Document:

Prepared by R.R. Donnelley Financial -- Sublease dated June 13, 2002

  EXHIBIT 10.14
 SUBLEASE
           This Sublease is made as of the 13th day of June, 2002, by and between PACIFIC INCOME ADVISORS, INC., a Delaware corporation (“Sublandlord”) and
ANWORTH MORTGAGE ASSET CORPORATION, a Maryland corporation (“Subtenant”) with regard to the following facts.
 RECITALS
           A.     Sublandlord is the tenant under that certain Wilshire Palisades Building Office Lease (as amended, the “Master
Lease”), dated as of April 30, 1987, with Tele/TAC Associates, a California limited partnership, original landlord, and EOP-Wilshire Palisades, L.L.C., a Delaware limited liability company, successor-in-interest to the original landlord
(collectively, “Landlord”) (a copy of which Master Lease is attached hereto as Exhibit A and by this reference made a part hereof) concerning approximately 13,364 rentable square feet of office space (the
“Premises”) located on the second (2nd) floor of the building located at 1299 Ocean Avenue, Santa Monica, California.
           B.     Subtenant desires to sublease from Sublandlord a portion of the Premises consisting of approximately 5,500 rentable square feet of
space (which portion shall be hereafter referred to as the “Subleased Premises”) more particularly set forth on Exhibit B, attached hereto, and Sublandlord has agreed to sublease the Subleased Premises to Subtenant upon the terms,
covenants and conditions herein set forth.
 AGREEMENT
           In
consideration of the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows.
           1.     Sublease.  Sublandlord hereby subleases and demises to Subtenant and Subtenant hereby hires and takes from Sublandlord the
Subleased Premises.
           2.     Term.  The term of this Sublease shall commence on June 14, 2002
(the “Commencement Date”) and shall end, unless sooner terminated as provided in the Master Lease, on June 30, 2012.
           3.     Rent.  Subtenant shall pay base rent during the term of this Sublease on a monthly basis in the same per rentable square
foot amount as the base rent applicable to the Premises pursuant to the Master Lease, based on the rentable square footage of the Subleased Premises, payable monthly in advance on the first day of each month.  In the event that the term of this
Sublease shall begin or end on a date which is not the first day of a month, base rent shall be prorated as of such date.
           4.     Use.  Subtenant covenants and agrees to use the Premises in accordance with the provisions of the Master Lease and for no
other purpose and otherwise in accordance with the terms and conditions of the Master Lease and this Sublease.
  

