Document:

Trust Floating Rate Common Securities

 Exhibit 4.2 
  

COMMON SECURITIES CERTIFICATE 
  
 THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE 
 SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR 
 ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE OFFERED, 
 SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN 
 EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT 
 TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND 
 SECTION 5.11 OF THE TRUST AGREEMENT

  

			
	Certificate Number	 	Number of Common Securities
		
	        C-	 	1,130

  
 Certificate
Evidencing Common Securities 
  
 of 
  
 ANWORTH CAPITAL TRUST 1

  
 Floating Rate Common Securities 
  
 (liquidation amount $1,000 per Common Security) 
  
 Anworth Capital Trust 1, a statutory trust created under the laws of the State of Delaware
(the “Trust”), hereby certifies that Anworth Mortgage Asset Corporation, a Maryland corporation (the “Holder”) is the registered owner of One Thousand One Hundred Thirty (1,130) common securities of the Trust
representing undivided common beneficial interests in the assets of the Trust and designated the Anworth Capital Trust 1 Floating Rate Common Securities (liquidation amount $1,000 per Common Security) (the “Common Securities”).
Except in accordance with Section 5.11 of the Trust Agreement (as defined below), the Common Securities are not transferable and, to the fullest extent permitted by law, any attempted transfer hereof other than in accordance therewith shall
be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of March 15, 2005 as the same may be amended from time to time (the “Trust Agreement”), among Anworth Mortgage Asset
Corporation, as Depositor, JPMorgan Chase Bank, National Association, as Property Trustee, Chase Bank USA, National Association, as Delaware Trustee, the Administrative Trustees named therein and the Holders, from time to time, of Trust
Securities. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. 
  
 Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. 

 This Common Securities Certificate shall be governed by and construed in accordance with the laws of the State of
Delaware. 
  
 Terms used but not defined herein have the meanings set forth in the
Trust Agreement. 

 IN WITNESS WHEREOF, one of the Administrative Trustees of
the Trust has executed on behalf of the Trust this certificate this      day of March, 2005. 
  

			
	ANWORTH CAPITAL TRUST 1
		
	By:	 	  

	Name:	 	Lloyd McAdams
	 	 	Administrative TrusteeFloating Rate Junior Subordinated Note Due 2035

 Exhibit 4.3 
  

FLOATING RATE JUNIOR SUBORDINATED NOTE DUE 2035 
  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS
HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. 
  
 THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES
MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED)
AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. 
  
 THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR
ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES. 
  
 THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN
MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF 

 THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER
PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE.” 
  
 ANWORTH MORTGAGE ASSET CORPORATION 
  
 Floating Rate Junior Subordinated Note due 2035 
  

				
	 No.
                    
	  	$	37,380,000

  
 Anworth Mortgage Asset
Corporation, a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to JPMorgan Chase Bank, National Association, not in its individual capacity, but solely as Property Trustee of the Anworth Capital Trust 1, or registered assigns, the principal sum of Thirty Seven Million Three Hundred Eighty
Thousand Dollars ($37,380,000) on March 30, 2035. The Company further promises to pay interest on said principal sum from March 15, 2005, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March 30, June 30, September 30 and December 30 of each year, commencing June 30, 2005, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall
accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a variable rate equal to LIBOR plus 3.10% per annum, together with Additional Tax Sums, if any,
as provided in Section 10.5 of the Indenture, until the principal hereof is paid or duly provided for or made available for payment; provided, further, that any overdue principal, premium, if any, or Additional Tax Sums and any
overdue installment of interest shall bear Additional Interest at a variable rate equal to LIBOR plus 3.10% per annum (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts
are due until they are paid or made available for payment, and such interest shall be payable on demand. 
  
 The amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period. The
interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered at the close of 

 
business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the Indenture. 
  
