose entity subsidiaries of the Company) receive compensation other than common stock; (viii) except as otherwise agreed to by the Participating Counterparties, the making of any payments to or liens or collateral granted for the benefit of any counterparty, including the Participating Counterparties (other than as expressly set forth in the Forbearance Agreement), or any lender or agent with respect to any material indebtedness of the Company; (ix) the exercise of remedies in connection with a Triggering Event by any Participating Counterparty; (x) payment by the Company to any repurchase agreement counterparty, including a Participating Counterparty or non-Participating Counterparty, other than as expressly set forth in the Forbearance Agreement; (xi) the threat or commencement of litigation by the Company against any Participating Counterparty (other than in connection with a breach of the Forbearance Agreement by a Participating Counterparty); (xii) the failure by the Company to take action’s within the Company’s control by April 15, 2020 to have the repo tracker turned “off” with respect to the assets subject to the repurchase agreements; (xiii) the failure by the Company to remit to the applicable Participating Counterparty income or proceeds received by the Company with respect to the assets subject to the repurchase agreements within one (1) business day of the receipt of such income or proceeds;

and (xiv) the Security Documents cease to create a valid and perfected first priority security interest in the Collateral after such perfection occurs in accordance with the terms of the Forbearance Agreement and Security Documents.

During the Forbearance Period, notwithstanding any terms of any applicable repurchase agreement to the contrary, the rate of interest or the pricing rate that shall accrue on any and all obligations of the Company owed to each Participating Counterparty under the applicable repurchase agreement shall be the greater of (a) the sum of (i) LIBOR (for a period of three months commencing on the date of the Forbearance Agreement and each three month anniversary of such date) and (ii) 2.50% and (b) 3.50%. Notwithstanding the foregoing, during the Forbearance Period, the obligations owing under such applicable repurchase agreements shall accrue at the rate of interest the related Participating Counterparty is entitled to charge thereunder (the “Contractual Rate”), but the obligation to pay the excess in the amount of interest accrued at the Contractual Rate over the amount of interest accrued at the Common Rate shall be deferred for each Participating Counterparty until, and shall be payable to such Participating Counterparty upon, the termination of the Forbearance Period.

During the Forbearance Period, notwithstanding any term in any repurchase agreement to the contrary, each Participating Counterparty agrees to extend the maturity dates of each of its repurchase agreements until the end of the Forbearance Period.

Subject to advance written notice to all Participating Counterparties, the Company and a Participating Counterparty may agree to optionally terminate a repurchase transaction in whole or part through the sale of all or a portion of the assets subject to such repurchase agreement, provided that (x) such sale shall be made on an arm’s length basis on customary market terms and (y) no such sale will result in such Participating Counterparty having a deficiency claim against the Company, unless such a sale resulting in a deficiency claim is approved by the Required Counterparties. During the Forbearance Period, all proceeds of any such termination (net of reasonable and customary expenses (if any) in connection with the applicable disposition) shall be remitted to and applied by the relevant Participating Counterparty as follows: (i) first, to the outstanding repurchase price in respect of the disposed applicable assets, (ii) second, to all other obligations owed under such applicable repurchase agreement, (iii) third, to all other obligations owed by the Companies to the relevant Participating Counterparty or its affiliates under any such applicable repurchase agreements, any other agreements or otherwise (regardless of whether the applicable Participating Counterparty or such affiliate has a contractual right to do so under the applicable repurchase agreement or any other agreement with any of the Companies), and (iv) fourth, any further proceeds shall be subject to the lien and security interest granted in the Forbearance Agreement. Further, all cash collateral that is held by any Participating Counterparty or any affiliate thereof in connection with any applicable repurchase agreement shall be applied by the relevant Participating Counterparty in accordance with the foregoing.