  
            5.     Master Lease.  As
applied to this Sublease, the words “Landlord” and “Tenant” as used in the Master Lease shall be deemed to refer to Sublandlord and Subtenant hereunder, respectively.  Subtenant and this Sublease shall be
subject in all respects to the terms of, and the rights of the Landlord under, the Master Lease.  Except as otherwise expressly provided in Section 7 hereof, the covenants, agreements, terms, provisions and conditions of the Master Lease
insofar as they relate to the Subleased Premises and insofar as they are not inconsistent with the terms of this Sublease are made a part of and incorporated into this Sublease as if recited herein in full, and the rights and obligations of the
Landlord and the Tenant under the Master Lease shall be deemed the rights and obligations of Sublandlord and Subtenant respectively hereunder and shall be binding upon and inure to the benefit of Sublandlord and Subtenant respectively.  As
between the parties hereto only, in the event of a conflict between the terms of the Master Lease and the terms of this Sublease, the terms of this Sublease shall control.
           6.     Landlord’s Performance Under Master Lease.
                    6.1     Subtenant recognizes that Sublandlord is not in a position to render any of the
services or to perform any of the obligations required of Sublandlord by the terms of this Sublease.  Therefore, notwithstanding anything to the contrary contained in this Sublease, Subtenant agrees that performance by Sublandlord of its
obligations hereunder are conditional upon due performance by the Landlord of its corresponding obligations under the Master Lease and Sublandlord shall not be liable to Subtenant for any default of the Landlord under the Master Lease. 
Subtenant shall not have any claim against Sublandlord by reason of the Landlord’s failure or refusal to comply with any of the provisions of the Master Lease unless such failure or refusal is a result of Sublandlord’s act or failure to
act.  This Sublease shall remain in full force and effect notwithstanding the Landlord’s failure or refusal to comply with any such provisions of the Master Lease and Subtenant shall pay the base rent and additional rent and all other
charges provided for herein without any abatement, deduction or setoff whatsoever.  Subtenant covenants and warrants that it fully understands and agrees to be subject to and bound by all of the covenants, agreements, terms, provisions and
conditions of the Master Lease, except as modified herein.  Furthermore, Subtenant and Sublandlord further covenant not to take any action or do or perform any act or fail to perform any act which would result in the failure or breach of any of
the covenants, agreements, terms, provisions or conditions of the Master Lease on the part of the Tenant thereunder.
                   6.2     Whenever the consent of Landlord shall be required by, or Landlord shall fail to
perform its obligations under, the Master Lease, Sublandlord agrees to use its best efforts to obtain, at Subtenant’s sole cost and expense, such consent and/or performance on behalf of Subtenant.
                   6.3     Sublandlord represents and warrants to Subtenant that the Master Lease is in full
force and effect, all obligations of both Landlord and Sublandlord thereunder have been satisfied and Sublessor has neither given nor received a notice of default pursuant to the Master Lease.
                   6.4     Sublandlord covenants as follows: (i) not to voluntarily terminate the Master Lease,
(ii) not to modify the Master Lease so as to adversely affect Subtenant’s rights hereunder, and (iii) to take all actions reasonably necessary to preserve the Master Lease.
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            7.     Variations from Master
Lease.  The following covenants, agreements, terms, provisions and conditions of the Master Lease are hereby modified or not incorporated herein:
                    7.1     Notwithstanding anything to the contrary set forth in Sections 2 and 3 of the
Master Lease, the term of this Sublease and base rent payable under this Sublease and the amount of the Security Deposit required of Subtenant shall be as set forth in Sections 2 and 3 above.
                    7.2     The parties hereto represent and warrant to each other that neither party dealt
with any broker or finder in connection with the consummation of this Sublease and each party agrees to indemnify, hold and save the other party harmless from and against any and all claims for brokerage commissions or finder’s fees arising out
of either of their acts in connection with this Sublease.  The provisions of this Section 7.2 shall survive the expiration or earlier termination of this Sublease.
                    7.3     Notwithstanding anything contained in the Master Lease to the contrary, as
between Sublandlord and Subtenant only, all insurance proceeds or condemnation awards received by Sublandlord under the Master Lease shall be deemed to be the property of Sublandlord.
                    7.4     Any notice which may or shall be given by either party hereunder shall be
either delivered personally or sent by certified mail, return receipt requested, addressed to the party for whom it is intended at the Subleased Premises (if to the Subtenant), or to Premises (if to the Sublandlord), or to such other address as may
have been designated in a notice given in accordance with the provisions of this Section 7.4.