 So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of this Security, to defer the payment of interest on this Security
for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “Extension Period”), during which Extension Period(s), no interest shall be due and payable (except any Additional Tax Sums that
may be due and payable). No Extension Period shall end on a date other than an Interest Payment Date, and no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. No interest shall be due and payable during an
Extension Period (except any Additional Tax Sums that may be due and payable), except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to
the extent payment of such interest would be legally enforceable) at a variable rate equal to LIBOR plus 3.10% per annum, compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or made available
for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on this Security, together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may further
defer the payment of interest; provided, that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) quarterly interest payment periods, (ii) no Extension Period shall end on a date
other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest
and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided, that (i) such Extension Period does not exceed twenty (20) quarterly interest payment periods, (ii) no
Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. The Company shall give the Holder of this Security and the Trustee
written notice of its election to begin any such Extension Period at least one Business Day prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral or, so long as this Security is
held by the Trust, at least one Business Day prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities of Anworth Capital Trust 1 would be payable but for such deferral and (ii) the date on which the
Property Trustee of such Trust is required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date for the payment of such Distributions. 
  
 During any such Extension Period, the Company shall not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock or (ii) make any payment of principal of or any interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company
in 

 
connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, (2) a dividend reinvestment or stockholder stock purchase plan and (3) the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series
of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (c) the purchase of fractional interests in shares of the Company’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any
Rights Plan, or the redemption or repurchase of rights pursuant thereto or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other
rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock). 
  
 Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying
Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least
ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the
address of such Person as such address shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Security is the Property Trustee, the payment of the principal of (and premium, if any) and interest
(including any overdue installment of interest and Additional Tax Sums, if any) on this Security will be made at such place and to such account as may be designated by the Property Trustee. 
  
 The indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether
now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. 
  
 Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose. 
  
  

 [REVERSE OF SECURITY] 
  
 This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued
under the Junior Subordinated Indenture, dated as of March 15, 2005 (the “Indenture”), between the Company and JPMorgan Chase Bank, National Association, as Trustee (in such capacity, the “Trustee,” which term
includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the
Company, the Trustee, the holders of Senior Debt, the Holders of the Securities and the holders of the Preferred Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. 
  
 All terms used in this Security that are defined in the Indenture or in the
Amended and Restated Trust Agreement, dated as of March 15, 2005 (as modified, amended or supplemented from time to time, the “Trust Agreement”), relating to the Anworth Capital Trust 1 (the “Trust”) among the
Company, as Depositor, the Trustees named therein and the Holders from time to time of the Trust Securities issued pursuant thereto, shall have the meanings assigned to them in the Indenture or the Trust Agreement, as the case may be. 
  
 The Company may, on any Interest Payment Date, at its option, upon not less
than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after March 30, 2010 and subject to the terms and conditions
of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption,
with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date. 
  
 In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’
nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of
Article XI of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest,
through but excluding the date fixed as the Redemption Date. 
  
 In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be
redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security. 
  
 The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the 

 
Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf
of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security. 
  
 No reference herein to the Indenture
and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the
extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed. 
  
 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to
“Qualified Purchasers” (as such term is defined in the Investment Company Act of 1940, as amended), and registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the
Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 
  
 The Securities are issuable only in registered form without coupons in
minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 
  
 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. 
  
 The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary. 
  
 The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it
is intended that this Security constitute indebtedness. 

 This Security shall be construed and enforced in accordance with and governed by the laws of the State of
New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law). 
  
  

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this
     day of             , 2005. 
  

			
	 ANWORTH MORTGAGE ASSET
 CORPORATION

		
	 By:
	 	  

	 Name:
	 	 Lloyd McAdams

	 Title:
	 	 Chief Executive Officer

 This is one of the Securities referred to in the within-mentioned Indenture. 
  
 Dated: 
  

			
	 JPMORGAN CHASE BANK, NATIONAL
 ASSOCIATION, not in its individual capacity, but
 solely as
Trustee

		
	 By:
	 	  

	 Name:
	 	 Maria D. Calzado

	 Title:
	 	 Vice President

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