During the Forbearance Period, the Company, among other things, agrees (i) not to pay any (a) management fees to AG REIT Management, LLC (the “Manager”), or any of the Manager’s affiliates or (b) dividends with respect to its outstanding preferred stock or common stock; (ii) to compensate the Company’s independent directors solely with common stock (except with respect to independent directors of special purpose entity subsidiaries of the Company); (iii) in connection with a Non-Participating Counterparty’s agreement to waive, or forbear from exercising remedies with respect to a default or potential default under a repurchase agreement or similar agreement with such Non-Participating Counterparty, to provide (a) any benefit or consideration to such Non-Participating Counterparty that is more favorable than the consideration or benefits under the Forbearance Agreement or (b) to agree to any term or conditions with such Non-Participating Counterparty that is more favorable than the terms set forth in the Forbearance Agreement, to provide advance written notice to the Participating Counterparties of such consideration, benefit, terms or conditions and to extend to the Participating Counterparties the same favorable consideration, benefits, terms or conditions that may be provided to a non-Participating Counterparty; (iv) to cooperate fully with the Participating Counterparties and their respective agents and professionals with any financial review or appraisal of the business, assets or conditions of the Company, including responses to all reasonably requested information, at the expense of the Company; (v) to pay the reasonable and documented professional fees of the Participating Counterparties incurred in connection with the consideration of the Forbearance Agreement, including legal fees and fees and expenses of a financial advisor for the Participating Counterparties; (vi) not to make any draws upon, or otherwise access credit, including further sales or repurchases, including, without limitation, from affiliates, other than with respect to certain Excepted Agreements; (vii) that all funds, cash collateral, income and other proceeds under or in connection with any repurchase assets under a repurchase agreement shall be applied (a) first, to all accrued and unpaid interest, (b) second, to the outstanding principal amount owed to the Participating Counterparty (c) third, to all other obligations owed by the Company to the relevant Participating Counterparty, and (d) fourth, to the extent there are any further proceeds, as subject to the lien and security interest granted in the Forbearance Agreement; (viii) upon the reasonable request of any Participating Counterparty and at the Company’s expense, to make, execute, endorse, acknowledge, file, record, register and/or deliver such agreement or document and take such other actions to create, perfect, preserve or protect the security interest of the Collateral Agent on behalf of the Participating Counterparties; (ix) to notify each Participating Counterparty of the occurrence of any Triggering Event or event of default; (x) that New York Governor Andrew Cuomo’s Executive Order No. 202.9, “Continuing Temporary Suspension and Modification of Laws Relating to Disaster Emergency” is inapplicable to any of the Applicable Agreements and will not seek to assert a claim against any Participating Counterparty on the basis of such order; (xi) use good faith efforts to have all of the Security Documents fully executed, and to perfect the liens on the Collateral to the Security Documents, a

s soon as reasonably practical, and in no event later than ten (10) business days after the Effective Date; (xii) unless agree upon by the Required Counterparties, to not enter into any new repurchase agreements, forward transactions, hedging agreements, ISDA agreements, warehouse agreements, swap agreements, loan agreements or any new transaction under the repurchase agreements; (xiii) to make a good faith effort to undertake a deleveraging process and use its commercially reasonable efforts to accomplish such deleveraging; and (xiv) to release each Participating Counterparty and certain related parties from any claims existing or that arose prior to the time of the Forbearance Agreement. Neither the Company nor any Participating Counterparty waives any of the party’s rights under the terms of the repurchase agreements or applicable law, including with respect to any bankruptcy proceedings.

Subordinated Debt

On April 10, 2020, the Company and certain of its subsidiaries issued a secured promissory note (the “Note”) to the Manager evidencing a $10 million loan made by the Manager to the Company. The obligations under the Note are guaranteed by the subsidiaries of the Company party to the Security Agreement. The Note is payable on the earlier to occur of (i) the full and indefeasible payment of the obligations of the Company arising under the repurchase agreements of the Participating Counterparties, and (ii) March 31, 2021 (the “Maturity Date”). The unpaid principal balance of the Note will accrue interest at a rate of 6.0% per annum. Interest on the Note shall be payable monthly in kind through the addition of such accrued monthly interest to the outstanding principal balance of the Note.