                    7.5     All amounts payable hereunder by Subtenant shall be payable directly to
Sublandlord.
                    7.6     Sublandlord shall deliver the
Subleased Premises to Subtenant in its current “as is” condition.
                    7.7     Subtenant shall not be required to remove any improvements located in the
Subleased Premises upon the expiration of the term hereof.
           8.     Indemnity.  Subtenant hereby
agrees to indemnify and hold Sublandlord harmless from and against any and all claims, losses and damages, including, without limitation, reasonable attorneys’ fees and disbursements, which may at any time be asserted against Sublandlord by (a)
the Landlord for failure of Subtenant to perform any of the covenants, agreements, terms, provisions or conditions contained in the Master Lease which by reason of the provisions of this Sublease Subtenant is obligated to perform, or (b) any person
by reason of Subtenant’s use and/or occupancy of the Subleased Premises.  The provisions of this Section 8 shall survive the expiration or earlier termination of the Master Lease and/or this Sublease, except to the extent any of the
foregoing is caused or by the negligence of Sublandlord.
           9.     Cancellation of Master Lease.  In
the event of the cancellation or termination of the Master Lease for any reason whatsoever or of the involuntary surrender of the Master Lease by operation of law prior to the expiration date of this Sublease, Subtenant agrees to make
full
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  and complete attornment to the Landlord under the Master Lease for the balance of the term of this Sublease and upon the
then executory terms hereof at the option of the Landlord at any time during Subtenant’s occupancy of the Premises, which attornment shall be evidenced by an agreement in form and substance reasonably satisfactory to the Landlord. 
Subtenant agrees to execute and deliver such an agreement at any time within ten (10) business days after request of the Landlord, and Subtenant waives the provisions of any law now or hereafter in effect which may give Subtenant any right of
election to terminate this Sublease or to surrender possession of the Subleased Premises in the event any proceeding is brought by the Landlord under the Master Lease to terminate the Master Lease.
           10.     Certificates.  Each party hereto shall at any time and from time to time as requested by the other party upon not less
than ten (10) days prior written notice, execute, acknowledge and deliver to the other party, a statement in writing certifying that this Sublease is unmodified and in full force and effect (or if there have been modifications that the same is in
full force and effect as modified and stating the modifications, if any) certifying the dates to which rent and any other charges have been paid and stating whether or not, to the knowledge of the person signing the certificate, that the other party
is not in default beyond any applicable grace period provided herein in performance of any of its obligations under this Sublease, and if so, specifying each such default of which the signer may have knowledge, it being intended that any such
statement delivered pursuant hereto may be relied upon by others with whom the party requesting such certificate may be dealing.
           11.     Assignment or Subletting.  Subject further to all of the rights of the Landlord under the Master Lease and the
restrictions contained in the Master Lease, Subtenant shall not be entitled to assign this Sublease or to sublet all or any portion of the Premises without the prior written consent of Sublandlord, which consent may be withheld by Sublandlord in its
sole discretion.
           12.     Severability.  If any term or provision of this Sublease or the application
thereof to any person or circumstances shall, to any extent, be invalid and unenforceable, the remainder of this Sublease or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term or provision of this Sublease shall be valid and be enforced to the fullest extent permitted by law.
           13.     Entire Agreement; Waiver.  This Sublease contains the entire agreement between the parties hereto and shall be binding
upon and inure to the benefit of their respective heirs, representatives, successors and permitted assigns.  Any agreement hereinafter made shall be ineffective to change, modify, waive, release, discharge, terminate or effect an abandonment
hereof, in whole or in part, unless such agreement is in writing and signed by the parties hereto.
           14.     Captions and Definitions.  Captions to the Sections in this Sublease are included for convenience only and are not
intended and shall not be deemed to modify or explain any of the terms of this Sublease.
           15.     Further
Assurances.  The parties hereto agree that each of them, upon the request of the other party, shall execute and deliver, in recordable form if necessary, such further
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  documents, instruments or agreements and shall take such further action that may be necessary or appropriate to effectuate
the purposes of this Sublease.
           16.     Governing Law.  This Sublease shall be governed by and in all
respects construed in accordance with the internal laws of the State of California.
           IN WITNESS WHEREOF, the parties hereto have caused
this Sublease to be executed as of the day and year first above written.

	  
 	 “Sublandlord”
 
	  
 	  
 
	  
 	 PACIFIC INCOME ADVISERS, INC.,
 a Delaware corporation
 
	  
 	  
 
	  
 	  
 
	  
 	 By:
 	 /s/ Heather U. Baines
 
	  
 	  
 	 
 	  
 
	  
 	 Print Name: Heather U. Baines
 
	  
 	  
 	 
 	  
 
	  
 	 Print Title: President & CEO
 
	  
 	  
 	 
 	  
 
	  
 	 “Subtenant”
 
	  
 	  
 
	  
 	 ANWORTH MORTGAGE ASSET
 CORPORATION, a Maryland corporation
 
	  
 	  
 
	  
 	 By:
 	 /s/ Lloyd McAdams
 
	  
 	  
 	 
 	  
 
	  
 	 Print Name: Lloyd McAdams
 
	  
 	  
 	 
 	  
 
	  
 	 Print Title: President & CEO
 
	  
 	  
 	 
 	  
 
								

 -5-Prepared by R.R. Donnelley Financial -- Stock & Warrant Purchase Agreement

 Exhibit 10.3
 AMERICAN TECHNOLOGY CORPORATION
 AMENDMENT NO. 1 TO SERIES D PREFERRED STOCK AND WARRANT
 PURCHASE AGREEMENT
       
          THIS AMENDMENT No. 1 TO SERIES D PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT  (the “Amendment”) is entered into effective as of July 3, 2002, by and among American Technology Corporation, a Delaware corporation (the “Company”), and each of those
persons and entities, severally and not jointly, whose names are set forth on the Schedule of Purchasers attached hereto as Exhibit A (which persons and entities are hereinafter collectively referred to as “Purchasers” and each
individually as a “Purchaser”).
 RECITALS
                A.     The parties have previously entered into a Series D Preferred Stock Purchase Agreement
dated as of May 3, 2002 (the “Purchase Agreement”);
                B.     The Company desires to amend the Purchase Agreement and its Certificate of Incorporation
so as to ensure compliance by it with the rules and interpretive policies of the Nasdaq Stock Market, where the Company’s common shares are currently listed for trading;
                C.     Section 7.6 of the Purchase Agreement requires the consent of the Company and the holders
of at least fifty percent (50%) of the Shares (treated as if converted and including any Conversion Shares into which the Shares or Warrants have been converted or exercised that have not been sold to the public) to amend or modify the Purchase
Agreement; and
                D.     The designations, rights and preferences of
the Shares may be amended by amendment of the Charter, which amendment requires the approval of the holders of a majority of the outstanding stock of the Corporation entitled to vote thereon, together with approval of the holders of a majority of
the outstanding Shares voting separately as a class; and
                E.     The
undersigned, constituting the Company and at least fifty percent (50%) of the Shares (treated as if converted and including any Conversion Shares into which the Shares or Warrants have been converted or exercised that have not been sold to the
public), wish to amend the Purchase Agreement to correct certain errors and to agree to not to vote their Shares in excess of the number of votes permitted by Nasdaq policies applicable to voting rights for convertible securities; and

               F.     The undersigned, constituting the holders of at least a majority of the
outstanding Shares,  wish to consent to the amendment to the Charter as approved by the Company’s board of directors.
                NOW, THEREFORE, in consideration of the mutual promises set forth in this Amendment, and for other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
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                 1.     Defined terms.  Except as otherwise defined herein, all capitalized terms used
herein shall have the respective meanings ascribed to them in the Purchase Agreement.
                2.     Correction of Drafting Error Concerning Adjustment of Conversion Terms. 
Section 6.2(b) of the Purchase Agreement is hereby deleted and replaced with the following:

	  
 	 (b)     Adjustment of Conversion Terms.  If the Registration Statement covering the Registrable Securities which is required to be filed by the
Company pursuant to the first sentence of Section 6.2(a) hereof is not filed by December 31, 2002, the terms of conversion of the Shares shall be adjusted as provided in the Certificate of Designation.
 