The Company’s obligations under the Note are secured by a lien on all of the assets of the Company granted to a Security Agreement dated April 10, 2020 between the Company and the Participating Counterparties and the Manager (the “Subordinated Security Agreement”). The Manager has agreed to subordinate the obligations of the Company with respect to the Note and liens held by the Manager for the security of the performance of the Company’s obligations under the Note to the Company’s obligations to the Participating Counterparties and to the lien held by the Collateral Agent to an Intercreditor and Subordination Agreement by and among the Company, the Manager and the Collateral Agent.

The terms of the Note were unanimously approved by the independent members of the Board of Directors of the Company.

As previously reported, the Company has engaged Hunton Andrews Kurth LLP as legal counsel and FTI LLC as financial advisor in connection with its financings and related matters

Evercore has been engaged by the independent members of the Board to advise them in connection with a review of capital raising and strategic options for the Company. Fried Frank Harris Shriver & Jacobson LLP is serving as legal advisor to the independent members of the Board.

The foregoing descriptions of the Forbearance Agreement, Promissory Note, Security and Collateral Agency Agreement, Subordinated Security Agreement and Intercreditor and Subordination Agreement are not complete and are qualified in their entireties by the text of each instrument, which are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively.

Item 7.01. Regulation FD Disclosure.

On April 13, 2020, the Company issued a press release, a copy of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

Exhibit 99.1 hereto is being furnished to Item 7.01, and the information contained therein shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Forward-Looking Statements

When used in this report or other written or oral communications, statements which are not historical in nature, including those containing words such as “will,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “could,” “would,” “should,” “may”, “expect” or similar expressions, are intended to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and, as such, may involve known and unknown risks, uncertainties and assumptions. Statements regarding the following subjects, among others, may be forward-looking: our ability to accurately predict our outstanding indebtedness and the status of our ongoing discussions with our financing counterparties. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results and outcomes could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in interest rates, changes in default rates, changes in the yield curve, changes in prepayment rates, the availability and terms of financing, changes in the market value of our assets, general economic conditions, conditions in the market for Non-Agency RMBS and CMBS securities, Excess MSRs and loans, our ability to predict and control costs, conditions in the real estate market, legislative and regulatory changes that could adversely affect the business of the Company, our ongoing negotiations with our repurchase financing counterparties and the Manager and the ongoing spread and economic effects of the novel coronavirus (COVID-19). Additional information concerning these and other risk factors are contained in the Company’s filings with the Securities and Exchange Commission (“SEC”), including our most recent Annual Report on Form 10-K and subsequent filings. All information in this current report on Form 8-K is as of April 13, 2020. The Company undertakes no duty to update any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

AG Mortgage Investment Trust, Inc. Exhibit
EX-10.1 2 exhibit101mitt8-k4132020.htm EXHIBIT 10.1 Exhibit Exhibit 10.1FORBEARANCE AGREEMENTTHIS FORBEARANCE AGREEMENT,…
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About AG Mortgage Investment Trust, Inc. (NYSE:MITT)

AG Mortgage Investment Trust, Inc. is a real estate investment trust (REIT). The Company is focused on investing in, acquiring and managing a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets, which the Company refers to as its target assets. It is also focused on investing in residential mortgage-backed securities (RMBS) issued or guaranteed by a government-sponsored enterprise, such as The Federal National Mortgage Association (Fannie Mae) or The Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, GSEs), or any agency of the United States Government, such as The Government National Mortgage Association (Ginnie Mae) (collectively Agency RMBS), and other real estate-related securities and financial assets, including Non-Agency RMBS, asset backed securities (ABS), commercial mortgage-backed securities (CMBS) and loans. The majority of its portfolio consists of mortgage-backed securities, specifically RMBS.