 
                3.     Voting Agreement.  Purchasers’ agree that until such time as the
Charter is amended in accordance with the resolution to amend the Charter attached hereto as Exhibit B, for each matter upon which the Shares are entitled to vote pursuant to Section 4(a) of the Certificate of Designation (a “Stockholder
Matter”), no Purchaser shall cast votes in excess of the number of votes obtained by multiplying the number of such Purchaser’s Shares held at the time of such vote by a fraction obtained by dividing the purchase price per share paid by
such Purchaser for such Shares, by $4.03 (as adjusted for any stock splits, reorganizations, dividends, recapitalizations and the like).  Purchasers further agree that any proxy delivered in connection with a Stockholder Matter shall be deemed
a proxy to vote only the number of shares permitted to be voted in accordance with this Section 3.  The Company shall treat as abstentions any Shares which, in accordance with the agreement in this Section 3, are not voted to the full extent
otherwise permitted by Section 4(a) of the Certificate of Designation. The provisions of this Section 3 shall be binding upon the successors in interest to any of the Shares.  The Company shall not permit the transfer of any of the Shares on
its books or issue a new certificate representing any of the Shares unless and until the person to whom such security is to be transferred shall have executed a written agreement, substantially in the form of this Amendment, pursuant to which such
person agrees to the provisions of this Section 3. The agreement in this Section 3 shall terminate upon the filing with the Delaware Secretary of State of a certificate certifying that the Charter has been amended in the manner contemplated by the
resolutions in Exhibit B.
                4.     Ownership.  Each
Purchaser represents and warrants that (a) such Purchaser now owns its Shares, free and clear of liens or encumbrances, and has not, prior to or on the date of this Amendment, executed or delivered any proxy or entered into any other voting
agreement or similar arrangement other than one which has expired or terminated prior to the date hereof, and (b) such Purchaser has full power and capacity to execute, deliver and perform this Amendment, which has been duly executed and delivered
by, and evidences the valid and binding obligation of, such Purchaser enforceable in accordance with its terms.
                5.     Specific Performance.  The parties hereto hereby declare that it is impossible
to measure in money the damages which will accrue to a party hereto or to its heirs, personal representatives, or assigns by reason of a failure to perform any of the obligations under this Amendment and agree that the terms of this Amendment shall
be specifically enforceable.  If any party hereto or its heirs, personal representatives, or assigns institutes any action or proceeding to
 2
  

 
  specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the
claim or defense therein that such party or such personal representative has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.
                6.     Consent to Amendment of Certificate of Incorporation.  The
undersigned hereby consents to the amendments to the Charter in substantially the form set forth in the resolutions to amend the Charter attached as Exhibit B hereto, and the filing of a certificate evidencing such amendment with the Delaware
Secretary of State.
                7.     Ratification.  The Purchase
Agreement, as hereby amended, is ratified and confirmed as being in full force and effect.
                8.     Governing Law.  This Amendment shall be interpreted and enforced under the
laws of the State of California as such laws are applied to agreements between California residents entered into and performed entirely in California.
                9.     Counterparts; Facsimile Signatures.  This Amendment may be executed in
counterparts, all of which together shall constitute a single original.  Facsimile signatures shall be deemed originals for all purposes.
 3
  

 
                  IN
WITNESS WHEREOF, the parties hereto have executed the SERIES D PREFERRED  STOCK AND WARRANT PURCHASE AGREEMENTas
of the date set forth in the first paragraph hereof.

	 COMPANY:
 	 PURCHASER:
 	  
 
	  
 	  
 	  
 
	 AMERICAN TECHNOLOGY CORPORATION
 	 
 	  
 
	 13114 Evening Creek Drive South
 	 [Print Name of Purchaser]
 	  
 
	 San Diego, California  92128
 	  
 	  
 
	  
 	  
 	  
 
	 By:
 	 By:
 	  
 
	  
 	 
 	  
 	  
 	 
 	  
 
	  
 	 Name:
 	  
 	  
 
	  
 	 Title:
 	  
 	  
 
	  
 	 Title (if any):
 	  
 
	  
 	  
 	 
 	  
 
								

 AMERICAN TECHNOLOGY CORPORATION
 SIGNATURE PAGE
 TO SERIES D PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
 4
  

 
  SERIES D PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
 EXHIBIT A
 SCHEDULE OF PURCHASERS

	 Michael E. Spencer
 	  
 
	  
 	  
 
	 Leonard M. Teninbaum Keogh Account,
 
	 Leonard M. Teninbaum, Trustee
 
	  
 	  
 
	 Veech Trust,
 	  
 
	 Bryant I.  Pickering,
 	  
 
	 Trustee
 	  
 
	  
 	  
 
	 Jerry E. Polis Family
 	  
 
	 Trust,
 	  
 
	 Jerry E. Polis, Trustee
 	  
 
	  
 	  
 
	 Canusa Trading Ltd.
 	  
 
	 W.A. Manuel,
 	  
 
	 President
 	  
 
	  
 	  
 
	 Palermo Trust
 	  
 
	 James A. Barnes,
 	  
 
	 Trustee
 
	  
 
	 Sunrise Management, Inc. Profit Sharing Plan
 
	 James A. Barnes, 
 	  
 
	 Trustee
 
	  
 
	 Clifford E. Koerner and Kathy L. Koerner,
 
	 JTWROS
 	  
 
	  
 	  
 
	 James C. Zolin and Josephine M. Zolin,
 
	 JTWROS
 	  
 
	  
 	  
 
	 Wayne Opperman
 	  
 
	  
 	  
 
	 Horacek Family Trust,
 	  
 
	 Anthony J. Horacek,
 	  
 
	 Trustee
 	  
 
	  
 	  
 
	 NGHK Holdings, LLC
 	  
 
	  
 	  
 
	 Gerald L. and Wilma S. Ehrens Family Trust
 

 
 5

 

	 Stifel, Nicolaus Custodian for Jonathan Berg
 
	 IRA
 	  
 
	  
 	  
 
	 R. Kirk Avery
 	  
 
	  
 	  
 
	 John C. Roemer
 	  
 
	  
 	  
 
	 Allan F. Gossman
 	  
 
	  
 	  
 
	 Jaron Summers and Kathleen Dahlberg,
 
	 JTWROS
 	  
 
	  
 	  
 
	 Granite Capital LP
 	  
 
	 c/o Walter F. Harrison,
 	  
 
	 III
 	  
 
	 Managing Member, Granite Capital LLC, G.P.
 
	  
 	  
 
	 Granite Capital II LP
 	  
 
	 c/o Walter F. Harrison,
 	  
 
	 III
 	  
 
	 Managing Member, Granite Capital LLC, G.P.
 

 6
  

 
  EXHIBIT B
 RESOLUTIONS TO
AMEND
 CERTIFICATE OF INCORPORATION
 OF
 AMERICAN TECHNOLOGY CORPORATION
                    WHEREAS, American Technology Corporation, a corporation organized under the laws of Delaware (the
“Corporation”), filed a Certificate of Designations of Series D Preferred Stock with the Delaware Secretary of State on May 3, 2002 (the “Series D Certificate of Designations”), and in accordance with Section 151 of the Delaware
Corporation Code, the Series D Certificate of Designations had the effect of amending Corporation’s Certificate of Incorporation;
                    WHEREAS, the Corporation has proposed to make certain amendments to the Series D Certificate of
Designations to conform the same to policies of the Nasdaq Stock Market concerning voting and conversion rights of securities issued by a listed company which are convertible to common shares; and
                    WHEREAS, the Board of Directors has approved the following resolutions, and directed that the same be
submitted to the stockholders of the Corporation for approval in accordance with Delaware law and Section 4(b) of the Series D Certificate of Designation.
                    NOW THEREFORE, BE IT:
                    Resolved, that the Corporation’s Certificate of Incorporation be amended to modify the voting powers,
preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions of the Series D Preferred Stock, as set forth in the Series D Certificate of Designation, as follows:

	  
 	                1.     Section 4(a) of the Series D Certificate
of Designation be amended by adding the following immediately prior to the period at the end of the first sentence thereof:  “provided, however, that the number of such votes for each holder of Series D Preferred Stock shall in no event
exceed the number of votes obtained by multiplying the number of shares of Series D Preferred Stock held by the fraction obtained by dividing the Original Issue Price by $4.03 (as adjusted for any stock splits, reorganizations, dividends,
recapitalizations and the like)”.
 
	  
 	  
 
	  
 	                2.     Section 5(l) of the Series D Certificate
of Designation be amended by replacing the phrase “Common Stock equal to” in the first sentence thereof with: “Common Stock, which when added to the maximum number of shares of Common Stock issuable upon exercise of all warrants
issued by the Corporation in connection with the sale of the Series D Preferred Stock, is equal to”.
 

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